July 28, 2016 - 4:06 PM EDT
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Green Bancorp, Inc. Reports Second Quarter 2016 Earnings

2016 Second Quarter Highlights

  • Second quarter 2016 net income was $3.6 million and earnings per share (diluted) were $0.10
  • Pre-tax, pre-provision adjusted net income was $16.7 million for the second quarter 2016 compared to $9.3 million in the second quarter 2015, a 79.5% increase
  • Recorded $11.0 million in provision for loan losses; the level of allowance for the Company’s energy related loans equals 9%
  • Managed Asset Reduction Strategy (“MARS”) producing strong results with a $36.6 million reduction in energy loans, inclusive of results from the first portfolio sale which closed in July

HOUSTON, July 28, 2016 (GLOBE NEWSWIRE) -- Green Bancorp, Inc. (NASDAQ:GNBC), the bank holding company (“Green Bancorp” or the “Company”) that operates Green Bank, N.A. (“Green Bank”), today announced results for its second quarter and six months ended June 30, 2016.  The Company reported net income for the quarter of $3.6 million, or $0.10 per diluted common share, compared to net income of $4.1 million or $0.16 per diluted common share reported for the same period in 2015. 

Manny Mehos, Chairman and Chief Executive Officer of Green Bancorp said, “The MARS team has made strong progress executing our energy reduction strategy in a short period of time.  Thus far, the team has successfully disposed of over 12% of the MARS portfolio, from March 31st through July 21st, and total energy loans have been reduced by $37 million to 7.5% of total loans, during the same period.  We remain confident that we will have substantially eliminated our energy exposure by the end of the first quarter of 2017 with the majority of the resolutions occurring this year.  We continue to expect that our existing reserves, purchase discount on acquired loans, and 2016 earnings are more than sufficient to fund the MARS initiative through its conclusion.  In fact, we expect that the bank will modestly build capital through this year.”

Geoff Greenwade, President of Green Bancorp and Chief Executive Officer of Green Bank, commented, “I am pleased with the progress that we have made towards re-positioning the bank for organic growth as we look to 2017.  Importantly, we are now beginning to see the ancillary benefits of the segregation of the MARS assets, as our portfolio bankers can more fully focus on their primary objective – building and maintaining solid banking relationships.  In addition, our team of commercial and business banking managers can now spend more of their time executing on our key strategic initiatives designed to drive organic growth and enhance shareholder value.  The primary focus of these initiatives is to drive loan and deposit growth, expand our banking team and market share in Dallas, and accelerate our pace of non-interest income growth.”

Results of operations for the quarter ended June 30, 2016

Net income for the quarter ended June 30, 2016 was $3.6 million, compared with $4.1 million for the same period in 2015. Net income per diluted common share was $0.10 for the quarter ended June 30, 2016, compared with $0.16 for the same period in 2015. The decrease in net income was principally due to an increase in provision for loan losses primarily related to energy exposure.  Returns on average assets and average common equity, each on an annualized basis, for the three months ended June 30, 2016 were 0.38% and 3.35%, respectively. Green Bancorp’s efficiency ratio, which represents noninterest expense divided by the sum of net interest income and noninterest income, was 55.39% for the three months ended June 30, 2016.

Net interest income before provision for loan losses for the quarter ended June 30, 2016 was $33.5 million, an increase of $12.6 million, or 60.3%, compared with $20.9 million during the same period in 2015.  The increase was primarily due to a $15.5 million increase in interest income on loans due to a 73.8% increase in average loan volume largely driven by the Patriot acquisition.  The net interest margin for the quarter ended June 30, 2016 was 3.74%, compared with 3.84% for the same period in 2015.  Average noninterest-bearing deposits for the quarter ended June 30, 2016 were $592.6 million, an increase of $101.3 million compared with the same period in 2015, and a decrease of $11.6 million compared to the quarter ended March 31, 2016. Average shareholders’ equity for the quarter ended June 30, 2016 was $435.5 million, an increase of $139.2 million compared with the same period in 2015, and a decrease of $5.3 million compared to the quarter ended March 31, 2016.

Net interest income before provision for loan losses during the quarter ended June 30, 2016 decreased 2.0% or $687 thousand, compared with $34.2 million for the quarter ended March 31, 2016, primarily due to an increase in the average cost of interest bearing deposits resulting from the Company’s deposit attraction strategy and a reduction in the accretion of purchase discounts on loans and deposits.  The net interest margin for the quarter ended June 30, 2016 of 3.74% decreased from 3.87% for the quarter ended March 31, 2016.

Noninterest income for the quarter ended June 30, 2016 was $3.8 million, an increase of $827 thousand, or 28.0%, compared with $3.0 million for the same period in 2015.  This increase was primarily due to a $530 thousand increase in customer service fees, $233 thousand increase in swap income and $179 thousand increase in bank owned life insurance offset by a $157 thousand decrease in gain on sale of loans held for sale.  When comparing the quarter ended June 30, 2016 to the quarter ended March 31, 2016, noninterest income decreased $373 thousand, or 9.0%, from $4.2 million, primarily due to a $280 thousand decrease in the gain on sale of the guaranteed portion of loans.

Noninterest expense for the quarter ended June 30, 2016 was $20.7 million, an increase of $4.1 million, or 24.7%, compared with $16.6 million for the same period in 2015.  The increase was primarily due to increases related to ongoing acquired Patriot operations.  When comparing the quarter ended June 30, 2016 to the quarter ended March 31, 2016, noninterest expense increased 6.1%, or $1.2 million, from $19.5 million, primarily due to expenses related to the MARS energy asset resolution initiative, including a $558 thousand increase in loan related expenses.  Other increases included a $515 thousand increase in the provision for off balance sheet credit losses and a $513 thousand increase in professional and regulatory fees primarily consisting of an increase in FDIC insurance premiums, offset by a $518 thousand decrease in salaries and employee benefits.

Loans held for investment at June 30, 2016 were $3.2 billion, an increase of $1.3 billion, or 68.3%, compared with $1.9 billion at June 30, 2015, primarily due to the Patriot acquisition, which was finalized at the beginning of the fourth quarter 2015 and continued opportunities for our portfolio bankers to generate new loans and expand existing relationships within our target markets.  Loans held for investment at June 30, 2016 increased $21.3 million, or 0.7%, from March 31, 2016, after $36.6 million in energy loan reductions related to MARS.  Average loans held for investment increased 73.9% or $1.4 billion to $3.2 billion for the quarter ended June 30, 2016, compared with $1.8 billion for the same period in 2015.  Average loans held for investment for the quarter ended June 30, 2016 increased 2.0% or $63.8 million from the quarter ended March 31, 2016.

