425
Filed by First Midwest Bancorp, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: First Midwest Bancorp, Inc.
(Registration Statement No. 333-208781)


 
 
 
 
 
FOR IMMEDIATE RELEASE
 
 

FIRST MIDWEST BANCORP, INC. ANNOUNCES
2015 FOURTH QUARTER AND FULL YEAR RESULTS

ITASCA, IL, January 26, 2016 - First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ NGS: FMBI), the holding company of First Midwest Bank (the "Bank"), today reported results of operations and financial condition for the fourth quarter of 2015. Net income for the fourth quarter of 2015 was $16.3 million, or $0.21 per share. This compares to $23.3 million, or $0.30 per share, for the third quarter of 2015, and $14.6 million, or $0.19 per share, for the fourth quarter of 2014. Fourth quarter performance for the current and prior year was impacted by acquisition and integration related pre-tax expenses of $1.4 million and $9.3 million, respectively, or $0.01 and $0.07 per share after tax. In addition, a non-cash property valuation pre-tax adjustment of $8.6 million, or $0.07 per share after tax, was recorded in the fourth quarter of 2015 as a result of previously announced strategic branch initiatives. Excluding these expenses, earnings per share was $0.29 for the fourth quarter of 2015 compared to $0.27 for the fourth quarter of 2014, an increase of 7%.

For the full year of 2015, the Company reported net income of $82.1 million, or $1.05 per share, compared to $69.3 million, or $0.92 per share, for the year ended December 31, 2014. Earnings per share was $1.13 for the year ended December 31, 2015, excluding the valuation adjustment and acquisition and integration related expenses, and $1.03 for the year ended December 31, 2014, excluding acquisition and integration related expenses.
SELECT FOURTH QUARTER HIGHLIGHTS
Increased earnings per share to $0.29, or 7%, compared to the fourth quarter of 2014, excluding the valuation adjustment and acquisition and integration related expenses.
Expanded fee-based revenues to $34 million, an increase of 16% from the fourth quarter of 2014.
Grew total loans to over $7 billion, up 7% from December 31, 2014 and 15% annualized from September 30, 2015.
Reduced non-performing assets to $62 million, a decline of 33% from December 31, 2014 and 13% from September 30, 2015.
Reduced loans past due 30-89 days to $16 million, down 19% from December 31, 2014 and 43% from September 30, 2015.
Completed the acquisition of The Peoples' Bank of Arlington Heights on December 3, 2015, adding $92 million in deposits and $57 million in loans, and concluded the conversion of operating systems on December 7, 2015.
Announced the acquisition of The National Bank & Trust Company of Sycamore on November 12, 2015, with $680 million in assets and $700 million in trust assets under management, receiving Bank Regulatory approvals by mid-January of 2016.
"It was an active quarter and year, reflecting strong progress on a number of business fronts and positioning us well as we enter 2016," said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. "Business growth was solid in an intensely competitive environment, with performance impacted by both prior and current year acquisitions as well as ongoing strategic efforts to optimize our branch distribution network. Excluding charges attendant to these activities, performance for the quarter was up 7% as compared to last year. Late year and expected first quarter of 2016 acquisitions will grow our Company by some 10% in assets and further expand our wealth management capabilities and branch distribution network in the western markets of metro Chicago."
Mr. Scudder continued, "As we look ahead, 2016 is looking to be a year of transition for the industry and First Midwest. An evolving, upward rate environment will require balanced financial management. At the same time, the growth of our Company will be accompanied by greater regulatory oversight and expectations. We are well prepared to navigate this transition, leveraging the strength of our balance sheet, products, distribution, and an engaged team of colleagues to grow and enhance shareholder returns."

First Midwest Bancorp, Inc. | One Pierce Place | Suite 1500 | Itasca | Illinois | 60143



RECENT EVENTS
Strategic Branch Initiatives
On January 15, 2016, the Company announced planned strategic branch initiatives to enhance its customer experience, branch network, and operating efficiency. Based on the Company's ongoing analysis of its existing distribution network as well as customer preference and usage patterns, the Company will open a full service branch in the attractive Naperville, Illinois and downtown Chicago markets during the first quarter of 2016, consolidate four existing branches into nearby operating locations, and sell twelve closed branches and seven parcels of land previously purchased for expansion.
The orderly execution of these plans over the near term will result in an annual pre-tax reduction of ongoing operating costs of approximately $3.6 million, 60% of which the Company expects to realize in 2016. In furtherance of these initiatives, First Midwest recorded a pre-tax, non-cash valuation adjustment of $8.6 million, or $0.07 per share after tax, as of December 31, 2015 for those properties designated for sale.
Pending Acquisition
The National Bank & Trust Company of Sycamore
On November 12, 2015, the Company entered into a definitive agreement to acquire NI Bancshares Corporation, the holding company for The National Bank & Trust Company of Sycamore ("NB&T"). With the acquisition, the Company will acquire ten banking offices in northern Illinois, $415 million in loans, and $600 million in deposits. In addition, the Company will acquire over $700 million in trust assets under management which represents approximately a 10% increase in the Company's current trust assets under management. The merger consideration will be a combination of Company common stock and cash, with an overall transaction value of $70 million. The Company received approval for this acquisition from the Federal Reserve on January 5, 2016 and the Illinois Department of Financial and Professional Regulation on January 15, 2016. The acquisition is expected to close and the operating systems converted late in the first quarter of 2016, subject to approval by the stockholders of NB&T and customary closing conditions.
Completed Acquisition
The Peoples' Bank of Arlington Heights
On December 3, 2015, the Company completed the acquisition of Peoples Bancorp, Inc. and its wholly-owned banking subsidiary, The Peoples' Bank of Arlington Heights ("Peoples Bank"), which was previously announced on September 21, 2015. With the acquisition, the Company acquired two banking offices in Arlington Heights, Illinois, and approximately $92 million in deposits and $57 million in loans. The conversion of operating systems concluded on December 7, 2015.


2



OPERATING PERFORMANCE
Net Interest Income and Margin Analysis
(Dollar amounts in thousands)
 
Quarters Ended
 
December 31, 2015
 
 
September 30, 2015
 
 
December 31, 2014
 
Average Balance
 
Interest
Earned/
Paid
 
Yield/
Rate
(%)
 
 
Average
Balance
 
Interest
Earned/
Paid
 
Yield/
Rate
(%)
 
 
Average
Balance
 
Interest
Earned/
Paid
 
Yield/
Rate
(%)
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other interest-earning assets
$
587,112

 
$
530

 
0.36
 
 
$
820,318

 
$
645

 
0.31
 
 
$
625,183

 
$
527

 
0.33
Securities (1)
1,260,167

 
9,855

 
3.13
 
 
1,194,711

 
9,559

 
3.20
 
 
1,113,546

 
9,992

 
3.59
Federal Home Loan Bank ("FHLB") and
  Federal Reserve Bank ("FRB") stock
38,926

 
371

 
3.81
 
 
38,748

 
369

 
3.81
 
 
36,209

 
342

 
3.78
Loans (1)(2)
7,013,586

 
76,405

 
4.32
 
 
6,887,611

 
76,328

 
4.40
 
 
6,545,967

 
73,371

 
4.45
Total interest-earning assets (1)
8,899,791

 
87,161

 
3.89
 
 
8,941,388

 
86,901

 
3.86
 
 
8,320,905

 
84,232

 
4.02
Cash and due from banks
131,589

 
 
 
 
 
 
132,504

 
 
 
 
 
 
126,317

 
 
 
 
Allowance for loan and covered
  loan losses
(74,823
)
 
 
 
 
 
 
(73,928
)
 


 
 
 
 
(74,686
)
 

 
 
Other assets
865,873

 
 
 
 
 
 
875,668

 


 
 
 
 
859,633

 

 
 
Total assets
$
9,822,430

 
 
 
 
 
 
$
9,875,632

 
 
 
 
 
 
$
9,232,169

 
 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing core deposits (3)
$
4,471,645

 
930

 
0.08
 
 
$
4,465,956

 
931

 
0.08
 
 
$
4,144,391

 
984

 
0.09
Time deposits
1,152,895

 
1,341

 
0.46
 
 
1,173,127

 
1,398

 
0.47
 
 
1,255,355

 
1,479

 
0.47
Borrowed funds
167,120

 
1,250

 
2.97
 
 
168,807

 
928

 
2.18
 
 
111,213

 
12

 
0.04
Senior and subordinated debt
201,168

 
3,134

 
6.18
 
 
201,083

 
3,133

 
6.18
 
 
194,137

 
3,015

 
6.16
Total interest-bearing liabilities
5,992,828

 
6,655

 
0.44
 
 
6,008,973

 
6,390

 
0.42
 
 
5,705,096

 
5,490

 
0.38
Demand deposits (3)
2,560,604

 
 
 
 
 
 
2,601,442

 
 
 
 
 
 
2,339,298

 
 
