2016 HIGHLIGHTS:

• Earnings of $134.3 million, or $1.05 per share
• Organic loan growth¹ of 7.1%; organic commercial and commercial real estate growth of 10.7%
• Tangible book value² increase of 8.9% over 2015

4TH QUARTER VS. 3RD QUARTER 2016 HIGHLIGHTS:

• Earnings of $33.5 million, or $0.25 per share
• Organic loan growth¹ of 6.1% annualized; organic commercial and commercial real estate growth of 9.7% annualized
• Stable Core Net Interest Margin²

¹ Excludes acquired loans; includes loans held for sale
² Non-GAAP measures – refer to Tables 4 & 11 for Non-GAAP reconciliations

                                                                                    

EVANSVILLE, Ind., Jan. 24, 2017 (GLOBE NEWSWIRE) -- Today Old National Bancorp (the “Company” or “Old National”) (NASDAQ:ONB) reported full-year 2016 net income of $134.3 million, or $1.05 per diluted share.  This net income represents an increase of 15.0% over full-year 2015 net income of $116.7 million, or $1.00 per diluted share, and represents the highest yearly earnings in the Company’s history.  The successful conversion and integration of the Company’s largest partnership, strong loan growth and consistently low credit metrics all contributed to this positive year-over-year performance.

For the 4^th quarter of 2016, Old National reported net income of $33.5 million, or $0.25 per diluted share.  During the current quarter, Old National recognized $12.8 million in pre-tax deferred gains related to the repurchase of various bank properties.  Also included in the 4^th quarter of 2016 were pre-tax pension termination charges of $9.8 million, pre-tax branch consolidation charges of $5.1 million, pre-tax merger and integration charges of $1.8 million and severance of $1.6 million.  These quarterly results compare to net income of $34.7 million in the 3^rd quarter of 2016 and $32.0 million recorded in the 4^th quarter of 2015.  The 3^rd quarter of 2016 contained $5.5 million in pre-tax merger and integration charges.

“A strong fourth quarter, driven by 6.1% annualized organic loan growth, capped a year of excellent growth for Old National,” said Chairman and CEO Bob Jones. “Not only did we increase our net income by 15% over 2015 while maintaining exceptional credit quality and increasing our tangible book value by nearly 9%, we accomplished all of this while expanding our franchise into Wisconsin with the largest partnership in our history.”

Committed to our Strategic Imperatives and 2016 Initiatives

Old National’s continued steady performance and strong credit and capital positions can be attributed to the Company’s unwavering commitment to the three strategic imperatives that have guided Old National for 11 years: 

     1. Strengthen the risk profile; 2. Enhance management discipline; and 3. Achieve consistent quality earnings.

Guided by these three strategic imperatives, Old National’s primary initiatives for 2016 were: 1. Continue to grow organic revenue; 2. Improve operating leverage; and 3. Prudent use of capital, all while maintaining a strong credit culture.

Grow Organic Revenue

Balance Sheet and Net Interest Margin

At December 31, 2016, period-end loans, including loans held for sale, totaled $9.101 billion, an increase of $135.7 million from the $8.966 billion at September 30, 2016.  This increase represents a 6.1% annualized organic growth rate.  Old National’s Louisville, Kentucky market, including the Company’s new Lexington office, the South Bend market and the Ft. Wayne region all contributed significantly to this loan portfolio growth during the 4^th quarter. Old National’s portfolio of commercial and commercial real estate loans grew by 9.7%, annualized, from the 3^rd quarter to the 4^th quarter of 2016.  On an annual basis, period-end loans, including loans held for sale, increased $2.139 billion from December 31, 2015.  Excluding the $1.647 billion in loan balances acquired from the Anchor partnership, organic loan growth was $491.9 million, or 7.1%.  Commercial and commercial real estate loans grew $395.5 million on an organic basis, net of the $968.6 million acquired from Anchor.

Total period-end core deposits, including demand and interest-bearing deposits, increased $146.6 million, or 5.6% annualized, to $10.629 billion at December 30, 2016, compared to $10.482 billion at September 30, 2016.  On an annual basis, period-end deposits, including demand and interest-bearing deposits, increased $2.327 billion from December 31, 2015.  Excluding the $1.853 billion in deposit balances assumed from the Anchor partnership, organic deposit growth was $473.9 million, or 5.7%.

Net interest income for the 4^th quarter of 2016, totaled $109.9 million compared to $107.8 million in the 3^rd quarter of 2016, and $85.9 million in the 4^th quarter of 2015.  On a fully taxable equivalent basis, net interest income was $115.4 million for the 4^th quarter of 2016 and represented a net interest margin on total average earning assets of 3.63%.  These results compare to net interest income on a fully taxable equivalent basis of $113.1 million and a margin of 3.60% in the 3^rd quarter of 2016.   In the 4^th quarter of 2015, Old National reported net interest income on a fully taxable equivalent basis of $91.1 million and a margin of 3.50%.  Refer to Table 4 for Non-GAAP taxable equivalent reconciliations.