Deposits at June 30, 2016 were $3.2 billion, an increase of $1.2 billion, or 58.4%, compared to June 30, 2015, primarily due to the Patriot acquisition.  Deposits at June 30, 2016 increased $150.2 million or 4.9% from March 31, 2016 due primarily to increases in money market accounts and time deposits resulting from the Company’s deposit attraction and retention initiatives.  Noninterest-bearing deposits at June 30, 2016 were $583.3 million, a decrease of $20.7 million, or 3.4%, compared to June 30, 2015 and a decrease of $9.3 million, or 1.6%, compared to March 31, 2016.  Average deposits increased 64.3% or $1.2 billion to $3.2 billion for the quarter ended June 30, 2016, compared with the same period of 2015. Average noninterest bearing deposits for the quarter ended June 30, 2016 were $592.6 million, an increase of $101.3 million compared with the same period in 2015, and a decrease of $11.6 million compared with the quarter ended March 31, 2016.

Results of operations for the six months ended June 30, 2016

Net income for the six months ended June 30, 2016 was $5.5 million, compared with $8.8 million for the same period in 2015. Net income per diluted common share was $0.15 for the six months ended June 30, 2016, compared with $0.33 for the same period in 2015.  The decrease in net income was principally due to the increase in provision for loan losses of $24.7 million when comparing the two periods.  Returns on average assets and average common equity, each on an annualized basis, for the six months ended June 30, 2016 were 0.29% and 2.53%, respectively. Green Bancorp’s efficiency ratio, which represents noninterest expense divided by the sum of net interest income and noninterest income, was 53.05% for the six months ended June 30, 2016.

Net interest income before provision for loan losses for the six months ended June 30, 2016, was $67.8 million an increase of $26.3 million, or 63.5%, compared with $41.4 million during the same period in 2015.  The increase was primarily due to a 74.4% increase in average loan volume largely driven by the Patriot acquisition.  The net interest margin for the six months ended June 30, 2016 decreased to 3.81%, compared with 3.88% for the same period in 2015.  Average noninterest-bearing deposits for the six months ended June 30, 2016 were $602.6 million, an increase of $141.5 million compared with the same period in 2015.  Average shareholders’ equity for the six months ended June 30, 2016 was $434.0 million, an increase of $140.0 million compared with the same period in 2015.

Noninterest income for the six months ended June 30, 2016 was $7.9 million, an increase of $2.9 million, or 57.5%, compared with $5.0 million for the same period in 2015.  This increase was primarily due to a $1.1 million increase in customer service fees, a $557 thousand increase in swap income, a $391 thousand increase in gain on sale of guaranteed portion of loans, a $376 thousand increase in loan fees and a $356 thousand increase in bank owned life insurance income all principally due to the Patriot acquisition.

Noninterest expense for the six months ended June 30, 2016, was $40.2 million, an increase of $9.8 million, or 32.4%, compared with $30.3 million for the same period in 2015.  The increase was primarily due to increases related to ongoing acquired Patriot operations and MARS expenses.

Average loans held for investment increased 74.5% or $1.3 billion to $3.2 billion for the six months ended June 30, 2016, compared with $1.8 billion for the same period in 2015 was primarily due to the Patriot acquisition. Average deposits increased 63.5% or $1.2 million to $3.1 billion for the six months ended June 30, 2016, compared with the same period of 2015.

Asset Quality

Nonperforming assets totaled $93.5 million or 2.44% of period end total assets at June 30, 2016, an increase of $82.2 million compared to $11.3 million or 0.47% of period end total assets at June 30, 2015. The increase was due to energy-related migration to nonperforming and the nonperforming loans and real estate acquired through foreclosure that was acquired through the Patriot acquisition.  Nonperforming assets at June 30, 2016 increased by $16.0 million compared to $77.5 million or 2.01% of period end total assets at March 31, 2016 due to expected energy-related migration to nonperforming.  Accruing loans classified as troubled debt restructures and included in the nonperforming asset totals were $5.5 million at June 30, 2016, compared with $681 thousand at June 30, 2015 and $5.6 million at March 31, 2016.  Real estate acquired through foreclosure totaled $6.2 million at June 30, 2016, an increase of $1.7 million, or 38.5% compared to June 30, 2015 and a decrease of $3.0 million, or 32.7% compared to March 31, 2016.

The allowance for loan losses was 1.49% of total loans at June 30, 2016, compared with 0.97% of total loans at June 30, 2015 and 1.25% of total loans at March 31, 2016.  The increase in the allowance for loan losses as a percentage of total loans when compared to June 30, 2015 was due primarily to an increase in both specific reserves and general reserves.  The increase in the percentage from the prior quarter was primarily due to additional specific reserves related to energy exposure and additional reserves on purchased credit impaired loans.  At June 30, 2016, the Company’s allowance for loans losses to total loans, excluding acquired loans that are accounted for under ASC 310-20 and ASC 310-30, was 2.14%.  Further, the allowance for loan losses plus acquired loan net discount to total loans adjusted for acquired loan net discount was 2.11% as of June 30, 2016.

The Company recorded a provision for loan losses of $11.0 million for the quarter ended June 30, 2016 down from the $16.0 million provision for the loan losses recorded for the quarter ended March 31, 2016.  The second quarter provision reflects the addition of specific reserves primarily related to impairment in the energy portfolio and additional reserves on purchased credit impaired loans.  The provision for loan losses was $27.0 million for the six months ended June 30, 2016, compared with $2.3 million for the six months ended June 30, 2015.

Net charge offs were $3.3 million for the quarter ended June 30, 2016, compared with net charge offs of $9.2 million for the quarter ended March 31, 2016, and net charge offs of $55 thousand for the quarter ended June 30, 2015. Net charge offs were $12.5 million, or 0.40% of average loans outstanding, for the six months ended June 30, 2016, compared with net recoveries of $377 thousand for the six months ended June 30, 2015.

Managed Asset Reduction Strategy (“MARS”)

As previously announced, the Company has initiated a strategy to divest its portfolio of energy loans and certain other classified assets on an accelerated basis.  A team of eight workout professionals who report to the Company’s Corporate Chief Credit Officer have been assigned to focus solely on the resolution of the MARS portfolio.  The MARS team will take a multifaceted approach to reducing the portfolio through the use of proven management and disposition techniques.

During the second quarter of 2016, the Company resolved $36.6 million in energy related loans which included $6.3 million in energy loans that were classified as held-for-sale at June 30, 2016.  These loans comprise the Company’s first portfolio sale that closed on July 20, 2016.  Net charge-offs (after considering existing reserves) totaled $2.8 million.

