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): January 21, 2016
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 January 21, 2016, PrivateBancorp, Inc. (the “Company”) announced its earnings results for the fourth quarter and year ended December 31, 2015. Attached as Exhibit 99.1 is a copy of the press release relating to the Company’s earnings results, which is incorporated herein by reference. Certain supplemental information relating to non-GAAP financial measures is reported in the attached press release in Exhibit 99.1.

ITEM 9.01
FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits

Exhibit
 
Description
 
 
 
99.1
 
Fourth Quarter 2015 Earnings Release dated January 21, 2016 (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: January 21, 2016
 
 
 
By:
 
/s/ Kevin M. Killips
 
 
 
 
 
 
Kevin M. Killips
 
 
 
 
 
 
Chief Financial Officer
INDEX TO EXHIBITS

Exhibit
 
Description
 
 
 
99.1
 
Fourth Quarter 2015 Earnings Release dated January 21, 2016 (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 Fourth Quarter and Full Year 2015 Earnings
Earnings per share up 38 percent for the quarter from prior year quarter
and up 20 percent for the year from full year 2014

CHICAGO, January 21, 2016 - PrivateBancorp, Inc. (NASDAQ: PVTB) today reported net income of $52.1 million, or $0.65 per diluted share, for the fourth quarter 2015, compared to $37.2 million, or $0.47 per diluted share, for the fourth quarter 2014, and $45.3 million, or $0.57 per diluted share, for the third quarter 2015. For the year ended December 31, 2015, the Company had net income of $185.3 million, or $2.32 per diluted share, compared to $153.1 million, or $1.94 per diluted share, for the year ended December 31, 2014.

“Our 2015 results reflect the benefit of our focus on consistent execution and building long-term profitable client relationships,” said Larry D. Richman, President and Chief Executive Officer, PrivateBancorp, Inc. “We grew loans, deposits and fee income as we built new client relationships and expanded services to existing clients. In fact, in the fourth quarter we generated almost $500 million in new loans to new clients and increased noninterest bearing deposits by more than $285 million. Our ability to generate earning assets and grow revenue throughout the year, and to manage expenses, led to a 20 percent increase in operating profit. Net income was up 21 percent compared to a year ago, our seventh consecutive year of improving our bottom line results and strengthening our balance sheet.

“As we look into 2016, we believe we are well positioned to continue to add new client relationships and serve existing clients as they carry out their business objectives. We are confident in the business we have built and proud of the value we deliver to our clients, our communities and our shareholders.”

Fourth Quarter 2015 Highlights

•
Total loans grew to $13.3 billion, up $1.4 billion from a year ago and $187.2 million from September 30, 2015.

•
Total deposits were $14.3 billion, increasing $1.3 billion from a year ago and $447.9 million from September 30, 2015. Noninterest-bearing demand deposits grew $839.0 million from a year ago and $286.9 million from September 30, 2015, representing 30 percent of total deposits at December 31, 2015, compared to 27 percent a year ago.

•
Net revenue of $170.4 million for the fourth quarter 2015 benefited from growth in average loans, increasing 15 percent from the fourth quarter 2014 and 4 percent from the third quarter 2015. Average loans grew $1.4 billion, or 13 percent, from the fourth quarter 2014 and $397.2 million, or 3 percent, from the third quarter 2015.

1


•
Net interest margin was 3.25 percent for the fourth quarter 2015, up from 3.07 percent for the fourth quarter 2014 and 3.23 percent for the third quarter 2015. Fourth quarter 2015 net interest margin benefited from fees recognized on early loan repayments. An improvement in short-term rates during the quarter also contributed modestly to net interest margin.

•
The provision for loan and covered loan losses was $2.8 million for the fourth quarter 2015, compared to $4.1 million for the fourth quarter 2014 and $4.2 million for the third quarter 2015.

•
Return on average assets was 1.21 percent and return on average common equity was 12.3 percent for the fourth quarter 2015. For the full year 2015, return on average assets was 1.13 percent, up from 1.04 percent for 2014, and return on average common equity was 11.6 percent, up from 10.9 percent for the prior year.

Operating Performance

Net interest income of $136.6 million in the fourth quarter 2015 increased 17 percent from the fourth quarter 2014 and 4 percent from the third quarter 2015, reflecting growth in average loans of 13 percent from the fourth quarter 2014 and 3 percent from the third quarter 2015. The fourth quarter 2014 also included a charge of $2.4 million related to the trust preferred securities redemption.

Net interest margin was 3.25 percent in the fourth quarter 2015, up 18 basis points from the fourth quarter 2014, reflecting higher loan yields and lower borrowing costs on a comparative basis. Compared to the third quarter 2015, net interest margin increased two basis points. Loan yields were two basis points higher compared to the prior quarter, benefiting from significant loan fees related to early loan repayments and a slight rise in short-term rates during the quarter. Deposits costs increased by one basis point, but the impact on margin was offset by an increase in average noninterest-bearing funds compared to the third quarter. The December interest rate moves will be more impactful in the first quarter 2016 as variable loans reprice.

Noninterest income was $32.6 million in the fourth quarter 2015, compared to $30.4 million for the fourth quarter 2014 and $30.8 million for the third quarter 2015. Treasury management fees were $7.9 million in the fourth quarter 2015, up 8 percent from the fourth quarter 2014, reflecting success in cross-sell activities. Syndication fees were $4.8 million in the fourth quarter 2015, up from $3.9 million in the fourth quarter 2014 and $4.4 million in the third quarter 2015. Syndication fees vary from quarter to quarter depending on the level and mix of loans originated and distributed.

Capital markets revenue of $6.3 million in the fourth quarter 2015 reflected a positive credit valuation adjustment (CVA) of $1.0 million. Excluding the CVA impact for all periods, capital markets revenue was $5.3 million in the fourth quarter 2015, down $623,000 from the fourth quarter 2014 and up $1.0 million from the third quarter 2015. Compared to the third quarter 2015, the fourth quarter benefited from additional interest rate derivative transactions, and foreign exchange revenues grew as spreads increased.

Assets under management and administration (AUMA) were $7.3 billion as of December 31, 2015, compared to $6.6 billion a year ago and $7.2 billion at September 30, 2015, benefiting from the continued focus on cross-selling asset management services to commercial clients and their owners and executives and ongoing client development. Asset management revenue was $4.4 million in the fourth quarter 2015, compared to $4.2 million for the fourth quarter 2014 and $4.5 million for the third quarter 2015.


2

Expenses

Noninterest expense was $83.0 million for the fourth quarter 2015, comparable to the fourth quarter 2014 and down $2.2 million from the third quarter 2015. The efficiency ratio was 48.7 percent for the fourth quarter 2015, compared to 56.0 percent for the fourth quarter 2014 and 52.2 percent for the third quarter 2015. Other expenses declined $6.6 million from the fourth quarter 2014 and $4.8 million from the third quarter 2015, primarily reflecting a release of reserves for unfunded commitments in the fourth quarter 2015 attributable to a problem credit provided for in the third quarter.

Higher incentive compensation accruals primarily drove an increase in salaries and benefits expense of 13 percent from the fourth quarter 2014 and 5 percent from the third quarter 2015. Compared to the prior year quarter, the quarter also reflected annual salary adjustments made during the first quarter and additional hires made over the last year.

Credit Quality

The allowance for loan losses was $160.7 million, or 1.21 percent of total loans, at December 31, 2015, compared to $162.9 million, or 1.25 percent of total loans, at September 30, 2015. The provision for loan losses was $2.9 million for the fourth quarter 2015, declining $1.1 million from the fourth quarter 2014 and $1.3 million from the third quarter 2015. Factors contributing to the reduction in the overall loan loss reserve and quarterly provision expense from the third quarter 2015 include commercial loan repayments and growth in commercial real estate loans; portfolio movement, including the migration of several commercial loans to improved risk rating positions; and a lower specific reserve requirement related to impaired loans. Annualized net charge-offs to average loans were 0.15 percent for the fourth quarter 2015, compared to 0.05 percent for the fourth quarter 2014 and annualized net recoveries to average loans of 0.05 percent for the third quarter 2015.

Nonperforming assets were 0.35 percent of total assets at December 31, 2015, compared to 0.34 percent at September 30, 2015. At December 31, 2015, nonperforming loans were $53.7 million, increasing $9.8 million from September 30, 2015. OREO declined $5.5 million to $7.3 million at December 31, 2015, largely reflecting properties sold during the quarter.

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 $17.3 billion at December 31, 2015, compared to $15.6 billion at December 31, 2014, and $16.9 billion at September 30, 2015. Total loans of $13.3 billion increased $1.4 billion from December 31, 2014, driven primarily by growth of $751.3 million in commercial and industrial loans and $435.8 million in commercial real estate loans. Compared to September 30, 2015, total loans increased $187.2 million, reflecting growth in commercial real estate and construction loans of $212.7 million and a reduction of commercial loans of $36.4 million from September 30, 2015, impacted by payoffs resulting from several clients completing sales of their businesses prior to year end. At year end, commercial loans represented 65 percent of total loans, and commercial real estate and construction loans represented 29 percent of total loans, relatively consistent with the prior comparative periods.

