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Old National reports 2nd quarter earnings of $51.7 million, or $0.32 per share

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EVANSVILLE, Ind., July 20, 2020 (GLOBE NEWSWIRE) --

Old National Bancorp (NASDAQ: ONB) reports 2Q20 net income of $51.7 million, diluted EPS of $0.32.

Adjusted 1 net income of $55.1 million, or $0.33 per diluted share.

CEO COMMENTARY :

Old Nationals strong 2 nd quarter loan production was driven by our ability to help more than 9,400 new and existing clients secure Paycheck Protection Program funding, which resulted in financial assistance to nearly 160,000 of their employees, said Old National Chairman & CEO Jim Ryan. We also maintained strong credit metrics and capital ratios during the quarter while working to finalize our recently announced technology partnership with Infosys a partnership that will accelerate and enhance our ability to provide powerful digital solutions to our clients.

SECOND QUARTER HIGHLIGHTS 2

Net income

"  Net income of $51.7 million

"  Earnings per share of $0.32

 

 

Net interest
income/NIM

"  Net interest income on a fully taxable equivalent basis of $149.0 million compared to $147.1 million

"  Net interest margin on a fully taxable equivalent basis of 3.14% compared to 3.31%

 

 

Operating
Performance

"  Pre-provision net revenue 1 (PPNR) of $87.3 million

"  Adjusted PPNR 1 of $92.1 million, up 7.6% over second quarter of 2019

"  Noninterest expense of $120.2 million

"  Adjusted noninterest expense 1 of $115.0 million

"  Efficiency ratio 1 of 56.29%

"  Adjusted efficiency ratio 1 of 53.79%, a 552 basis point improvement

 

 

Loans and
Credit
Quality

"  End-of-period total loans 3 of $13,738.2 million compared to $12,438.8 million

æ  Paycheck Protection Program Loans (PPP) amounted to $1,462.8 million at the end of June

"  Second-quarter total commercial production, excluding PPP loans, of $658.5 million

"  Provision for credit losses of $22.5 million

"  June 30 pipeline of $2.7 billion

"  Net charge-offs of $0.5 million, or 0.02% annualized, compared to net charge-offs of $6.5 million

"  Non-performing loans of 1.04% of total loans compared to 1.16%

 

Return
Profile &
Capital

"  Return on average common equity of 7.27%

"  Return on average tangible common equity 1 of 12.41%

"  Adjusted return on average tangible common equity 1 of 13.18%

"  No shares of common stock were repurchased during the current quarter

 

 

Notable
Items

"  $4.9 million in ONB Way charges

"  $0.3 million in tax credit amortization

1 Non-GAAP financial measure that Management believes is useful in evaluating the financial results of the Company please refer to the Non GAAP reconciliations contained in this release
2 Comparisons are on a linked-quarter basis, unless otherwise noted
3 Includes loans held for sale

THE ONB WAY, OLD NATIONAL'S STRATEGIC PLAN, CONTINUES WITH TECHNOLOGY PARTNERSHIP

In a press release dated July 10, 2020, Old National announced a strategic technology partnership with Infosys, one of the world's foremost information technology companies. This partnership will enable faster adoption of digital solutions, modernize Old National's existing technology infrastructure and enhance both the employee and client experience.

RESULTS OF OPERATIONS

Old National Bancorp reported second quarter 2020 net income of $51.7 million, or $0.32 per diluted share. 

Included in the second quarter were pre-tax charges of $5.0 million for ONB Way. Excluding these charges from the current quarter and netting out debt securities gains, adjusted net income was $55.1 million, or $0.33 per diluted share.

LOANS
Strong PPP volume drove total loan balances higher.

  • Period-end total loans were $13,738.2 million at June 30, 2020, compared to $12,438.8 million at March 31, 2020. Driving the large increase was $1,462.8 million in outstanding PPP loan balances at June 30, 2020.

  • Commercial and industrial loans increased $1,260.9 million to $4,307.5 million as a result of strong PPP loan production.

  • Commercial real estate loans increased $119.9 million to $5,403.3 million, or 9.1% annualized growth.

  • Consumer loans decreased $51.1 million to $1,675.6 million and residential mortgage loans decreased $98.6 million to $2,229.3 million.

  • Commercial loan production in the second quarter, excluding PPP loan production, was $658.5 million; period-end pipeline totaled $2.7 billion.

  • Average total loans in the second quarter were $13,450.1 million, an increase of $1,257.7 million from the first quarter of 2020.

DEPOSITS
A low-cost core deposit franchise continues to be one of Old Nationals strengths.

  • Period-end total deposits were $16,319.4 million at June 30, 2020, compared to $14,305.4 million at March 31, 2020. PPP funds and higher client savings rates drove the increase in deposit balances.

  • On average, total deposits in the second quarter were $15,652.8 million, compared to $14,327.8 million in the first quarter of 2020. 

NET INTEREST INCOME AND MARGIN
Net interest income higher on net PPP loan fees while net interest margin is lower with decline in accretion income and impact of 1% PPP loan coupon.

  • Net interest income increased to $145.6 million in the second quarter of 2020 from $143.8 million in the first quarter of 2020. 

  • The net interest margin on a fully taxable equivalent basis decreased 17 basis points to 3.14% compared to 3.31% in the first quarter of 2020. 

  • PPP interest and net fees combined to have a positive impact of $6.6 million to net interest income in the second quarter while the low 1% coupon rate negatively impacted net interest margin by 5 basis points.

  • Accretion income was $5.8 million, or 12 basis points of net interest margin, in the second quarter of 2020 compared to $6.7 million, or 15 basis points of net interest margin, in the first quarter of 2020. In the second quarter of 2020, accretion income was 2.8% of adjusted total revenue.

  • Interest collected on nonaccrual loans was $0.6 million, or 1 basis point of net interest margin, in the second quarter of 2020 compared to $0.7 million, or 1 basis point of net interest margin, in the first quarter of 2020.

