UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 16, 2015
 
 
PRIVATEBANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)
 
 
 
Delaware
 
001-34066
 
36-3681151
(State or other jurisdiction
of incorporation)
 
(Commission
file number)
 
(I.R.S. employer
identification no.)

120 S. LaSalle St.
Suite 400
Chicago, Illinois
 
60603
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (312) 564-2000
Not Applicable
(Former name or former address, if changed since last report)
 
 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2 below):
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






ITEM 2.02
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 16, 2015, PrivateBancorp, Inc. (the “Company”) announced its earnings results for the first quarter ended March 31, 2015. Attached as Exhibit 99.1 is a copy of the press release relating to the Company’s earnings results, which is incorporated herein by reference. Certain supplemental information relating to non-GAAP financial measures is reported in the attached press release in Exhibit 99.1.
 
ITEM 9.01
FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
 
Exhibit
  
Description
 
 
 
99.1
  
First Quarter 2015 Earnings Release dated April 16, 2015 (intended to be deemed furnished with the Commission rather than filed pursuant to General Instruction B.2. to Form 8-K)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
PRIVATEBANCORP, INC.
 
 
 
 
 
 
 
Dated: April 16, 2015
 
 
 
By:
 
/s/ Kevin M. Killips
 
 
 
 
 
 
Kevin M. Killips
 
 
 
 
 
 
Chief Financial Officer
INDEX TO EXHIBITS
 
Exhibit
  
Description
 
 
 
99.1
  
First Quarter 2015 Earnings Release dated April 16, 2015 (intended to be deemed furnished with the Commission rather than filed pursuant to General Instruction B.2. to Form 8-K)





Exhibit 99.1


For further information:

Media Contact:
Amy Yuhn
312-564-1378
ayuhn@theprivatebank.com

Investor Relations Contact:
Jeanette O'Loughlin
312-564-6076
joloughlin@theprivatebank.com

PrivateBancorp Reports First Quarter 2015 Earnings
Earnings per share of $0.52 for the first quarter 2015, compared to $0.44 for the first quarter 2014
and $0.47 for the fourth quarter 2014

CHICAGO, April 16, 2015 - PrivateBancorp, Inc. (NASDAQ: PVTB) today reported net income of $41.5 million, or $0.52 per diluted share, for the first quarter 2015, compared to $34.5 million, or $0.44 per diluted share, for the first quarter 2014, and $37.2 million, or $0.47 per diluted share, for the fourth quarter 2014.

“I am pleased with our start to the year as we leverage the momentum we have built in our business,” said Larry D. Richman, President and Chief Executive Officer, PrivateBancorp, Inc. “Through our consistent execution, we delivered another quarter of strong results for our shareholders. First quarter net income increased 20 percent year over year to $41 million, largely driven by client loan growth in our commercial and industrial portfolio as well as the gain we realized from the sale of our branch in Georgia.

“Our solid loan growth helped boost net interest income by 12 percent from the first quarter last year, which led to a 15 percent increase in net revenue to $156 million,” Richman continued. “We are well-positioned to continue to add new client relationships and do more for our existing clients in 2015 as we build on our differentiated commercial banking model.”

First Quarter 2015 Highlights

•
Total loans grew to $12.2 billion, up $1.2 billion from a year ago and $278.3 million from December 31, 2014, primarily driven by growth in commercial and industrial loans.

•
Total deposits were $14.1 billion at March 31, 2015, up $2.2 billion from a year ago, and $1.0 billion from December 31, 2014. Average deposits increased $1.6 billion from a year ago and $210.0 million from the previous quarter.

•
Net interest margin was 3.21 percent, compared to 3.23 percent for the first quarter 2014 and 3.07 percent for the fourth quarter 2014. The current quarter reflected the full benefit of the fourth quarter's redemption of trust preferred securities.


1

•
Operating profit of $73.3 million for the first quarter 2015 included seasonally higher benefits expense and a gain on sale of the Norcross, Ga., branch. Excluding the one-time gain on sale, operating profit increased 15 percent from the first quarter 2014 and 6 percent from the fourth quarter 2014, primarily reflecting continued growth in earning assets.

•
Return on average assets was 1.07 percent and return on average common equity was 11.05 percent for the first quarter 2015. In comparison, return on average assets was 0.95 percent and return on average common equity was 10.0 percent for the fourth quarter 2014.

Operating Performance

Net interest income was $122.0 million in the first quarter 2015, an increase of 12 percent compared to the first quarter 2014, and up 4 percent compared to the fourth quarter 2014, despite two fewer days in the first quarter. Average loan growth of 13 percent from the first quarter 2014 and 3 percent from the fourth quarter 2014, as well as a full-quarter's benefit from the fourth quarter 2014 trust preferred securities redemption, positively impacted net interest income.

Net interest margin was 3.21 percent in the first quarter 2015, compared to 3.23 percent in the first quarter 2014 and 3.07 percent in the fourth quarter 2014. The trust preferred securities redemption lowered borrowing costs and improved net interest margin by seven basis points on a comparative basis. The current quarter also benefited from a higher level of loan fees, including the collection of a one-time fee that contributed three basis points to loan yields. Average cash equivalents declined from the fourth quarter 2014, which benefited net interest margin by three basis points on a comparative basis. Interest-bearing deposit costs were relatively unchanged. Loan pricing remains competitive in the current environment with ongoing yield compression. Contractual loan yields on a total portfolio basis declined two basis points on a sequential basis.

Noninterest income was $33.5 million in the first quarter 2015, compared to $26.2 million for the first quarter 2014 and $30.4 million compared to the fourth quarter 2014. Results for the first quarter 2015 reflected a $4.1 million gain on sale of the Norcross, Ga., branch. Treasury management fees grew to $7.3 million in the first quarter 2015, up 11 percent from the first quarter 2014 and up slightly from the fourth quarter 2014. Continued cross selling to new clients drove higher treasury management volume. Mortgage banking revenue more than doubled from the first quarter 2014 and increased 22 percent from the fourth quarter 2014, as purchase activity increased and a decline in rates during the first quarter 2015 drove an increase in refinancing volume.

Capital markets revenue was up slightly from the first quarter 2014 and down $1.5 million from the fourth quarter 2014. Excluding the impact of the credit valuation adjustment, capital markets revenue was $5.0 million for the first quarter 2015, down from $5.9 million for the fourth quarter 2014, when several larger transactions drove higher interest rate swap volume. The demand for interest rate derivatives continues to be influenced by rate environment expectations. Foreign exchange revenue, which represented 36 percent of capital markets revenue for the first quarter 2015, benefited from several larger transactions, growing 5 percent from the fourth quarter 2014. Syndication fees were $2.6 million for the first quarter 2015, down from $3.3 million for the first quarter 2014 and $3.9 million for the fourth quarter 2014. Syndication fees vary from quarter to quarter depending on the mix of loan originations.

Assets under management and administration (AUMA) were $7.3 billion as of March 31, 2015, compared to $6.0 billion a year ago and $6.6 billion at December 31, 2014. Asset management revenue was $4.4 million in the first quarter 2015, compared to $4.3 million for the first quarter 2014 and $4.2 million for the fourth quarter 2014.


2

Expenses

Noninterest expense was $83.1 million for the first quarter 2015, compared to $75.8 million for the first quarter 2014 and $83.0 million for the fourth quarter 2014. Salaries and benefits expense increased $7.7 million from the first quarter 2014 and $5.6 million from the fourth quarter 2014. First-quarter salaries and benefits expense included seasonally higher payroll taxes attributable to incentive compensation payments and higher benefits expenses during the period. Additional hires made throughout 2014, annual salary adjustments, and a higher bonus accrual contributed to increased compensation expense compared to the prior-year period.

Other expenses declined $3.9 million on a sequential basis, as the fourth quarter 2014 included $1.6 million of office relocation costs and a higher provision related to unfunded commitments. Unfunded commitments at March 31, 2015, increased 3 percent from year-end, primarily related to growth in commercial and industrial commitments. The provision for unfunded commitments declined to $376,000 for the first quarter 2015, compared to $496,000 for the first quarter 2014 and $2.5 million for the fourth quarter 2014. Net foreclosed property expense declined 53 percent compared to the first quarter 2014, reflecting a lower amount of writedowns and carrying costs on a reduced amount of foreclosed property (OREO).

The efficiency ratio was 53.1 percent for the first quarter 2015, compared to 55.8 percent for the first quarter 2014 and 56.0 percent for the fourth quarter 2014. For the full year 2014, the efficiency ratio was 54.2 percent.

Credit Quality

The allowance for loan losses as a percentage of total loans was 1.29 percent at March 31, 2015, comparable to December 31, 2014. The provision for loan losses was $5.5 million for the first quarter 2015, compared to $4.0 million for the fourth quarter 2014 and $3.4 million for the first quarter 2014. Net charge-offs to average loans were 0.05 percent for the first quarter 2015, consistent with the fourth quarter 2014.

Nonperforming assets were 0.53 percent of total assets at March 31, 2015, down from 0.82 percent at March 31, 2014, and comparable to December 31, 2014. At March 31, 2015, nonperforming loans were $71.0 million, compared to $93.8 million at March 31, 2014, and $67.5 million at December 31, 2014. OREO of $15.6 million at March 31, 2015, declined $7.9 million from March 31, 2014, and $1.8 million from December 31, 2014.

Credit quality results exclude covered assets acquired through an FDIC-assisted transaction that are subject to a loss sharing agreement.