 
 
Total funding sources
8,553,432

 
 
 
 
 
 
8,610,415

 


 
 
 
 
8,044,394

 

 
 
Other liabilities
114,492

 
 
 
 
 
 
130,250

 
 
 
 
 
 
115,093

 
 
 
 
Stockholders' equity - common
1,154,506

 
 
 
 
 
 
1,134,967

 
 
 
 
 
 
1,072,682

 
 
 

Total liabilities and
  stockholders' equity
$
9,822,430

 
 
 
 
 
 
$
9,875,632

 
 
 
 
 
 
$
9,232,169

 
 
 
 
Tax-equivalent net interest
  income/margin (1) 
 
 
80,506

 
3.59
 
 
 
 
80,511

 
3.58
 
 
 
 
78,742

 
3.76
Tax-equivalent adjustment
 
 
(2,494
)
 
 
 
 
 
 
(2,609
)
 
 
 
 
 
 
(2,923
)
 
 
Net interest income (GAAP)
 
 
$
78,012

 
 
 
 
 
 
$
77,902

 
 
 
 
 
 
$
75,819

 
 

(1) Interest income and yields on tax-exempt securities and loans are presented on a tax-equivalent basis, assuming a federal income tax rate of 35%. This non-GAAP financial measure assists management in comparing revenue from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded in income tax expense. These adjustments have no impact on net income.
(2) Includes loans acquired through Federal Deposit Insurance Corporation ("FDIC")-assisted transactions subject to loss sharing agreements ("covered loans") and a related FDIC indemnification asset.
(3) See the Deposit Composition table for further average balance detail by category.
Total average interest-earning assets were relatively unchanged from the third quarter of 2015, with the increase of $126.0 million in average loans and $65.5 million in securities offset by a $233.2 million decline in lower yielding other interest-earning assets. Total average funding sources were consistent with the third quarter of 2015.
Compared to the fourth quarter of 2014, the $578.9 million increase in total average interest-earning assets and the $509.0 million rise in total average funding sources reflect loan growth over the course of the year, the full impact of the Great Lakes Financial Resources, Inc. ("Great Lakes") acquisition completed during the fourth quarter of 2014, and the Peoples Bank acquisition completed during the fourth quarter of 2015.
Tax-equivalent net interest margin for the current quarter was 3.59%, increasing one basis point from the third quarter of 2015 while decreasing 17 basis points from the fourth quarter of 2014. Compared to the third quarter of 2015, the rise in tax-equivalent net interest margin was due primarily to the reinvestment of other interest-earning assets into higher yielding loans and securities which was partially offset by lower acquired loan accretion and covered loan income and the continued shift in the loan mix to

3



floating rate loans. Tax-equivalent net interest margin decreased compared to the fourth quarter of 2014, driven primarily by the continued shift in the loan mix and lower covered loan income.
Acquired loan accretion related to the Company's acquisitions completed in 2014 contributed $1.3 million for the fourth quarter of 2015, $1.8 million for the third quarter of 2015, and $1.4 million for the fourth quarter of 2014.

Fee-based Revenues and Total Noninterest Income Analysis
(Dollar amounts in thousands)
 
 
Quarters Ended
 
December 31, 2015
Percent Change from
 
 
December 31,
2015
 
September 30,
2015
 
December 31,
2014
 
September 30,
2015
 
December 31,
2014
Service charges on deposit accounts
 
$
10,303

 
$
10,519

 
$
10,015

 
(2.1
)
 
2.9

Wealth management fees
 
7,493

 
7,222

 
6,744

 
3.8

 
11.1

Card-based fees
 
6,761

 
6,868

 
6,390

 
(1.6
)
 
5.8

Merchant servicing fees (1)
 
2,929

 
3,207

 
2,703

 
(8.7
)
 
8.4

Mortgage banking income
 
1,777

 
1,402

 
812

 
26.7

 
118.8

Other service charges, commissions, and fees
 
4,664

 
3,900

 
2,700

 
19.6

 
72.7

Total fee-based revenues
 
33,927

 
33,118

 
29,364

 
2.4

 
15.5

Other income
 
1,729

 
1,372

 
1,767

 
26.0

 
(2.2
)
Net securities gains (losses)
 
822

 
524

 
(63
)
 
56.9

 
N/M

Total noninterest income
 
$
36,478

 
$
35,014

 
$
31,068

 
4.2

 
17.4

N/M – Not meaningful.
(1) Merchant servicing fees are substantially offset by merchant card expense included in noninterest expense for each period presented.
Total fee-based revenues of $33.9 million grew by 15.5% compared to the fourth quarter of 2014 and 2.4% compared to the third quarter of 2015. The increases compared to both prior periods presented reflect continued growth in wealth management fees, mortgage banking income, and capital market and lease initiatives within other service charges, commissions, and fees.
Continued sales of fiduciary and investment advisory services to new and existing customers drove the rise in wealth management fees compared to both prior periods presented.
Mortgage banking income resulted from sales of $51.4 million of 1-4 family mortgage loans in the secondary market during the fourth quarter of 2015, compared to $42.2 million in the third quarter of 2015 and $30.2 million in the fourth quarter of 2014.
Compared to both prior periods presented, the increase in other service charges, commissions, and fees was driven by fee income generated from sales of capital market products to commercial clients and gains on sales of lease contracts. Gains on sales of lease contracts generated by First Midwest Equipment Finance, formed from an acquisition in September of 2014, totaled $687,000, $456,000, and $327,000, for the fourth and third quarters of 2015 and fourth quarter of 2014, respectively. In addition, the Company has retained leases within the loan portfolio of $104.4 million as of December 31, 2015, up from $23.0 million as of December 31, 2014.
Total noninterest income of $36.5 million grew 17.4% and 4.2% from the fourth quarter of 2014 and the third quarter of 2015, respectively.


4



Noninterest Expense Analysis
(Dollar amounts in thousands)
 
 
Quarters Ended
 
December 31, 2015
Percent Change from
 
 
December 31,
2015
 
September 30,
2015
 
December 31,
2014
 
September 30,
2015
 
December 31,
2014
Salaries and employee benefits:
 
 
 
 
 
 
 
 
 
 
Salaries and wages
 
$
34,295

 
$
33,554

 
$
32,640

 
2.2

 
5.1

Retirement and other employee benefits
 
8,925

 
7,807

 
7,660

 
14.3

 
16.5

Total salaries and employee benefits
 
43,220

 
41,361

 
40,300

 
4.5

 
7.2

Net occupancy and equipment expense
 
9,256

 
9,406

 
9,479

 
(1.6
)
 
(2.4
)
Professional services
 
6,117

 
6,172

 
6,664

 
(0.9
)
 
(8.2
)
Technology and related costs
 
3,694

 
3,673

 
3,444

 
0.6

 
7.3

Merchant card expense (1)
 
2,495

 
2,722

 
2,203

 
(8.3
)
 
13.3

Advertising and promotions
 
2,211

 
1,828

 
2,418

 
21.0

 
(8.6
)
Cardholder expenses
 
1,329

 
1,354

 
1,036

 
(1.8
)
 
28.3

Net other real estate owned ("OREO")
  expense
 
926

 
1,290

 
2,544

 
(28.2
)
 
(63.6
)
Other expenses
 
7,525

 
6,559

 
7,446

 
14.7

 
1.1

Property valuation adjustments
 
8,581

 

 

 
N/M

 
N/M

Acquisition and integration related expenses
 
1,389

 

 
9,294

 
N/M

 
(85.1
)
Total noninterest expense
 
$
86,743

 
$
74,365

 
$
84,828

 
16.6

 
2.3

Efficiency ratio (2)
 
65
%
 
63
%
 
66
%
 
 
 
 
N/M – Not meaningful.
(1) Merchant card expenses are substantially offset by merchant servicing fees included in noninterest income for each period presented.
(2) The efficiency ratio expresses noninterest expense, excluding OREO expense, as a percentage of tax-equivalent net interest income plus total fee-based revenues, other income, and tax-equivalent adjusted bank-owned life insurance ("BOLI") income. In addition, property valuation adjustments of $8.6 million and acquisition and integration related expenses of $1.4 million are excluded from the efficiency ratio for the fourth quarter of 2015. For the fourth quarter of 2014, acquisition and integration related expenses of $9.3 million are excluded from the efficiency ratio. See the accompanying Non-GAAP Reconciliations for details on the calculation of the efficiency ratio.
Excluding the property valuation adjustment and acquisition and integration related expenses, total noninterest expense increased by 1.6% from the fourth quarter of 2014 and 3.2% from the third quarter of 2015.
The rise in total noninterest expense compared to the fourth quarter of 2014 was due partly to operating costs of the banking locations acquired in the Great Lakes acquisition during December of 2014. These costs primarily occurred within salaries and employee benefits, net occupancy and equipment expense, and other expenses. The reduction in professional services compared to the fourth quarter of 2014 resulted primarily from lower legal and loan remediation expenses and lower costs to service the Company's covered loan portfolio.
Salaries and employee benefits and other expenses increased compared to the third quarter of 2015 due primarily to talent recruitment and organizational growth needs.
The rise in retirement and other employee benefits compared to both prior periods presented was impacted by lump sum distributions related to the Company's defined benefit retirement plan, prompted in part by an expectation of rising rates. This expense is expected to return to normalized levels in subsequent quarters.
During the fourth quarter of 2015, property valuation adjustments of $8.6 million were recognized on twelve closed branches and seven parcels of land as part of the Company's strategic branch initiatives.