  • The cost of total deposits declined 17 basis points to 0.17% in the second quarter of 2020 while the cost of total interest-bearing deposits decreased 23 basis points to 0.25%.

CREDIT QUALITY
Strong credit quality remains a hallmark of the Old National franchise.

  • Provision for credit losses was $22.5 million in the second quarter of 2020, compared to $16.9 million in the first quarter, and continues to be impacted by an economic forecast that includes the impact of novel coronavirus pandemic.

  • Net charge-offs in the second quarter were $0.5 million, or 0.02% of total average loans, and 30-89 day delinquencies of 0.16%.

  • Non-performing loans decreased as a percentage of total loans to 1.04%.

  • Loans acquired from previous acquisitions were recorded at fair value at the acquisition date. As of June 30, 2020, the remaining discount on these acquired loans was $61.5 million.

  • The allowance for credit losses was $128.4 million, or 0.94% of total loans at June 30, 2020.

NONINTEREST INCOME
Noninterest income increased due to strong mortgage banking revenue and an increase in capital markets income.

  • Total noninterest income for the second quarter of 2020 was $58.5 million, an increase of $1.0 million from the first quarter of 2020.

  • Mortgage banking revenue increased $6.2 million and capital markets income increased $1.9 million when compared to the first quarter of 2020 while service charges on deposit accounts decreased $2.5 million and investment product fees decreased $1.0 million.

NONINTEREST EXPENSE
Second quarter results demonstrate benefit of The ONB Way, helping drive positive operating leverage 1 .

  • Noninterest expense for the second quarter of 2020 was $120.2 million and included $4.9 million in ONB Way charges and $0.3 million in tax credit amortization.

  • Excluding these items, adjusted noninterest expense for the second quarter was $115.0 million, compared to the $122.0 million in adjusted noninterest expense in the first quarter of 2020.

  • The second quarter efficiency ratio was 56.29%, while the adjusted efficiency ratio was 53.79%.

  • Adjusted operating leverage 1 was +576 basis points for the second quarter of 2020 as compared to the second quarter of 2019.

INCOME TAXES

  • On a fully taxable-equivalent basis, income tax expense in the second quarter was $13.1 million, resulting in a 20.2% FTE tax rate.

  • Income tax expense included $0.3 million in tax credit benefit. 

CAPITAL AND LIQUIDITY
Capital ratios remain strong.

  • At the end of the second quarter, total risk-based capital was 12.68% and regulatory tier 1 capital was 11.70%.

  • Tangible common equity to tangible assets was 8.45% at the end of the second quarter compared to 8.81% in the first quarter of 2020.

  • The Company did not repurchase any shares of common stock during the second quarter.

  • A low loan to deposit ratio of 84.2%, combined with existing funding sources plus available unencumbered, high-quality collateral, provides strong liquidity.

NON-GAAP RECONCILIATIONS

($ in millions, except EPS, shares in 000s)

2Q20

Adjustments 4

Adjusted 2Q20

Total Revenues (FTE)

$

207.5

 

 

$

(0.4

)

 

$

207.1

 

Less: Provision for Credit Losses

(22.5

)

 

 

 

(22.5

)

Less: Noninterest Expenses

(120.2

)

 

4.9

 

 

(115.3

)

Income before Income Taxes (FTE)

$

64.8

 

 

$

4.5

 

 

$

69.3

 

Income Taxes

(13.1

)

 

(1.1

)

 

(14.2

)

Net Income

$

51.7

 

 

$

3.4

 

 

$

55.1

 

Average Shares Outstanding

165,302

 

 

 

 

165,302

 

Earnings Per Share - Diluted

$

0.32

 

 

$

0.01

 

 

$

0.33

 

4 Tax-effect calculations use the current statutory FTE tax rates (federal + state)

($ in millions)

2Q20

1Q20

Net Interest Income

$

145.6

 

 

$

143.8

 

Add: FTE Adjustment

3.4

 

 

3.3

 

Net Interest Income (FTE)

$

149.0

 

 

$

147.1

 

Average Earning Assets

$

19,007.7

 

 

$

17,774.0

 

Net Interest Margin (FTE)

3.14

%

 

3.31

%

 

 

 

($ in millions)

2Q20

2Q19

Net Interest Income

$

145.6

 

 

$

155.2

 

Add: FTE Adjustment

3.4

 

 

3.3

 

Net Interest Income (FTE)

$

149.0

 

 

$

158.5

 

Add: Total Noninterest Income

58.5

 

 

51.2

 

Less: Noninterest Expense

120.2

 

 

128.1

 

Pre-Provision Net Revenue

$

87.3

 

 

$

81.6

 

Less: Debt Securities Gains

(0.5

)

 

(1.2

)

Add: Loss on Branch Actions

0.1

 

 

 

Add: ONB Way Charges

4.9

 

 

1.4

 

Add: Merger and Integration Charges

 

 

3.2

 

Add: Amortization of Tax Credit Investments

0.3

 

 

0.6

 

Adjusted Pre-Provision Net Revenue

$

92.1

 

 

$

85.6

 


($ in millions)

2Q20

1Q20

2Q19

Noninterest Expense

$

120.2

 

 

$

158.7

 

 

$

128.1

 

Less: ONB Way Charges

(4.9

)

 

(31.2

)

 

(1.4

)

Less: Merger and Integration Charges

 

 

 

 

(3.2

)

Noninterest Expense less Charges

$

115.3

 

 

$

127.5

 

 

$

123.5

 

Less: Amortization of Tax Credit Investments

(0.3

)

 

(5.5

)

 

(0.6

)

Adjusted Noninterest Expense

$

115.0

 

 

$

122.0

 

 

$

122.9

 

Less: Intangible Amortization

(3.6

)

 

(3.8

)

 

(4.3

)

