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): July 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 South 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 July 16, 2015, PrivateBancorp, Inc. (the “Company”) announced its earnings results for the second quarter and six months ended June 30, 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
 
Second Quarter 2015 Earnings Release dated July 16, 2015 (intended to be deemed furnished to 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: July 16, 2015
 
 
 
By:
 
/s/ Kevin M. Killips
 
 
 
 
 
 
Kevin M. Killips
 
 
 
 
 
 
Chief Financial Officer
INDEX TO EXHIBITS

Exhibit
 
Description
 
 
 
99.1
 
Second Quarter 2015 Earnings Release dated July 16, 2015 (intended to be deemed furnished to 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 Second Quarter 2015 Earnings
Earnings per share of $0.58 for second quarter 2015, compared to $0.52 for second quarter 2014
and first quarter 2015

CHICAGO, July 16, 2015 - PrivateBancorp, Inc. (NASDAQ: PVTB) today reported net income of $46.4 million, or $0.58 per diluted share, for the second quarter 2015, compared to $40.8 million, or $0.52 per diluted share, for the second quarter 2014, and $41.5 million, or $0.52 per diluted share, for the first quarter 2015. For the six months ended June 30, 2015, the Company had net income of $87.9 million, or $1.10 per diluted share, compared to $75.3 million, or $0.96 per diluted share, for the six months ended June 30, 2014.

“We drove top-line growth in the second quarter through our consistent focus on providing high-touch client solutions to commercial middle market companies,” said Larry D. Richman, President and Chief Executive Officer, PrivateBancorp, Inc. “We increased net interest income and fee revenue in the quarter as we added new clients and expanded our relationships with existing clients. This drove an 11 percent increase in net revenue year over year to $158.7 million and a 14 percent increase in net income to $46.4 million.

“I am pleased with our strong results in the first two quarters of this year as we continue to capitalize on our ability to help our clients achieve their business goals,” Richman continued. “I believe we are well positioned for the second half of 2015 as we continue to leverage the strength of our experienced teams to build lasting relationships with our clients.”

Second Quarter 2015 Highlights

•
Total loans grew to $12.5 billion, up $1.4 billion, or 13 percent, from a year ago and up $372.8 million, or 3 percent, from March 31, 2015, driven by growth in commercial and industrial and commercial real estate loans.

•
Total deposits were $13.4 billion, a decline of $712.8 million, or 5 percent, from March 31, 2015, reflecting the expected client redeployment of transaction-related funds received during the first quarter. Deposits were up $1.2 billion, or 9 percent, from a year ago.

•
Net interest margin was 3.17 percent, declining from 3.21 percent both for the second quarter 2014 and the first quarter 2015, primarily driven by a lower level of loan fees and continued yield compression.


1

•
Net revenue of $158.7 million benefited from growth in earning assets and improvement in fee income, increasing 11 percent from the second quarter 2014 and up slightly from the first quarter 2015. Excluding a one-time gain related to the Norcross, Ga., branch sale in the first quarter 2015, net revenue improved by 4 percent on a sequential basis.

•
The provision for loan and covered loan losses was $2.1 million, compared to $327,000 for the second quarter 2014 and $5.6 million for the first quarter 2015. The current quarter's provision was impacted by the release of specific reserves established in earlier periods.

•
Return on average assets was 1.15 percent and return on average common equity was 11.9 percent for the second quarter 2015. In comparison, return on average assets was 1.07 percent and return on average common equity was 11.1 percent for the first quarter 2015.

Operating Performance

Net interest income was $124.6 million in the second quarter 2015, an increase of 11 percent compared to the second quarter 2014 and 2 percent compared to the first quarter 2015, primarily reflecting growth in average loans. Average loan balances increased 13 percent from the second quarter 2014 and 3 percent from the first quarter 2015. Compared to the second quarter 2014, net interest income also benefited from interest savings of $1.9 million largely related to the trust preferred securities redemption in the fourth quarter 2014.

Net interest margin was 3.17 percent in the second quarter 2015, compared to 3.21 percent in both the second quarter 2014 and the first quarter 2015. Compared to the first quarter 2015, net interest margin was primarily impacted by lower loan yields, which declined by seven basis points largely due to lower loan fees. Loan fees declined by five basis points, including the impact of a large fee collected in the prior quarter. The remaining decline in loan yields from the first quarter 2015 reflects lower contractual interest rates on a total portfolio basis, partially mitigated by an increase in one-month LIBOR. Interest-bearing deposit costs remained stable on a sequential basis. Compared to the second quarter 2014, net interest margin was impacted by lower loan yields and higher levels of average cash equivalents, which was partially offset by the benefit from the trust preferred securities redemption.

Noninterest income was $33.1 million in the second quarter 2015, compared to $30.3 million for the second quarter 2014 and $33.5 million for the first quarter 2015. Excluding a $4.1 million gain on the branch sale included in the first quarter 2015, non-interest income increased 12 percent on a sequential basis. Treasury management fees grew to $7.4 million in the second quarter 2015, up 11 percent from the second quarter 2014 and up slightly from the first quarter 2015. Continued success in cross-sell activities drove higher treasury management volume. Syndication fees of $5.4 million in the second quarter 2015 were comparable to the second quarter 2014 and more than doubled from the first quarter 2015. The current quarter benefited from a higher volume of transactions compared to the first quarter. Syndication fees will vary from quarter to quarter depending on the mix of loans originated and distributed.

Capital markets revenue was $4.9 million in the second quarter 2015, comparable to the second quarter 2014 and up $747,000 from the first quarter 2015. Excluding the impact of the credit valuation adjustment, capital markets revenue was $4.3 million in the second quarter 2015, down from $5.3 million in the second quarter 2014 and $5.0 million for the first quarter 2015. Foreign exchange revenue grew 33 percent from the first quarter 2015 reflecting increased client penetration. The demand for interest rate derivatives continues to be influenced by rate environment expectations.

Assets under management and administration were $7.5 billion as of June 30, 2015, growing from $6.4 billion a year ago and $7.3 billion at March 31, 2015, due to continued focus on cross-selling asset management services to banking clients and ongoing client development in this business. Asset management revenue was $4.7 million in the second quarter 2015, up compared to $4.4 million for both the second quarter 2014 and the first quarter 2015. Mortgage banking grew 58 percent from the second quarter 2014 and 10 percent from the first quarter 2015, primarily reflecting favorable market conditions and active client development.


2

Expenses

Noninterest expense was $81.9 million for the second quarter 2015, compared to $75.5 million for the second quarter 2014 and $83.1 million for the first quarter 2015. The efficiency ratio was 51.6 percent for the second quarter 2015, compared to 52.6 percent for the second quarter 2014 and 53.1 percent for the first quarter 2015.

Salaries and benefits expense declined $2.3 million from the first quarter 2015. First quarter's seasonally higher payroll taxes and benefits expenses were partially offset by a full quarter's impact of annual salary adjustments and additional performance-based incentive compensation accruals. Compared to the second quarter 2014, salaries and employee benefits increased $5.6 million due to annual salary adjustments, additional hires made throughout the period, and higher incentive compensation accruals based on improved performance.

Net foreclosed property expense declined $2.2 million from the second quarter 2014 and $743,000 from the first quarter 2015, reflecting a lower amount of writedowns and carrying costs on a reduced amount of foreclosed property (OREO). Marketing expense increased $1.1 million from the second quarter 2014 and the first quarter 2015 and included additional advertising and branding expenses, including the launch of an advertising campaign in the current quarter.

Credit Quality

The allowance for loan losses as a percentage of total loans was 1.25 percent at June 30, 2015, compared to 1.29 percent at March 31, 2015. The provision for loan losses was $2.1 million for the second quarter 2015, compared to $2.0 million for the second quarter 2014 and $5.5 million for the first quarter 2015. The current quarter's provision was impacted by loan growth, some credit migration, and favorable developments relating to several nonperforming loans that reduced specific reserve requirements. Specific reserves at June 30, 2015, declined to $7.5 million compared to $15.6 million at March 31, 2015. Net charge-offs to average loans were 0.05 percent for the second quarter 2015, consistent with the first quarter 2015.

Nonperforming assets were 0.44 percent of total assets at June 30, 2015, down from 0.53 percent at March 31, 2015. At June 30, 2015, nonperforming loans were $56.6 million, compared to $71.0 million at March 31, 2015. OREO declined 3 percent during the current quarter to $15.1 million at June 30, 2015.

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

Balance Sheet

Total assets were $16.2 billion at June 30, 2015, compared to $14.6 billion at June 30, 2014, and $16.4 billion at March 31, 2015. Total loans of $12.5 billion increased 13 percent from June 30, 2014, and 3 percent from March 31, 2015, primarily driven by growth in commercial and industrial loans, as well as commercial real estate loans. At June 30, 2015, total commercial loans (including owner-occupied commercial real estate) comprised 67 percent of total loans, and commercial real estate and construction represented 27 percent of total loans.

