U.S. Markets closed

CrossFirst Bankshares, Inc. Reports Record Fourth Quarter & Full-Year 2019 Operating Revenue and Net Income

LEAWOOD, Kan., Jan. 23, 2020 (GLOBE NEWSWIRE) -- CrossFirst Bankshares, Inc. (CFB), the bank holding company for CrossFirst Bank, reported its results for the fourth quarter and full-year of 2019, including record net income of $11.4 million, or $0.22 per diluted share, and full-year 2019 net income of $40.6 million, or $0.83 per diluted share. CrossFirst continued to deliver growth in operating revenue and earnings while managing through a declining interest rate environment.

"We are pleased to announce our 23rd consecutive quarter of record operating revenue performance," said CrossFirst CEO and President George F. Jones, Jr. “Despite the headwinds of a declining rate environment, we were able to deliver quarterly operating revenue growth through strong balance sheet growth and by maintaining our net interest margin. Doubling our net income year over year is a tremendous success for our Company. We have built a great organization and I am proud of what we have accomplished during the year.”

2019 Fourth Quarter and Full-Year Highlights:

  • Approaching $5 billion of assets with 30% operating revenue growth compared to full-year 2018

  • Record quarterly net income of $11.4 million, an increase of 10% from the fourth quarter of 2018

  • Record full-year net income of $40.6 million, a year-over-year increase of 107%

  • Diluted EPS of $0.83 for full-year 2019, a year-over-year increase of 77%

  • Achieved efficiency ratios of 55.6% for the quarter and 58.4% for the year

  • Grew loans by $223 million from the previous quarter and $793 million or 26% since year-end December 31, 2018

  • Grew deposits by $266 million from the previous quarter and $716 million or 22% since year-end December 31, 2018

  • Book value per share of $11.80 at December 31, 2019 compared to $10.21 at December 31, 2018
             
  Quarter-to-Date  Year-to-Date 
  December 31,   December 31,
  2018  2019 2018 2019
  (Dollars in millions except per share data)
Operating revenue(1) $ 33.5   $ 39.4   $ 116.5   $ 150.2  
Net income $ 10.3   $ 11.4   $ 19.6   $ 40.6  
Diluted EPS $ 0.22   $ 0.22   $ 0.47   $ 0.83  
                         
Return on average assets   1.06 %   0.94 %   0.56 %   0.90 %
Non-GAAP core operating return on average assets(2)   0.67 %   0.94 %   0.57 %   0.88 %
Return on average common equity   9.03 %   7.45 %   5.34 %   7.67 %
Non-GAAP return on average tangible common equity(2)   9.20 %   7.55 %   5.47 %   7.79 %
Net interest margin   3.44 %   3.17 %   3.29 %   3.26 %
Net interest margin, fully tax-equivalent(3)   3.51 %   3.23 %   3.39 %   3.31 %
Efficiency ratio   60.2 %   55.6 %   73.6 %   58.4 %
Non-GAAP core operating efficiency ratio, fully tax-equivalent(2)(3)   61.4 %   54.7 %   67.7 %   57.2 %

(1) Net interest income plus non-interest income.
(2) Represents a non-GAAP measure. See "Table 6. Non-GAAP Financial Measures" for a reconciliation of this measure.
(3) Tax exempt income is calculated on a tax equivalent basis. Tax-free municipal securities are exempt from Federal taxes. The incremental federal tax rate used is 21.0%.

Income from Operations

Net Interest Income

The Company produced interest income of $55.2 million for the fourth quarter of 2019, an increase of 17% from the fourth quarter of 2018 and remained flat from the previous quarter due to the declining interest rate environment. Full-year interest income is up 38% year-over- year primarily as a result of continued strong growth in average earning assets. The tax-equivalent yield on earning assets declined from 5.00% to 4.76% during the fourth quarter of 2019 primarily due to the movement of variable rate assets indexed to market rates.

Interest expense for the fourth quarter of 2019 was $18.0 million, or 22% higher than the fourth quarter of 2018 and 9% lower than the third quarter of 2019. Average interest-bearing deposits in the fourth quarter of 2019 totaled $3.3 billion, an increase of $806 million or 33% from the same quarter in 2018. Compared to the third quarter of 2019, interest-bearing deposit mix changes during the quarter were a result of responding to declining rates to lower margin exposure, therefore most of the new deposit growth came from variable rate accounts. Non- deposit funding costs decreased to 1.86% from 1.95% in the third quarter of 2019 while overall cost of funds for the quarter was 1.71%, compared to 1.94% for the third quarter of 2019.