Adjusted Noninterest Expense Less Intangible Amortization

$

111.4

 

 

$

118.2

 

 

$

118.6

 

Net Interest Income

$

145.6

 

 

$

143.8

 

 

$

155.2

 

FTE Adjustment

3.4

 

 

3.3

 

 

3.3

 

Net Interest Income (FTE)

$

149.0

 

 

$

147.1

 

 

$

158.5

 

Total Noninterest Income

58.5

 

 

57.5

 

 

51.2

 

Total Revenue (FTE)

207.5

 

 

204.6

 

 

209.7

 

Less: Debt Securities Gains/Losses

(0.5

)

 

(5.2

)

 

(1.2

)

Add: Loss on Branch Actions

0.1

 

 

 

 

 

Adjusted Total Revenue (FTE)

207.1

 

 

199.4

 

 

208.5

 

Efficiency Ratio

56.29

%

 

77.71

%

 

59.35

%

Adjusted Efficiency Ratio

53.79

%

 

59.31

%

 

56.85

%

Operating Leverage 5 (basis points)

518

 

 

 

 

Adjusted Operating Leverage 6 (basis points)

576

 

 

 

 

5 Year-over-year basis point change in noninterest expenses plus change in total revenue
6 Year-over-year basis point change in adjusted noninterest expense plus change in adjusted total revenue

($ in millions)

2Q20

1Q20

Net Income

$

51.7

 

 

$

22.6

 

Add: Intangible Amortization (net of tax 7 )

2.7

 

 

2.9

 

Tangible Net Income

$

54.4

 

 

$

25.5

 

Less: Securities Gains/Losses (net of tax 7 )

(0.4

)

 

(3.9

)

Add: Loss on Branch Actions (net of tax 7 )

0.1

 

 

 

Add: ONB Way Charges (net of tax 7 )

3.7

 

 

23.4

 

Adjusted Tangible Net Income

$

57.8

 

 

$

45.0

 

Average Total Shareholders Equity

2,845.4

 

 

2,833.5

 

Less: Average Goodwill

(1,037.0

)

 

(1,037.0

)

Less: Average Intangibles

(54.4

)

 

(58.1

)

Average Tangible Shareholders Equity

$

1,754.0

 

 

$

1,738.4

 

Return on Average Tangible Common Equity

12.41

%

 

5.86

%

Adjusted Return on Average Tangible Common Equity

13.18

%

 

10.35

%

7 Tax-effect calculations use the current statutory FTE tax rates (federal + state)

CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 8:00 a.m. Central Time on Monday, July 20, 2020, to review second-quarter 2020 financial results. The live audio web cast of the call, along with the corresponding presentation slides, will be available on the Companys Investor Relations web page at oldnational.com and will be archived there for 12 months. A replay of the call will also be available from 11:00 a.m. Central Time on July 20 through August 2. To access the replay, dial 1-855-859-2056, Conference ID Code 7973414.

ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB), the holding company of Old National Bank, is the largest bank holding company headquartered in Indiana. With $22.1 billion in assets, it ranks among the top 100 banking companies in the U.S. and has been recognized as a Worlds Most Ethical Company by the Ethisphere Institute for nine consecutive years.  Since its founding in Evansville in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships and keeping our clients at the center of all we do. This is an approach to business that we call The ONB Way . Today, Old Nationals footprint includes Indiana, Kentucky, Michigan, Wisconsin and Minnesota. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investment and capital market services. For more information and financial data, please visit Investor Relations at oldnational.com .

USE OF NON-GAAP FINANCIAL MEASURES
This earnings release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Old Nationals results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.

FORWARD-LOOKING STATEMENT
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, descriptions of Old National Bancorps (Old Nationals) financial condition, results of operations, asset and credit quality trends and profitability. Forward-looking statements can be identified by the use of the words anticipate, believe, expect, intend, could and should, and other words of similar meaning. These forward-looking statements express managements current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties, such as statements about the potential impacts of the COVID-19 pandemic. There are a number of factors that could cause actual results to differ materially from those in such statements. Factors that might cause such a difference include, but are not limited to: the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses and governments responses to the pandemic on our operations and personnel, and on commercial activity and demand across our and our customers businesses; market, economic, operational, liquidity, credit and interest rate risks associated with Old Nationals business(including developments and volatility arising from the COVID-19 pandemic); competition; government legislation and policies (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its related regulations); ability of Old National to execute its business plan, including the anticipated impact from the ONB Way strategic plan that may differ from current estimates; changes in the economy which could materially impact credit quality trends and the ability to generate loans and gather deposits; failure or circumvention of our internal controls; failure or disruption of our information systems; significant changes in accounting, tax or regulatory practices or requirements, including the impact of the new CECL standard as well as changes to address the impact of COVID-19; new legal obligations or liabilities or unfavorable resolutions of litigations; disruptive technologies in payment systems and other services traditionally provided by banks; computer hacking and other cybersecurity threats; other matters discussed in this press release; and other factors identified in our Annual Report on Form 10-K and other periodic filings with the SEC. These forward-looking statements are made only as of the date of this press release, and Old National does not undertake an obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this press release.