Old National recorded $16.8 million in accretion income as part of net interest income, or a 53 basis points contribution to the net interest margin, in the 4^th quarter of 2016.  Accretion income is related to purchase accounting discounts from the Company’s various acquisitions.  Total accretion income in the 3^rd quarter of 2016 and the 4^th quarter of 2015 reported by Old National was $15.9 million, or a 51 basis point net interest margin contribution, and $12.3 million, or a 48 basis point net interest margin contribution, respectively.  Excluding accretion income, the core net interest margin was 3.10% in the 4^th quarter of 2016, compared to 3.09% in the 3^rd quarter of 2016 and 3.02% in the 4^th quarter of 2015.  Refer to Table 4 for Non-GAAP reconciliations.

Noninterest Income

For the 4^th quarter of 2016, total noninterest income amounted to $62.8 million and compares to $47.2 million reported in the 3^rd quarter of 2016 and $60.6 million in the 4^th quarter of 2015.  During the 4^th quarter of 2016 and the 4^th quarter of 2015, Old National recognized pre-tax deferred gains relating to the repurchase of various bank properties in the amount of $12.8 million and $10.8 million, respectively.

Improve Operating Leverage

Old National’s noninterest expenses totaled $126.3 million for the 4^th quarter of 2016.  Included in this total is a $9.8 million pre-tax charge for the termination of the Company’s pension plan, $5.1 million in pretax charges related to branch consolidations, $1.8 million in pre-tax merger and integration charges and $1.6 million in severance.  Noninterest expenses for the 3^rd quarter of 2016 were $108.1 million and for the 4^th quarter of 2015 were $102.5 million. Items impacting noninterest expenses for the 3^rd quarter of 2016 include pre-tax merger and integration charges of $5.5 million.  Old National consolidated five branches during 2016 and has closed an additional 15 branches in January 2017.  As of December 31, 2016, Old National has 202 branches throughout its franchise.

Prudent Use of Capital

At December 31, 2016, Old National’s capital position remained well above regulatory guideline minimums with regulatory tier 1 and total risk-based capital ratios of 11.7% and 12.2%, respectively, compared to 11.9% and 12.5% at September 30, 2016, and 12.6% and 13.3% at December 31, 2015.  Old National did not repurchase any stock in the open market during the 4^th quarter or during the entire year of 2016.

The following table presents Old National’s risk-based and leverage ratios compared to industry requirements:

Table 1	Fully Phased-In Regulatory Guidelines Minimum	Consolidated ONB at December 31, 2016
Tier 1 Risk-Based Capital Ratio	> 8.5%	11.7	%
Total Risk-Based Capital Ratio	> 10.5%	12.2	%
Common Equity Tier 1 Capital Ratio	> 7.0%	11.5	%
Tier 1 Leverage Capital Ratio	> 4.0%	8.4	%

Old National’s ratio of tangible common equity to tangible assets was 7.92% at December 31, 2016, compared to 8.13% at September 30, 2016, and 7.66% at December 31, 2015.  Refer to Table 11 for Non-GAAP reconciliations. 

Maintain a Strong Credit Culture

Old National recorded a provision recapture of $1.8 million and had net recoveries of $17 thousand in the 4^th quarter of 2016.  These results compare to $1.3 million in provision expense and net charge-offs of $1.6 million, and provision expense of $0.5 million and net recoveries of $0.5 million, in the 3^rd quarter of 2016 and the 4^th quarter of 2015, respectively.  Net charge-offs for the 4^th quarter of 2016 were 0.00% of average total loans on an annualized basis, compared to net charge-offs of 0.07% of average total loans in the 3^rd quarter of 2016 and net recoveries of 0.03% of average total loans in the 4^th quarter of 2015. 

Delinquencies remained low as Old National reported 30+ day delinquent loans of 0.43% in the 4^th quarter of 2016 compared to 0.36% in the 3^rd quarter of 2016.  Old National’s 90+ day delinquent loans for the 4^th and 3^rd quarters of 2016 were near zero.

For the full year of 2016, Old National reported net charge-offs of $3.4 million, or 0.04% of average total loans, and recorded provision expense of $1.0 million.  This compares to the full year of 2015 with net recoveries of $1.5 million, or 0.02% of average total loans, and provision expense of $2.9 million.

Old National’s allowance for loan losses at December 31, 2016, was $49.8 million, or 0.55% of total loans, compared to an allowance of $51.5 million, or 0.58% of total loans at September 30, 2016, and $52.2 million, or 0.75% of total loans, at December 31, 2015.  The coverage ratio (allowance to non-performing loans) stood at 34% at December 31, 2016, compared to 31% at September 30, 2016, and 36% at December 31, 2015.

