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): October 13, 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 Street
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 October 13, 2015, PrivateBancorp, Inc. (the “Company”) announced its earnings results for the third quarter and nine months ended September 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
 
Third Quarter 2015 Earnings Release dated October 13, 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: October 13, 2015
 
 
 
By:
 
/s/ Kevin M. Killips
 
 
 
 
 
 
Kevin M. Killips
 
 
 
 
 
 
Chief Financial Officer
INDEX TO EXHIBITS

Exhibit
 
Description
 
 
 
99.1
 
Third Quarter 2015 Earnings Release dated October 13, 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 Third Quarter 2015 Earnings
Earnings per share of $0.57 for third quarter 2015, compared to $0.51 for third quarter 2014
and $0.58 for second quarter 2015

CHICAGO, October 13, 2015 - PrivateBancorp, Inc. (NASDAQ: PVTB) today reported net income of $45.3 million, or $0.57 per diluted share, for the third quarter 2015, compared to $40.5 million, or $0.51 per diluted share, for the third quarter 2014, and $46.4 million, or $0.58 per diluted share, for the second quarter 2015. For the nine months ended September 30, 2015, the Company had net income of $133.2 million, or $1.67 per diluted share, compared to $115.9 million, or $1.47 per diluted share, for the nine months ended September 30, 2014.

“Our third quarter results reflect our consistent execution as we continue to establish relationships with new clients and expand our banking business with existing clients,” said Larry D. Richman, President and Chief Executive Officer, PrivateBancorp, Inc. “We grew loans $536 million from the prior quarter, with a good mix of commercial and industrial and commercial real estate. We grew deposits from new and existing clients, and noninterest-bearing demand deposits increased 10 percent over the previous quarter.

“On a year-over-year basis, third quarter net revenue was up 10 percent to $163 million as our steady loan growth drove a 12 percent increase in net interest income,” Richman continued. “Net income increased 12 percent over third quarter 2014 to $45 million. Overall, I’m pleased with our performance this quarter and believe we are well positioned to finish the year strong.”

Third Quarter 2015 Highlights

•
Total loans grew to $13.1 billion, up $1.5 billion, or 13 percent, from a year ago and up $536.0 million, or 4 percent, from June 30, 2015. Commercial loans represented 67 percent of total loans and commercial real estate and construction loans represented 27 percent of total loans at September 30, 2015.

•
Total deposits were $13.9 billion, increasing $1.0 billion, or 8 percent, from a year ago and $508.8 million, or 4 percent, from June 30, 2015. Noninterest-bearing demand deposits represented 29 percent of total deposits at September 30, 2015, compared to 26 percent a year ago.

•
Net revenue of $163.1 million benefited from growth in earning assets, increasing 10 percent from the third quarter 2014 and 3 percent from the second quarter 2015.


1

•
Net interest margin was 3.23 percent, comparable to the third quarter 2014 and up from 3.17 percent for the second quarter 2015. The current quarter benefited from a higher level of loan fees and lower average cash equivalents compared to the sequential quarter.

•
The provision for loan and covered loan losses was $4.2 million, compared to $3.9 million for the third quarter 2014 and $2.1 million for the second quarter 2015.

•
Return on average assets was 1.09 percent and return on average common equity was 11.1 percent for the third quarter 2015.

Operating Performance

Net interest income was $131.2 million in the third quarter 2015, an increase of 12 percent from the third quarter 2014 and 5 percent from the second quarter 2015, primarily reflecting growth in average loans. Average loan balances increased 13 percent from the third quarter 2014 and 3 percent from the second quarter 2015. Compared to the third quarter 2014, net interest income also benefited from interest savings largely related to the trust preferred securities redemption in the fourth quarter 2014.

Net interest margin was 3.23 percent in the third quarter 2015, comparable to the third quarter 2014, as the benefit from the trust preferred securities redemption offset the impact of lower loan yields. Compared to the second quarter 2015, net interest margin improved by six basis points. The current quarter benefited from a higher level of loan fees on a comparative basis, including one large fee from an early repayment that contributed three basis points to net interest margin. Excluding the impact of loan fees, loan yields remained relatively stable on a sequential basis. While loan pricing remains competitive in the current environment, the loan portfolio is largely indexed to short-term rates and benefited from a modest rise in one-month LIBOR. Lower average cash equivalents on a comparative basis also contributed three basis points to net interest margin. Deposits costs increased by two basis points, which was offset by an increase in average noninterest-bearing funds from the second quarter.

Noninterest income was $30.8 million in the third quarter 2015, compared to $30.7 million for the third quarter 2014 and $33.1 million for the second quarter 2015. Treasury management fees grew to $8.0 million in the third quarter 2015, up 16 percent from the third quarter 2014 and up 8 percent from the second quarter 2015. Continued success in cross-sell activities drove higher treasury management volume. Syndication fees declined to $4.4 million in the third quarter 2015, down from $6.8 million in the third quarter 2014 and $5.4 million in the second quarter 2015. Syndication fees will vary from quarter to quarter depending on the level and mix of loans originated and distributed.

Capital markets revenue of $3.1 million in the third quarter 2015 reflected a negative credit valuation adjustment (CVA) of $1.2 million. Excluding the CVA impact for all periods, capital markets revenue was $4.3 million in the third quarter 2015, up $1.6 million from the third quarter 2014 and comparable to the second quarter 2015. Compared to the third quarter 2014, the current quarter benefited from several larger interest rate derivative transactions, and foreign exchange revenues grew reflecting increased client penetration.

Assets under management and administration (AUMA) were $7.2 billion as of September 30, 2015, compared to $6.5 billion a year ago, benefiting from the continued focus on cross-selling asset management services to commercial and private wealth clients and ongoing client development. Compared to June 30, 2015, AUMA balances declined 4 percent primarily driven by market performance. Asset management revenue was $4.5 million in the third quarter 2015, compared to $4.2 million for the third quarter 2014 and $4.7 million for the second quarter 2015. Mortgage banking revenue improved 15 percent from the third quarter 2014 and declined 20 percent from the second quarter 2015 which benefited from a higher level of refinance activity.


2

Expenses

Noninterest expense was $85.2 million for the third quarter 2015, compared to $77.8 million for the third quarter 2014 and $81.9 million for the second quarter 2015. The efficiency ratio was 52.2 percent for the third quarter 2015, compared to 52.5 percent for the third quarter 2014 and 51.6 percent for the second quarter 2015.

Salaries and benefits expense was comparable to the second quarter 2015 and increased $3.6 million from the third quarter 2014 due to annual salary adjustments made during the first quarter, additional hires made over the last year, and higher incentive compensation accruals. Other expenses increased by $1.8 million from the third quarter 2014 and $2.4 million from the second quarter 2015, primarily related to a higher provision for unfunded commitments.

Credit Quality

The allowance for loan losses as a percentage of total loans was 1.25 percent at September 30, 2015, comparable to June 30, 2015. The provision for loan losses was $4.2 million for the third quarter 2015, increasing $471,000 from the third quarter 2014 and $2.1 million from the second quarter 2015. The current quarter's provision for loan losses reflected loan growth, portfolio movement, and recoveries exceeding charge-offs. Net recoveries to average loans were 0.05 percent for the third quarter 2015, compared to net charge-offs to average loans of less than 0.01 percent for the third quarter 2014 and 0.05 percent for the second quarter 2015.

Nonperforming assets were 0.34 percent of total assets at September 30, 2015, down from 0.44 percent at June 30, 2015. At September 30, 2015, nonperforming loans were $44.0 million, declining from $56.6 million at June 30, 2015. OREO declined 15 percent during the current quarter to $12.8 million at September 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 $16.9 billion at September 30, 2015, compared to $15.2 billion at September 30, 2014, and $16.2 billion at June 30, 2015. Total loans of $13.1 billion increased 13 percent from September 30, 2014, and 4 percent from June 30, 2015, driven by growth in commercial and industrial and commercial real estate loans. At September 30, 2015, total commercial loans (including owner-occupied commercial real estate) comprised 67 percent of total loans, and commercial real estate and construction loans represented 27 percent of total loans.

