The First Bancshares, Inc. Reports Results for Third Quarter Ended September 30, 2020; Increases Quarterly Dividend 20%
The First Bancshares, Inc. (“FBMS” or “the Company”) (NASDAQ: FBMS), holding company for The First, A National Banking Association, (www.thefirstbank.com) reported today net income available to common shareholders for the quarter ended September 30, 2020.
Highlights for the Quarter:
Average loans increased $9.1 million, or 0.3% for the sequential quarter comparison. Average deposits increased $143.2 million, or 3.5% for the sequential quarter comparison. Provision for loan losses totaled $6.9 million for the quarter as compared to $7.6 million for the sequential quarter comparison and $1.0 million for the third quarter of 2019. On September 25, 2020, the Company issued $65 million in aggregate principal amount of subordinated debt. Pre-tax, pre-provision operating earnings which excludes acquisition charges, treasury awards, gains from bargain purchase of Southwest Georgia Financial Corporation (“SGB”) and sale of land increased 26.5% to $22.1 million for the quarter ended September 30, 2020 as compared to $17.4 million for the third quarter of 2019. Pre-tax, pre-provision operating earnings which excludes acquisition charges, treasury awards, gains from bargain purchase of SGB and sale of land increased 2.9% to $22.1 million for the quarter ended September 30, 2020 as compared to $21.4 million for the second quarter of 2020. Due to the current economic environment, the allowance for loan losses increased 22% to $34.3 million or 1.09% of total loans at September 30, 2020 as compared to $28.1 million or 0.88% of total loans at June 30, 2020. The Company also has $8.8 million in credit marks associated with acquired loan portfolios. As of October 21, 2020, total COVID related modifications were $78.5 million, representing 2.5% of the loan portfolio and down from a peak of $676 million or 21% of the loan portfolio. For additional details related to our response and potential effects of COVID-19, see the investor presentation filed and available under presentations and press releases included in the investor relations section of the company’s website: www.thefirstbank.com. During the first quarter of 2020, the Company elected to delay the adoption of the Current Expected Credit Losses (“CECL”) afforded through the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).M. Ray “Hoppy” Cole, President and Chief Executive Officer, commented, “We are pleased with the results of the third quarter and our Company continues to show strong performance in revenue growth and increasing profitability. Pre-tax, pre-provision income increased 26% year over year and 2.9% linked quarter. We are proud of this improvement given the challenging market conditions related to margin compression and the uncertainty in economic activity associated with the pandemic.
During the quarter we raised an additional $65MM of subordinated debt which positions our Company to take advantage of any opportunities that may arise post the pandemic, and to resume our previously approved share buyback program.”
Quarterly Earnings
Net income available to common shareholders totaled $11.9 million for the quarter ended September 30, 2020, a decrease of $0.4 million, or 2.9%, compared to $12.3 million for the quarter ended September 30, 2019.
Net income available to common shareholders totaled $11.9 million for the quarter ended September 30, 2020, a decrease of $5.0 million, or 29.6%, compared to $16.9 million for the quarter ended June 30, 2020. The Company recorded a $7.0 million bargain purchase gain on the acquisition of SGB during the quarter ended June 30, 2020.
Pre-tax, pre-provision operating earnings, which exclude acquisition charges, treasury awards, and gains increased 26.5% to $22.1 million for the quarter ended September 30, 2020 as compared to $17.4 million for the third quarter of 2019 and increased 2.9% to $22.1 million for the quarter ended September 30, 2020 as compared to $21.4 million for the second quarter of 2020.
Provision for loan losses totaled $6.9 million for the quarter ended September 30, 2020, an increase of $5.9 million, or 611% as compared to $1.0 million for the third quarter of 2019 and a decrease of $0.7 million, or 9.0% as compared to $7.6 million for the second quarter of 2020. $5.8 million of the $6.9 million provision for loan loss expense for the quarter ended September 30, 2020 was related to the anticipated economic effects of COVID-19.
Earnings Per Share
For the third quarter of 2020, fully diluted earnings per share were $0.55, compared to $0.71 for the third quarter of 2019. The additional provision for loan losses expense of $5.9 million, or $4.5 million net of tax, for the quarter ended September 30, 2020, which is primarily attributable to the COVID-19 pandemic, represents a decrease of $0.21 in fully diluted earnings per share.
For the third quarter of 2020, fully diluted earnings per share were $0.55, compared to $0.79 for the second quarter of 2020. The bargain purchase and sale of land gains for the quarter ended June 30, 2020 accounted for an increase of $0.35 in fully diluted earnings per share.
Fully diluted earnings per share for the quarter ended September 30, 2020 include the issuance of 2,546,967 shares of our common stock during the second quarter of 2020 in association with the acquisition of SGB and the issuance of 1,682,889 shares of our common stock during the fourth quarter of 2019 in association with the acquisition of First Florida Bancorp, Inc. (“FFB”). Fully diluted earnings per share for all quarters of 2020 include the purchase by the Company of 168,188 shares throughout the calendar year of 2019.
Fully diluted earnings per share for the quarter ended September 30, 2019 include the issuance of 2,377,501 shares of our common stock during the first quarter of 2019 in association with the acquisition of FPB Financial Corp (“FPB”).
Balance Sheet
Consolidated assets increased $79.3 million to $5.164 billion at September 30, 2020 from $5.085 billion at June 30, 2020. Assets include $260.2 million in PPP loans.
Total average loans were $3.166 billion for the quarter ended September 30, 2020, as compared to $3.157 billion for the quarter ended June 30, 2020, and $2.343 billion for the quarter ended September 30, 2019, representing an increase of $9.1 million, or 0.3%, for the sequential quarter comparison, and an increase of $822.3 million, or 35.1%, in prior year quarterly comparison. The acquisitions of FFB and SGB accounted for $647.2 million, net of fair value marks, of the total increase in average loans as compared to the third quarter of 2019.