In accordance with current accounting practices, the loans acquired from Anchor during the 2^nd quarter of 2016 were recorded at fair value with no allowance recorded at the acquisition date.  When considering both the allowance for loan losses plus the purchase accounting marks, Old National believes it remains appropriately reserved, as demonstrated by the table below.

Table 2 – At December 31, 2016 ($ in millions)	ONB Excluding Anchor1			Anchor			ONB Consolidated
Allowance for Loan Losses (ALLL)	$	49.8		$	0.0		$	49.8
Remaining Loan Discount		70.6			59.1			129.7
Total ALLL + Remaining Loan Discount	$	120.4		$	59.1		$	179.5
Pre-Discount Loan Balance	$	7,660.8		$	1,479.4		$	9,140.2
ALLL/Pre-Discount Loan Balance		0.65	%		0.00	%		0.54	%
Mark/Pre-Discount Loan Balance		0.92	%		4.00	%		1.42	%
Combined ALLL & Discount/Pre-Discount Loan Balance		1.57	%		4.00	%		1.96	%

¹ Includes discount on loans acquired through previous partnerships.

The following table presents certain credit quality metrics related to Old National’s loan portfolio:

Table 3 ($ in millions)	4Q16			3Q16			4Q15
Non-Performing Loans (NPLs)	$	145.8		$	165.3		$	146.7
Problem Loans (Including NPLs)		220.4			233.5			213.3
Special Mention Loans		95.5			125.8			134.3
Net Charge-Off (Recoveries) Ratio		0.0	%		0.07	%		(0.03	)%
Provision for Loan Losses	$	(1.8	)	$	1.3		$	0.5
Allowance for Loan Losses		49.8			51.5			52.2

About Old National

Old National Bancorp (NASDAQ:ONB), the holding company of Old National Bank, is the largest financial services holding company headquartered in Indiana. With $14.9 billion in assets, it ranks among the top 100 banking companies in the U.S.  Since its founding in Evansville in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships with clients. Today, Old National’s footprint includes Indiana, Kentucky, Michigan and Wisconsin. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investments and brokerage services. For more information and financial data, please visit Investor Relations at oldnational.com.

Conference Call

Old National will hold a conference call at 10:00 a.m. Central Time on Tuesday, January 24, 2017, to discuss 4^th quarter and full-year 2016 financial results, strategic developments, and the Company’s financial outlook.  The live audio web cast of the call, along with the corresponding presentation slides, will be available on the Company’s 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 1:00 p.m. Central Time on January 24 through February 7.  To access the replay, dial 1-855-859-2056, Conference ID Code 50911607.

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 National’s 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.

Table 4 – Non-GAAP Reconciliations-Core Net Interest Margin

($ in millions)	4Q16			3Q16			4Q15
Net Interest Income	$	109.9		$	107.8		$	85.9
Taxable Equivalent Adjustment		5.5			5.3			5.2
Net Interest Income – Taxable Equivalent	$	115.4		$	113.1		$	91.1
Less Accretion1		16.8			15.9			12.3
Core Net Interest Income – Taxable Equivalent Less Accretion	$	98.6		$	97.2		$	78.8
Average Earning Assets	$	12,713.3		$	12,575.5		$	10,414.8
Core Net Interest Margin – Fully Taxable Equivalent		3.10	%		3.09	%		3.02	%

¹ Accretion related to purchase accounting discounts on acquired loan portfolios.

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 Bancorp’s (“Old National’s”) 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 management’s current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties and 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: expected cost savings, synergies and other financial benefits from the recently completed mergers might not be realized within the expected timeframes and costs or difficulties relating to integration matters might be greater than expected; market, economic, operational, liquidity, credit and interest rate risks associated with Old National’s business; 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; 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; 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.