Balance Sheet

Total assets grew to $16.4 billion at March 31, 2015, compared to $14.3 billion at March 31, 2014, and $15.6 billion at December 31, 2014. Total loans of $12.2 billion increased 11 percent from March 31, 2014, and 2 percent from December 31, 2014, primarily driven by growth in commercial and industrial loans. At March 31, 2015, total commercial loans comprised 67 percent of total loans, and commercial real estate and construction represented 27 percent of total loans.

The Company's investment securities portfolio was $2.8 billion at March 31, 2015, up 7 percent from March 31, 2014, and consistent with December 31, 2014. Cash and cash equivalents were $958.4 million at March 31, 2015 and reflected deposit growth, compared to $351.1 million at March 31, 2014, and $424.6 million at December 31, 2014.

Total liabilities were $14.8 billion at March 31, 2015, up compared to $13.0 billion at March 31, 2014, and $14.1 billion compared to December 31, 2014. Total deposits were $14.1 billion at March 31, 2015, increasing 19 percent from March 31, 2014, and 8 percent from December 31, 2014. Deposit balances of commercial clients fluctuate based on their cash management and liquidity needs. Transactional inflows relating to several commercial clients contributed to the deposit growth in the first quarter 2015, a meaningful portion of which was subsequently redeployed

3

by the clients. At March 31, 2015, the loan-to-deposit ratio was 86 percent, compared to 92 percent as of March 31, 2014, and 91 percent as of December 31, 2014.

Capital

As of March 31, 2015, the total risk-based capital ratio was 12.29 percent, the Tier 1 risk-based capital ratio was 10.34 percent, and the leverage ratio was 10.16 percent. The Tier 1 common capital ratio was 9.23 percent and the tangible common equity ratio was 8.86 percent at the end of the first quarter 2015. These capital ratios are calculated in accordance with the new capital rules that became effective on January 1, 2015.

Quarterly Conference Call and Webcast Presentation

PrivateBancorp will host a conference call Thursday, April 16, 2015, at 10 a.m. CDT. The call may be accessed by telephone at (888) 782-9127 (U.S. and Canada) or (706) 634-5643 (International) and entering passcode #8210528. A live webcast of the call can be accessed on the Company website at: investor.theprivatebank.com. A rebroadcast will be available beginning approximately two hours after the call until midnight April 30, 2015, by calling (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (International) and entering passcode #8210528.

About PrivateBancorp, Inc.

PrivateBancorp, Inc., through its subsidiaries, delivers customized business and personal financial services to middle-market companies, as well as business owners, executives, entrepreneurs and families in all of the markets and communities we serve. As of March 31, 2015, the Company had 34 offices in 11 states and $16.4 billion in assets. The Company’s website is www.theprivatebank.com.

Forward-Looking Statements

Statements made in this press release that are not historical facts may constitute forward-looking statements within the meaning of federal securities laws. Our ability to predict results or the actual effects of future plans, strategies or events is inherently uncertain. Factors which could cause actual results to differ from those reflected in forward-looking statements include:

•
continued uncertainty regarding U.S. and global economic outlook that may impact market conditions or affect demand for certain banking products and services;
•
unanticipated developments in pending or prospective loan transactions or greater-than-expected paydowns or payoffs of existing loans;
•
unanticipated changes in interest rates;
•
competitive pressures in the financial services industry that may affect the pricing of the Company’s loan and deposit products as well as its services;
•
unforeseen credit quality problems or changing economic conditions that could result in charge-offs greater than we have anticipated in our allowance for loan losses or changes in value of our investments;
•
lack of sufficient or cost-effective sources of liquidity or funding as and when needed;
•
loss of key personnel or our ability to recruit and retain appropriate talent;
•
greater-than-anticipated costs to support the growth of our business, including investments in technology, process improvements or other infrastructure enhancements, or greater-than-anticipated compliance costs or regulatory burdens; or
•
failures or disruptions to, or compromises of, our data processing or other information or operational systems, including the potential impact of disruptions or breaches at our third-party service providers.


4

These factors should be considered in evaluating forward-looking statements and undue reliance should not be placed on our forward-looking statements. Readers should also consider the risks, assumptions and uncertainties set forth in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2014, as well as those set forth in our subsequent periodic and current reports filed with the SEC. Forward-looking statements speak only as of the date they are made and we assume no obligation to update any of these statements in light of new information, future events or otherwise unless required under the federal securities laws.

Non-U.S. GAAP Financial Measures

This press release contains both financial measures based on accounting principles generally accepted in the United States (U.S. GAAP) and non-U.S. GAAP based financial measures. We believe that presenting these non-U.S. GAAP financial measures will provide information useful to investors in understanding our underlying operational performance, our business, and performance trends and facilitates comparisons with the performance of others in the banking industry. If non-U.S. GAAP financial measures are used, the comparable U.S. GAAP financial measure, as well as the reconciliation to the comparable U.S. GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with U.S. GAAP, nor are they necessarily comparable to non-U.S. GAAP performance measures that may be presented by other companies.

Editor's Note: Financial highlights attached. Full financial supplement available on the Company's website at investor.theprivatebank.com.


5

Consolidated Income Statements
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
1Q15
 
4Q14
 
3Q14
 
2Q14
 
1Q14
Interest Income
 
 
 
 
 
 
 
 
 
Loans, including fees
$
122,702

 
$
120,649

 
$
119,211

 
$
113,696

 
$
110,199

Federal funds sold and interest-bearing deposits in banks
261

 
347

 
142

 
139

 
142

Securities:
 
 
 
 
 
 
 
 
 
Taxable
13,556

 
13,250

 
13,370

 
13,625

 
13,255

Exempt from Federal income taxes
1,806

 
1,683

 
1,529

 
1,432

 
1,529

Other interest income
48

 
49

 
48

 
59

 
33

Total interest income
138,373

 
135,978

 
134,300

 
128,951

 
125,158

Interest Expense
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
1,006

 
1,026

 
918

 
842

 
942

Savings deposits and money market accounts
4,610

 
4,623

 
4,173

 
4,087

 
3,974

Time deposits
5,639

 
5,803

 
5,723

 
5,034

 
4,806

Short-term and secured borrowings
197

 
143

 
158

 
141

 
196

Long-term debt
4,928

 
7,507

 
6,570

 
6,496

 
6,488

Total interest expense
16,380

 
19,102

 
17,542

 
16,600

 
16,406

Net interest income
121,993

 
116,876

 
116,758

 
112,351

 
108,752

Provision for loan and covered loan losses
5,646

 
4,120

 
3,890

 
327

 
3,707

Net interest income after provision for loan and covered loan losses
116,347

 
112,756

 
112,868

 
112,024

 
105,045

Non-interest Income
 
 
 
 
 
 
 
 
 
Asset management
4,363

 
4,241

 
4,240

 
4,440

 
4,347

Mortgage banking
3,775

 
3,083

 
2,904

 
2,626

 
1,632

Capital markets products
4,172

 
5,705

 
3,253

 
5,006

 
4,083

Treasury management
7,327

 
7,262

 
6,935

 
6,676

 
6,599

Loan, letter of credit and commitment fees
5,106

 
4,901

 
4,970

 
4,806

 
4,634

Syndication fees
2,622

 
3,943

 
6,818

 
5,440

 
3,313

Deposit service charges and fees and other income
5,617

 
1,291

 
1,546

 
1,069

 
1,297

Net securities gains
534

 
—

 
3

 
196

 
331

Total non-interest income
33,516

 
30,426

 
30,669

 
30,259

 
26,236

Non-interest Expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
52,361

 
46,746

 
46,421

 
44,405

 
44,620

Net occupancy and equipment expense
7,864

 
7,947

 
7,807

 
7,728

 
7,776

Technology and related costs
3,421

 
3,431

 
3,362

 
3,205

 
3,283

Marketing
3,578

 
3,687

 
3,752

 
3,589

 
2,413

Professional services
2,310

 
3,471

 
2,626

 
2,905

 
2,759

Outsourced servicing costs
1,680

 
1,814

 
1,736

 
1,850

 
1,464

Net foreclosed property expenses
1,328

 
1,456

 
1,631

 
2,771

 
2,823

Postage, telephone, and delivery
862

 
809

 
839

 
927

 
825

Insurance
3,211

 
3,455

 
3,077

 
3,016

 
2,903

Loan and collection expense
2,268

 
2,037

 
2,099

 
1,573

 
1,056

Other expenses
4,262

 
8,172

 
4,486

 
3,496

 
5,828

Total non-interest expense
83,145

 
83,025

 
77,836

 
75,465

 
75,750

Income before income taxes
66,718

 
60,157

 
65,701

 
66,818

 
55,531

Income tax provision
25,234

 
22,934

 
25,174

 
25,994

 
21,026

Net income available to common stockholders
$
41,484

 
$
37,223

 
$
40,527

 
$
40,824

 
$
34,505

Per Common Share Data
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.53

 
$
0.48

 
$
0.52

 
$
0.52

 
$
0.44

Diluted earnings per share
$
0.52

 
$
0.47

 
$
0.51

 
$
0.52

 
$
0.44

Cash dividends declared
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

Weighted-average common shares outstanding
77,407

 
77,173

 
77,110

 
77,062

 
76,675

Weighted-average diluted common shares outstanding
78,512

 
78,122

 
77,934

 
77,806

 
77,417




6

Consolidated Balance Sheets
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
3/31/14
 
