Cadence Bancorporation Reports Fourth Quarter and Full Year 2020 Financial Results

January 25, 2021 6:25 AM EST

Get inside Wall Street with StreetInsider Premium. Claim your 1-week free trial here.

HOUSTON--(BUSINESS WIRE)-- Cadence Bancorporation (NYSE: CADE) (“Cadence”) today announced net income for the quarter ended December 31, 2020 of $200.6 million or $1.57 per share, compared to $51.4 million or $0.40 per share for the quarter ended December 31, 2019, and $49.3 million or $0.39 per share for the quarter ended September 30, 2020. For the full year ended December 31, 2020, Cadence reported a net loss of ($205.5) million or ($1.63) per diluted common share (“per share”), compared to net income of $202.0 million or $1.56 per share for the year ended December 31, 2019. The fourth quarter of 2020 included an acceleration of gain recognition from the interest rate collar we terminated in March 2020 which resulted in $129.5 million ($169.2 million pretax) or $1.02 per share being accelerated into fourth quarter earnings (“accelerated hedge revenue”). This acceleration was triggered by the determination of hedge accounting partial ineffectiveness as announced in our related Form 8-K filed January 7, 2021.

“We are pleased to report strong performance across multiple fronts in the fourth quarter. The provision for loan losses is down meaningfully linked quarter, as are nonperforming and criticized assets. With the exception of hospitality, we saw broad-based improvement in credit migration, as many businesses recover, and our portfolios continue to de-risk. Our deposit franchise improved materially in 2020, and in the fourth quarter it was encouraging to see an increase in net interest margin and yields on originated loans. Our hedging activities protected the bank from the sharp decline in interest rates this year, and the unwinding of the hedge has produced a significant increase in regulatory capital, with our Common Equity Tier 1 capital ratio ending the year at 14.0%. Considering these results, we are pleased to announce proactive capital actions, including an increase of our fourth quarter dividend to $0.15 cents per share, payable in the first quarter 2021. Furthermore, we plan to retire maturing and callable debt and reactivate our share buyback program, which had been put on hold during the shutdown. Cadence operates in some of the most attractive markets in America, with a highly motivated and experienced team focused on serving our customers and driving shareholder value. While there clearly remains uncertainty in the broader environment, we are encouraged by our performance and the opportunities to further leverage our excess capital and liquidity in 2021,” stated Paul B. Murphy, Jr., Chairman and Chief Executive Officer of Cadence Bancorporation.

Adjusted Performance Metrics (1):

  • Adjusted net income (1), excluding non-routine income and expenses (2), was $206.7 million for the full year of 2020 compared to $223.1 million for 2019. For the fourth quarter of 2020, adjusted net income was $199.7 million, an increase of $147.8 million or 284% compared to the fourth quarter of 2019 and an increase of $148.3 million or 288% compared to the third quarter of 2020.
  • Adjusted pre-tax pre-provision net revenue (1) for the full year 2020 was $542.5 million, compared to $400.3 million for the full year 2019. Adjusted pre-tax pre-provision net earnings in the fourth quarter of 2020 was $260.0 million, an increase of $165.2 million or 174% compared to the fourth quarter of 2019 and an increase of $165.4 million or 175% compared to the third quarter of 2020.
  • Adjusted EPS (1) for the full year 2020 was $1.64 compared to $1.72 for 2019. Adjusted EPS for fourth quarter of 2020 of $1.57 increased from the prior year quarter of $0.40 and increased from the linked quarter of $0.40.
  • Adjusted annualized returns on average assets (1) and adjusted tangible common equity (1) for the full year 2020 were 1.14% and 11.59%, respectively, compared to 1.26% and 13.60% for the full year 2019, respectively, and for the fourth quarter of 2020 were 4.33% and 41.72%, respectively, compared to 1.16% and 11.93%, respectively, for the fourth quarter of 2019 and 1.12% and 11.52%, respectively, for the third quarter of 2020.

Fourth Quarter 2020 Highlights:

Fourth quarter 2020 highlights (compared to the linked quarter where applicable) are as follows:

  • The provision for credit losses for the fourth quarter of 2020 was $2.8 million compared to $33.0 million in the linked quarter reflecting improvement in overall credit metrics and lower loan balances. As ofDecember 31, 2020, our allowance for credit losses (“ACL”) increased to 2.89% of total loans, up from 2.86% at September 30, 2020. Excluding Paycheck Protection Program (“PPP”) loans, our ACL ratio to loans was 3.12% at December 31, 2020, up from 3.11% at September 30, 2020. Our ratio of ACL to total nonperforming loans increased to 261% from 204%.
  • Our tax equivalent net interest margin (“NIM”) increased to 3.54%, up 5 basis points from prior quarter. The improvement in NIM was driven by continued management of deposit costs, declining 7 basis points to 0.25%, and fees earned on forgiven PPP loans and other loan payoffs.
  • Common Equity Tier 1 capital ratio increased to 14.0% and total risk weighted capital increased to 16.7%, reflecting material increases from the prior quarter due to the strong quarterly earnings combined with lower risk weighted assets.
  • Non-interest income in the fourth quarter of 2020 included the accelerated hedge revenue of $169.2 million.
  • Annualized returns on average assets and tangible common equity (1) for the fourth quarter of 2020 were 4.35% and 41.90%, respectively, compared to 1.08% and 11.08%, respectively, for the third quarter of 2020, with the increases reflecting the impact of the accelerated hedge revenue combined with lower loan provisions.

Balance Sheet:

Total assets were $18.7 billion as of December 31, 2020, an increase of $912.3 million or 5.1% from December 31, 2019, and an increase of $308.4 million or 1.7% from September 30, 2020. The linked quarter increase was driven by increases in core deposits, cash and securities, partially offset by net declines in loans.

Cash and Cash Equivalents at December 31, 2020 totaled $2.1 billion as compared to $1.0 billion at December 31, 2019 and to $1.2 billion at September 30, 2020. The $806.8 million increase in the fourth quarter of 2020 resulted from a decrease in loans combined with an increase in deposits.

Investment Securities at December 31, 2020 totaled $3.3 billion as compared to $2.4 billion at December 31, 2019 and $3.1 billion at September 30, 2020. Securities as a percent of earning assets was 18.6%, 14.6%, and 17.4% at December 31, 2020, December 31, 2019, and September 30, 2020, respectively. The increase in securities from both the prior year and linked quarter is a result of increased balance sheet liquidity resulting from growth in deposits and the declines in net loans. Securities acquired during the fourth quarter include primarily agency pass-through mortgage-backed securities along with some municipal securities.

Loans at December 31, 2020 totaled $12.7 billion as compared to $13.0 billion at December 31, 2019, a decrease of $264.5 million or 2.0%. Loans decreased $746.4 million or 5.5% from $13.5 billion at September 30, 2020. The decline in the quarter included paydowns and payoffs of $117 million in PPP loans, $113 million in criticized loans, $180 million in Shared National Credits (SNCs), and $94 million in leveraged loans without moderating factors (note there is some overlap between these categories). On a portfolio basis, Restaurants declined $120 million and Energy declined $80 million, reflecting our targeted risk reduction strategy in those portfolios. Commercial Real Estate (“CRE”) declined $200 million, primarily reflective of credits transitioning to the permanent debt markets. The $321 million decline in General Commercial &Industrial (“C&I”) included $90 million in PPP loans as well as paydowns and payoffs resulting from excess borrower liquidity, borrower migration to non-bank and Main Street Lending fundings, and resolutions of problem credits.

Goodwill at December 31, 2020 totaled $43.1 million, down from $486.0 million at December 31, 2019 and unchanged from September 30, 2020. As previously reported, the Company recorded a $443.7 million ($412.9 million, after-tax), non-cash goodwill impairment charge in the first quarter of 2020. The remaining goodwill at December 31, 2020 relates to our registered investment advisory subsidiary and trust division.

Total Deposits at December 31, 2020 were $16.1 billion, an increase of $1.3 billion or 8.9% from the December 31, 2019 level and up $266.0 million or 1.7% from the September 30, 2020 level. Non-interest bearing deposits were $5.0 billion or 31.4% of total deposits at December 31, 2020, up from $3.8 billion or 26.0% at December 31, 2019 and essentially unchanged from September 30, 2020. Total cost of deposits declined to 0.25% for the fourth quarter 2020, significantly lower than both the fourth quarter 2019 cost of 1.14% and the third quarter 2020 cost of 0.32%.

Shareholders’ equity was $2.1 billion at December 31, 2020, a decrease of $339.7 million or 13.8% from December 31, 2019, and an increase of $49.6 million or 2.4% from September 30, 2020. The year over year decrease was driven by the goodwill impairment charge in the first quarter of 2020. The linked quarter increase included quarterly net income of $200.6 million, $9.4 million in cash dividends, and a decrease of $144.6 million in other comprehensive income (“OCI”) driven by the reclassification of hedge revenue into current earnings.

Tangible common shareholders’ equity (1) was $2.0 billion at December 31, 2020, an increase of $124.4 million or 6.7% from December 31, 2019 and an increase of $54.8 million or 2.8% from September 30, 2020. The full year increase was driven by tangible earnings during the year. The linked quarter increase resulted from the same factors noted above.

  • Total shareholders’ equity to total assets and tangible equity to tangible assets were 11.3% and 10.7%, respectively, at December 31, 2020 compared to 13.8% and 10.9% at December 31, 2019, and 11.3% and 10.6% at September 30, 2020, respectively.
  • Tangible book value per share (1) was $15.83 as of December 31, 2020, an increase of $1.18 or 8.1% from $14.65 as of December 31, 2019 and an increase of $0.43 or 2.8% from $15.40 as of September 30, 2020.
  • Total outstanding shares at December 31, 2020 were 125.97 million.