5



LOAN PORTFOLIO AND ASSET QUALITY
Loan Portfolio Composition
(Dollar amounts in thousands)
 
 
As of
 
December 31, 2015
Percent Change from
 
 
December 31,
2015
 
September 30,
2015
 
December 31,
2014
 
September 30, 2015 (1)
 
December 31,
2014
Commercial and industrial
 
$
2,524,726

 
$
2,392,860

 
$
2,253,556

 
22.0

 
12.0

Agricultural
 
387,440

 
393,732

 
358,249

 
(6.4
)
 
8.1

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
Office
 
479,374

 
487,629

 
494,637

 
(6.8
)
 
(3.1
)
Retail
 
434,241

 
432,107

 
452,225

 
2.0

 
(4.0
)
Industrial
 
481,839

 
494,341

 
531,517

 
(10.1
)
 
(9.3
)
Multi-family
 
528,324

 
539,308

 
564,421

 
(8.1
)
 
(6.4
)
Construction
 
216,882

 
192,086

 
204,236

 
51.6

 
6.2

Other commercial real estate
 
931,190

 
869,748

 
887,897

 
28.3

 
4.9

Total commercial real estate
 
3,071,850

 
3,015,219

 
3,134,933

 
7.5

 
(2.0
)
Total corporate loans
 
5,984,016

 
5,801,811

 
5,746,738

 
12.6

 
4.1

Home equity
 
653,468

 
647,223

 
543,185

 
3.9

 
20.3

1-4 family mortgages
 
355,854

 
294,261

 
291,463

 
83.7

 
22.1

Installment
 
137,602

 
131,185

 
76,032

 
19.6

 
81.0

Total consumer loans
 
1,146,924

 
1,072,669

 
910,680

 
27.7

 
25.9

Total loans, excluding covered loans
 
7,130,940

 
6,874,480

 
6,657,418

 
14.9

 
7.1

Covered loans
 
30,775

 
51,219

 
79,435

 
N/M

 
(61.3
)
Total loans
 
$
7,161,715

 
$
6,925,699

 
$
6,736,853

 
13.6

 
6.3

N/M – Not meaningful.
(1) Ratios are presented on an annualized basis.
Total loans, excluding covered loans, of $7.1 billion grew $256.5 million, or 14.9%, on an annualized basis from September 30, 2015 and $473.5 million, or 7.1%, from December 31, 2014. Compared to the third quarter of 2015, the increase in loans was driven primarily by strong sales production of the corporate lending teams, growth in 1-4 family mortgages, and the Peoples Bank acquisition completed in the fourth quarter of 2015, which contributed $53.9 million.
Compared to the fourth quarter of 2014, the increase in loans resulted primarily from strong sales production, growth in 1-4 family mortgages, and the expansion of the Company's web-based installment programs. The overall decline in commercial real estate loans compared to the fourth quarter of 2014 resulted from the decision of certain customers to opportunistically sell their commercial businesses and investment real estate properties or use excess liquidity to payoff long-term debt. These decreases more than offset organic commercial real estate growth.
Compared to both prior periods presented, growth in corporate loans was concentrated within our commercial and industrial loan category. The increase in commercial and industrial loans primarily reflects the continued expansion into select sector-based lending areas such as leasing, healthcare, asset-based lending, and structured finance.



6



Asset Quality
(Dollar amounts in thousands)
 
 
As of
 
December 31, 2015
Percent Change from
 
 
December 31,
2015
 
September 30,
2015
 
December 31,
2014
 
September 30,
2015
 
December 31,
2014
Asset quality, excluding covered
loans and covered OREO
 
 
 
 
 
 
 
 
 
 
Non-accrual loans
 
$
28,875

 
$
32,308

 
$
59,971

 
(10.6
)
 
(51.9
)
90 days or more past due loans
 
2,883

 
4,559

 
1,173

 
(36.8
)
 
N/M

Total non-performing loans
 
31,758

 
36,867

 
61,144

 
(13.9
)
 
(48.1
)
Accruing troubled debt restructurings
  ("TDRs")
 
2,743

 
2,771

 
3,704

 
(1.0
)
 
(25.9
)
OREO
 
27,349

 
31,129

 
26,898

 
(12.1
)
 
1.7

Total non-performing assets
 
$
61,850

 
$
70,767

 
$
91,746

 
(12.6
)
 
(32.6
)
30-89 days past due loans
 
$
16,329

 
$
28,629

 
$
20,073

 


 


Non-accrual loans to total loans
 
0.40
%
 
0.47
%
 
0.90
%
 
 
 
 
Non-performing loans to total loans
 
0.45
%
 
0.54
%
 
0.92
%
 
 
 
 
Non-performing assets to total loans plus
  OREO
 
0.86
%
 
1.02
%
 
1.37
%
 
 
 
 
Allowance for Credit Losses
 
 
 
 
 
 
 
 
 
 
Allowance for loan and covered loan losses
 
$
73,630

 
$
72,500

 
$
72,694

 


 


Reserve for unfunded commitments
 
1,225

 
1,225

 
1,816

 


 


Total allowance for credit losses
 
$
74,855

 
$
73,725

 
$
74,510

 


 


Allowance for credit losses to total loans (1)
 
1.05
%
 
1.06
%
 
1.11
%
 
 
 
 
Allowance for credit losses to
  non-accrual loans, excluding covered loans
 
253.57
%
 
215.45
%
 
112.19
%
 
 
 
 
N/M – Not meaningful.
(1) This ratio includes acquired loans that are recorded at fair value through an acquisition adjustment, which incorporates credit risk, as of the acquisition date with no allowance for credit losses being established at that time. As the acquisition adjustment is accreted into income over future periods, an allowance for credit losses is established as necessary to reflect credit deterioration. The allowance for credit losses to total loans, excluding acquired loans, was 1.11%, 1.14%, and 1.24% at December 31, 2015, September 30, 2015, and December 31, 2014, respectively.

Asset quality continued to improve across all metrics. Total non-performing assets, excluding covered loans and covered OREO, decreased by $8.9 million, or 12.6%, from September 30, 2015 and $29.9 million, or 32.6%, from December 31, 2014. Non-performing assets to total loans plus OREO improved to 0.86% at December 31, 2015 compared to 1.02% at September 30, 2015 and 1.37% at December 31, 2014.

7



Charge-Off Data
(Dollar amounts in thousands)
 
 
Quarters Ended
 
Years Ended
 
 
December 31,
2015
 
September 30,
2015
 
December 31,
2014
 
December 31, 2015
 
December 31, 2014
Net loan charge-offs (1):
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
1,781

 
$
1,601

 
$
1,217

 
$
13,312

 
$
13,471

Agricultural
 

 

 

 

 
153

Office, retail, and industrial
 
267

 
457

 
143

 
2,420

 
6,848

Multi-family
 
(27
)
 
67

 
476

 
530

 
856

Construction
 
105

 
(114
)
 
(6
)
 
(214
)
 
886

Other commercial real estate
 
110

 
92

 
(247
)
 
650

 
3,107

Consumer
 
1,134

 
959

 
342

 
3,004

 
6,845

Covered
 

 
1

 
146

 
514

 
(187
)
Total net loan charge-offs
 
$
3,370

 
$
3,063

 
$
2,071

 
$
20,216

 
$
31,979

 
 
 
 
 
 
 
 
 
 
 
Net loan charge-offs to average loans
 
0.19
%
 
0.18
%
 
0.13
%
 
0.29
%
 
0.52
%

(1) Amounts represent charge-offs, net of recoveries.
Total net loan charge-offs for the fourth quarter of 2015 were 19 basis points of average loans, or $3.4 million, consistent with the third quarter of 2015 and increasing slightly from 13 basis points for the fourth quarter of 2014.