Unaudited
 
Audited
 
Unaudited
 
Unaudited
 
Unaudited
Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
158,431

 
$
132,211

 
$
181,248

 
$
247,048

 
$
233,685

Federal funds sold and interest-bearing deposits in banks
799,953

 
292,341

 
416,071

 
160,349

 
117,446

Loans held-for-sale
89,461

 
115,161

 
57,748

 
80,724

 
26,262

Securities available-for-sale, at fair value
1,631,237

 
1,645,344

 
1,541,754

 
1,527,747

 
1,577,406

Securities held-to-maturity, at amortized cost
1,159,853

 
1,129,285

 
1,072,002

 
1,066,216

 
1,023,214

Federal Home Loan Bank ("FHLB") stock
28,556

 
28,666

 
28,666

 
28,666

 
30,005

Loans – excluding covered assets, net of unearned fees
12,170,484

 
11,892,219

 
11,547,587

 
11,136,942

 
10,924,985

Allowance for loan losses
(156,610
)
 
(152,498
)
 
(150,135
)
 
(146,491
)
 
(146,768
)
Loans, net of allowance for loan losses and unearned fees
12,013,874

 
11,739,721

 
11,397,452

 
10,990,451

 
10,778,217

Covered assets
32,191

 
34,132

 
65,482

 
81,047

 
94,349

Allowance for covered loan losses
(6,021
)
 
(5,191
)
 
(4,485
)
 
(14,375
)
 
(16,571
)
Covered assets, net of allowance for covered loan losses
26,170

 
28,941

 
60,997

 
66,672

 
77,778

Other real estate owned, excluding covered assets
15,625

 
17,416

 
17,293

 
19,823

 
23,565

Premises, furniture, and equipment, net
38,544

 
39,143

 
39,611

 
40,088

 
39,556

Accrued interest receivable
41,202

 
40,531

 
39,701

 
36,568

 
39,273

Investment in bank owned life insurance
55,561

 
55,207

 
54,849

 
54,500

 
54,184

Goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Other intangible assets
5,230

 
5,885

 
6,627

 
7,381

 
8,136

Derivative assets
56,607

 
43,062

 
34,896

 
47,012

 
44,528

Other assets
147,003

 
196,427

 
147,512

 
135,118

 
137,486

Total assets
$
16,361,348

 
$
15,603,382

 
$
15,190,468

 
$
14,602,404

 
$
14,304,782

Liabilities
 
 
 
 
 
 
 
 
 
Demand deposits:
 
 
 
 
 
 
 
 
 
Noninterest-bearing
$
3,936,181

 
$
3,516,695

 
$
3,342,862

 
$
3,387,424

 
$
3,103,736

Interest-bearing
1,498,810

 
1,907,320

 
1,433,429

 
1,230,681

 
1,466,095

Savings deposits and money market accounts
6,156,331

 
5,171,025

 
5,368,866

 
5,033,247

 
4,786,398

Time deposits
2,510,406

 
2,494,928

 
2,704,047

 
2,584,849

 
2,529,932

Total deposits
14,101,728

 
13,089,968

 
12,849,204

 
12,236,201

 
11,886,161

Deposits held-for-sale
—

 
122,216

 
128,508

 
—

 
—

Short-term and secured borrowings
258,788

 
432,385

 
6,563

 
235,319

 
333,400

Long-term debt
344,788

 
344,788

 
656,793

 
626,793

 
627,793

Accrued interest payable
7,004

 
6,948

 
6,987

 
6,282

 
6,251

Derivative liabilities
26,967

 
26,767

 
27,976

 
35,402

 
40,522

Other liabilities
82,644

 
98,631

 
79,128

 
64,586

 
67,409

Total liabilities
14,821,919

 
14,121,703

 
13,755,159

 
13,204,583

 
12,961,536

Equity
 
 
 
 
 
 
 
 
 
Common stock:
 
 
 
 
 
 
 
 
 
Voting
77,968

 
77,211

 
76,858

 
75,526

 
75,428

Nonvoting
—

 
—

 
285

 
1,585

 
1,585

Treasury stock
(5,560
)
 
(53
)
 
(6
)
 
(945
)
 
(1,697
)
Additional paid-in capital
1,047,227

 
1,034,048

 
1,028,813

 
1,024,869

 
1,021,436

Retained earnings
390,247

 
349,556

 
313,123

 
273,380

 
233,347

Accumulated other comprehensive income, net of tax
29,547

 
20,917

 
16,236

 
23,406

 
13,147

Total equity
1,539,429

 
1,481,679

 
1,435,309

 
1,397,821

 
1,343,246

Total liabilities and equity
$
16,361,348

 
$
15,603,382

 
$
15,190,468

 
$
14,602,404

 
$
14,304,782



7

Selected Financial Data
 
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
1Q15
 
4Q14
 
3Q14
 
2Q14
 
1Q14
 
Selected Statement of Income Data:
 
 
 
 
 
 
 
 
 
 
Net interest income
$
121,993

 
$
116,876

 
$
116,758

 
$
112,351

 
$
108,752

 
Net revenue (1)(2)
$
156,453

 
$
148,180

 
$
148,238

 
$
143,354

 
$
135,788

 
Operating profit (1)(2)
$
73,308

 
$
65,155

 
$
70,402

 
$
67,889

 
$
60,038

 
Provision for loan and covered loan losses
$
5,646

 
$
4,120

 
$
3,890

 
$
327

 
$
3,707

 
Income before income taxes
$
66,718

 
$
60,157

 
$
65,701

 
$
66,818

 
$
55,531

 
Net income available to common stockholders
$
41,484

 
$
37,223

 
$
40,527

 
$
40,824

 
$
34,505

 
Per Common Share Data:
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.53

 
$
0.48

 
$
0.52

 
$
0.52

 
$
0.44

 
Diluted earnings per share
$
0.52

 
$
0.47

 
$
0.51

 
$
0.52

 
$
0.44

 
Dividends declared
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
Book value (period end) (1)
$
19.61

 
$
18.95

 
$
18.37

 
$
17.90

 
$
17.21

 
Tangible book value (period end) (1)(2)
$
18.35

 
$
17.67

 
$
17.08

 
$
16.61

 
$
15.90

 
Market value (period end)
$
35.17

 
$
33.40

 
$
29.91

 
$
29.06

 
$
30.51

 
Book value multiple (period end)
1.79

x
1.76

x
1.63

x
1.62

x
1.77

x
Share Data:
 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
77,407

 
77,173

 
77,110

 
77,062

 
76,675

 
Weighted-average diluted common shares outstanding
78,512

 
78,122

 
77,934

 
77,806

 
77,417

 
Common shares issued (period end)
78,654

 
78,180

 
78,121

 
78,101

 
78,108

 
Common shares outstanding (period end)
78,494

 
78,178

 
78,121

 
78,069

 
78,049

 
Performance Ratio:
 
 
 
 
 
 
 
 
 
 
Return on average common equity
11.05
%
 
10.03
%
 
11.27
%
 
11.88
%
 
10.48
%
 
Return on average assets
1.07
%
 
0.95
%
 
1.09
%
 
1.14
%
 
1.00
%
 
Return on average tangible common equity (1)(2)
11.94
%
 
10.89
%
 
12.27
%
 
12.97
%
 
11.50
%
 
Net interest margin (1)(2)
3.21
%
 
3.07
%
 
3.23
%
 
3.21
%
 
3.23
%
 
Fee revenue as a percent of total revenue (1)
21.28
%
 
20.66
%
 
20.80
%
 
21.11
%
 
19.24
%
 
Non-interest income to average assets
0.86
%
 
0.78
%
 
0.83
%
 
0.84
%
 
0.76
%
 
Non-interest expense to average assets
2.14
%
 
2.12
%
 
2.09
%
 
2.10
%
 
2.19
%
 
Net overhead ratio (1)
1.27
%
 
1.35
%
 
1.27
%
 
1.26
%
 
1.43
%
 
Efficiency ratio (1)(2)
53.14
%
 
56.03
%
 
52.51
%
 
52.64
%
 
55.79
%
 
Balance Sheet Ratios:
 
 
 
 
 
 
 
 
 
 
Loans to deposits (period end) (3)
86.30
%
 
90.85
%
 
89.87
%
 
91.02
%
 
91.91
%
 
Average interest-earning assets to average interest-bearing liabilities
144.69
%
 
145.10
%
 
145.51
%
 
143.72
%
 
143.43
%
 
Capital Ratios (period end):
 
 
 
 
 
 
 
 
 
 
Total risk-based capital (1)
12.29
%
 
12.51
%
 
13.18
%
 
13.41
%
 
13.39
%
 
Tier 1 risk-based capital (1)
10.34
%
 
10.49
%
 
11.12
%
 
11.24
%
 
11.19
%
 
Tier 1 leverage ratio (1)
10.16
%
 
9.96
%
 
10.70
%
 
10.63
%
 
10.60
%
 
Tier 1 common equity to risk-weighted assets (1)(4)
9.23
%
 
9.33
%
 
9.38
%
 
9.42
%
 
9.33
%
 
Tangible common equity to tangible assets (1)(2)
8.86
%
 
8.91
%
 
8.84
%
 
8.94
%
 
8.74
%
 
Total equity to total assets
9.41
%
 
9.50
%
 
9.45
%
 
9.57
%
 
9.39
%
 
(1) 
Refer to Glossary of Terms for definition.
(2) 
This is a non-U.S. GAAP financial measure. Refer to "Non-U.S. GAAP Financial Measures" for a reconciliation from non-U.S. GAAP to U.S. GAAP.
(3) 
Excludes covered assets. Refer to Glossary of Terms for definition.
(4) 
Effective January 1, 2015, the Tier 1 common equity to risk-weighted assets ratio became a required regulatory capital measure and as presented for the 2015 period is calculated in accordance with the new capital rules. For prior periods, this ratio was considered a non-U.S. GAAP Financial measure. For the periods prior to January 1, 2015, the Tier 1 common equity to risk-weighted assets ratio contained herein is calculated without giving effect to the final Basel III capital rules. Refer to "Non-U.S. GAAP Financial Measures" for a reconciliation from non-U.S. GAAP to U.S. GAAP for periods prior to 2015.