Tax-equivalent net interest margin declined to 3.23% for the quarter compared to 3.51% for the same quarter in 2018, reflecting the impact of the declining rate environment. For full-year 2019, the Company reported a tax equivalent net interest margin of 3.31%, slightly lower than full-year 2018 results. The tax-equivalent adjustment, which accounts for income taxes saved on the interest earned on nontaxable securities and loans, was $0.7 million for the fourth quarter of both 2019 and 2018, and $0.6 million for the third quarter of 2019. Net interest income totaled $37.2 million for the fourth quarter of 2019 or 4% greater than the third quarter of 2019. Full-year 2019 net interest income totaled $141.4 million or 28% higher than the same period of 2018 reflecting the Company's strong balance sheet growth and maintenance of net interest margin.

Non-Interest Income

Non-interest income increased $1.0 million in the fourth quarter of 2019 or 83% compared to the same quarter of 2018 and decreased $1.0 million or 32% lower compared to the third quarter of 2019. While the Company continues to increase fee income commensurate with its growth, during the quarter the Company recorded $0.5 million of bond gains as well as more income from the back to back swap program than in the fourth quarter in 2018. The reduction in non-interest income from the prior quarter was due to increased activity for swap fees and a one-time $0.8 million gain related to a change in derivative valuation in the third quarter of 2019. For full-year 2019, non-interest income increased $2.6 million compared to full-year 2018 primarily due to the increased swap activity, the revaluation of the swap program, and the additional activity derived from additional balance sheet and customer growth.

Non-Interest Expense

Non-interest expense for the fourth quarter of 2019 increased $1.7 million, or 9%, compared to the fourth quarter of 2018 and increased $0.7 million, or 3%, from the third quarter of 2019. Compared to the fourth quarter of 2018, salary and employment-related expenses increased $1.4 million for additional employee headcount required to support growth and data processing costs were higher from the Company's increased volumes of activity from balance sheet growth and a larger customer base. As compared to the third quarter of 2019, salary and employment-related expenses decreased $0.4 million as a result of continuing to manage resource allocation and hiring, FDIC insurance expense increased as a result of a one-time small bank credit in the third quarter and professional fees increased $0.6 million. For full-year 2019, non-interest expense increased 2% or $1.9 million compared to full-year 2018 primarily due to salary and employment expenses to support growth and higher data processing costs.

CrossFirst’s effective tax rate for the twelve months ended December 31, 2019 was 16.6% as compared to (13.9)% for the twelve months ended December 31, 2018. The year-over-year change was due to higher earnings, state tax credits related to our new headquarters, a reduction in tax-exempt income due to average yields on tax exempt securities decreasing, and permanent tax benefits from stock-based compensation awards vested and exercised in 2018 as compared to 2019. The effective tax rate for the fourth quarter of 2019 was 19.4% compared to (16.8)% for the fourth quarter of 2018. For both of the comparable periods, the Company continued to benefit from the tax- exempt municipal bond portfolio creating an effective tax rate lower than the statutory tax rates.

Balance Sheet Performance & Analysis

During the fourth quarter of 2019, total assets increased by $292 million or 6% compared to September 30, 2019 with both strong loan and deposit growth. Asset growth for CrossFirst was $836 million or 20% year-over-year. During the fourth quarter of 2019, total available for sale investment securities increased $9 million to $742 million, while the overall average for the quarter was $745 million. Tax-exempt municipal securities on average increased $35 million and mortgage-backed securities decreased $19 million. Overall, the Company increased the size of the bond portfolio during 2019 by $78 million, or 12% compared to year-end 2018. The increase in investment securities was part of management's strategy to manage liquidity and optimize income.

Loan Growth Results

The Company continued to maintain a diversified loan portfolio while experiencing strong loan growth of 6% for the fourth quarter of 2019 and 26% since December 31, 2018. Loan yields declined 32 basis points in the overall portfolio commensurate with the adjustable rate loan movements in LIBOR and Prime during the quarter. The Company experienced $174 million in payoffs for the quarter, but funded $255 million in loans to new borrowers to replace and grow the overall portfolio.