Inclusive of the loan sale closed in July, total energy loans have been reduced to $240.7 million from $292.6 million at December 31, 2015.

Acquisition of Patriot Bancshares, Inc.

On October 1, 2015, Green Bancorp completed the acquisition of Patriot Bancshares, Inc. (“Patriot”) and its wholly-owned subsidiary, Patriot Bank. Patriot, headquartered in Houston, TX, operated six locations in Houston, two in Dallas and one in Fannin County, Texas.  As of September 30, 2015, Patriot, on a consolidated basis, reported total assets of $1.4 billion, total loans of $1.1 billion, total deposits of $1.1 billion and total shareholders’ equity of $125.2 million.

Non-GAAP Financial Measures

Green Bancorp’s management uses certain non−GAAP (generally accepted accounting principles) financial measures to evaluate its performance.  Specifically, Green Bancorp reviews tangible book value per common share, the tangible common equity to tangible assets ratio, allowance for loan losses to total loans excluding acquired loans, allowance for loan losses plus acquired loans net discount to total loans adjusted for acquired loan net discount, selected metrics excluding one-time acquisition expenses and pre-tax, pre-provision adjusted net income.  Green Bancorp has included in this Earnings Release information related to these non-GAAP financial measures for the applicable periods presented.  Please refer to the “Notes to Financial Highlights” at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures.

Conference Call

As previously announced, Green Bancorp will hold a conference call today, July 28, 2016, to discuss its second quarter 2016 results at 5:00 p.m. (Eastern Time).  The conference call can be accessed live over the phone by dialing 1-877-407-0789, or for international callers, 1-201-689-8562 and requesting to be joined to the Green Bancorp Second Quarter 2016 Earnings Conference Call.  A replay will be available starting at 8:00 pm (Eastern Time) on July 28, 2016 and can be accessed by dialing 1-877-870-5176, or for international callers, 1-858-384-5517.  The passcode for the replay is 13640935.  The replay will be available until 11:59 pm (Eastern Time) on August 4, 2016.

Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of the Company's website at investors.greenbank.com.  The online replay will remain available for a limited time beginning immediately following the call.

To learn more about Green Bancorp, please visit the Company's website at www.greenbank.com.  Green Bancorp uses its website as a channel of distribution for material Company information.  Financial and other material information regarding Green Bancorp is routinely posted on the Company's website and is readily accessible.

About Green Bancorp, Inc.
Headquartered in Houston, Texas, Green Bancorp is a bank holding company that operates Green Bank in Houston, Dallas and Austin. Commercial-focused, Green Bank is a nationally chartered bank regulated by the Office of the Comptroller of the Currency, a division of the Department of the Treasury of the United States.

Forward Looking Statement
The information presented herein and in other documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), in press releases or other public shareholder communications, or in oral statements made with the approval of an authorized executive officer contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 giving Green Bancorp’s expectations or predictions of future financial or business performance or conditions.  Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “prospects” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions.  These forward-looking statements are subject to numerous assumptions, risks and uncertainties which change over time. Forward-looking statements speak only as of the date they are made and we assume no duty to update forward-looking statements.

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made.  These statements may relate to future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial information.  By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements. Statements about the expected timing, completion and effects of the proposed transactions and all other statements in this release other than historical facts constitute forward-looking statements.

In addition to factors previously disclosed in Green Bancorp’s reports filed with the SEC and those identified elsewhere in this communication, the following factors among others, could cause actual results to differ materially from forward-looking statements: difficulties and delays in integrating the Green Bancorp and Patriot businesses or fully realizing cost savings and other benefits; business disruption following the merger; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms.

Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

                
                
  Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015
           
  (Dollars in thousands)
Period End Balance Sheet Data:               
Cash and cash equivalents $  199,950  $  171,421  $  124,906  $  96,451  $  168,416 
Securities    237,029     302,838     318,151     249,558     258,882 
Other investments    18,586     24,744     20,986     16,977     10,831 
Loans held for sale    6,253     -     384     192     1,287 
Loans held for investment    3,189,436     3,168,183     3,130,669     1,982,280     1,894,742 
Allowance for loan losses    (47,420)    (39,714)    (32,947)    (20,724)    (18,292)
Goodwill    85,291     85,291     85,291     30,129     30,129 
Core deposit intangibles, net    10,758     11,160     11,562     3,704     3,852 
Real estate acquired through foreclosure    6,216     9,230     12,122     1,665     4,488 
Premises and equipment, net    26,706     27,252     27,736     24,766     24,773 
Other assets    94,642     89,004     87,297     30,989     29,843 
Total assets $  3,827,447  $  3,849,409  $  3,786,157  $  2,415,987  $  2,408,951 
                
Noninterest-bearing deposits $  583,347  $  592,690  $  643,354  $  499,101  $  604,073 
Interest-bearing transaction and savings deposits    1,208,960     1,069,931     1,104,630     792,957     758,123 
Certificates and other time deposits    1,414,954     1,394,398     1,352,764     649,082     662,335 
Total deposits    3,207,261     3,057,019     3,100,748     1,941,140     2,024,531 
Securities sold under agreements to repurchase    3,227     3,544     3,073     3,080     9,858 
Other borrowed funds    150,000     328,968     223,265     158,893     67,309 
Subordinated debentures    13,397     13,292     13,187     -     - 
Other liabilities    18,621     15,676     16,482     9,645     8,601 
Total liabilities    3,392,506     3,418,499     3,356,755     2,112,758     2,110,299 
Shareholders' equity    434,941     430,910     429,402     303,229     298,652 
Total liabilities and equity $  3,827,447  $  3,849,409  $  3,786,157  $  2,415,987  $  2,408,951 
                          


                      
  For the Quarter Ended For the
 Six Months Ended
  Jun 30,
2016
 Mar 31,
2016
 Dec 31,
2015
 Sep 30,
2015
 Jun 30,
2015
 Jun 30,
2016
 Jun 30,
2015
                      
  (Dollars in thousands)
Income Statement Data:                     
Interest income:                     
Loans, including fees $ 37,711 $ 37,345 $ 37,693 $ 22,601 $ 22,252 $ 75,056 $ 43,911
Securities   988   1,081   1,079   809   838   2,069   1,716
Other investments   205   173   119   111   113   378   223
Federal funds sold   1   1   2   -   -   2   -
Deposits in financial institutions   157   124   104   78   53   281   108
Total interest income   39,062   38,724   38,997   23,599   23,256   77,786   45,958
                      