Quarter end regulatory capital ratios remained robust and increased significantly during the quarter as follows:

 

 

4Q20

 

3Q20

 

4Q19

Common equity Tier 1 capital

 

14.0%

 

12.0%

 

11.5%

Tier 1 leverage capital

 

10.9%

 

9.9%

 

10.3%

Tier 1 risk-based capital

 

14.0%

 

12.0%

 

11.5%

Total risk-based capital

 

16.7%

 

14.7%

 

13.7%

Asset Quality:

Credit quality metrics during the fourth quarter of 2020 reflected a number of improvements including declines in nonperforming and criticized loan balances but continued to reflect ongoing COVID-driven stress and economic uncertainty, particularly in the Hospitality sector.

  • Net charge-offs for the full year 2020 were $106.1 million or 0.79% of average loans as compared to $85.8 million or 0.63% for the full year 2019. Net charge-offs for the fourth quarter of 2020 were $21.2 million or 0.64% annualized of average loans compared to $35.3 million or 1.04% annualized and $19.9 million or 0.58% annualized for the quarters ended December 31, 2019 and September 30, 2020, respectively. The current quarter net charge-offs included $4.2 million in Restaurant, $9.2 million in Commercial Real Estate (“CRE”), and $7.3 million in General C&I.
  • Provision for credit losses for the full year 2020 was $278.0 million or 2.06% of average loans as compared to $111.0 million or 0.81% of average loans for 2019. Provision for credit losses for the fourth quarter of 2020 was $2.8 million as compared to $27.1 million for the fourth quarter of 2019 and $33.0 million for the third quarter of 2020. The current quarter’s provision was impacted by improvements in nonperforming and criticized loans and lower loan balances. The fourth quarter 2020 loan provision was concentrated in the CRE segment provision of $7.4 million (primarily due to the Hospitality portfolio), which was partially offset by reductions of $3.0 million in C&I and $1.4 million in Consumer segments.
  • The ACL was $367.2 million or 2.89% of total loans as of December 31, 2020, as compared to $119.6 million or 0.92% of total loans as of December 31, 2019, and $385.4 million or 2.86% of total loans as of September 30, 2020. Excluding PPP loans, the ACL was 3.12% of total loans at December 31, 2020, increased from 3.11% at September 30, 2020.
  • The material increase in the ACL during 2020 incorporated loan provisions of $278.0 million, net charge-offs of $106.1 million and “day 1” CECL adoption impact of $75.6 million.
  • Total nonperforming loans (“NPL”) as a percent of total loans were 1.08% at December 31, 2020, compared to 0.92% at December 31, 2019 and 1.40% at September 30, 2020. NPL totaled $138.0 million, $119.6 million and $189.1 million as of December 31, 2020, December 31, 2019 and September 30, 2020, respectively. The linked quarter decline of $51.1 million or 27% was due primarily to payoffs and to a lesser extent, net charge-offs.
  • The ACL coverage of NPL increased meaningfully to 266.1% as of December 31, 2020, as compared to 100.1% as of December 31, 2019, and 203.8% as of September 30, 2020.
  • Total criticized loans at December 31, 2020 were $871.7 million or 6.85% of total loans as compared to $605.1 million or 4.66% at December 31, 2019 and $1.1 billion or 8.05% at September 30, 2020. The linked quarter decrease of $211.3 million or 20% was primarily in Restaurant, Energy, General C&I, and Healthcare credits, reflecting decreases of 28.7%, 21.0%, 30.2% and 49.0%, respectively.
  • Active COVID related loan payment deferrals totaled $135 million at January 15, 2021, down from $376 million at September 30, 2020.
  • Loans 30-89 days past due were 0.36% of total loans at December 31, 2020, compared to 0.17% at December 31, 2019 and 0.15% at September 30, 2020. While minor, the increase was primarily due to a small number of loans that includes $9.4 million in Hospitality loans and $4.8 million in Mortgage loans.

Total Revenue:

Total operating revenue (1) for 2020 was $926.3 million, up $144.2 million or 18.4%, and for the fourth quarter of 2020 was $366.5 million, up $171.7 million or 88.1% from the same period in 2019 and up $181.8 million or 98.5% from the linked quarter.

Net interest income for the full year 2020 was $619.0 million as compared to $651.2 million for 2019, a decrease of $32.2 million or 4.9%. The year-over-year decline in earning asset yields of 117 basis points was driven by lower index rates partially offset by our hedges, combined with an increase in lower yielding securities. This decline was partially offset by our cost of funds declining 81 basis points as we achieved record low-deposit costs and record high levels of non-interest bearing deposits during 2020.

Net interest income for the fourth quarter of 2020 was $156.7 million, a decrease of $4.2 million or 2.6% from the same period in 2019 and an increase of $2.7 million or 1.8% from the third quarter of 2020. Compared to the linked quarter, loan interest income excluding accretion increased $0.9 million as loan fees from loan payoffs offset the impact of lower volumes, funding costs decreased by $2.5 million driven by continued reduction of deposit costs, and hedge interest income increased $0.2 million. These improvements were partially offset by a decrease of $0.5 million in loan accretion and a decrease of $0.3 million in investment income due to lower yielding securities.

  • We continued to lower our interest rates on deposits with total cost of deposits dropping from 0.32% to 0.25% linked quarter, down 21.9%. Noninterest-bearing deposits as a percent of total deposits remained stable at 31.4% compared to 31.9% in the linked quarter. Total interest-bearing liability costs declined by 8 basis points from 0.59% to 0.51% linked quarter, down 13.6%. Average interest-bearing liabilities declined $244.2 million or 2.2% from the prior quarter to $10.9 billion.
  • Yield on loans excluding accretion and hedge income was 3.89% in the fourth quarter of 2020, up 14 basis points from 3.75% in the third quarter of 2020. Excluding the impact of PPP loans, this yield was 3.98% and 3.87%, for the fourth and third quarters of 2020, respectively. Average loans declined $414.0 million or 3.0% from the prior quarter to $13.2 billion.
  • Total hedge income in interest income (which includes the amortized effective collar gain recognition and other hedge income) for the fourth quarter of 2020 totaled $19.9 million as compared to $19.7 million for the third quarter of 2020. The effective portion of the collar gain was and will continue to be reflected in interest income, whereas the ineffective portion of the gain was reflected in noninterest income during the fourth quarter of 2020. At December 31, 2020, the remaining portion of the collar gain (included in OCI) yet to be amortized into revenue was $35.4 million, with $33.5 million expected to be amortized into interest income in 2021 and the final $1.9 million expected in early 2022.
  • Accretion on acquired loans totaled $5.9 million for the fourth quarter of 2020 as compared to $6.4 million for the third quarter of 2020.
  • Yield on investment securities declined to 1.87% in the fourth quarter of 2020 compared to 2.06% in the linked quarter, with the lower yield reflecting the impact of securities purchased in the fourth quarter and late in the third quarter. Average investment securities increased $241.4 million or 8.2% from the prior quarter to $3.2 billion. Fed funds sold and short-term investments also increased by $237.0 million or 25.2% from the prior quarter due to excess liquidity during the fourth quarter.
  • Total earning asset yields declined slightly to 3.85% in the fourth quarter of 2020 compared to 3.86% in the linked quarter, with average balances increasing by $64.0 million or 0.4% to $17.7 billion.
  • Our NIM for the full year 2020 decreased to 3.58% compared to 4.00% for 2019. Our net interest spread for 2020 decreased to 3.29% as compared to 3.48% for 2019. Our NIM for the fourth quarter of 2020 was 3.54% as compared to 3.89% for the fourth quarter of 2019 and 3.49% for the third quarter of 2020.

PPP loans averaged $1.0 billion in the fourth quarter at a yield of 2.82%, and along with cash in deposits associated with these loans, negatively impacted our fourth quarter NIM by 10 basis points as illustrated in the table below. Excluding the impact of the PPP program, the fourth quarter 2020 NIM remained stable at 3.64%, as lower deposit costs more than offset the impact of lower loan balances and lower securities yields. Specifically, the NIM change during the quarter included:

Quarterly Change

$ MM

NIM

3Q 2020 Net Interest Income

$154.5

 

3.49%

3Q 2020 Net Interest Income before PPP loans & associated cash

$148.4

 

3.64%

Loans (ex PPP & accretion)

(0.5)

 

(0.04%)

Deposits

2.6

 

0.07%

Hedge Income

0.2

 

0.00%

Accretion

(0.5)

 

(0.01%)

Securities

(0.3)

 

(0.01%)

Cash

0.2

 

0.00%

Borrowings

(0.2)

 

(0.01%)

NIM before PPP loans & cash*

$149.9

 

3.64%

PPP Loans & associated cash

7.4

 

(0.10%)

4Q 2020 Net Interest Margin

$157.3

 

3.54%

*Calculated by removing the quarterly average balance of PPP loans and income, as well as the quarterly average balance of cash associated with unused PPP funds.

Noninterest income for the full year of 2020 was $307.4 million, an increase of $176.4 million or 135% from 2019. Noninterest income for the fourth quarter of 2020 was $209.7 million, an increase of $175.8 million from the same period of 2019 and an increase of $177.2 million from the linked quarter. Adjusted noninterest income (1) for the fourth quarter of 2020 was $208.4 million, an increase of $176.1 million from the fourth quarter of 2019, and an increase of $175.3 million from the linked quarter.