TABLE 5
Financial Highlights (unaudited)
($ and shares in thousands, except per share data)
	Three Months Ended										Twelve Months Ended
	December 31,			September 30,			December 31,				December 31,			December 31,
		2016			2016			2015				2016			2015
Income Statement
Net interest income	$	109,917		$	107,803		$	85,922			$	402,703		$	366,116
Provision for loan losses		(1,756	)		1,306			484				960			2,923
Noninterest income		62,751			47,243			60,614				252,830			230,632
Noninterest expense		126,258			108,062			102,469				454,147			430,932
Net income		33,456			34,709			31,985				134,264			116,716
Per Common Share Data (Diluted)
Net income available to common shareholders	$	0.25		$	0.25		$	0.27			$	1.05		$	1.00
Average diluted shares outstanding		135,383			135,011			114,716				128,301			116,255
Book value		13.42			13.59			13.05				13.42			13.05
Stock price		18.15			14.06			13.56				18.15			13.56
Dividend payout ratio		52	%		52	%		43	%			50	%		48	%
Tangible common book value (1)		8.30			8.43			7.62				8.30			7.62
Performance Ratios
Return on average assets		0.91	%		0.96	%		1.07	%			0.98	%		0.98	%
Return on average common equity		7.33	%		7.62	%		8.63	%			7.84	%		7.88	%
Net interest margin (FTE)		3.63	%		3.60	%		3.50	%			3.58	%		3.72	%
Efficiency ratio (2)		69.53	%		66.05	%		66.42	%			65.82	%		68.65	%
Net charge-offs (recoveries) to average loans		0.00	%		0.07	%		-0.03	%			0.04	%		-0.02	%
Allowance for loan losses to ending loans		0.55	%		0.58	%		0.75	%			0.55	%		0.75	%
Non-performing loans to ending loans		1.62	%		1.86	%		2.11	%			1.62	%		2.11	%
Balance Sheet
Total loans	$	9,010,512		$	8,904,985		$	6,948,405			$	9,010,512		$	6,948,405
Total assets		14,860,237			14,703,071			11,991,527				14,860,237			11,991,527
Total deposits		10,743,253			10,646,708			8,400,860				10,743,253			8,400,860
Total borrowed funds		2,152,086			2,023,099			1,920,246				2,152,086			1,920,246
Total shareholders' equity		1,814,417			1,834,457			1,491,170				1,814,417			1,491,170
Capital Ratios (1)
Risk-based capital ratios (EOP):
Tier 1 common equity		11.5	%		11.8	%		12.1	%			11.5	%		12.1	%
Tier 1		11.7	%		11.9	%		12.6	%			11.7	%		12.6	%
Total		12.2	%		12.5	%		13.3	%			12.2	%		13.3	%
Leverage ratio (to average assets)		8.4	%		8.4	%		8.5	%			8.4	%		8.5	%
Total equity to assets (averages)		12.44	%		12.60	%		12.42	%			12.55	%		12.42	%
Tangible common equity to tangible assets		7.92	%		8.13	%		7.66	%			7.92	%		7.66	%
Nonfinancial Data
Full-time equivalent employees		2,733			2,910			2,652				2,733			2,652
Number of branches		202			201			160				202			160
(1) See non-GAAP measures on Table 11.
(2) 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 securities transactions.  This presentation excludes intangible amortization and net 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

 

TABLE 6
Income Statement (unaudited)
($ and shares in thousands, except per share data)
	Three Months Ended									Twelve Months Ended
	December 31,				September 30,			December 31,		December 31,				December 31,
		2016			2016			2015			2016			2015
Interest income	$	121,849		$	119,713		$	94,960			447,134		$	399,189
Less:  interest expense		11,932			11,910			9,038			44,431			33,073
Net interest income		109,917			107,803			85,922			402,703			366,116
Provision for loan losses		(1,756	)		1,306			484			960			2,923
Net interest income after provision for loan losses		111,673			106,497			85,438			401,743			363,193
Wealth management fees		8,593			8,572			8,142			34,641			34,395
Service charges on deposit accounts		10,448			11,054			10,039			41,578			43,372
Debit card and ATM fees		4,183			4,330			3,646			16,769			21,340
Mortgage banking revenue		4,399			7,718			2,145			20,240			12,540
Insurance premiums and commissions		152			132			10,491			20,527			42,714
Investment product fees		5,155			5,038			4,375			18,822			17,924
Company-owned life insurance		2,198			2,163			2,064			8,479			8,604
Change in Indemnification Asset		-			-			57			233			(9,034	)
Other income		26,319			6,517			17,686			43,675			37,224
Net gain on sale of ONB Insurance Group, Inc.		-			-			-			41,864			-
Net gain on branch divestitures		-			-			272			-			15,627
Gains (losses) on sales of securities		1,239			1,647			1,662			5,848			5,718
Gains (losses) on derivatives		65			72			35			154			208
Total noninterest income		62,751			47,243			60,614			252,830			230,632
Salaries and employee benefits		72,344			60,861			56,782			252,892			243,875
Occupancy		11,591			12,944			11,796			50,947			53,239
Equipment		3,675			3,564			2,856			13,448			13,183
Marketing		3,495			3,528			1,769			14,620			10,410
Data processing		7,961			8,242			6,020			32,002			27,309
Communication		2,805			2,755			2,106			9,959			9,586
Professional fees		3,904			3,252			2,808			15,705			11,756
Loan expenses		1,963			2,213			1,811			7,632			6,373
Supplies		885			799			565			2,865			2,275
FDIC assessment		2,583			2,149			1,913			8,681			7,503
Other real estate owned expense		944			728			482			4,195			2,703
Intangible amortization		3,241			3,233			2,816			12,486			11,746
Other expense		10,867			3,794			10,745			28,715			30,974
Total noninterest expense		126,258			108,062			102,469			454,147			430,932
Income before income taxes		48,166			45,678			43,583			200,426			162,893
Income tax expense		14,710			10,969			11,598			66,162			46,177
Net income	$	33,456		$	34,709		$	31,985		$	134,264		$	116,716
Diluted Earnings Per Share
Net income	$	0.25		$	0.25		$	0.27		$	1.05		$	1.00
Average Common Shares Outstanding
Basic		134,670			134,492			114,103			127,705			115,726
Diluted		135,383			135,011			114,716			128,301			116,255
Common shares outstanding at end of period		135,159			134,985			114,297			135,159			114,297