                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                     
                                       
                                       
                                       
                                       
(Dollars in millions) 4Q18   1Q19
  2Q19
  3Q19
  4Q19
  % of
Total

  QoQ
Growth
($)

  QoQ
Growth
(%)
(1)
  YoY
Growth
($)

  YoY
Growth
(%)
(1)
                                       
                                       
                                       
                                       
                                       
                                                                       
                                                                       
                                                                       
                                                                       
Average loans (gross)                                                                      
                                                                       
                                                                       
Commercial and industrial $ 1,021     $ 1,145     $ 1,224     $ 1,284     $ 1,315     35 %   $ 31   2 %   $ 294     29 %
Energy   349       367       383       389       400     11       11   3       51     15  
Commercial real estate   810       866       946       974       1,007     27       33   3       197     24  
Construction and land development   449       444       457       487       599     16       112   23       150     33  
Residential real estate   240       310       342       362       384     10       22   6       144     60  
Consumer & Equity Lines   42       44       46       45       45     1         (1 )
    3     5  
Total $ 2,911     $ 3,176     3,398     $ 3,541     3,750     100 %    $ 209    6 %    $ 839      29 %
                                                                       
                                                   
Yield on loans for the period ending   5.56 %     5.75 %     5.66 %     5.53 %     5.21 %            

(1) Actual unrounded values are used to calculate the reported percent disclosed. Accordingly, recalculations using the amounts in millions as disclosed in this release may not produce the same amounts.

Deposit Growth Results

The Company continues to maintain a traditional deposit mix, with the goal of keeping pace with growth in the loan portfolio. Deposit growth was primarily funded with money market accounts during the fourth quarter, which have historically adjusted with movements in Federal Funds rates. During the fourth quarter, the Company added short term wholesale funding and $62 million of brokered deposits to replace the brokered funding that previously rolled off in the third quarter of 2019.


(Dollars in millions)  4Q18     1Q19     2Q19     3Q19     4Q19   % of
Total
  QoQ
Growth
($)
  QoQ 
Growth (%)(1)
  YoY
Growth
($)
  YoY
Growth
(%)(1)
Average deposits                                                                      
Non-interest bearing deposits $ 492     $ 477     $ 513     $ 535     $ 522     14 %   $ (13 )   (3 )%   $ 30   6 %
Transaction deposits   63       104       144       135       200     5 %     65     49       137   217  
Savings and money market deposits   1,498       1,544       1,560       1,744       1,854     49 %     110     6       356   24  
Time deposits   913       1,165       1,305       1,277       1,226     32 %     (51 )   (4 )     313   34  
Total $ 2,966     $ 3,290     $ 3,522     $ 3,691     $ 3,802     100 %   $ 111     3 %   $ 836   28 %
                                                                       
Cost of deposits for the period ending   1.70 %     1.96 %     1.99 %     1.94 %     1.70 %                                
Cost of interest-bearing deposits for the period ending   2.04 %     2.30 %     2.33 %     2.26 %     1.97 %                                

(1) Actual unrounded values are used to calculate the reported percent disclosed. Accordingly, recalculations using the amounts in millions as disclosed in this release may not produce the same amounts.

Asset Quality Position

The Company continued to add to the allowance for loan loss in order to support loan growth and changes in relative risk for the overall portfolio, recording a provision expense of $3.4 million for the fourth quarter. Net charge-offs were $5.5 million for the quarter as a result of a partial charge-off of a previously identified non-performing commercial and industrial loan, as compared to charge-offs of $0.2 million for the fourth quarter in 2018. During the quarter, non-performing assets to total assets and overall asset quality remained consistent with the previous quarters asset quality metrics.