Interest expense:                     
Transaction and savings deposits   1,312   1,150   1,030   696   695   2,462   1,377
Certificates and other time deposits   3,702   2,763   2,505   1,651   1,607   6,465   3,081
Subordinated debentures   243   237   227   -   -   480   -
Other borrowed funds   264   346   228   90   31   610   61
Total interest expense   5,521   4,496   3,990   2,437   2,333   10,017   4,519
                      
Net interest income   33,541   34,228   35,007   21,162   20,923   67,769   41,439
Provision for loan losses   11,000   16,000   12,500   3,054   805   27,000   2,310
Net interest income after provision for loan losses   22,541   18,228   22,507   18,108   20,118   40,769   39,129
                      
Noninterest income:                     
Customer service fees   1,447   1,404   1,278   867   917   2,851   1,780
Loan fees   719   699   647   680   671   1,418   1,042
Gain on sale of available-for-sale securities, net   -   -   772   -   -   -   -
Gain on sale of held for sale loans, net   -   41   60   113   157   41   232
Gain on sale of guaranteed portion of loans, net   858   1,138   971   908   960   1,996   1,605
Other   758   873   548   303   250   1,631   381
Total noninterest income   3,782   4,155   4,276   2,871   2,955   7,937   5,040
                      
Noninterest expense:                     
Salaries and employee benefits   11,461   11,979   11,913   8,562   8,878   23,440   17,635
Occupancy   2,035   2,030   2,743   1,332   1,562   4,065   3,022
Professional and regulatory fees   2,435   1,922   1,863   1,988   3,605   4,357   5,072
Data processing   945   970   1,261   610   583   1,915   1,227
Software license and maintenance   528   476   738   352   392   1,004   754
Marketing   301   298   331   160   152   599   300
Loan related   801   243   628   185   263   1,044   372
Real estate acquired by foreclosure, net   381   300   352   339   382   681   395
Other   1,788   1,269   1,643   844   761   3,057   1,557
Total noninterest expense   20,675   19,487   21,472   14,372   16,578   40,162   30,334
                      
Income before income taxes   5,648   2,896   5,311   6,607   6,495   8,544   13,835
Provision for income taxes   2,017   1,057   2,738   2,528   2,357   3,074   5,048
Net income $ 3,631 $ 1,839 $ 2,573 $ 4,079 $ 4,138 $ 5,470 $ 8,787
                      


                       
  As of and For the Quarter Ended As of and For the
Six Months Ended
 
  Jun 30,
2016
 Mar 31,
2016
 Dec 31,
2015
 Sep 30,
2015
 Jun 30,
2015
 Jun 30,
2016
 Jun 30,
2015
 
                       
  (Dollars in thousands, except per share data) 
Per Share Data (Common Stock):                      
Basic earnings per common share $ 0.10 $ 0.05 $ 0.07 $ 0.16 $ 0.16 $ 0.15 $ 0.34 
Diluted earnings per share   0.10   0.05   0.07   0.15   0.16   0.15   0.33 
Book value per common share   11.82   11.77   11.67   11.54   11.37   11.82   11.37 
Tangible book value per common share (1)   9.21   9.14   9.04   10.25   10.08   9.21   10.08 
                       
Common Stock Data:                      
Shares outstanding at period end   36,798   36,788   36,788   26,277   26,270   36,798   26,270 
Weighted average basic shares outstanding for the period   36,613   36,706   36,623   26,274   26,199   36,660   26,186 
Weighted average diluted shares outstanding for the period   36,613   36,709   36,854   26,551   26,518   36,665   26,445 
                       
Selected Performance Metrics:                      
Return on average assets   0.38%  0.20%  0.27%  0.68%  0.73%  0.29%  0.79%
Return on average equity   3.35   1.68   2.38   5.37   5.60   2.53   6.03 
Efficiency ratio   55.39   50.77   54.66   59.80   69.43   53.05   65.26 
Loans to deposits ratio   99.44   103.64   100.96   102.12   93.59   99.44   93.59 
Noninterest expense to average assets   2.19   2.08   2.27   2.38   2.93   2.13   2.73 
                       
Capital Ratios:                      
Average shareholders’ equity to average total assets   11.4%  11.7%  11.4%  12.6%  13.0%  11.5%  13.1%
Tier 1 capital to average assets (leverage)   9.6   9.5   9.6   11.4   11.9   9.6   11.9 
Common equity tier 1 capital(2)   9.5   9.4   9.6   12.2   12.5   9.5   12.5 
Tier 1 capital to risk-weighted assets   9.8   9.7   10.0   12.2   12.5   9.8   12.5 
Total capital to risk-weighted assets   11.1   10.8   10.9   13.1   13.4   11.1   13.4 
Tangible common equity to tangible assets (1)   9.1   8.9   9.0   11.3   11.1   9.1   11.1 
                       
Selected Other Metrics:                      
Number of full time equivalent employees   359   353   353   258   266   359   266 
Number of portfolio bankers   67   61   63   52   55   67   55 
Period end actual loan portfolio average per portfolio banker $ 42,906 $ 49,823 $ 46,822 $ 36,601 $ 33,191 $ 42,906 $ 33,191 
Period end target loan portfolio average per portfolio banker $ 60,762 $ 60,738 $ 60,584 $ 52,299 $ 47,348 $ 60,762 $ 47,348 
Estimated remaining capacity to target loan portfolio size   29.39%  17.97%  22.72%  30.02%  29.90%  29.39%  29.90%
                       

(1) Refer to “Notes to Financial Highlights” at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure.
(2) Common equity tier 1 capital ratio is a new ratio required under the Basel III Capital Rules effective January 1, 2015.