 

TABLE 7
Balance Sheet (unaudited)
($ in thousands)
		December 31,				September 30,				December 31,
			2016				2016				2015
	Assets
	Federal Reserve Bank account	$	36,496			$	31,634			$	125,724
	Money market investments		9,642				4,513				2,783
	Investments:
	Treasury and government sponsored agencies		541,190				622,726				768,564
	Mortgage-backed securities		1,535,659				1,495,683				1,082,403
	States and political subdivisions		1,131,003				1,148,147				1,100,501
	Other securities		441,110				449,614				428,951
	Total investments		3,648,962				3,716,170				3,380,419
	Loans held for sale		90,682				60,465				13,810
	Loans:
	Commercial		1,917,099				1,836,380				1,804,615
	Commercial and agriculture real estate		3,130,853				3,092,575				1,847,821
	Consumer:
	Home equity		476,439				481,995				359,954
	Other consumer loans		1,398,591				1,388,803				1,183,814
	Subtotal of commercial and consumer loans		6,922,982				6,799,753				5,196,204
	Residential real estate		2,087,530				2,105,232				1,644,614
	Covered loans		-				-				107,587
	Total loans		9,010,512				8,904,985				6,948,405
	Total earning assets		12,796,294				12,717,767				10,471,141
	Allowance for loan losses		(49,808	)			(51,547	)			(52,233	)
	Nonearning Assets:
	Cash and due from banks		209,381				224,893				91,311
	Premises and equipment		429,622				333,266				196,676
	Goodwill and intangible assets		692,695				696,128				619,942
	Company-owned life insurance		352,956				351,431				341,294
	Net deferred tax assets		181,863				169,466				109,984
	Loan servicing rights		25,561				25,920				10,468
	FDIC Indemnification Asset		-				-				9,030
	Other real estate owned		18,546				23,719				12,498
	Other assets		203,127				212,028				181,416
	Total nonearning assets		2,113,751				2,036,851				1,572,619
	Total assets	$	14,860,237			$	14,703,071			$	11,991,527
	Liabilities and Equity
	Noninterest-bearing demand deposits	$	3,016,093			$	2,944,331			$	2,488,855
	NOW accounts		2,596,595				2,486,190				2,133,536
	Savings accounts		2,954,709				2,963,637				2,201,352
	Money market accounts		707,748				687,895				577,050
	Other time deposits		1,353,614				1,400,068				901,352
	Total core deposits		10,628,759				10,482,121				8,302,145
	Brokered CD's		114,494				164,587				98,715
	Total deposits		10,743,253				10,646,708				8,400,860
	Federal funds purchased and interbank borrowings		213,003				125,121				291,090
	Securities sold under agreements to repurchase		367,052				347,804				387,409
	Federal Home Loan Bank advances		1,353,092				1,331,379				1,023,491
	Other borrowings		218,939				218,795				218,256
	Total borrowed funds		2,152,086				2,023,099				1,920,246
	Accrued expenses and other liabilities		150,481				198,807				179,251
	Total liabilities		13,045,820				12,868,614				10,500,357
	Common stock, surplus, and retained earnings		1,873,789				1,853,286				1,525,967
	Other comprehensive income		(59,372	)			(18,829	)			(34,797	)
	Total shareholders' equity		1,814,417				1,834,457				1,491,170
	Total liabilities and shareholders' equity	$	14,860,237			$	14,703,071			$	11,991,527

 