8



DEPOSIT PORTFOLIO

Deposit Composition
(Dollar amounts in thousands)
 
 
Average for Quarters Ended
 
December 31, 2015
Percent Change from
 
 
December 31,
2015
 
September 30,
2015
 
December 31,
2014
 
September 30, 2015
 
December 31, 2014
Demand deposits
 
$
2,560,604

 
$
2,601,442

 
$
2,339,298

 
(1.6
)
 
9.5

Savings deposits
 
1,483,962

 
1,471,003

 
1,306,388

 
0.9

 
13.6

NOW accounts
 
1,411,425

 
1,405,371

 
1,331,360

 
0.4

 
6.0

Money market accounts
 
1,576,258

 
1,589,582

 
1,506,643

 
(0.8
)
 
4.6

Core deposits
 
7,032,249

 
7,067,398

 
6,483,689

 
(0.5
)
 
8.5

Time deposits and other
 
1,152,895

 
1,173,127

 
1,255,355

 
(1.7
)
 
(8.2
)
Total deposits
 
$
8,185,144

 
$
8,240,525

 
$
7,739,044

 
(0.7
)
 
5.8


Average core deposits of $7.0 billion for the fourth quarter of 2015 were consistent with the third quarter of 2015 and increased 8.5% compared to the fourth quarter of 2014. Compared to the third quarter of 2015, a normal seasonal decrease in average municipal deposits was offset by growth in commercial deposits and the one-month impact of $92.0 million in deposits assumed in the December of 2015 Peoples Bank acquisition. The rise in average core deposits compared to the fourth quarter of 2014 resulted from growth and the full quarter impact of deposits assumed in the December of 2014 Great Lakes acquisition, which further strengthened the Company's core deposit base.



9



CAPITAL MANAGEMENT

Capital Ratios
 
 
As of
 
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
 
December 31,
2014
Company regulatory capital ratios (1):
Total capital to risk-weighted assets
 
11.15
%
 
11.43
%
 
11.37
%
 
11.23
%
Tier 1 capital to risk-weighted assets
 
10.28
%
 
10.55
%
 
10.49
%
 
10.18
%
Tier 1 common capital to risk-weighted assets
 
9.73
%
 
10.00
%
 
9.93
%
 
N/A

Tier 1 leverage to average assets
 
9.40
%
 
9.29
%
 
9.34
%
 
9.03
%
Company tangible common equity ratios (2)(3):
 
 
 
 
 
 
Tangible common equity to tangible assets
 
8.59
%
 
8.50
%
 
8.32
%
 
8.41
%
Tangible common equity, excluding other comprehensive loss,
  to tangible assets
 
8.89
%
 
8.67
%
 
8.54
%
 
8.59
%
Tangible common equity to risk-weighted assets
 
9.29
%
 
9.70
%
 
9.55
%
 
9.73
%
N/A - Not applicable.

(1) Basel III Capital Rules became effective for the Company on January 1, 2015. These rules revise the risk-based capital requirements and introduce a new capital measure, Tier 1 common capital to risk-weighted assets. As a result, ratios subsequent to December 31, 2014 are computed using the new rules and prior periods presented are reported using the regulatory guidance applicable at that time.
(2) Ratio is not subject to formal Federal Reserve regulatory guidance.
(3) Tangible common equity ("TCE") represents common stockholders' equity less goodwill and identifiable intangible assets. In management's view, Tier 1 common capital and TCE measures are meaningful to the Company, as well as analysts and investors, in assessing the Company's use of equity and in facilitating comparisons with competitors. See the accompanying Non-GAAP Reconciliations for details of the calculation of these ratios.
Compared to September 30, 2015, the declines in the Company's regulatory capital ratios tied to end-of-period risk-weighted assets reflect the impact of the increase in assets late in the fourth quarter of 2015, including those acquired from the Peoples Bank acquisition.
The Board of Directors approved a quarterly cash dividend of $0.09 per common share during the fourth quarter of 2015, which is consistent with the third quarter of 2015 and follows a dividend increase from $0.08 to $0.09 per common share during the first quarter of 2015.


10



Conference Call
A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, January 27, 2016 at 10:00 A.M. (ET). Members of the public who would like to listen to the conference call should dial (877) 507-0639 (U.S. domestic) or (412) 317-6003 (International) and ask for the First Midwest Bancorp, Inc. Earnings Conference Call. The number should be dialed 10 to 15 minutes prior to the start of the conference call. There is no charge to access the call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the Company's website, www.firstmidwest.com/investorrelations. For those unable to listen to the live broadcast, a replay will be available on the Company's website or by dialing (877) 344-7529 (U.S. domestic) or (412) 317-0088 (International) conference I.D. 10078820 beginning one hour after completion of the live call until 9:00 A.M. (ET) on February 4, 2016. Please direct any questions regarding obtaining access to the conference call to First Midwest Bancorp, Inc. Investor Relations, via e-mail, at investor.relations@firstmidwest.com.
Press Release and Additional Information Available on Website
This press release and the accompanying unaudited Selected Financial Information are available through the "Investor Relations" section of First Midwest's website at www.firstmidwest.com/investorrelations.
Forward-Looking Statements
This press release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by the use of words such as "may," "might," "will," "would," "should," "could," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "probable," "potential," "possible," "target," "continue," "look forward," or "assume" and words of similar import. Forward-looking statements are not historical facts but instead express only management's beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of management's control. It is possible that actual results and events may differ, possibly materially, from the anticipated results or events indicated in these forward-looking statements. Forward-looking statements are not guarantees of future performance, and we caution you not to place undue reliance on these statements. Forward-looking statements are made only as of the date of this press release, and we undertake no obligation to update any forward-looking statements contained in this press release to reflect new information or events or conditions after the date hereof.
Forward-looking statements may be deemed to include, among other things, statements relating to our future financial performance, the performance of our loan or securities portfolio, the expected amount of future credit reserves or charge-offs, corporate strategies or objectives, anticipated trends in our business, regulatory developments, acquisition transactions, including estimated synergies, cost savings and financial benefits of pending or consummated transactions, including First Midwest's proposed acquisition of NI Bancshares Corporation ("NI Bancshares"), and growth strategies, including possible future acquisitions. These statements are subject to certain risks, uncertainties and assumptions. For a discussion of these risks, uncertainties and assumptions, you should refer to the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2014, as well as our subsequent filings made with the Securities and Exchange Commission ("SEC"). However, these risks and uncertainties are not exhaustive. Other sections of such reports describe additional factors that could adversely impact our business and financial performance.
Additional Information for Stockholders
The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed merger of First Midwest and NI Bancshares, First Midwest has filed a registration statement on Form S-4 (File no. 333-208781) with the SEC. The registration statement includes a proxy statement of NI Bancshares, which also constitutes a prospectus of First Midwest, that will be sent to the stockholders of NI Bancshares. Stockholders are advised to read the registration statement and proxy statement/prospectus because it contains important information about First Midwest, NI Bancshares and the proposed transaction. This document and other documents relating to the transaction filed by First Midwest can be obtained free of charge from the SEC's website at www.sec.gov. These documents also can be obtained free of charge by accessing First Midwest's website at www.firstmidwest.com under the tab "Investor Relations" and then under "SEC Filings." Alternatively, these documents can be obtained free of charge from First Midwest upon written request to First Midwest Bancorp, Inc., Attn: Corporate Secretary, One Pierce Place, Suite 1500, Itasca, Illinois 60143 or by calling (630) 875-7463, or from NI Bancshares upon written request to NI Bancshares Corporation, Attn: Michael A. Cullen, President and Chief Executive Officer, 230 W. State Street, Sycamore, Illinois 60178 or by calling (815) 895-2125.




11



Participants in this Transaction
First Midwest, NI Bancshares, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from NI Bancshares stockholders in connection with the proposed transaction between First Midwest and NI Bancshares under the rules of the SEC. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, is included in the proxy statement/prospectus regarding the proposed transaction. Additional information about First Midwest and its directors and certain of its officers may be found in First Midwest's definitive proxy statement relating to its 2015 Annual Meeting of Stockholders filed with the SEC on April 14, 2015. This definitive proxy statement can be obtained free of charge from the SEC's website at www.sec.gov.
Non-GAAP Financial Information
The Company's accounting and reporting policies conform to U.S. generally accepted accounting principles ("GAAP") and general practice within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which the Company believes are useful because they assist investors in assessing the Company's operating performance. Although intended to enhance investors' understanding of the Company's business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. See the following reconciliations for details on the calculation of these measures to the extent presented herein.
About the Company
First Midwest is a relationship-focused financial institution and one of Illinois' largest independent publicly-traded bank holding companies. First Midwest's principal subsidiary, First Midwest Bank, and other affiliates provide a full range of business, middle market and retail banking as well as wealth management and private banking services through over 100 locations in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest was recognized as having the "Highest Customer Satisfaction with Retail Banking in the Midwest, Two Years in a Row"* according to the J.D. Power 2014 and 2015 Retail Banking Satisfaction StudiesSM. First Midwest's website is www.firstmidwest.com.
Contact Information
Investors:
Paul F. Clemens
EVP and Chief Financial Officer
(630) 875-7347
paul.clemens@firstmidwest.com
Media:
James M. Roolf
SVP and Corporate Relations Officer
(630) 875-7533
jim.roolf@firstmidwest.com














* First Midwest Bank received the highest numerical score among retail banks in the Midwest region in the proprietary J.D. Power 2014 and 2015 Retail Banking Satisfaction StudiesSM. The 2015 study is based on 82,030 total responses measuring 20 providers in the Midwest region (IA, IL, KS, MO, MN, WI) and measures opinions of consumers with their primary banking provider. Proprietary study results are based on experiences and perceptions of consumers surveyed April 2014 - February 2015. Your experiences may vary. Visit jdpower.com.