Total liabilities were $14.6 billion at June 30, 2015, compared to $13.2 billion at June 30, 2014, and $14.8 billion compared to March 31, 2015. Total deposits were $13.4 billion at June 30, 2015, up 9 percent from June 30, 2014, and up 2 percent from year end. As anticipated, deposits declined 5 percent from March 31, 2015, primarily attributable to several commercial clients redeploying transaction-related funds received during the first quarter. The deposit base is predominately comprised of commercial client balances, which will fluctuate from time to time based on their business and liquidity needs. At June 30, 2015, the loan-to-deposit ratio was 94 percent, compared to 91 percent as of June 30, 2014, and 86 percent as of March 31, 2015.


3

Capital

As of June 30, 2015, the total risk-based capital ratio was 12.41 percent, the Tier 1 risk-based capital ratio was 10.49 percent, and the leverage ratio was 10.24 percent. The common equity Tier 1 ratio was 9.41 percent and the tangible common equity ratio was 9.22 percent at the end of the second quarter 2015.

Quarterly Conference Call and Webcast Presentation

PrivateBancorp will host a conference call Thursday, July 16, 2015, at 10 a.m. CT. The call may be accessed by telephone at (888) 782-9127 (U.S. and Canada) or (706) 634-5643 (International) and entering passcode #72801553. A live webcast of the call can be accessed at investor.theprivatebank.com. A rebroadcast will be available beginning approximately two hours after the call until midnight ET July 30, 2015, by calling (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (International) and entering passcode #72801553.

About PrivateBancorp, Inc.

PrivateBancorp, Inc., through its subsidiary The PrivateBank, 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 it serves. As of June 30, 2015, the Company had 34 offices in 11 states and $16.2 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 or an extended period of continued historically low interest rates;
•
competitive pressures in the financial services industry relating to both pricing and loan structures, which have led to ongoing compression in loan yields and may impact our growth rate;
•
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;
•
an inability to attract sufficient or cost-effective sources of liquidity or funding as and when needed;
•
unanticipated losses of one or more large depositor relationships, or other significant deposit outflows;
•
loss of key personnel or an inability to recruit appropriate talent cost-effectively;
•
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 security 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 our fiscal year ended December 31, 2014, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, 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 of the non-U.S. GAAP financial measure 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)
 
 
 
 
 
 
 
 
Quarter Ended
June 30,
 
Six Months Ended
June 30,
 
2015
 
2014
 
2015
 
2014
Interest Income
 
 
 
 
 
 
 
Loans, including fees
$
125,647

 
$
113,696

 
$
248,349

 
$
223,895

Federal funds sold and interest-bearing deposits in banks
245

 
139

 
506

 
281

Securities:
 
 
 
 
 
 
 
Taxable
13,541

 
13,625

 
27,097

 
26,880

Exempt from Federal income taxes
1,981

 
1,432

 
3,787

 
2,961

Other interest income
63

 
59

 
111

 
92

Total interest income
141,477

 
128,951

 
279,850

 
254,109

Interest Expense
 
 
 
 
 
 
 
Interest-bearing demand deposits
966

 
842

 
1,972

 
1,784

Savings deposits and money market accounts
4,953

 
4,087

 
9,563

 
8,061

Time deposits
5,730

 
5,034

 
11,369

 
9,840

Short-term and secured borrowings
234

 
141

 
431

 
337

Long-term debt
4,972

 
6,496

 
9,900

 
12,984

Total interest expense
16,855

 
16,600

 
33,235

 
33,006

Net interest income
124,622

 
112,351

 
246,615

 
221,103

Provision for loan and covered loan losses
2,116

 
327

 
7,762

 
4,034

Net interest income after provision for loan and covered loan losses
122,506

 
112,024

 
238,853

 
217,069

Non-interest Income
 
 
 
 
 
 
 
Asset management
4,741

 
4,440

 
9,104

 
8,787

Mortgage banking
4,152

 
2,626

 
7,927

 
4,258

Capital markets products
4,919

 
5,006

 
9,091

 
9,089

Treasury management
7,421

 
6,676

 
14,748

 
13,275

Loan, letter of credit and commitment fees
4,914

 
4,806

 
10,020

 
9,440

Syndication fees
5,375

 
5,440

 
7,997

 
8,753

Deposit service charges and fees and other income
1,538

 
1,069

 
7,155

 
2,366

Net securities (losses) gains
(1
)
 
196

 
533

 
527

Total non-interest income
33,059

 
30,259

 
66,575

 
56,495

Non-interest Expense
 
 
 
 
 
 
 
Salaries and employee benefits
50,020

 
44,405

 
102,381

 
89,025

Net occupancy and equipment expense
8,159

 
7,728

 
16,023

 
15,504

Technology and related costs
3,420

 
3,205

 
6,841

 
6,488

Marketing
4,666

 
3,589

 
8,244

 
6,002

Professional services
2,585

 
2,905

 
4,895

 
5,664

Outsourced servicing costs
2,034

 
1,850

 
3,714

 
3,314

Net foreclosed property expenses
585

 
2,771

 
1,913

 
5,594

Postage, telephone, and delivery
899

 
927

 
1,761

 
1,752

Insurance
3,450

 
3,016

 
6,661

 
5,919

Loan and collection expense
2,210

 
1,573

 
4,478

 
2,629

Other expenses
3,869

 
3,496

 
8,131

 
9,324

Total non-interest expense
81,897

 
75,465

 
165,042

 
151,215

Income before income taxes
73,668

 
66,818

 
140,386

 
122,349

Income tax provision
27,246

 
25,994

 
52,480

 
47,020

Net income available to common stockholders
$
46,422

 
$
40,824

 
$
87,906

 
$
75,329

Per Common Share Data
 
 
 
 
 
 
 
Basic earnings per share
$
0.59

 
$
0.52

 
$
1.12

 
$
0.97

Diluted earnings per share
$
0.58

 
$
0.52

 
$
1.10

 
$
0.96

Cash dividends declared
$
0.01

 
$
0.01

 
$
0.02

 
$
0.02

Weighted-average common shares outstanding
77,942

 
77,062

 
77,676

 
76,869

Weighted-average diluted common shares outstanding
79,158

 
77,806

 
78,837

 
77,612




6


Consolidated Income Statements
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
2Q15
 
1Q15
 
4Q14
 
3Q14
 
2Q14
Interest Income
 
 
 
 
 
 
 
 
 
Loans, including fees
$
125,647

 
$
122,702

 
$
120,649

 
$
119,211

 
$
113,696

Federal funds sold and interest-bearing deposits in banks
245

 
261

 
347

 
142

 
139

Securities:
 
 
 
 
 
 
 
 
 
Taxable
13,541

 
13,556

 
13,250

 
13,370

 
13,625

Exempt from Federal income taxes
1,981

 
1,806

 
1,683

 
1,529

 
1,432

Other interest income
63

 
48

 
49

 
48

 
59

Total interest income
141,477

 
138,373

 
135,978

 
134,300

 
128,951

Interest Expense
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
966

 
1,006

 
1,026

 
918

 
842

Savings deposits and money market accounts
4,953

 
4,610

 
4,623

 
4,173

 
4,087

Time deposits
5,730

 
5,639

 
5,803

 
5,723

 
5,034

Short-term and secured borrowings
234

 
197

 
143

 
158

 
141

Long-term debt
4,972

 
4,928

 
7,507

 
6,570

 
6,496

Total interest expense
16,855

 
16,380

 
19,102

 
17,542

 
16,600

Net interest income
124,622

 
121,993

 
116,876

 
116,758

 
112,351

Provision for loan and covered loan losses
2,116

 
5,646

 
4,120

 
3,890

 
327

Net interest income after provision for loan and covered loan losses
122,506

 
116,347

 
112,756

 
112,868

 
112,024

Non-interest Income
 
 
 
 
 
 
 
 
 
Asset management
4,741

 
4,363

 
4,241

 
4,240

 
4,440

Mortgage banking
4,152

 
3,775

 
3,083

 
2,904

 
2,626

Capital markets products
4,919

 
4,172

 
5,705

 
3,253

 
5,006

Treasury management
7,421

 
7,327

 
7,262

 
6,935

 
6,676

Loan, letter of credit and commitment fees
4,914

 
5,106

 
4,901

 
4,970

 
4,806

Syndication fees
5,375

 
2,622

 
3,943

 
6,818

 
5,440

Deposit service charges and fees and other income
1,538

 
5,617

 
1,291

 
1,546

 
1,069

Net securities (losses) gains
(1
)
 