TABLE 8
Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
		Three Months Ended									Three Months Ended									Three Months Ended
		December 31, 2016									September 30, 2016									December 31, 2015
		Average			Income (1)/			Yield/			Average			Income (1)/			Yield/			Average			Income (1)/			Yield/
Earning Assets:		Balance			Expense			Rate			Balance			Expense			Rate			Balance			Expense			Rate
Fed Funds sold, resell agr, Fed Reserve
Bank account, and money market		$	40,791		$	37		0.36	%		$	21,923		$	23		0.42	%		$	94,660		$	29		0.12	%
Investments:
Treasury and gov't sponsored agencies			551,665			2,754		2.00	%			671,295			3,390		2.02	%			770,472			3,658		1.90	%
Mortgage-backed securities			1,504,887			7,182		1.91	%			1,414,753			6,353		1.80	%			1,134,521			5,356		1.89	%
States and political subdivisions			1,141,703			13,458		4.72	%			1,139,983			13,329		4.68	%			1,088,917			12,935		4.75	%
Other securities			445,877			2,868		2.57	%			446,870			2,566		2.30	%			431,541			2,635		2.44	%
Total investments			3,644,132			26,262		2.88	%			3,672,901			25,638		2.79	%			3,425,451			24,584		2.87	%
Loans:
Commercial (2)			1,871,338			17,453		3.65	%			1,861,906			18,268		3.84	%			1,773,804			16,861		3.72	%
Commercial and agriculture real estate (2)			3,125,500			45,375		5.68	%			2,975,029			41,906		5.51	%			1,860,536			27,496		5.78	%
Consumer:
Home equity (2)			485,984			4,597		3.76	%			483,678			4,895		4.03	%			424,013			4,218		3.95	%
Other consumer loans (2)			1,384,017			11,942		3.43	%			1,404,947			11,960		3.39	%			1,160,652			9,747		3.33	%
Subtotal commercial and consumer loans			6,866,839			79,367		4.60	%			6,725,560			77,029		4.56	%			5,219,005			58,322		4.43	%
Residential real estate loans (2)			2,161,583			21,689		4.00	%			2,155,070			22,343		4.14	%			1,675,707			17,188		4.10	%
Total loans (2)			9,028,422			101,056		4.42	%			8,880,630			99,372		4.41	%			6,894,712			75,510		4.32	%
Total earning assets		$	12,713,345		$	127,355		3.97	%		$	12,575,454		$	125,033		3.94	%		$	10,414,823		$	100,123		3.80	%
Less: Allowance for loan losses			(52,691	)								(52,809	)								(52,677	)
Non-Earning Assets:
Cash and due from banks		$	209,957								$	204,991								$	118,494
Other assets			1,806,507									1,721,772									1,460,768
Total assets			14,677,118								$	14,449,408								$	11,941,408
Interest-Bearing Liabilities:
NOW accounts		$	2,560,533		$	430		0.07	%		$	2,461,799		$	456		0.07	%		$	2,063,815		$	289		0.06	%
Savings accounts			2,952,666			1,138		0.15	%			2,708,307			962		0.14	%			2,207,640			784		0.14	%
Money market accounts			703,904			142		0.08	%			936,232			326		0.14	%			828,501			263		0.13	%
Other time deposits			1,392,410			2,714		0.78	%			1,352,876			2,704		0.79	%			909,985			2,123		0.93	%
Total interest-bearing deposits			7,609,513			4,424		0.23	%			7,459,214			4,448		0.24	%			6,009,941			3,459		0.23	%
Brokered CD's			132,901			293		0.88	%			174,375			371		0.85	%			80,951			141		0.69	%
Total interest-bearing deposits and CD's			7,742,414			4,717		0.24	%			7,633,589			4,819		0.25	%			6,090,892			3,600		0.23	%
Federal funds purchased and interbank borrowings			79,913			107		0.53	%			178,770			226		0.50	%			114,174			83		0.29	%
Securities sold under agreements to repurchase			354,709			370		0.41	%			355,735			375		0.42	%			415,586			378		0.36	%
Federal Home Loan Bank advances			1,264,368			4,383		1.38	%			1,129,756			4,137		1.46	%			927,988			2,714		1.16	%
Other borrowings			218,860			2,355		4.30	%			218,719			2,353		4.30	%			218,178			2,263		4.15	%
Total borrowed funds			1,917,850			7,215		1.50	%			1,882,980			7,091		1.50	%			1,675,926			5,438		1.29	%
Total interest-bearing liabilities		$	9,660,264		$	11,932		0.49	%		$	9,516,569		$	11,910		0.50	%		$	7,766,818		$	9,038		0.46	%
Noninterest-Bearing Liabilities
Demand deposits			3,006,263									2,895,945									2,483,234
Other liabilities			184,598									215,620									208,696
Shareholders' equity			1,825,993									1,821,274									1,482,660
Total liabilities and shareholders' equity		$	14,677,118								$	14,449,408								$	11,941,408
Net interest rate spread								3.48	%								3.44	%								3.34	%
Net interest margin (FTE)								3.63	%								3.60	%								3.50	%
FTE adjustment					$	5,506								$	5,320								$	5,163
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.