Total liabilities were $15.2 billion at September 30, 2015, compared to $13.8 billion at September 30, 2014, and $14.6 billion compared to June 30, 2015. Total deposits were $13.9 billion at September 30, 2015, increasing 8 percent from September 30, 2014, and 4 percent from June 30, 2015, driven primarily by higher noninterest-bearing demand deposit and money market account balances. Noninterest-bearing demand deposits represented 29 percent of total deposits at September 30, 2015, compared to 26 percent a year ago and 28 percent at June 30, 2015. The deposit base is predominately comprised of commercial client balances, including deposits from a variety of financial service businesses, which will fluctuate from time to time based on their business and liquidity needs. At September 30, 2015, the loan-to-deposit ratio was 94 percent, compared to 90 percent as of September 30, 2014, and 94 percent as of June 30, 2015.

Capital

As of September 30, 2015, the total risk-based capital ratio was 12.28 percent, the Tier 1 risk-based capital ratio was 10.39 percent, and the leverage ratio was 10.35 percent. The common equity Tier 1 ratio was 9.35 percent and the tangible common equity ratio was 9.23 percent at the end of the third quarter 2015.


3

Quarterly Conference Call and Webcast Presentation

PrivateBancorp will host a conference call Tuesday, October 13, 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 #33786969. 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 October 27, 2015, by calling (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (International) and entering passcode #33786969.

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 September 30, 2015, the Company had 35 offices in 12 states and $16.9 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;
•
competitive pressures in the financial services industry relating to both pricing and loan structures, which may impact our growth rate due to increasing availability in the market of financing alternatives offering terms outside our risk tolerances;
•
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.

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 June 30, 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.


4

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)
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2015
 
2014
 
2015
 
2014
Interest Income
 
 
 
 
 
 
 
Loans, including fees
$
132,106

 
$
119,211

 
$
380,455

 
$
343,106

Federal funds sold and interest-bearing deposits in banks
168

 
142

 
674

 
423

Securities:
 
 
 
 
 
 
 
Taxable
13,599

 
13,370

 
40,696

 
40,250

Exempt from Federal income taxes
2,177

 
1,529

 
5,964

 
4,490

Other interest income
69

 
48

 
180

 
140

Total interest income
148,119

 
134,300

 
427,969

 
388,409

Interest Expense
 
 
 
 
 
 
 
Interest-bearing demand deposits
937

 
918

 
2,909

 
2,702

Savings deposits and money market accounts
5,119

 
4,173

 
14,682

 
12,234

Time deposits
5,782

 
5,723

 
17,151

 
15,563

Short-term borrowings
24

 
158

 
455

 
495

Long-term debt
5,048

 
6,570

 
14,948

 
19,554

Total interest expense
16,910

 
17,542

 
50,145

 
50,548

Net interest income
131,209

 
116,758

 
377,824

 
337,861

Provision for loan and covered loan losses
4,197

 
3,890

 
11,959

 
7,924

Net interest income after provision for loan and covered loan losses
127,012

 
112,868

 
365,865

 
329,937

Non-interest Income
 
 
 
 
 
 
 
Asset management
4,462

 
4,240

 
13,566

 
13,027

Mortgage banking
3,340

 
2,904

 
11,267

 
7,162

Capital markets products
3,098

 
3,253

 
12,189

 
12,342

Treasury management
8,010

 
6,935

 
22,758

 
20,210

Loan, letter of credit and commitment fees
5,670

 
4,970

 
15,690

 
14,410

Syndication fees
4,364

 
6,818

 
12,361

 
15,571

Deposit service charges and fees and other income
1,585

 
1,546

 
8,740

 
3,912

Net securities gains
260

 
3

 
793

 
530

Total non-interest income
30,789

 
30,669

 
97,364

 
87,164

Non-interest Expense
 
 
 
 
 
 
 
Salaries and employee benefits
50,019

 
46,421

 
152,400

 
135,446

Net occupancy and equipment expense
8,180

 
7,807

 
24,203

 
23,311

Technology and related costs
3,583

 
3,362

 
10,424

 
9,850

Marketing
3,682

 
3,752

 
11,926

 
9,754

Professional services
3,679

 
2,626

 
8,574

 
8,290

Outsourced servicing costs
1,786

 
1,736

 
5,500

 
5,050

Net foreclosed property expenses
1,080

 
1,631

 
2,993

 
7,225

Postage, telephone, and delivery
857

 
839

 
2,618

 
2,591

Insurance
3,667

 
3,077

 
10,328

 
8,996

Loan and collection expense
2,324

 
2,099

 
6,802

 
4,728

Other expenses
6,318

 
4,486

 
14,449

 
13,810

Total non-interest expense
85,175

 
77,836

 
250,217

 
229,051

Income before income taxes
72,626

 
65,701

 
213,012

 
188,050

Income tax provision
27,358

 
25,174

 
79,838

 
72,194

Net income available to common stockholders
$
45,268

 
$
40,527

 
$
133,174

 
$
115,856

Per Common Share Data
 
 
 
 
 
 
 
Basic earnings per share
$
0.58

 
$
0.52

 
$
1.70

 
$
1.48

Diluted earnings per share
$
0.57

 
$
0.51

 
$
1.67

 
$
1.47

Cash dividends declared
$
0.01

 
$
0.01

 
$
0.03

 
$
0.03

Weighted-average common shares outstanding
78,144

 
77,110

 
77,834

 
76,951

Weighted-average diluted common shares outstanding
79,401

 
77,934

 
79,027

 
77,721




6


Consolidated Income Statements
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
3Q15
 
2Q15
 
1Q15
 
4Q14
 
3Q14
Interest Income
 
 
 
 
 
 
 
 
 
Loans, including fees
$
132,106

 
$
125,647

 
$
122,702

 
$
120,649

 
$
119,211

Federal funds sold and interest-bearing deposits in banks
168

 
245

 
261

 
347

 
142

Securities:
 
 
 
 
 
 
 
 
 
Taxable
13,599

 
13,541

 
13,556

 
13,250

 
13,370

Exempt from Federal income taxes
2,177

 
1,981

 
1,806

 
1,683

 
1,529

Other interest income
69

 
63

 
48

 
49

 
48

Total interest income
148,119

 
141,477

 
138,373

 
135,978

 
134,300

Interest Expense
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
937

 
966

 
1,006

 
1,026

 
918

Savings deposits and money market accounts
5,119

 
4,953

 
4,610

 
4,623

 
4,173

Time deposits
5,782

 
5,730

 
5,639

 
5,803

 
5,723

Short-term borrowings
24

 
234

 
197

 
143

 
158

Long-term debt
5,048

 
4,972

 
4,928

 
7,507

 
6,570

Total interest expense
16,910

 
16,855

 
16,380

 
19,102

 
17,542

Net interest income
131,209

 
124,622

 
121,993

 
116,876

 
116,758

Provision for loan and covered loan losses
4,197

 
2,116

 
5,646

 
4,120

 
3,890

Net interest income after provision for loan and covered loan losses
127,012

 
122,506

 
116,347

 
112,756

 
112,868

Non-interest Income
 
 
 
 
 
 
 
 
 
Asset management
4,462

 
4,741

 
4,363

 
4,241

 
4,240

Mortgage banking
3,340

 
4,152

 
3,775

 
3,083

 
2,904

Capital markets products
3,098

 
4,919

 
4,172

 
5,705

 
3,253

Treasury management
8,010

 
7,421

 
7,327

 
7,262

 
6,935

Loan, letter of credit and commitment fees
5,670

 
4,914

 
5,106

 
4,901

 
4,970

Syndication fees
4,364

 
5,375

 
2,622

 
3,943

 
6,818

Deposit service charges and fees and other income
1,585

 
1,538

 
5,617

 
1,291

 
1,546

Net securities gains (losses)
260

 
(1
)
 
534

 
—

 
3

Total non-interest income
30,789

 
33,059

 
33,516

 
30,426

 
30,669

Non-interest Expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
50,019

 
50,020

 
52,361

 
46,746

 
46,421

Net occupancy and equipment expense
8,180

 
8,159

 
7,864

 
7,947

 
7,807

Technology and related costs
3,583

 
3,420

 
3,421

 
3,431

 
3,362

Marketing
3,682

 
4,666

 
3,578

 
3,687

 
3,752

Professional services
3,679

 
2,585

 
2,310

 
3,471

 
2,626

Outsourced servicing costs
1,786

 
2,034

 
1,680

 
1,814

 
1,736

Net foreclosed property expenses
1,080

 
585

 
1,328

 
1,456

 
1,631

Postage, telephone, and delivery
857

 
899

 
862

 
809

 
839

Insurance
3,667

 
3,450

 
3,211

 
3,455

 
3,077

Loan and collection expense
2,324

 
2,210

 
2,268

 
2,037

 
2,099

Other expenses
6,318

 
3,869

 
4,262

 
8,172

 
4,486

Total non-interest expense
85,175

 
81,897

 
83,145

 
83,025

 
77,836

Income before income taxes
72,626

 
73,668

 
66,718

 
60,157

 
65,701

Income tax provision
27,358

 
27,246

 
25,234

 
22,934

 
25,174

Net income available to common stockholders
$
45,268

 
$
46,422

 
$
41,484

 
$
37,223

 
$
40,527

Per Common Share Data
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.58

 
$
0.59

 
$
0.53

 
$
0.48

 
$
0.52

Diluted earnings per share
$
0.57

 
$
0.58

 
$
0.52

 
$
0.47

 
$
0.51

Cash dividends declared
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

Weighted-average common shares outstanding
78,144

 
77,942

 
77,407

 
77,173

 
77,110

Weighted-average diluted common shares outstanding
79,401

 
79,158

 
78,512

 
78,122

 
77,934




7


Consolidated Balance Sheets
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
9/30/15
 