Average loans increased $9.1 million, or 0.3% for the sequential quarter comparison. Excluding the acquired loans and PPP loans, average loans decreased $85.1 million, or 3.6% as compared to the quarter ended September 30, 2019.
Total average deposits were $4.212 billion for the quarter ended September 30, 2020, as compared to $4.069 billion for the quarter ended June 30, 2020, and $2.766 billion for the quarter ended September 30, 2019, representing an increase of $143.2 million, or 3.5%, for the sequential quarter comparison, and an increase of $1.447 billion, or 52.3%, in prior year quarterly comparison. The acquisitions of FFB and SGB accounted for $912.1 million of the total increase in average deposits as compared to the third quarter of 2019.
Average deposits increased $143.2 million, or 3.5% for the sequential quarter comparison. Excluding the acquired deposits, average deposits increased $534.5 million, or 19.3% as compared to the quarter ended September 30, 2019.
The Company implemented Deposit Reclassification at the beginning of 2020. This program reclassifies noninterest bearing deposits and NOW deposit balances to money market accounts. This program reduces our reserve balance required at the Federal Reserve Bank of Atlanta which provides additional funds for liquidity and lending. At quarter end September 30, 2020, $712.8 million in noninterest deposit balances and $677.3 million in NOW deposit accounts were reclassified as money market accounts.
Asset Quality
Nonperforming assets totaled $44.9 million at September 30, 2020, a decrease of $0.8 million compared to $45.7 million at June 30, 2020 and a decrease of $2.4 million compared to $47.3 million at September 30, 2019. Nonaccrual loans decreased $1.9 million as compared to June 30, 2020 and increased $2.1 million as compared to September 30, 2019. Other real estate decreased $0.3 million as compared to June 30, 2020 and decreased $4.8 million as compared to September 30, 2019.
The ratio of the allowance for loan and leases losses (ALLL) to total loans was 1.09% at September 30, 2020, 0.88% at June 30, 2020 and 0.56% at September 30, 2019. The ratio of annualized net charge-offs (recoveries) to total loans was 0.09% for the quarter ended September 30, 2020 compared to 0.04% for the quarter ended June 30, 2020 and 0.004% for the quarter ended September 30, 2019.
Third Quarter 2020 vs. Third Quarter 2019 Earnings Comparison
Net income available to common shareholders for the third quarter of 2020 totaled $11.9 million compared to $12.3 million for the third quarter of 2019, a decrease of $0.4 million or 2.9%. In comparing the quarters, an increased provision for loan losses in the amount of $5.9 million more was expensed during the third quarter of 2020 as compared to the third quarter of 2019.
Net interest income for the third quarter of 2020 was $40.0 million, an increase of $9.5 million when compared to the third quarter of 2019. The increase was due to interest income earned on a higher volume of loans. Fully tax equivalent (“FTE”) net interest income totaled $40.6 million and $30.7 million for the third quarter of 2020 and 2019, respectively. FTE net interest income increased $9.9 million in the prior year quarterly comparison due to increased loan volume. Purchase accounting adjustments accounted for $0.6 million of the difference in net interest income for the third quarter comparisons. Third quarter 2020 FTE net interest margin of 3.58% included 17 basis points related to purchase accounting adjustments compared to 4.05% for the same quarter in 2019, which included 19 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin decreased 45 basis points in prior year quarterly comparison.
Non-interest income increased $1.7 million for the third quarter of 2020 as compared to the third quarter of 2019. Mortgage income increased $1.2 million in prior year quarterly comparison.
Third quarter 2020 non-interest expense was $26.9 million, an increase of $6.1 million, or 29.3% as compared to the third quarter of 2019. Excluding the net decrease in acquisition charges of $0.5 million for the quarterly comparison, non-interest expense increased $6.6 million in the third quarter of 2020, of which $4.1 million was attributable to the operations of FFB and SGB, as compared to third quarter of 2019.
Investment securities totaled $984.9 million, or 19.1% of total assets at September 30, 2020, versus $640.8 million, or 18.4% of total assets at September 30, 2019. The average balance of investment securities increased $335.8 million in prior year quarterly comparison, primarily as a result of the acquisitions. The average tax equivalent yield on investment securities decreased 76 basis points to 2.48% from 3.24% in prior year quarterly comparison. The investment portfolio had a net unrealized gain of $33.2 million at September 30, 2020 as compared to a net unrealized gain of $13.9 million at September 30, 2019.
The FTE average yield on all earning assets decreased 80 basis points in prior year quarterly comparison, from 4.94% for the third quarter of 2019 to 4.14% for the third quarter of 2020. Average interest expense decreased 56 basis points from 1.17% for the third quarter of 2019 to 0.61% for the third quarter of 2020. Cost of all deposits averaged 47 basis points for the third quarter of 2020 compared to 76 basis points for the third quarter of 2019.
Third Quarter 2020 vs Second Quarter 2020 Earnings Comparison
Net income available to common shareholders for the third quarter of 2020 decreased $5.0 million to $11.9 million compared to $16.9 million for the second quarter of 2020. During the second quarter of 2020, the Company recorded a bargain purchase gain in the amount of $7.0 million, net of tax.