  • The fourth quarter includes the accelerated hedge revenue of $169.2 million reclassified from OCI. The partial accounting ineffectiveness determination resulted from a significant decrease in forecasted LIBOR based loans to support future amortization of the remaining transaction gain on the termination of our interest rate collar. See additional discussion in our Form 8-K filed January 7, 2021.
  • Excluding the accelerated hedge revenue, the linked quarter increase was $6.1 million including increases of $3.6 million in earnings from limited partnerships, $1.3 million in securities gains, $0.7 million in investment advisory revenue, and $0.6 million in credit related fees.
  • Noninterest income as a percent of total revenue for 2020 was 33.2% as compared to 16.7% for 2019, and for the fourth quarter of 2020 was 57.2% as compared to 17.4% for the fourth quarter of 2019 and 17.5% for the linked quarter. Before the impact of the accelerated hedge revenue of $169.2 million, noninterest income as a percent of total revenue for 2020 and the fourth quarter of 2020 were 18.3% and 20.5%, respectively, both increased from the comparable periods.

Noninterest expense for the full year of 2020 was $826.5 million, an increase of $417.7 million or 102.2% from 2019 due to the goodwill impairment charge of $443.7 million recorded in the first quarter of 2020. Noninterest expense for the fourth quarter of 2020 was $105.3 million, an increase of $4.8 million or 4.8% from the same period in 2019 and an increase of $10.5 million or 11.0% from the linked quarter. Adjusted noninterest expense (1), which excludes the impact of non-routine items (2), was $377.6 million for the full year of 2020, a decrease of $1.4 million or 0.4% from 2019. For the fourth quarter of 2020, adjusted noninterest expense was $105.1 million, up $6.7 million or 6.9% from the fourth quarter of 2019 and up $12.6 million or 13.6% from the third quarter of 2020. The linked quarter increase in noninterest expenses resulted from an increase of $8.1 million in personnel costs driven by an increase of $8.5 million in incentive compensation due to improved corporate performance partially offset by a reduction of $1.0 million in medical insurance expense due to improved claims experience.

Our adjusted efficiency ratio(1) for the full year of 2020 was 41.0% as compared to 48.6% for 2019. The adjusted efficiency ratio for the fourth quarter of 2020 was 28.8%, compared to the linked quarter ratio of 49.4% and the prior year’s fourth quarter ratio of 50.9%. The full year and linked quarter improvements are both a result of the accelerated hedge revenue of $169.2 million. Before the impact of the accelerated hedge revenue, the full year and fourth quarter 2020 efficiency ratios both reflected slight increases at 50.3% and 53.7%, respectively, with the full year increase reflecting lower revenues in 2020 and the linked quarter increase reflecting the higher fourth quarter expenses.

Taxes:

The effective tax rate for the full year 2020 was (15.3%) as compared to 23.0% for the full year 2019. The effective tax rate for the fourth quarter of 2020 was 22.4% compared to 16.1% for the linked quarter and 23.4% for the fourth quarter of 2019. The full year 2020 effective rate was impacted by $313.3 million in non-deductible goodwill impairment.

_____________________________

(1)

Considered a non-GAAP financial measure. See Table10 “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

(2)

See Table 10 for a detail of non-routine income and expenses. The fourth quarter 2020 accelerated hedge revenue is not included as an adjustment from GAAP earnings to arrive at the non-GAAP adjusted performance metrics presented herein due to the historical and continuing nature of hedge revenue in our earnings, and the revenue resulting from the partial ineffectiveness designation merely representing an acceleration of a portion of the fixed collar gain into earnings as compared to the original amortization expectation. The revised amortization expectation for the remainder of the collar gain is presented within this release for clarification of this component of ongoing hedge revenue.

Dividend:

On January 21, 2021, the board of directors of Cadence Bancorporation declared a quarterly cash dividend in the amount of $0.15 per share of outstanding common stock, representing an annualized dividend of $0.60 per share. The dividend will be paid on February 12, 2021 to holders of record of Cadence’s Class A common stock on February 5, 2021.

Share Repurchase Authorization:

On January 21, 2021, the board of directors of Cadence Bancorporation authorized a share repurchase program providing for the purchase of shares of the Company’s Class A common stock for an aggregate purchase price of up to $200 million, subject to regulatory approvals. The previously approved share repurchase program authorizing up to $100 million is set to expire in February 2021.

Supplementary Financial Tables (Unaudited):

Supplementary financial tables (unaudited) are included in this release following the customary disclosure information.

Fourth Quarter 2020 Earnings Conference Call:

Cadence Bancorporation executive management will host a conference call to discuss fourth quarter 2020 results on Monday, January 25, 2021, at 7:30 a.m. CT / 8:30 a.m. ET. Slides to be presented by management on the conference call can be viewed by visiting www.cadencebancorporation.com and selecting “Events & Presentations” then “Presentations”.

Conference Call Access:

To access the conference call, please dial one of the following numbers approximately 10-15 minutes prior to the start time to allow time for registration and use the Elite Entry Number provided below.

Dial in (toll free):

1-888-317-6003

International dial in:

1-412-317-6061

Canada (toll free):

1-866-284-3684

Participant Elite Entry Number:

3708183

For those unable to participate in the live presentation, a replay will be available through February 8, 2021. To access the replay, please use the following numbers:

US Toll Free:

1-877-344-7529

International Toll:

1-412-317-0088

Canada Toll Free:

1-855-669-9658

Replay Access Code:

10150788

Webcast Access:

The call and corresponding presentation slides will be webcast live on the home page of the Company’s website: www.cadencebancorporation.com.

About Cadence Bancorporation:

Cadence Bancorporation (NYSE: CADE), headquartered in Houston, Texas, is a regional financial holding company with $18.7 billion in total assets as of December 31, 2020. Its wholly owned subsidiary, Cadence Bank, N.A., operates 98 branch locations in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas, and provides corporations, middle-market companies, small businesses and consumers with a full range of innovative banking and financial solutions. Services and products include commercial and business banking, treasury management, specialized lending, asset-based lending, commercial real estate, SBA lending, foreign exchange, wealth management, investment and trust services, financial planning, retirement plan management, payroll and insurance services, consumer banking, consumer loans, mortgages, home equity lines and loans, and credit cards. Clients have access to leading-edge online and mobile solutions, interactive teller machines, and more than 55,000 ATMs. The Cadence team of 1,900 associates is committed to exceeding customer expectations and helping their clients succeed financially.

Cautionary Statement Regarding Forward-Looking Information

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our results of operations, financial condition and financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict.

Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Such factors include, without limitation, the “Risk Factors” referenced in our Registration Statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”) on May 21, 2018, and our Registration Statement on Form S-4 filed with the SEC on July 20, 2018, other risks and uncertainties listed from time to time in our reports and documents filed with the SEC, including our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, and the following factors: business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic market areas; economic, market, operational, liquidity, credit and interest rate risks associated with our business; deteriorating asset quality and higher loan charge-offs; the laws and regulations applicable to our business; our ability to achieve organic loan and deposit growth and the composition of such growth; increased competition in the financial services industry, nationally, regionally or locally; our ability to maintain our historical earnings trends; our ability to raise additional capital to implement our business plan; material weaknesses in our internal control over financial reporting; systems failures or interruptions involving our information technology and telecommunications systems or third-party servicers; the composition of our management team and our ability to attract and retain key personnel; the fiscal position of the U.S. federal government and the soundness of other financial institutions; the composition of our loan portfolio, including the identity of our borrowers and the concentration of loans in energy-related industries and in our specialized industries; the portion of our loan portfolio that is comprised of participations and shared national credits; the amount of nonperforming and classified assets we hold; the extent of the impact of the COVID-19 pandemic on us and our customers, counterparties, employees, and third-party service providers, and the impacts to our business, financial position, results of operations, and prospects; the impact on our financial condition, results of operations, financial disclosures, and future business strategies related to the implementation of FASB Accounting Standards Update 2016-13, Financial Instruments – Credit Losses, commonly referred to as CECL. Cadence can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements. The forward-looking statements are made as of the date of this communication, and Cadence does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.

About Non-GAAP Financial Measures

Certain of the financial measures and ratios we present, including “efficiency ratio,” “adjusted efficiency ratio,” “adjusted noninterest expenses,” “adjusted operating revenue,” “tangible common equity ratio,” “tangible book value per share” and “return on average tangible common equity”, “adjusted return on average tangible common equity”, “adjusted return on average assets”, “adjusted diluted earnings per share”, and “pre-tax, pre-provision net revenue” are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis.

We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.

These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance. A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables (Table 10).

Table 1 – Selected Financial Data

 

 

As of and for the Three Months Ended

 

 

As of and for the
Years Ended December 31,

 

(In thousands, except per share data)

 

4Q20

 

 

3Q20

 

 

2Q20

 

 

1Q20

 

 

4Q19

 

 

2020

 

 

2019

 

Statement of Operations Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

170,739

 

 

$

170,497

 

 

$

177,175

 

 

$

192,754

 

 

$

207,620

 

 

$

711,166

 

 

$

860,076

 

Interest expense

 

 

13,998

 

 

 

16,455

 

 

 

22,461

 

 

 

39,286

 

 

 

46,709

 

 

 

92,200

 

 

 

208,903

 

Net interest income

 

 

156,741

 

 

 

154,042

 

 

 

154,714

 

 

 

153,468

 

 

 

160,911

 

 

 

618,966

 

 

 

651,173

 

Provision for credit losses

 

 

2,835

 

 

 

32,973

 

 

 

158,811

 

 

 

83,429

 

 

 

27,126

 

 

 

278,048

 

 

 

111,027

 

Net interest income after provision

 

 

153,906

 

 

 

121,069

 

 

 

(4,097

)

 

 

70,039

 

 

 

133,785

 

 

 

340,918

 

 

 

540,146

 

Noninterest income (1)

 

 

209,745

 

 

 

32,591

 

 

 

29,950

 

 

 

35,069

 

 

 

33,898

 

 

 

307,355

 

 

 

130,925

 

Noninterest expense (2)

 

 

105,331

 

 

 

94,859

 

 

 

88,620

 

 

 

537,653

 

 

 

100,519

 