12



Accompanying Unaudited Selected Financial Information
Consolidated Statements of Financial Condition (Unaudited)
(Dollar amounts in thousands)
 
 
 
As of
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
2015
 
2015
 
2015
 
2015
 
2014
Period-End Balance Sheet
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
114,587

 
$
125,279

 
$
135,546

 
$
126,450

 
$
117,315

Interest-bearing deposits in other banks
266,615

 
822,264

 
811,287

 
492,607

 
488,947

Trading securities, at fair value
16,894

 
17,038

 
18,172

 
18,374

 
17,460

Securities available-for-sale, at fair value
1,306,636

 
1,151,418

 
1,142,407

 
1,151,603

 
1,187,009

Securities held-to-maturity, at amortized cost
23,152

 
23,723

 
24,292

 
25,861

 
26,555

FHLB and FRB stock
39,306

 
38,748


38,748

 
38,748

 
37,558

Loans, excluding covered loans:
 
 
 
 
 
 
 
 
 
Commercial and industrial
2,524,726

 
2,392,860

 
2,366,056

 
2,318,058

 
2,253,556

Agricultural
387,440

 
393,732

 
377,410

 
368,836

 
358,249

Commercial real estate:
 
 
 
 
 
 
 
 
 
Office, retail, and industrial
1,395,454

 
1,414,077

 
1,432,502

 
1,443,562

 
1,478,379

Multi-family
528,324

 
539,308

 
557,947

 
560,800

 
564,421

Construction
216,882

 
192,086

 
190,970

 
191,104

 
204,236

Other commercial real estate
931,190

 
869,748


871,119

 
881,026

 
887,897

Home equity
653,468

 
647,223

 
599,320

 
599,543

 
543,185

1-4 family mortgages
355,854

 
294,261

 
283,562

 
285,758

 
291,463

Installment
137,602

 
131,185

 
113,382

 
92,834

 
76,032

Total loans, excluding covered loans
7,130,940

 
6,874,480

 
6,792,268

 
6,741,521

 
6,657,418

 Covered loans
30,775

 
51,219


57,917

 
62,830

 
79,435

 Allowance for loan and covered loan losses
(73,630
)
 
(72,500
)
 
(71,463
)
 
(70,990
)
 
(72,694
)
Net loans
7,088,085

 
6,853,199

 
6,778,722

 
6,733,361

 
6,664,159

OREO, excluding covered OREO
27,349

 
31,129

 
24,471

 
26,042

 
26,898

Covered OREO
433

 
906


3,759

 
7,309

 
8,068

FDIC indemnification asset
3,903

 
6,106

 
7,335

 
8,540

 
8,452

Premises, furniture, and equipment, net
122,278

 
127,443

 
128,621

 
128,698

 
131,109

Investment in BOLI
209,601

 
208,666

 
207,814

 
207,190

 
206,498

Goodwill and other intangible assets
339,277

 
331,250

 
332,223

 
333,202

 
334,199

Accrued interest receivable and other assets
174,560

 
197,877

 
209,630

 
200,611

 
190,912

Total assets
$
9,732,676

 
$
9,935,046

 
$
9,863,027

 
$
9,498,596

 
$
9,445,139

Liabilities and Stockholders' Equity
 

 

 
 
 
 
 
Noninterest-bearing deposits
$
2,414,454


$
2,671,793


$
2,508,316

 
$
2,339,492

 
$
2,301,757

Interest-bearing deposits
5,683,284

 
5,624,657

 
5,704,355

 
5,575,187

 
5,586,001

Total deposits
8,097,738

 
8,296,450

 
8,212,671

 
7,914,679

 
7,887,758

Borrowed funds
165,096

 
169,943

 
189,036

 
131,200

 
137,994

Senior and subordinated debt
201,208

 
201,123

 
201,039

 
200,954

 
200,869

Accrued interest payable and other liabilities
122,366

 
119,861

 
135,324

 
135,813

 
117,743

Stockholders' equity
1,146,268

 
1,147,669

 
1,124,957

 
1,115,950

 
1,100,775

Total liabilities and stockholders' equity
$
9,732,676

 
$
9,935,046

 
$
9,863,027

 
$
9,498,596

 
$
9,445,139

Stockholders' equity, excluding accumulated other
comprehensive income ("AOCI")
$
1,174,657

 
$
1,163,487

 
$
1,146,189

 
$
1,128,755

 
$
1,116,630

Stockholders' equity, common
1,146,268

 
1,147,669

 
1,124,957

 
1,115,950

 
1,100,775


13



Condensed Consolidated Statements of Income (Unaudited)
(Dollar amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters Ended
 
 
Years Ended
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
 
December 31,
 
December 31,
 
2015
 
2015
 
2015
 
2015
 
2014
 
 
2015
 
2014
Income Statement
 
 
 

 
 
 
 
 
 
 
 
 
 
Interest income
$
84,667

 
$
84,292

 
$
84,556

 
$
82,469

 
$
81,309

 
 
$
335,984

 
$
299,864

Interest expense
6,655

 
6,390

 
5,654

 
5,687

 
5,490

 
 
24,386

 
23,012

Net interest income
78,012

 
77,902

 
78,902

 
76,782

 
75,819

 
 
311,598

 
276,852

Provision for loan and covered
  loan losses
4,500

 
4,100

 
6,000

 
6,552

 
1,659

 
 
21,152

 
19,168

Net interest income after
  provision for loan and
  covered loan losses
73,512

 
73,802

 
72,902

 
70,230

 
74,160

 
 
290,446

 
257,684

Noninterest Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service charges on deposit
  accounts
10,303

 
10,519


9,886

 
9,271

 
10,015

 
 
39,979

 
36,910

Wealth management fees
7,493

 
7,222


7,433

 
7,014

 
6,744

 
 
29,162

 
26,474

Card-based fees
6,761

 
6,868

 
6,953

 
6,402

 
6,390

 
 
26,984

 
24,340

Merchant servicing fees
2,929

 
3,207

 
2,938

 
2,665

 
2,703

 
 
11,739

 
11,260

Mortgage banking income
1,777

 
1,402


1,439

 
1,123

 
812

 
 
5,741

 
4,011

Other service charges,
  commissions, and fees
4,664

 
3,900

 
2,924

 
2,166

 
2,700

 
 
13,654

 
8,086

Total fee-based revenues
33,927

 
33,118

 
31,573

 
28,641

 
29,364

 
 
127,259

 
111,081

Other income
1,437

 
1,372

 
1,900

 
1,948

 
1,767

 
 
6,657

 
5,545

Net securities gains (losses)
822

 
524

 
515

 
512

 
(63
)
 
 
2,373

 
8,097

Gains on sales of properties
292

 

 

 

 

 
 
292

 
3,954

Loss on early extinguishment
  of debt

 

 

 

 

 
 

 
(2,059
)
Total noninterest income
36,478

 
35,014

 
33,988

 
31,101

 
31,068

 
 
136,581

 
126,618

Noninterest Expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and employee
benefits:
 
 
 
 
 
 
 
 
 
 
 


 
 
Salaries and wages
34,295

 
33,554

 
33,096

 
32,794

 
32,640

 
 
133,739

 
116,578

Retirement and other
  employee benefits
8,925

 
7,807

 
7,198

 
7,922

 
7,660

 
 
31,852

 
27,245

Total salaries and
  employee benefits
43,220

 
41,361

 
40,294

 
40,716

 
40,300

 
 
165,591

 
143,823

Net occupancy and
  equipment expense
9,256

 
9,406

 
9,622

 
10,436

 
9,479

 
 
38,720

 
35,181

Professional services
6,117

 
6,172

 
5,322

 
5,109

 
6,664

 
 
22,720

 
23,436

Technology and related costs
3,694

 
3,673

 
3,527

 
3,687

 
3,444

 
 
14,581

 
12,875

Merchant card expense
2,495

 
2,722


2,472

 
2,197

 
2,203

 
 
9,886

 
9,195

Advertising and promotions
2,211

 
1,828

 
2,344

 
1,223

 
2,418

 
 
7,606

 
8,159

Cardholder expenses
1,329

 
1,354

 
1,292

 
1,268

 
1,036

 
 
5,243

 
4,251

Net OREO expense
926

 
1,290

 
1,861

 
1,204

 
2,544

 
 
5,281

 
7,075

Other expenses
7,525

 
6,559

 
6,717

 
6,817

 
7,446

 
 
27,618

 
33,034

Property valuation
adjustments
8,581

 

 

 

 

 
 
8,581

 

Acquisition and integration
  related expense
1,389

 

 

 

 
9,294

 
 
1,389

 
13,872

Total noninterest expense
86,743

 
74,365

 
73,451

 
72,657

 
84,828

 
 
307,216

 
283,826

Income before income
  tax expense
23,247

 
34,451

 
33,439

 
28,674

 
20,400

 
 
119,811

 
100,476

Income tax expense
6,923

 
11,167

 
10,865

 
8,792

 
5,807

 
 
37,747

 
31,170

Net income
$
16,324

 
$
23,284

 
$
22,574

 
$
19,882

 
$
14,593

 
 
$
82,064

 
$
69,306

Net income applicable to
  common shares
$
16,145

 
$
23,058

 
$
22,325

 
$
19,654

 
$
14,454

 
 
$
81,182

 
$
68,470

Net income applicable to
common shares, excluding
certain significant
transactions
(1)
$
22,127

 
$
23,058

 
$
22,325

 
$
19,654

 
$
20,030

 
 
$
87,164

 
$
54,598

Footnotes to Condensed Consolidated Statements of Income
(1) 
Certain significant transactions include property valuation adjustments related to strategic branch initiatives and acquisition and integration related expenses associated with completed and pending acquisitions.