8

Selected Financial Data (continued)
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
1Q15
 
4Q14
 
3Q14
 
2Q14
 
1Q14
Additional Selected Information:
 
 
 
 
 
 
 
 
 
(Increase) decrease credit valuation adjustment on capital markets derivatives (1)
$
(805
)
 
$
(216
)
 
$
486

 
$
(250
)
 
$
(66
)
Salaries and employee benefits:
 
 
 
 
 
 
 
 
 
Salaries and wages
$
27,002

 
$
26,521

 
$
26,178

 
$
25,671

 
$
24,973

Share-based costs
5,143

 
4,118

 
3,872

 
3,892

 
3,685

Incentive compensation and commissions
11,062

 
12,053

 
12,294

 
10,493

 
8,244

Payroll taxes, insurance and retirement costs
9,154

 
4,054

 
4,077

 
4,349

 
7,718

Total salaries and employee benefits
$
52,361

 
$
46,746

 
$
46,421

 
$
44,405

 
$
44,620

Loan and collection expense:
 
 
 
 
 
 
 
 
 
Loan origination and servicing expense
$
1,626

 
$
1,528

 
$
1,528

 
$
1,202

 
$
799

Loan remediation expense
642

 
509

 
571

 
371

 
257

Total loan and collection expense
$
2,268

 
$
2,037

 
$
2,099

 
$
1,573

 
$
1,056

Provision (release) for unfunded commitments
$
376

 
$
2,514

 
$
481

 
$
(339
)
 
$
496

Unfunded commitments, excluding covered assets
$
6,229,242

 
$
6,041,301

 
$
5,365,042

 
$
4,957,324

 
$
4,814,346

Assets under management and administration (AUMA) (1)
$
7,328,192

 
$
6,645,928

 
$
6,480,713

 
$
6,365,962

 
$
6,043,258

Custody assets included in AUMA
$
3,604,333

 
$
3,511,996

 
$
3,319,188

 
$
3,151,829

 
$
2,910,234

Note: Certain reclassifications have been made to prior period amounts to conform to the current period presentation.
Basic and Diluted Earnings per Common Share
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
1Q15
 
4Q14
 
3Q14
 
2Q14
 
1Q14
Basic earnings per common share
 
 
 
 
 
 
 
 
 
Net income
$
41,484

 
$
37,223

 
$
40,527

 
$
40,824

 
$
34,505

Net income allocated to participating stockholders (2)
(463
)
 
(470
)
 
(515
)
 
(519
)
 
(613
)
Net income allocated to common stockholders
$
41,021

 
$
36,753

 
$
40,012

 
$
40,305

 
$
33,892

Weighted-average common shares outstanding
77,407

 
77,173

 
77,110

 
77,062

 
76,675

Basic earnings per common share
$
0.53

 
$
0.48

 
$
0.52

 
$
0.52

 
$
0.44

Diluted earnings per common share
 
 
 
 
 
 
 
 
 
Diluted earnings applicable to common stockholders (3)
$
41,028

 
$
36,758

 
$
40,017

 
$
40,308

 
$
33,897

Weighted-average diluted common shares outstanding:
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
77,407

 
77,173

 
77,110

 
77,062

 
76,675

Dilutive effect of stock awards
1,105

 
949

 
824

 
744

 
742

Weighted-average diluted common shares outstanding
78,512

 
78,122

 
77,934

 
77,806

 
77,417

Diluted earnings per common share
$
0.52

 
$
0.47

 
$
0.51

 
$
0.52

 
$
0.44

(1) 
Refer to Glossary of Terms for definition.
(2) 
Participating stockholders are those that hold certain share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents. Such shares or units are considered participating securities (i.e., the Company’s deferred stock units and certain restricted stock units and nonvested restricted stock awards).
(3) 
Earnings allocated to common stockholders for basic and diluted earnings per share may differ under the two-class method as a result of adding common stock equivalents for options to dilutive shares outstanding, which alters the ratio used to allocate earnings to common stockholders and participating securities for the purposes of calculating diluted earnings per share.

9

Loan Portfolio Composition (excluding covered assets (1))
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3/31/15
 
% of Total
 
12/31/14
 
% of Total
 
9/30/14
 
% of Total
 
6/30/14
 
% of Total
 
3/31/14
 
% of Total
 
Unaudited
 
 
 
Audited
 
 
 
Unaudited
 
 
 
Unaudited
 
 
 
Unaudited
 
 
Commercial and industrial
$
6,213,029

 
51
%
 
$
5,996,070

 
50
%
 
$
5,932,562

 
51
%
 
$
5,738,523

 
51
%
 
$
5,537,694

 
51
%
Commercial - owner-occupied CRE
1,977,601

 
16
%
 
1,892,564

 
16
%
 
1,843,199

 
16
%
 
1,731,060

 
16
%
 
1,771,528

 
16
%
Total commercial
8,190,630

 
67
%
 
7,888,634

 
66
%
 
7,775,761

 
67
%
 
7,469,583

 
67
%
 
7,309,222

 
67
%
Commercial real estate
2,411,359

 
20
%
 
2,323,616

 
20
%
 
2,233,018

 
19
%
 
2,086,976

 
19
%
 
2,062,260

 
19
%
Commercial real estate - multi-family
492,695

 
4
%
 
593,103

 
5
%
 
546,641

 
5
%
 
533,854

 
5
%
 
524,872

 
5
%
Total commercial real estate
2,904,054

 
24
%
 
2,916,719

 
25
%
 
2,779,659

 
24
%
 
2,620,830

 
24
%
 
2,587,132

 
24
%
Construction
357,258

 
3
%
 
381,102

 
3
%
 
307,066

 
3
%
 
360,313

 
3
%
 
335,476

 
3
%
Residential real estate
376,741

 
3
%
 
361,565

 
3
%
 
343,573

 
3
%
 
337,329

 
3
%
 
337,832

 
3
%
Home equity
138,734

 
1
%
 
142,177

 
1
%
 
141,159

 
1
%
 
144,081

 
1
%
 
147,574

 
1
%
Personal
203,067

 
2
%
 
202,022

 
2
%
 
200,369

 
2
%
 
204,806

 
2
%
 
207,749

 
2
%
Total loans
$
12,170,484

 
100
%
 
$
11,892,219

 
100
%
 
$
11,547,587

 
100
%
 
$
11,136,942

 
100
%
 
$
10,924,985

 
100
%
Total new loans to new clients (2)
$
385,777

 
 
 
$
451,896

 
 
 
$
421,326

 
 
 
$
364,771

 
 
 
$
391,785

 
 
(1) 
Refer to Glossary of Terms for definition.
(2) 
Amounts are unaudited.


10

Commercial Loan Portfolio Composition by Industry Segment
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
(Classified pursuant to the North American Industrial Classification System standard industry descriptions and represents our client's primary business activity)
 
March 31, 2015
 
December 31, 2014
 
Amount
 
% of Total
 
Amount
 
% of Total
Healthcare
$
1,892,977

 
23
%
 
$
1,787,092

 
23
%
Manufacturing
1,743,868

 
21
%
 
1,746,328

 
22
%
Finance and insurance
881,395

 
11
%
 
779,146

 
10
%
Wholesale trade
690,463

 
8
%
 
685,247

 
9
%
Real estate, rental and leasing
552,710

 
7
%
 
549,467

 
7
%
Administrative, support, waste management and remediation services
542,537

 
7
%
 
505,939

 
6
%
Professional, scientific and technical services
491,047

 
6
%
 
447,483

 
6
%
Architecture, engineering and construction
302,033

 
4
%
 
288,527

 
4
%
Retail
277,997

 
3
%
 
277,393

 
3
%
All other (1)
815,603

 
10
%
 
822,012

 
10
%
Total commercial (2)
$
8,190,630

 
100
%
 
$
7,888,634

 
100
%
Commercial Real Estate and Construction Loan Portfolio by Collateral Type
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
March 31, 2015
 
December 31, 2014
 
Amount
 
% of Total
 
Amount
 
% of Total
Commercial Real Estate
 
 
 
 
 
 
 
Retail
$
681,323

 
23
%
 
$
608,102

 
21
%
Multi-family
492,695

 
17
%
 
593,103

 
20
%
Office
528,869

 
18
%
 
543,657

 
19
%
Healthcare
365,480

 
13
%
 
361,476

 
12
%
Industrial/warehouse
279,389

 
10
%
 
264,976

 
9
%
Land
210,550

 
7
%
 
199,497

 
7
%
Residential 1-4 family
86,173

 
3
%
 
76,995

 
3
%
Mixed use/other
259,575

 
9
%
 
268,913

 
9
%
Total commercial real estate
$
2,904,054

 
100
%
 
$
2,916,719

 
100
%
Construction
 
 
 
 
 
 
 
Multi-family
$
109,327

 
30
%
 
$
113,206

 
30
%
Retail
98,121

 
27
%
 
100,086

 
26
%
Industrial/warehouse
55,696

 
16
%
 
43,779

 
11
%
Residential 1-4 family
33,104

 
9
%
 
32,419

 
9
%
Healthcare
16,171

 
5
%
 
22,382

 
6
%
Office
16,185

 
5
%
 
14,447

 
4
%
Mixed use/other
28,654

 
8
%
 
54,783

 
14
%
Total construction
$
357,258

 
100
%
 
$
381,102

 
100
%
(1) 
All other consists of numerous smaller balances across a variety of industries with no category greater than 3%.
(2) 
Includes owner-occupied commercial real estate of $2.0 billion at March 31, 2015 and $1.9 billion at December 31, 2014.