534

 
—

 
3

 
196

Total non-interest income
33,059

 
33,516

 
30,426

 
30,669

 
30,259

Non-interest Expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
50,020

 
52,361

 
46,746

 
46,421

 
44,405

Net occupancy and equipment expense
8,159

 
7,864

 
7,947

 
7,807

 
7,728

Technology and related costs
3,420

 
3,421

 
3,431

 
3,362

 
3,205

Marketing
4,666

 
3,578

 
3,687

 
3,752

 
3,589

Professional services
2,585

 
2,310

 
3,471

 
2,626

 
2,905

Outsourced servicing costs
2,034

 
1,680

 
1,814

 
1,736

 
1,850

Net foreclosed property expenses
585

 
1,328

 
1,456

 
1,631

 
2,771

Postage, telephone, and delivery
899

 
862

 
809

 
839

 
927

Insurance
3,450

 
3,211

 
3,455

 
3,077

 
3,016

Loan and collection expense
2,210

 
2,268

 
2,037

 
2,099

 
1,573

Other expenses
3,869

 
4,262

 
8,172

 
4,486

 
3,496

Total non-interest expense
81,897

 
83,145

 
83,025

 
77,836

 
75,465

Income before income taxes
73,668

 
66,718

 
60,157

 
65,701

 
66,818

Income tax provision
27,246

 
25,234

 
22,934

 
25,174

 
25,994

Net income available to common stockholders
$
46,422

 
$
41,484

 
$
37,223

 
$
40,527

 
$
40,824

Per Common Share Data
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.59

 
$
0.53

 
$
0.48

 
$
0.52

 
$
0.52

Diluted earnings per share
$
0.58

 
$
0.52

 
$
0.47

 
$
0.51

 
$
0.52

Cash dividends declared
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

Weighted-average common shares outstanding
77,942

 
77,407

 
77,173

 
77,110

 
77,062

Weighted-average diluted common shares outstanding
79,158

 
78,512

 
78,122

 
77,934

 
77,806




7


Consolidated Balance Sheets
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
6/30/15
 
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
Unaudited
 
Unaudited
 
Audited
 
Unaudited
 
Unaudited
Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
185,983

 
$
158,431

 
$
132,211

 
$
181,248

 
$
247,048

Federal funds sold and interest-bearing deposits in banks
192,531

 
799,953

 
292,341

 
416,071

 
160,349

Loans held-for-sale
54,263

 
89,461

 
115,161

 
57,748

 
80,724

Securities available-for-sale, at fair value
1,698,233

 
1,631,237

 
1,645,344

 
1,541,754

 
1,527,747

Securities held-to-maturity, at amortized cost
1,199,120

 
1,159,853

 
1,129,285

 
1,072,002

 
1,066,216

Federal Home Loan Bank ("FHLB") stock
25,854

 
28,556

 
28,666

 
28,666

 
28,666

Loans – excluding covered assets, net of unearned fees
12,543,281

 
12,170,484

 
11,892,219

 
11,547,587

 
11,136,942

Allowance for loan losses
(157,051
)
 
(156,610
)
 
(152,498
)
 
(150,135
)
 
(146,491
)
Loans, net of allowance for loan losses and unearned fees
12,386,230

 
12,013,874

 
11,739,721

 
11,397,452

 
10,990,451

Covered assets
30,529

 
32,191

 
34,132

 
65,482

 
81,047

Allowance for covered loan losses
(6,332
)
 
(6,021
)
 
(5,191
)
 
(4,485
)
 
(14,375
)
Covered assets, net of allowance for covered loan losses
24,197

 
26,170

 
28,941

 
60,997

 
66,672

Other real estate owned, excluding covered assets
15,084

 
15,625

 
17,416

 
17,293

 
19,823

Premises, furniture, and equipment, net
37,672

 
38,544

 
39,143

 
39,611

 
40,088

Accrued interest receivable
43,442

 
41,202

 
40,531

 
39,701

 
36,568

Investment in bank owned life insurance
55,926

 
55,561

 
55,207

 
54,849

 
54,500

Goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Other intangible assets
4,586

 
5,230

 
5,885

 
6,627

 
7,381

Derivative assets
47,442

 
56,607

 
43,062

 
34,896

 
47,012

Other assets
161,291

 
147,003

 
196,427

 
147,512

 
135,118

Total assets
$
16,225,895

 
$
16,361,348

 
$
15,603,382

 
$
15,190,468

 
$
14,602,404

Liabilities
 
 
 
 
 
 
 
 
 
Demand deposits:
 
 
 
 
 
 
 
 
 
Noninterest-bearing
$
3,702,377

 
$
3,936,181

 
$
3,516,695

 
$
3,342,862

 
$
3,387,424

Interest-bearing
1,304,270

 
1,498,810

 
1,907,320

 
1,433,429

 
1,230,681

Savings deposits and money market accounts
5,992,288

 
6,156,331

 
5,171,025

 
5,368,866

 
5,033,247

Time deposits
2,390,001

 
2,510,406

 
2,494,928

 
2,704,047

 
2,584,849

Total deposits
13,388,936

 
14,101,728

 
13,089,968

 
12,849,204

 
12,236,201

Deposits held-for-sale
—

 
—

 
122,216

 
128,508

 
—

Short-term and secured borrowings
434,695

 
258,788

 
432,385

 
6,563

 
235,319

Long-term debt
694,788

 
344,788

 
344,788

 
656,793

 
626,793

Accrued interest payable
7,543

 
7,004

 
6,948

 
6,987

 
6,282

Derivative liabilities
24,696

 
26,967

 
26,767

 
27,976

 
35,402

Other liabilities
90,441

 
82,644

 
98,631

 
79,128

 
64,586

Total liabilities
14,641,099

 
14,821,919

 
14,121,703

 
13,755,159

 
13,204,583

Equity
 
 
 
 
 
 
 
 
 
Common stock:
 
 
 
 
 
 
 
 
 
Voting
78,047

 
77,968

 
77,211

 
76,858

 
75,526

Nonvoting
—

 
—

 
—

 
285

 
1,585

Treasury stock
(29
)
 
(5,560
)
 
(53
)
 
(6
)
 
(945
)
Additional paid-in capital
1,051,778

 
1,047,227

 
1,034,048

 
1,028,813

 
1,024,869

Retained earnings
435,872

 
390,247

 
349,556

 
313,123

 
273,380

Accumulated other comprehensive income, net of tax
19,128

 
29,547

 
20,917

 
16,236

 
23,406

Total equity
1,584,796

 
1,539,429

 
1,481,679

 
1,435,309

 
1,397,821

Total liabilities and equity
$
16,225,895

 
$
16,361,348

 
$
15,603,382

 
$
15,190,468

 
$
14,602,404



8


Selected Financial Data
 
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
2Q15
 
1Q15
 
4Q14
 
3Q14
 
2Q14
 
Selected Statement of Income Data:
 
 
 
 
 
 
 
 
 
 
Net interest income
$
124,622

 
$
121,993

 
$
116,876

 
$
116,758

 
$
112,351

 
Net revenue (1)(2)
$
158,717

 
$
156,453

 
$
148,180

 
$
148,238

 
$
143,354

 
Operating profit (1)(2)
$
76,820

 
$
73,308

 
$
65,155

 
$
70,402

 
$
67,889

 
Provision for loan and covered loan losses
$
2,116

 
$
5,646

 
$
4,120

 
$
3,890

 
$
327

 
Income before income taxes
$
73,668

 
$
66,718

 
$
60,157

 
$
65,701

 
$
66,818

 
Net income available to common stockholders
$
46,422

 
$
41,484

 
$
37,223

 
$
40,527

 
$
40,824

 
Per Common Share Data:
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.59

 
$
0.53

 
$
0.48

 
$
0.52

 
$
0.52

 
Diluted earnings per share
$
0.58

 
$
0.52

 
$
0.47

 
$
0.51

 
$
0.52

 
Dividends declared
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
Book value (period end) (1)
$
20.13

 
$
19.61

 
$
18.95

 
$
18.37

 
$
17.90

 
Tangible book value (period end) (1)(2)
$
18.88

 
$
18.35

 
$
17.67

 
$
17.08

 
$
16.61

 
Market value (period end)
$
39.82

 
$
35.17

 
$
33.40

 
$
29.91

 
$
29.06

 
Book value multiple (period end)
1.98

x
1.79

x
1.76

x
1.63

x
1.62

x
Share Data:
 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
77,942

 
77,407

 
77,173

 
77,110

 
77,062

 
Weighted-average diluted common shares outstanding
79,158

 
78,512

 
78,122

 
77,934

 
77,806

 
Common shares issued (period end)
78,718

 
78,654

 
78,180

 
78,121

 
78,101

 
Common shares outstanding (period end)
78,717

 
78,494

 
78,178

 
78,121

 
78,069

 
Performance Ratio:
 
 
 
 
 
 
 
 
 