Total liabilities were $15.6 billion at December 31, 2015, compared to $14.1 billion at December 31, 2014, and $15.2 billion compared to September 30, 2015. Total deposits were $14.3 billion at December 31, 2015, increasing 10 percent from December 31, 2014, and 3 percent from September 30, 2015, reflecting growth in noninterest-bearing demand deposit balances offset by lower traditional brokered time deposits. Average deposits grew 9 percent from the fourth quarter 2014 and 4 percent from the third quarter 2015. Noninterest-bearing demand deposits represented 30 percent of total deposits at December 31, 2015, compared to 27 percent a year ago and 29 percent at September 30, 2015. At December 31, 2015, the loan-to-deposit ratio was 92 percent, compared to 91 percent as of December 31, 2014, and 94 percent as of September 30, 2015.

3


Capital

As of December 31, 2015, the total risk-based capital ratio was 12.37 percent, the Tier 1 risk-based capital ratio was 10.56 percent, and the leverage ratio was 10.35 percent. The common equity Tier 1 ratio was 9.54 percent and the tangible common equity ratio was 9.33 percent at the end of the year end 2015.

Quarterly Conference Call and Webcast Presentation

PrivateBancorp will host a conference call Thursday, January 21, 2016, 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 #8500868. A live webcast of the call can be accessed at investor.theprivatebank.com. A rebroadcast will be available at that website and by telephone by calling (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (International) and entering passcode #8500868 beginning approximately two hours after the call until midnight ET February 4, 2016.

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 December 31, 2015, the Company had 35 offices in 12 states and $17.3 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:

•
uncertainty regarding recent geopolitical developments and the U.S. and global economic outlook that may continue to 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;
•
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;
•
unanticipated changes in monetary policies of the Federal Reserve or significant changes in the pace of, or market expectations for, future interest rate increases;
•
an inability to attract and maintain 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 September 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.

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)
 
 
 
 
 
 
 
 
Quarter Ended
December 31,
 
Year Ended
December 31,
 
2015
 
2014
 
2015
 
2014
 
Unaudited
 
Unaudited
 
Unaudited
 
Audited
Interest Income
 
 
 
 
 
 
 
Loans, including fees
$
137,006

 
$
120,649

 
$
517,461

 
$
463,755

Federal funds sold and interest-bearing deposits in banks
229

 
347

 
903

 
770

Securities:
 
 
 
 
 
 
 
Taxable
14,587

 
13,250

 
55,283

 
53,500

Exempt from Federal income taxes
2,306

 
1,683

 
8,270

 
6,173

Other interest income
115

 
49

 
295

 
189

Total interest income
154,243

 
135,978

 
582,212

 
524,387

Interest Expense
 
 
 
 
 
 
 
Interest-bearing demand deposits
936

 
1,026

 
3,845

 
3,728

Savings deposits and money market accounts
5,487

 
4,623

 
20,169

 
16,857

Time deposits
5,941

 
5,803

 
23,092

 
21,366

Short-term borrowings
201

 
143

 
656

 
638

Long-term debt
5,087

 
7,507

 
20,035

 
27,061

Total interest expense
17,652

 
19,102

 
67,797

 
69,650

Net interest income
136,591

 
116,876

 
514,415

 
454,737

Provision for loan and covered loan losses
2,831

 
4,120

 
14,790

 
12,044

Net interest income after provision for loan and covered loan losses
133,760

 
112,756

 
499,625

 
442,693

Non-interest Income
 
 
 
 
 
 
 
Asset management
4,392

 
4,241

 
17,958

 
17,268

Mortgage banking
2,812

 
3,083

 
14,079

 
10,245

Capital markets products
6,341

 
5,705

 
18,530

 
18,047

Treasury management
7,878

 
7,262

 
30,636

 
27,472

Loan, letter of credit and commitment fees
4,958

 
4,901

 
20,648

 
19,311

Syndication fees
4,844

 
3,943

 
17,205

 
19,514

Deposit service charges and fees and other income
1,394

 
1,291

 
10,134

 
5,203

Net securities gains
29

 
—

 
822

 
530

Total non-interest income
32,648

 
30,426

 
130,012

 
117,590

Non-interest Expense
 
 
 
 
 
 
 
Salaries and employee benefits
52,619

 
46,746

 
205,019

 
182,192

Net occupancy and equipment expense
8,505

 
7,947

 
32,708

 
31,258

Technology and related costs
3,843

 
3,431

 
14,267

 
13,281

Marketing
4,196

 
3,687

 
16,122

 
13,441

Professional services
2,746

 
3,471

 
11,320

 
11,761

Outsourced servicing costs
1,994

 
1,814

 
7,494

 
6,864

Net foreclosed property expenses
1,217

 
1,456

 
4,210

 
8,681

Postage, telephone, and delivery
964

 
809

 
3,582

 
3,400

Insurance
3,644

 
3,455

 
13,972

 
12,451

Loan and collection expense
1,754

 
2,037

 
8,556

 
6,765

Other expenses
1,538

 
8,172

 
15,987

 
21,982

Total non-interest expense
83,020

 
83,025

 
333,237

 
312,076

Income before income taxes
83,388

 
60,157

 
296,400

 
248,207

Income tax provision
31,251

 
22,934

 
111,089

 
95,128

Net income available to common stockholders
$
52,137

 
$
37,223

 
$
185,311

 
$
153,079

Per Common Share Data
 
 
 
 
 
 
 
Basic earnings per share
$
0.66

 
$
0.48

 
$
2.36

 
$
1.96

Diluted earnings per share
$
0.65

 
$
0.47

 
$
2.32

 
$
1.94

Cash dividends declared
$
0.01

 
$
0.01

 
$
0.04

 
$
0.04

Weighted-average common shares outstanding
78,366

 
77,173

 
77,968

 
77,007

Weighted-average diluted common shares outstanding
79,738

 
78,122

 
79,206

 
77,822




6


Consolidated Income Statements
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
4Q15
 
3Q15
 
2Q15
 
1Q15
 
4Q14
Interest Income
 
 
 
 
 
 
 
 
 
Loans, including fees
$
137,006

 
$
132,106

 
$
125,647

 
$
122,702

 
$
120,649

Federal funds sold and interest-bearing deposits in banks
229

 
168

 
245

 
261

 
347

Securities:
 
 
 
 
 
 
 
 
 
Taxable
14,587

 
13,599

 
13,541

 
13,556

 
13,250

Exempt from Federal income taxes
2,306

 
2,177

 
1,981

 
1,806

 
1,683

Other interest income
115

 
69

 
63

 
48

 
49

Total interest income
154,243

 
148,119

 
141,477

 
138,373

 
135,978

Interest Expense
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
936

 
937

 
966

 
1,006

 
1,026

Savings deposits and money market accounts
5,487

 
5,119

 
4,953

 
4,610

 
4,623

Time deposits
5,941

 
5,782

 
5,730

 
5,639

 
5,803

Short-term borrowings
201

 
24

 
234

 
197

 
143

Long-term debt
5,087

 
5,048

 
4,972

 
4,928

 
7,507

Total interest expense
17,652

 
16,910

 
16,855

 
16,380

 
19,102

Net interest income
136,591

 
131,209

 
124,622

 
121,993

 
116,876

Provision for loan and covered loan losses
2,831

 
4,197

 
2,116

 
5,646

 
4,120

Net interest income after provision for loan and covered loan losses
133,760

 
127,012

 
122,506

 
116,347

 
112,756

Non-interest Income
 
 
 
 
 
 
 
 
 
Asset management
4,392

 
4,462

 
4,741

 
4,363

 
4,241

Mortgage banking
2,812

 
3,340

 
4,152

 
3,775

 
3,083

Capital markets products
6,341

 
3,098

 
4,919

 
4,172

 
5,705

Treasury management
7,878

 
8,010

 
7,421

 
7,327

 
7,262

Loan, letter of credit and commitment fees
4,958

 
5,670

 
4,914

 
5,106

 
4,901

Syndication fees
4,844

 
4,364

 
5,375

 
2,622

 
3,943

Deposit service charges and fees and other income
1,394

 
1,585

 
1,538

 
5,617

 
1,291

Net securities gains (losses)
29

 
260

 
(1
)
 