14






Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of or for the
 
Quarters Ended
 
 
Years Ended
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
 
December 31,
 
December 31,
 
2015
 
2015
 
2015
 
2015
 
2014
 
 
2015
 
2014
Earnings Per Share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per common
share ("EPS")
(1)
$
0.21

 
$
0.30

 
$
0.29

 
$
0.26

 
$
0.19

 
 
$
1.05

 
$
0.92

Diluted EPS (1)
$
0.21

 
$
0.30

 
$
0.29

 
$
0.26

 
$
0.19

 
 
$
1.05

 
$
0.92

Diluted EPS, excluding
certain significant
transactions
(1)(7)
$
0.29

 
$
0.30

 
$
0.29

 
$
0.26

 
$
0.27

 
 
$
1.13

 
$
1.03

Common Stock and Related Per Common Share Data
 
 
 
 
 
Book value
$
14.70

 
$
14.72

 
$
14.43

 
$
14.31

 
$
14.17

 
 
$
14.70

 
$
14.17

Tangible book value
10.35

 
10.47

 
10.17

 
10.04

 
9.87

 
 
10.35

 
9.87

Dividends declared per share
0.09

 
0.09

 
0.09

 
0.09

 
0.08

 
 
0.36

 
0.31

Closing price at period end
18.43

 
17.54

 
18.97

 
17.37

 
17.11

 
 
18.43

 
17.11

Closing price to book value
1.3

 
1.2

 
1.3

 
1.2

 
1.2

 
 
1.3

 
1.2

Period end shares outstanding
77,952

 
77,942

 
77,961

 
77,957

 
77,695

 
 
77,952

 
77,695

Period end treasury shares
10,276

 
10,286

 
10,267

 
10,271

 
10,533

 
 
10,276

 
10,533

Common dividends
$
7,017

 
$
7,014

 
$
7,022

 
$
7,011

 
$
6,206

 
 
$
28,064

 
$
23,530

Key Ratios/Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average common
equity
(1)(2)
5.55
%
 
8.06
%
 
7.97
%
 
7.15
%
 
5.35
%
 
 
7.17
%
 
6.56
%
Return on average tangible
common equity
(1)(2)
8.06
%
 
11.68
%
 
11.62
%
 
10.52
%
 
7.89
%
 
 
10.44
%
 
9.32
%
Return on average tangible
common equity, excluding
certain significant
transactions
(1)(2)(7)
10.94
%
 
11.68
%
 
11.62
%
 
10.52
%
 
10.83
%
 
 
11.19
%
 
10.42
%
Return on average assets (2)
0.66
%
 
0.94
%
 
0.94
%
 
0.85
%
 
0.63
%
 
 
0.85
%
 
0.80
%
Efficiency ratio (1)
65.11
%
 
63.20
%
 
61.70
%
 
64.46
%
 
66.09
%
 
 
63.61
%
 
64.57
%
Net interest margin (3)
3.59
%
 
3.58
%
 
3.76
%
 
3.79
%
 
3.76
%
 
 
3.68
%
 
3.69
%
Loans-to-deposits
88.44
%
 
83.48
%
 
83.41
%
 
85.97
%
 
85.41
%
 
 
88.44
%
 
85.41
%
Yield on average interest-earning
assets
(3)
3.89
%
 
3.86
%
 
4.02
%
 
4.06
%
 
4.02
%
 
 
3.95
%
 
3.98
%
Cost of funds
0.44
%
 
0.42
%
 
0.38
%
 
0.39
%
 
0.38
%
 
 
0.41
%
 
0.43
%
Net noninterest expense to
  average assets
2.08
%
 
1.60
%
 
1.66
%
 
1.80
%
 
2.31
%
 
 
1.79
%
 
1.93
%
Effective income tax rate
29.78
%
 
32.41
%
 
32.50
%
 
30.66
%
 
28.47
%
 
 
31.51
%
 
31.02
%
Capital Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total capital to risk-weighted
assets
(1)
11.15
%
 
11.43
%
 
11.37
%
 
11.23
%
 
11.23
%
 
 
11.15
%
 
11.23
%
Tier 1 capital to risk-weighted
assets
(1)
10.28
%
 
10.55
%
 
10.49
%
 
10.35
%
 
10.19
%
 
 
10.28
%
 
10.19
%
Tier 1 common capital to risk-
weighted assets (CET1)
(1)(4)
9.73
%
 
10.00
%
 
9.93
%
 
9.79
%
 
N/A

 
 
9.73
%
 
N/A

Tier 1 leverage to average
assets
(1)
9.40
%
 
9.29
%
 
9.34
%
 
9.32
%
 
9.03
%
 
 
9.40
%
 
9.03
%
Tangible common equity to
tangible assets
(1)
8.59
%
 
8.50
%
 
8.32
%
 
8.54
%
 
8.41
%
 
 
8.59
%
 
8.41
%
Tangible common equity,
excluding AOCI, to tangible
assets
(1)
8.89
%
 
8.67
%
 
8.54
%
 
8.68
%
 
8.59
%
 
 
8.89
%
 
8.59
%
Tangible common equity to risk-
weighted assets
(1)
9.29
%
 
9.70
%
 
9.55
%
 
9.51
%
 
9.73
%
 
 
9.29
%
 
9.73
%
Note: Selected Financial Information footnotes are located at the end of this section.

15



Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of or for the
 
Quarters Ended
 
 
Years Ended
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
 
December 31,
 
December 31,
 
2015
 
2015
 
2015
 
2015
 
2014
 
 
2015
 
2014
Asset Quality Performance Data
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-performing assets (5)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
5,587

 
$
6,438

 
$
11,100

 
$
12,913

 
$
22,693

 
 
$
5,587

 
$
22,693

Agricultural
355

 
112

 
317

 
358

 
360

 
 
355

 
360

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office, retail, and industrial
6,875

 
6,961

 
12,599

 
11,363

 
12,939

 
 
6,875

 
12,939

Multi-family
796

 
1,046

 
1,287

 
700

 
754

 
 
796

 
754

Construction
905

 
3,332

 
4,940

 
7,488

 
6,981

 
 
905

 
6,981

Other commercial real estate
5,611

 
5,898

 
5,513

 
5,915

 
6,970

 
 
5,611

 
6,970

Consumer
8,746

 
8,521

 
9,253

 
9,340

 
9,274

 
 
8,746

 
9,274

Total non-accrual loans
28,875

 
32,308

 
45,009

 
48,077

 
59,971

 
 
28,875

 
59,971

90 days or more past due loans
2,883

 
4,559

 
2,744

 
3,564

 
1,173

 
 
2,883

 
1,173

Total non-performing loans
31,758

 
36,867

 
47,753

 
51,641

 
61,144

 
 
31,758

 
61,144

Accruing troubled debt
  restructurings
2,743

 
2,771

 
3,067

 
3,581

 
3,704

 
 
2,743

 
3,704

Other real estate owned
27,349

 
31,129

 
24,471

 
26,042

 
26,898

 
 
27,349

 
26,898

Total non-performing assets
$
61,850

 
$
70,767

 
$
75,291

 
$
81,264

 
$
91,746

 
 
$
61,850

 
$
91,746

30-89 days past due loans (5)
$
16,329

 
$
28,629

 
$
28,625

 
$
18,631

 
$
20,073

 
 
$
16,329

 
$
20,073

Allowance for credit losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses
$
71,992

 
$
68,384

 
$
66,602

 
$
65,311

 
$
65,468

 
 
$
71,992

 
$
65,468

Allowance for covered loan
  losses
1,638

 
4,116

 
4,861

 
5,679

 
7,226

 
 
1,638

 
7,226

Reserve for unfunded
  commitments
1,225

 
1,225

 
1,816

 
1,816

 
1,816

 
 