Net interest income for the third quarter of 2020 was $40.0 million as compared to $39.2 million for the second quarter of 2020, an increase of $0.8 million. FTE net interest income increased $0.8 million to $40.6 million from $39.8 million in sequential-quarter comparison. Third quarter 2020 FTE net interest margin of 3.58% included 17 basis points related to purchase accounting adjustments compared to 3.63% for the second quarter in 2020, which included 21 basis points related to purchase accounting adjustments. Excluding the purchase accounting adjustments, the core net interest margin decreased 1 basis point in sequential quarter comparison.
Investment securities totaled $984.9 million, or 19.1% of total assets at September 30, 2020, versus $953.3 million, or 18.7% of total assets at June 30, 2020. The average balance of investment securities increased $51.2 million in sequential-quarter comparison. The average tax equivalent yield on investment securities decreased 7 basis points to 2.48% from 2.55% in sequential-quarter comparison. The investment portfolio had a net unrealized gain of $33.2 million at September 30, 2020 as compared to a net unrealized gain of $32.9 million at June 30, 2020.
The FTE average yield on all earning assets decreased in sequential-quarter comparison from 4.23% to 4.14%. Average interest expense decreased 6 basis points from 0.67% for the second quarter of 2020 to 0.61% for the third quarter of 2020. Cost of all deposits averaged 47 basis points for the third quarter of 2020 compared to 52 basis points for the second quarter of 2020.
Excluding the bargain purchase and sale of land gains, non-interest income increased $0.8 million in sequential-quarter comparison resulting from increased mortgage income in the amount of $0.3 million and increased service charges on deposit accounts in the amount of $0.2 million.
Non-interest expense for the third quarter of 2020 was $26.9 million compared to $28.1 million for the second quarter of 2020. Excluding acquisition charges for each quarter, non-interest expense increased $0.9 million.
Year-to-Date Earnings Comparison
In year-over-year comparison, net income available to common shareholders increased $5.3 million, or 16.6%, from $31.9 million for the nine months ended September 30, 2019 to $37.2 million for the same period ended September 30, 2020. Excluding the bargain purchase and sale of land gains of $7.5 million, net of tax, and the increased provision expense of $14.4 million, net of tax, net income available to common shareholders increased $12.2 million in year-over-year comparison.
Net interest income increased $24.9 million in year-over-year comparison, primarily due to interest income earned on a higher volume of loans and securities.
Non-interest income increased $4.2 million in year-over-year comparison excluding the awards and gains mentioned above. Mortgage income increased $2.9 million and interchange fee income increased $0.9 million in the year-over-year comparison.
Non-interest expense was $78.4 million for the nine months ended September 30, 2020 an increase of $14.8 million as compared to the same period ended September 30, 2019. $11.7 million of the increase is related to the operations of FFB and SGB.
Declaration of Cash Dividend
The Company announced that its Board of Directors declared a cash dividend of $0.12 per share to be paid on its common stock on November 24, 2020 to shareholders of record as of the close of business on November 10, 2020.
About The First Bancshares, Inc.
The First Bancshares, Inc., headquartered in Hattiesburg, Mississippi, is the parent company of The First, A National Banking Association (“The First”). Founded in 1996, The First has operations in Mississippi, Louisiana, Alabama, Florida and Georgia. The Company’s stock is traded on the NASDAQ Global Market under the symbol FBMS. Information is available on the Company’s website: www.thefirstbank.com.
Non-GAAP Financial Measures
Our accounting and reporting policies conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of our performance. This press release includes operating net earnings, operating efficiency ratio, pre-tax, pre-provision operating earnings, operating earnings per share, diluted operating earnings per common share, fully tax equivalent net interest income, fully tax equivalent net interest margin, core net interest margin, average tax equivalent yield on investment securities, fully tax equivalent average yield on all earning assets, total tangible common equity, tangible book value per common share and certain ratios derived from these non-GAAP financial measures. The Company believes that the non-GAAP financial measures included in this press release allow management and investors to understand and compare results in a more consistent manner for the periods presented in this press release. Non-GAAP financial measures should be considered supplemental and not a substitute for the Company’s results reported in accordance with GAAP for the periods presented, and other bank holding companies may define or calculate these measures differently. These non-GAAP financial measures should not be considered in isolation and do not purport to be an alternative to net income, earnings per share, net interest income, book value or other GAAP financial measures as a measure of operating performance. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure is provided in this press release following the Condensed Consolidated Financial Information (unaudited).
Forward Looking Statements
This news release and certain of our other filings with the Securities and Exchange Commission contain statements that constitute “forward looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Such statements can generally be identified by such words as “believes,” “anticipates,” “expects,” “may,” “will,” “assumes,” “should,” “predicts,” “could,” “would,” “intends,” “targets,” “estimates,” “projects,” “plans,” “potential,” “positioned” and other similar words and expressions of the future or otherwise regarding the outlook for the Company’s future business and financial performance and/or the performance of the banking industry and economy in general. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risk and uncertainties which may cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on the information known to, and current beliefs and expectations of, the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. Factors that might cause such differences include, but are not limited to: (1) competitive pressures among financial institutions increasing significantly; (2) changes in economic or political conditions, either nationally or locally, particularly in areas in which the Company conducts operations; (3) interest rate risk; (4) changes in applicable laws, rules, or regulations, including changes to statutes, regulations or regulatory policies or practices as a result of, or in response to COVID-19; (5) risks related to the Company’s recently completed acquisitions, including that the anticipated benefits from the recently completed acquisitions are not realized in the time frame anticipated or at all as a result of changes in general economic and market conditions or other unexpected factors or events; (6) changes in management’s plans for the future; (7) credit risk associated with our lending activities; changes in interest rates, loan demand, real estate values, or competition; (8) changes in accounting principles, policies, or guidelines; (9) adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the COVID-19 pandemic; (10) the impact of the COVID-19 pandemic on the Company’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations; (11) potential increases in the provision for loan losses resulting from the COVID-19 pandemic; and (12) other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services. These and other factors that could cause results to differ materially from those described in the forward-looking statements, as well as a discussion of the risks and uncertainties that may affect our business, can be found in our Annual Report on Form 10-K and in other filings we make with the Securities and Exchange Commission, which are available on the SEC’s website, http://www.sec.gov. Undue reliance should not be placed on forward-looking statements. The Company disclaims any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.