 
Return on average common equity
11.85
%
 
11.05
%
 
10.03
%
 
11.27
%
 
11.88
%
 
Return on average assets
1.15
%
 
1.07
%
 
0.95
%
 
1.09
%
 
1.14
%
 
Return on average tangible common equity (1)(2)
12.75
%
 
11.94
%
 
10.89
%
 
12.27
%
 
12.97
%
 
Net interest margin (1)(2)
3.17
%
 
3.21
%
 
3.07
%
 
3.23
%
 
3.21
%
 
Fee revenue as a percent of total revenue (1)
20.97
%
 
21.28
%
 
20.66
%
 
20.80
%
 
21.11
%
 
Non-interest income to average assets
0.82
%
 
0.86
%
 
0.78
%
 
0.83
%
 
0.84
%
 
Non-interest expense to average assets
2.03
%
 
2.14
%
 
2.12
%
 
2.09
%
 
2.10
%
 
Net overhead ratio (1)
1.21
%
 
1.27
%
 
1.35
%
 
1.27
%
 
1.26
%
 
Efficiency ratio (1)(2)
51.60
%
 
53.14
%
 
56.03
%
 
52.51
%
 
52.64
%
 
Balance Sheet Ratios:
 
 
 
 
 
 
 
 
 
 
Loans to deposits (period end) (3)
93.68
%
 
86.30
%
 
90.85
%
 
89.87
%
 
91.02
%
 
Average interest-earning assets to average interest-bearing liabilities
144.67
%
 
144.69
%
 
145.10
%
 
145.51
%
 
143.72
%
 
Capital Ratios (period end):
 
 
 
 
 
 
 
 
 
 
Total risk-based capital (1)
12.41
%
 
12.29
%
 
12.51
%
 
13.18
%
 
13.41
%
 
Tier 1 risk-based capital (1)
10.49
%
 
10.34
%
 
10.49
%
 
11.12
%
 
11.24
%
 
Tier 1 leverage ratio (1)
10.24
%
 
10.16
%
 
9.96
%
 
10.70
%
 
10.63
%
 
Common equity Tier 1 (1)(4)
9.41
%
 
9.23
%
 
9.33
%
 
9.38
%
 
9.42
%
 
Tangible common equity to tangible assets (1)(2)
9.22
%
 
8.86
%
 
8.91
%
 
8.84
%
 
8.94
%
 
Total equity to total assets
9.77
%
 
9.41
%
 
9.50
%
 
9.45
%
 
9.57
%
 
(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 common equity Tier 1 ratio is a required regulatory capital measure and as presented for the 2015 period is calculated in accordance with the new Basel III capital rules. For periods prior to January 1, 2015, this ratio was considered a non-U.S. GAAP financial measure and was 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.

9


Selected Financial Data (continued)
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
2Q15
 
1Q15
 
4Q14
 
3Q14
 
2Q14
Additional Selected Information:
 
 
 
 
 
 
 
 
 
Decrease (increase) credit valuation adjustment on capital markets derivatives (1)
$
616

 
$
(805
)
 
$
(216
)
 
$
486

 
$
(250
)
Salaries and employee benefits:
 
 
 
 
 
 
 
 
 
Salaries and wages
$
27,461

 
$
27,002

 
$
26,521

 
$
26,178

 
$
25,671

Share-based costs
4,316

 
5,143

 
4,118

 
3,872

 
3,892

Incentive compensation and commissions
13,091

 
11,062

 
12,053

 
12,294

 
10,493

Payroll taxes, insurance and retirement costs
5,152

 
9,154

 
4,054

 
4,077

 
4,349

Total salaries and employee benefits
$
50,020

 
$
52,361

 
$
46,746

 
$
46,421

 
$
44,405

Loan and collection expense:
 
 
 
 
 
 
 
 
 
Loan origination and servicing expense
$
1,607

 
$
1,626

 
$
1,528

 
$
1,528

 
$
1,202

Loan remediation expense
603

 
642

 
509

 
571

 
371

Total loan and collection expense
$
2,210

 
$
2,268

 
$
2,037

 
$
2,099

 
$
1,573

Provision (release) for unfunded commitments
$
507

 
$
376

 
$
2,514

 
$
481

 
$
(339
)
Unfunded commitments, excluding covered assets
$
6,135,242

 
$
6,229,242

 
$
6,041,301

 
$
5,365,042

 
$
4,957,324

Assets under management and administration (AUMA):
 
 
 
 
 
 
 
 
 
Personal managed
$
1,892,973

 
$
1,897,644

 
$
1,786,633

 
$
1,796,901

 
$
1,834,034

Corporate and institutional managed
1,883,166

 
1,826,215

 
1,347,299

 
1,364,624

 
1,380,099

Total managed assets
3,776,139

 
3,723,859

 
3,133,932

 
3,161,525

 
3,214,133

Custody assets
3,682,388

 
3,604,333

 
3,511,996

 
3,319,188

 
3,151,829

Total AUMA
$
7,458,527

 
$
7,328,192

 
$
6,645,928

 
$
6,480,713

 
$
6,365,962

Basic and Diluted Earnings per Common Share
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
2Q15
 
1Q15
 
4Q14
 
3Q14
 
2Q14
Basic earnings per common share
 
 
 
 
 
 
 
 
 
Net income
$
46,422

 
$
41,484

 
$
37,223

 
$
40,527

 
$
40,824

Net income allocated to participating stockholders (2)
(366
)
 
(463
)
 
(470
)
 
(515
)
 
(519
)
Net income allocated to common stockholders
$
46,056

 
$
41,021

 
$
36,753

 
$
40,012

 
$
40,305

Weighted-average common shares outstanding
77,942

 
77,407

 
77,173

 
77,110

 
77,062

Basic earnings per common share
$
0.59

 
$
0.53

 
$
0.48

 
$
0.52

 
$
0.52

Diluted earnings per common share
 
 
 
 
 
 
 
 
 
Diluted earnings applicable to common stockholders (3)
$
46,059

 
$
41,028

 
$
36,758

 
$
40,017

 
$
40,308

Weighted-average diluted common shares outstanding:
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
77,942

 
77,407

 
77,173

 
77,110

 
77,062

Dilutive effect of stock awards
1,216

 
1,105

 
949

 
824

 
744

Weighted-average diluted common shares outstanding
79,158

 
78,512

 
78,122

 
77,934

 
77,806

Diluted earnings per common share
$
0.58

 
$
0.52

 
$
0.47

 
$
0.51

 
$
0.52

(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) 
Net income 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.

10


Loan Portfolio Composition (excluding covered assets (1))
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6/30/15
 
% of Total
 
3/31/15
 
% of Total
 
12/31/14
 
% of Total
 
9/30/14
 
% of Total
 
6/30/14
 
% of Total
 
Unaudited
 
 
 
Unaudited
 
 
 
Audited
 
 
 
Unaudited
 
 
 
Unaudited
 
 
Commercial and industrial
$
6,397,736

 
51
%
 
$
6,213,029

 
51
%
 
$
5,996,070

 
50
%
 
$
5,932,562

 
51
%
 
$
5,738,523

 
51
%
Commercial - owner-occupied CRE
2,048,489

 
16
%
 
1,977,601

 
16
%
 
1,892,564

 
16
%
 
1,843,199

 
16
%
 
1,731,060

 
16
%
Total commercial
8,446,225

 
67
%
 
8,190,630

 
67
%
 
7,888,634

 
66
%
 
7,775,761

 
67
%
 
7,469,583

 
67
%
Commercial real estate
2,432,608

 
19
%
 
2,411,359

 
20
%
 
2,323,616

 
20
%
 
2,233,018

 
19
%
 
2,086,976

 
19
%
Commercial real estate - multi-family
561,924

 
5
%
 
492,695

 
4
%
 
593,103

 
5
%
 
546,641

 
5
%
 
533,854

 
5
%
Total commercial real estate
2,994,532

 
24
%
 
2,904,054

 
24
%
 
2,916,719

 
25
%
 
2,779,659

 
24
%
 
2,620,830

 
24
%
Construction
371,096

 
3
%
 
357,258

 
3
%
 
381,102

 
3
%
 
307,066

 
3
%
 
360,313

 
3
%
Residential real estate
415,826

 
3
%
 
376,741

 
3
%
 
361,565

 
3
%
 
343,573

 
3
%
 
337,329

 
3
%
Home equity
137,461

 
1
%
 
138,734

 
1
%
 
142,177

 
1
%
 
141,159

 
1
%
 
144,081

 
1
%
Personal
178,141

 
2
%
 
203,067

 
2
%
 
202,022

 
2
%
 
200,369

 
2
%
 
204,806

 
2
%
Total loans
$
12,543,281

 
100
%
 
$
12,170,484

 
100
%
 
$
11,892,219

 
100
%
 
$
11,547,587

 
100
%
 
$
11,136,942

 
100
%
Total new loans to new clients (2)
$
344,356

 
 
 
$
385,777

 
 
 
$
451,896

 
 
 
$
421,326

 
 
 
$
364,771

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


11


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)
 