1,225

 
1,816

Total allowance for credit losses
$
74,855

 
$
73,725

 
$
73,279

 
$
72,806

 
$
74,510

 
 
$
74,855

 
$
74,510

Provision for loan and covered
  loan losses
$
4,500

 
$
4,100

 
$
6,000

 
$
6,552

 
$
1,659

 
 
$
21,152

 
$
19,168

Net charge-offs by category
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
1,781

 
$
1,601

 
$
3,273

 
$
6,657

 
$
1,217

 
 
$
13,312

 
$
13,471

Agricultural

 

 

 

 

 
 

 
153

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office, retail, and industrial
267

 
457

 
1,862

 
(166
)
 
143

 
 
2,420

 
6,848

Multi-family
(27
)
 
67

 
466

 
24

 
476

 
 
530

 
856

Construction
105

 
(114
)
 
(188
)
 
(17
)
 
(6
)
 
 
(214
)
 
886

Other commercial real estate
110

 
92

 
(603
)
 
1,051

 
(247
)
 
 
650

 
3,107

Consumer
1,134

 
959

 
432

 
479

 
342

 
 
3,004

 
6,845

Net charge-offs, excluding
  covered loans
3,370

 
3,062

 
5,242

 
8,028

 
1,925

 
 
19,702

 
32,166

Charge-offs on covered loans

 
1

 
285

 
228

 
146

 
 
514

 
(187
)
Total net charge-offs
$
3,370

 
$
3,063

 
$
5,527

 
$
8,256

 
$
2,071

 
 
$
20,216

 
$
31,979

Total recoveries included above
$
1,031

 
$
1,294

 
$
2,579

 
$
1,797

 
$
2,669

 
 
$
6,701

 
$
8,205

Note: Selected Financial Information footnotes are located at the end of this section.


16



Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of or for the
 
Quarters Ended
 
 
Years Ended
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
 
December 31,
 
December 31,
 
2015
 
2015
 
2015
 
2015
 
2014
 
 
2015
 
2014
Asset Quality ratios (5)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-accrual loans to total loans
0.40
%
 
0.47
%
 
0.66
%
 
0.71
%
 
0.90
%
 
 
0.40
%
 
0.90
%
Non-performing loans to
  total loans
0.45
%
 
0.54
%
 
0.70
%
 
0.77
%
 
0.92
%
 
 
0.45
%
 
0.92
%
Non-performing assets to
  total loans plus OREO
0.86
%
 
1.02
%
 
1.10
%
 
1.20
%
 
1.37
%
 
 
0.86
%
 
1.37
%
Non-performing assets to
tangible common equity plus
allowance for credit losses
7.03
%
 
7.99
%
 
8.74
%
 
9.56
%
 
11.00
%
 
 
7.03
%
 
11.00
%
Non-accrual loans to total assets
0.30
%
 
0.33
%
 
0.46
%
 
0.51
%
 
0.64
%
 
 
0.30
%
 
0.64
%
Allowance for credit losses and net charge-off ratios
 
 
 
 
 
Allowance for credit losses to
total loans
(6)
1.05
%
 
1.06
%
 
1.07
%
 
1.07
%
 
1.11
%
 
 
1.05
%
 
1.11
%
Allowance for credit losses to
loans, excluding acquired loans
1.11
%
 
1.14
%
 
1.16
%
 
1.19
%
 
1.24
%
 
 
1.11
%
 
1.24
%
Allowance for credit losses to
non-accrual loans
(5)
253.57
%
 
215.45
%
 
152.01
%
 
139.62
%
 
112.19
%
 
 
253.57
%
 
112.19
%
Allowance for credit losses to
non-performing loans
(5)
230.55
%
 
188.81
%
 
143.27
%
 
129.99
%
 
110.04
%
 
 
230.55
%
 
110.04
%
Net charge-offs to average
loans
(2)
0.19
%
 
0.18
%
 
0.33
%
 
0.50
%
 
0.13
%
 
 
0.29
%
 
0.52
%
Footnotes to Selected Financial Information
(1) 
See the Non-GAAP Reconciliations section for the detailed calculation.
(2) 
Annualized based on the actual number of days for each period presented.
(3) 
Tax equivalent basis reflects federal and state tax benefits.
(4) 
Basel III Capital Rules became effective for the Company on January 1, 2015. These rules revise the risk-based capital requirements and introduce a new capital measure, Tier 1 common capital to risk weighted assets. As a result, ratios subsequent to December 31, 2014 are computed using the new rules and prior periods presented are reported using the regulatory guidance applicable at that time.
(5) 
Excludes covered loans and covered OREO.
(6) 
This ratio includes acquired loans that are recorded at fair value through an acquisition adjustment, which incorporates credit risk, as of the acquisition date with no allowance for credit losses being established at that time. As the acquisition adjustment is accreted into income over future periods, an allowance for credit losses is established as necessary to reflect credit deterioration.
(7) 
Certain significant transactions include property valuation adjustments related to strategic branch initiatives and acquisition and integration related expenses associated with completed and pending acquisitions.


17






Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters Ended
 
 
Years Ended
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
 
December 31,
 
December 31,
 
2015
 
2015
 
2015
 
2015
 
2014
 
 
2015
 
2014
Earnings Per Share
 
 


 
 
 
 
 


 
 


 


Net income
$
16,324

 
$
23,284

 
$
22,574

 
$
19,882

 
$
14,593

 
 
$
82,064

 
$
69,306

Net income applicable to non-
  vested restricted shares
(179
)
 
(226
)
 
(249
)
 
(228
)
 
(139
)
 
 
(882
)
 
(836
)
Net income applicable to
  common shares
16,145

 
23,058

 
22,325

 
19,654

 
14,454

 
 
81,182

 
68,470

Tax-equivalent property
valuation adjustments
5,149

 

 

 

 

 
 
5,149

 

Tax-equivalent acquisition and
  integration related expenses
833

 

 

 

 
5,576

 
 
833

 
8,323

Net income applicable to
common shares, excluding
certain significant
transactions
(1)
$
22,127

 
$
23,058

 
$
22,325

 
$
19,654

 
$
20,030

 
 
$
87,164

 
$
76,793

Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average common
  shares outstanding (basic)
77,121

 
77,106

 
77,089

 
76,918

 
75,119

 
 
77,059

 
74,484

Dilutive effect of common
  stock equivalents
13

 
13

 
12

 
12

 
12

 
 
13

 
12

Weighted-average diluted
  common shares
  outstanding
77,134

 
77,119

 
77,101

 
76,930

 
75,131

 
 
77,072

 
74,496

Basic EPS
$
0.21

 
$
0.30

 
$
0.29

 
$
0.26

 
$
0.19

 
 
$
1.05

 
$
0.92

Diluted EPS
$
0.21

 
$
0.30

 
$
0.29

 
$
0.26

 
$
0.19

 
 
$
1.05

 
$
0.92

Diluted EPS, excluding certain
significant transactions
(1)
$
0.29

 
$
0.30

 
$
0.29

 
$
0.26

 
$
0.27

 
 
$
1.13

 
$
1.03

Anti-dilutive shares not
  included in the computation of
  diluted EPS
735

 
751

 
768

 
948

 
1,146

 
 
800

 
1,198

Efficiency Ratio Calculation
 
 
 
 
 
 
 
 
 
 
 


 


Noninterest expense
$
86,743

 
$
74,365

 
$
73,451

 
$
72,657

 
$
84,828

 
 
$
307,216

 
$
283,826

Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net OREO expense
(926
)
 
(1,290
)
 
(1,861
)
 
(1,204
)
 
(2,544
)
 
 
(5,281
)
 
(7,075
)
Property valuation adjustments
(8,581
)
 

 

 

 

 
 
(8,581
)
 

Acquisition and integration
  related expenses
(1,389
)
 

 

 

 
(9,294
)
 
 
(1,389
)
 
(13,872
)
Total
$
75,847

 
$
73,075

 
$
71,590

 
$
71,453

 
$
72,990

 
 
$
291,965

 
$
262,879

Tax-equivalent net interest
income
(2)
$
80,506

 
$
80,511

 
$
81,595

 
$
79,665

 
$
78,742

 
 
$
322,277

 
$
288,589

Fee-based revenues
33,927

 
33,118

 
31,573

 
28,641

 
29,364

 
 
127,259

 
111,081

Add:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income, excluding
  BOLI income
515

 
446

 
446

 
1,065

 
924

 
 
2,472

 
2,672

Tax-adjusted BOLI
  (BOLI/.6)
1,537

 
1,543

 
2,423

 
1,472

 
1,405

 
 
6,975

 
4,788

Total
$
116,485

 
$
115,618

 
$
116,037

 
$
110,843

 
$
110,435

 
 
$
458,983

 
$
407,130

Efficiency ratio
65.11
%
 
63.20
%
 
61.70
%
 
64.46
%
 
66.09
%
 
 
63.61
%
 
64.57
%
Tax Equivalent Net Interest Income
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
78,012

 
$
77,902

 
$
78,902

 
$
76,782

 
$
75,819

 
 
$
311,598

 
$
276,852

Tax-equivalent adjustment
2,494

 
2,609

 
2,693

 
2,883

 
2,923

 
 
10,679

 
11,737

Tax-equivalent net interest
income
(2)
$
80,506

 
$
80,511

 
$
81,595

 
$
79,665

 
$
78,742

 
 
$
322,277

 
$
288,589

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.