6/30/15
 
3/31/15
 
12/31/14
 
9/30/14
 
Unaudited
 
Unaudited
 
Unaudited
 
Audited
 
Unaudited
Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
145,477

 
$
185,983

 
$
158,431

 
$
132,211

 
$
181,248

Federal funds sold and interest-bearing deposits in banks
231,600

 
192,531

 
799,953

 
292,341

 
416,071

Loans held-for-sale
76,225

 
54,263

 
89,461

 
115,161

 
57,748

Securities available-for-sale, at fair value
1,703,926

 
1,698,233

 
1,631,237

 
1,645,344

 
1,541,754

Securities held-to-maturity, at amortized cost
1,293,433

 
1,199,120

 
1,159,853

 
1,129,285

 
1,072,002

Federal Home Loan Bank ("FHLB") stock
30,740

 
25,854

 
28,556

 
28,666

 
28,666

Loans – excluding covered assets, net of unearned fees
13,079,314

 
12,543,281

 
12,170,484

 
11,892,219

 
11,547,587

Allowance for loan losses
(162,868
)
 
(157,051
)
 
(156,610
)
 
(152,498
)
 
(150,135
)
Loans, net of allowance for loan losses and unearned fees
12,916,446

 
12,386,230

 
12,013,874

 
11,739,721

 
11,397,452

Covered assets
28,559

 
30,529

 
32,191

 
34,132

 
65,482

Allowance for covered loan losses
(6,337
)
 
(6,332
)
 
(6,021
)
 
(5,191
)
 
(4,485
)
Covered assets, net of allowance for covered loan losses
22,222

 
24,197

 
26,170

 
28,941

 
60,997

Other real estate owned, excluding covered assets
12,760

 
15,084

 
15,625

 
17,416

 
17,293

Premises, furniture, and equipment, net
38,265

 
37,672

 
38,544

 
39,143

 
39,611

Accrued interest receivable
43,064

 
43,442

 
41,202

 
40,531

 
39,701

Investment in bank owned life insurance
56,292

 
55,926

 
55,561

 
55,207

 
54,849

Goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Other intangible assets
4,008

 
4,586

 
5,230

 
5,885

 
6,627

Derivative assets
59,978

 
47,442

 
56,607

 
43,062

 
34,896

Other assets
166,128

 
161,291

 
147,003

 
196,427

 
147,512

Total assets
$
16,894,605

 
$
16,225,895

 
$
16,361,348

 
$
15,603,382

 
$
15,190,468

Liabilities
 
 
 
 
 
 
 
 
 
Demand deposits:
 
 
 
 
 
 
 
 
 
Noninterest-bearing
$
4,068,816

 
$
3,702,377

 
$
3,936,181

 
$
3,516,695

 
$
3,342,862

Interest-bearing
1,264,201

 
1,304,270

 
1,498,810

 
1,907,320

 
1,433,429

Savings deposits and money market accounts
6,249,485

 
5,992,288

 
6,156,331

 
5,171,025

 
5,368,866

Time deposits
2,315,237

 
2,390,001

 
2,510,406

 
2,494,928

 
2,704,047

Total deposits
13,897,739

 
13,388,936

 
14,101,728

 
13,089,968

 
12,849,204

Deposits held-for-sale
—

 
—

 
—

 
122,216

 
128,508

Short-term borrowings
514,121

 
434,695

 
258,788

 
432,385

 
6,563

Long-term debt
694,788

 
694,788

 
344,788

 
344,788

 
656,793

Accrued interest payable
6,509

 
7,543

 
7,004

 
6,948

 
6,987

Derivative liabilities
21,967

 
24,696

 
26,967

 
26,767

 
27,976

Other liabilities
111,482

 
90,441

 
82,644

 
98,631

 
79,128

Total liabilities
15,246,606

 
14,641,099

 
14,821,919

 
14,121,703

 
13,755,159

Equity
 
 
 
 
 
 
 
 
 
Common stock:
 
 
 
 
 
 
 
 
 
Voting
78,197

 
78,047

 
77,968

 
77,211

 
76,858

Nonvoting
—

 
—

 
—

 
—

 
285

Treasury stock
(63
)
 
(29
)
 
(5,560
)
 
(53
)
 
(6
)
Additional paid-in capital
1,060,274

 
1,051,778

 
1,047,227

 
1,034,048

 
1,028,813

Retained earnings
480,342

 
435,872

 
390,247

 
349,556

 
313,123

Accumulated other comprehensive income, net of tax
29,249

 
19,128

 
29,547

 
20,917

 
16,236

Total equity
1,647,999

 
1,584,796

 
1,539,429

 
1,481,679

 
1,435,309

Total liabilities and equity
$
16,894,605

 
$
16,225,895

 
$
16,361,348

 
$
15,603,382

 
$
15,190,468



8


Selected Financial Data
 
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
3Q15
 
2Q15
 
1Q15
 
4Q14
 
3Q14
 
Selected Statement of Income Data:
 
 
 
 
 
 
 
 
 
 
Net interest income
$
131,209

 
$
124,622

 
$
121,993

 
$
116,876

 
$
116,758

 
Net revenue (1)(2)
$
163,134

 
$
158,717

 
$
156,453

 
$
148,180

 
$
148,238

 
Operating profit (1)(2)
$
77,959

 
$
76,820

 
$
73,308

 
$
65,155

 
$
70,402

 
Provision for loan and covered loan losses
$
4,197

 
$
2,116

 
$
5,646

 
$
4,120

 
$
3,890

 
Income before income taxes
$
72,626

 
$
73,668

 
$
66,718

 
$
60,157

 
$
65,701

 
Net income available to common stockholders
$
45,268

 
$
46,422

 
$
41,484

 
$
37,223

 
$
40,527

 
Per Common Share Data:
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.58

 
$
0.59

 
$
0.53

 
$
0.48

 
$
0.52

 
Diluted earnings per share
$
0.57

 
$
0.58

 
$
0.52

 
$
0.47

 
$
0.51

 
Dividends declared
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
Book value (period end) (1)
$
20.90

 
$
20.13

 
$
19.61

 
$
18.95

 
$
18.37

 
Tangible book value (period end) (1)(2)
$
19.65

 
$
18.88

 
$
18.35

 
$
17.67

 
$
17.08

 
Market value (period end)
$
38.33

 
$
39.82

 
$
35.17

 
$
33.40

 
$
29.91

 
Book value multiple (period end)
1.83

x
1.98

x
1.79

x
1.76

x
1.63

x
Share Data:
 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
78,144

 
77,942

 
77,407

 
77,173

 
77,110

 
Weighted-average diluted common shares outstanding
79,401

 
79,158

 
78,512

 
78,122

 
77,934

 
Common shares issued (period end)
78,865

 
78,718

 
78,654

 
78,180

 
78,121

 
Common shares outstanding (period end)
78,863

 
78,717

 
78,494

 
78,178

 
78,121

 
Performance Ratio:
 
 
 
 
 
 
 
 
 