 
 
 
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
Amount
 
% of Total
 
Amount
 
% of Total
 
Amount
 
% of Total
Healthcare
$
1,938,339

 
23
%
 
$
1,892,977

 
23
%
 
$
1,787,092

 
23
%
Manufacturing
1,835,288

 
22
%
 
1,743,868

 
21
%
 
1,746,328

 
22
%
Finance and insurance
873,846

 
10
%
 
881,395

 
11
%
 
779,146

 
10
%
Wholesale trade
690,011

 
8
%
 
690,463

 
8
%
 
685,247

 
9
%
Real estate, rental and leasing
569,449

 
7
%
 
552,710

 
7
%
 
549,467

 
7
%
Administrative, support, waste management and remediation services
522,696

 
6
%
 
542,537

 
7
%
 
505,939

 
6
%
Professional, scientific and technical services
519,084

 
6
%
 
491,047

 
6
%
 
447,483

 
6
%
Architecture, engineering and construction
287,209

 
4
%
 
302,033

 
4
%
 
288,527

 
4
%
Retail
269,041

 
3
%
 
277,997

 
3
%
 
277,393

 
3
%
All other (1)
941,262

 
11
%
 
815,603

 
10
%
 
822,012

 
10
%
Total commercial (2)
$
8,446,225

 
100
%
 
$
8,190,630

 
100
%
 
$
7,888,634

 
100
%
Commercial Real Estate and Construction Loan Portfolio by Collateral Type
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
Amount
 
% of Total
 
Amount
 
% of Total
 
Amount
 
% of Total
Commercial Real Estate
 
 
 
 
 
 
 
 
 
 
 
Retail
$
699,758

 
23
%
 
$
681,323

 
23
%
 
$
608,102

 
21
%
Multi-family
561,924

 
19
%
 
492,695

 
17
%
 
593,103

 
20
%
Office
517,519

 
17
%
 
528,869

 
18
%
 
543,657

 
19
%
Healthcare
304,834

 
10
%
 
365,480

 
13
%
 
361,476

 
12
%
Industrial/warehouse
295,531

 
10
%
 
279,389

 
10
%
 
264,976

 
9
%
Land
239,704

 
8
%
 
210,550

 
7
%
 
199,497

 
7
%
Residential 1-4 family
82,277

 
3
%
 
86,173

 
3
%
 
76,995

 
3
%
Mixed use/other
292,985

 
10
%
 
259,575

 
9
%
 
268,913

 
9
%
Total commercial real estate
$
2,994,532

 
100
%
 
$
2,904,054

 
100
%
 
$
2,916,719

 
100
%
Construction
 
 
 
 
 
 
 
 
 
 
 
Multi-family
$
119,812

 
32
%
 
$
109,327

 
30
%
 
113,206

 
30
%
Retail
79,784

 
21
%
 
98,121

 
27
%
 
100,086

 
26
%
Industrial/warehouse
49,809

 
13
%
 
55,696

 
16
%
 
43,779

 
11
%
Residential 1-4 family
32,087

 
9
%
 
33,104

 
9
%
 
32,419

 
9
%
Healthcare
27,624

 
8
%
 
16,171

 
5
%
 
22,382

 
6
%
Office
24,653

 
7
%
 
16,185

 
5
%
 
14,447

 
4
%
Mixed use/other
37,327

 
10
%
 
28,654

 
8
%
 
54,783

 
14
%
Total construction
$
371,096

 
100
%
 
$
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 June 30, 2015 and March 31, 2015 and $1.9 billion at December 31, 2014.

12


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

 
0.08
%
Nonperforming loans to total loans
0.45
%
 
0.58
%
 
0.57
%
 
0.64
%
 
0.69
%
Nonperforming loans to total assets
0.35
%
 
0.43
%
 
0.43
%
 
0.48
%
 
0.52
%
Nonperforming assets to total assets
0.44
%
 
0.53
%
 
0.54
%
 
0.60
%
 
0.66
%
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
Total loans
1.25
%
 
1.29
%
 
1.28
%
 
1.30
%
 
1.32
%
Nonperforming loans
278
%
 
221
%
 
226
%
 
204
%
 
191
%
Nonperforming assets
 
 
 
 
 
 
 
 
 
Loans past due 90 days and accruing
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Nonaccrual loans
56,574

 
71,018

 
67,544

 
73,429

 
76,589

OREO
15,084

 
15,625

 
17,416

 
17,293

 
19,823

Total nonperforming assets
$
71,658

 
$
86,643

 
$
84,960

 
$
90,722

 
$
96,412

Restructured loans accruing interest
$
36,686

 
$
22,368

 
$
22,745

 
$
22,136

 
$
32,982

Loans past due and still accruing
 
 
 
 
 
 
 
 
 
30-59 days
$
2,151

 
$
6,673

 
$
7,696

 
$
711

 
$
3,566

60-89 days
672

 
2,544

 
4,120

 
2,746

 
117

Total loans past due and still accruing
$
2,823

 
$
9,217

 
$
11,816

 
$
3,457

 
$
3,683

Special mention loans
$
132,441

 
$
102,651

 
$
100,989

 
$
76,611

 
$
119,878

Potential problem loans
$
137,757

 
$
107,038

 
$
87,442

 
$
119,770

 
$
125,033

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming Loans Rollforward
 
 
 
 
 
 
 
 
 
Beginning balance
$
71,018

 
$
67,544

 
$
73,429

 
$
76,589

 
$
93,827

Additions:
 
 
 
 
 
 
 
 
 
New nonaccrual loans
6,884

 
16,279

 
6,052

 
16,767

 
16,327

Reductions:
 
 
 
 
 
 
 
 
 
Return to performing status
—

 
(97
)
 
(439
)
 
—

 
—

Paydowns and payoffs, net of advances
(15,800
)
 
(4,841
)
 
(457
)
 
(16,371
)
 
(19,936
)
Net sales
(317
)
 
(2,407
)
 
(1,800
)
 
(1,053
)
 
(7,875
)
Transfer to OREO
(1,996
)
 
(2,152
)
 
(6,177
)
 
(776
)
 
(1,111
)
Charge-offs
(3,215
)
 
(3,308
)
 
(3,064
)
 
(1,727
)
 
(4,643
)
Total reductions
(21,328
)
 
(12,805
)
 
(11,937
)
 
(19,927
)
 
(33,565
)
Balance at end of period
$
56,574

 
$
71,018

 
$
67,544

 
$
73,429

 
$
76,589

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

13


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
June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
124,689

 
1.5
%
 
 
$
125,948

 
1.5
%
 
 
$
27,845

 
0.3
%
 
 
$
8,446,225

Commercial real estate
83

 
*

 
 
2,614

 
0.1
%
 
 
13,441

 
0.4
%
 
 
2,994,532

Construction
—

 
—
%
 
 
—

 
—
%
 
 
—

 
—
%
 
 
371,096

Residential real estate
6,148

 
1.5
%
 
 
6,533

 
1.6
%
 
 
4,116

 
1.0
%
 
 
415,826

Home equity
806

 
0.6
%
 
 
2,618

 
1.9
%
 
 
11,148

 
8.1
%
 
 
137,461

Personal
715

 
0.4
%
 
 
44

 
*

 
 
24

 
*

 
 
178,141

Total
$
132,441

 
1.1
%
 
 
$
137,757

 
1.1
%
 
 
$
56,574

 
0.5
%
 
 
$
12,543,281

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

*
Less than 0.1%.


14


Allowance for Loan Losses (excluding covered assets (1))
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
2Q15
 
1Q15
 
4Q14
 
3Q14
 
2Q14
Change in allowance for loan losses:
 
 
 
 
 
 
 
 
 
Balance at beginning of period
$
156,610

 
$
152,498

 
$
150,135

 
$
146,491

 
$
146,768

Loans charged-off:
 
 
 
 
 
 
 
 
 
Commercial
(2,921
)
 
(2,202
)
 
(1,732
)
 
(227
)
 
(2,142
)
Commercial real estate
(98
)
 
(887
)
 
(417
)
 
(1,133
)
 
(2,082
)
Construction
—

 
—

 
1

 
(7
)
 
—

Residential real estate
(194
)
 
(37
)
 
(847
)
 
(252
)
 
(180
)
Home equity
—

 
(371
)
 
(130
)
 
(172
)
 
(268
)
Personal
(28
)
 
(10
)
 
(7
)
 
(8
)
 
(13
)
Total charge-offs
(3,241
)
 
(3,507
)
 
(3,132
)
 
(1,799
)
 
(4,685
)
Recoveries on loans previously charged-off:
 
 
 
 
 
 
 
 
 