 

 

826,464

 

 

 

408,770

 

Income (loss) before income taxes

 

 

258,320

 

 

 

58,801

 

 

 

(62,767

)

 

 

(432,545

)

 

 

67,164

 

 

 

(178,191

)

 

 

262,301

 

Income tax expense (benefit)

 

 

57,737

 

 

 

9,486

 

 

 

(6,653

)

 

 

(33,234

)

 

 

15,738

 

 

 

27,336

 

 

 

60,343

 

Net income (loss)

 

$

200,583

 

 

$

49,315

 

 

$

(56,114

)

 

$

(399,311

)

 

$

51,426

 

 

$

(205,527

)

 

$

201,958

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

125,974

 

 

 

125,957

 

 

 

125,925

 

 

 

126,630

 

 

 

127,954

 

 

 

126,121

 

 

 

128,914

 

Diluted

 

 

126,409

 

 

 

126,095

 

 

 

125,925

 

 

 

126,630

 

 

 

128,003

 

 

 

126,121

 

 

 

129,018

 

Earnings (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.58

 

 

$

0.39

 

 

$

(0.45

)

 

$

(3.15

)

 

$

0.40

 

 

$

(1.63

)

 

$

1.56

 

Diluted

 

 

1.57

 

 

 

0.39

 

 

 

(0.45

)

 

 

(3.15

)

 

 

0.40

 

 

 

(1.63

)

 

 

1.56

 

Period-End Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,053,946

 

 

$

1,247,172

 

 

$

1,899,369

 

 

$

609,351

 

 

$

988,764

 

 

$

2,053,946

 

 

$

988,764

 

Investment securities

 

 

3,332,168

 

 

 

3,088,699

 

 

 

2,661,433

 

 

 

2,461,644

 

 

 

2,368,592

 

 

 

3,332,168

 

 

 

2,368,592

 

Total loans, net of unearned income

 

 

12,719,129

 

 

 

13,465,556

 

 

 

13,699,097

 

 

 

13,392,191

 

 

 

12,983,655

 

 

 

12,719,129

 

 

 

12,983,655

 

Allowance for credit losses

 

 

367,160

 

 

 

385,412

 

 

 

370,901

 

 

 

245,246

 

 

 

119,643

 

 

 

367,160

 

 

 

119,643

 

Total assets

 

 

18,712,567

 

 

 

18,404,195

 

 

 

18,857,753

 

 

 

17,237,918

 

 

 

17,800,229

 

 

 

18,712,567

 

 

 

17,800,229

 

Total deposits

 

 

16,052,245

 

 

 

15,786,221

 

 

 

16,069,282

 

 

 

14,489,505

 

 

 

14,742,794

 

 

 

16,052,245

 

 

 

14,742,794

 

Noninterest-bearing deposits

 

 

5,033,748

 

 

 

5,033,338

 

 

 

5,220,109

 

 

 

3,959,721

 

 

 

3,833,704

 

 

 

5,033,748

 

 

 

3,833,704

 

Interest-bearing deposits

 

 

11,018,497

 

 

 

10,752,883

 

 

 

10,849,173

 

 

 

10,529,784

 

 

 

10,909,090

 

 

 

11,018,497

 

 

 

10,909,090

 

Borrowings and subordinated debentures

 

 

372,669

 

 

 

372,446

 

 

 

372,222

 

 

 

372,440

 

 

 

372,173

 

 

 

372,669

 

 

 

372,173

 

Total shareholders’ equity

 

 

2,121,102

 

 

 

2,071,472

 

 

 

2,045,480

 

 

 

2,113,543

 

 

 

2,460,846

 

 

 

2,121,102

 

 

 

2,460,846

 

Average Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

$

3,201,722

 

 

$

2,960,357

 

 

$

2,487,467

 

 

$

2,397,275

 

 

$

2,003,339

 

 

$

2,763,450

 

 

$

1,776,689

 

Total loans, net of unearned income

 

 

13,238,440

 

 

 

13,652,395

 

 

 

13,884,220

 

 

 

13,161,371

 

 

 

13,423,435

 

 

 

13,483,895

 

 

 

13,714,731

 

Allowance for credit losses

 

 

393,306

 

 

 

389,243

 

 

 

267,464

 

 

 

201,785

 

 

 

132,975

 

 

 

313,377

 

 

 

114,256

 

Total assets

 

 

18,354,046

 

 

 

18,248,014

 

 

 

18,500,600

 

 

 

17,694,018

 

 

 

17,843,383

 

 

 

18,199,726

 

 

 

17,689,126

 

Total deposits

 

 

15,736,884

 

 

 

15,628,314

 

 

 

15,774,787

 

 

 

14,574,614

 

 

 

14,749,327

 

 

 

15,430,038

 

 

 

14,628,628

 

Noninterest-bearing deposits

 

 

5,245,478

 

 

 

4,892,079

 

 

 

4,587,673

 

 

 

3,658,612

 

 

 

3,648,874

 

 

 

4,598,544

 

 

 

3,431,300

 

Interest-bearing deposits

 

 

10,491,406

 

 

 

10,736,235

 

 

 

11,187,115

 

 

 

10,916,002

 

 

 

11,100,454

 

 

 

10,831,494

 

 

 

11,197,328

 

Borrowings and subordinated debentures

 

 

372,920

 

 

 

372,304

 

 

 

372,547

 

 

 

439,698

 

 

 

374,179

 

 

 

389,275

 

 

 

437,186

 

Total shareholders’ equity

 

 

2,072,030

 

 

 

2,052,079

 

 

 

2,118,796

 

 

 

2,446,810

 

 

 

2,471,398

 

 

 

2,171,826

 

 

 

2,373,856

 

(1)

The quarter ended December 31, 2020, includes hedge revenue of $169.2 million, $129.5 million after tax.

(2)

The quarter ended March 31, 2020, includes the non-cash goodwill impairment charge of $443.7 million, $412.9 million after-tax.

Table 1 (Continued) – Selected Financial Data

 

 

As of and for the Three Months Ended

 

 

As of and for the
Years Ended December 31,

 

(In thousands, except per share data)

 

4Q20 (4)

 

 

3Q20

 

 

2Q20

 

 

1Q20

 

 

4Q19

 

 

2020 (4)

 

 

2019

 

Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value

 

$

16.84

 

 

$

16.45

 

 

$

16.24

 

 

$

16.79

 

 

$

19.29

 

 

$

16.84

 

 

$

19.29

 

Tangible book value (1)

 

 

15.83

 

 

 

15.40

 

 

 

15.15

 

 

 

15.65

 

 

 

14.65

 

 

 

15.83

 

 

 

14.65

 

Cash dividends declared

 

 

0.075

 

 

 

0.050

 

 

 

0.050

 

 

 

0.175

 

 

 

0.175

 

 

 

0.350

 

 

 

0.700

 

Dividend payout ratio

 

 

4.75

%

 

 

12.82

%

 

 

(11.11

)%

 

 

(5.56

)%

 

 

43.75

%

 

 

(21.47

)%

 

 

44.87

%

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average common equity (2)

 

 

38.51

%

 

 

9.56

%

 

 

(10.65

)%

 

 

(65.64

)%

 

 

8.26

%

 

 

(9.46

)%

 

 

8.51

%

Return on average tangible common equity (1) (2)

 

 

41.90

 

 

 

11.08

 

 

 

(10.56

)

 

 

3.86

 

 

 

11.82

 

 

 

11.63

 

 

 

12.40

 

Return on average assets (2)

 

 

4.35

 

 

 

1.08

 

 

 

(1.22

)

 

 

(9.08

)

 

 

1.14

 

 

 

(1.13

)

 

 

1.14

 

Net interest margin (2)

 

 

3.54

 

 

 

3.49

 

 

 

3.51

 

 

 

3.80

 

 

 

3.89

 

 

 

3.58

 

 

 

4.00

 

Efficiency ratio (1)

 

 

28.74

 

 

 

50.83

 

 

 

47.99

 

 

 

285.17

 

 

 

51.60

 

 

 

89.22

 

 

 

52.27

 

Adjusted efficiency ratio (1)

 

 

28.79

 

 

 

49.45

 

 

 

47.93

 

 

 

49.88

 

 

 

50.91

 

 

 

41.04

 

 

 

48.64

 

Asset Quality Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total NPA to total loans, OREO, and other NPA

 

 

1.24

%

 

 

1.55

%

 

 

1.74

%

 

 

1.31

%

 

 

0.97

%

 

 

1.24

%

 

 

0.97

%

Total nonperforming loans ("NPL") to total loans

 

 

1.08

 

 

 

1.40

 

 

 

1.64

 

 

 

1.19

 

 

 

0.92

 

 

 

1.08

 

 

 

0.92

 

Total ACL to total loans

 

 

2.89

 

 

 

2.86

 

 

 

2.71

 

 

 

1.83

 

 

 

0.92

 

 

 

2.89

 

 

 

0.92

 

ACL to total NPL

 

 

266.05

 

 

 

203.82

 

 

 

165.30

 

 

 

153.61

 

 

 

100.07

 

 

 

266.05

 

 

 

100.07

 

Net charge-offs to average loans (2)

 

 

0.64

 

 

 

0.58

 

 

 

0.94

 

 

 

0.99

 

 

 

1.04

 

 

 

0.79

 

 

 

0.63

 

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders’ equity to assets

 

 

11.3

%

 

 

11.3

%

 

 

10.8

%

 

 

12.3

%

 

 

13.8

%

 

 

11.3

%

 

 

13.8

%

Tangible common equity to tangible assets (1)

 

 

10.7

 

 

 

10.6

 

 

 

10.2

 

 

 

11.5

 

 

 

10.9

 

 

 

10.7

 

 

 

10.9

 

Common equity Tier 1 capital (3)

 

 

14.0

 

 

 

12.0

 

 

 

11.7

 

 

 

11.4

 

 

 

11.5

 

 

 

14.0

 

 

 

11.5

 

Tier 1 leverage capital (3)

 

 

10.9

 

 

 

9.9

 

 

 

9.5

 

 

 

10.1

 

 

 

10.3

 

 

 

10.9

 

 

 

10.3

 

Tier 1 risk-based capital (3)

 

 

14.0

 

 

 

12.0

 

 

 

11.7

 

 

 

11.4

 

 

 

11.5

 

 

 

14.0

 

 

 

11.5

 

Total risk-based capital (3)

 

 

16.7

 

 

 

14.7

 

 

 

14.3

 

 

 

13.8

 

 

 

13.7

 

 

 

16.7

 

 

 

13.7

 

_____________________

(1)

 

Considered a non-GAAP financial measure. See Table 10 "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

(2)

 

Quarterly periods are annualized.