                            
                            
  For the Quarter Ended 
  June 30, 2016  March 31, 2016  June 30, 2015 
  Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
  Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
  Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
 
                                  
  (Dollars in thousands) 
Assets                           
Interest-Earning Assets:                           
Loans $  3,188,438  $ 37,711  4.76% $  3,124,711  $ 37,345  4.81% $  1,834,975  $ 22,252  4.86%
Securities    267,019    988  1.49     312,861    1,081  1.39     263,900    838  1.27 
Other investments    24,542    205  3.36     22,498    173  3.09     9,940    113  4.56 
Federal funds sold    1,166    1  0.34     2,507    1  0.16     1,006    -  - 
Interest earning deposits in financial institutions    121,096    157  0.52     94,902    124  0.53     75,836    53  0.28 
Total interest-earning assets    3,602,261    39,062  4.36%    3,557,479    38,724  4.38%    2,185,657    23,256  4.27%
                            
Allowance for loan losses    (42,020)          (33,080)          (18,387)      
Noninterest-earning assets    243,591           245,025           106,027       
Total assets $  3,803,832        $  3,769,424        $  2,273,297       
                            
Liabilities and Shareholders’ Equity                           
Interest-bearing liabilities:                           
Interest-bearing demand and savings deposits $  1,151,728  $ 1,312  0.46% $  1,066,999  $ 1,150  0.43% $  775,043  $ 695  0.36%
Certificates and other time deposits    1,424,437    3,702  1.05     1,342,562    2,763  0.83     662,109    1,607  0.97 
Securities sold under agreements to repurchase    3,680    1  0.11     4,121    2  0.20     11,699    4  0.14 
Other borrowed funds    165,776    263  0.64     280,838    344  0.49     29,230    27  0.37 
Subordinated debentures    13,346    243  7.32     13,244    237  7.20     -    -  - 
Total interest-bearing liabilities    2,758,967    5,521  0.80%    2,707,764    4,496  0.67%    1,478,081    2,333  0.63%
                            
Noninterest-bearing liabilities:                           
Noninterest-bearing demand deposits    592,649           604,261           491,305       
Other liabilities    16,757           16,654           7,652       
Total liabilities    3,368,373           3,328,679           1,977,038       
Shareholders’ equity    435,459           440,745           296,259       
Total liabilities and  shareholders’ equity $  3,803,832        $  3,769,424        $  2,273,297       
                            
Net interest rate spread         3.56%        3.71%        3.63%
Net interest income and margin(1)     $ 33,541  3.74%    $ 34,228  3.87%    $ 20,923  3.84%
                            

(1) Net interest margin is equal to net interest income divided by interest-earning assets.

                   
                   
  For the Six Months Ended June 30,  
  2016  2015 
  Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
  Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
 
                       
  (Dollars in thousands) 
Assets                  
Interest-Earning Assets:                  
Loans $  3,156,574  $ 75,056  4.78% $  1,809,827  $ 43,911  4.89%
Securities    289,939    2,069  1.44     250,000    1,716  1.38 
Other investments    23,520    378  3.23     10,186    223  4.41 
Federal funds sold    1,836    2  0.22     824    -  - 
Interest earning deposits in financial institutions    107,999    281  0.52     81,156    108  0.27 
Total interest-earning assets    3,579,868    77,786  4.37%    2,151,993    45,958  4.31%
                   
Allowance for loan losses    (37,549)          (17,093)      
Noninterest-earning assets    244,309           105,864       
Total assets $  3,786,628        $  2,240,764       
                   
Liabilities and Shareholders’ Equity                  
Interest-bearing liabilities:                  
Interest-bearing demand and savings deposits $  1,109,364  $ 2,462  0.45% $  781,495  $ 1,377  0.36%
Certificates and other time deposits    1,383,500    6,465  0.94     650,768    3,081  0.95 
Securities sold under agreements to repurchase    3,901    3  0.15     13,436    10  0.15 
Other borrowed funds    223,307    607  0.55     32,368    51  0.32 
Subordinated debentures    13,294    480  7.26     -    -  - 
Total interest-bearing liabilities    2,733,366    10,017  0.74%    1,478,067    4,519  0.62%
                   
Noninterest-bearing liabilities:                  
Noninterest-bearing demand deposits    602,594           461,091       
Other liabilities    16,706           7,627       
Total liabilities    3,352,666           1,946,785       
Shareholders’ equity    433,962           293,979       
Total liabilities and  shareholders’ equity $  3,786,628        $  2,240,764       
                   
Net interest rate spread         3.63%        3.69%
Net interest income and margin(1)     $ 67,769  3.81%    $ 41,439  3.88%
                   

(1) Net interest margin is equal to net interest income divided by interest-earning assets.


Yield Trend

            
  For the Quarter Ended 
  Jun 30,
2016
 Mar 31,
2016
 Dec 31,
2015
 Sep 30,
2015
 Jun 30,
2015
 
            
Average yield on interest-earning assets:           
Loans, including fees  4.76% 4.81% 4.91% 4.67% 4.86%
Securities  1.49  1.39  1.26  1.24  1.27 
Other investments  3.36  3.09  2.04  2.77  4.56 
Federal funds sold  0.34  0.16  0.16  -  - 
Interest-earning deposits in financial institutions  0.52  0.53  0.32  0.26  0.28 
Total interest-earning assets  4.36% 4.38% 4.37% 4.05% 4.27%
            
Average rate on interest-bearing liabilities:           
Interest bearing transaction and savings  0.46% 0.43% 0.38% 0.36% 0.36%
Certificates and other time deposits  1.05  0.83  0.77  1.01  0.97 
Other borrowed funds  0.63  0.49  0.33  0.20  0.30 
Subordinated debentures  7.32  7.20  6.94  -  - 
Total interest-bearing liabilities  0.80% 0.67% 0.59% 0.60% 0.63%
            
Net interest rate spread  3.56% 3.71% 3.77% 3.45% 3.63%
Net interest margin (1)  3.74% 3.87% 3.92% 3.63% 3.84%
            

(1) Net interest margin is equal to net interest income divided by interest-earning assets.


Supplemental Yield Trend

            
  For the Quarter Ended 
  Jun 30, 
2016
 Mar 31,
2016
 Dec 31,
2015
 Sep 30,
2015
 Jun 30,
2015
 
            
Average yield on loans, excluding fees (2)  4.29% 4.29% 4.22% 4.37% 4.47%
Average cost of interest-bearing deposits  0.78  0.65  0.59  0.66  0.64 
Average cost of total deposits, including noninterest-bearing  0.64  0.52  0.46  0.49  0.48 
            

(2) Average yield on loans, excluding fees, is equal to loan interest income divided by average loan principal.