Commercial
984

 
511

 
720

 
1,145

 
813

Commercial real estate
272

 
598

 
270

 
356

 
1,360

Construction
164

 
19

 
57

 
6

 
9

Residential real estate
47

 
57

 
231

 
9

 
135

Home equity
73

 
70

 
73

 
67

 
60

Personal
86

 
873

 
167

 
128

 
20

Total recoveries
1,626

 
2,128

 
1,518

 
1,711

 
2,397

Net (charge-offs) recoveries
(1,615
)
 
(1,379
)
 
(1,614
)
 
(88
)
 
(2,288
)
Provisions charged to operating expenses
2,056

 
5,491

 
3,977

 
3,732

 
2,011

Balance at end of period
$
157,051

 
$
156,610

 
$
152,498

 
$
150,135

 
$
146,491

Allocation of allowance for loan losses:
 
 
 
 
 
 
 
 
 
General allocated reserve:
 
 
 
 
 
 
 
 
 
Commercial
$
110,255

 
$
98,230

 
$
91,975

 
$
89,904

 
$
85,213

Commercial real estate
26,108

 
29,405

 
29,397

 
27,164

 
28,420

Construction
3,816

 
4,026

 
4,290

 
4,029

 
3,621

Residential real estate
4,651

 
4,793

 
4,581

 
4,515

 
4,650

Home equity
2,750

 
2,296

 
3,069

 
3,025

 
3,300

Personal
2,003

 
2,224

 
2,559

 
2,517

 
2,800

Total allocated
149,583

 
140,974

 
135,871

 
131,154

 
128,004

Specific reserve
7,468

 
15,636

 
16,627

 
18,981

 
18,487

Total
$
157,051

 
$
156,610

 
$
152,498

 
$
150,135

 
$
146,491

Allocation of reserve by a percent of total allowance for loan losses:
 
 
 
 
 
 
 
 
 
General allocated reserve:
 
 
 
 
 
 
 
 
 
Commercial
70
%
 
63
%
 
60
%
 
59
%
 
59
%
Commercial real estate
17
%
 
19
%
 
19
%
 
18
%
 
19
%
Construction
2
%
 
3
%
 
3
%
 
3
%
 
2
%
Residential real estate
3
%
 
3
%
 
3
%
 
3
%
 
3
%
Home equity
2
%
 
1
%
 
2
%
 
2
%
 
2
%
Personal
1
%
 
1
%
 
2
%
 
2
%
 
2
%
Total allocated
95
%
 
90
%
 
89
%
 
87
%
 
87
%
Specific reserve
5
%
 
10
%
 
11
%
 
13
%
 
13
%
Total
100
%
 
100
%
 
100
%
 
100
%
 
100
%
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
Total loans
1.25
%
 
1.29
%
 
1.28
%
 
1.30
%
 
1.32
%
Nonperforming loans
278
%
 
221
%
 
226
%
 
204
%
 
191
%
(1) 
Refer to Glossary of Terms for definition.

15


Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6/30/15
 
% of Total
 
3/31/15
 
% of Total
 
12/31/14
 
% of Total
 
9/30/14
 
% of Total
 
6/30/14
 
% of Total
 
Unaudited
 
 
 
Unaudited
 
 
 
Audited
 
 
 
Unaudited
 
 
 
Unaudited
 
 
Noninterest-bearing demand deposits
$
3,702,377

 
28
%
 
$
3,936,181

 
28
%
 
$
3,516,695

 
27
%
 
$
3,342,862

 
26
%
 
$
3,387,424

 
28
%
Interest-bearing demand deposits
1,304,270

 
10
%
 
1,498,810

 
11
%
 
1,907,320

 
15
%
 
1,433,429

 
11
%
 
1,230,681

 
10
%
Savings deposits
329,258

 
2
%
 
331,796

 
2
%
 
319,100

 
2
%
 
310,850

 
2
%
 
281,099

 
2
%
Money market accounts
5,663,030

 
42
%
 
5,824,535

 
41
%
 
4,851,925

 
37
%
 
5,058,016

 
39
%
 
4,752,148

 
39
%
Time deposits
2,390,001

 
18
%
 
2,510,406

 
18
%
 
2,494,928

 
19
%
 
2,704,047

 
22
%
 
2,584,849

 
21
%
Total deposits
$
13,388,936

 
100
%
 
$
14,101,728

 
100
%
 
$
13,089,968

 
100
%
 
$
12,849,204

 
100
%
 
$
12,236,201

 
100
%
Total new deposits from new clients (1)
$
251,361

 
 
 
$
302,849

 
 
 
$
330,000

 
 
 
$
269,176

 
 
 
$
199,811

 
 
(1) 
Amounts are unaudited.

Brokered Deposit Composition
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
6/30/15
 
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
Noninterest-bearing demand deposits
$
231,193

 
$
264,493

 
$
107,564

 
$
104,957

 
$
90,422

 
Interest-bearing demand deposits
304,876

 
323,094

 
641,466

 
415,953

 
386,426

 
Money market accounts
1,926,246

 
1,891,590

 
1,448,663

 
1,545,778

 
1,505,659

 
Time deposits:
 
 
 
 
 
 
 
 
 
 
Traditional
624,137

 
673,944

 
564,116

 
663,393

 
604,688

 
CDARS (1)
348,073

 
458,192

 
521,995

 
597,449

 
554,575

 
Other
90,438

 
87,732

 
82,714

 
101,408

 
114,072

 
Non-client CDARS
—

 
—

 
—

 
—

 
12,866

 
Total time deposits
1,062,648

 
1,219,868

 
1,168,825

 
1,362,250

 
1,286,201

 
Total brokered deposits
$
3,524,963

 
$
3,699,045

 
$
3,366,518

 
$
3,428,938

 
$
3,268,708

 
Brokered deposits as a % of total deposits
26
%
 
26
%
 
26
%
 
27
%
 
27
%
 
(1) 
The CDARS® deposit program is a deposit services arrangement that effectively achieves FDIC deposit insurance for jumbo deposit relationships.


16


Net Interest Margin
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
June 30, 2015
 
 
March 31, 2015
 
 
June 30, 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
$
393,761

 
$
245

 
0.25
%
 
 
$
420,844

 
$
261

 
0.25
%
 
 
$
225,135

 
$
139

 
0.24
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
2,396,003

 
13,541

 
2.26
%
 
 
2,362,725

 
13,556

 
2.30
%
 
 
2,291,837

 
13,625

 
2.38
%
Tax-exempt (2)
383,514

 
3,017

 
3.15
%
 
 
347,856

 
2,750

 
3.16
%
 
 
268,765

 
2,176

 
3.24
%
Total securities
2,779,517

 
16,558

 
2.38
%
 
 
2,710,581

 
16,306

 
2.41
%
 
 
2,560,602

 
15,801

 
2.47
%
FHLB stock
26,415

 
63

 
0.94
%
 
 
28,664

 
48

 
0.67
%
 
 
28,916

 
59

 
0.81
%
Loans, excluding covered assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
8,426,836

 
88,317

 
4.15
%
 
 
8,096,853

 
84,992

 
4.20
%
 
 
7,485,211

 
81,366

 
4.30
%
Commercial real estate
2,916,389

 
27,019

 
3.67
%
 
 
2,887,159

 
27,586

 
3.82
%
 
 
2,470,926

 
22,132

 
3.54
%
Construction
392,676

 
4,036

 
4.07
%
 
 
388,437

 
3,798

 
3.91
%
 
 
378,189

 
3,612

 
3.78
%
Residential
415,942

 
3,541

 
3.40
%
 
 
386,106

 
3,488

 
3.61
%
 
 
348,267

 
3,221

 
3.70
%
Personal and home equity
320,661

 
2,457

 
3.07
%
 
 
342,088

 
2,481

 
2.94
%
 
 
355,262

 
2,747

 
3.10
%
Total loans, excluding covered assets (3)
12,472,504

 
125,370

 
3.98
%
 
 
12,100,643

 
122,345

 
4.05
%
 
 
11,037,855

 
113,078

 
4.06
%
Covered assets (4)
30,939

 
277

 
3.61
%
 
 
32,801

 
357

 
4.41
%
 
 
84,246

 
618

 
2.91
%
Total interest-earning assets (2)
15,703,136

 
$
142,513

 
3.60
%
 
 
15,293,533

 
$
139,317

 
3.65
%
 
 
13,936,754

 
$
129,695

 
3.69
%
Cash and due from banks
173,915

 
 
 
 
 
 
171,330

 
 
 
 
 
 
148,143

 
 
 
 
Allowance for loan and covered loan losses
(164,844
)
 
 
 
 
 
 
(160,550
)
 
 
 
 
 
 
(164,694
)
 
 
 
 
Other assets
496,560

 
 
 
 
 
 
486,600

 
 
 
 
 
 
486,593

 
 
 
 
Total assets
$
16,208,767

 
 
 
 
 
 
$
15,790,913

 
 
 
 
 
 
$
14,406,796

 
 
 
 
Liabilities and Equity :
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
1,428,497