(3)

 

Current quarter regulatory capital ratios are estimates.

(4)

 

Asset Quality Ratios do not include nonperforming loans held for sale of $176 thousand.

Table 2 – Average Balances/Yield/Rates

 

 

For the Three Months Ended December 31,

 

 

 

2020

 

 

2019

 

 

 

Average

 

 

Income/

 

 

Yield/

 

 

Average

 

 

Income/

 

 

Yield/

 

(In thousands)

 

Balance

 

 

Expense

 

 

Rate

 

 

Balance

 

 

Expense

 

 

Rate

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned income (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated loans

 

$

10,939,304

 

 

$

125,535

 

 

 

4.57

%

 

$

10,160,970

 

 

$

134,450

 

 

 

5.25

%

ANCI portfolio

 

 

2,126,553

 

 

 

25,943

 

 

 

4.85

 

 

 

3,017,005

 

 

 

46,247

 

 

 

6.08

 

PCD portfolio (3)

 

 

172,583

 

 

 

3,820

 

 

 

8.81

 

 

 

245,474

 

 

 

9,857

 

 

 

15.93

 

Total loans

 

 

13,238,440

 

 

 

155,298

 

 

 

4.67

 

 

 

13,423,449

 

 

 

190,554

 

 

 

5.63

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

2,895,541

 

 

 

12,597

 

 

 

1.73

 

 

 

1,806,932

 

 

 

11,699

 

 

 

2.57

 

Tax-exempt (2)

 

 

306,181

 

 

 

2,427

 

 

 

3.15

 

 

 

196,407

 

 

 

1,829

 

 

 

3.69

 

Total investment securities

 

 

3,201,722

 

 

 

15,024

 

 

 

1.87

 

 

 

2,003,339

 

 

 

13,528

 

 

 

2.68

 

Federal funds sold and short-term investments

 

 

1,178,973

 

 

 

548

 

 

 

0.18

 

 

 

930,910

 

 

 

3,392

 

 

 

1.45

 

Other investments

 

 

76,878

 

 

 

380

 

 

 

1.97

 

 

 

77,348

 

 

 

530

 

 

 

2.72

 

Total interest-earning assets

 

 

17,696,013

 

 

 

171,250

 

 

 

3.85

 

 

 

16,435,046

 

 

 

208,004

 

 

 

5.02

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

216,116

 

 

 

 

 

 

 

 

 

 

 

107,180

 

 

 

 

 

 

 

 

 

Premises and equipment

 

 

125,955

 

 

 

 

 

 

 

 

 

 

 

128,458

 

 

 

 

 

 

 

 

 

Accrued interest and other assets

 

 

709,268

 

 

 

 

 

 

 

 

 

 

 

1,305,674

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

 

(393,306

)

 

 

 

 

 

 

 

 

 

 

(132,975

)

 

 

 

 

 

 

 

 

Total assets

 

$

18,354,046

 

 

 

 

 

 

 

 

 

 

$

17,843,383

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

7,881,093

 

 

$

4,145

 

 

 

0.21

%

 

$

8,195,455

 

 

$

26,946

 

 

 

1.30

%

Savings deposits

 

 

336,304

 

 

 

127

 

 

 

0.15

 

 

 

262,638

 

 

 

320

 

 

 

0.48

 

Time deposits

 

 

2,274,009

 

 

 

5,711

 

 

 

1.00

 

 

 

2,642,361

 

 

 

14,983

 

 

 

2.25

 

Total interest-bearing deposits

 

 

10,491,406

 

 

 

9,983

 

 

 

0.38

 

 

 

11,100,454

 

 

 

42,249

 

 

 

1.51

 

Other borrowings

 

 

149,981

 

 

 

931

 

 

 

2.47

 

 

 

152,102

 

 

 

953

 

 

 

2.49

 

Subordinated debentures

 

 

222,939

 

 

 

3,085

 

 

 

5.51

 

 

 

222,077

 

 

 

3,507

 

 

 

6.27

 

Total interest-bearing liabilities

 

 

10,864,326

 

 

 

13,999

 

 

 

0.51

 

 

 

11,474,633

 

 

 

46,709

 

 

 

1.61

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

5,245,478

 

 

 

 

 

 

 

 

 

 

 

3,648,874

 

 

 

 

 

 

 

 

 

Accrued interest and other liabilities

 

 

172,212

 

 

 

 

 

 

 

 

 

 

 

248,478

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

16,282,016

 

 

 

 

 

 

 

 

 

 

 

15,371,985

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

2,072,030

 

 

 

 

 

 

 

 

 

 

 

2,471,398

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

18,354,046

 

 

 

 

 

 

 

 

 

 

$

17,843,383

 

 

 

 

 

 

 

 

 

Net interest income/net interest spread

 

 

 

 

 

 

157,251

 

 

 

3.34

%

 

 

 

 

 

 

161,295

 

 

 

3.40

%

Net yield on earning assets/net interest margin

 

 

 

 

 

 

 

 

 

 

3.54

%

 

 

 

 

 

 

 

 

 

 

3.89

%

Taxable equivalent adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

 

 

 

 

 

(510

)

 

 

 

 

 

 

 

 

 

 

(384

)

 

 

 

 

Net interest income

 

 

 

 

 

$

156,741

 

 

 

 

 

 

 

 

 

 

$

160,911

 

 

 

 

 

_____________________

(1)

Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made for these loans in the calculation of yields.

(2)

Interest income and yields are presented on a fully taxable equivalent basis using an income tax rate of 21%.

(3)

Prior to the adoption of CECL on January 1, 2020, these loans were referred to as ACI loans, but with the adoption of CECL they are referred to as PCD loans.

Table 2 (Continued) – Average Balances/Yield/Rates

 

 

For the Three Months Ended December 31, 2020

 

 

For the Three Months Ended September 30, 2020

 

 

 

Average

 

 

Income/

 

 

Yield/

 

 

Average

 

 

Income/

 

 

Yield/

 

(In thousands)

 

Balance

 

 

Expense

 

 

Rate

 

 

Balance

 

 

Expense

 

 

Rate

 

ASSETS

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned income (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated loans

 

$

10,939,304

 

 

$

125,535

 

 

 

4.57

%

 

$

11,168,913

 

 

$

123,177

 

 

 

4.39

%

ANCI portfolio

 

 

2,126,553

 

 

 

25,943

 

 

 

4.85

 

 

 

2,295,097

 

 

 

28,214

 

 

 

4.89

 

PCD portfolio (3)

 

 

172,583

 

 

 

3,820

 

 

 

8.81

 

 

 

188,385

 

 

 

3,460

 

 

 

7.31

 

Total loans

 

 

13,238,440

 

 

 

155,298

 

 

 

4.67

 

 

 

13,652,395

 

 

 

154,851

 

 

 

4.51

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

2,895,541

 

 

 

12,597

 

 

 

1.73

 

 

 

2,694,012

 

 

 

13,164

 

 

 

1.94

 

Tax-exempt (2)

 

 

306,181

 

 

 

2,427

 

 

 

3.15

 

 

 

266,345

 

 

 

2,150

 

 

 

3.21

 

Total investment securities

 

 

3,201,722

 

 

 

15,024

 

 

 

1.87

 

 

 

2,960,357

 

 

 

15,314

 

 

 

2.06

 

Federal funds sold and short-term investments

 

 

1,178,973

 

 

 

548

 

 

 

0.18

 

 

 

942,017

 

 

 

432

 

 

 

0.18

 

Other investments

 

 

76,878

 

 

 

380

 

 

 

1.97

 

 

 

77,262

 

 

 

350

 

 

 

1.80

 

Total interest-earning assets

 

 

17,696,013

 

 

 

171,250

 

 

 

3.85

 

 

 

17,632,031

 

 

 

170,947

 

 

 

3.86

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

216,116

 

 

 

 

 

 

 

 

 

 

 

170,241

 

 

 

 

 

 

 

 

 

Premises and equipment

 

 

125,955

 

 

 

 

 

 

 

 

 

 

 

127,432

 

 

 

 

 

 

 

 

 

Accrued interest and other assets

 

 

709,268

 

 

 

 

 

 

 

 

 

 

 

707,553

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

 

(393,306

)

 

 

 

 

 

 

 

 

 

 

(389,243

)

 

 

 

 

 

 

 

 

Total assets

 

$

18,354,046

 

 

 

 

 

 

 

 

 

 

$

18,248,014

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

7,881,093

 

 

$

4,145

 

 

 

0.21

%

 

$

8,037,801

 

 

$

4,681

 

 

 

0.23

%

Savings deposits

 

 

336,304

 

 

 

127

 

 

 

0.15

 

 

 

319,004

 

 

 

140

 

 

 

0.17

 

Time deposits

 

 

2,274,009

 

 

 

5,711

 

 

 

1.00

 

 

 

2,379,430

 

 

 

7,741

 