 

TABLE 9
Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
		Twelve Months Ended									Twelve Months Ended
		December 31, 2016									December 31, 2015
		Average			Income (1)/			Yield/			Average			Income (1)/			Yield/
Earning Assets:		Balance			Expense			Rate			Balance			Expense			Rate
Fed Funds sold, resell agr, Fed Reserve
Bank account, and money market		$	32,697		$	130		0.40	%		$	43,383		$	47		0.11	%
Investments:
Treasury and gov't sponsored agencies			672,659			13,207		1.96	%			829,728			16,080		1.94	%
Mortgage-backed securities			1,295,749			24,174		1.87	%			1,137,565			20,645		1.81	%
States and political subdivisions			1,125,713			53,003		4.71	%			1,023,983			49,162		4.80	%
Other securities			438,832			10,391		2.37	%			444,520			10,903		2.45	%
Total investments			3,532,953			100,775		2.85	%			3,435,796			96,790		2.82	%
Loans:
Commercial (2)			1,835,317			70,591		3.85	%			1,754,141			75,900		4.33	%
Commercial and agriculture real estate (2)			2,648,911			150,592		5.69	%			1,862,055			118,237		6.35	%
Consumer:
Home equity (2)			459,648			20,356		4.43	%			439,657			17,480		3.98	%
Other consumer loans (2)			1,336,381			45,020		3.37	%			1,115,430			39,370		3.53	%
Subtotal commercial and consumer loans			6,280,257			286,559		4.56	%			5,171,283			250,987		4.85	%
Residential real estate loans (2)			1,995,060			80,963		4.06	%			1,712,636			70,908		4.14	%
Total loans (2)			8,275,317			367,522		4.44	%			6,883,919			321,895		4.68	%
Total earning assets		$	11,840,967		$	468,427		3.96	%		$	10,363,098		$	418,732		4.04	%
Less: Allowance for loan losses			(52,215	)								(50,538	)
Non-Earning Assets:
Cash and due from banks		$	192,401								$	163,275
Other assets			1,661,200									1,451,125
Total assets		$	13,642,353								$	11,926,960
Interest-bearing Liabilities:
NOW accounts		$	2,389,143		$	1,529		0.06	%		$	2,160,019		$	758		0.04	%
Savings accounts			2,595,622			3,723		0.14	%			2,299,357			3,199		0.14	%
Money market accounts			763,909			840		0.11	%			677,414			577		0.09	%
Other time deposits			1,209,414			9,898		0.82	%			1,001,436			9,270		0.93	%
Total interest-bearing deposits			6,958,088			15,990		0.23	%			6,138,226			13,804		0.23	%
Brokered CD's			152,233			1,293		0.85	%			62,346			364		0.58	%
Total interest-bearing deposits and CD's			7,110,321			17,283		0.24	%			6,200,572			14,168		0.23	%
Federal funds purchased and interbank borrowings			137,997			673		0.49	%			126,124			265		0.21	%
Securities sold under agreements to repurchase			368,757			1,509		0.41	%			406,117			1,488		0.37	%
Federal Home Loan Bank advances			1,121,413			15,547		1.39	%			793,703			8,122		1.02	%
Other borrowings			222,708			9,419		4.23	%			217,978			9,030		4.14	%
Total borrowed funds			1,850,875			27,148		1.47	%			1,543,922			18,905		1.22	%
Total interest-bearing liabilities		$	8,961,196		$	44,431		0.50	%		$	7,744,494		$	33,073		0.43	%
Noninterest-Bearing Liabilities
Demand deposits			2,776,140									2,500,571
Other liabilities			192,443									200,994
Shareholders' equity			1,712,574									1,480,901
Total liabilities and shareholders' equity		$	13,642,353								$	11,926,960
Net interest rate spread								3.46	%								3.61	%
Net interest margin (FTE)								3.58	%								3.72	%
FTE adjustment					$	21,293								$	19,543
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.

 