 

 

 

 

 

 

 

Financial Highlights (unaudited)

($ and shares in thousands, except per share data)

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

March 31

June 30,

 

June 30,

June 30,

 

2020

2020

2019

 

2020

2019

Income Statement

 

 

 

 

 

 

Net interest income

$

145,671

 

$

143,771

 

$

155,230

 

 

$

289,442

 

$

302,278

 

Tax equivalent adjustment (1)

3,367

 

3,323

 

3,289

 

 

6,690

 

6,487

 

Net interest income - tax equivalent basis

149,038

 

147,094

 

158,519

 

 

296,132

 

308,765

 

Provision for loan losses (4)

22,545

 

16,950

 

1,003

 

 

39,495

 

2,046

 

Noninterest income

58,461

 

57,502

 

51,214

 

 

115,963

 

97,630

 

Noninterest expense

120,121

 

158,744

 

128,118

 

 

278,865

 

251,159

 

Net income

51,705

 

22,640

 

62,964

 

 

74,345

 

119,240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Common Share Data

 

 

 

 

 

 

Weighted average diluted shares

165,302

 

168,404

 

173,675

 

 

166,848

 

174,531

 

Net income (diluted)

$

0.32

 

$

0.13

 

$

0.36

 

 

$

0.45

 

$

0.68

 

Cash dividends

0.14

 

0.14

 

0.13

 

 

0.28

 

0.26

 

Common dividend payout ratio (2)

44

%

108

%

35

%

 

62

%

38

%

Book value

$

17.35

 

$

17.10

 

$

16.28

 

 

$

17.35

 

$

16.28

 

Stock price

13.76

 

13.19

 

16.59

 

 

13.76

 

16.59

 

Tangible common book value (3)

10.75

 

10.48

 

9.86

 

 

10.75

 

9.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance Ratios

 

 

 

 

 

 

Return on average assets

0.96

%

0.44

%

1.26

%

 

0.71

%

1.20

%

Return on average common equity

7.27

%

3.20

%

9.13

%

 

5.24

%

8.72

%

Return on tangible common equity (3)

12.27

%

5.89

%

15.59

%

 

9.01

%

14.82

%

Return on average tangible common equity (3)

12.41

%

5.86

%

16.04

%

 

9.15

%

15.47

%

Net interest margin (FTE)

3.14

%

3.31

%

3.66

%

 

3.22

%

3.59

%

Efficiency ratio (5)

56.29

%

77.71

%

59.35

%

 

66.80

%

59.79

%

Net charge-offs (recoveries) to average loans

0.02

%

0.21

%

0.01

%

 

0.11

%

0.02

%

Allowance for loan losses to ending loans (4)

0.94

%

0.86

%

0.47

%

 

0.94

%

0.47

%

Non-performing loans to ending loans

1.04

%

1.16

%

1.34

%

 

1.04

%

1.34

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet (EOP)

 

 

 

 

 

 

Total loans

$

13,615,701

 

$

12,384,612

 

$

12,046,578

 

 

$

13,615,701

 

$

12,046,578

 

Total assets

22,102,188

 

20,741,141

 

20,145,285

 

 

22,102,188

 

20,145,285

 

Total deposits

16,319,446

 

14,305,362

 

14,363,101

 

 

16,319,446

 

14,363,101

 

Total borrowed funds

2,641,436

 

3,245,214

 

2,726,481

 

 

2,641,436

 

2,726,481

 

Total shareholders' equity

2,864,255

 

2,823,435

 

2,803,139

 

 

2,864,255

 

2,803,139

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios (3)

 

 

 

 

 

 

Risk-based capital ratios (EOP):

 

 

 

 

 

 

Tier 1 common equity

11.70

%

11.40

%

11.89

%

 

11.70

%

11.89

%

Tier 1

11.70

%

11.40

%

11.89

%

 

11.70

%

11.89

%

Total

12.68

%

12.28

%

12.82

%

 

12.68

%

12.82

%

Leverage ratio (to average assets)

8.12

%

8.46

%

8.82

%

 

8.12

%

8.82

%

 

 

 

 

 

 

 

Total equity to assets (averages)

13.16

%

13.91

%

13.82

%

 

13.53

%

13.76

%

Tangible common equity to tangible assets

8.45

%

8.81

%

8.92

%

 

8.45

%

8.92

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonfinancial Data

 

 

 

 

 

 

Full-time equivalent employees

2,530

 

2,736

 

2,829

 

 

2,530

 

2,829

 

Banking centers

162

 

192

 

192

 

 

162

 

192

 

 

 

 

 

 

 

 

(1) Calculated using the federal statutory tax rate in effect of 21% for all periods.

(2) Cash dividends per share divided by net income per share (basic).

(3) Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures.

(4) Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.

(5) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of FTE net interest income and noninterest revenues, excluding net gains from debt securities transactions. This presentation excludes amortization of intangibles and net debt securities gains, as is common in other company releases, and better aligns with true operating performance.

FTE - Fully taxable equivalent basis EOP - End of period actual balances

N/A - Not applicable


 

 

 

 

 

 

 

Income Statement (unaudited)

($ and shares in thousands, except per share data)

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

 

2020

2020

2019

 

2020

2019

Interest income

$

161,974

 

$

167,999

 

$

189,063

 

 

$

329,973

 

$

367,981

 

Less: interest expense

16,303

 

24,228

 

33,833

 

 

40,531

 

65,703

 

Net interest income

145,671

 

143,771

 

155,230

 

 

289,442

 

302,278

 

Provision for loan losses (1)

22,545

 

16,950

 

1,003

 

 

39,495

 

2,046

 

Net interest income after provision for loan losses

123,126

 

126,821

 

154,227

 

 

249,947

 

300,232

 

 

 

 

 

 

 

 

Wealth management fees

9,424

 

8,884

 

9,909

 

 

18,308

 

18,444

 

Service charges on deposit accounts

7,582

 

10,077

 

11,515

 

 

17,659

 

22,341

 

Debit card and ATM fees

4,832

 

4,998

 

5,419

 

 

9,830

 

10,922

 

Mortgage banking revenue

17,313

 

11,119

 

7,135

 

 

28,432

 

12,146

 

Investment product fees

4,845

 

5,874

 

5,591

 

 

10,719

 

10,862

 

Capital markets income

6,179

 

4,328

 

3,150

 

 

10,507

 

5,667

 

Company-owned life insurance

2,968

 

3,080

 

2,711

 

 

6,048

 

5,899

 

Other income

4,807

 

3,968

 

4,619

 

 

8,775

 

10,287

 

Gains (losses) on sales of debt securities

511

 