Statements about the potential effects of the COVID-19 pandemic on the Company’s assets, business, liquidity, financial condition, prospects, and results of operations may constitute forward-looking statements and are subject to the risks that the actual effects may differ, possibly materially, from what is reflected in these forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the depth, dispersion and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on customers, employees, third parties and the Company.
FIRST BANCSHARES, INC and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(Dollars in thousands except per share data)
EARNINGS DATA
Quarter
Ended
9/30/20
Quarter
Ended
6/30/20
Quarter
Ended
3/31/20
Quarter
Ended
12/31/19
Quarter
Ended
9/30/19
Total Interest Income
$ 46,337
$ 45,799
$ 41,598
$ 40,444
$ 37,241
Total Interest Expense
6,365
6,619
7,533
7,000
6,782
Net Interest Income
39,972
39,180
34,065
33,444
30,459
FTE net interest income*
40,608
39,772
34,526
33,847
30,739
Provision for loan losses
6,921
7,606
7,102
850
974
Non-interest income
8,794
15,680
6,474
7,574
7,103
Non-interest expense
26,935
28,070
23,439
24,960
20,825
Earnings before income taxes
14,910
19,184
9,998
15,208
15,763
Income tax expense
2,993
2,241
1,687
3,353
3,491
Net income available to common shareholders
$ 11,917
$ 16,943
$ 8,311
$ 11,855
$ 12,272
PER COMMON SHARE DATA
Basic earnings per share
$ 0.56
$ 0.79
$ 0.44
$ 0.65
$ 0.72
Diluted earnings per share
0.55
0.79
0.44
0.64
0.71
Diluted earnings per share, operating*
0.56
0.52
0.47
0.72
0.74
Quarterly dividends per share
.10
.10
.10
.08
.08
Book value per common share at end of period
29.82
29.34
29.49
28.91
27.92
Tangible book value per common share at period end*
20.93
20.40
19.52
18.87
19.39
Market price at end of period
20.97
22.50
19.07
35.52
32.30
Shares outstanding at period end
21,408,017
21,395,258
18,851,955
18,802,266
17,123,625
Weighted average shares outstanding:
Basic
21,405,309
21,341,913
18,818,115
18,241,244
17,131,080
Diluted
21,544,040
21,437,180
18,942,129
18,398,609
17,267,953
AVERAGE BALANCE SHEET DATA
Total assets
$5,085,340
$4,913,620
$3,990,493
$3,767,587
$3,439,202
Loans and leases
3,165,653
3,156,524
2,602,340
2,512,524
2,343,392
Total deposits
4,212,410
4,069,239
3,186,943
2,963,603
2,765,816
Total common equity
632,527
607,127
547,309
518,070
470,024
Total tangible common equity*
441,635
423,966
358,889
346,742
324,619
SELECTED RATIOS
Annualized return on avg assets (ROA)
0.94%
1.38%
0.83%
1.26%
1.43%
Annualized return on avg assets, operating*
0.95%
0.91%
0.89%
1.40%
1.49%
Annualized pre-tax, pre-provision, operating*
1.74%
1.75%
1.79%
1.87%
2.03%
Annualized return on avg common equity, operating*
7.65%
7.40%
6.50%
10.16%
10.91%
Annualized return on avg tangible common equity, oper*
10.95%
10.60%
9.91%
15.18%
15.80%
Average loans to average deposits
75.15%
77.57%
81.66%
84.78%
84.73%
FTE Net Interest Margin*
3.58%
3.63%
3.93%
4.06%
4.05%
Efficiency Ratio
54.52%
50.62%
57.17%
60.26%
55.03%
Efficiency Ratio, operating*
54.04%
53.91%
55.36%
55.67%
53.17%
*See reconciliation of Non-GAAP financial measures
CREDIT QUALITY
Allowance for loan losses (ALLL) as a % of total loans
1.09%
0.88%
0.80%
0.53%
0.56%
Nonperforming assets to tangible equity + ALLL
9.31%
9.84%
12.12%
13.13%
13.71%
Nonperforming assets to total loans + OREO
1.42%
1.44%
1.81%
1.86%
2.00%
Annualized QTD net charge-offs (recoveries) to total loans
0.09%
0.04%
0.03%
(0.002%)
0.0041%
Condensed Consolidated Financial Information (unaudited)
(in thousands)
BALANCE SHEET
Sept 30,
2020
June 30,
2020
Mar 31,
2020
Dec 31,
2019
Sept 30,
2019
Assets
Cash and cash equivalents
$ 603,736
$ 539,125
$ 286,759
$ 168,864
$ 159,990
Securities available-for-sale
957,458
927,205
762,977
765,087
612,002
Securities held-to-maturity
-
-
-
-
6,328
Other investments
27,461
26,059
25,911
26,690
22.517
Total investment securities
984,919
953,264
788,888
791,777
640,847
Loans held for sale
22,482
18,632
13,288
10,810
11,104
Total loans
3,155,932
3,171,535
2,602,288
2,600,358
2,349,986
Allowance for loan losses
(34,256)
(28,064)
(20,804)
(13,908)
(13,043)
Loans, net
3,121,676