TABLE 10
Asset Quality (EOP) (unaudited)
($ in thousands)
	Three Months Ended										Twelve Months Ended
	December 31,			September 30,			December 31,				December 31,			December 31,
		2016			2016			2015				2016			2015
Beginning allowance for loan losses	$	51,547		$	51,804		$	51,226			$	52,233		$	47,849
Provision for loan losses		(1,756	)		1,306			484				960			2,923
Gross charge-offs		(3,472	)		(4,519	)		(4,353	)			(14,610	)		(12,877	)
Gross recoveries		3,489			2,956			4,876				11,225			14,338
Net (charge-offs) recoveries		17			(1,563	)		523				(3,385	)		1,461
Ending allowance for loan losses	$	49,808		$	51,547		$	52,233			$	49,808		$	52,233
Net charge-offs (recoveries) / average loans (1)		0.00	%		0.07	%		-0.03	%			0.04	%		-0.02	%
Average loans outstanding (1)	$	9,018,280		$	8,865,400		$	6,891,197			$	8,265,169		$	6,756,135
EOP loans outstanding (1)	$	9,010,512		$	8,904,985		$	6,948,405			$	9,010,512		$	6,948,405
Allowance for loan losses / EOP loans (1)		0.55	%		0.58	%		0.75	%			0.55	%		0.75	%
Underperforming Assets:
Loans 90 Days and over (still accruing)	$	328		$	443		$	916			$	328		$	916
Non-performing loans:
Nonaccrual loans (2)		131,407			151,484			132,373				131,407			132,373
Renegotiated loans		14,376			13,860			14,285				14,376			14,285
Total non-performing loans		145,783			165,344			146,658				145,783			146,658
Foreclosed properties		18,546			23,719			12,498				18,546			12,498
Total underperforming assets	$	164,657		$	189,506		$	160,072			$	164,657		$	160,072
Classified loans - "problem loans"	$	220,429		$	233,469		$	213,294			$	220,429		$	213,294
Other classified assets		7,063			6,634			6,857				7,063			6,857
Criticized loans - "special mention loans"		95,462			125,840			134,347				95,462			134,347
Total classified and criticized assets	$	322,954		$	365,943		$	354,498			$	322,954		$	354,498
Non-performing loans / EOP loans (1)		1.62	%		1.86	%		2.11	%			1.62	%		2.11	%
Allowance to non-performing loans (3)		34	%		31	%		36	%			34	%		36	%
Under-performing assets / EOP loans (1)		1.83	%		2.13	%		2.30	%			1.83	%		2.30	%
EOP total assets	$	14,860,237		$	14,703,071		$	11,991,527			$	14,860,237		$	11,991,527
Under-performing assets / EOP assets		1.11	%		1.29	%		1.33	%			1.11	%		1.33	%
EOP - End of period actual balances
(1) Excludes loans held for sale.
(2) Includes renegotiated loans totaling $26.3 million at December 31, 2016, $29.9 million at September 30, 2016 and $30.0 million at December 31, 2015.
(3) 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 on the acquisition date.

 

TABLE 11
Non-GAAP Measures (unaudited)
($ in thousands)
		Three Months Ended										Twelve Months Ended
		December 31,			September 30,			December 31,				December 31,			December 31,
			2016			2016			2015				2016			2015
	Actual End of Period Balances
	GAAP shareholders' equity	$	1,814,417		$	1,834,457		$	1,491,170			$	1,814,417		$	1,491,170
	Deduct:
	Goodwill		655,018			655,210			584,634				655,018			584,634
	Intangibles		37,677			40,918			35,308				37,677			35,308
			692,695			696,128			619,942				692,695			619,942
	Tangible shareholders' equity	$	1,121,722		$	1,138,329		$	871,228			$	1,121,722		$	871,228
	Actual End of Period Balances
	GAAP assets	$	14,860,237		$	14,703,071		$	11,991,527			$	14,860,237		$	11,991,527
	Add:
	Trust overdrafts		122			47			29				122			29
	Deduct:
	Goodwill		655,018			655,210			584,634				655,018			584,634
	Intangibles		37,677			40,918			35,308				37,677			35,308
			692,695			696,128			619,942				692,695			619,942
	Tangible assets	$	14,167,664		$	14,006,990		$	11,371,614			$	14,167,664		$	11,371,614
	Risk-weighted assets	$	10,101,539		$	9,703,233		$	7,718,065			$	10,101,539		$	7,718,065
	GAAP net income	$	33,456		$	34,709		$	31,985			$	134,264		$	116,716
	Add:
	Intangible amortization (net of tax)		3,192			3,213			2,545				11,979			10,593
	Tangible net income	$	36,648		$	37,922		$	34,530			$	146,243		$	127,309
	Tangible Ratios
	Return on tangible common equity		13.07	%		13.33	%		15.85	%			13.04	%		14.61	%
	Return on tangible assets		1.03	%		1.08	%		1.21	%			1.03	%		1.12	%
	Tangible common equity to tangible assets		7.92	%		8.13	%		7.66	%			7.92	%		7.66	%
	Tangible common equity to risk-weighted assets		11.10	%		11.73	%		11.29	%			11.10	%		11.29	%
	Tangible common book value (1)		8.30			8.43			7.62				8.30			7.62
	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	$	1,176,849		$	1,156,274		$	968,772			$	1,176,849		$	968,772
	Deduct:
	Trust Preferred Securities		45,000			45,000			45,000				45,000			45,000
	Additional Tier 1 capital deductions		(30,968	)		(30,466	)		(10,725	)			(30,968	)		(10,725	)
			14,032			14,534			34,275				14,032			34,275
	Tier 1 common equity	$	1,162,817		$	1,141,740		$	934,497			$	1,162,817		$	934,497
	Risk-weighted assets		10,101,539			9,703,233			7,718,065				10,101,539			7,718,065
	Tier 1 common equity to risk-weighted assets		11.51	%		11.77	%		12.11	%			11.51	%		12.11	%

Contacts:

Media:
Kathy A. Schoettlin – (812) 465-7269
Executive Vice President – Communications

Financial Community:
Lynell J. Walton – (812) 464-1366
Senior Vice President – Investor Relations

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