5,174

 

1,165

 

 

5,685

 

1,062

 

Total noninterest income

58,461

 

57,502

 

51,214

 

 

115,963

 

97,630

 

 

 

 

 

 

 

 

Salaries and employee benefits

66,556

 

79,173

 

71,566

 

 

145,729

 

142,749

 

Occupancy

13,245

 

15,133

 

14,559

 

 

28,378

 

29,137

 

Equipment

3,853

 

5,305

 

4,517

 

 

9,158

 

8,991

 

Marketing

2,395

 

3,097

 

4,439

 

 

5,492

 

8,162

 

Data processing

9,629

 

9,467

 

10,207

 

 

19,096

 

19,548

 

Communication

2,296

 

2,798

 

2,849

 

 

5,094

 

5,903

 

Professional fees

3,545

 

4,293

 

4,921

 

 

7,838

 

7,831

 

FDIC assessment

2,014

 

1,609

 

1,454

 

 

3,623

 

3,541

 

Amortization of intangibles

3,612

 

3,776

 

4,325

 

 

7,388

 

8,797

 

Amortization of tax credit investments

287

 

5,515

 

568

 

 

5,802

 

828

 

Other expense

12,689

 

28,578

 

8,713

 

 

41,267

 

15,672

 

Total noninterest expense

120,121

 

158,744

 

128,118

 

 

278,865

 

251,159

 

 

 

 

 

 

 

 

Income before income taxes

61,466

 

25,579

 

77,323

 

 

87,045

 

146,703

 

Income tax expense

9,761

 

2,939

 

14,359

 

 

12,700

 

27,463

 

Net income

$

51,705

 

$

22,640

 

$

62,964

 

 

$

74,345

 

$

119,240

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

Net income

$

0.32

 

$

0.13

 

$

0.36

 

 

$

0.45

 

$

0.68

 

 

 

 

 

 

 

 

Average Common Shares Outstanding

 

 

 

 

 

 

Basic

164,732

 

167,748

 

172,985

 

 

166,240

 

173,855

 

Diluted

165,302

 

168,404

 

173,675

 

 

166,848

 

174,531

 

 

 

 

 

 

 

 

Common shares outstanding at end of period

165,093

 

165,109

 

172,231

 

 

165,093

 

172,231

 

 

 

 

 

 

 

 

(1) Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.


 

Balance Sheet (unaudited)

($ in thousands)

 

 

June 30,

 

March 31,

 

June 30,

 

2020

 

2020

 

2019

Assets

 

 

 

 

 

Federal Reserve Bank account

$

54,807

 

 

$

130,295

 

 

$

40,945

 

Money market investments

14,633

 

 

9,349

 

 

20,210

 

Investments:

 

 

 

 

 

Treasury and government-sponsored agencies

489,232

 

 

530,904

 

 

725,327

 

Mortgage-backed securities

3,304,054

 

 

3,210,000

 

 

2,900,235

 

States and political subdivisions

1,355,959

 

 

1,302,395

 

 

1,186,311

 

Other securities

512,375

 

 

497,709

 

 

489,855

 

Total investments

5,661,620

 

 

5,541,008

 

 

5,301,728

 

Loans held for sale, at fair value

122,507

 

 

54,209

 

 

37,904

 

Loans:

 

 

 

 

 

Commercial

4,307,505

 

 

3,046,579

 

 

3,074,849

 

Commercial and agriculture real estate

5,403,316

 

 

5,283,464

 

 

4,993,693

 

Consumer:

 

 

 

 

 

Home equity

547,286

 

 

561,789

 

 

553,991

 

Other consumer loans

1,128,296

 

 

1,164,929

 

 

1,201,847

 

Subtotal of commercial and consumer loans

11,386,403

 

 

10,056,761

 

 

9,824,380

 

Residential real estate

2,229,298

 

 

2,327,851

 

 

2,222,198

 

Total loans

13,615,701

 

 

12,384,612

 

 

12,046,578

 

Total earning assets

19,469,268

 

 

18,119,473

 

 

17,447,365

 

 

 

 

 

 

 

Allowance for loan losses (1)

(128,394

)

 

(106,380

)

 

(56,292

)

Non-earning Assets:

 

 

 

 

 

Cash and due from banks

241,054

 

 

203,533

 

 

239,831

 

Premises and equipment, net

462,796

 

 

462,364

 

 

493,481

 

Operating lease right-of-use assets

80,400

 

 

86,819

 

 

106,222

 

Goodwill and other intangible assets

1,089,711

 

 

1,093,323

 

 

1,104,478

 

Company-owned life insurance

453,116

 

 

450,148

 

 

445,749

 

Other assets

434,237

 

 

431,861

 

 

364,451

 

Total non-earning assets

2,761,314

 

 

2,728,048

 

 

2,754,212

 

Total assets

$

22,102,188

 

 

$

20,741,141

 

 

$

20,145,285

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Noninterest-bearing demand deposits

$

5,217,678

 

 

$

4,058,559

 

 

$

3,771,888

 

Interest-bearing:

 

 

 

 

 

Checking and NOW accounts

4,567,046

 

 

4,105,006

 

 

3,950,161

 

Savings accounts

3,166,680

 

 

2,853,305

 

 

2,877,673

 

Money market accounts

1,895,809

 

 

1,746,798

 

 

1,819,716

 

Other time deposits

1,321,499

 

 

1,469,185

 

 

1,756,814

 

Total core deposits

16,168,712

 

 

14,232,853

 

 

14,176,252

 

Brokered CD's

150,734

 

 

72,509

 

 

186,849

 

Total deposits

16,319,446

 

 

14,305,362

 

 

14,363,101

 

 

 

 

 

 

 

Federal funds purchased and interbank borrowings

801

 

 

560,770

 

 

410,036

 

Securities sold under agreements to repurchase

367,744

 

 

318,067

 

 