 

 

1.29

 

Total interest-bearing deposits

 

 

10,491,406

 

 

 

9,983

 

 

 

0.38

 

 

 

10,736,235

 

 

 

12,562

 

 

 

0.47

 

Other borrowings

 

 

149,981

 

 

 

931

 

 

 

2.47

 

 

 

149,973

 

 

 

931

 

 

 

2.47

 

Subordinated debentures

 

 

222,939

 

 

 

3,085

 

 

 

5.51

 

 

 

222,331

 

 

 

2,961

 

 

 

5.30

 

Total interest-bearing liabilities

 

 

10,864,326

 

 

 

13,999

 

 

 

0.51

 

 

 

11,108,539

 

 

 

16,454

 

 

 

0.59

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

5,245,478

 

 

 

 

 

 

 

 

 

 

 

4,892,079

 

 

 

 

 

 

 

 

 

Accrued interest and other liabilities

 

 

172,212

 

 

 

 

 

 

 

 

 

 

 

195,317

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

16,282,016

 

 

 

 

 

 

 

 

 

 

 

16,195,935

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

2,072,030

 

 

 

 

 

 

 

 

 

 

 

2,052,079

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

18,354,046

 

 

 

 

 

 

 

 

 

 

$

18,248,014

 

 

 

 

 

 

 

 

 

Net interest income/net interest spread

 

 

 

 

 

 

157,251

 

 

 

3.34

%

 

 

 

 

 

 

154,493

 

 

 

3.27

%

Net yield on earning assets/net interest margin

 

 

 

 

 

 

 

 

 

 

3.54

%

 

 

 

 

 

 

 

 

 

 

3.49

%

Taxable equivalent adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

 

 

 

 

 

(510

)

 

 

 

 

 

 

 

 

 

 

(451

)

 

 

 

 

Net interest income

 

 

 

 

 

$

156,741

 

 

 

 

 

 

 

 

 

 

$

154,042

 

 

 

 

 

_____________________

(1)

Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made for these loans in the calculation of yields.

(2)

Interest income and yields are presented on a fully taxable equivalent basis using an income tax rate of 21%.

(3)

Prior to the adoption of CECL on January 1, 2020, these loans were referred to as ACI loans, but with the adoption of CECL they are referred to as PCD loans.

Table 2 (Continued) – Average Balances/Yield/Rates

 

 

For the Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

 

Average

 

 

Income/

 

 

Yield/

 

 

Average

 

 

Income/

 

 

Yield/

 

(In thousands)

 

Balance

 

 

Expense

 

 

Rate

 

 

Balance

 

 

Expense

 

 

Rate

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned income (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated loans

 

$

10,874,853

 

 

$

504,036

 

 

 

4.63

%

 

$

10,053,507

 

 

$

542,543

 

 

 

5.40

%

ANCI portfolio

 

 

2,415,141

 

 

 

127,774

 

 

 

5.29

 

 

 

3,387,367

 

 

 

219,183

 

 

 

6.47

 

PCD portfolio (3)

 

 

193,902

 

 

 

16,328

 

 

 

8.42

 

 

 

273,857

 

 

 

34,559

 

 

 

12.62

 

Total loans

 

 

13,483,895

 

 

 

648,138

 

 

 

4.81

 

 

 

13,714,731

 

 

 

796,285

 

 

 

5.81

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

2,515,807

 

 

 

51,983

 

 

 

2.07

 

 

 

1,568,599

 

 

 

42,450

 

 

 

2.71

 

Tax-exempt (2)

 

 

247,643

 

 

 

8,332

 

 

 

3.36

 

 

 

208,090

 

 

 

7,983

 

 

 

3.84

 

Total investment securities

 

 

2,763,450

 

 

 

60,315

 

 

 

2.18

 

 

 

1,776,689

 

 

 

50,433

 

 

 

2.84

 

Federal funds sold and short-term investments

 

 

1,023,367

 

 

 

3,092

 

 

 

0.30

 

 

 

759,026

 

 

 

12,762

 

 

 

1.68

 

Other investments

 

 

77,908

 

 

 

1,371

 

 

 

1.76

 

 

 

70,127

 

 

 

2,274

 

 

 

3.24

 

Total interest-earning assets

 

 

17,348,620

 

 

 

712,916

 

 

 

4.11

 

 

 

16,320,573

 

 

 

861,754

 

 

 

5.28

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

203,413

 

 

 

 

 

 

 

 

 

 

 

115,268

 

 

 

 

 

 

 

 

 

Premises and equipment

 

 

127,151

 

 

 

 

 

 

 

 

 

 

 

128,448

 

 

 

 

 

 

 

 

 

Accrued interest and other assets

 

 

833,919

 

 

 

 

 

 

 

 

 

 

 

1,239,093

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

 

(313,377

)

 

 

 

 

 

 

 

 

 

 

(114,256

)

 

 

 

 

 

 

 

 

Total assets

 

$

18,199,726

 

 

 

 

 

 

 

 

 

 

$

17,689,126

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

8,101,392

 

 

$

38,005

 

 

 

0.47

%

 

$

7,983,237

 

 

$

117,462

 

 

 

1.47

%

Savings deposits

 

 

305,031

 

 

 

763

 

 

 

0.25

 

 

 

253,170

 

 

 

1,066

 

 

 

0.42

 

Time deposits

 

 

2,425,071

 

 

 

36,647

 

 

 

1.51

 

 

 

2,960,921

 

 

 

69,550

 

 

 

2.35

 

Total interest-bearing deposits

 

 

10,831,494

 

 

 

75,415

 

 

 

0.70

 

 

 

11,197,328

 

 

 

188,078

 

 

 

1.68

 

Other borrowings

 

 

166,730

 

 

 

3,906

 

 

 

2.34

 

 

 

256,815

 

 

 

8,704

 

 

 

3.39

 

Subordinated debentures

 

 

222,545

 

 

 

12,879

 

 

 

5.79

 

 

 

180,371

 

 

 

12,121

 

 

 

6.72

 

Total interest-bearing liabilities

 

 

11,220,769

 

 

 

92,200

 

 

 

0.82

 

 

 

11,634,514

 

 

 

208,903

 

 

 

1.80

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

4,598,544

 

 

 

 

 

 

 

 

 

 

 

3,431,300

 

 

 

 

 

 

 

 

 

Accrued interest and other liabilities

 

 

208,587

 

 

 

 

 

 

 

 

 

 

 

249,456

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

16,027,900

 

 

 

 

 

 

 

 

 

 

 

15,315,270

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

2,171,826

 

 

 

 

 

 

 

 

 

 

 

2,373,856

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

18,199,726

 

 

 

 

 

 

 

 

 

 

$

17,689,126

 

 

 

 

 

 

 

 

 

Net interest income/net interest spread

 

 

 

 

 

 

620,716

 

 

 

3.29

%

 

 

 

 

 

 

652,851

 

 

 

3.48

%

Net yield on earning assets/net interest margin

 

 

 

 

 

 

 

 

 

 

3.58

%

 

 

 

 

 

 

 

 

 

 

4.00

%

Taxable equivalent adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

 

 

 

 

 

(1,750

)

 

 

 

 

 

 

 

 

 

 

(1,678

)

 

 

 

 

Net interest income

 

 

 

 

 

$

618,966

 

 

 

 

 

 

 

 

 

 

$

651,173

 

 

 

 

 

_____________________

(1)

Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made for these loans in the calculation of yields.

(2)

Interest income and yields are presented on a fully taxable equivalent basis using an income tax rate of 21%.

(3)

Prior to the adoption of CECL on January 1, 2020, these loans were referred to as ACI loans, but with the adoption of CECL they are referred to as PCD loans.

Table 3 – Loan Interest Income Detail

 

For the Three Months Ended,

For the Year Ended,

 

(In thousands)

4Q20

 

 

3Q20

 

 

2Q20

 

 

1Q20

 

 

4Q19

 

 

December
31,
2020

 

 

December
31,
2019

 

Interest Income Detail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated loans

$

125,535

 

 

$

123,177

 

 

$

125,922

 

 

$

129,402

 

 

$

134,450

 

 

$

504,036

 

 

$

542,543

 

ANCI loans: interest income

 

20,507

 

 

 

22,850

 

 

 

26,264

 

 

 

32,940

 

 

 

37,637

 

 

 

102,562

 

 

 

180,974

 

ANCI loans: accretion

 

5,436

 

 

 

5,364

 

 

 

6,703

 

 

 

7,710

 

 

 

8,610

 

 

 

25,212

 

 

 

38,209

 

PCD loans: interest income (1)

 

3,355

 

 

 

2,421

 

 

 

3,111

 

 

 

3,039

 

 

 

3,839

 

 

 

11,926

 

 

 

29,927

 

PCD loans: accretion (1)

 

465

 

 

 

1,039

 

 

 

854

 

 

 

2,043

 

 

 

6,018

 

 

 

4,402

 

 

 

4,632

 

Total loan interest income

$

155,298

 

 

$

154,851

 

 

$

162,854

 

 

$

175,134

 

 

$

190,554

 

 

$

648,138

 

 

$

796,285

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yields

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated loans

 

4.57

%

 

 

4.39

%

 

 

4.53

 

%

 

5.10

 

%

 

5.25

 

%

 

4.63

%

 

 

5.40

%

ANCI loans without discount accretion

 

3.84

 

 

 

3.96

 

 

 

4.20

 

 

 

4.85

 

 

 

4.95

 

 

 

4.25

 

 

 

5.34

 

ANCI loans discount accretion

 

1.01

 

 

 

0.93

 

 

 

1.08

 

 

 

1.14

 

 

 

1.13

 

 

 

1.04

 

 

 

1.13

 

PCD loans without discount accretion

 

7.73

 

 

 

5.11

 

 

 

6.30

 

 

 

5.65

 

 

 

6.20

 

 

 

6.15

 

 

 

10.93

 

PCD loans discount accretion

 

1.08

 

 

 

2.20

 

 

 

1.73

 

 

 

3.80

 

 

 

9.73

 

 

 

2.27

 

 

 

1.69

 

Total loan yield

 

4.67

%

 

 

4.51

%

 

 

4.72

 

%

 

5.35

 

%

 

5.63

 

%

 

4.81

%

 

 

5.81

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Prior year PCD amounts have been revised to be comparable to the current year presentation. Interest income for PCD loans represents contractual interest.