534

 
—

Total non-interest income
32,648

 
30,789

 
33,059

 
33,516

 
30,426

Non-interest Expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
52,619

 
50,019

 
50,020

 
52,361

 
46,746

Net occupancy and equipment expense
8,505

 
8,180

 
8,159

 
7,864

 
7,947

Technology and related costs
3,843

 
3,583

 
3,420

 
3,421

 
3,431

Marketing
4,196

 
3,682

 
4,666

 
3,578

 
3,687

Professional services
2,746

 
3,679

 
2,585

 
2,310

 
3,471

Outsourced servicing costs
1,994

 
1,786

 
2,034

 
1,680

 
1,814

Net foreclosed property expenses
1,217

 
1,080

 
585

 
1,328

 
1,456

Postage, telephone, and delivery
964

 
857

 
899

 
862

 
809

Insurance
3,644

 
3,667

 
3,450

 
3,211

 
3,455

Loan and collection expense
1,754

 
2,324

 
2,210

 
2,268

 
2,037

Other expenses
1,538

 
6,318

 
3,869

 
4,262

 
8,172

Total non-interest expense
83,020

 
85,175

 
81,897

 
83,145

 
83,025

Income before income taxes
83,388

 
72,626

 
73,668

 
66,718

 
60,157

Income tax provision
31,251

 
27,358

 
27,246

 
25,234

 
22,934

Net income available to common stockholders
$
52,137

 
$
45,268

 
$
46,422

 
$
41,484

 
$
37,223

Per Common Share Data
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.66

 
$
0.58

 
$
0.59

 
$
0.53

 
$
0.48

Diluted earnings per share
$
0.65

 
$
0.57

 
$
0.58

 
$
0.52

 
$
0.47

Cash dividends declared
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

Weighted-average common shares outstanding
78,366

 
78,144

 
77,942

 
77,407

 
77,123

Weighted-average diluted common shares outstanding
79,738

 
79,401

 
79,158

 
78,512

 
78,122




7


Consolidated Balance Sheets
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
12/31/15
 
9/30/15
 
6/30/15
 
3/31/15
 
12/31/14
 
Unaudited
 
Unaudited
 
Unaudited
 
Unaudited
 
Audited
Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
145,147

 
$
145,477

 
$
185,983

 
$
158,431

 
$
132,211

Federal funds sold and interest-bearing deposits in banks
238,511

 
231,600

 
192,531

 
799,953

 
292,341

Loans held-for-sale
108,798

 
76,225

 
54,263

 
89,461

 
115,161

Securities available-for-sale, at fair value
1,765,366

 
1,703,926

 
1,698,233

 
1,631,237

 
1,645,344

Securities held-to-maturity, at amortized cost
1,355,283

 
1,293,433

 
1,199,120

 
1,159,853

 
1,129,285

Federal Home Loan Bank ("FHLB") stock
26,613

 
30,740

 
25,854

 
28,556

 
28,666

Loans – excluding covered assets, net of unearned fees
13,266,475

 
13,079,314

 
12,543,281

 
12,170,484

 
11,892,219

Allowance for loan losses
(160,736
)
 
(162,868
)
 
(157,051
)
 
(156,610
)
 
(152,498
)
Loans, net of allowance for loan losses and unearned fees
13,105,739

 
12,916,446

 
12,386,230

 
12,013,874

 
11,739,721

Covered assets
26,954

 
28,559

 
30,529

 
32,191

 
34,132

Allowance for covered loan losses
(5,712
)
 
(6,337
)
 
(6,332
)
 
(6,021
)
 
(5,191
)
Covered assets, net of allowance for covered loan losses
21,242

 
22,222

 
24,197

 
26,170

 
28,941

Other real estate owned, excluding covered assets
7,273

 
12,760

 
15,084

 
15,625

 
17,416

Premises, furniture, and equipment, net
42,405

 
38,265

 
37,672

 
38,544

 
39,143

Accrued interest receivable
45,482

 
43,064

 
43,442

 
41,202

 
40,531

Investment in bank owned life insurance
56,653

 
56,292

 
55,926

 
55,561

 
55,207

Goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Other intangible assets
3,430

 
4,008

 
4,586

 
5,230

 
5,885

Derivative assets
40,615

 
59,978

 
47,442

 
56,607

 
43,062

Other assets
202,823

 
166,128

 
161,291

 
147,003

 
196,427

Total assets
$
17,259,421

 
$
16,894,605

 
$
16,225,895

 
$
16,361,348

 
$
15,603,382

Liabilities
 
 
 
 
 
 
 
 
 
Demand deposits:
 
 
 
 
 
 
 
 
 
Noninterest-bearing
$
4,355,700

 
$
4,068,816

 
$
3,702,377

 
$
3,936,181

 
$
3,516,695

Interest-bearing
1,503,372

 
1,264,201

 
1,304,270

 
1,498,810

 
1,907,320

Savings deposits and money market accounts
6,296,443

 
6,249,485

 
5,992,288

 
6,156,331

 
5,171,025

Time deposits
2,190,077

 
2,315,237

 
2,390,001

 
2,510,406

 
2,494,928

Total deposits
14,345,592

 
13,897,739

 
13,388,936

 
14,101,728

 
13,089,968

Deposits held-for-sale
—

 
—

 
—

 
—

 
122,216

Short-term borrowings
372,467

 
514,121

 
434,695

 
258,788

 
432,385

Long-term debt
694,788

 
694,788

 
694,788

 
344,788

 
344,788

Accrued interest payable
7,080

 
6,509

 
7,543

 
7,004

 
6,948

Derivative liabilities
18,229

 
21,967

 
24,696

 
26,967

 
26,767

Other liabilities
122,314

 
111,482

 
90,441

 
82,644

 
98,631

Total liabilities
15,560,470

 
15,246,606

 
14,641,099

 
14,821,919

 
14,121,703

Equity
 
 
 
 
 
 
 
 
 
Common stock:
 
 
 
 
 
 
 
 
 
Voting
78,439

 
78,197

 
78,047

 
77,968

 
77,211

Treasury stock
(103
)
 
(63
)
 
(29
)
 
(5,560
)
 
(53
)
Additional paid-in capital
1,071,674

 
1,060,274

 
1,051,778

 
1,047,227

 
1,034,048

Retained earnings
531,682

 
480,342

 
435,872

 
390,247

 
349,556

Accumulated other comprehensive income, net of tax
17,259

 
29,249

 
19,128

 
29,547

 
20,917

Total equity
1,698,951

 
1,647,999

 
1,584,796

 
1,539,429

 
1,481,679

Total liabilities and equity
$
17,259,421

 
$
16,894,605

 
$
16,225,895

 
$
16,361,348

 
$
15,603,382



8


Selected Financial Data
 
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
4Q15
 
3Q15
 
2Q15
 
1Q15
 
4Q14
 
Selected Statement of Income Data:
 
 
 
 
 
 
 
 
 
 
Net interest income
$
136,591

 
$
131,209

 
$
124,622

 
$
121,993

 
$
116,876

 
Net revenue (1)(2)
$
170,445

 
$
163,134

 
$
158,717

 
$
156,453

 
$
148,180

 
Operating profit (1)(2)
$
87,425

 
$
77,959

 
$
76,820

 
$
73,308

 
$
65,155

 
Provision for loan and covered loan losses
$
2,831

 
$
4,197

 
$
2,116

 
$
5,646

 
$
4,120

 
Income before income taxes
$
83,388

 
$
72,626

 
$
73,668

 
$
66,718

 
$
60,157

 
Net income available to common stockholders
$
52,137

 
$
45,268

 
$
46,422

 
$
41,484

 
$
37,223

 
Per Common Share Data:
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.66

 
$
0.58

 
$
0.59

 
$
0.53

 
$
0.48

 
Diluted earnings per share
$
0.65

 
$
0.57

 
$
0.58

 
$
0.52

 
$
0.47

 
Dividends declared
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
Book value (period end) (1)
$
21.48

 
$
20.90

 
$
20.13

 
$
19.61

 
$
18.95

 
Tangible book value (period end) (1)(2)
$
20.25

 
$
19.65

 
$
18.88

 
$
18.35

 
$
17.67

 
Market value (period end)
$
41.02

 
$
38.33

 
$
39.82

 
$
35.17

 
$
33.40

 
Book value multiple (period end)
1.91

x
1.83

x
1.98

x
1.79

x
1.76

x
Share Data:
 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
78,366

 
78,144

 
77,942

 
77,407

 
77,173

 
Weighted-average diluted common shares outstanding
79,738

 
79,401

 
79,158

 
78,512

 
78,122

 
Common shares issued (period end)
79,099

 
78,865

 
78,718

 
78,654

 
78,180

 
Common shares outstanding (period end)
79,097

 
78,863

 
78,717

 
78,494

 
78,178

 
Performance Ratio:
 
 
 
 
 
 
 
 
 
 
Return on average common equity
12.29
%
 
11.05
%
 
11.85
%
 
11.05
%
 
10.03
%
 
Return on average assets
1.21
%
 
1.09
%
 
1.15
%
 
1.07
%
 
0.95
%
 
Return on average tangible common equity (1)(2)
13.13
%
 
11.85
%
 
12.75
%
 
11.94
%
 
10.89
%
 
Net interest margin (1)(2)
3.25
%
 
3.23
%
 
3.17
%
 
3.21
%
 
3.07
%
 
Fee revenue as a percent of total revenue (1)
19.28
%
 
18.88
%
 
20.97
%
 
21.28
%
 
20.66
%
 
Non-interest income to average assets
0.75
%
 
0.74
%
 
0.82
%
 
0.86
%
 
0.78
%
 
Non-interest expense to average assets
1.92
%
 
2.04
%
 
2.03
%
 
2.14
%
 
2.12
%
 
Net overhead ratio (1)
1.16
%
 
1.30
%
 
1.21
%
 
1.27
%
 
1.35
%
 
Efficiency ratio (1)(2)
48.71
%
 
52.21
%
 
51.60
%
 
53.14
%
 
56.03
%
 
Balance Sheet Ratios:
 