 
Return on average common equity
11.05
%
 
11.85
%
 
11.05
%
 
10.03
%
 
11.27
%
 
Return on average assets
1.09
%
 
1.15
%
 
1.07
%
 
0.95
%
 
1.09
%
 
Return on average tangible common equity (1)(2)
11.85
%
 
12.75
%
 
11.94
%
 
10.89
%
 
12.27
%
 
Net interest margin (1)(2)
3.23
%
 
3.17
%
 
3.21
%
 
3.07
%
 
3.23
%
 
Fee revenue as a percent of total revenue (1)
18.88
%
 
20.97
%
 
21.28
%
 
20.66
%
 
20.80
%
 
Non-interest income to average assets
0.74
%
 
0.82
%
 
0.86
%
 
0.78
%
 
0.83
%
 
Non-interest expense to average assets
2.04
%
 
2.03
%
 
2.14
%
 
2.12
%
 
2.09
%
 
Net overhead ratio (1)
1.30
%
 
1.21
%
 
1.27
%
 
1.35
%
 
1.27
%
 
Efficiency ratio (1)(2)
52.21
%
 
51.60
%
 
53.14
%
 
56.03
%
 
52.51
%
 
Balance Sheet Ratios:
 
 
 
 
 
 
 
 
 
 
Loans to deposits (period end) (3)
94.11
%
 
93.68
%
 
86.30
%
 
90.85
%
 
89.87
%
 
Average interest-earning assets to average interest-bearing liabilities
149.67
%
 
144.67
%
 
144.69
%
 
145.10
%
 
145.51
%
 
Capital Ratios (period end):
 
 
 
 
 
 
 
 
 
 
Total risk-based capital (1)
12.28
%
 
12.41
%
 
12.29
%
 
12.51
%
 
13.18
%
 
Tier 1 risk-based capital (1)
10.39
%
 
10.49
%
 
10.34
%
 
10.49
%
 
11.12
%
 
Tier 1 leverage ratio (1)
10.35
%
 
10.24
%
 
10.16
%
 
9.96
%
 
10.70
%
 
Common equity Tier 1 (1)(4)
9.35
%
 
9.41
%
 
9.23
%
 
9.33
%
 
9.38
%
 
Tangible common equity to tangible assets (1)(2)
9.23
%
 
9.22
%
 
8.86
%
 
8.91
%
 
8.84
%
 
Total equity to total assets
9.75
%
 
9.77
%
 
9.41
%
 
9.50
%
 
9.45
%
 
(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 periods 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)
 
 
 
 
 
 
 
 
 
 
3Q15
 
2Q15
 
1Q15
 
4Q14
 
3Q14
Additional Selected Information:
 
 
 
 
 
 
 
 
 
(Increase) decrease credit valuation adjustment on capital markets derivatives (1)
$
(1,227
)
 
$
616

 
$
(805
)
 
$
(216
)
 
$
486

Salaries and employee benefits:
 
 
 
 
 
 
 
 
 
Salaries and wages
$
28,143

 
$
27,461

 
$
27,002

 
$
26,521

 
$
26,178

Share-based costs
4,509

 
4,316

 
5,143

 
4,118

 
3,872

Incentive compensation and commissions
13,308

 
13,091

 
11,062

 
12,053

 
12,294

Payroll taxes, insurance and retirement costs
4,059

 
5,152

 
9,154

 
4,054

 
4,077

Total salaries and employee benefits
$
50,019

 
$
50,020

 
$
52,361

 
$
46,746

 
$
46,421

Loan and collection expense:
 
 
 
 
 
 
 
 
 
Loan origination and servicing expense
$
1,522

 
$
1,607

 
$
1,626

 
$
1,528

 
$
1,528

Loan remediation expense
802

 
603

 
642

 
509

 
571

Total loan and collection expense
$
2,324

 
$
2,210

 
$
2,268

 
$
2,037

 
$
2,099

Assets under management and administration (AUMA):
 
 
 
 
 
 
 
 
 
Personal managed
$
1,839,829

 
$
1,892,973

 
$
1,897,644

 
$
1,786,633

 
$
1,796,901

Corporate and institutional managed
1,800,522

 
1,883,166

 
1,826,215

 
1,347,299

 
1,364,624

Total managed assets
3,640,351

 
3,776,139

 
3,723,859

 
3,133,932

 
3,161,525

Custody assets
3,519,364

 
3,682,388

 
3,604,333

 
3,511,996

 
3,319,188

Total AUMA
$
7,159,715

 
$
7,458,527

 
$
7,328,192

 
$
6,645,928

 
$
6,480,713

Basic and Diluted Earnings per Common Share
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
3Q15
 
2Q15
 
1Q15
 
4Q14
 
3Q14
Basic earnings per common share
 
 
 
 
 
 
 
 
 
Net income
$
45,268

 
$
46,422

 
$
41,484

 
$
37,223

 
$
40,527

Net income allocated to participating stockholders (2)
(354
)
 
(366
)
 
(463
)
 
(470
)
 
(515
)
Net income allocated to common stockholders
$
44,914

 
$
46,056

 
$
41,021

 
$
36,753

 
$
40,012

Weighted-average common shares outstanding
78,144

 
77,942

 
77,407

 
77,173

 
77,110

Basic earnings per common share
$
0.58

 
$
0.59

 
$
0.53

 
$
0.48

 
$
0.52

Diluted earnings per common share
 
 
 
 
 
 
 
 
 
Diluted earnings applicable to common stockholders (3)
$
44,922

 
$
46,059

 
$
41,028

 
$
36,758

 
$
40,017

Weighted-average diluted common shares outstanding:
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
78,144

 
77,942

 
77,407

 
77,173

 
77,110

Dilutive effect of stock awards
1,257

 
1,216

 
1,105

 
949

 
824

Weighted-average diluted common shares outstanding
79,401

 
79,158

 
78,512

 
78,122

 
77,934

Diluted earnings per common share
$
0.57

 
$
0.58

 
$
0.52

 
$
0.47

 
$
0.51

(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 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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9/30/15
 
% of Total
 
6/30/15
 
% of Total
 
3/31/15
 
% of Total
 
12/31/14
 
% of Total
 
9/30/14
 
% of Total
 
Unaudited
 
 
 
Unaudited
 
 
 
Unaudited
 
 
 
Audited
 
 
 
Unaudited
 
 
Commercial and industrial
$
6,654,268

 
51
%
 
$
6,397,736

 
51
%
 
$
6,213,029

 
51
%
 
$
5,996,070

 
50
%
 
$
5,932,562

 
51
%
Commercial - owner-occupied CRE
2,017,733

 
16
%
 
2,048,489

 
16
%
 
1,977,601

 
16
%
 
1,892,564

 
16
%
 
1,843,199

 
16
%
Total commercial
8,672,001

 
67
%
 
8,446,225

 
67
%
 
8,190,630

 
67
%
 
7,888,634

 
66
%
 
7,775,761

 
67
%
Commercial real estate
2,545,143

 
19
%
 
2,432,608

 
19
%
 
2,411,359

 
20
%
 
2,323,616

 
20
%
 
2,233,018

 
19
%
Commercial real estate - multi-family
704,195

 
5
%
 
561,924

 
5
%
 
492,695

 
4
%
 
593,103

 
5
%
 
546,641

 
5
%
Total commercial real estate
3,249,338

 
24
%
 
2,994,532

 
24
%
 
2,904,054

 
24
%
 
2,916,719

 
25
%
 
2,779,659

 
24
%
Construction
412,688

 
3
%
 
371,096

 
3
%
 
357,258

 
3
%
 
381,102

 
3
%
 
307,066

 
3
%
Residential real estate
439,005

 
3
%
 
415,826

 
3
%
 
376,741

 
3
%
 
361,565

 
3
%
 
343,573

 
3
%
Home equity
133,122

 
1
%
 
137,461

 
1
%
 
138,734

 
1
%
 
142,177

 
1
%
 
141,159

 
1
%
Personal
173,160

 
2
%
 
178,141

 
2
%
 
203,067

 
2
%
 
202,022

 
2
%
 
200,369

 
2
%
Total loans
$
13,079,314

 
100
%
 
$
12,543,281

 
100
%
 
$
12,170,484

 
100
%
 
$
11,892,219

 
100
%
 
$
11,547,587

 
100
%
Total new loans to new clients (2)
$
399,209

 
 
 
$
344,356

 
 
 
$
385,777

 
 
 
$
451,896

 
 
 
$
421,326

 
 
(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)
 
 
 
 
 
September 30, 2015
 
June 30, 2015
 
December 31, 2014
 
Amount
 
% of Total
 
Amount
 
% of Total
 
Amount
 
% of Total
Healthcare
$
1,808,455

 
21
%
 
$
1,938,339

 
23
%
 
$
1,787,092

 
23
%
Manufacturing
1,877,842

 
22
%
 
1,835,288

 
22
%
 
1,746,328

 
22
%
Finance and insurance
1,162,536

 
14
%
 
873,846

 
10
%
 
779,146

 
10
%
Wholesale trade
669,580

 
8
%
 
690,011

 
8
%
 
685,247

 
9
%
Real estate, rental and leasing
553,032

 
6
%
 
569,449

 
7
%
 
549,467

 
7
%
Administrative, support, waste management and remediation services
502,759

 
6
%
 
522,696

 
6
%
 
505,939

 
6
%
Professional, scientific and technical services
552,313

 
6
%
 
519,084

 
6
%
 
447,483

 
6
%
Architecture, engineering and construction
281,918

 
3
%
 
287,209

 
4
%
 
288,527

 
4
%
Retail
286,593

 
3
%
 
269,041

 
3
%
 
277,393

 
3
%
All other (1)
976,973

 
11
%
 
941,262

 
11
%
 
822,012

 
10
%
Total commercial (2)
$
8,672,001

 
100
%
 
$
8,446,225

 
100
%
 
$
7,888,634

 
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 September 30, 2015 and June 30, 2015, and $1.9 billion at December 31, 2014.