Table 4 – Allowance for Credit Losses (“ACL”) (1)

 

 

For the Three Months Ended

 

 

For the Year Ended
December 31,

 

(In thousands)

 

4Q20

 

 

3Q20

 

 

2Q20

 

 

1Q20

 

 

4Q19

 

 

2020

 

 

2019

 

Balance at beginning of period

 

$

385,412

 

 

$

370,901

 

 

$

245,246

 

 

$

119,643

 

 

$

127,773

 

 

$

119,643

 

 

$

94,378

 

Cumulative effect of the adoption of CECL (2)

 

 

 

 

 

 

 

 

 

 

 

75,850

 

 

 

 

 

 

75,850

 

 

 

 

Charge-offs

 

 

(23,956

)

 

 

(21,830

)

 

 

(33,452

)

 

 

(33,098

)

 

 

(35,432

)

 

 

(112,336

)

 

 

(87,001

)

Recoveries

 

 

2,770

 

 

 

1,936

 

 

 

901

 

 

 

613

 

 

 

176

 

 

 

6,220

 

 

 

1,239

 

Net charge-offs

 

 

(21,186

)

 

 

(19,894

)

 

 

(32,551

)

 

 

(32,485

)

 

 

(35,256

)

 

 

(106,116

)

 

 

(85,762

)

Provision for loan losses

 

 

2,934

 

 

 

34,405

 

 

 

158,206

 

 

 

82,238

 

 

 

27,126

 

 

 

277,783

 

 

 

111,027

 

Balance at end of period

 

$

367,160

 

 

$

385,412

 

 

$

370,901

 

 

$

245,246

 

 

$

119,643

 

 

$

367,160

 

 

$

119,643

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

This table represents the activity in the ACL for funded loans.

(2)

The Company adopted ASU 2016-13, Financial Instruments – Credit Losses (“CECL”), on January 1, 2020 and recorded this cumulative effect adjustment as a result of accounting change.

Table 5 – ACL Activity by Segment

 

 

For the Three Months Ended December 31, 2020

 

(In thousands)

 

Commercial
and
Industrial

 

 

Commercial
Real Estate

 

 

Consumer

 

 

Total
Allowance for
Credit Losses

 

 

Reserve for
Unfunded
Commitments (1)

 

 

Total

 

As of September 30, 2020

 

$

202,197

 

 

$

143,008

 

 

$

40,207

 

 

$

385,412

 

 

$

2,395

 

 

$

387,807

 

Provision for credit losses

 

 

(2,990

)

 

 

7,372

 

 

 

(1,448

)

 

 

2,934

 

 

 

(99

)

 

 

2,835

 

Charge-offs

 

 

(12,870

)

 

 

(10,500

)

 

 

(586

)

 

 

(23,956

)

 

 

 

 

 

(23,956

)

Recoveries

 

 

1,028

 

 

 

1,307

 

 

 

435

 

 

 

2,770

 

 

 

 

 

 

2,770

 

As of December 31, 2020

 

$

187,365

 

 

$

141,187

 

 

$

38,608

 

 

$

367,160

 

 

$

2,296

 

 

$

369,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31, 2020

 

(In thousands)

 

Commercial
and
Industrial

 

 

Commercial
Real Estate

 

 

Consumer

 

 

Total
Allowance for
Credit Losses

 

 

Reserve for
Unfunded
Commitments (1)

 

 

Total

 

As of December 31, 2019

 

$

89,796

 

 

$

15,319

 

 

$

14,528

 

 

$

119,643

 

 

$

1,699

 

 

$

121,342

 

Cumulative effect of the adoption of CECL

 

 

32,951

 

 

 

20,599

 

 

 

22,300

 

 

 

75,850

 

 

 

332

 

 

 

76,182

 

As of January 1, 2020

 

 

122,747

 

 

 

35,918

 

 

 

36,828

 

 

 

195,493

 

 

 

2,031

 

 

 

197,524

 

Provision for credit losses

 

 

157,580

 

 

 

117,792

 

 

 

2,411

 

 

 

277,783

 

 

 

265

 

 

 

278,048

 

Charge-offs

 

 

(96,277

)

 

 

(14,283

)

 

 

(1,776

)

 

 

(112,336

)

 

 

 

 

 

(112,336

)

Recoveries

 

 

3,315

 

 

 

1,760

 

 

 

1,145

 

 

 

6,220

 

 

 

 

 

 

6,220

 

As of December 31, 2020

 

$

187,365

 

 

$

141,187

 

 

$

38,608

 

 

$

367,160

 

 

$

2,296

 

 

$

369,456

 

(1)

The reserve for unfunded commitments is recorded in other liabilities in the consolidated balance sheets.

Table 6 – Criticized Loans by Segment

 

 

As of December 31, 2020

 

(Amortized cost in thousands)

 

Special Mention

 

 

Substandard

 

 

Doubtful

 

 

Total Criticized

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General C&I

 

$

61,910

 

 

$

90,896

 

 

$

12,583

 

 

$

165,389

 

Energy

 

 

93,708

 

 

 

150,810

 

 

 

8,115

 

 

 

252,633

 

Restaurant

 

 

55,141

 

 

 

133,709

 

 

 

6,987

 

 

 

195,837

 

Healthcare

 

 

761

 

 

 

29,614

 

 

 

 

 

 

30,375

 

Total commercial and industrial

 

 

211,520

 

 

 

405,029

 

 

 

27,685

 

 

 

644,234

 

Commercial real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial, retail, and other

 

 

35,992

 

 

 

26,540

 

 

 

 

 

 

62,532

 

Hospitality (1)

 

 

54,449

 

 

 

83,460

 

 

 

 

 

 

137,909

 

Multifamily

 

 

90

 

 

 

198

 

 

 

 

 

 

288

 

Office

 

 

4,863

 

 

 

7,843

 

 

 

 

 

 

12,706

 

Total commercial real estate

 

 

95,394

 

 

 

118,041

 

 

 

 

 

 

213,435

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

 

 

 

14,023

 

 

 

 

 

 

14,023

 

Other

 

 

 

 

 

4

 

 

 

 

 

 

4

 

Total consumer

 

 

 

 

 

14,027

 

 

 

 

 

 

14,027

 

Total

 

$

306,914

 

 

$

537,097

 

 

$

27,685

 

 

$

871,696

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2020

 

(Amortized cost in thousands)

 

Special Mention

 

 

Substandard

 

 

Doubtful

 

 

Total Criticized

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General C&I

 

$

71,384

 

 

$

156,323

 

 

$

9,270

 

 

$

236,977

 

Energy sector

 

 

146,772

 

 

 

165,277

 

 

 

7,816

 

 

 

319,865

 

Restaurant industry

 

 

97,315

 

 

 

169,899

 

 

 

7,624

 

 

 

274,838

 

Healthcare

 

 

722

 

 

 

58,802

 

 

 

 

 

 

59,524

 

Total commercial and industrial

 

 

316,193

 

 

 

550,301

 

 

 

24,710

 

 

 

891,204

 

Commercial real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial, retail, and other

 

 

29,574

 

 

 

11,856

 

 

 

 

 

 

41,430

 

Hospitality (1)

 

 

64,323

 

 

 

46,465

 

 

 

 

 

 

110,788

 

Multifamily

 

 

91

 

 

 

200

 

 

 

 

 

 

291

 

Office

 

 

346

 

 

 

13,250

 

 

 

3,029

 

 

 

16,625

 

Total commercial real estate

 

 

94,334

 

 

 

71,771

 

 

 

3,029

 

 

 

169,134

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

 

 

 

 

22,770

 

 

 

 

 

 

22,770

 

Other

 

 

 

 

 

358

 

 

 

 

 

 

358

 

Total consumer

 

 

 

 

 

23,128

 

 

 

 

 

 

23,128

 

Total

 

$

410,527

 

 

$

645,200

 

 

$

27,739

 

 

$

1,083,466

 

(1)

Hospitality balances have historically been included in Industrial, retail, and other.

Table 7 – Nonperforming Assets

 

 

As of

 

(In thousands)

 

4Q20 (3)

 

 

3Q20

 

 

2Q20

 

 

1Q20

 

 

4Q19

 

Nonperforming loans (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

109,000

 

 

$

145,570

 

 

$

182,839

 

 

$

136,712

 

 

$

106,803

 

Commercial real estate

 

 

14,969

 

 

 

27,163

 

 

 

25,261

 

 

 

8,133

 

 

 

1,127

 

Consumer

 

 

14,033

 

 

 

16,364

 

 

 

16,284

 

 

 

14,808

 

 

 

7,289

 

Small business (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,337

 

Total nonperforming loans ("NPL")

 

 

138,002

 

 

 

189,097

 

 

 

224,384

 

 

 

159,653

 

 

 

119,556

 

Foreclosed OREO and other NPA

 

 

19,788

 

 

 

20,344

 

 

 

13,949

 

 

 

15,679

 

 

 

5,958

 

Total nonperforming assets

 

$

157,790

 

 

$

209,441

 

 

$

238,333

 

 

$

175,332

 

 

$

125,514

 

NPL as a percentage of total loans

 

 

1.08

%

 

 

1.40

%

 

 

1.64

%

 

 

1.19

%

 

 

0.92

%

NPA as a percentage of loans plus OREO/other

 

 

1.24

%

 

 

1.55

%

 

 

1.74

%

 

 

1.31

%

 

 

0.97

%

NPA as a percentage of total assets

 

 

0.84

%

 

 

1.14

%

 

 

1.26

%

 

 

0.99

%

 

 

0.71

%

Total accruing loans 90 days or more past due

 

$

13,880

 

 

$

7,260

 

 

$

3,123

 

 

$

1,999

 

 

$

23,364

 

(1)

 

Amounts are not comparable due to our adoption of CECL on January 1, 2020. Prior to this date, pools of individual ACI loans were excluded because they continued to earn interest income from the accretable yield at the pool level. With the adoption of CECL, the pools were discontinued, and performance is based on contractual terms for individual loans. Additionally, prior to January 1, 2020, we used recorded investment in this table. With the adoption of CECL, we now use amortized cost.