18






Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of or for the
 
Quarters Ended
 
 
Years Ended
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
 
December 31,
 
December 31,
 
2015
 
2015
 
2015
 
2015
 
2014
 
 
2015
 
2014
Risk-Based Capital Data (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock
$
882

 
$
882

 
$
882

 
$
882

 
$
882

 
 
$
882

 
$
882

Additional paid-in capital
446,672

 
445,037

 
443,558

 
441,689

 
449,798

 
 
446,672

 
449,798

Retained earnings
953,516

 
944,209

 
927,939

 
912,387

 
899,516

 
 
953,516

 
899,516

Treasury stock, at cost
(226,413
)
 
(226,641
)
 
(226,190
)
 
(226,203
)
 
(233,566
)
 
 
(226,413
)
 
(233,566
)
Goodwill and other
  intangible assets
(327,115
)
 
(318,854
)
 
(319,243
)
 
(319,635
)
 
(334,199
)
 
 
(327,115
)
 
(334,199
)
Disallowed deferred
tax assets (CET1)
(3)
(1,888
)
 
(2,889
)
 
(3,046
)
 
(3,354
)
 
(30,638
)
 
 
(1,888
)
 
(30,638
)
Common equity Tier 1
capital
845,654

 
841,744

 
823,900

 
805,766

 
751,793

 
 
845,654

 
751,793

Trust preferred securities
50,690

 
50,690

 
50,690

 
50,690

 
50,690

 
 
50,690

 
50,690

Disallowed deferred
tax assets (other)
(3)
(2,868
)
 
(4,334
)
 
(4,568
)
 
(5,030
)
 
N/A

 
 
(2,868
)
 
N/A

Tier 1 capital
893,476

 
888,100

 
870,022

 
851,426

 
802,483

 
 
893,476

 
802,483

Tier 2 capital
74,855

 
73,725

 
73,279

 
72,806

 
82,209

 
 
74,855

 
82,209

Total capital
$
968,331

 
$
961,825

 
$
943,301

 
$
924,232

 
$
884,692

 
 
$
968,331

 
$
884,692

Risk-weighted assets
$
8,687,864

 
$
8,414,729

 
$
8,296,679

 
$
8,229,627

 
$
7,876,754

 
 
$
8,687,864

 
$
7,876,754

Adjusted average assets
$
9,501,087

 
$
9,559,796

 
$
9,318,347

 
$
9,134,320

 
$
8,884,045

 
 
$
9,501,087

 
$
8,884,045

Total capital to risk-weighted
  assets
11.15
%
 
11.43
%
 
11.37
%
 
11.23
%
 
11.23
%
 
 
11.15
%
 
11.23
%
Tier 1 capital to risk-weighted
  assets
10.28
%
 
10.55
%
 
10.49
%
 
10.35
%
 
10.19
%
 
 
10.28
%
 
10.19
%
Tier 1 common capital to risk-
weighted assets (CET1)
(3)
9.73
%
 
10.00
%
 
9.93
%
 
9.79
%
 
N/A

 
 
9.73
%
 
N/A

Tier 1 leverage to average assets
9.40
%
 
9.29
%
 
9.34
%
 
9.32
%
 
9.03
%
 
 
9.40
%
 
9.03
%
Tangible Common Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders' equity
$
1,146,268

 
$
1,147,669

 
$
1,124,957

 
$
1,115,950

 
$
1,100,775

 
 
$
1,146,268

 
$
1,100,775

Less: goodwill and other
  intangible assets
(339,277
)
 
(331,250
)
 
(332,223
)
 
(333,202
)
 
(334,199
)
 
 
(339,277
)
 
(334,199
)
Tangible common equity
806,991

 
816,419

 
792,734

 
782,748

 
766,576

 
 
806,991

 
766,576

Less: AOCI
28,389

 
15,818

 
21,232

 
12,805

 
15,855

 
 
28,389

 
15,855

Tangible common equity,
  excluding AOCI
$
835,380

 
$
832,237

 
$
813,966

 
$
795,553

 
$
782,431

 
 
$
835,380

 
$
782,431

Total assets
$
9,732,676

 
$
9,935,046

 
$
9,863,027

 
$
9,498,596

 
$
9,445,139

 
 
$
9,732,676

 
$
9,445,139

Less: goodwill and other
  intangible assets
(339,277
)
 
(331,250
)
 
(332,223
)
 
(333,202
)
 
(334,199
)
 
 
(339,277
)
 
(334,199
)
Tangible assets
$
9,393,399

 
$
9,603,796

 
$
9,530,804

 
$
9,165,394

 
$
9,110,940

 
 
$
9,393,399

 
$
9,110,940

Tangible common equity to
  tangible assets
8.59
%
 
8.50
%
 
8.32
%
 
8.54
%
 
8.41
%
 
 
8.59
%
 
8.41
%
Tangible common equity,
  excluding AOCI, to tangible
  assets
8.89
%
 
8.67
%
 
8.54
%
 
8.68
%
 
8.59
%
 
 
8.89
%
 
8.59
%
Tangible common equity to risk-
  weighted assets
9.29
%
 
9.70
%
 
9.55
%
 
9.51
%
 
9.73
%
 
 
9.29
%
 
9.73
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.

19






Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of or for the
 
Quarters Ended
 
 
Years Ended
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
 
December 31,
 
December 31,
 
2015
 
2015
 
2015
 
2015
 
2014
 
 
2015
 
2014
Return on Average Common and Tangible Common Equity
 
 
 
 
 
 
 
 
 
 
 
Net income applicable to
  common shares
$
16,145

 
$
23,058

 
$
22,325

 
$
19,654

 
$
14,454

 
 
$
81,182

 
$
68,470

Intangibles amortization
971

 
973

 
978

 
998

 
842

 
 
3,920

 
2,889

Tax-equivalent adjustment of
  intangibles amortization
(388
)
 
(389
)
 
(391
)
 
(399
)
 
(337
)
 
 
(1,568
)
 
(1,156
)
Net income applicable to
  common shares, excluding
  intangibles amortization
16,728

 
23,642

 
22,912

 
20,253

 
14,959

 
 
83,534

 
70,203

Tax-equivalent property
valuation adjustments
(2)
5,149

 

 

 

 

 
 
5,149

 

Tax-equivalent acquisition and
integration related expenses
(2)
833

 

 

 

 
5,576

 
 
833

 
8,323

Net income applicable to
common shares, excluding
certain significant
transactions
(1)
$
22,710

 
$
23,642

 
$
22,912

 
$
20,253

 
$
20,535

 
 
$
89,516

 
$
78,526

Average stockholders' equity
$
1,154,506

 
$
1,134,967

 
$
1,123,530

 
$
1,114,762

 
$
1,072,682

 
 
$
1,132,058

 
$
1,043,566

Less: average intangible assets
(331,013
)
 
(331,720
)
 
(332,694
)
 
(333,684
)
 
(320,533
)
 
 
(332,269
)
 
(290,303
)
Average tangible common
  equity
$
823,493

 
$
803,247

 
$
790,836

 
$
781,078

 
$
752,149

 
 
$
799,789

 
$
753,263

Return on average common
equity
(4)
5.55
%
 
8.06
%
 
7.97
%
 
7.15
%
 
5.35
%
 
 
7.17
%
 
6.56
%
Return on average tangible
common equity
(4)
8.06
%
 
11.68
%
 
11.62
%
 
10.52
%
 
7.89
%
 
 
10.44
%
 
9.32
%
Return on average tangible
common equity, excluding
certain significant
transactions
(1)(4)
10.94
%
 
11.68
%
 
11.62
%
 
10.52
%
 
10.83
%
 
 
11.19
%
 
10.42
%
Footnotes to Non-GAAP Reconciliations
(1) 
Certain significant transactions include property valuation adjustments related to strategic branch initiatives and acquisition and integration related expenses associated with completed and pending acquisitions.
(2) 
Tax equivalent basis reflects federal and state tax benefits.
(3) 
Basel III Capital Rules became effective for the Company on January 1, 2015. These rules revise the risk-based capital requirements and introduce a new capital measure, Tier 1 common capital to risk-weighted assets. As a result, ratios subsequent to December 31, 2014 are computed using the new rules and prior periods presented are reported using the regulatory guidance applicable at that time.
(4) 
Annualized based on the actual number of days for each period presented.


20