Portfolio Composition

                               
                               
  Jun 30, 2016  Mar 31, 2016  Dec 31, 2015  Sep 30, 2015  Jun 30, 2015 
                               
  (Dollars in thousands) 
Period End Balances                              
                               
Commercial & industrial $ 1,128,541  35.4% $ 1,130,710  35.7% $ 1,206,452  38.5% $ 820,337  41.4% $ 795,483  42.0%
Real Estate:                              
Owner occupied commercial   366,587  11.5    367,507  11.6    353,889  11.3    183,224  9.2    176,453  9.2 
Commercial   1,078,434  33.8    1,020,399  32.2    904,115  28.9    483,628  24.4    383,863  20.3 
Construction, land & land development   334,925  10.5    356,207  11.2    358,813  11.5    252,206  12.8    290,469  15.3 
Residential mortgage   270,337  8.5    280,236  8.9    293,483  9.4    230,796  11.6    234,026  12.4 
Consumer and Other   10,612  0.3    13,124  0.4    13,917  0.4    12,089  0.6    14,448  0.8 
Total loans held for investment $ 3,189,436  100.0% $ 3,168,183  100.0% $ 3,130,669  100.0% $ 1,982,280  100.0% $ 1,894,742  100.0%
                               
Deposits:                              
Noninterest-bearing $ 583,347  18.2% $ 592,690  19.4% $ 643,354  20.7% $ 499,101  25.7% $ 604,073  29.9%
Interest-bearing transaction   164,584  5.1    178,470  5.8    172,737  5.6    132,604  6.8    133,584  6.6 
Money market   926,159  28.9    760,992  24.9    793,808  25.6    604,912  31.2    567,613  28.0 
Savings   118,217  3.7    130,469  4.3    138,085  4.5    55,441  2.9    56,926  2.8 
Certificates and other time deposits   1,414,954  44.1    1,394,398  45.6    1,352,764  43.6    649,082  33.4    662,335  32.7 
Total deposits $ 3,207,261  100.0% $ 3,057,019  100.0% $ 3,100,748  100.0% $ 1,941,140  100.0% $ 2,024,531  100.0%
                               
Loan to Deposit Ratio   99.4%     103.6%     101.0%     102.1%     93.6%  
                               


Asset Quality

                              
                              
  As of and for the Quarter Ended  As of and for the
 Six Months Ended
  
  Jun 30,
2016
  Mar 31,
2016
  Dec 31,
2015
  Sep 30,
2015
  Jun 30,
2015
  Jun 30,
2016
  Jun 30,
2015
  
                                   
  (Dollars in thousands)          
Nonperforming Assets:                             
Nonaccrual loans $  66,628  $  49,264  $  37,541  $  22,762  $  4,402  $  66,628  $  4,402  
Accruing loans 90 or more days past due    14,320     12,147     52     4,233     -     14,320     -  
Restructured loans—nonaccrual    853     1,270     1,464     1,623     1,712     853     1,712  
Restructured loans—accrual    5,469     5,616     5,988     6,048     681     5,469     681  
Total nonperforming loans    87,270     68,297     45,045     34,666     6,795     87,270     6,795  
Real estate acquired through foreclosure    6,216     9,230     12,122     1,665     4,488     6,216     4,488  
Total nonperforming assets $  93,486  $  77,527  $  57,167  $  36,331  $  11,283  $  93,486  $  11,283  
                              
Charge-offs:                             
Commercial and industrial $  (3,336 $  (9,880 $  (362 $  (981 $  (1,227 $  (13,216 $  (1,304 
Owner occupied commercial real estate    (177    -     -     -     -     (177    -  
Residential mortgage    -     (6    (22    (41    -     (6    -  
Other consumer    (37    (20    (17    (12    (12    (57    (117 
Total charge-offs    (3,550    (9,906    (401    (1,034    (1,239    (13,456    (1,421 
                              
Recoveries:                             
Commercial and industrial $  175  $  582  $  94  $  331  $  1,163  $  757  $  1,760  
Commercial real estate    -     -     1     75     -     -     1  
Construction, land & land development    47     26     5     -     -     73     -  
Residential mortgage    20     57     14     4     6     77     18  
Other consumer    14     8     10     2     15     22     19  
Total recoveries    256     673     124     412     1,184     929     1,798  
                              
Net (charge-offs) recoveries $  (3,294 $  (9,233 $  (277 $  (622 $  (55 $  (12,527 $  377  
                              
Allowance for loan losses at end of period $  47,420  $  39,714  $  32,947  $  20,724  $  18,292  $  47,420  $  18,292  
                              
Asset Quality Ratios:                             
Nonperforming assets to total assets    2.44%    2.01%    1.51%    1.50%    0.47%    2.44%    0.47% 
Nonperforming loans to total loans    2.74     2.16     1.44     1.75     0.36     2.74     0.36  
Total classified assets to total regulatory capital    49.03     50.93     37.59     28.19     19.03     49.03     19.03  
Allowance for loan losses to total loans    1.49     1.25     1.05     1.05     0.97     1.49     0.97  
Net charge-offs (recoveries) to average loans outstanding    0.10     0.30     0.01     0.03     0.00     0.40     (0.02 
                                     

We identify certain financial measures discussed in this release as being “non‑GAAP financial measures.” In accordance with the SEC’s rules, we classify a financial measure as being a non‑GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles as in effect from time to time in the United States in our statements of income, balance sheet or statements of cash flows. Non‑GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively either financial measures calculated in accordance with GAAP, operating measures or other measures that are not non‑GAAP financial measures or both.

The non‑GAAP financial measures that we discuss in this release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non‑GAAP financial measures that we discuss in this release may differ from that of other companies reporting measures with similar names. You should understand how such other banking organizations calculate their financial measures similar or with names similar to the non‑GAAP financial measures we have discussed in this release when comparing such non‑GAAP financial measures.

Tangible Book Value Per Common Share.  Tangible book value is a non‑GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as shareholders’ equity less goodwill and core deposit intangibles, net of accumulated amortization; and (b) tangible book value per common share as tangible common equity (as described in clause (a)) divided by shares of common stock outstanding. For tangible book value, the most directly comparable financial measure calculated in accordance with GAAP is our book value.

We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

The following table reconciles, as of the dates set forth below, total shareholders’ equity to tangible common equity and presents our tangible book value per common share compared with our book value per common share:

                 
                 
  Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 
                 
  (Dollars in thousands, except per share data)
Tangible Common Equity                
Total shareholders’ equity $ 434,941 $ 430,910 $ 429,402 $ 303,229 $ 298,652 
Adjustments:                
Goodwill   85,291   85,291   85,291   30,129   30,129 
Core deposit intangibles   10,758   11,160   11,562   3,704   3,852 
Tangible common equity $ 338,892 $ 334,459 $ 332,549 $ 269,396 $ 264,671 
Common shares outstanding (1)   36,798   36,788   36,788   26,277   26,270 
Book value per common share (1) $ 11.82 $ 11.71 $ 11.67 $ 11.54 $ 11.37 
Tangible book value per common share (1) $ 9.21 $ 9.09 $ 9.04 $ 10.25 $ 10.08 
                 

(1) Excludes the dilutive effect of common stock issuable upon exercise of outstanding stock options.  The number of exercisable options outstanding was 785,352 as of Jun 30, 2016; 874,466 as of Mar 31, 2016; 875,007 as of Dec 31, 2015; 939,576 as of Sep 30, 2015; and 938,927 as of Jun 30, 2015.