11

Asset Quality (excluding covered assets (1))
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
1Q15
 
4Q14
 
3Q14
 
2Q14
 
1Q14
Credit Quality Key Ratios
 
 
 
 
 
 
 
 
 
Net charge-offs (recoveries) (annualized) to average loans
0.05
%
 
0.05
%
 
*

 
0.08
%
 
-0.01
 %
Nonperforming loans to total loans
0.58
%
 
0.57
%
 
0.64
%
 
0.69
%
 
0.86
 %
Nonperforming loans to total assets
0.43
%
 
0.43
%
 
0.48
%
 
0.52
%
 
0.66
 %
Nonperforming assets to total assets
0.53
%
 
0.54
%
 
0.60
%
 
0.66
%
 
0.82
 %
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
Total loans
1.29
%
 
1.28
%
 
1.30
%
 
1.32
%
 
1.34
 %
Nonperforming loans
221
%
 
226
%
 
204
%
 
191
%
 
156
 %
 
 
 
 
 
 
 
 
 
 
Nonperforming assets
 
 
 
 
 
 
 
 
 
Loans past due 90 days and accruing
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Nonaccrual loans
71,018

 
67,544

 
73,429

 
76,589

 
93,827

OREO
15,625

 
17,416

 
17,293

 
19,823

 
23,565

Total nonperforming assets
$
86,643

 
$
84,960

 
$
90,722

 
$
96,412

 
$
117,392

 
 
 
 
 
 
 
 
 
 
Restructured loans accruing interest
$
22,368

 
$
22,745

 
$
22,136

 
$
32,982

 
$
26,462

 
 
 
 
 
 
 
 
 
 
Loans past due and still accruing
 
 
 
 
 
 
 
 
 
30-59 days
$
6,673

 
$
7,696

 
$
711

 
$
3,566

 
$
4,296

60-89 days
2,544

 
4,120

 
2,746

 
117

 
8,792

Total loans past due and still accruing
$
9,217

 
$
11,816

 
$
3,457

 
$
3,683

 
$
13,088

 
 
 
 
 
 
 
 
 
 
Special mention loans
$
102,651

 
$
100,989

 
$
76,611

 
$
119,878

 
$
87,329

Potential problem loans
$
107,038

 
$
87,442

 
$
119,770

 
$
125,033

 
$
106,474

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming Loans Rollforward
 
 
 
 
 
 
 
 
 
Beginning balance
$
67,544

 
$
73,429

 
$
76,589

 
$
93,827

 
$
94,238

Additions:
 
 
 
 
 
 
 
 
 
New nonaccrual loans
16,279

 
6,052

 
16,767

 
16,327

 
14,882

Reductions:
 
 
 
 
 
 
 
 
 
Return to performing status
(97
)
 
(439
)
 
—

 
—

 
(119
)
Paydowns and payoffs, net of advances
(4,841
)
 
(457
)
 
(16,371
)
 
(19,936
)
 
(3,326
)
Net sales
(2,407
)
 
(1,800
)
 
(1,053
)
 
(7,875
)
 
(6,327
)
Transfer to OREO
(2,152
)
 
(6,177
)
 
(776
)
 
(1,111
)
 
(689
)
Charge-offs
(3,308
)
 
(3,064
)
 
(1,727
)
 
(4,643
)
 
(4,832
)
Total reductions
(12,805
)
 
(11,937
)
 
(19,927
)
 
(33,565
)
 
(15,293
)
Balance at end of period
$
71,018

 
$
67,544

 
$
73,429

 
$
76,589

 
$
93,827

(1) 
Refer to Glossary of Terms for definition.
*
Less than 0.01%.

12

Asset Quality (excluding covered assets (1))
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit Quality Indicators
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Special Mention Loans
 
% of Portfolio Loan Type
 
 
Potential Problem Loans
 
% of Portfolio Loan Type
 
 
Non-Performing Loans
 
% of Portfolio Loan Type
 
 
Total Loans
March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
97,851

 
1.2
%
 
 
$
95,448

 
1.2
%
 
 
$
38,973

 
0.5
%
 
 
$
8,190,630

Commercial real estate
130

 
*

 
 
2,925

 
0.1
%
 
 
15,619

 
0.5
%
 
 
2,904,054

Construction
—

 
—
%
 
 
—

 
—
%
 
 
—

 
—
%
 
 
357,258

Residential real estate
3,323

 
0.9
%
 
 
6,045

 
1.6
%
 
 
4,763

 
1.3
%
 
 
376,741

Home equity
502

 
0.4
%
 
 
2,599

 
1.9
%
 
 
11,345

 
8.2
%
 
 
138,734

Personal
845

 
0.4
%
 
 
21

 
*

 
 
318

 
0.2
%
 
 
203,067

Total
$
102,651

 
0.8
%
 
 
$
107,038

 
0.9
%
 
 
$
71,018

 
0.6
%
 
 
$
12,170,484

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
93,130

 
1.2
%
 
 
$
78,562

 
1.0
%
 
 
$
31,047

 
0.4
%
 
 
$
7,888,634

Commercial real estate
3,552

 
0.1
%
 
 
746

 
*

 
 
19,749

 
0.7
%
 
 
2,916,719

Construction
—

 
—
%
 
 
—

 
—
%
 
 
—

 
—
%
 
 
381,102

Residential real estate
2,964

 
0.8
%
 
 
5,981

 
1.7
%
 
 
5,274

 
1.5
%
 
 
361,565

Home equity
1,170

 
0.8
%
 
 
2,108

 
1.5
%
 
 
11,044

 
7.8
%
 
 
142,177

Personal
173

 
0.1
%
 
 
45

 
*

 
 
430

 
0.2
%
 
 
202,022

Total
$
100,989

 
0.8
%
 
 
$
87,442

 
0.7
%
 
 
$
67,544

 
0.6
%
 
 
$
11,892,219

*
Less than 0.1%.


13

Allowance for Loan Losses (excluding covered assets (1))
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
1Q15
 
4Q14
 
3Q14
 
2Q14
 
1Q14
Change in allowance for loan losses:
 
 
 
 
 
 
 
 
 
Balance at beginning of period
$
152,498

 
$
150,135

 
$
146,491

 
$
146,768

 
$
143,109

Loans charged-off:
 
 
 
 
 
 
 
 
 
Commercial
(2,202
)
 
(1,732
)
 
(227
)
 
(2,142
)
 
(1,487
)
Commercial real estate
(887
)
 
(417
)
 
(1,133
)
 
(2,082
)
 
(2,582
)
Construction
—

 
1

 
(7
)
 
—

 
—

Residential real estate
(37
)
 
(847
)
 
(252
)
 
(180
)
 
(235
)
Home equity
(371
)
 
(130
)
 
(172
)
 
(268
)
 
(447
)
Personal
(10
)
 
(7
)
 
(8
)
 
(13
)
 
(130
)
Total charge-offs
(3,507
)
 
(3,132
)
 
(1,799
)
 
(4,685
)
 
(4,881
)
Recoveries on loans previously charged-off:
 
 
 
 
 
 
 
 
 
Commercial
511

 
720

 
1,145

 
813

 
3,662

Commercial real estate
598

 
270

 
356

 
1,360

 
688

Construction
19

 
57

 
6

 
9

 
7

Residential real estate
57

 
231

 
9

 
135

 
300

Home equity
70

 
73

 
67

 
60

 
28

Personal
873

 
167

 
128

 
20

 
406

Total recoveries
2,128

 
1,518

 
1,711

 
2,397

 
5,091

Net (charge-offs) recoveries
(1,379
)
 
(1,614
)
 
(88
)
 
(2,288
)
 
210

Provisions charged to operating expenses
5,491

 
3,977

 
3,732

 
2,011

 
3,449

Balance at end of period
$
156,610

 
$
152,498

 
$
150,135

 
$
146,491

 
$
146,768

Allocation of allowance for loan losses:
 
 
 
 
 
 
 
 
 
General allocated reserve:
 
 
 
 
 
 
 
 
 
Commercial
$
98,230

 
$
91,975

 
$
89,904

 
$
85,213

 
$
81,402

Commercial real estate
29,405

 
29,397

 
27,164

 
28,420

 
28,096

Construction
4,026

 
4,290

 
4,029

 
3,621

 
3,547

Residential real estate
4,793

 
4,581

 
4,515

 
4,650

 
4,780

Home equity
2,296

 
3,069

 
3,025

 
3,300

 
3,226

Personal
2,224

 
2,559

 
2,517

 
2,800

 
2,950

Total allocated
140,974

 
135,871

 
131,154

 
128,004

 
124,001

Specific reserve
15,636

 
16,627

 
18,981

 
18,487

 
22,767

Total
$
156,610

 
$
152,498

 
$
150,135

 
$
146,491

 
$
146,768

Allocation of reserve by a percent of total allowance for loan losses:
 