                                       
Asset quality (Dollars in millions) 4Q18    1Q19    2Q19    3Q19    4Q19 
Non-accrual loans $ 17.8     $ 13.0     $ 50.0     $ 43.6     $ 39.7  
Other real estate owned         2.5       2.5       2.5       3.6  
Non-performing assets   17.8       15.5       52.8       46.7       47.9  
Loans 90+ days past due and still accruing               0.2       0.6       4.6  
Loans 30 - 89 days past due   3.7       31.1       23.6       64.7       4.5  
Net charge-offs (recoveries)   0.2       0.7             4.7       5.5  
                                       
Asset quality metrics (%) 4Q18    1Q19    2Q19    3Q19    4Q19 
Non-performing assets to total assets   0.43 %     0.36 %     1.18 %     1.00 %     0.97 %
Allowance for loan loss to total loans   1.23       1.22       1.24       1.18       1.06  
Allowance for loan loss to non-performing loans   212       307       85       97       92  
Net charge-offs (recoveries) to average loans(1)   0.03       0.09             0.53       0.58  
Provision to average loans(1)   0.61       0.36       0.34       0.54       0.09  
(1) Interim periods annualized.                    

Capital Position

At December 31, 2019, stockholders’ equity totaled $613 million, or $11.80 per share, compared to $602 million, or $11.59 per share, at September 30, 2019. Tangible common stockholders' equity was $606 million and tangible book value per share was $11.66 at December 31, 2019. The increase in stockholders' equity for the fourth quarter was primarily a result of quarterly earnings and modest movement in accumulated other comprehensive income for unrealized bond gains.

Period-end (Dollars in millions, except per share data) 4Q18
  1Q19
  2Q19
  3Q19
  4Q19
Total Stockholders' Equity $ 490     $ 481     $ 499     $ 602     $ 613  
                                       
Book value per share $ 10.21     $ 10.63     $ 11.00     $ 11.59     $ 11.80  
Tangible book value per share(1) $ 10.04     $ 10.46     $ 10.83     $ 11.44     $ 11.66  
                                       
Common equity tier 1 capital ratio   11.75 %     11.23 %     11.02 %     12.91 %     12.19 %
Tier 1 capital ratio   12.53       11.23       11.04       12.93       12.21  
Total capital ratio   13.51       12.20       12.04       13.90       13.08  
Leverage ratio   12.43       11.15       10.87       12.57       12.08  

(1) Represents a non-GAAP measure. See "Table 6. Non-GAAP Financial Measures" for a reconciliation of this measure.

During the third quarter of 2019, the Company issued 6,594,362 new shares in its initial public offering, including the over-allotment, bringing its total net proceeds from the offering to approximately $87.0 million. The Company intends to use the net proceeds from the offering to support growth, organically or through mergers and acquisitions, and for general corporate purposes. As previously disclosed, the Company is currently considering using a portion of the net proceeds for the opening of a second smaller full-service branch in the Dallas MSA, in addition to consistently evaluating other strategic opportunities.

Conference Call and Webcast

CrossFirst will hold a conference call and webcast to discuss fourth quarter 2019 and year end results on Thursday, January 23, 2020 at 4 p.m. CST / 5 p.m. EST. The conference call and webcast may also include discussion of Company developments, forward-looking statements and other material information about business and financial matters. Investors, news media, and other participants should register for the call or audio webcast at https://investors.CrossFirstbankshares.com. Participants may dial into the call toll-free at (877) 621-5851 from anywhere in the U.S. or (470) 495-9492 internationally, using conference ID no. 5624769. Participants are encouraged to dial into the call or access the webcast approximately 10 minutes prior to the start time.

A replay of the webcast will be available on the Company's website. A replay of the conference call will be available two hours following the close of the call until January 30, 2020, accessible at (855) 859-2056 with conference ID no. 5624769.

Cautionary Notice about Forward-Looking Statements

The financial results in this press release reflect preliminary, unaudited results, which are not final until the Company’s Annual Report on Form 10-K is filed. This earnings release contains forward-looking statements. These forward-looking statements reflect the Company's current views with respect to, among other things, future events and its financial performance. Any statements about management’s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Any or all of the forward-looking statements in this earnings release may turn out to be inaccurate.

The inclusion of forward-looking information in this earnings release should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect our financial condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in such forward-looking statements.

Accordingly, the Company cautions you that any such forward-looking statements are not a guarantee of future performance and that actual results may prove to be materially different from the results expressed or implied by the forward-looking statements due to a number of factors. Such factors include, without limitation, those listed from time to time in reports that the Company files with the Securities and Exchange Commission. These forward-looking statements are made as of the date of this communication, and the Company 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 law.