 
 
 
 
 
 
 
 
 
Loans to deposits (period end) (3)
92.48
%
 
94.11
%
 
93.68
%
 
86.30
%
 
90.85
%
 
Average interest-earning assets to average interest-bearing liabilities
152.94
%
 
149.67
%
 
144.67
%
 
144.69
%
 
145.10
%
 
Capital Ratios (period end):
 
 
 
 
 
 
 
 
 
 
Total risk-based capital (1)
12.37
%
 
12.28
%
 
12.41
%
 
12.29
%
 
12.51
%
 
Tier 1 risk-based capital (1)
10.56
%
 
10.39
%
 
10.49
%
 
10.34
%
 
10.49
%
 
Tier 1 leverage ratio (1)
10.35
%
 
10.35
%
 
10.24
%
 
10.16
%
 
9.96
%
 
Common equity Tier 1 (1)(4)
9.54
%
 
9.35
%
 
9.41
%
 
9.23
%
 
9.33
%
 
Tangible common equity to tangible assets (1)(2)
9.33
%
 
9.23
%
 
9.22
%
 
8.86
%
 
8.91
%
 
Total equity to total assets
9.84
%
 
9.75
%
 
9.77
%
 
9.41
%
 
9.50
%
 
(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)
 
 
 
 
 
 
 
 
 
 
4Q15
 
3Q15
 
2Q15
 
1Q15
 
4Q14
Additional Selected Information:
 
 
 
 
 
 
 
 
 
Decrease (increase) credit valuation adjustment on capital markets derivatives (1)
$
1,043

 
$
(1,227
)
 
$
616

 
$
(805
)
 
$
(216
)
Salaries and employee benefits:
 
 
 
 
 
 
 
 
 
Salaries and wages
$
28,113

 
$
28,143

 
$
27,461

 
$
27,002

 
$
26,521

Share-based costs
4,871

 
4,509

 
4,316

 
5,143

 
4,118

Incentive compensation and commissions
14,676

 
13,308

 
13,091

 
11,062

 
12,053

Payroll taxes, insurance and retirement costs
4,959

 
4,059

 
5,152

 
9,154

 
4,054

Total salaries and employee benefits
$
52,619

 
$
50,019

 
$
50,020

 
$
52,361

 
$
46,746

Loan and collection expense:
 
 
 
 
 
 
 
 
 
Loan origination and servicing expense
$
1,445

 
$
1,522

 
$
1,607

 
$
1,626

 
$
1,528

Loan remediation expense
309

 
802

 
603

 
642

 
509

Total loan and collection expense
$
1,754

 
$
2,324

 
$
2,210

 
$
2,268

 
$
2,037

Assets under management and administration (AUMA):
 
 
 
 
 
 
 
 
 
Personal managed
$
1,872,737

 
$
1,839,829

 
$
1,892,973

 
$
1,897,644

 
$
1,786,633

Corporate and institutional managed
1,787,187

 
1,800,522

 
1,883,166

 
1,826,215

 
1,347,299

Total managed assets
3,659,924

 
3,640,351

 
3,776,139

 
3,723,859

 
3,133,932

Custody assets
3,631,149

 
3,519,364

 
3,682,388

 
3,604,333

 
3,511,996

Total AUMA
$
7,291,073

 
$
7,159,715

 
$
7,458,527

 
$
7,328,192

 
$
6,645,928

Basic and Diluted Earnings per Common Share
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
4Q15
 
3Q15
 
2Q15
 
1Q15
 
4Q14
Basic earnings per common share
 
 
 
 
 
 
 
 
 
Net income
$
52,137

 
$
45,268

 
$
46,422

 
$
41,484

 
$
37,223

Net income allocated to participating stockholders (2)
(412
)
 
(354
)
 
(366
)
 
(463
)
 
(470
)
Net income allocated to common stockholders
$
51,725

 
$
44,914

 
$
46,056

 
$
41,021

 
$
36,753

Weighted-average common shares outstanding
78,366

 
78,144

 
77,942

 
77,407

 
77,123

Basic earnings per common share
$
0.66

 
$
0.58

 
$
0.59

 
$
0.53

 
$
0.48

Diluted earnings per common share
 
 
 
 
 
 
 
 
 
Diluted earnings applicable to common stockholders (3)
$
51,729

 
$
44,922

 
$
46,059

 
$
41,028

 
$
36,758

Weighted-average diluted common shares outstanding:
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
78,366

 
78,144

 
77,942

 
77,407

 
77,173

Dilutive effect of stock awards
1,372

 
1,257

 
1,216

 
1,105

 
949

Weighted-average diluted common shares outstanding
79,738

 
79,401

 
79,158

 
78,512

 
78,122

Diluted earnings per common share
$
0.65

 
$
0.57

 
$
0.58

 
$
0.52

 
$
0.47

(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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12/31/15
 
% of Total
 
9/30/15
 
% of Total
 
6/30/15
 
% of Total
 
3/31/15
 
% of Total
 
12/31/14
 
% of Total
 
Unaudited
 
 
 
Unaudited
 
 
 
Unaudited
 
 
 
Unaudited
 
 
 
Audited
 
 
Commercial and industrial
$
6,747,389

 
51
%
 
$
6,654,268

 
51
%
 
$
6,397,736

 
51
%
 
$
6,213,029

 
51
%
 
$
5,996,070

 
50
%
Commercial - owner-occupied CRE
1,888,238

 
14
%
 
2,017,733

 
16
%
 
2,048,489

 
16
%
 
1,977,601

 
16
%
 
1,892,564

 
16
%
Total commercial
8,635,627

 
65
%
 
8,672,001

 
67
%
 
8,446,225

 
67
%
 
8,190,630

 
67
%
 
7,888,634

 
66
%
Commercial real estate
2,629,873

 
20
%
 
2,545,143

 
19
%
 
2,432,608

 
19
%
 
2,411,359

 
20
%
 
2,323,616

 
20
%
Commercial real estate - multi-family
722,637

 
5
%
 
704,195

 
5
%
 
561,924

 
5
%
 
492,695

 
4
%
 
593,103

 
5
%
Total commercial real estate
3,352,510

 
25
%
 
3,249,338

 
24
%
 
2,994,532

 
24
%
 
2,904,054

 
24
%
 
2,916,719

 
25
%
Construction
522,263

 
4
%
 
412,688

 
3
%
 
371,096

 
3
%
 
357,258

 
3
%
 
381,102

 
3
%
Residential real estate
461,412

 
4
%
 
439,005

 
3
%
 
415,826

 
3
%
 
376,741

 
3
%
 
361,565

 
3
%
Home equity
129,317

 
1
%
 
133,122

 
1
%
 
137,461

 
1
%
 
138,734

 
1
%
 
142,177

 
1
%
Personal
165,346

 
1
%
 
173,160

 
2
%
 
178,141

 
2
%
 
203,067

 
2
%
 
202,022

 
2
%
Total loans
$
13,266,475

 
100
%
 
$
13,079,314

 
100
%
 
$
12,543,281

 
100
%
 
$
12,170,484

 
100
%
 
$
11,892,219

 
100
%
Total new loans to new clients (2)
$
498,496

 
 
 
$
399,209

 
 
 
$
344,356

 
 
 
$
385,777

 
 
 
$
451,896

 
 
(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)
 
 
 
 
 
December 31, 2015
 
September 30, 2015
 
December 31, 2014
 
Amount
 
% of Total
 
Amount
 
% of Total
 
Amount
 
% of Total
Manufacturing
1,810,085

 
21
%
 
1,839,569

 
21
%
 
1,700,561

 
22
%
Healthcare
1,807,764

 
21
%
 
1,813,421

 
21
%
 
1,791,921

 
23
%
Finance and insurance
1,333,363

 
15
%
 
1,205,733

 
14
%
 
800,690

 
10
%
Wholesale trade
768,571

 
9
%
 
713,267

 
8
%
 
726,176

 
9
%
Professional, scientific and technical services
574,278

 
7
%
 
583,059

 
7
%
 
461,672

 
6
%
Real estate, rental and leasing
542,437

 
6
%
 
602,262

 
7
%
 
578,329

 
7
%
Administrative and support and waste management and remediation
481,827

 
5
%
 
463,336

 
5
%
 
480,266

 
6
%
Architecture, engineering and construction
252,351

 
3
%
 
303,510

 
4
%
 
301,172

 
4
%
Retail
228,935

 
3
%
 
258,822

 
3
%
 
251,790

 
3
%
All other (1)
836,016

 
10
%
 
889,022

 
10
%
 
796,057

 
10
%
Total commercial (2)
$
8,635,627

 
100
%
 
$
8,672,001

 
100
%
 
$
7,888,634

 
100
%
Note: Certain reclassifications have been made to prior period amounts to conform to the current period presentation.
(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 $1.9 billion at December 31, 2015, $2.0 billion at September 30, 2015, and $1.9 billion at December 31, 2014.