 
$
966

 
0.27
%
 
 
$
1,524,124

 
$
1,006

 
0.27
%
 
 
$
1,199,553

 
$
842

 
0.28
%
Savings deposits
330,092

 
322

 
0.39
%
 
 
325,615

 
312

 
0.39
%
 
 
285,501

 
194

 
0.27
%
Money market accounts
5,879,152

 
4,631

 
0.32
%
 
 
5,538,192

 
4,298

 
0.31
%
 
 
4,947,609

 
3,893

 
0.32
%
Time deposits
2,437,037

 
5,730

 
0.94
%
 
 
2,560,036

 
5,639

 
0.89
%
 
 
2,591,585

 
5,034

 
0.78
%
Total interest-bearing deposits
10,074,778

 
11,649

 
0.46
%
 
 
9,947,967

 
11,255

 
0.46
%
 
 
9,024,248

 
9,963

 
0.44
%
Short-term and secured borrowings
327,226

 
234

 
0.28
%
 
 
276,841

 
197

 
0.28
%
 
 
45,363

 
141

 
1.23
%
Long-term debt
452,480

 
4,972

 
4.39
%
 
 
344,788

 
4,928

 
5.72
%
 
 
627,716

 
6,496

 
4.13
%
Total interest-bearing liabilities
10,854,484

 
16,855

 
0.62
%
 
 
10,569,596

 
16,380

 
0.63
%
 
 
9,697,327

 
16,600

 
0.69
%
Noninterest-bearing demand deposits
3,637,010

 
 
 
 
 
 
3,552,717

 
 
 
 
 
 
3,202,460

 
 
 
 
Other liabilities
145,377

 
 
 
 
 
 
146,199

 
 
 
 
 
 
128,428

 
 
 
 
Equity
1,571,896

 
 
 
 
 
 
1,522,401

 
 
 
 
 
 
1,378,581

 
 
 
 
Total liabilities and equity
$
16,208,767

 
 
 
 
 
 
$
15,790,913

 
 
 
 
 
 
$
14,406,796

 
 
 
 
Net interest spread (2)(5)
 
 
 
 
2.98
%
 
 
 
 
 
 
3.02
%
 
 
 
 
 
 
3.00
%
Contribution of noninterest-bearing sources of funds
 
 
 
 
0.19
%
 
 
 
 
 
 
0.19
%
 
 
 
 
 
 
0.21
%
Net interest income/margin (2)(5)
 
 
125,658

 
3.17
%
 
 
 
 
122,937

 
3.21
%
 
 
 
 
113,095

 
3.21
%
Less: tax equivalent adjustment
 
 
1,036

 
 
 
 
 
 
944

 
 
 
 
 
 
744

 
 
Net interest income, as reported
 
 
$
124,622

 
 
 
 
 
 
$
121,993

 
 
 
 
 
 
$
112,351

 
 
(1) 
Interest income included $6.3 million, $7.5 million, and $6.6 million in loan fees for the quarter ended June 30, 2015, March 31, 2015 and June 30, 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 $63.7 million, $69.3 million, and $86.7 million for the quarter ended June 30, 2015, March 31, 2015, and June 30, 2014, respectively. Interest foregone on impaired loans was estimated to be approximately $613,000, $671,000 and $836,000 for the quarter ended June 30, 2015, March 31, 2015, and June 30, 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) 
Refer to Glossary of Terms for definition.

17


Net Interest Margin
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
2015
 
2014
 
Average Balance
 
Interest (1)
 
Yield / Rate
 
Average Balance
 
Interest (1)
 
Yield / Rate
Assets:
 
 
 
 
 
 
 
 
 
 
 
Federal funds sold and interest-bearing deposits in banks
$
407,228

 
$
506

 
0.25
%
 
$
229,200

 
$
281

 
0.24
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
Taxable
2,379,456

 
27,097

 
2.28
%
 
2,264,882

 
26,880

 
2.37
%
Tax-exempt (2)
365,783

 
5,767

 
3.15
%
 
267,167

 
4,505

 
3.37
%
Total securities
2,745,239

 
32,864

 
2.40
%
 
2,532,049

 
31,385

 
2.48
%
FHLB stock
27,533

 
111

 
0.80
%
 
29,457

 
92

 
0.62
%
Loans, excluding covered assets:
 
 
 
 
 
 
 
 
 
 
 
Commercial
8,262,658

 
173,309

 
4.17
%
 
7,336,579

 
159,581

 
4.33
%
Commercial real estate
2,901,855

 
54,604

 
3.74
%
 
2,479,255

 
44,141

 
3.54
%
Construction
390,666

 
7,834

 
3.99
%
 
346,880

 
6,689

 
3.84
%
Residential
401,106

 
7,027

 
3.50
%
 
349,426

 
6,579

 
3.77
%
Personal and home equity
331,315

 
4,939

 
3.01
%
 
358,784

 
5,500

 
3.09
%
Total loans, excluding covered assets (3)
12,287,600

 
247,713

 
4.01
%
 
10,870,924

 
222,490

 
4.07
%
Covered assets (4)
31,865

 
636

 
4.02
%
 
90,012

 
1,405

 
3.12
%
Total interest-earning assets (2)
15,499,465

 
$
281,830

 
3.62
%
 
13,751,642

 
$
255,653

 
3.70
%
Cash and due from banks
172,629

 
 
 
 
 
147,448

 
 
 
 
Allowance for loan and covered loan losses
(162,709
)
 
 
 
 
 
(164,813
)
 
 
 
 
Other assets
491,609

 
 
 
 
 
485,268

 
 
 
 
Total assets
$
16,000,994

 
 
 
 
 
$
14,219,545

 
 
 
 
Liabilities and Equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
1,476,046

 
$
1,972

 
0.27
%
 
$
1,246,343

 
$
1,784

 
0.29
%
Savings deposits
327,866

 
634

 
0.39
%
 
285,104

 
391

 
0.28
%
Money market accounts
5,709,614

 
8,929

 
0.32
%
 
4,804,677

 
7,670

 
0.32
%
Time deposits
2,498,196

 
11,369

 
0.92
%
 
2,569,668

 
9,840

 
0.77
%
Total interest-bearing deposits
10,011,722

 
22,904

 
0.46
%
 
8,905,792

 
19,685

 
0.45
%
Short-term and secured borrowings
302,173

 
431

 
0.28
%
 
44,332

 
337

 
1.51
%
Long-term debt
398,931

 
9,900

 
4.96
%
 
627,754

 
12,984

 
4.13
%
Total interest-bearing liabilities
10,712,826

 
33,235

 
0.62
%
 
9,577,878

 
33,006

 
0.69
%
Noninterest-bearing demand deposits
3,595,097

 
 
 
 
 
3,152,119

 
 
 
 
Other liabilities
145,786

 
 
 
 
 
132,432

 
 
 
 
Equity
1,547,285

 
 
 
 
 
1,357,116

 
 
 
 
Total liabilities and equity
$
16,000,994

 
 
 
 
 
$
14,219,545

 
 
 
 
Net interest spread (2)(5)
 
 
 
 
3.00
%
 
 
 
 
 
3.01
%
Contribution of noninterest-bearing sources of funds
 
 
 
 
0.19
%
 
 
 
 
 
0.21
%
Net interest income/margin (2)(5)
 
 
248,595

 
3.19
%
 
 
 
222,647

 
3.22
%
Less: tax-equivalent adjustment
 
 
1,980

 
 
 
 
 
1,544

 
 
Net interest income, as reported
 
 
$
246,615

 
 
 
 
 
$
221,103

 
 
(1) 
Interest income included $13.8 million and $12.7 million in loan fees for the six months ended June 30, 2015 and 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 $65.8 million and $89.3 million for the six months ended June 30, 2015 and 2014, respectively. Interest foregone on impaired loans was estimated to be approximately$1.3 million and $1.7 million for the six months ended June 30, 2015 and 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) 
Refer to Glossary of Terms for definition.


18


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, adjusted net income, net interest margin, net revenue, operating profit, and efficiency ratio all on a fully taxable-equivalent basis, return on average tangible common equity, common equity Tier 1 ratio (prior to 2015), 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 may 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 common equity Tier 1 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.


19


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

The following table reconciles non-U.S. GAAP financial measures to U.S. GAAP.
 