About CrossFirst

CrossFirst Bankshares, Inc., is a Kansas corporation and a registered bank holding company for its wholly-owned subsidiary CrossFirst Bank, which is headquartered in Leawood, Kansas. CrossFirst Bank has seven full-service banking offices primarily along the I-35 corridor in Kansas, Missouri, Oklahoma and Texas.

CROSSFIRST BANKSHARES, INC. CONTACT:
Matt Needham, Director of Investor Relations
(913) 312-6822
https://investors.crossfirstbankshares.com

   
   

Unaudited Financial Tables

  • Table 1. Consolidated Balance Sheets
  • Table 2. Consolidated Statements of Income
  • Table 3. Year-to-Date Analysis of Changes in Net Interest Income (2018 & 2019)
  • Table 4. 2018 - 2019 Quarterly Analysis of Changes in Net Interest Income
  • Table 5. Linked Quarterly Analysis of Changes in Net Interest Income
  • Table 6. Non-GAAP Financial Measures
   
TABLE 1. CONSOLIDATED BALANCE SHEETS
  As of December 31,
             
  2018       2019
(unaudited)
 
   
  (Dollars in thousands)
Assets              
Cash and cash equivalents $ 216,541     $ 187,320  
Available for sale securities - taxable   296,133       298,208  
Available for sale securities - tax-exempt   367,545       443,426  
Premises and equipment, held for sale   3,444        
      Loans, net of allowance for loan losses of $40,896 and $37,826 at December 31,        
  2019 and 2018, respectively   3,022,921       3,811,348  
Premises and equipment, net   74,945       70,210  
Restricted equity securities   14,525       17,278  
Interest receivable   14,092       15,716  
Foreclosed assets held for sale         3,619  
Deferred tax asset   16,316       9,560  
Goodwill and other intangible assets, net   7,796       7,694  
Bank-owned life insurance   63,811       65,689  
Other   9,146       12,943  
Total assets $ 4,107,215     $ 4,943,011  
Liabilities and stockholders’ equity
           
Deposits            
Non-interest bearing $ 484,284     $ 521,826  
Savings, NOW and money market   1,714,136       2,162,187  
Time   1,009,677       1,239,746  
Total deposits   3,208,097       3,923,759  
Federal funds purchased and repurchase agreements   75,406       14,921  
Federal Home Loan Bank advances   312,985       358,743  
Other borrowings   884       921  
Interest payable and other liabilities   19,507       31,245  
Total liabilities   3,616,879       4,329,589  
Stockholders’ equity              
Redeemable preferred stock, $0.01 par value, $25 liquidation value:    
          authorized - 5,000,000 shares, issued - 0 and 1,200,000 shares at December 31,    
   2019 and 2018, respectively   12        
Common stock, $0.01 par value:    
authorized - 200,000,000 shares, issued - 51,969,203 and 45,074,322 shares at December 31, 2019 and 2018, respectively   451       520  
Additional paid-in capital   454,512       519,870  
Retained earnings   38,567       76,666  
Other   (196 )     (85 )
Accumulated other comprehensive income (loss)   (3,010 )     16,451  
Total stockholders’ equity   490,336       613,422  
Total liabilities and stockholders’ equity $ 4,107,215     $ 4,943,011  
               


 
TABLE 2. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
  Three Months Ended
December 31,