 
 
 
 
 
 
 
 
General allocated reserve:
 
 
 
 
 
 
 
 
 
Commercial
63
%
 
60
%
 
59
%
 
59
%
 
56
%
Commercial real estate
19
%
 
19
%
 
18
%
 
19
%
 
19
%
Construction
3
%
 
3
%
 
3
%
 
2
%
 
2
%
Residential real estate
3
%
 
3
%
 
3
%
 
3
%
 
3
%
Home equity
1
%
 
2
%
 
2
%
 
2
%
 
2
%
Personal
1
%
 
2
%
 
2
%
 
2
%
 
2
%
Total allocated
90
%
 
89
%
 
87
%
 
87
%
 
84
%
Specific reserve
10
%
 
11
%
 
13
%
 
13
%
 
16
%
Total
100
%
 
100
%
 
100
%
 
100
%
 
100
%
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
Total loans
1.29
%
 
1.28
%
 
1.30
%
 
1.32
%
 
1.34
%
Nonperforming loans
221
%
 
226
%
 
204
%
 
191
%
 
156
%
(1) 
Refer to Glossary of Terms for definition.

14

Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3/31/15
 
% of Total
 
12/31/14
 
% of Total
 
9/30/14
 
% of Total
 
6/30/14
 
% of Total
 
3/31/14
 
% of Total
 
Unaudited
 
 
 
Audited
 
 
 
Unaudited
 
 
 
Unaudited
 
 
 
Unaudited
 
 
Noninterest-bearing deposits
$
3,936,181

 
28
%
 
$
3,516,695

 
27
%
 
$
3,342,862

 
26
%
 
$
3,387,424

 
28
%
 
$
3,103,736

 
26
%
Interest-bearing demand deposits
1,498,810

 
11
%
 
1,907,320

 
15
%
 
1,433,429

 
11
%
 
1,230,681

 
10
%
 
1,466,095

 
12
%
Savings deposits
331,796

 
2
%
 
319,100

 
2
%
 
310,850

 
2
%
 
281,099

 
2
%
 
288,686

 
3
%
Money market accounts
5,824,535

 
41
%
 
4,851,925

 
37
%
 
5,058,016

 
39
%
 
4,752,148

 
39
%
 
4,497,712

 
38
%
Time deposits
2,510,406

 
18
%
 
2,494,928

 
19
%
 
2,704,047

 
22
%
 
2,584,849

 
21
%
 
2,529,932

 
21
%
Total deposits
$
14,101,728

 
100
%
 
$
13,089,968

 
100
%
 
$
12,849,204

 
100
%
 
$
12,236,201

 
100
%
 
$
11,886,161

 
100
%
Total new deposits from new clients (1)
$
302,849

 
 
 
$
330,000

 
 
 
$
269,176

 
 
 
$
199,811

 
 
 
$
324,167

 
 
(1) 
Amounts are unaudited.

Brokered Deposit Composition
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
3/31/14
 
Noninterest-bearing demand deposits
$
264,493

 
$
107,564

 
$
104,957

 
$
90,422

 
$
87,388

 
Interest-bearing demand deposits
323,094

 
641,466

 
415,953

 
386,426

 
426,125

 
Money market accounts
1,891,590

 
1,448,663

 
1,545,778

 
1,505,659

 
1,391,114

 
Time deposits:
 
 
 
 
 
 
 
 
 
 
Traditional
673,944

 
564,116

 
663,393

 
604,688

 
458,344

 
CDARS (1)
458,192

 
521,995

 
597,449

 
554,575

 
639,521

 
Other
87,732

 
82,714

 
101,408

 
114,072

 
112,668

 
Non-client CDARS
—

 
—

 
—

 
12,866

 
—

 
Total time deposits
1,219,868

 
1,168,825

 
1,362,250

 
1,268,201

 
1,210,533

 
Total brokered deposits
$
3,699,045

 
$
3,366,518

 
$
3,428,938

 
$
3,268,708

 
$
3,115,160

 
Brokered deposits as a % of total deposits
26
%
 
26
%
 
27
%
 
27
%
 
26
%
 
Note: Certain reclassifications have been made to prior period amounts to conform to the current period presentation.
(1) 
The CDARS® deposit program is a deposit services arrangement that effectively achieves FDIC deposit insurance for jumbo deposit relationships.


15

Net Interest Margin
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
March 31, 2015
 
 
December 31, 2014
 
 
March 31, 2014
 
Average
Balance
 

Interest (1)
 
Yield/
Rate
 
 
Average
Balance
 

Interest (1)
 
Yield/
Rate
 
 
Average
Balance
 

Interest (1)
 
Yield/
Rate
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal funds sold and interest-bearing deposits in banks
$
420,844

 
$
261

 
0.25
%
 
 
$
546,290

 
$
347

 
0.25
%
 
 
$
233,311

 
$
142

 
0.24
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
2,362,725

 
13,556

 
2.30
%
 
 
2,313,925

 
13,250

 
2.29
%
 
 
2,237,628

 
13,255

 
2.37
%
Tax-exempt (2)
347,856

 
2,750

 
3.16
%
 
 
320,064

 
2,561

 
3.20
%
 
 
265,551

 
2,329

 
3.51
%
Total securities
2,710,581

 
16,306

 
2.41
%
 
 
2,633,989

 
15,811

 
2.40
%
 
 
2,503,179

 
15,584

 
2.49
%
FHLB stock
28,664

 
48

 
0.67
%
 
 
28,666

 
49

 
0.67
%
 
 
30,005

 
33

 
0.44
%
Loans, excluding covered assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
8,096,853

 
84,992

 
4.20
%
 
 
7,936,429

 
85,122

 
4.20
%
 
 
7,186,657

 
78,215

 
4.35
%
Commercial real estate
2,887,159

 
27,586

 
3.82
%
 
 
2,756,167

 
25,535

 
3.63
%
 
 
2,487,677

 
22,009

 
3.54
%
Construction
388,437

 
3,798

 
3.91
%
 
 
367,492

 
3,607

 
3.84
%
 
 
315,136

 
3,077

 
3.91
%
Residential
386,106

 
3,488

 
3.61
%
 
 
376,140

 
3,481

 
3.70
%
 
 
350,388

 
3,357

 
3.83
%
Personal and home equity
342,088

 
2,481

 
2.94
%
 
 
337,844

 
2,532

 
2.97
%
 
 
362,335

 
2,753

 
3.08
%
Total loans, excluding covered assets (3)
12,100,643

 
122,345

 
4.05
%
 
 
11,774,072

 
120,277

 
4.00
%
 
 
10,702,193

 
109,411

 
4.09
%
Covered assets (4)
32,801

 
357

 
4.41
%
 
 
39,408

 
372

 
3.74
%
 
 
95,842

 
788

 
3.30
%
Total interest-earning assets (2)
15,293,533

 
$
139,317

 
3.65
%
 
 
15,022,425

 
$
136,856

 
3.57
%
 
 
13,564,530

 
$
125,958

 
3.72
%
Cash and due from banks
171,330

 
 
 
 
 
 
168,412

 
 
 
 
 
 
146,746

 
 
 
 
Allowance for loan and covered loan losses
(160,550
)
 
 
 
 
 
 
(157,870
)
 
 
 
 
 
 
(164,933
)
 
 
 
 
Other assets
486,600

 
 
 
 
 
 
475,904

 
 
 
 
 
 
483,870

 
 
 
 
Total assets
$
15,790,913

 
 
 
 
 
 
$
15,508,871

 
 
 
 
 
 
$
14,030,213

 
 
 
 
Liabilities and Equity (5):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
1,524,124

 
$
1,006

 
0.27
%
 
 
$
1,470,988

 
$
1,026

 
0.28
%
 
 
$
1,293,652

 
$
942

 
0.30
%
Savings deposits
325,615

 
312

 
0.39
%
 
 
315,982

 
306

 
0.38
%
 
 
284,703

 
196

 
0.28
%
Money market accounts
5,538,192

 
4,298

 
0.31
%
 
 
5,316,027

 
4,317

 
0.32
%
 
 
4,660,158

 
3,778

 
0.33
%
Time deposits
2,560,036

 
5,639

 
0.89
%
 
 
2,645,410

 
5,803

 
0.87
%
 
 
2,547,508

 
4,806

 
0.77
%
Total interest-bearing deposits
9,947,967

 
11,255

 
0.46
%
 
 
9,748,407

 
11,452

 
0.47
%
 
 
8,786,021

 
9,722

 
0.45
%
Short-term and secured borrowings
276,841

 
197

 
0.28
%
 
 
16,137

 
143

 
3.46
%
 
 
43,289

 
196

 
1.81
%
Long-term debt
344,788

 
4,928

 
5.72
%
 
 
588,310

 
7,507

 
5.09
%
 
 
627,793

 
6,488

 
4.13
%
Total interest-bearing liabilities
10,569,596

 
16,380

 
0.63
%
 
 
10,352,854

 
19,102

 
0.73
%
 
 
9,457,103

 
16,406

 
0.70
%
Noninterest-bearing demand deposits
3,552,717

 
 