12


Commercial Real Estate and Construction Loan Portfolio by Collateral Type
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2015
 
September 30, 2015
 
December 31, 2014
 
Amount
 
% of Total
 
Amount
 
% of Total
 
Amount
 
% of Total
Commercial Real Estate
 
 
 
 
 
 
 
 
 
 
 
Retail
$
763,179

 
23
%
 
$
735,868

 
23
%
 
$
608,102

 
21
%
Multi-family
722,637

 
22
%
 
704,195

 
22
%
 
593,103

 
20
%
Office
572,711

 
17
%
 
503,343

 
15
%
 
543,657

 
19
%
Healthcare
335,918

 
10
%
 
383,929

 
12
%
 
361,476

 
12
%
Industrial/warehouse
319,958

 
9
%
 
311,745

 
9
%
 
264,976

 
9
%
Land
247,190

 
7
%
 
242,801

 
7
%
 
199,497

 
7
%
Residential 1-4 family
86,214

 
3
%
 
81,444

 
3
%
 
76,995

 
3
%
Mixed use/other
304,703

 
9
%
 
286,013

 
9
%
 
268,913

 
9
%
Total commercial real estate
$
3,352,510

 
100
%
 
$
3,249,338

 
100
%
 
$
2,916,719

 
100
%
Construction
 
 
 
 
 
 
 
 
 
 
 
Multi-family
$
130,020

 
25
%
 
$
115,516

 
28
%
 
113,206

 
30
%
Retail
107,327

 
21
%
 
85,607

 
21
%
 
100,086

 
26
%
Office
84,459

 
16
%
 
54,770

 
13
%
 
14,447

 
4
%
Healthcare
62,460

 
12
%
 
35,262

 
9
%
 
22,382

 
6
%
Industrial/warehouse
46,530

 
9
%
 
32,585

 
8
%
 
43,779

 
11
%
Residential 1-4 family
21,849

 
4
%
 
30,527

 
7
%
 
32,419

 
9
%
Mixed use/other
69,618

 
13
%
 
58,421

 
14
%
 
54,783

 
14
%
Total construction
$
522,263

 
100
%
 
$
412,688

 
100
%
 
$
381,102

 
100
%

13


Asset Quality (excluding covered assets (1))
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
4Q15
 
3Q15
 
2Q15
 
1Q15
 
4Q14
Credit Quality Key Ratios
 
 
 
 
 
 
 
 
 
Net charge-offs (recoveries) (annualized) to average loans
0.15
%
 
-0.05
 %
 
0.05
%
 
0.05
%
 
0.05
%
Nonperforming loans to total loans
0.41
%
 
0.34
 %
 
0.45
%
 
0.58
%
 
0.57
%
Nonperforming loans to total assets
0.31
%
 
0.26
 %
 
0.35
%
 
0.43
%
 
0.43
%
Nonperforming assets to total assets
0.35
%
 
0.34
 %
 
0.44
%
 
0.53
%
 
0.54
%
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
Total loans
1.21
%
 
1.25
 %
 
1.25
%
 
1.29
%
 
1.28
%
Nonperforming loans
299
%
 
370
 %
 
278
%
 
221
%
 
226
%
Nonperforming assets
 
 
 
 
 
 
 
 
 
Loans past due 90 days and accruing
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Nonaccrual loans
53,749

 
43,982

 
56,574

 
71,018

 
67,544

OREO
7,273

 
12,760

 
15,084

 
15,625

 
17,416

Total nonperforming assets
$
61,022

 
$
56,742

 
$
71,658

 
$
86,643

 
$
84,960

Restructured loans accruing interest
$
16,546

 
$
25,697

 
$
36,686

 
$
22,368

 
$
22,745

Loans past due and still accruing
 
 
 
 
 
 
 
 
 
30-59 days
$
7,452

 
$
2,236

 
$
2,151

 
$
6,673

 
$
7,696

60-89 days
1,615

 
4,184

 
672

 
2,544

 
4,120

Total loans past due and still accruing
$
9,067

 
$
6,420

 
$
2,823

 
$
9,217

 
$
11,816

Special mention loans
$
120,028

 
$
146,827

 
$
132,441

 
$
102,651

 
$
100,989

Potential problem loans
$
132,398

 
$
127,950

 
$
137,757

 
$
107,038

 
$
87,442

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming Loans Rollforward
 
 
 
 
 
 
 
 
 
Beginning balance
$
43,982

 
$
56,574

 
$
71,018

 
$
67,544

 
$
73,429

Additions:
 
 
 
 
 
 
 
 
 
New nonaccrual loans
19,969

 
1,127

 
6,884

 
16,279

 
6,052

Reductions:
 
 
 
 
 
 
 
 
 
Return to performing status
(614
)
 
(998
)
 
—

 
(97
)
 
(439
)
Paydowns and payoffs, net of advances
(997
)
 
(8,807
)
 
(15,800
)
 
(4,841
)
 
(457
)
Net sales
(393
)
 
(1,990
)
 
(317
)
 
(2,407
)
 
(1,800
)
Transfer to OREO
(1,141
)
 
(954
)
 
(1,996
)
 
(2,152
)
 
(6,177
)
Transfer to loans held for sale
(667
)
 
—

 
—

 
—

 
—

Charge-offs
(6,390
)
 
(970
)
 
(3,215
)
 
(3,308
)
 
(3,064
)
Total reductions
(10,202
)
 
(13,719
)
 
(21,328
)
 
(12,805
)
 
(11,937
)
Balance at end of period
$
53,749

 
$
43,982

 
$
56,574

 
$
71,018

 
$
67,544

(1) 
Refer to Glossary of Terms for definition.


14


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
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
85,217

 
1.0
%
 
 
$
124,654

 
1.4
%
 
 
$
32,794

 
0.4
%
 
 
$
8,635,627

Commercial real estate
27,580

 
0.8
%
 
 
121

 
*

 
 
8,501

 
0.3
%
 
 
3,352,510

Construction
—

 
—
%
 
 
—

 
—
%
 
 
—

 
—
%
 
 
522,263

Residential real estate
5,988

 
1.3
%
 
 
5,031

 
1.1
%
 
 
4,762

 
1.0
%
 
 
461,412

Home equity
623

 
0.5
%
 
 
2,451

 
1.9
%
 
 
7,671

 
5.9
%
 
 
129,317

Personal
620

 
0.4
%
 
 
141

 
0.1
%
 
 
21

 
*

 
 
165,346

Total
$
120,028

 
0.9
%
 
 
$
132,398

 
1.0
%
 
 
$
53,749

 
0.4
%
 
 
$
13,266,475

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
%
 
 
6,071

 
1.4
%
 
 
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
%
 
 
151

 
0.1
%
 
 
26

 
*

 
 
173,160

Total
$
146,827

 
1.1
%
 
 
$
127,950

 
1.0
%
 
 
$
43,982

 
0.3
%
 
 
$
13,079,314


Reserve for Unfunded Commitments (2)
 
 
 
 
 
 
 
 
 
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
4Q15
 
3Q15
 
2Q15
 
1Q15
 
4Q14
Balance at beginning of period
$
15,209

 
$
13,157

 
$
12,650

 
$
12,274

 
$
9,844

(Release) provision for unfunded commitments
(3,450
)
 
2,048

 
507

 
376

 
2,514

Recovery (charge-off) of unfunded commitments
—

 
4

 
—

 
—

 
(84
)
Balance at end of period
$
11,759

 
$
15,209

 
$
13,157

 
$
12,650

 
$
12,274

Unfunded commitments, excluding covered assets, at period end
$
6,606,746

 
$
6,310,701

 
$
6,135,242

 
$
6,229,242

 
$
6,041,301

(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%.