Quarter Ended
 
2015
 
2014
 
June 30
 
March 31
 
December 31
 
September 30
 
June 30
Taxable-equivalent net interest income
 
 
 
 
 
 
 
 
 
U.S. GAAP net interest income
$
124,622

 
$
121,993

 
$
116,876

 
$
116,758

 
$
112,351

Taxable-equivalent adjustment
1,036

 
944

 
878

 
811

 
744

Taxable-equivalent net interest income (a)
$
125,658

 
$
122,937

 
$
117,754

 
$
117,569

 
$
113,095

 
 
 
 
 
 
 
 
 
 
Average Earning Assets (b)
$
15,703,136

 
$
15,293,533

 
$
15,022,425

 
$
14,283,920

 
$
13,936,754

 
 
 
 
 
 
 
 
 
 
Net Interest Margin ((a) annualized) / (b)
3.17
%
 
3.21
%
 
3.07
%
 
3.23
%
 
3.21
%
 
 
 
 
 
 
 
 
 
 
Net Revenue
 
 
 
 
 
 
 
 
 
Taxable-equivalent net interest income
$
125,658

 
$
122,937

 
$
117,754

 
$
117,569

 
$
113,095

U.S. GAAP non-interest income
33,059

 
33,516

 
30,426

 
30,669

 
30,259

Net revenue (c)
$
158,717

 
$
156,453

 
$
148,180

 
$
148,238

 
$
143,354

 
 
 
 
 
 
 
 
 
 
Operating Profit
 
 
 
 
 
 
 
 
 
U.S. GAAP income before income taxes
$
73,668

 
$
66,718

 
$
60,157

 
$
65,701

 
$
66,818

Provision for loan and covered loan losses
2,116

 
5,646

 
4,120

 
3,890

 
327

Taxable-equivalent adjustment
1,036

 
944

 
878

 
811

 
744

Operating profit
$
76,820

 
$
73,308

 
$
65,155

 
$
70,402

 
$
67,889

 
 
 
 
 
 
 
 
 
 
Efficiency Ratio
 
 
 
 
 
 
 
 
 
U.S. GAAP non-interest expense (d)
$
81,897

 
$
83,145

 
$
83,025

 
$
77,836

 
$
75,465

Net revenue
$
158,717

 
$
156,453

 
$
148,180

 
$
148,238

 
$
143,354

Efficiency ratio (d) / (c)
51.60
%
 
53.14
%
 
56.03
%
 
52.51
%
 
52.64
%
 
 
 
 
 
 
 
 
 
 
Adjusted Net Income
 
 
 
 
 
 
 
 
 
U.S. GAAP net income available to common stockholders
$
46,422

 
$
41,484

 
$
37,223

 
$
40,527

 
$
40,824

Amortization of intangibles, net of tax
398

 
397

 
449

 
458

 
458

Adjusted net income (e)
$
46,820

 
$
41,881

 
$
37,672

 
$
40,985

 
$
41,282

 
 
 
 
 
 
 
 
 
 
Average Tangible Common Equity
 
 
 
 
 
 
 
 
 
U.S. GAAP average total equity
$
1,571,896

 
$
1,522,401

 
$
1,472,111

 
$
1,426,273

 
$
1,378,581

Less: average goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Less: average other intangibles
4,897

 
5,551

 
6,243

 
6,996

 
7,749

Average tangible common equity (f)
$
1,472,958

 
$
1,422,809

 
$
1,371,827

 
$
1,325,236

 
$
1,276,791

 
 
 
 
 
 
 
 
 
 
Return on average tangible common equity ((e) annualized) / (f)
12.75
%
 
11.94
%
 
10.89
%
 
12.27
%
 
12.97
%


20


Non-U.S. GAAP Financial Measures (continued)
(Dollars in thousands)
(Unaudited)
 
Six Months Ended June 30,
 
2015
 
2014
Taxable-equivalent net interest income
 
 
 
U.S. GAAP net interest income
$
246,615

 
$
221,103

Taxable-equivalent adjustment
1,980

 
1,544

Taxable-equivalent net interest income (a)
$
248,595

 
$
222,647

Average Earning Assets (b)
$
15,499,465

 
$
13,751,642

Net Interest Margin ((a) annualized) / (b)
3.19
%
 
3.22
%
Net Revenue
 
 
 
Taxable-equivalent net interest income
$
248,595

 
$
222,647

U.S. GAAP non-interest income
66,575

 
56,495

Net revenue (c)
$
315,170

 
$
279,142

Operating Profit
 
 
 
U.S. GAAP income before income taxes
$
140,386

 
$
122,349

Provision for loan and covered loan losses
7,762

 
4,034

Taxable-equivalent adjustment
1,980

 
1,544

Operating profit
$
150,128

 
$
127,927

Efficiency Ratio
 
 
 
U.S. GAAP non-interest expense (d)
$
165,042

 
$
151,215

Net revenue
$
315,170

 
$
279,142

Efficiency ratio (d) / (c)
52.37
%
 
54.17
%
Adjusted Net Income
 
 
 
U.S. GAAP net income available to common stockholders
$
87,906

 
$
75,329

Amortization of intangibles, net of tax
795

 
916

Adjusted net income (e)
$
88,701

 
$
76,245

Average Tangible Common Equity
 
 
 
U.S. GAAP average total equity
$
1,547,285

 
$
1,357,116

Less: average goodwill
94,041

 
94,041

Less: average other intangibles
5,222

 
8,125

Average tangible common equity (f)
$
1,448,022

 
$
1,254,950

Return on average tangible common equity ((e) annualized) / (f)
12.35
%
 
12.27
%


21


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

 
$
1,435,309

 
$
1,397,821

Trust preferred securities
 
 
 
 
169,788

 
244,793

 
244,793

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

 
16,236

 
23,406

Less: goodwill
 
 
 
 
94,041

 
94,041

 
94,041

Less: other intangibles
 
 
 
 
5,885

 
6,627

 
7,381

Less: disallowed servicing rights
 
 
 
 
44

 
42

 
32

Tier 1 risk-based capital
 
 
 
 
1,530,580

 
1,563,156

 
1,517,754

Less: trust preferred securities
 
 
 
 
169,788

 
244,793

 
244,793

Common equity Tier 1 (g)
 
 
 
 
$
1,360,792

 
$
1,318,363

 
$
1,272,961

 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
2015
 
2014
 
June 30
 
March 31
 
December 31
 
September 30
 
June 30
Tangible Common Equity
 
 
 
 
 
 
 
 
 
U.S. GAAP total equity
$
1,584,796

 
$
1,539,429

 
$
1,481,679

 
$
1,435,309

 
$
1,397,821

Less: goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Less: other intangibles
4,586

 
5,230

 
5,885

 
6,627

 
7,381

Tangible common equity (h)
$
1,486,169

 
$
1,440,158

 
$
1,381,753

 
$
1,334,641

 
$
1,296,399

 
 
 
 
 
 
 
 
 
 
Tangible Assets
 
 
 
 
 
 
 
 
 
U.S. GAAP total assets
$
16,225,895

 
$
16,361,348

 
$
15,603,382

 
$
15,190,468

 
$
14,602,404

Less: goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Less: other intangibles
4,586

 
5,230

 
5,885

 
6,627

 
7,381

Tangible assets (i)
$
16,127,268

 
$
16,262,077

 
$
15,503,456

 
$
15,089,800

 
$
14,500,982

 
 
 
 
 
 
 
 
 
 
Risk-weighted Assets (j)
$
15,706,019

 
$
15,395,081

 
$
14,592,655

 
$
14,053,735

 
$
13,506,797

 
 
 
 
 
 
 
 
 
 
Period-end Common Shares Outstanding (k)
78,717

 
78,494

 
78,178

 
78,121

 
78,069

 
 
 
 
 
 
 
 
 
 
Ratios:
 
 
 
 
 
 
 
 
 
Common equity Tier 1 ratio (g) / (j) (1)
—

 
—

 
9.33
%
 
9.38
%
 
9.42
%
Tangible common equity to risk-weighted assets (h) / (j)
9.46
%
 
9.35
%
 
9.47
%
 
9.50
%
 
9.60
%
Tangible common equity to tangible assets (h) / (i)
9.22
%
 
8.86
%
 
8.91
%
 
8.84
%
 
8.94
%
Tangible book value (h) / (k)
$
18.88

 
$
18.35

 
$
17.67

 
$
17.08

 
$
16.61

(1) Effective January 1, 2015, the common equity Tier 1 ratio became a required regulatory capital measure and is calculated in accordance with the new capital rules. For the periods prior to January 1, 2015, this ratio is considered a Non-GAAP measure and was calculated without giving effect to the final Basel III capital rules.  

22


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.

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

Common equity Tier 1 to risk-weighted assets ratio - Common equity Tier 1 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.

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 taxable-equivalent net interest income 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.

23



Glossary of Terms (continued)

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.

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 equity to risk-weighted assets ratio - Tier 1 risk-based capital 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; less goodwill and certain other intangible assets, 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.

24
Privatebancorp - Privatebancorp Capital Trust IV - 10% Trust Preferred (NASDAQ:PVTBP)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more Privatebancorp - Privatebancorp Capital Trust IV - 10% Trust Preferred Charts.
Privatebancorp - Privatebancorp Capital Trust IV - 10% Trust Preferred (NASDAQ:PVTBP)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more Privatebancorp - Privatebancorp Capital Trust IV - 10% Trust Preferred Charts.