334,540

 

Federal Home Loan Bank advances

2,035,014

 

 

2,130,263

 

 

1,730,065

 

Other borrowings

237,877

 

 

236,114

 

 

251,840

 

Total borrowed funds

2,641,436

 

 

3,245,214

 

 

2,726,481

 

Operating lease liabilities

91,845

 

 

95,830

 

 

110,596

 

Accrued expenses and other liabilities

185,206

 

 

271,300

 

 

141,968

 

Total liabilities

19,237,933

 

 

17,917,706

 

 

17,342,146

 

Common stock, surplus, and retained earnings

2,715,212

 

 

2,685,278

 

 

2,761,102

 

Accumulated other comprehensive income (loss), net of tax

149,043

 

 

138,157

 

 

42,037

 

Total shareholders' equity

2,864,255

 

 

2,823,435

 

 

2,803,139

 

Total liabilities and shareholders' equity

$

22,102,188

 

 

$

20,741,141

 

 

$

20,145,285

 

(1) Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.


 

 

 

 

 

 

 

 

 

 

 

 

 

Average Balance Sheet and Interest Rates (unaudited)

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

Three Months Ended

 

 

June 30, 2020

 

March 31, 2020

 

June 30, 2019

 

 

Average

Income (1)/

Yield/

 

Average

Income (1)/

Yield/

 

Average

Income (1)/

Yield/

Earning Assets:

 

Balance

Expense

Rate

 

Balance

Expense

Rate

 

Balance

Expense

Rate

Money market and other interest-earning

 

 

 

 

 

 

 

 

 

 

 

 

investments

 

$

85,680

 

$

34

 

0.16

%

 

$

58,406

 

$

349

 

2.41

%

 

$

58,321

 

$

334

 

2.29

%

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

Treasury and government-sponsored agencies

 

501,838

 

3,033

 

2.42

%

 

583,971

 

3,697

 

2.53

%

 

695,775

 

4,301

 

2.47

%

Mortgage-backed securities

 

3,179,165

 

17,930

 

2.26

%

 

3,171,650

 

19,065

 

2.40

%

 

2,767,791

 

18,799

 

2.72

%

States and political subdivisions

 

1,293,756

 

11,757

 

3.63

%

 

1,273,156

 

11,409

 

3.58

%

 

1,193,176

 

11,235

 

3.77

%

Other securities

 

497,204

 

3,224

 

2.59

%

 

494,500

 

3,216

 

2.60

%

 

496,631

 

4,063

 

3.27

%

Total investments

 

5,471,963

 

35,944

 

2.63

%

 

5,523,277

 

37,387

 

2.71

%

 

5,153,373

 

38,398

 

2.98

%

Loans: (2)

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

4,049,403

 

31,729

 

3.10

%

 

2,907,297

 

29,053

 

3.95

%

 

3,063,590

 

37,828

 

4.88

%

Commercial and agriculture real estate

 

5,340,622

 

58,007

 

4.30

%

 

5,188,597

 

62,439

 

4.76

%

 

5,019,859

 

72,214

 

5.69

%

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

554,701

 

4,213

 

3.06

%

 

558,356

 

5,631

 

4.06

%

 

558,223

 

7,390

 

5.31

%

Other consumer loans

 

1,135,943

 

11,530

 

4.08

%

 

1,167,802

 

12,219

 

4.21

%

 

1,201,752

 

12,408

 

4.14

%

Subtotal commercial and consumer loans

 

11,080,669

 

105,479

 

3.83

%

 

9,822,052

 

109,342

 

4.48

%

 

9,843,424

 

129,840

 

5.29

%

Residential real estate loans

 

2,369,407

 

23,884

 

4.03

%

 

2,370,295

 

24,244

 

4.09

%

 

2,247,570

 

23,780

 

4.23

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans

 

13,450,076

 

129,363

 

3.82

%

 

12,192,347

 

133,586

 

4.35

%

 

12,090,994

 

153,62...

0 5.05% Total earning assets $19,007,719 $165,341 3.46% $17,774,030 $171,322 3.84% $17,302,688 $192,352 4.43% Less: Allowance for loan losses (3) (107,619) (83,244) (56,632) Non-earning Assets: Cash and due from banks $332,745 $287,601 $234,337 Other assets 2,384,934 2,388,092 2,473,255 Total assets $21,617,779 $20,366,479 $19,953,648 Interest-Bearing Liabilities: Checking and NOW accounts $4,431,074 $1,075 0.10% $4,104,778 $2,860 0.28% $3,895,881 $4,196 0.43%Savings accounts 3,060,012 736 0.10% 2,828,177 1,298 0.18% 2,879,704 2,145 0.30%Money market accounts 1,844,488 910 0.20% 1,784,169 2,507 0.57% 1,789,777 3,729 0.84%Other time deposits 1,378,115 3,786 1.10% 1,562,074 5,186 1.34% 1,779,770 7,181 1.62%Total interest-bearing deposits 10,713,689 6,507 0.24% 10,279,198 11,851 0.46% 10,345,132 17,251 0.67%Brokered CD's 68,149 291 1.72% 84,099 447 2.14% 212,198 1,268 2.40%Total interest-bearing deposits and CD's 10,781,838 6,798 0.25% 10,363,297 12,298 0.48% 10,557,330 18,519 0.70% Federal funds purchased and interbank borrowings 143,811 44 0.12% 392,857 1,240 1.27% 300,810 1,817 2.42%Securities sold under agreements to repurchase 350,545 185 0.21% 329,091 384 0.47% 331,695 671 0.81%Federal Home Loan Bank advances 2,144,497 6,844 1.28% 1,965,130 7,768 1.59% 1,695,681 10,039 2.37%Other borrowings 251,738 2,432 3.87% 240,276 2,538 4.23% 251,577 2,787 4.43%Total borrowed funds 2,890,591 9,505 1.32% 2,927,354 11,930 1.64% 2,579,763 15,314 2.38% Total interest-bearing liabilities 13,672,429 16,303 0.48% 13,290,651 24,228 0.73% 13,137,093 33,833 1.03% Noninterest-Bearing Liabilities and Shareholders' Equity Demand deposits $4,871,002 $3,964,493 $3,812,175 Other liabilities 228,950 277,812 246,134 Shareholders' equity 2,845,398 2,833,523 2,758,246 Total liabilities and shareholders' equity $21,617,779 $20,366,479 $19,953,648 Net interest rate spread 2.98% 3.11% 3.40% Net interest margin (FTE) 3.14% 3.31% 3.66% FTE adjustment $3,367 $3,323 $3,289 (1) Interest income is reflected on a fully taxable equivalent basis (FTE).(2) Includes loans held for sale.(3) Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.