15


Allowance for Loan Losses (excluding covered assets (1))
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
4Q15
 
3Q15
 
2Q15
 
1Q15
 
4Q14
Change in allowance for loan losses:
 
 
 
 
 
 
 
 
 
Balance at beginning of period
$
162,868

 
$
157,051

 
$
156,610

 
$
152,498

 
$
150,135

Loans charged-off:
 
 
 
 
 
 
 
 
 
Commercial
(5,654
)
 
(661
)
 
(2,921
)
 
(2,202
)
 
(1,732
)
Commercial real estate
(298
)
 
(175
)
 
(98
)
 
(887
)
 
(417
)
Construction
—

 
—

 
—

 
—

 
1

Residential real estate
(166
)
 
(97
)
 
(194
)
 
(37
)
 
(847
)
Home equity
(260
)
 
(85
)
 
—

 
(371
)
 
(130
)
Personal
(15
)
 
(6
)
 
(28
)
 
(10
)
 
(7
)
Total charge-offs
(6,393
)
 
(1,024
)
 
(3,241
)
 
(3,507
)
 
(3,132
)
Recoveries on loans previously charged-off:
 
 
 
 
 
 
 
 
 
Commercial
786

 
2,115

 
984

 
511

 
720

Commercial real estate
205

 
134

 
272

 
598

 
270

Construction
11

 
10

 
164

 
19

 
57

Residential real estate
16

 
198

 
47

 
57

 
231

Home equity
314

 
50

 
73

 
70

 
73

Personal
12

 
131

 
86

 
873

 
167

Total recoveries
1,344

 
2,638

 
1,626

 
2,128

 
1,518

Net (charge-offs) recoveries
(5,049
)
 
1,614

 
(1,615
)
 
(1,379
)
 
(1,614
)
Provisions charged to operating expenses
2,917

 
4,203

 
2,056

 
5,491

 
3,977

Balance at end of period
$
160,736

 
$
162,868

 
$
157,051

 
$
156,610

 
$
152,498

Allocation of allowance for loan losses:
 
 
 
 
 
 
 
 
 
General allocated reserve:
 
 
 
 
 
 
 
 
 
Commercial
$
113,161

 
$
115,543

 
$
110,255

 
$
98,230

 
$
91,975

Commercial real estate
26,454

 
24,836

 
26,108

 
29,405

 
29,397

Construction
5,441

 
4,397

 
3,816

 
4,026

 
4,290

Residential real estate
3,700

 
3,772

 
4,651

 
4,793

 
4,581

Home equity
2,638

 
2,713

 
2,750

 
2,296

 
3,069

Personal
2,080

 
2,535

 
2,003

 
2,224

 
2,559

Total allocated
153,474

 
153,796

 
149,583

 
140,974

 
135,871

Specific reserve
7,262

 
9,072

 
7,468

 
15,636

 
16,627

Total
$
160,736

 
$
162,868

 
$
157,051

 
$
156,610

 
$
152,498

Allocation of reserve by a percent of total allowance for loan losses:
 
 
 
 
 
 
 
 
 
General allocated reserve:
 
 
 
 
 
 
 
 
 
Commercial
70
%
 
70
%
 
70
%
 
63
%
 
60
%
Commercial real estate
17
%
 
15
%
 
17
%
 
19
%
 
19
%
Construction
3
%
 
3
%
 
2
%
 
3
%
 
3
%
Residential real estate
2
%
 
2
%
 
3
%
 
3
%
 
3
%
Home equity
2
%
 
2
%
 
2
%
 
1
%
 
2
%
Personal
1
%
 
2
%
 
1
%
 
1
%
 
2
%
Total allocated
95
%
 
94
%
 
95
%
 
90
%
 
89
%
Specific reserve
5
%
 
6
%
 
5
%
 
10
%
 
11
%
Total
100
%
 
100
%
 
100
%
 
100
%
 
100
%
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
Total loans
1.21
%
 
1.25
%
 
1.25
%
 
1.29
%
 
1.28
%
Nonperforming loans
299
%
 
370
%
 
278
%
 
221
%
 
226
%
(1) 
Refer to Glossary of Terms for definition.

16


Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12/31/15
 
% of Total
 
9/30/15
 
% of Total
 
6/30/15
 
% of Total
 
3/31/15
 
% of Total
 
12/31/14
 
% of Total
 
Unaudited
 
 
 
Unaudited
 
 
 
Unaudited
 
 
 
Unaudited
 
 
 
Audited
 
 
Noninterest-bearing demand deposits
$
4,355,700

 
30
%
 
$
4,068,816

 
29
%
 
$
3,702,377

 
28
%
 
$
3,936,181

 
28
%
 
$
3,516,695

 
27
%
Interest-bearing demand deposits
1,503,372

 
11
%
 
1,264,201

 
9
%
 
1,304,270

 
10
%
 
1,498,810

 
11
%
 
1,907,320

 
15
%
Savings deposits
377,191

 
3
%
 
356,694

 
3
%
 
329,258

 
2
%
 
331,796

 
2
%
 
319,100

 
2
%
Money market accounts
5,919,252

 
41
%
 
5,892,791

 
42
%
 
5,663,030

 
42
%
 
5,824,535

 
41
%
 
4,851,925

 
37
%
Time deposits
2,190,077

 
15
%
 
2,315,237

 
17
%
 
2,390,001

 
18
%
 
2,510,406

 
18
%
 
2,494,928

 
19
%
Total deposits
$
14,345,592

 
100
%
 
$
13,897,739

 
100
%
 
$
13,388,936

 
100
%
 
$
14,101,728

 
100
%
 
$
13,089,968

 
100
%
Total new deposits from new clients (1)
$
198,980

 
 
 
$
356,399

 
 
 
$
251,361

 
 
 
$
302,849

 
 
 
$
330,000

 
 
(1) 
Amounts are unaudited.

Brokered Deposit Composition
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
12/31/15
 
9/30/15
 
6/30/15
 
3/31/15
 
12/31/14
 
Noninterest-bearing demand deposits
$
381,723

 
$
371,675

 
$
231,193

 
$
264,493

 
$
107,564

 
Interest-bearing demand deposits
242,466

 
266,133

 
304,876

 
323,094

 
641,466

 
Savings
974

 
948

 
—

 
—

 
—

 
Money market accounts
1,818,091

 
1,903,413

 
1,926,246

 
1,891,590

 
1,448,663

 
Time deposits:
 
 
 
 
 
 
 
 
 
 
Traditional
437,235

 
576,859

 
624,137

 
673,944

 
564,116

 
CDARS (1)
208,086

 
228,436

 
348,073

 
458,192

 
521,995

 
Other
74,954

 
87,463

 
90,438

 
87,732

 
82,714

 
Total time deposits
720,275

 
892,758

 
1,062,648

 
1,219,868

 
1,168,825

 
Total brokered deposits
$
3,163,529

 
$
3,434,927

 
$
3,524,963

 
$
3,699,045

 
$
3,366,518

 
Brokered deposits as a % of total deposits
22
%
 
25
%
 
26
%
 
26
%
 
26
%
 
Note: Certain reclassifications have been made to prior period amounts to conform to the current period presentation.
(1) 
The CDARS® deposit program is a deposit services arrangement that effectively achieves FDIC deposit insurance for jumbo deposit relationships.


17


Net Interest Margin
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
December 31, 2015
 
 
September 30, 2015
 
 
December 31, 2014
 
Average
Balance
 

Interest (1)
 
Yield/
Rate
 
 
Average
Balance
 

Interest (1)
 
Yield/
Rate
 
 
Average
Balance
 

Interest (1)
 
Yield/
Rate
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal funds sold and interest-bearing deposits in banks
$
316,349

 
$
229

 
0.28
%
 
 
$
270,278

 
$
168

 
0.24
%
 
 
$
546,290

 
$
347

 
0.25
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
2,560,038

 
14,587

 
2.28
%
 
 
2,440,779

 
13,599

 
2.23
%
 
 
2,313,925

 
13,250

 
2.29
%
Tax-exempt (2)
444,339

 
3,512

 
3.16
%
 
 
424,003

 
3,313

 
3.13
%
 
 
320,064

 
2,561

 
3.20
%
Total securities
3,004,377

 
18,099

 
2.41
%
 
 
2,864,782

 
16,912

 
2.36
%
 
 
2,633,989

 
15,811

 
2.40
%
FHLB stock
26,025

 
115

 
1.74
%
 
 
25,907

 
69

 
1.04
%
 
 
28,666

 
49

 
0.67
%
Loans, excluding covered assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
8,696,086

 
94,345

 
4.25
%
 
 
8,561,067

 
92,139

 
4.21
%
 
 
7,936,429

 
85,122

 
4.20
%
Commercial real estate
3,291,094

 
31,226

 
3.71
%
 
 
3,108,679

 
29,039

 
3.66
%
 
 
2,756,167

 
25,535

 
3.63
%
Construction
507,444

 
4,918

 
3.79
%
 
 
442,331

 
4,493

 
3.97
%
 
 
367,492

 
3,607

 
3.84
%
Residential
471,378

 
4,158

 
3.53
%
 
 
446,783

 
3,959

 
3.54
%
 
 
376,140

 
3,481

 
3.70
%
Personal and home equity
291,524

 
2,177

 
2.96
%
 
 
301,449

 
2,237

 
2.94
%
 
 
337,844

 
2,532

 
2.97
%
Total loans, excluding covered assets (3)
13,257,526

 
136,824

 
4.04
%
 
 
12,860,309

 
131,867

 
4.02
%
 
 
11,774,072

 
120,277

 
4.00
%
Covered assets (4)
27,681

 
182

 
2.61
%
 
 
29,322

 
239

 
3.23
%
 
 
39,408

 
372

 
3.74
%
Total interest-earning assets (2)
16,631,958

 
$
155,449

 
3.67
%
 
 
16,050,598

 
$
149,255

 
3.65
%
 
 
15,022,425

 
$
136,856

 
3.57
%
Cash and due from banks
188,286

 
 