(2)

 

Upon the adoption of CECL, small business loans are included in commercial and industrial and commercial real estate loans.

(3)

 

Nonperforming loans do not include nonperforming loans held for sale of $176 thousand.

Table 8 – Noninterest Income

 

 

For the Three Months Ended

Years Ended
December 31,

 

(In thousands)

 

4Q20

 

 

3Q20

 

 

2Q20

 

 

1Q20

 

 

4Q19

 

 

2020

 

 

2019

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hedge revenue

 

$

169,248

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

169,248

 

 

$

 

Investment advisory revenue

 

 

7,457

 

 

 

6,797

 

 

 

6,505

 

 

 

5,605

 

 

 

6,920

 

 

 

26,364

 

 

 

24,890

 

Trust services revenue

 

 

4,885

 

 

 

4,556

 

 

 

4,092

 

 

 

4,815

 

 

 

4,713

 

 

 

18,349

 

 

 

18,066

 

Service charges on deposit accounts

 

 

6,028

 

 

 

5,847

 

 

 

4,852

 

 

 

6,416

 

 

 

5,181

 

 

 

23,143

 

 

 

20,503

 

Mortgage banking income

 

 

3,062

 

 

 

3,535

 

 

 

2,020

 

 

 

1,111

 

 

 

841

 

 

 

9,727

 

 

 

3,174

 

Credit-related fees

 

 

4,766

 

 

 

4,202

 

 

 

4,401

 

 

 

5,983

 

 

 

5,094

 

 

 

19,352

 

 

 

21,265

 

Bankcard fees

 

 

1,775

 

 

 

1,745

 

 

 

1,716

 

 

 

1,958

 

 

 

1,933

 

 

 

7,194

 

 

 

8,486

 

Payroll processing revenue

 

 

1,309

 

 

 

1,255

 

 

 

1,143

 

 

 

1,367

 

 

 

1,373

 

 

 

5,074

 

 

 

5,149

 

SBA income

 

 

2,889

 

 

 

3,037

 

 

 

1,335

 

 

 

1,908

 

 

 

2,153

 

 

 

9,169

 

 

 

7,232

 

Other service fees

 

 

1,751

 

 

 

1,450

 

 

 

1,528

 

 

 

1,912

 

 

 

1,701

 

 

 

6,641

 

 

 

7,412

 

Securities gains, net

 

 

1,353

 

 

 

79

 

 

 

2,286

 

 

 

2,994

 

 

 

317

 

 

 

6,712

 

 

 

2,018

 

Other

 

 

5,222

 

 

 

88

 

 

 

72

 

 

 

1,000

 

 

 

3,672

 

 

 

6,382

 

 

 

12,730

 

Total noninterest income

 

$

209,745

 

 

$

32,591

 

 

$

29,950

 

 

$

35,069

 

 

$

33,898

 

 

$

307,355

 

 

$

130,925

 

Table 9 – Noninterest Expenses

 

 

For the Three Months Ended

Years Ended
December 31,

 

(In thousands)

 

4Q20

 

 

3Q20

 

 

2Q20

 

 

1Q20

 

 

4Q19

 

 

2020

 

 

2019

 

Noninterest Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

59,833

 

 

$

51,734

 

 

$

47,158

 

 

$

48,807

 

 

$

54,840

 

 

$

207,532

 

 

$

213,874

 

Premises and equipment

 

 

11,036

 

 

 

10,716

 

 

 

10,634

 

 

 

10,808

 

 

 

11,618

 

 

 

43,194

 

 

 

44,637

 

Merger related expenses

 

 

 

 

 

2,105

 

 

 

 

 

 

1,282

 

 

 

925

 

 

 

3,386

 

 

 

28,497

 

Intangible asset amortization

 

 

5,164

 

 

 

5,299

 

 

 

5,472

 

 

 

5,592

 

 

 

5,876

 

 

 

21,528

 

 

 

23,862

 

Data processing

 

 

3,047

 

 

 

3,024

 

 

 

3,084

 

 

 

3,352

 

 

 

3,343

 

 

 

12,507

 

 

 

13,013

 

Software amortization

 

 

4,480

 

 

 

4,432

 

 

 

4,036

 

 

 

3,547

 

 

 

3,427

 

 

 

16,495

 

 

 

13,352

 

Consulting and professional fees

 

 

3,450

 

 

 

3,320

 

 

 

3,009

 

 

 

2,707

 

 

 

3,552

 

 

 

12,485

 

 

 

10,301

 

Loan related expenses

 

 

1,709

 

 

 

953

 

 

 

735

 

 

 

760

 

 

 

654

 

 

 

4,157

 

 

 

2,383

 

FDIC insurance

 

 

3,007

 

 

 

2,528

 

 

 

3,939

 

 

 

2,436

 

 

 

1,245

 

 

 

11,910

 

 

 

5,394

 

Communications

 

 

1,175

 

 

 

1,119

 

 

 

1,002

 

 

 

1,156

 

 

 

1,236

 

 

 

4,453

 

 

 

5,116

 

Advertising and public relations

 

 

956

 

 

 

716

 

 

 

920

 

 

 

1,464

 

 

 

1,764

 

 

 

4,057

 

 

 

5,017

 

Legal expenses

 

 

726

 

 

 

681

 

 

 

579

 

 

 

411

 

 

 

306

 

 

 

2,398

 

 

 

1,608

 

Other

 

 

10,748

 

 

 

8,232

 

 

 

8,052

 

 

 

11,636

 

 

 

11,732

 

 

 

38,667

 

 

 

41,716

 

Noninterest expenses excluding goodwill impairment charge

 

 

105,331

 

 

 

94,859

 

 

 

88,620

 

 

 

93,958

 

 

 

100,519

 

 

 

382,769

 

 

 

408,770

 

Goodwill impairment charge

 

 

 

 

 

 

 

 

 

 

 

443,695

 

 

 

 

 

 

443,695

 

 

 

 

Total noninterest expenses

 

$

105,331

 

 

$

94,859

 

 

$

88,620

 

 

$

537,653

 

 

$

100,519

 

 

$

826,464

 

 

$

408,770

 

Table 10 – Reconciliation of Non-GAAP Financial Measures

 

As of and for the Three Months Ended

 

As of and for the
Year Ended December 31,

 

(In thousands, except share and per share data)

4Q20

 

3Q20

 

2Q20

 

1Q20

 

4Q19

 

2020

 

2019

 

Efficiency ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expenses (numerator)

$

105,331

 

$

94,859

 

$

88,620

 

$

537,653

 

$

100,519

 

$

826,464

 

$

408,770

 

Net interest income

$

156,741

 

$

154,042

 

$

154,714

 

$

153,468

 

$

160,911

 

$

618,966

 

$

651,173

 

Noninterest income

 

209,745

 

 

32,591

 

 

29,950

 

 

35,069

 

 

33,898

 

 

307,355

 

 

130,925

 

Operating revenue (denominator)

$

366,486

 

$

186,633

 

$

184,664

 

$

188,537

 

$

194,809

 

$

926,321

 

$

782,098

 

Efficiency ratio

 

28.74

%

 

50.83

%

 

47.99

%

 

285.17

%

 

51.60

%

 

89.22

%

 

52.27

%

Adjusted efficiency ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expenses

$

105,331

 

$

94,859

 

$

88,620

 

$

537,653

 

$

100,519

 

$

826,464

 

$

408,770

 

Less: non-cash goodwill impairment charge

 

 

 

 

 

 

 

443,695

 

 

 

 

443,695

 

 

 

Less: merger related expenses

 

 

 

2,105

 

 

 

 

1,282

 

 

925

 

 

3,386

 

 

28,497

 

Less: pension plan termination expense

 

 

 

 

 

 

 

 

 

1,225

 

 

 

 

1,225

 

Less: expenses related to COVID-19 pandemic

 

215

 

 

235

 

 

1,205

 

 

122

 

 

 

 

1,777

 

 

 

Adjusted noninterest expenses (numerator)

$

105,116

 

$

92,519

 

$

87,415

 

$

92,554

 

$

98,369

 

$

377,606

 

$

379,048

 

Net interest income

$

156,741

 

$

154,042

 

$

154,714

 

$

153,468

 

$

160,911

 

$

618,966

 

$

651,173

 

Noninterest income

 

209,745

 

 

32,591

 

 

29,950

 

 

35,069

 

 

33,898

 

 

307,355

 

 

130,925

 

Plus: impairment charge on branch building

 

 

 

538

 

 

 

 

 

 

 

 

538

 

 

 

Less: gain on sale of acquired loans

 

 

 

 

 

 

 

 

 

1,263

 

 

 

 

2,777

 

Less: securities gains, net

 

1,353

 

 

79

 

 

2,286

 

 

2,994

 

 

317

 

 

6,712

 

 

2,018

 

Adjusted noninterest income

 

208,392