Commercial Real Estate and Construction Loan Portfolio by Collateral Type
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2015
 
June 30, 2015
 
December 31, 2014
 
Amount
 
% of Total
 
Amount
 
% of Total
 
Amount
 
% of Total
Commercial Real Estate
 
 
 
 
 
 
 
 
 
 
 
Retail
$
735,868

 
23
%
 
$
699,758

 
23
%
 
$
608,102

 
21
%
Multi-family
704,195

 
22
%
 
561,924

 
19
%
 
593,103

 
20
%
Office
503,343

 
15
%
 
517,519

 
17
%
 
543,657

 
19
%
Healthcare
383,929

 
12
%
 
304,834

 
10
%
 
361,476

 
12
%
Industrial/warehouse
311,745

 
9
%
 
295,531

 
10
%
 
264,976

 
9
%
Land
242,801

 
7
%
 
239,704

 
8
%
 
199,497

 
7
%
Residential 1-4 family
81,444

 
3
%
 
82,277

 
3
%
 
76,995

 
3
%
Mixed use/other
286,013

 
9
%
 
292,985

 
10
%
 
268,913

 
9
%
Total commercial real estate
$
3,249,338

 
100
%
 
$
2,994,532

 
100
%
 
$
2,916,719

 
100
%
Construction
 
 
 
 
 
 
 
 
 
 
 
Multi-family
$
115,516

 
28
%
 
$
119,812

 
32
%
 
113,206

 
30
%
Retail
85,607

 
21
%
 
79,784

 
21
%
 
100,086

 
26
%
Industrial/warehouse
32,585

 
8
%
 
49,809

 
13
%
 
43,779

 
11
%
Residential 1-4 family
30,527

 
7
%
 
32,087

 
9
%
 
32,419

 
9
%
Healthcare
35,262

 
9
%
 
27,624

 
8
%
 
22,382

 
6
%
Office
54,770

 
13
%
 
24,653

 
7
%
 
14,447

 
4
%
Mixed use/other
58,421

 
14
%
 
37,327

 
10
%
 
54,783

 
14
%
Total construction
$
412,688

 
100
%
 
$
371,096

 
100
%
 
$
381,102

 
100
%


12


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

Nonperforming loans to total loans
0.34
 %
 
0.45
%
 
0.58
%
 
0.57
%
 
0.64
%
Nonperforming loans to total assets
0.26
 %
 
0.35
%
 
0.43
%
 
0.43
%
 
0.48
%
Nonperforming assets to total assets
0.34
 %
 
0.44
%
 
0.53
%
 
0.54
%
 
0.60
%
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
Total loans
1.25
 %
 
1.25
%
 
1.29
%
 
1.28
%
 
1.30
%
Nonperforming loans
370
 %
 
278
%
 
221
%
 
226
%
 
204
%
Nonperforming assets
 
 
 
 
 
 
 
 
 
Loans past due 90 days and accruing
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Nonaccrual loans
43,982

 
56,574

 
71,018

 
67,544

 
73,429

OREO
12,760

 
15,084

 
15,625

 
17,416

 
17,293

Total nonperforming assets
$
56,742

 
$
71,658

 
$
86,643

 
$
84,960

 
$
90,722

Restructured loans accruing interest
$
25,697

 
$
36,686

 
$
22,368

 
$
22,745

 
$
22,136

Loans past due and still accruing
 
 
 
 
 
 
 
 
 
30-59 days
$
2,236

 
$
2,151

 
$
6,673

 
$
7,696

 
$
711

60-89 days
4,184

 
672

 
2,544

 
4,120

 
2,746

Total loans past due and still accruing
$
6,420

 
$
2,823

 
$
9,217

 
$
11,816

 
$
3,457

Special mention loans
$
146,827

 
$
132,441

 
$
102,651

 
$
100,989

 
$
76,611

Potential problem loans
$
127,950

 
$
137,757

 
$
107,038

 
$
87,442

 
$
119,770

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming Loans Rollforward
 
 
 
 
 
 
 
 
 
Beginning balance
$
56,574

 
$
71,018

 
$
67,544

 
$
73,429

 
$
76,589

Additions:
 
 
 
 
 
 
 
 
 
New nonaccrual loans
1,127

 
6,884

 
16,279

 
6,052

 
16,767

Reductions:
 
 
 
 
 
 
 
 
 
Return to performing status
(998
)
 
—

 
(97
)
 
(439
)
 
—

Paydowns and payoffs, net of advances
(8,807
)
 
(15,800
)
 
(4,841
)
 
(457
)
 
(16,371
)
Net sales
(1,990
)
 
(317
)
 
(2,407
)
 
(1,800
)
 
(1,053
)
Transfer to OREO
(954
)
 
(1,996
)
 
(2,152
)
 
(6,177
)
 
(776
)
Charge-offs
(970
)
 
(3,215
)
 
(3,308
)
 
(3,064
)
 
(1,727
)
Total reductions
(13,719
)
 
(21,328
)
 
(12,805
)
 
(11,937
)
 
(19,927
)
Balance at end of period
$
43,982

 
$
56,574

 
$
71,018

 
$
67,544

 
$
73,429

(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
September 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
139,622

 
1.6
%
 
 
$
116,345

 
1.3
%
 
 
$
18,370

 
0.2
%
 
 
$
8,672,001

Commercial real estate
77

 
*

 
 
2,687

 
0.1
%
 
 
12,041

 
0.4
%
 
 
3,249,338

Construction
—

 
—
%
 
 
—

 
—
%
 
 
—

 
—
%
 
 
412,688

Residential real estate
6,029

 
1.4
%
 
 
151

 
*

 
 
4,272

 
1.0
%
 
 
439,005

Home equity
487

 
0.4
%
 
 
2,696

 
2.0
%
 
 
9,273

 
7.0
%
 
 
133,122

Personal
612

 
0.4
%
 
 
6,071

 
3.5
%
 
 
26

 
*

 
 
173,160

Total
$
146,827

 
1.1
%
 
 
$
127,950

 
1.0
%
 
 
$
43,982

 
0.3
%
 
 
$
13,079,314

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


Reserve for Unfunded Commitments (2)
 
 
 
 
 
 
 
 
 
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
3Q15
 
2Q15
 
1Q15
 
4Q14
 
3Q14
Balance at beginning of period
$
13,157

 
$
12,650

 
$
12,274

 
$
9,844

 
$
9,363

Provision for unfunded commitments
2,048

 
507

 
376

 
2,514

 
481

Recovery (charge-off) of unfunded commitments
4

 
—

 
—

 
(84
)
 
—

Balance at end of period
$
15,209

 
$
13,157

 
$
12,650

 
$
12,274

 
$
9,844

Unfunded commitments, excluding covered assets, at period end
$
6,310,701

 
$
6,135,242

 
$
6,229,242

 
$
6,041,301

 
$
5,365,042

(1) 
Refer to Glossary of Terms for definition.
(2) 
Unfunded commitments include commitments to extend credit, standby letters of credit and commercial letters of credit. Unfunded commitments related to covered assets are excluded as they are covered under a loss sharing agreement with the FDIC.
*
Less than 0.1%.