 
 
 
 
172,742

 
 
 
 
 
 
168,412

 
 
 
 
Allowance for loan and covered loan losses
(171,277
)
 
 
 
 
 
 
(167,173
)
 
 
 
 
 
 
(157,870
)
 
 
 
 
Other assets
512,251

 
 
 
 
 
 
486,158

 
 
 
 
 
 
475,904

 
 
 
 
Total assets
$
17,161,218

 
 
 
 
 
 
$
16,542,325

 
 
 
 
 
 
$
15,508,871

 
 
 
 
Liabilities and Equity (5):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
1,426,603

 
$
936

 
0.26
%
 
 
$
1,411,434

 
$
937

 
0.26
%
 
 
$
1,470,988

 
$
1,026

 
0.28
%
Savings deposits
368,087

 
430

 
0.46
%
 
 
342,568

 
370

 
0.43
%
 
 
315,982

 
306

 
0.38
%
Money market accounts
5,946,834

 
5,057

 
0.34
%
 
 
5,829,378

 
4,749

 
0.32
%
 
 
5,316,027

 
4,317

 
0.32
%
Time deposits
2,262,252

 
5,941

 
1.04
%
 
 
2,302,743

 
5,782

 
1.00
%
 
 
2,645,410

 
5,803

 
0.87
%
Total interest-bearing deposits
10,003,776

 
12,364

 
0.49
%
 
 
9,886,123

 
11,838

 
0.48
%
 
 
9,748,407

 
11,452

 
0.47
%
Short-term borrowings
176,165

 
201

 
0.45
%
 
 
143,436

 
24

 
0.07
%
 
 
16,137

 
143

 
3.46
%
Long-term debt
694,788

 
5,087

 
2.91
%
 
 
694,788

 
5,048

 
2.89
%
 
 
588,310

 
7,507

 
5.09
%
Total interest-bearing liabilities
10,874,729

 
17,652

 
0.64
%
 
 
10,724,347

 
16,910

 
0.63
%
 
 
10,352,854

 
19,102

 
0.73
%
Noninterest-bearing demand deposits
4,420,246

 
 
 
 
 
 
4,039,259

 
 
 
 
 
 
3,542,261

 
 
 
 
Other liabilities
182,759

 
 
 
 
 
 
152,737

 
 
 
 
 
 
141,645

 
 
 
 
Equity
1,683,484

 
 
 
 
 
 
1,625,982

 
 
 
 
 
 
1,472,111

 
 
 
 
Total liabilities and equity
$
17,161,218

 
 
 
 
 
 
$
16,542,325

 
 
 
 
 
 
$
15,508,871

 
 
 
 
Net interest spread (2)(6)
 
 
 
 
3.03
%
 
 
 
 
 
 
3.02
%
 
 
 
 
 
 
2.84
%
Contribution of noninterest-bearing sources of funds
 
 
 
 
0.22
%
 
 
 
 
 
 
0.21
%
 
 
 
 
 
 
0.23
%
Net interest income/margin (2)(6)
 
 
137,797

 
3.25
%
 
 
 
 
132,345

 
3.23
%
 
 
 
 
117,754

 
3.07
%
Less: tax equivalent adjustment
 
 
1,206

 
 
 
 
 
 
1,136

 
 
 
 
 
 
878

 
 
Net interest income, as reported
 
 
$
136,591

 
 
 
 
 
 
$
131,209

 
 
 
 
 
 
$
116,876

 
 
(1) 
Interest income included $9.2 million, $8.0 million, and $6.0 million in loan fees for the three months ended December 31, 2015, September 30, 2015 and December 31, 2014, respectively.
(2) 
Interest income and yields are presented on a tax-equivalent basis, assuming a federal income tax rate of 35%. This is a non-U.S. GAAP measure.
(3) 
Includes loans held-for-sale and nonaccrual loans. Average loans on a nonaccrual basis for the recognition of interest income totaled $48.9 million, $49.3 million, and $73.1 million for the three months ended December 31, 2015, September 30, 2015, and December 31, 2014, respectively. Interest foregone on impaired loans was estimated to be approximately $488,000, $481,000 and $722,000 for the three months ended December 31, 2015, September 30, 2015, and December 31, 2014, respectively, calculated based on the average loan portfolio yield for the respective period.
(4) 
Covered interest-earning assets consist of loans acquired through a FDIC-assisted transaction that are subject to a loss share agreement and the related indemnification asset.
(5) 
Includes deposits held-for-sale.
(6) 
Refer to Glossary of Terms for definition.

18


Net Interest Margin
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
2015
 
2014
 
Average Balance
 
Interest (1)
 
Yield / Rate
 
Average Balance
 
Interest (1)
 
Yield / Rate
Assets:
 
 
 
 
 
 
 
 
 
 
 
Federal funds sold and interest-bearing deposits in banks
$
349,803

 
$
903

 
0.26
%
 
$
309,535

 
$
770

 
0.25
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
Taxable
2,440,429

 
55,283

 
2.27
%
 
2,279,054

 
53,500

 
2.35
%
Tax-exempt (2)
400,258

 
12,592

 
3.15
%
 
286,551

 
9,406

 
3.28
%
Total securities
2,840,687

 
67,875

 
2.39
%
 
2,565,605

 
62,906

 
2.45
%
FHLB stock
26,743

 
295

 
1.10
%
 
29,058

 
189

 
0.65
%
Loans, excluding covered assets:
 
 
 
 
 
 
 
 
 
 
 
Commercial
8,447,121

 
359,794

 
4.26
%
 
7,592,012

 
330,220

 
4.35
%
Commercial real estate
3,052,095

 
114,868

 
3.76
%
 
2,568,603

 
93,123

 
3.63
%
Construction
433,123

 
17,245

 
3.98
%
 
360,711

 
14,152

 
3.92
%
Residential
430,332

 
15,145

 
3.52
%
 
359,621

 
13,299

 
3.70
%
Personal and home equity
313,758

 
9,353

 
2.98
%
 
348,815

 
10,552

 
3.03
%
Total loans, excluding covered assets (3)
12,676,429

 
516,405

 
4.07
%
 
11,229,762

 
461,346

 
4.11
%
Covered assets (4)
30,169

 
1,056

 
3.50
%
 
72,153

 
2,409

 
3.34
%
Total interest-earning assets (2)
15,923,831

 
$
586,534

 
3.69
%
 
14,206,113

 
$
527,620

 
3.71
%
Cash and due from banks
176,586

 
 
 
 
 
154,334

 
 
 
 
Allowance for loan and covered loan losses
(165,994
)
 
 
 
 
 
(161,001
)
 
 
 
 
Other assets
495,437

 
 
 
 
 
478,025

 
 
 
 
Total assets
$
16,429,860

 
 
 
 
 
$
14,677,471

 
 
 
 
Liabilities and Equity (5):
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
1,447,298

 
$
3,845

 
0.27
%
 
$
1,289,190

 
$
3,728

 
0.29
%
Savings deposits
341,709

 
1,434

 
0.42
%
 
293,316

 
912

 
0.31
%
Money market accounts
5,799,593

 
18,735

 
0.32
%
 
4,966,272

 
15,945

 
0.32
%
Time deposits
2,389,460

 
23,092

 
0.97
%
 
2,623,243

 
21,366

 
0.81
%
Total interest-bearing deposits
9,978,060

 
47,106

 
0.47
%
 
9,172,021

 
41,951

 
0.46
%
Short-term borrowings
230,402

 
656

 
0.28
%
 
42,797

 
638

 
1.49
%
Long-term debt
548,075

 
20,035

 
3.66
%
 
618,556

 
27,061

 
4.37
%
Total interest-bearing liabilities
10,756,537

 
67,797

 
0.63
%
 
9,833,374

 
69,650

 
0.71
%
Noninterest-bearing demand deposits
3,915,032

 
 
 
 
 
3,308,345

 
 
 
 
Other liabilities
156,840

 
 
 
 
 
132,220

 
 
 
 
Equity
1,601,451

 
 
 
 
 
1,403,532

 
 
 
 
Total liabilities and equity
$
16,429,860

 
 
 
 
 
$
14,677,471

 
 
 
 
Net interest spread (2)(6)
 
 
 
 
3.06
%
 
 
 
 
 
3.00
%
Contribution of noninterest-bearing sources of funds
 
 
 
 
0.20
%
 
 
 
 
 
0.22
%
Net interest income/margin (2)(6)
 
 
518,737

 
3.26
%
 
 
 
457,970

 
3.22
%
Less: tax-equivalent adjustment
 
 
4,322

 
 
 
 
 
3,233

 
 
Net interest income, as reported
 
 
$
514,415

 
 
 
 
 
$
454,737

 
 
(1) 
Interest income included $31.0 million and $26.4 million in loan fees for the year ended December 31, 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 $57.9 million and $82.7 million for the year ended December 31, 2015 and 2014, respectively. Interest foregone on impaired loans was estimated to be approximately $2.3 million and $3.2 million for the year ended December 31, 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) 
Includes deposits held-for-sale.
(6) 
Refer to Glossary of Terms for definition.
 