 
 
 
 
3,542,261

 
 
 
 
 
 
3,101,219

 
 
 
 
Other liabilities
146,199

 
 
 
 
 
 
141,645

 
 
 
 
 
 
136,478

 
 
 
 
Equity
1,522,401

 
 
 
 
 
 
1,472,111

 
 
 
 
 
 
1,335,413

 
 
 
 
Total liabilities and equity
$
15,790,913

 
 
 
 
 
 
$
15,508,871

 
 
 
 
 
 
$
14,030,213

 
 
 
 
Net interest spread (2)(5)
 
 
 
 
3.02
%
 
 
 
 
 
 
2.84
%
 
 
 
 
 
 
3.02
%
Contribution of noninterest-bearing sources of funds
 
 
 
 
0.19
%
 
 
 
 
 
 
0.23
%
 
 
 
 
 
 
0.21
%
Net interest income/margin (2)(5)
 
 
122,937

 
3.21
%
 
 
 
 
117,754

 
3.07
%
 
 
 
 
109,552

 
3.23
%
Less: tax equivalent adjustment
 
 
944

 
 
 
 
 
 
878

 
 
 
 
 
 
800

 
 
Net interest income, as reported
 
 
$
121,993

 
 
 
 
 
 
$
116,876

 
 
 
 
 
 
$
108,752

 
 
(1) 
Interest income included $7.5 million, $6.0 million, and $6.2 million in loan fees for the quarter ended March 31, 2015, December 31, 2014 and March 31, 2014, respectively.
(2) 
Interest income and yields are presented on a tax-equivalent basis, assuming a federal income tax rate of 35%. This is a non-U.S. GAAP measure.
(3) 
Includes loans held-for-sale and nonaccrual loans. Average loans on a nonaccrual basis for the recognition of interest income totaled $69.3 million, $73.1 million, and $93.0 million for the quarter ended March 31, 2015, December 31, 2014, and March 31, 2014, respectively. Interest foregone on impaired loans was estimated to be approximately $671,000, $722,000 and $870,000 for the quarter ended March 31, 2015, December 31, 2014, and March 31, 2014, respectively, calculated based on the average loan portfolio yield for the respective period.
(4) 
Covered interest-earning assets consist of loans acquired through a FDIC-assisted transaction that are subject to a loss share agreement and the related indemnification asset.
(5) 
December 31, 2014 includes deposits held-for-sale.
(6) 
Refer to Glossary of Terms for definition.

16

NON-U.S. GAAP FINANCIAL MEASURES

This press release contains both U.S. GAAP and non-U.S. GAAP based financial measures. These non-U.S. GAAP financial measures include net interest income, net interest margin, net revenue, operating profit, and efficiency ratio all on a fully taxable-equivalent basis, return on average tangible common equity, Tier 1 common equity to risk-weighted assets, tangible common equity to risk-weighted assets, tangible common equity to tangible assets, and tangible book value. We believe that presenting these non-U.S. GAAP financial measures will provide information useful to investors in understanding our underlying operational performance, our business, and performance trends and facilitates comparisons with the performance of others in the banking industry.

We use net interest income on a taxable-equivalent basis in calculating various performance measures by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments assuming a 35% tax rate. Management believes this measure to be the preferred industry measurement of net interest income as it enhances comparability to net interest income arising from taxable and tax-exempt sources, and accordingly believes that providing this measure may be useful for peer comparison purposes.

In addition to capital ratios defined by banking regulators, we also consider various measures when evaluating capital utilization and adequacy, including return on average tangible common equity, tangible common equity to risk-weighted assets, tangible common equity to tangible assets, and tangible book value. These calculations are intended to complement the capital ratios defined by banking regulators for both absolute and comparative purposes. All of these measures exclude the ending balances of goodwill and other intangibles while certain of these ratios exclude preferred capital components. Because U.S. GAAP does not include capital ratio measures, we believe there are no comparable U.S. GAAP financial measures to these ratios. We believe these non-U.S. GAAP financial measures are relevant because they provide information that is helpful in assessing the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of our capitalization to other similar companies. However, because there are no standardized definitions for these ratios, our calculations may not be comparable with other companies. For the periods prior to January 1, 2015, the Tier 1 common equity to risk-weighted assets ratio contained herein is calculated without giving effect to the final Basel III capital rules.

Non-U.S. GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-U.S. GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation or as a substitute for analyses of results as reported under U.S. GAAP. As a result, we encourage readers to consider our Consolidated Financial Statements in their entirety and not to rely on any single financial measure.


17

Non-U.S. GAAP Financial Measures
(Amounts in thousands)
(Unaudited)

The following table reconciles non-U.S. GAAP financial measures to U.S. GAAP items.
 
Quarter Ended
 
2015
 
2014
 
March 31
 
December 31
 
September 30
 
June 30
 
March 31
Taxable-equivalent net interest income
 
 
 
 
 
 
 
 
 
U.S. GAAP net interest income
$
121,993

 
$
116,876

 
$
116,758

 
$
112,351

 
$
108,752

Taxable-equivalent adjustment
944

 
878

 
811

 
744

 
800

Taxable-equivalent net interest income (a)
$
122,937

 
$
117,754

 
$
117,569

 
$
113,095

 
$
109,552

 
 
 
 
 
 
 
 
 
 
Average Earning Assets (b)
$
15,293,533

 
$
15,022,425

 
$
14,283,920

 
$
13,936,754

 
$
13,564,530

 
 
 
 
 
 
 
 
 
 
Net Interest Margin ((a) annualized) / (b)
3.21
%
 
3.07
%
 
3.23
%
 
3.21
%
 
3.23
%
 
 
 
 
 
 
 
 
 
 
Net Revenue
 
 
 
 
 
 
 
 
 
Taxable-equivalent net interest income
$
122,937

 
$
117,754

 
$
117,569

 
$
113,095

 
$
109,552

U.S. GAAP non-interest income
33,516

 
30,426

 
30,669

 
30,259

 
26,236

Net revenue (c)
$
156,453

 
$
148,180

 
$
148,238

 
$
143,354

 
$
135,788

 
 
 
 
 
 
 
 
 
 
Operating Profit
 
 
 
 
 
 
 
 
 
U.S. GAAP income before income taxes
$
66,718

 
$
60,157

 
$
65,701

 
$
66,818

 
$
55,531

Provision for loan and covered loan losses
5,646

 
4,120

 
3,890

 
327

 
3,707

Taxable-equivalent adjustment
944

 
878

 
811

 
744

 
800

Operating profit
$
73,308

 
$
65,155

 
$
70,402

 
$
67,889

 
$
60,038

 
 
 
 
 
 
 
 
 
 
Efficiency Ratio
 
 
 
 
 
 
 
 
 
U.S. GAAP non-interest expense (d)
$
83,145

 
$
83,025

 
$
77,836

 
$
75,465

 
$
75,750

Net revenue
$
156,453

 
$
148,180

 
$
148,238

 
$
143,354

 
$
135,788

Efficiency ratio (d) / (c)
53.14
%
 
56.03
%
 
52.51
%
 
52.64
%
 
55.79
%
 
 
 
 
 
 
 
 
 
 
Adjusted Net Income
 
 
 
 
 
 
 
 
 
U.S. GAAP net income available to common stockholders
$
41,484

 
$
37,223

 
$
40,527

 
$
40,824

 
$
34,505

Amortization of intangibles, net of tax
397

 
449

 
458

 
458

 
458

Adjusted net income (e)
$
41,881

 
$
37,672

 
$
40,985

 
$
41,282

 
$
34,963

 
 
 
 
 
 
 
 
 
 
Average Tangible Common Equity
 
 
 
 
 
 
 
 
 
U.S. GAAP average total equity
$
1,522,401

 
$
1,472,111

 
$
1,426,273

 
$
1,378,581

 
$
1,335,413

Less: average goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Less: average other intangibles
5,551

 
6,243

 
6,996

 
7,749

 
8,506

Average tangible common equity (f)
$
1,422,809

 
$
1,371,827

 
$
1,325,236

 
$
1,276,791

 
$
1,232,866

 
 
 
 
 
 
 
 
 
 
Return on average tangible common equity ((e) annualized) / (f)
11.94
%
 
10.89
%
 
12.27
%
 
12.97
%
 
11.50
%


18

Non-U.S. GAAP Financial Measures (continued)
(Amounts in thousands)
(Unaudited)
 
 
 
Quarter Ended
 
 
 
2014
 
 
 
December 31
 
September 30
 
June 30
 
March 31
Tier 1 Common Capital
 
 
 
 
 
 
 
 
 
U.S. GAAP total equity
 
 
$
1,481,679

 
$
1,435,309

 
$
1,397,821

 
$
1,343,246

Trust preferred securities
 
 
169,788

 
244,793

 
244,793

 
244,793

Less: accumulated other comprehensive income, net of tax
 
 
20,917

 
16,236

 
23,406

 
13,147

Less: goodwill
 
 
94,041

 
94,041

 
94,041

 
94,041

Less: other intangibles
 
 
5,885

 
6,627

 
7,381

 
8,136

Less: disallowed servicing rights
 
 
44

 
42

 
32

 
32

Tier 1 risk-based capital
 
 
1,530,580

 
1,563,156

 
1,517,754

 
1,472,683

Less: trust preferred securities
 
 
169,788

 
244,793

 
244,793

 
244,793

Tier 1 common capital (g)
 