  Twelve Months Ended
December 31,
  2018   2019   2018   2019
               
  (Dollars in thousands except per share data)
Interest Income                            
Loans, including fees
Available for sale securities
$ 40,813     $ 49,208   $ 130,075     $ 191,527  
Available for sale securities - Taxable   2,243       1,894     7,972       8,540  
Available for sale securities - Tax-exempt   3,135       3,191     14,757       12,011  
Deposits with financial institutions   615       601     3,096       3,053  
Dividends on bank stocks   262       286     980       1,087  
   Total interest income   47,068       55,180     156,880       216,218  
Interest Expense        
Deposits   12,733       16,247     39,372       67,668  
Fed funds purchased and repurchase agreements   440       91     1,068       592  
Advances from Federal Home Loan Bank   1,533       1,628     5,841       6,367  
Other borrowings   47       35     231       147  
   Total interest expense   14,753       18,001     46,512       74,774  
Net Interest Income   32,315       37,179     110,368       141,444  
Provision for Loan Losses   4,500       3,350     13,500       13,900  
Net Interest Income after Provision for Loan Losses   27,815       33,829     96,868       127,544  
Non-Interest Income                            
Service charges and fees (rebates) on customer accounts   (62 )     163     444       604  
Gain (loss) on sale of available for sale securities   (70 )     520     538       987  
Impairment of premises and equipment held for sale             (171 )     (424 )
Gain on sale of loans   209           827       207  
Income from bank-owned life insurance   458       462     1,969       1,878  
Swap fee income, net   (14 )     338     285       2,753  
Other non-interest income   674       703     2,191       2,710  
   Total non-interest income   1,195       2,186     6,083       8,715  
Non-Interest Expense                            
Salaries and employee benefits   12,429       13,818     56,118       57,114  
Occupancy   2,015       2,048     8,214       8,349  
Professional fees   899       1,041     3,320       2,964  
Deposit insurance premiums   775       767     3,186       2,787  
Data processing   525       676     1,995       2,544  
Advertising   709       685     2,691       2,455  
Software and communication   672       910     2,630       3,317  
Depreciation and amortization   482       414     1,788       1,734  
Other non-interest expense   1,660       1,526     5,813       6,384  
   Total non-interest expense   20,166       21,885     85,755       87,648  
Net Income Before Taxes   8,844       14,130     17,196       48,611  
Income tax expense (benefit)   (1,490 )     2,746     (2,394 )     8,054  
Net Income $ 10,334     $ 11,384   $ 19,590     $ 40,557  
Basic Earnings Per Share $ 0.22     $ 0.22   $ 0.48     $ 0.85  
Diluted Earnings Per Share $ 0.22     $ 0.22   $ 0.47     $ 0.83  
                             


 
TABLE 3. YEAR-TO-DATE ANALYSIS OF CHANGES IN NET INTEREST INCOME
(UNAUDITED)
 
  Twelve Months Ended
December 31,
  2018   2019
  Average
Balance
  Interest
Income /
Expense
  Average
Yield /
Rate(3)
  Average
Balance
  Interest
Income /
Expense
  Average
Yield /
Rate(3)
                       
Interest-earning assets: (Dollars in thousands)
                                       
Securities - taxable $ 281,709     $ 8,952   3.18 %   $ 330,051     $ 9,627   2.92 %
Securities - tax-exempt(1)   459,231       17,856   3.89       390,908       14,533   3.72  
Federal funds sold   16,377       339   2.07       15,195       364   2.40  
Interest-bearing deposits in other banks   159,279       2,757   1.73       139,538       2,689   1.93  
Gross loans, net of unearned income(2)   2,435,424       130,075   5.34       3,468,079       191,527   5.52  
Total interest-earning assets(1)   3,352,020     $ 159,979   4.77 %     4,343,771     $ 218,740   5.04 %
Allowance for loan losses   (30,921 )             (41,971 )        
Other non-interest-earning assets   173,556               197,963          
Total assets $ 3,494,655             $ 4,499,763          
Interest-bearing liabilities                      
Transaction deposits $ 56,321     $ 175   0.31 %   $ 146,109     $ 1,742   1.19 %
Savings and money market deposits   1,410,727       23,405   1.66       1,676,417       35,385   2.11  
Time deposits   835,595       15,792   1.89       1,243,304       30,541   2.46  
Total interest-bearing deposits   2,302,643       39,372   1.71       3,065,830       67,668   2.21  
FHLB and short-term borrowings   395,825       7,004   1.77       366,577       6,959   1.90  
Trust preferred securities, net of fair value adjustments   864       136   15.69       899       147   16.34  
Non-interest-bearing deposits   425,243               512,142          
Cost of funds   3,124,575     $ 46,512   1.49 %     3,945,448     $ 74,774   1.90 %
Other liabilities   12,634               25,708          
Stockholders’ equity   357,446               528,607          
Total liabilities and stockholders' equity $ 3,494,655             $ 4,499,763          
Net interest income(1)     $ 113,467           $ 143,966    
Net interest spread(1)         3.28 %           3.14 %
Net interest margin(1)         3.39 %           3.31 %

(1) Tax exempt income is calculated on a tax equivalent basis. Tax-free municipal securities are exempt from Federal taxes. The incremental tax rate used is 21.0%. 
(2) Average loan balances include nonaccrual loans.
(3) Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this release may not produce the same amounts.

...