19


NON-U.S. GAAP FINANCIAL MEASURES

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

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

In addition to capital ratios defined by banking regulators, we also consider various measures when evaluating capital utilization and adequacy, including return on average tangible common equity, tangible common equity to risk-weighted assets, tangible common equity to tangible assets, and tangible book value. These calculations are intended to complement the capital ratios defined by banking regulators for both absolute and comparative purposes. All of these measures exclude the ending balances of goodwill and other intangibles while certain of these ratios exclude preferred capital components. Because U.S. GAAP does not include capital ratio measures, we believe there are no comparable U.S. GAAP financial measures to these ratios. We believe these non-U.S. GAAP financial measures are relevant because they provide information that is helpful in assessing the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of our capitalization to other similar companies. However, because there are no standardized definitions for these ratios, our calculations may not be comparable with other companies. For the periods prior to January 1, 2015, the 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.


20


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
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
Taxable-equivalent net interest income
 
 
 
 
 
 
 
 
 
U.S. GAAP net interest income
$
136,591

 
$
131,209

 
$
124,622

 
$
121,993

 
$
116,876

Taxable-equivalent adjustment
1,206

 
1,136

 
1,036

 
944

 
878

Taxable-equivalent net interest income (a)
$
137,797

 
$
132,345

 
$
125,658

 
$
122,937

 
$
117,754

 
 
 
 
 
 
 
 
 
 
Average Earning Assets (b)
$
16,631,958

 
$
16,050,598

 
$
15,703,136

 
$
15,293,533

 
$
15,022,425

 
 
 
 
 
 
 
 
 
 
Net Interest Margin ((a) annualized) / (b)
3.25
%
 
3.23
%
 
3.17
%
 
3.21
%
 
3.07
%
 
 
 
 
 
 
 
 
 
 
Net Revenue
 
 
 
 
 
 
 
 
 
Taxable-equivalent net interest income
$
137,797

 
$
132,345

 
$
125,658

 
$
122,937

 
$
117,754

U.S. GAAP non-interest income
32,648

 
30,789

 
33,059

 
33,516

 
30,426

Net revenue (c)
$
170,445

 
$
163,134

 
$
158,717

 
$
156,453

 
$
148,180

 
 
 
 
 
 
 
 
 
 
Operating Profit
 
 
 
 
 
 
 
 
 
U.S. GAAP income before income taxes
$
83,388

 
$
72,626

 
$
73,668

 
$
66,718

 
$
60,157

Provision for loan and covered loan losses
2,831

 
4,197

 
2,116

 
5,646

 
4,120

Taxable-equivalent adjustment
1,206

 
1,136

 
1,036

 
944

 
878

Operating profit
$
87,425

 
$
77,959

 
$
76,820

 
$
73,308

 
$
65,155

 
 
 
 
 
 
 
 
 
 
Efficiency Ratio
 
 
 
 
 
 
 
 
 
U.S. GAAP non-interest expense (d)
$
83,020

 
$
85,175

 
$
81,897

 
$
83,145

 
$
83,025

Net revenue
$
170,445

 
$
163,134

 
$
158,717

 
$
156,453

 
$
148,180

Efficiency ratio (d) / (c)
48.71
%
 
52.21
%
 
51.60
%
 
53.14
%
 
56.03
%
 
 
 
 
 
 
 
 
 
 
Adjusted Net Income
 
 
 
 
 
 
 
 
 
U.S. GAAP net income available to common stockholders
$
52,137

 
$
45,268

 
$
46,422

 
$
41,484

 
$
37,223

Amortization of intangibles, net of tax
357

 
353

 
398

 
397

 
449

Adjusted net income (e)
$
52,494

 
$
45,621

 
$
46,820

 
$
41,881

 
$
37,672

 
 
 
 
 
 
 
 
 
 
Average Tangible Common Equity
 
 
 
 
 
 
 
 
 
U.S. GAAP average total equity
$
1,683,484

 
$
1,625,982

 
$
1,571,896

 
$
1,522,401

 
$
1,472,111

Less: average goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Less: average other intangibles
3,711

 
4,291

 
4,897

 
5,551

 
6,243

Average tangible common equity (f)
$
1,585,732

 
$
1,527,650

 
$
1,472,958

 
$
1,422,809

 
$
1,371,827

 
 
 
 
 
 
 
 
 
 
Return on average tangible common equity ((e) annualized) / (f)
13.13
%
 
11.85
%
 
12.75
%
 
11.94
%
 
10.89
%


21


Non-U.S. GAAP Financial Measures (continued)
(Dollars in thousands)
(Unaudited)
 
Year Ended December 31,
 
2015
 
2014
Taxable-equivalent net interest income
 
 
 
U.S. GAAP net interest income
$
514,415

 
$
454,737

Taxable-equivalent adjustment
4,322

 
3,233

Taxable-equivalent net interest income (a)
$
518,737

 
$
457,970

Average Earning Assets (b)
$
15,923,831

 
$
14,206,113

Net Interest Margin (a) / (b)
3.26
%
 
3.22
%
Net Revenue
 
 
 
Taxable-equivalent net interest income
$
518,737

 
$
457,970

U.S. GAAP non-interest income
130,012

 
117,590

Net revenue (c)
$
648,749

 
$
575,560

Operating Profit
 
 
 
U.S. GAAP income before income taxes
$
296,400

 
$
248,207

Provision for loan and covered loan losses
14,790

 
12,044

Taxable-equivalent adjustment
4,322

 
3,233

Operating profit
$
315,512

 
$
263,484

Efficiency Ratio
 
 
 
U.S. GAAP non-interest expense (d)
$
333,237

 
$
312,076

Net revenue
$
648,749

 
$
575,560

Efficiency ratio (d) / (c)
51.37
%
 
54.22
%
Adjusted Net Income
 
 
 
U.S. GAAP net income available to common stockholders
$
185,311

 
$
153,079

Amortization of intangibles, net of tax
1,505

 
1,823

Adjusted net income (e)
$
186,816

 
$
154,902

Average Tangible Common Equity
 
 
 
U.S. GAAP average total equity
$
1,601,451

 
$
1,403,532

Less: average goodwill
94,041

 
94,041

Less: average other intangibles
4,606

 
7,366

Average tangible common equity (f)
$
1,502,804

 
$
1,302,125

Return on average tangible common equity (e) / (f)
12.43
%
 
11.90
%


22


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

Trust preferred securities
 
 
 
 
 
 
 
 
169,788

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

Less: goodwill
 
 
 
 
 
 
 
 
94,041

Less: other intangibles
 
 
 
 
 
 
 
 
5,885

Less: disallowed servicing rights
 
 
 
 
 
 
 
 
44

Tier 1 risk-based capital
 
 
 
 


 
 
 
1,530,580

Less: trust preferred securities
 
 
 
 
 
 
 
 
169,788

Common equity Tier 1 (g)
 
 
 
 


 
 
 
$
1,360,792

 
 
 
 
 
 
 
 
 
 
 
As of
 
2015
 
2014
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
Tangible Common Equity
 
 
 
 
 
 
 
 
 
U.S. GAAP total equity
$
1,698,951

 
$
1,647,999

 
$
1,584,796

 
$
1,539,429

 
$
1,481,679

Less: goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Less: other intangibles
3,430

 
4,008

 
4,586

 
5,230

 
5,885

Tangible common equity (h)
$
1,601,480

 
$
1,549,950

 
$
1,486,169

 
$
1,440,158

 
$
1,381,753

 
 
 
 
 
 
 
 
 
 
Tangible Assets
 
 
 
 
 
 
 
 
 
U.S. GAAP total assets
$
17,259,421

 
$
16,894,605

 
$
16,225,895

 
$
16,361,348

 
$
15,603,382

Less: goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Less: other intangibles
3,430

 
4,008

 
4,586

 
5,230

 
5,885

Tangible assets (i)
$
17,161,950

 
$
16,796,556

 
$
16,127,268

 
$
16,262,077

 
$
15,503,456

 
 
 
 
 
 
 
 
 
 
Risk-weighted Assets (j)
—

 
—

 
—

 
—

 
$
14,592,655

 
 
 
 
 
 
 
 
 
 
Period-end Common Shares Outstanding (k)
79,097

 
78,863

 
78,717

 
78,494

 
78,178

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

 
—

 
—

 
—

 
9.33
%
Tangible common equity to tangible assets (h) / (i)
9.33
%
 
9.23
%
 
9.22
%
 
8.86
%
 
8.91
%
Tangible book value (h) / (k)
$
20.25

 
$
19.65

 
$
18.88

 
$
18.35

 
$
17.67

(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.  

23


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.

24



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.

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