3,143,471
2,581,484
2,586,450
2,336,943
Premises and equipment
124,875
125,053
108,013
104,980
96,726
Other Real Estate Owned
5,202
5,471
6,974
7,299
9,974
Goodwill and other intangibles
190,380
191,431
187,927
188,865
146,091
Other assets
110,889
108,458
88,468
82,818
80,256
Total assets
$5,164,159
$5,084,905
$4,061,801
$3,941,863
$3,481,931
Liabilities and Shareholders’ Equity
Non-interest bearing deposits^
$ 482,236
$ 486,039
$ 340,606
$ 723,208
$ 642,054
Interest-bearing deposits
3,746,978
3,730,851
2,937,188
2,353,325
2,119,181
Total deposits
4,229,214
4,216,890
3,277,794
3,076,533
2,761,345
Borrowings
115,827
116,005
116,180
214,319
136,250
Subordinated debentures
144,709
80,756
80,717
80,678
80,639
Other liabilities
36,040
43,459
31,184
26,675
25,609
Total liabilities
4,525,790
4,457,110
3,505,875
3,398,205
3,003,843
Total shareholders’ equity
638,369
627,795
555,926
543,658
478,088
Total liabilities and shareholders’ equity
$5,164,159
$5,084,905
$4,061,801
$3,941,863
$3,481,931
^Reclassified $712,806 to interest-bearing depositsCondensed Consolidated Financial Information (unaudited)
(in thousands except per share data)
EARNINGS STATEMENT
Three Months Ended
9/30/20
6/30/20
3/31/20
12/31/19
9/30/19
Interest Income:
Loans, including fees
$ 39,344
$ 39,184
$ 34,290
$ 33,556
$ 31,279
Investment securities
5,309
5,187
5,304
5,298
4,752
Accretion of purchase accounting adjustments
1,655
1,409
1,715
1,553
1,201
Other interest income
29
19
289
37
9
Total interest income
46,337
45,799
41,598
40,444
37,241
Interest Expense:
Deposits
5,110
5,967
6,034
5,489
5,156
Borrowings
265
224
917
771
451
Subordinated debentures
1,188
1,176
1,203
1,213
1,270
Accretion of purchase accounting adjustments
(198)
(748)
(621)
(473)
(95)
Total interest expense
6,365
6,619
7,533
7,000
6,782
Net interest income
39,972
39,180
34,065
33,444
30,459
Provision for loan losses
6,921
7,606
7,102
850
974
Net interest income after provision for loan losses
33,051
31,574
26,963
32,594
29,485
Non-interest Income:
Service charges on deposit accounts
1,780
1,597
1,914
2,110
1,979
Mortgage Income
2,961
2,646
1,567
1,720
1,800
Interchange Fee Income
2,491
2,395
1,986
2,075
2,252
Gain (loss) on securities, net
32
73
174
(9)
57
Financial Assistance Award/Bank Enterprise Award
-
-
-
714
-
Bargain Purchase Gain and Gain on Sale of Land
-
7,643
-
-
-
Other charges and fees
1,530
1,326
833
964
1,015
Total non-interest income
8,794
15,680
6,474
7,574
7,103
Non-interest expense:
Salaries and employee benefits
15,494
15,866
13,228
13,092
11,612
Occupancy expense
3,826
3,200
2,918
3,190
2,632
FDIC/OCC premiums
447
237
147
147
111
Marketing
24
25
213
248
62
Amortization of core deposit intangibles
1,052
1,052
938
907
796
Other professional services
990
984
874
951
1,140
Acquisition charges
238
2,295
740
2,300
705
Other non-interest expense
4,864
4,411
4,381
4,125
3,767
Total Non-interest expense
26,935
28,070
23,439
24,960
20,825
Earnings before income taxes
14,910
19,184
9,998
15,208
15,763
Income tax expense
2,993
2,241
1,687
3,353
3,491
Net income available to common shareholders
$ 11,917
$ 16,943
$ 8,311
$ 11,855
$ 12,272
Diluted earnings per common share
$ 0.55
$ 0.79
$ 0.44
$ 0.64
$ 0.71
Diluted earnings per common share, operating*
$ 0.56
$ 0.52
$ 0.47
$ 0.72
$ 0.74
*See reconciliation of Non-GAAP financial measures
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)
Year to Date
EARNINGS STATEMENT
2020
2019
Interest Income:
Loans, including fees
$ 112,818
$ 89,760
Investment securities
15,800
14,108
Accretion of purchase accounting adjustments
4,779
3,988
Other interest income
337
229
Total interest income
133,734
108,085
Interest Expense:
Deposits
17,111
14,808
Borrowings
1,406
1,285
Subordinated debentures
3,567
3,691
Amortization of purchase accounting adjustments
(1,567)
(61)
Total interest expense
20,517
19,723
Net interest income
113,217
88,362
Provision for loan losses
21,628
2,888
Net interest income after provision for loan losses
91,589
85,474
Non-interest Income:
Service charges on deposit accounts
5,291
5,728
Mortgage Income
7,174
4,268
Interchange Fee Income
6,872
5,949
Gain (loss) on securities, net