Tangible Common Equity to Tangible Assets.  Tangible common equity to tangible assets is a non‑GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as shareholders’ equity less goodwill and core deposit intangibles, net of accumulated amortization; (b) tangible assets as total assets less goodwill and core deposit intangibles, net of accumulated amortization; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total shareholders’ equity to total assets.

We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, each exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing both total shareholders’ equity and assets while not increasing our tangible common equity or tangible assets.

The following table reconciles, as of the dates set forth below, total shareholders’ equity to tangible common equity and total assets to tangible assets and presents our tangible common equity to tangible assets:

                 
  Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 
                 
  (Dollars in thousands)
Tangible Common Equity                
Total shareholders’ equity $ 434,941 $ 430,910 $ 429,402 $ 303,229 $ 298,652 
Adjustments:                
Goodwill   85,291   85,291   85,291   30,129   30,129 
Core deposit intangibles   10,758   11,160   11,562   3,704   3,852 
Tangible common equity $ 338,892 $ 334,459 $ 332,549 $ 269,396 $ 264,671 
Tangible Assets                
Total assets $ 3,827,447 $ 3,849,409 $ 3,786,157 $ 2,415,987 $ 2,408,951 
Adjustments:                
Goodwill   85,291   85,291   85,291   30,129   30,129 
Core deposit intangibles   10,758   11,160   11,562   3,704   3,852 
Tangible assets $ 3,731,398 $ 3,752,958 $ 3,689,304 $ 2,382,154 $ 2,374,970 
Tangible Common Equity to Tangible Assets    9.1%  8.9%  9.0%  11.3%  11.1%
                 

Allowance for Loan Losses to Total Loans excluding Acquired Loans.  The allowance for loan losses to total loans excluding acquired loans is a non‑GAAP measure used by management to evaluate the Company’s financial condition. Due to the application of purchase accounting, we use this non-GAAP ratio that excludes that impact of these items to evaluate our allowance for loan losses to total loans.  We calculate: (a) total loans excluding acquired loans as total loans less the fair value of acquired loans accounted for under ASC topics 310-20 and 310-30; and (b) allowance for loan losses to total loans excluding acquired loans as the allowance for loan losses divided by total loans excluding acquired loans (as described in clause (a)).  For allowance for loan losses to total loans excluding acquired loans, the most directly comparable financial measure calculated in accordance with GAAP is allowance for loan losses to total loans.

We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in the allowance for loan losses to total loans excluding acquired loans.  The acquired loans may have a premium or discount associated with them that includes a potential credit loss component with similar characteristics to the allowance for loan losses.  This measure reports the allowance for loan loss coverage to only those loans not accounted for pursuant to ASC topics 310-20 and 310-30 which may assist the investor in evaluating the allowance coverage of loans excluding acquired loans.

The following table reconciles, as of the dates set forth below, allowance for loan losses to total loans excluding acquired loans:

                 
  Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 
                 
  (Dollars in thousands)
Allowance for loan losses $ 47,420 $ 39,714 $ 32,947 $ 20,724 $ 18,292 
Total loans excluding acquired loans                
Total loans $ 3,189,436 $ 3,168,183 $ 3,130,669 $ 1,982,280 $ 1,894,742 
Less: Fair value of acquired loans accounted for under ASC Topics 310-20 and 310-30   974,372   1,092,635   1,197,112   172,645   190,815 
Total loans excluding acquired loans $ 2,215,064 $ 2,075,548 $ 1,933,557 $ 1,809,635 $ 1,703,927 
Allowance for loan losses to total loans excluding acquired loans  2.14% 1.91% 1.70% 1.15% 1.07%
                 

Allowance for Loan Losses plus Acquired Loan Net Discount to Total Loans adjusted for Acquired Loan Net Discount.  Allowance for loan losses plus acquired loan net discount to total loans adjusted for acquired loan net discount is a non‑GAAP measure used by management to evaluate the Company’s financial condition. We calculate: (a) allowance for loan losses plus acquired loan net discount as allowance for loan losses plus acquired loan net discount, net of accumulated amortization; (b) total loans adjusted for acquired loan net discount as total loans plus acquired loan net discount, net of accumulated amortization; and (c) allowance for loan losses plus acquired loan net discount to total loans adjusted for acquired loan net discount as allowance for loan losses plus acquired loan net discount (as calculated in clause (a)) divided by total loans adjusted for acquired loan net discount (as calculated in clause (b)).  For allowance for loan losses to total loans excluding acquired loans, the most directly comparable financial measure calculated in accordance with GAAP is allowance for loan losses to total loans.

We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in the allowance for loan losses plus the acquired loan net discount to total loans adjusted for the acquired loan net discount.  This measure reports the combined allowance for loan loss and acquired loan net discount (or premium) as a percentage of loans inclusive of the acquired loan net discount (or premium) which may assist the investor in evaluating allowance coverage on loans inclusive of additional discount or premium resulting from purchase accounting adjustments.

The following table reconciles, as of the dates set forth below, allowance for loan losses plus acquired loans net discount to total loans adjusted for acquired loan net discount:

                 
                 
  Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 
                 
  (Dollars in thousands)
Allowance for loan losses plus acquired loan net discount                
Allowance for loan losses at end of period $ 47,420 $ 39,714 $ 32,947 $ 20,724 $ 18,292 
Plus: Net discount on acquired loans   20,412   22,871   25,348   2,580   2,771 
Total allowance plus acquired loan net discount $ 67,832 $ 62,585 $ 58,295 $ 23,304 $ 21,063 
                 
Total loans adjusted for acquired loan net discount                
Total loans $ 3,189,436 $ 3,168,183 $ 3,130,669 $ 1,982,280 $ 1,894,742 
Plus: Net discount on acquired loans   20,412   22,871   25,348   2,580   2,771 
Total loans adjusted for acquired loan net discount $ 3,209,848 $ 3,191,054 $ 3,156,017 $ 1,984,860 $ 1,897,513 
Allowance for loan losses plus acquired loan net discount loans to total loans adjusted for acquired loan net discount  2.11% 1.96% 1.85% 1.17% 1.11%
                 