14


Allowance for Loan Losses (excluding covered assets (1))
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
3Q15
 
2Q15
 
1Q15
 
4Q14
 
3Q14
Change in allowance for loan losses:
 
 
 
 
 
 
 
 
 
Balance at beginning of period
$
157,051

 
$
156,610

 
$
152,498

 
$
150,135

 
$
146,491

Loans charged-off:
 
 
 
 
 
 
 
 
 
Commercial
(661
)
 
(2,921
)
 
(2,202
)
 
(1,732
)
 
(227
)
Commercial real estate
(175
)
 
(98
)
 
(887
)
 
(417
)
 
(1,133
)
Construction
—

 
—

 
—

 
1

 
(7
)
Residential real estate
(97
)
 
(194
)
 
(37
)
 
(847
)
 
(252
)
Home equity
(85
)
 
—

 
(371
)
 
(130
)
 
(172
)
Personal
(6
)
 
(28
)
 
(10
)
 
(7
)
 
(8
)
Total charge-offs
(1,024
)
 
(3,241
)
 
(3,507
)
 
(3,132
)
 
(1,799
)
Recoveries on loans previously charged-off:
 
 
 
 
 
 
 
 
 
Commercial
2,115

 
984

 
511

 
720

 
1,145

Commercial real estate
134

 
272

 
598

 
270

 
356

Construction
10

 
164

 
19

 
57

 
6

Residential real estate
198

 
47

 
57

 
231

 
9

Home equity
50

 
73

 
70

 
73

 
67

Personal
131

 
86

 
873

 
167

 
128

Total recoveries
2,638

 
1,626

 
2,128

 
1,518

 
1,711

Net recoveries (charge-offs)
1,614

 
(1,615
)
 
(1,379
)
 
(1,614
)
 
(88
)
Provisions charged to operating expenses
4,203

 
2,056

 
5,491

 
3,977

 
3,732

Balance at end of period
$
162,868

 
$
157,051

 
$
156,610

 
$
152,498

 
$
150,135

Allocation of allowance for loan losses:
 
 
 
 
 
 
 
 
 
General allocated reserve:
 
 
 
 
 
 
 
 
 
Commercial
$
115,543

 
$
110,255

 
$
98,230

 
$
91,975

 
$
89,904

Commercial real estate
24,836

 
26,108

 
29,405

 
29,397

 
27,164

Construction
4,397

 
3,816

 
4,026

 
4,290

 
4,029

Residential real estate
3,772

 
4,651

 
4,793

 
4,581

 
4,515

Home equity
2,713

 
2,750

 
2,296

 
3,069

 
3,025

Personal
2,535

 
2,003

 
2,224

 
2,559

 
2,517

Total allocated
153,796

 
149,583

 
140,974

 
135,871

 
131,154

Specific reserve
9,072

 
7,468

 
15,636

 
16,627

 
18,981

Total
$
162,868

 
$
157,051

 
$
156,610

 
$
152,498

 
$
150,135

Allocation of reserve by a percent of total allowance for loan losses:
 
 
 
 
 
 
 
 
 
General allocated reserve:
 
 
 
 
 
 
 
 
 
Commercial
70
%
 
70
%
 
63
%
 
60
%
 
59
%
Commercial real estate
15
%
 
17
%
 
19
%
 
19
%
 
18
%
Construction
3
%
 
2
%
 
3
%
 
3
%
 
3
%
Residential real estate
2
%
 
3
%
 
3
%
 
3
%
 
3
%
Home equity
2
%
 
2
%
 
1
%
 
2
%
 
2
%
Personal
2
%
 
1
%
 
1
%
 
2
%
 
2
%
Total allocated
94
%
 
95
%
 
90
%
 
89
%
 
87
%
Specific reserve
6
%
 
5
%
 
10
%
 
11
%
 
13
%
Total
100
%
 
100
%
 
100
%
 
100
%
 
100
%
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
Total loans
1.25
%
 
1.25
%
 
1.29
%
 
1.28
%
 
1.30
%
Nonperforming loans
370
%
 
278
%
 
221
%
 
226
%
 
204
%
(1) 
Refer to Glossary of Terms for definition.

15


Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9/30/15
 
% of Total
 
6/30/15
 
% of Total
 
3/31/15
 
% of Total
 
12/31/14
 
% of Total
 
9/30/14
 
% of Total
 
Unaudited
 
 
 
Unaudited
 
 
 
Unaudited
 
 
 
Audited
 
 
 
Unaudited
 
 
Noninterest-bearing demand deposits
$
4,068,816

 
29
%
 
$
3,702,377

 
28
%
 
$
3,936,181

 
28
%
 
$
3,516,695

 
27
%
 
$
3,342,862

 
26
%
Interest-bearing demand deposits
1,264,201

 
9
%
 
1,304,270

 
10
%
 
1,498,810

 
11
%
 
1,907,320

 
15
%
 
1,433,429

 
11
%
Savings deposits
356,694

 
3
%
 
329,258

 
2
%
 
331,796

 
2
%
 
319,100

 
2
%
 
310,850

 
2
%
Money market accounts
5,892,791

 
42
%
 
5,663,030

 
42
%
 
5,824,535

 
41
%
 
4,851,925

 
37
%
 
5,058,016

 
39
%
Time deposits
2,315,237

 
17
%
 
2,390,001

 
18
%
 
2,510,406

 
18
%
 
2,494,928

 
19
%
 
2,704,047

 
22
%
Total deposits
$
13,897,739

 
100
%
 
$
13,388,936

 
100
%
 
$
14,101,728

 
100
%
 
$
13,089,968

 
100
%
 
$
12,849,204

 
100
%
Total new deposits from new clients (1)
$
356,399

 
 
 
$
251,361

 
 
 
$
302,849

 
 
 
$
330,000

 
 
 
$
269,176

 
 
(1) 
Amounts are unaudited.

Brokered Deposit Composition
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
9/30/15
 
6/30/15
 
3/31/15
 
12/31/14
 
9/30/14
 
Noninterest-bearing demand deposits
$
371,675

 
$
231,193

 
$
264,493

 
$
107,564

 
$
104,957

 
Interest-bearing demand deposits
266,133

 
304,876

 
323,094

 
641,466

 
415,953

 
Money market accounts
1,903,413

 
1,926,246

 
1,891,590

 
1,448,663

 
1,545,778

 
Time deposits:
 
 
 
 
 
 
 
 
 
 
Traditional
576,859

 
624,137

 
673,944

 
564,116

 
663,393

 
CDARS (1)
228,436

 
348,073

 
458,192

 
521,995

 
597,449

 
Other
87,463

 
90,438

 
87,732

 
82,714

 
101,408

 
Total time deposits
892,758

 
1,062,648

 
1,219,868

 
1,168,825

 
1,362,250

 
Total brokered deposits
$
3,433,979

 
$
3,524,963

 
$
3,699,045

 
$
3,366,518

 
$
3,428,938

 
Brokered deposits as a % of total deposits
25
%
 
26
%
 
26
%
 
26
%
 
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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
September 30, 2015
 
 
June 30, 2015
 
 
September 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
$
270,278

 
$
168

 
0.24
%
 
 
$
393,761

 
$
245

 
0.25
%
 
 
$
230,829

 
$
142

 
0.24
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
2,440,779

 
13,599

 
2.23
%
 
 
2,396,003

 
13,541

 
2.26
%
 
 
2,272,066

 
13,370

 
2.35
%
Tax-exempt (2)
424,003

 
3,313

 
3.13
%
 
 
383,514

 
3,017

 
3.15
%
 
 
291,172

 
2,340

 
3.22
%
Total securities
2,864,782

 
16,912

 
2.36
%
 
 
2,779,517

 
16,558

 
2.38
%
 
 
2,563,238

 
15,710

 
2.45
%
FHLB stock
25,907

 
69

 
1.04
%
 
 
26,415

 
63

 
0.94
%
 
 
28,666

 
48

 
0.65
%
Loans, excluding covered assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
8,561,067

 
92,139

 
4.21
%
 
 
8,426,836

 
88,317

 
4.15
%
 
 
7,751,264

 
85,516

 
4.32
%
Commercial real estate
3,108,679

 
29,039

 
3.66
%
 
 
2,916,389

 
27,019

 
3.67
%
 
 
2,556,825

 
23,447

 
3.59
%
Construction
442,331

 
4,493

 
3.97
%
 
 
392,676

 
4,036

 
4.07
%
 
 
380,876

 
3,856

 
3.96
%
Residential
446,783

 
3,959

 
3.54
%
 
 
415,942

 
3,541

 
3.40
%
 
 
362,297

 
3,240

 
3.58
%
Personal and home equity
301,449

 
2,237

 
2.94
%
 
 
320,661

 
2,457

 
3.07
%
 
 
340,163

 
2,520

 
2.94
%
Total loans, excluding covered assets (3)
12,860,309

 
131,867

 
4.02
%
 
 
12,472,504

 
125,370

 
3.98
%
 
 
11,391,425

 
118,579

 
4.08
%
Covered assets (4)
29,322

 
239

 
3.23
%
 
 
30,939

 
277

 
3.61
%
 
 
69,762

 
632

 
3.56
%
Total interest-earning assets (2)
16,050,598

 
$
149,255

 
3.65
%
 
 
15,703,136

 
$
142,513

 
3.60
%
 
 
14,283,920

 
$
135,111

 
3.72
%
Cash and due from banks
172,742

 
 