279
131
Financial Assistance Award/Bank Enterprise Award
-
233
Bargain Purchase Gain and Gain on Sale of Land
7,643
-
Other charges and fees
3,689
3,064
Total non-interest income
30,948
19,373
Non-interest expense:
Salaries and employee benefits
44,588
33,924
Occupancy expense
9,943
7,606
FDIC/OCC premiums
831
485
Marketing
262
397
Amortization of core deposit intangibles
3,041
2,308
Other professional services
2,848
3,040
Acquisition charges
3,273
3,975
Other non-interest expense
13,658
11,874
Total Non-interest expense
78,444
63,609
Earnings before income taxes
44,093
41,238
Income tax expense
6,922
9,348
Net income available to common shareholders
$ 37,171
$ 31,890
Diluted earnings per common share
$ 1.80
$ 1.90
Diluted earnings per common share, operating*
$ 1.56
$ 2.07
*See reconciliation of Non-GAAP financial measures
Condensed Consolidated Financial Information (unaudited)
(Dollars in thousands)
COMPOSITION OF LOANS
Sept 30,
2020
Percent
of Total
June 30,
2020
Mar 31,
2020
Dec 31,
2019
Sept 30,
2019
Percent
of Total
Commercial, financial and agricultural
$ 576,812
18.1%
$ 629,497
$ 327,979
$ 332,600
$ 338,584
14.3%
Real estate – construction
330,070
10.4%
337,337
334,707
359,195
284,103
12.0%
Real estate – commercial
1,191,514
37.5%
1,163,897
1,048,854
1,028,012
943,218
39.9%
Real estate – residential
999,381
31.4%
978,372
828,378
814,282
724,860
30.7%
Lease Financing Receivable
2,478
0.1%
2,811
3,526
3,095
3,239
0.1%
Obligations of States & subdivisions
13,345
0.4%
17,010
18,218
20,716
16,545
0.7%
Consumer
42,332
1.3%
42,611
40,626
42,458
39,437
1.7%
Loans held for sale
22,482
0.8%
18,632
13,288
10,810
11,104
0.6%
Total loans
$3,178,414
100%
$3,190,167
$2,615,576
$2,611,168
$2,361,090
100%
COMPOSITION OF DEPOSITS
Sept 30,
2020
Percent
of Total
June 30,
2020
Mar 31,
2020
Dec 31,
2019
Sept 30,
2019
Percent
of Total
Noninterest bearing^
$ 482,236
11.4%
$486,039
$340,606
$723,208
$642,054
23.3%
NOW and other^
658,453
15.6%
601,195
478,526
941,598
926,704
33.5%
Money Market/Savings^
2,456,504
58.1%
2,451,991
1,826,973
750,010
651,539
23.6%
Time Deposits of less than $250,000
473,265
11.2%
499,406
462,808
479,386
401,549
14.5%
Time Deposits of $250,000 or more
158,756
3.7%
178,259
168,881
182,331
139,489
5.1%
Total Deposits
$4,229,214
100%
$4,216,890
$3,277,794
$3,076,533
$2,761,345
100%
Deposits Without Reclassification^
Sept 30,
2020
Percent
of Total
June 30,
2020
Noninterest bearing
$1,195,042
28.3%
$1,189,766
Now and other
1,335,798
31.6%
1,347,324
Money Market/Savings
1,066,353
25.2%
1,002,135
Time Deposits of less than $250,000
473,265
11.2%
499,406
Time Deposits of $250,000 or more
158,756
3.7%
178,259
Total Deposits
$4,229,214
100%
$4,216,890
ASSET QUALITY DATA
Sept 30,
2020
June 30,
2020
Mar 31,
2020
Dec 31,
2019
Sept 30,
2019
Nonaccrual loans
$ 37,300
$ 39,201
$ 37,751
$ 38,393
$ 35,175
Loans past due 90 days and over
2,396
1,009
2,393
2,715
2,116
Total nonperforming loans
39,696
40,210
40,144
41,108
37,291
Other real estate owned
5,202
5,471
6,974
7,299
9,974
Nonaccrual securities
-
-
-
-
52
Total nonperforming assets
$ 44,898
$45,681
$47,118
$48,407
$ 47,317
Nonperforming assets to total assets
0.87%
0.90%
1.16%
1.23%
1.36%
Nonperforming assets to total loans + OREO
1.42%
1.44%
1.81%
1.86%
2.00%
ALLL to nonperforming loans
86.30%
69.79%
51.82%
33.83%
34.98%
ALLL to total loans
1.09%
0.88%
0.80%
0.53%
0.56%
Qtr-to-date net charge-offs (recoveries)
$ 729
$ 346
$ 205
$ (15)
$ 23
Annualized QTD net chg-offs (recs) to loans
0.09%
0.04%
0.03%
(0.002%)
0.004%
Yield
Three Months Ended
Three Months Ended
Three Months Ended
Three Months Ended
Three Months Ended
Analysis
September 30, 2020
June 30, 2020
March 31, 2020
December 31, 2019
September 30, 2019
Tax
Tax
Tax
Tax
Tax
Avg
Equivalent
Yield/
Avg
Equivalent
Yield/
Avg
Equivalent
Yield/
Avg
Equivalent
Yield/
Avg
Equivalent
Yield/
Balance
interest
Rate
Balance
interest
Rate
Balance
interest
Rate
Balance
interest
Rate
Balance
interest
Rate
Taxable securities$ 616,168
$ 3,432
2.23%
$ 605,626
$ 3,439
2.27%
$ 560,613
$ 3,944
2.81%
$ 556,004
$ 4,108
2.96%
$ 494,184
$ 3,926
3.18%
Tax-exempt securities341,550
2,513
2.94%
300,922