Selected Metrics Excluding One-time Acquisition Expenses.  The selected metrics excluding one-time acquisition expenses are non‑GAAP measures used by management to evaluate the Company’s performance. We calculate: (a) noninterest expense excluding one-time acquisition expenses as total noninterest expense less the one-time acquisition expenses; (b) net income excluding one-time acquisition expenses as net income plus one-time acquisition expenses, net of taxes; (c) diluted earnings per share excluding one-time acquisition expenses as net income excluding one-time acquisition expenses (as calculated in clause (b)) divided by the weighted average diluted shares outstanding; (d) return on average assets excluding one-time acquisition expenses as net income excluding one-time acquisition expenses (as calculated in clause (b)) divided by average total assets; (e) return on average equity excluding one-time acquisition expenses as net income excluding one-time acquisition expenses (as calculated in clause (b)) divided by average total shareholders’ equity; and (f) efficiency ratio excluding one-time acquisition expenses as noninterest expense excluding one-time acquisition expenses (as calculated in clause (a)) divided by the sum of net interest income and noninterest income.  For noninterest expense excluding one-time acquisition expenses, the most comparable financial measure calculated in accordance with GAAP is noninterest expense. For net income excluding one-time acquisition expenses, the most comparable financial measure calculated in accordance with GAAP is net income. For diluted earnings per share excluding one-time acquisition expenses, the most comparable financial measure calculated in accordance with GAAP is diluted earnings per share. For return on average assets excluding one-time acquisition expenses, the most comparable financial measure calculated in accordance with GAAP is return on average assets. For return on average equity excluding one-time acquisition expenses, the most comparable financial measure calculated in accordance with GAAP is return on average equity. For the efficiency ratio excluding one-time acquisition expenses, the most comparable financial measure calculated in accordance with GAAP is the efficiency ratio.

We believe that these measures are important to many investors in the marketplace who are interested in changes from period to period in noninterest expense, net income, diluted earnings per share, return on average assets, return on average equity and efficiency ratio with the exclusion of one-time acquisition expenses.

The following table reconciles, as of the dates set forth below, the selected metrics excluding one-time acquisition expenses:

                       
  For the Quarter Ended For the
 Six Months Ended
 
  Jun 30,
2016
 Mar 31,
2016
 Dec 31,
2015
 Sep 30,
2015
 Jun 30,
2015
 Jun 30,
2016
 Jun 30,
2015
 
                       
  (Dollars in thousands, except per share data)       
Noninterest Expense Excluding One-time Acquisition Expenses                      
Total noninterest expense $ 20,675 $ 19,487 $ 21,472 $ 14,372 $ 16,578 $ 40,162 $ 30,334 
Less: One-time acquisition expenses   37   390   1,846   808   1,996   427   2,222 
Noninterest expense excluding one-time acquisition expenses $ 20,638 $ 19,097 $ 19,626 $ 13,564 $ 14,582 $ 39,735 $ 28,112 
                       
Net Income Excluding One-time Acquisition Expenses                      
Net Income $ 3,631 $ 1,839 $ 2,573 $ 4,079 $ 4,138 $ 5,470 $ 8,787 
Plus: One-time acquisition expenses   37   390   1,846   808   1,996   427   2,222 
Less: Tax benefit at the statutory rate   13   137   646   283   699   149   778 
Addback: Tax expense for non-deductible one-time acquisition expenses   -   -   857   -   -   -   - 
Net income excluding one-time acquisition expenses $ 3,655 $ 2,093 $ 4,630 $ 4,604 $ 5,435 $ 5,748 $ 10,231 
                       
Weighted average diluted shares outstanding   36,613   36,709   36,854   26,551   26,518   36,665   26,445 
Diluted earnings per share $ 0.10 $ 0.05 $ 0.07 $ 0.15 $ 0.16 $ 0.15 $ 0.33 
Diluted earnings per share, excluding one-time acquisition expenses   0.10   0.06   0.13   0.17   0.20   0.16   0.39 
                       
Average Total Assets $ 3,803,832 $ 3,769,424 $ 3,761,050 $ 2,395,556 $ 2,273,297 $ 3,786,628 $ 2,240,764 
Return on average assets   0.38%  0.20%  0.27%  0.68%  0.73%  0.29%  0.79%
Return on average assets, excluding one-time acquisition expenses   0.39   0.22   0.49   0.76   0.96   0.31   0.92 
                       
Average Common Shareholders' equity $ 435,459 $ 440,745 $ 429,527 $ 301,370 $ 296,259 $ 433,962 $ 293,979 
Return on average equity   3.35%  1.68%  2.38%  5.37%  5.60%  2.53%  6.03%
Return on average equity, excluding one-time acquisition expenses   3.38   1.91   4.28   6.06   7.36   2.66   7.02 
                       
Net interest income $ 33,541 $ 34,228 $ 35,007 $ 21,162 $ 20,923 $ 67,769 $ 41,439 
Noninterest Income $ 3,782 $ 4,155 $ 4,276 $ 2,871 $ 2,955 $ 7,937 $ 5,040 
                       
Efficiency ratio   55.39%  50.77%  54.66%  59.80%  69.43%  53.05%  65.26%
Efficiency ratio, excluding one-time acquisition expenses   55.30   49.75   49.96   56.44   61.07   52.49   60.48 
                       

Pre-tax, Pre-provision Adjusted Net Income.  Pre-tax, pre-provision adjusted net income is a non‑GAAP measure used by management to evaluate the Company’s financial condition. We calculate pre-tax, pre-provision adjusted net income as net income plus provision for income taxes, plus provision for loan losses, plus one-time acquisition expenses.  For pre-tax, pre-provision adjusted net income, the most directly comparable financial measure calculated in accordance with GAAP is net income.

We believe that this measure is important to many investors in the marketplace who are interested in understanding the operating performance of the company before provision for loan losses, which can vary from quarter to quarter, and income taxes.   

The following table reconciles, as of the dates set forth below, pre-tax, pre-provision adjusted net income:

                      
  For the Quarter Ended For the
 Six Months Ended
  Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Jun 30, 2016 Jun 30, 2015
                      
  (Dollars in thousands)      
Pre-Tax, Pre-Provision Adjusted Net Income                     
Net Income $ 3,631 $ 1,839 $ 2,573 $ 4,079 $ 4,138 $ 5,470 $ 8,787
Plus: Provision on income taxes   2,017   1,057   2,738   2,528   2,357   3,074   5,048
Plus: Provision for loan losses   11,000   16,000   12,500   3,054   805   27,000   2,310
Plus: One-time acquisition expenses   37   390   1,846   808   1,996   427   2,222
Total pre-tax, pre-provision adjusted net income $ 16,685 $ 19,286 $ 19,657 $ 10,469 $ 9,296 $ 35,971 $ 18,367
                      

 

Media Contact:
Mike Barone
713-275-8243
[email protected]

Investor Relations:
713-275-8220
[email protected]

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Source: GlobeNewswire (July 28, 2016 - 4:06 PM EDT)

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