 
 
 
 
173,915

 
 
 
 
 
 
153,849

 
 
 
 
Allowance for loan and covered loan losses
(167,173
)
 
 
 
 
 
 
(164,844
)
 
 
 
 
 
 
(156,632
)
 
 
 
 
Other assets
486,158

 
 
 
 
 
 
496,560

 
 
 
 
 
 
465,897

 
 
 
 
Total assets
$
16,542,325

 
 
 
 
 
 
$
16,208,767

 
 
 
 
 
 
$
14,747,034

 
 
 
 
Liabilities and Equity :
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
1,411,434

 
$
937

 
0.26
%
 
 
$
1,428,497

 
$
966

 
0.27
%
 
 
$
1,191,688

 
$
918

 
0.31
%
Savings deposits
342,568

 
370

 
0.43
%
 
 
330,092

 
322

 
0.39
%
 
 
286,807

 
215

 
0.30
%
Money market accounts
5,829,378

 
4,749

 
0.32
%
 
 
5,879,152

 
4,631

 
0.32
%
 
 
4,934,436

 
3,958

 
0.32
%
Time deposits
2,302,743

 
5,782

 
1.00
%
 
 
2,437,037

 
5,730

 
0.94
%
 
 
2,706,474

 
5,723

 
0.84
%
Total interest-bearing deposits
9,886,123

 
11,838

 
0.48
%
 
 
10,074,778

 
11,649

 
0.46
%
 
 
9,119,405

 
10,814

 
0.47
%
Short-term and secured borrowings
143,436

 
24

 
0.07
%
 
 
327,226

 
234

 
0.28
%
 
 
66,439

 
158

 
0.93
%
Long-term debt
694,788

 
5,048

 
2.89
%
 
 
452,480

 
4,972

 
4.39
%
 
 
630,706

 
6,570

 
4.16
%
Total interest-bearing liabilities
10,724,347

 
16,910

 
0.63
%
 
 
10,854,484

 
16,855

 
0.62
%
 
 
9,816,550

 
17,542

 
0.71
%
Noninterest-bearing demand deposits
4,039,259

 
 
 
 
 
 
3,637,010

 
 
 
 
 
 
3,381,787

 
 
 
 
Other liabilities
152,737

 
 
 
 
 
 
145,377

 
 
 
 
 
 
122,424

 
 
 
 
Equity
1,625,982

 
 
 
 
 
 
1,571,896

 
 
 
 
 
 
1,426,273

 
 
 
 
Total liabilities and equity
$
16,542,325

 
 
 
 
 
 
$
16,208,767

 
 
 
 
 
 
$
14,747,034

 
 
 
 
Net interest spread (2)(5)
 
 
 
 
3.02
%
 
 
 
 
 
 
2.98
%
 
 
 
 
 
 
3.01
%
Contribution of noninterest-bearing sources of funds
 
 
 
 
0.21
%
 
 
 
 
 
 
0.19
%
 
 
 
 
 
 
0.22
%
Net interest income/margin (2)(5)
 
 
132,345

 
3.23
%
 
 
 
 
125,658

 
3.17
%
 
 
 
 
117,569

 
3.23
%
Less: tax equivalent adjustment
 
 
1,136

 
 
 
 
 
 
1,036

 
 
 
 
 
 
811

 
 
Net interest income, as reported
 
 
$
131,209

 
 
 
 
 
 
$
124,622

 
 
 
 
 
 
$
116,758

 
 
(1) 
Interest income included $8.0 million, $6.3 million, and $7.7 million in loan fees for the three months ended September 30, 2015, June 30, 2015 and September 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 $49.3 million, $63.7 million, and $76.9 million for the three months ended September 30, 2015, June 30, 2015, and September 30, 2014, respectively. Interest foregone on impaired loans was estimated to be approximately $481,000, $613,000 and $763,000 for the three months ended September 30, 2015, June 30, 2015, and September 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)
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 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
$
361,076

 
$
674

 
0.25
%
 
$
229,749

 
$
423

 
0.24
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
Taxable
2,400,121

 
40,696

 
2.26
%
 
2,267,303

 
40,250

 
2.37
%
Tax-exempt (2)
385,403

 
9,080

 
3.14
%
 
275,257

 
6,845

 
3.32
%
Total securities
2,785,524

 
49,776

 
2.38
%
 
2,542,560

 
47,095

 
2.47
%
FHLB stock
26,985

 
180

 
0.88
%
 
29,190

 
140

 
0.63
%
Loans, excluding covered assets:
 
 
 
 
 
 
 
 
 
 
 
Commercial
8,363,221

 
265,448

 
4.19
%
 
7,476,056

 
245,097

 
4.32
%
Commercial real estate
2,971,554

 
83,643

 
3.71
%
 
2,505,395

 
67,588

 
3.56
%
Construction
408,077

 
12,327

 
3.98
%
 
358,370

 
10,545

 
3.88
%
Residential
416,499

 
10,987

 
3.52
%
 
353,999

 
9,819

 
3.70
%
Personal and home equity
321,250

 
7,176

 
2.99
%
 
352,512

 
8,020

 
3.04
%
Total loans, excluding covered assets (3)
12,480,601

 
379,581

 
4.01
%
 
11,046,332

 
341,069

 
4.07
%
Covered assets (4)
31,008

 
874

 
3.77
%
 
83,188

 
2,037

 
3.24
%
Total interest-earning assets (2)
15,685,194

 
$
431,085

 
3.62
%
 
13,931,019

 
$
390,764

 
3.71
%
Cash and due from banks
172,667

 
 
 
 
 
149,605

 
 
 
 
Allowance for loan and covered loan losses
(164,213
)
 
 
 
 
 
(162,056
)
 
 
 
 
Other assets
489,772

 
 
 
 
 
478,740

 
 
 
 
Total assets
$
16,183,420

 
 
 
 
 
$
14,397,308

 
 
 
 
Liabilities and Equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
1,454,272

 
$
2,909

 
0.27
%
 
$
1,227,924

 
$
2,702

 
0.29
%
Savings deposits
332,820

 
1,004

 
0.40
%
 
285,678

 
605

 
0.28
%
Money market accounts
5,749,974

 
13,678

 
0.32
%
 
4,848,405

 
11,629

 
0.32
%
Time deposits
2,432,329

 
17,151

 
0.94
%
 
2,615,772

 
15,563

 
0.80
%
Total interest-bearing deposits
9,969,395

 
34,742

 
0.47
%
 
8,977,779

 
30,499

 
0.45
%
Short-term and secured borrowings
248,679

 
455

 
0.24
%
 
51,782

 
495

 
1.26
%
Long-term debt
498,634

 
14,948

 
3.99
%
 
628,749

 
19,554

 
4.13
%
Total interest-bearing liabilities
10,716,708

 
50,145

 
0.62
%
 
9,658,310

 
50,548

 
0.70
%
Noninterest-bearing demand deposits
3,744,778

 
 
 
 
 
3,229,517

 
 
 
 
Other liabilities
148,128

 
 
 
 
 
129,059

 
 
 
 
Equity
1,573,806

 
 
 
 
 
1,380,422

 
 
 
 
Total liabilities and equity
$
16,183,420

 
 
 
 
 
$
14,397,308

 
 
 
 
Net interest spread (2)(5)
 
 
 
 
3.00
%
 
 
 
 
 
3.01
%
Contribution of noninterest-bearing sources of funds
 
 
 
 
0.20
%
 
 
 
 
 
0.21
%
Net interest income/margin (2)(5)
 
 
380,940

 
3.20
%
 
 
 
340,216

 
3.22
%
Less: tax-equivalent adjustment
 
 
3,116

 
 
 
 
 
2,355

 
 
Net interest income, as reported
 
 
$
377,824

 
 
 
 
 
$
337,861

 
 
(1) 
Interest income included $21.7 million and $20.4 million in loan fees for the nine months ended September 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 $60.2 million and $85.6 million for the nine months ended September 30, 2015 and 2014, respectively. Interest foregone on impaired loans was estimated to be approximately $1.8 million and $2.5 million for the nine months ended September 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 was 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.
 