Average Balance Sheet and Interest Rates (unaudited)

($ in thousands)

Six Months Ended

Six Months Ended

June 30, 2020

June 30, 2019

Average

Income (1)/

Yield/

Average

Income (1)/

Yield/

Earning Assets:

Balance

Expense

Rate

Balance

Expense

Rate

Money market and other interest-earning

investments

$

72,043

$

383

1.07

%

$

58,510

$

612

2.11

%

Investments:

Treasury and government-sponsored agencies

542,904

6,730

2.48

%

700,569

8,203

2.34

%

Mortgage-backed securities

3,175,408

36,996

2.33

%

2,633,326

36,402

2.76

%

States and political subdivisions

1,283,456

23,165

3.61

%

1,212,658

22,688

3.74

%

Other securities

495,852

6,440

2.60

%

497,115

8,503

3.42

%

Total investments

$

5,497,620

$

73,331

2.67

%

$

5,043,668

$

75,796

3.01

%

Loans: (2)

Commercial

3,478,351

60,782

3.46

%

3,092,833

73,863

4.75

%

Commercial and agriculture real estate

5,264,610

120,446

4.53

%

5,004,824

137,290

5.46

%

Consumer:

Home equity

556,528

9,845

3.56

%

573,211

14,987

5.27

%

Other consumer loans

1,151,871

23,748

4.15

%

1,197,150

24,208

4.08

%

Subtotal commercial and consumer loans

10,451,360

214,821

4.13

%

9,868,018

250,348

5.12

%

Residential real estate loans

2,369,852

48,128

4.06

%

2,253,375

47,712

4.23

%

Total loans

12,821,212

262,949

4.07

%

12,121,393

298,060

4.91

%

Total earning assets

$

18,390,875

$

336,663

3.64

%

$

17,223,571

$

374,468

4.34

%

Less: Allowance for loan losses (3)

(95,432

)

(56,213

)

Non-earning Assets:

Cash and due from banks

$

310,173

$

232,159

Other assets

2,386,513

2,481,842

Total assets

$

20,992,129

$

19,881,359

Interest-Bearing Liabilities:

Checking and NOW accounts

$

4,267,926

$

3,934

0.19

%

$

3,795,441

$

7,338

0.39

%

Savings accounts

2,944,094

2,034

0.14

%

2,907,552

4,428

0.31

%

Money market accounts

1,814,328

3,417

0.38

%

1,746,456

6,555

0.76

%

Other time deposits

1,470,094

8,972

1.23

%

1,809,975

14,283

1.59

%

Total interest-bearing deposits

10,496,442

18,357

0.35

%

10,259,424

32,604

0.64

%

Brokered CD's

76,124

739

1.95

%

201,878

2,359

2.36

%

Total interest-bearing deposits and CD's

10,572,566

19,096

0.36

%

10,461,302

34,963

0.67

%

Federal funds purchased and interbank borrowings

268,334

1,284

0.96

%

308,860

3,735

2.44

%

Securities sold under agreements to repurchase

339,818

569

0.34

%

346,396

1,333

0.78

%

Federal Home Loan Bank advances

2,054,814

14,612

1.43

%

1,684,093

19,970

2.39

%

Other borrowings

246,007

4,970

4.04

%

250,690

5,702

4.55

%

Total borrowed funds

2,908,973

21,435

1.48

%

2,590,039

30,740

2.39

%

Total interest-bearing liabilities

13,481,539

40,531

0.60

%

13,051,341

65,703

1.02

%

Noninterest-Bearing Liabilities and Shareholders' Equity

Demand deposits

$

4,417,748

$

3,829,406

Other liabilities

253,382

264,274

Shareholders' equity

2,839,460

2,736,338

Total liabilities and shareholders' equity

$

20,992,129

$

19,881,359

Net interest rate spread

3.04

%

3.32

%

Net interest margin (FTE)

3.22

%

3.59

%

FTE adjustment

$

6,690

$

6,487

(1) Interest income is reflected on a fully taxable equivalent basis (FTE).

(2) Includes loans held for sale.

(3) Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.


Asset Quality (EOP) (unaudited)

($ in thousands)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2020

2020

2019

2020

2019

Beginning allowance for loan losses

$

106,380

$

54,619

$

55,559

$

54,619

$

55,461

Impact of adopting ASC 326 on 1/1/2020 (1)

41,347

N/A

41,347

N/A

Provision for loan losses (1)

22,545

16,950

1,003

39,495

2,046

Gross charge-offs

(2,232

)

(8,445

)

(2,876

)

(10,677

)

(5,769

)

Gross recoveries

1,701

1,909

2,606

3,610

4,554

Net (charge-offs) recoveries

(531

)

(6,536

)

(270

)

(7,067

)

(1,215

)

Ending allowance for loan losses (1)

$

128,394

$

106,380

$

56,292

$

128,394

$

56,292

Net charge-offs (recoveries) / average loans (2)

0.02

%

0.21

%

0.01

%

0.11

%

0.02

%

Average loans outstanding (2)