2,340
3.11%
224,212
1,821
3.25%
188,709
1,593
3.38%
127,750
1,108
3.47%
Total investment securities957,718
5,945
2.48%
906,548
5,779
2.55%
784,825
5,765
2.94%
744,713
5,701
3.06%
621,934
5,034
3.24%
in other banks413,786
29
0.03%
321,559
19
0.02%
129,978
289
0.89%
80,612
37
0.18%
71,165
7
0.04%
Loans3,165,653
40,999
5.18%
3,156,524
40,593
5.14%
2,602,340
36,005
5.53%
2,512,524
35,109
5.59%
2,343,392
32,480
5.54%
Total Interest earning assets4,537,157
46,973
4.14%
4,384,631
46,391
4.23%
3,517,143
42,059
4.78%
3,337,849
40,847
4.90%
3,036,491
37,521
4.94%
Other assets548,183
528,989
473,350
429,738
402,711
Total assets$ 5,085,340
$ 4,913,620
$ 3,990,493
$ 3,767,587
$ 3,439,202
Interest-bearing liabilities: Deposits$ 3,960,054
$ 4,912
0.50%
$ 3,746,535
$ 5,219
0.56%
$ 3,042,529
$ 5,413
0.71%
$ 2,263,299
$ 5,016
0.89%
$ 2,140,419
$ 5,061
0.95%
Borrowed Funds115,935
265
0.91%
116,270
224
0.77%
145,267
917
2.53%
174,475
771
1.77%
95,241
451
1.89%
Subordinated debentures81,470
1,188
5.83%
80,736
1,176
5.83%
80,697
1,203
5.96%
80,658
1,213
6.02%
80,619
1,270
6.30%
Total interest bearing liabilities4,157,459
6,365
0.61%
3,943,541
6,619
0.67%
3,268,493
7,533
0.92%
2,518,432
7,000
1.11%
2,316,279
6,782
1.17%
Other liabilities295,354
362,952
174,691
731,085
652,899
Shareholders' equity632,527
607,127
547,309
518,070
470,024
Total liabilities and shareholders' equity$ 5,085,340
$ 4,913,620
$ 3,990,493
$ 3,767,587
$ 3,439,202
Net interest income (FTE)*$ 40,608
3.53%
$ 39,772
3.56%
$ 34,526
3.86%
$ 33,847
3.78%
$ 30,739
3.77%
Net interest margin (FTE)*3.58%
3.63%
3.93%
4.06%
4.05%
Core net interest margin*3.41%
3.42%
3.65%
3.80%
3.86%
*See reconciliation for Non-GAAP financial measuresReconciliation of Non-GAAP Financial Measures (unaudited)
(in thousands except per share data)
Three Months Ended
Per Common Share Data
Sept 30,
2020
June 30,
2020
Mar 31,
2020
Dec 31,
2019
Sept 30,
2019
Book value per common share
$ 29.82
$ 29.34
$ 29.49
$ 28.91
$ 27.92
Effect of intangible assets per share
8.89
8.94
9.97
10.04
8.53
Tangible book value per common share
$ 20.93
$ 20.40
$ 19.52
$ 18.87
$ 19.39
Diluted earnings per share
$ 0.55
$ 0.79
$ 0.44
$ 0.64
$ 0.71
Effect of acquisition charges
0.01
0.11
0.04
0.14
0.04
Tax on acquisition charges
-
(0.03)
(0.01)
(0.03)
(0.01)
Effect of bargain purchase gain and gain on sale of land
-
(0.36)
-
-
-
Tax on gain on sale of land
-
0.01
-
-
-
Effect of Treasury awards
-
-
-
(0.04)
-
Tax on Treasury awards
-
-
-
0.01
-
Diluted earnings per share, operating
$ 0.56
$ 0.52
$ 0.47
$ 0.72
$ 0.74
Year to Date
2020
2019
Diluted earnings per share
$ 1.80
$ 1.90
Effect of acquisition charges
0.16
0.24
Tax on acquisition charges
(0.03)
(0.06)
Effect of bargain purchase gain and gain on sale of land
(0.38)
-
Tax on gain on sale of land
.01
-
Effect of Treasury awards
-
(0.01)
Tax on Treasury awards
-
-
Diluted earnings per share, operating
$ 1.56
$ 2.07
Year to Date
2020
2019
Net income available to common shareholders
$ 37,171
$ 31,890
Acquisition charges
3,273
3,975
Tax on acquisition charges
(743)
(887)
Bargain purchase gain and gain on sale of land
(7,643)
-
Tax on gain on sale of land
157
-
Treasury awards
-
(233)
Tax on Treasury awards
-
59
Net earnings available to common shareholders, operating
$ 32,215
$ 34,804
Three Months Ended
Average Balance Sheet Data
Sept 30,
2020
June 30,
2020
Mar 31,
2020
Dec 31,
2019
Sept 30,
2019
Total average assets
A
$5,085,340
$4,913,620
$3,990,493
$3,767,587
$3,439,202
Total average earning assets
B
4,537,157
$4,384,631
$3,517,143
$3,337,849
$3,036,492
Common Equity
C
$ 632,527
$ 607,127
$ 547,309
$ 518,070
$ 470,024
Less intangible assets
190,892
183,161
188,420
171,328
145,405
Total Tangible common equity
D
$ 441,635
$ 423,966
$ 358,889
$ 346,742
$ 324,619
Three Months Ended
Net Interest Income Fully Tax Equivalent
Sept 30,
2020
June 30,
2020
Mar 31,
2020
Dec 31,
2019
Sept 30,
2019
Net interest income
E
$ 39,972
$ 39,180
$ 34,065
$ 33,444
$ 30,459
Tax-exempt investment income
(1,877)
(1,748)
(1,360)
(1,190)
(828)
Taxable investment income
2,513
2,340
1,821
1,593
1,108
Net Interest Income Fully Tax Equivalent
F
$ 40,608
$ 39,772
$ 34,526