Three Months Ended
 
2015
 
2014
 
September 30
 
June 30
 
March 31
 
December 31
 
September 30
Taxable-equivalent net interest income
 
 
 
 
 
 
 
 
 
U.S. GAAP net interest income
$
131,209

 
$
124,622

 
$
121,993

 
$
116,876

 
$
116,758

Taxable-equivalent adjustment
1,136

 
1,036

 
944

 
878

 
811

Taxable-equivalent net interest income (a)
$
132,345

 
$
125,658

 
$
122,937

 
$
117,754

 
$
117,569

 
 
 
 
 
 
 
 
 
 
Average Earning Assets (b)
$
16,050,598

 
$
15,703,136

 
$
15,293,533

 
$
15,022,425

 
$
14,283,920

 
 
 
 
 
 
 
 
 
 
Net Interest Margin ((a) annualized) / (b)
3.23
%
 
3.17
%
 
3.21
%
 
3.07
%
 
3.23
%
 
 
 
 
 
 
 
 
 
 
Net Revenue
 
 
 
 
 
 
 
 
 
Taxable-equivalent net interest income
$
132,345

 
$
125,658

 
$
122,937

 
$
117,754

 
$
117,569

U.S. GAAP non-interest income
30,789

 
33,059

 
33,516

 
30,426

 
30,669

Net revenue (c)
$
163,134

 
$
158,717

 
$
156,453

 
$
148,180

 
$
148,238

 
 
 
 
 
 
 
 
 
 
Operating Profit
 
 
 
 
 
 
 
 
 
U.S. GAAP income before income taxes
$
72,626

 
$
73,668

 
$
66,718

 
$
60,157

 
$
65,701

Provision for loan and covered loan losses
4,197

 
2,116

 
5,646

 
4,120

 
3,890

Taxable-equivalent adjustment
1,136

 
1,036

 
944

 
878

 
811

Operating profit
$
77,959

 
$
76,820

 
$
73,308

 
$
65,155

 
$
70,402

 
 
 
 
 
 
 
 
 
 
Efficiency Ratio
 
 
 
 
 
 
 
 
 
U.S. GAAP non-interest expense (d)
$
85,175

 
$
81,897

 
$
83,145

 
$
83,025

 
$
77,836

Net revenue
$
163,134

 
$
158,717

 
$
156,453

 
$
148,180

 
$
148,238

Efficiency ratio (d) / (c)
52.21
%
 
51.60
%
 
53.14
%
 
56.03
%
 
52.51
%
 
 
 
 
 
 
 
 
 
 
Adjusted Net Income
 
 
 
 
 
 
 
 
 
U.S. GAAP net income available to common stockholders
$
45,268

 
$
46,422

 
$
41,484

 
$
37,223

 
$
40,527

Amortization of intangibles, net of tax
353

 
398

 
397

 
449

 
458

Adjusted net income (e)
$
45,621

 
$
46,820

 
$
41,881

 
$
37,672

 
$
40,985

 
 
 
 
 
 
 
 
 
 
Average Tangible Common Equity
 
 
 
 
 
 
 
 
 
U.S. GAAP average total equity
$
1,625,982

 
$
1,571,896

 
$
1,522,401

 
$
1,472,111

 
$
1,426,273

Less: average goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Less: average other intangibles
4,291

 
4,897

 
5,551

 
6,243

 
6,996

Average tangible common equity (f)
$
1,527,650

 
$
1,472,958

 
$
1,422,809

 
$
1,371,827

 
$
1,325,236

 
 
 
 
 
 
 
 
 
 
Return on average tangible common equity ((e) annualized) / (f)
11.85
%
 
12.75
%
 
11.94
%
 
10.89
%
 
12.27
%


20


Non-U.S. GAAP Financial Measures (continued)
(Dollars in thousands)
(Unaudited)
 
Nine Months Ended September 30,
 
2015
 
2014
Taxable-equivalent net interest income
 
 
 
U.S. GAAP net interest income
$
377,824

 
$
337,861

Taxable-equivalent adjustment
3,116

 
2,355

Taxable-equivalent net interest income (a)
$
380,940

 
$
340,216

Average Earning Assets (b)
$
15,685,194

 
$
13,931,019

Net Interest Margin ((a) annualized) / (b)
3.20
%
 
3.22
%
Net Revenue
 
 
 
Taxable-equivalent net interest income
$
380,940

 
$
340,216

U.S. GAAP non-interest income
97,364

 
87,164

Net revenue (c)
$
478,304

 
$
427,380

Operating Profit
 
 
 
U.S. GAAP income before income taxes
$
213,012

 
$
188,050

Provision for loan and covered loan losses
11,959

 
7,924

Taxable-equivalent adjustment
3,116

 
2,355

Operating profit
$
228,087

 
$
198,329

Efficiency Ratio
 
 
 
U.S. GAAP non-interest expense (d)
$
250,217

 
$
229,051

Net revenue
$
478,304

 
$
427,380

Efficiency ratio (d) / (c)
52.31
%
 
53.59
%
Adjusted Net Income
 
 
 
U.S. GAAP net income available to common stockholders
$
133,174

 
$
115,856

Amortization of intangibles, net of tax
1,148

 
1,374

Adjusted net income (e)
$
134,322

 
$
117,230

Average Tangible Common Equity
 
 
 
U.S. GAAP average total equity
$
1,573,806

 
$
1,380,422

Less: average goodwill
94,041

 
94,041

Less: average other intangibles
4,908

 
7,745

Average tangible common equity (f)
$
1,474,857

 
$
1,278,636

Return on average tangible common equity ((e) annualized) / (f)
12.18
%
 
12.29
%


21


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

 
$
1,435,309

Trust preferred securities
 
 
 
 
 
 
169,788

 
244,793

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

 
16,236

Less: goodwill
 
 
 
 
 
 
94,041

 
94,041

Less: other intangibles
 
 
 
 
 
 
5,885

 
6,627

Less: disallowed servicing rights
 
 
 
 
 
 
44

 
42

Tier 1 risk-based capital
 
 
 
 


 
1,530,580

 
1,563,156

Less: trust preferred securities
 
 
 
 
 
 
169,788

 
244,793

Common equity Tier 1 (g)
 
 
 
 


 
$
1,360,792

 
$
1,318,363

 
 
 
 
 
 
 
 
 
 
 

 
2015
 
2014
 
September 30
 
June 30
 
March 31
 
December 31
 
September 30
Tangible Common Equity
 
 
 
 
 
 
 
 
 
U.S. GAAP total equity
$
1,647,999

 
$
1,584,796

 
$
1,539,429

 
$
1,481,679

 
$
1,435,309

Less: goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Less: other intangibles
4,008

 
4,586

 
5,230

 
5,885

 
6,627

Tangible common equity (h)
$
1,549,950

 
$
1,486,169

 
$
1,440,158

 
$
1,381,753

 
$
1,334,641

 
 
 
 
 
 
 
 
 
 
Tangible Assets
 
 
 
 
 
 
 
 
 
U.S. GAAP total assets
$
16,894,605

 
$
16,225,895

 
$
16,361,348

 
$
15,603,382

 
$
15,190,468

Less: goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Less: other intangibles
4,008

 
4,586

 
5,230

 
5,885

 
6,627

Tangible assets (i)
$
16,796,556

 
$
16,127,268

 
$
16,262,077

 
$
15,503,456

 
$
15,089,800

 
 
 
 
 
 
 
 
 
 
Risk-weighted Assets (j)
$
16,362,816

 
$
15,706,019

 
$
15,395,081

 
$
14,592,655

 
$
14,053,735

 
 
 
 
 
 
 
 
 
 
Period-end Common Shares Outstanding (k)
78,863

 
78,717

 
78,494

 
78,178

 
78,121

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

 
—

 
—

 
9.33
%
 
9.38
%
Tangible common equity to risk-weighted assets (h) / (j)
9.47
%
 
9.46
%
 
9.35
%
 
9.47
%
 
9.50
%
Tangible common equity to tangible assets (h) / (i)
9.23
%
 
9.22
%
 
8.86
%
 
8.91
%
 
8.84
%
Tangible book value (h) / (k)
$
19.65

 
$
18.88

 
$
18.35

 
$
17.67

 
$
17.08

(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
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Privatebancorp - Privatebancorp Capital Trust IV - 10% Trust Preferred (NASDAQ:PVTBP)
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