$

13,435,260

$

12,182,704

$

12,083,609

$

12,808,982

$

12,115,408

EOP loans outstanding (2)

13,615,701

12,384,612

12,046,578

13,615,701

12,046,578

Allowance for loan losses / EOP loans (1)(2)

0.94

%

0.86

%

0.47

%

0.94

%

0.47

%

Underperforming Assets:

Loans 90 Days and over (still accruing)

$

779

$

658

$

423

$

779

$

423

Non-performing loans:

Nonaccrual loans (3)

125,546

126,987

142,421

125,546

142,421

TDRs still accruing

16,582

17,040

19,031

16,582

19,031

Total non-performing loans

142,128

144,027

161,452

142,128

161,452

Foreclosed properties

1,786

2,163

2,819

1,786

2,819

Total underperforming assets

$

144,693

$

146,848

$

164,694

$

144,693

$

164,694

Classified and Criticized Assets:

Nonaccrual loans (3)

125,546

126,987

142,421

125,546

142,421

Substandard accruing loans

192,433

181,157

174,728

192,433

174,728

Loans 90 days and over (still accruing)

779

658

423

779

423

Total classified loans - "problem loans"

$

318,758

$

308,802

$

317,572

$

318,758

$

317,572

Other classified assets

2,565

2,616

2,550

2,565

2,550

Criticized loans - "special mention loans"

220,300

238,011

220,455

220,300

220,455

Total classified and criticized assets

$

541,623

$

549,429

$

540,577

$

541,623

$

540,577

Non-performing loans / EOP loans (2)

1.04

%

1.16

%

1.34

%

1.04

%

1.34

%

Allowance to non-performing loans (1)(4)

90

%

74

%

35

%

90

%

35

%

Under-performing assets / EOP loans (2)

1.06

%

1.19

%

1.37

%

1.06

%

1.37

%

EOP total assets

$

22,102,188

$

20,741,141

$

20,145,285

$

22,102,188

$

20,145,285

Under-performing assets / EOP assets

0.65

%

0.71

%

0.82

%

0.65

%

0.82

%

EOP - End of period actual balances

(1) Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.

(2) Excludes loans held for sale.

(3) Includes TDRs totaling $11.3 million at June 30, 2020, $11.8 million at March 31, 2020, and $24.7 million at June 30, 2019.

(4) Includes acquired loans that were recorded at fair value in accordance with ASC 805 at the date of acquisition. As such, the credit risk was incorporated in the fair value recorded and no allowance for loan losses was recorded for 2019 quarter ends.


Non-GAAP Measures (unaudited)

($ in thousands)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2020

2020

2019

2020

2019

Actual End of Period Balances

GAAP shareholders' equity

$

2,864,255

$

2,823,435

$

2,803,139

$

2,864,255

$

2,803,139

Deduct:

Goodwill

1,036,994

1,036,994

1,036,258

1,036,994

1,036,258

Intangibles

52,717

56,329

68,220

52,717

68,220

1,089,711

1,093,323

1,104,478

1,089,711

1,104,478

Tangible shareholders' equity

$

1,774,544

$

1,730,112

$

1,698,661

$

1,774,544

$

1,698,661

Average Balances

GAAP shareholders' equity

$

2,845,398

$

2,833,523

$

2,758,246

$

2,839,460

$

2,736,338

Deduct:

Goodwill

1,036,994

1,036,994

1,036,258

1,036,994

1,036,258

Intangibles

54,449

58,127

70,282

56,288

72,554

1,091,443

1,095,121

1,106,540

1,093,282

1,108,812

Average tangible shareholders' equity

$

1,753,955

$

1,738,402

$

1,651,706

$

1,746,178

$

1,627,526

Actual End of Period Balances

GAAP assets

$

22,102,188

$

20,741,141

$

20,145,285

$

22,102,188

$

20,145,285

Add:

Trust overdrafts

15

119

29

15

29

Deduct:

Goodwill

1,036,994

1,036,994

1,036,258

1,036,994

1,036,258

Intangibles

52,717

56,329

68,220

52,717

68,220

1,089,711

1,093,323

1,104,478

1,089,711

1,104,478

Tangible assets

$

21,012,492

$

19,647,937

$

19,040,836

$

21,012,492

$

19,040,836

Risk-weighted assets

$

14,416,184

$

14,420,130

$

13,996,770

$

14,416,184

$

13,996,770

GAAP net income

$

51,705

$

22,640

$

62,964

$

74,345

$

119,240

Add:

Amortization of intangibles (net of tax)

2,708

2,849

3,262

5,557

6,635

Tangible net income

$

54,413

$

25,489

$

66,226

$

79,902

$

125,875

Tangible Ratios

Return on tangible common equity

12.27

%

5.89

%

15.59

%

9.01

%

14.82

%

Return on average tangible common equity

12.41

%

5.86

%

16.04

%

9.15

%

15.47

%

Return on tangible assets

1.04

%

0.52

%

1.39

%

0.76

%

1.32

%

Tangible common equity to tangible assets

8.45

%

8.81

%

8.92

%

8.45

%

8.92

%

Tangible common equity to risk-weighted assets

12.31

%

12.00

%

12.14

%

12.31

%

12.14

%

Tangible common book value (1)

10.75

10.48

9.86

10.75

9.86

Tangible common equity presentation includes other comprehensive income as is common in other company releases.

(1) Tangible common shareholders' equity divided by common shares issued and outstanding at period-end.

Tier 1 capital

$

1,686,714

$

1,643,249

$

1,664,277

$

1,686,714

$

1,664,277

Risk-weighted assets

14,416,184

14,420,130

13,996,770

14,416,184

13,996,770

Tier 1 common equity to risk-weighted assets

11.70

%

11.40

%

11.89

%

11.70

%

11.89

%


Media: Kathy A. Schoettlin (812) 465-7269

Investors: Lynell J. Walton (812) 464-1366