$ 33,847
$ 30,739
Annualized Net Interest Margin
E/B
3.52%
3.57%
3.87%
4.01%
4.01%
Annualized Net Interest Margin, Fully Tax Equivalent
F/B
3.58%
3.63%
3.93%
4.06%
4.05%
Total Interest Income, Fully Tax Equivalent
Total Interest Income
$ 46,337
$ 45,799
$ 41,598
$ 40,444
$ 37,241
Tax-exempt investment income
(1,877)
(1,748)
(1,360)
(1,190)
(828)
Taxable investment income
2,513
2,340
1,821
1,593
1,108
Total Interest Income, Fully Tax Equivalent
G
$ 46,973
$ 46,391
$ 42,059
$ 40,847
$ 37,521
Yield on Average Earning Assets, Fully Tax Equivalent
G/B
4.14%
4.23%
4.78%
4.90%
4.94%
Interest Income Investment Securities, Fully Tax Equivalent
Interest Income Investment Securities
$ 5,309
$ 5,187
$ 5,304
$ 5,298
$ 4,752
Tax-exempt investment income
(1,877)
(1,748)
(1,360)
(1,190)
(828)
Taxable investment Income
2,513
2,340
1,821
1,593
1,108
Interest Income Investment Securities, Fully Tax Equivalent
H
$ 5,945
$ 5,779
$ 5,765
$ 5,701
$ 5,034
Average Investment Securities
I
$ 957,718
$ 906,548
$ 784,825
$ 744,713
$ 621,934
Yield on Investment Securities, Fully Tax Equivalent
H/I
2.48%
2.55%
2.94%
3.06%
3.24%
Three Months Ended
Core Net Interest Margin
Sept 30,
2020
June 30,
2020
Mar 31,
2020
Dec 31,
2019
Sept 30,
2019
Net interest income (FTE)
$ 40,608
$ 39,772
$ 34,526
$ 33,847
$ 30,739
Less purchase accounting adjustments
1,853
2,157
2,336
2,026
1,296
Net interest income, net of purchase accounting adj
J
$ 38,755
$ 37,615
$ 32,190
$ 31,821
$ 29,443
Total average earning assets
$4,537,157
$4,384,631
$3,517,143
$3,337,849
$3,036,492
Add average balance of loan valuation discount
11,501
10,651
12,237
12,252
13.679
Avg earning assets, excluding loan valuation discount
K
$4,548,658
$4,395,282
$3,529,380
$3,350,101
$3,050,171
Core net interest margin
J/K
3.41%
3.42%
3.65%
3.80%
3.86%
Three Months Ended
Efficiency Ratio
Sept 30,
2020
June 30,
2020
Mar 31,
2020
Dec 31,
2019
Sept 30,
2019
Operating Expense
Total non-interest expense
$ 26,935
$ 28,070
$ 23,439
$ 24,960
$ 20,825
Pre-tax non-operating expenses
(238)
(2,295)
(740)
(2,300)
(705)
Adjusted Operating Expense
L
$ 26,697
$ 25,775
$ 22,699
$ 22,660
$ 20,120
Operating Revenue
Net interest income, FTE
$ 40,608
$ 39,772
$ 34,526
$ 33,847
$ 30,739
Total non-interest income
8,794
15,680
6,474
7,574
7,103
Pre-tax non-operating items
-
(7,643)
-
(714)
-
Adjusted Operating Revenue
M
$ 49,402
$ 47,809
$ 41,000
$ 40,707
$ 37,842
Efficiency Ratio, operating
L/M
54.04%
53.91%
55.36%
55.67%
53.17%
Three Months Ended
Return Ratios
Sept 30,
2020
June 30,
2020
Mar 31,
2020
Dec 31,
2019
Sept 30,
2019
Net income available to common shareholders
N
$ 11,917
$ 16,943
$ 8,311
$ 11,855
$ 12,272
Acquisition charges
238
2,295
740
2,300
705
Tax on acquisition charges
(61)
(518)
(164)
(461)
(152)
Bargain purchase gain and gain on sale of land
-
(7,643)
-
-
-
Tax on gain on sale of land
-
157
-
-
-
Treasury awards
-
-
-
(714)
-
Tax on Treasury awards
-
-
-
181
-
Net earnings available to common shareholders, operating
O
$ 12,094
$ 11,234
$ 8,887
$ 13,161
$ 12,825
Pre-Tax Pre-Provision Operating Earnings
Earnings before income taxes
P
$ 14,910
$ 19,184
$ 9,998
$ 15,208
$ 15,763
Acquisition charges
238
2,295
740
2,300
705
Provision for loan losses
6,921
7,606
7,102
850
974
Treasury Awards and Gains
-
(7,643)
-
(714)
-
Pre-Tax, Pre-Provision Operating Earnings
Q
$ 22,069
$ 21,442
$ 17,840
$ 17,644
$ 17,442
Annualized return on avg assets
N/A
0.94%
1.38%
0.83%
1.26%
1.43%
Annualized return on avg assets, oper
O/A
0.95%
0.91%
0.89%
1.40%
1.49%
Annualized pre-tax, pre-provision, oper
Q/A
1.74%
1.75%
1.79%
1.87%
2.03%
Annualized return on avg common equity, oper
O/C
7.65%
7.40%
6.50%
10.16%
10.91%
Annualized return on avg tangible common equity, operating
O/D
10.95%
10.60%
9.91%
15.18%
15.80%
Mortgage Department
Net Interest Income after provision for loan losses
$ 142
$ 127
$ 119
$ 59
$ 200
Loan fee income
2,961
2,646
1,567
1,720
1,800
Salaries and employee benefits
(1,444)
(1,246)
(1,077)
(975)
(986)
Other non-interest expense
(110)
(99)
(152)
(164)
(134)
Earnings before income taxes
$ 1,549
$ 1,428
$ 457
$ 640
$ 880
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