 
$
1,360,792

 
$
1,318,363

 
$
1,272,961

 
$
1,227,890

 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
2015
 
2014
 
March 31
 
December 31
 
September 30
 
June 30
 
March 31
Tangible Common Equity
 
 
 
 
 
 
 
 
 
U.S. GAAP total equity
$
1,539,429

 
$
1,481,679

 
$
1,435,309

 
$
1,397,821

 
$
1,343,246

Less: goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Less: other intangibles
5,230

 
5,885

 
6,627

 
7,381

 
8,136

Tangible common equity (h)
$
1,440,158

 
$
1,381,753

 
$
1,334,641

 
$
1,296,399

 
$
1,241,069

 
 
 
 
 
 
 
 
 
 
Tangible Assets
 
 
 
 
 
 
 
 
 
U.S. GAAP total assets
$
16,361,348

 
$
15,603,382

 
$
15,190,468

 
$
14,602,404

 
$
14,304,782

Less: goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Less: other intangibles
5,230

 
5,885

 
6,627

 
7,381

 
8,136

Tangible assets (i)
$
16,262,077

 
$
15,503,456

 
$
15,089,800

 
$
14,500,982

 
$
14,202,605

 
 
 
 
 
 
 
 
 
 
Risk-weighted Assets (j)
$
15,395,081

 
$
14,592,655

 
$
14,053,735

 
$
13,506,797

 
$
13,160,955

 
 
 
 
 
 
 
 
 
 
Period-end Common Shares Outstanding (k)
78,494

 
78,178

 
78,121

 
78,069

 
78,049

 
 
 
 
 
 
 
 
 
 
Ratios:
 
 
 
 
 
 
 
 
 
Tier 1 common equity to risk-weighted assets (g) / (j) (1)
—

 
9.33
%
 
9.38
%
 
9.42
%
 
9.33
%
Tangible common equity to risk-weighted assets (h) / (j)
9.35
%
 
9.47
%
 
9.50
%
 
9.60
%
 
9.43
%
Tangible common equity to tangible assets (h) / (i)
8.86
%
 
8.91
%
 
8.84
%
 
8.94
%
 
8.74
%
Tangible book value (h) / (k)
$
18.35

 
$
17.67

 
$
17.08

 
$
16.61

 
$
15.90

(1) Effective January 1, 2015, the Tier 1 common equity to risk-weighted assets ratio became a required regulatory capital measure and is calculated in accordance with the new capital rules applicable to U.S. bank holding companies. For the periods prior to January 1, 2015, the Tier 1 common equity to risk-weighted assets ratio contained herein is considered a Non-GAAP measure and was calculated without giving effect to the final Basel III capital rules.

19

Glossary of Terms

Assets under management and administration (“AUMA”) - Assets held in trust where we serve as trustee or in accounts where we make investment decisions on behalf of clients. AUMA also includes non-managed assets we hold in custody for clients or for which we receive fees for advisory or brokerage services. We do not include these assets on our Consolidated Balance Sheets.

Book value - Total common equity divided by outstanding shares of common stock at end of period.

Common equity - Total equity less preferred stock.

Covered assets - Assets acquired through an FDIC-assisted transaction that are subject to a loss share agreement and are presented separately on the Consolidated Balance Sheets.

Credit quality indicators - We have adopted an internal risk rating policy in which each loan is rated for credit quality with a numerical rating of 1 through 8. Loans rated 5 and better (1-5 ratings, inclusive) are credits that exhibit acceptable financial performance, cash flow, and leverage. We attempt to mitigate risk by loan structure, collateral, monitoring, and other credit risk management controls. Credits rated 6 are performing in accordance with contractual terms but are considered "special mention" as these credits demonstrate potential weakness that if left unresolved, may result in deterioration in the Company’s credit position and/or the repayment prospects for the credit. Borrowers rated special mention may exhibit adverse operating trends, high leverage, tight liquidity or other credit concerns. Loans rated 7 may be classified as either accruing ("potential problem") or nonaccrual ("nonperforming"). Potential problem loans, like special mention, are loans that are performing in accordance with contractual terms, but for which management has some level of concern (greater than that of special mention loans) about the ability of the borrowers to meet existing repayment terms in future periods. These loans continue to accrue interest but the ultimate collection of these loans in full is questionable due to the same conditions that characterize a 6-rated credit. These credits may also have somewhat increased risk profiles as a result of the current net worth and/or paying capacity of the obligor or guarantors or the value of the collateral pledged. These loans generally have a well-defined weakness that may jeopardize collection of the debt and are characterized by the distinct possibility that the Company may sustain some loss if the deficiencies are not resolved. Although these loans are generally identified as potential problem loans and require additional attention by management, they may never become nonperforming. Nonperforming loans include nonaccrual loans risk rated 7 or 8 and have all the weaknesses inherent in a 7-rated potential problem loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently-existing facts, conditions and values, highly questionable and improbable. Special mention, potential problem and nonperforming loans are reviewed at a minimum on a quarterly basis, while all other rated credits over a certain dollar threshold, depending on loan type, are reviewed annually or more frequently as the circumstances warrant.

Credit valuation adjustment ("CVA") - An adjustment may need to be incorporated into the valuation of derivative instruments for nonperformance risk to include the counterparty’s credit risk and the Company’s own credit risk. This adjustment is referred to as the CVA. The CVA represents the credit component of fair value with regard to both client-based trades and the related matched trades with interbank dealer counterparties.

Efficiency ratio - Total non-interest expense divided by the sum of net interest income on a tax-equivalent basis and non-interest income. This is a non-U.S. GAAP financial measure.

Fee revenue as percent of total revenue ratio - Total non-interest income less net securities gains (losses) divided by the sum of net interest income and non-interest income less net securities gains (losses).

U.S. GAAP - Accounting principles generally accepted in the United States of America.

Net interest margin - Expressed as a percentage, net interest margin is a ratio computed as annualized taxable-equivalent net interest income divided by average interest-earning assets. The annualization of net interest income for the quarterly yield takes into consideration the interest payment convention at the product level. This is a non-U.S. GAAP financial measure.

Net interest spread - The difference between the average yield earned on interest-earning assets on a taxable-equivalent basis and the average rate paid for interest-bearing liabilities.

Net overhead ratio - Total non-interest expense less non-interest income divided by average total assets.

Net revenue - The sum of taxable equivalent net interest income and non-interest income. This is a non-U.S. GAAP financial measure.


20

Glossary of Terms (continued)

Non-U.S. GAAP - Certain financial measures within this document that are not formally defined by U.S. GAAP or codified in the federal banking regulations. A reconciliation of these non-U.S. GAAP financial measures may be found on the previous pages.

Operating profit - The sum of U.S. GAAP income before income taxes, provision for loan and covered loan losses and taxable-equivalent adjustment. This is a non-U.S. GAAP financial measure.

Return on average tangible common equity - Annualized net income available to common stockholders, adjusted for tax-affected amortization of intangibles, divided by average tangible common equity. Average tangible common equity equals average total equity less average goodwill, average intangible assets, and average preferred stock. This is a non-U.S. GAAP financial measure.

Risk-weighted assets - Computed by the assignment of specific risk-weights to assets and off-balance sheet instruments determined in accordance with the applicable regulations of the Board of Governors of the Federal Reserve System in effect as of the respective reporting periods.

Tangible book value - Total common equity less goodwill and other intangibles divided by outstanding shares of common stock at end of period. This is a non-U.S. GAAP financial measure.

Tangible common equity to tangible assets ratio - Tangible common equity divided by tangible assets, where tangible common equity equals total equity less preferred stock, goodwill and other intangible assets and tangible assets equals total assets less goodwill and other intangible assets. This is a non-U.S. GAAP financial measure.

Taxable-equivalent net interest income - The interest income earned on certain assets is completely or partially exempt from Federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of yields and margins for all interest-earning assets, we use interest income on a taxable-equivalent basis in calculating average yields and net interest margins by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on other taxable investments. This adjustment is not permitted under U.S. GAAP on the Consolidated Income Statement.

Tier 1 common equity - Tier 1 risk-based capital, less preferred equity, less trust preferred securities, and less noncontrolling interests, as defined by the Board of Governors of the Federal Reserve System in effect as of the respective reporting periods.

Tier 1 equity to risk-weighted assets ratio - Tier 1 common equity divided by period-end risk-weighted assets as defined by the Board of Governors of the Federal Reserve System in effect as of the respective reporting periods.

Tier 1 leverage ratio - Tier 1 risk-based capital divided by adjusted average total assets.

Tier 1 risk-based capital - Total equity, plus trust preferred securities, plus certain noncontrolling interests that are held by others; less goodwill and certain other intangible assets, less equity investments in nonfinancial companies, less ineligible servicing assets, less disallowed deferred tax assets and less net unrealized holding gains (losses) on available-for-sale equity securities, available-for-sale debt securities, and cash flow hedge derivatives.

Tier 1 risk-based capital ratio - Tier 1 risk-based capital divided by period-end risk-weighted assets.

Total risk-based capital - Tier 1 risk-based capital plus qualifying subordinated debt, other noncontrolling interests not qualified as Tier 1, eligible gains on available-for-sale equity securities and the allowance for loan and lease losses, subject to certain limitations.

Total risk-based capital ratio - Total risk-based capital divided by period-end risk-weighted assets.

21
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