UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 23, 2019 (January 23, 2019)
BankUnited, Inc.
(Exact name of registrant as specified in its charter)
Delaware | 001-35039 | 27-0162450 | ||
(State of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
14817 Oak Lane
Miami Lakes, FL 33016
(Address of principal executive offices) (Zip Code)
(305) 569-2000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o
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Item 2.02 Results of Operations and Financial Condition.
On January 23, 2019, BankUnited, Inc. (the “Company”) reported its results for the quarter ended December 31, 2018. A copy of the Company’s press release containing this information and slides containing supplemental information related to the release are being furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item 8.01 Other Events
On January 23, 2019, the Company announced that its board of directors had authorized a new share repurchase program under which the Company may repurchase up to $150 million in shares of its outstanding common stock. The new repurchase program replaces the Company's prior repurchase programs, pursuant to which the Company repurchased 8.4 million shares of its common stock for an aggregate purchase price of $300 million. Any repurchases under the new repurchase program will be made in accordance with applicable securities laws from time to time in open market or private transactions. The extent to which the Company repurchases shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, the Company’s capital position and amount of retained earnings, regulatory requirements and other considerations. No time limit was set for the completion of the share repurchase program, and the program may be suspended or discontinued at any time.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number | Description | ||
January 23, 2019 | |||
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: | January 23, 2019 | BANKUNITED, INC. | |
/s/ Leslie N. Lunak | |||
Name: | Leslie N. Lunak | ||
Title: | Chief Financial Officer | ||
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EXHIBIT INDEX
Exhibit Number | Description | ||
January 23, 2019 | |||
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Exhibit 99.1
BANKUNITED, INC. REPORTS 2018 RESULTS
Miami Lakes, Fla. — January 23, 2019 — BankUnited, Inc. (the “Company”) (NYSE: BKU) today announced financial results for the quarter and year ended December 31, 2018.
For the quarter ended December 31, 2018, the Company reported net income of $52.4 million, or $0.50 per diluted share compared to $417.8 million, or $3.79 per diluted share, for the quarter ended December 31, 2017. Excluding the impact of a discrete income tax benefit and related professional fees, net income for the quarter ended December 31, 2017 was $94.8 million, or $0.86 per diluted share(1).
For the year ended December 31, 2018, the Company reported net income of $324.9 million, or $2.99 per diluted share, compared to $614.3 million, or $5.58 per diluted share, for the year ended December 31, 2017. Excluding the impact of the discrete income tax benefit and professional fees, net income was $291.3 million or $2.65 per diluted share for the year ended December 31, 2017(1).
The return on average stockholders’ equity for the year ended December 31, 2018 was 10.57%, while the return on average assets was 1.05%.
Non-loss share diluted earnings per share(1) for the quarter ended December 31, 2018 was $0.59. The provision for loan losses related to taxi medallion loans negatively impacted non-loss share diluted earnings per share for the quarter by $0.10.
Rajinder Singh, Chairman, President and Chief Executive Officer, said, "This quarter was a pivotal one for BankUnited, positioning us well for the future. We executed the final loan sale under our loss sharing agreement with the FDIC, and would like to thank the FDIC for being a great partner over the past 9 years. We also sold our taxi medallion portfolio, terminated the Bank's operating agreement with the OCC and completed the full $300 million in share repurchases authorized by our Board in 2018. We also turned in another good quarter of DDA growth; non-interest bearing demand deposits grew by 18% for 2018."
Performance Highlights
• | During the quarter ended December 31, 2018, pursuant to the terms of the Single Family Shared-Loss Agreement and consent received from the FDIC, the Bank executed a portfolio sale of certain covered loans and OREO. This sale was the final sale conducted under the terms of the Single Family Shared-Loss Agreement. Covered loans with an unpaid principal balance ("UPB") totaling approximately $260 million were sold; covered loans with a UPB totaling $401 million and a carrying value of $201 million at December 31, 2018 were retained in portfolio. See the section entitled "Covered Loans" below for further discussion. |
• | During the quarter ended December 31, 2018, the Bank sold substantially all of its taxi medallion finance loans. The provision for loan losses related to taxi medallion loans for the quarter ended December 31, 2018 totaled $14.0 million. This provision, net of tax, impacted diluted earnings per share by $0.10. |
• | For the quarter ended December 31, 2018, total deposits increased by a record $1.2 billion, of which $208 million was non-interest bearing demand deposits. Total deposits increased by $1.6 billion for the year ended December 31, 2018. During 2018, non-interest bearing demand deposits grew by 18% or $550 million. Non-covered loans and leases, including equipment under operating lease, grew by $257 million, net of a $79 million reduction in outstanding taxi medallion loans, during the quarter ended December 31, 2018. For the year ended December 31, 2018, non-covered loans and leases grew by $965 million. |
• | Net interest income increased by $56.2 million to $295.1 million for the quarter ended December 31, 2018 from $238.8 million for the quarter ended December 31, 2017. Interest income increased by $102.2 million, driven by increases in the average balances of loans and investment securities outstanding as well as increases in yields on interest earning assets, particularly on the covered loans. Interest expense increased by $45.9 million, driven primarily by increases in average interest bearing deposits and an increase in the cost of interest bearing liabilities. For the year |
(1) Net income and diluted earnings per common share, each excluding the impact of a discrete income tax benefit and related professional fees and Non-loss share diluted earnings per share are non-GAAP financial measures. See section entitled "Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measurements to their comparable GAAP financial measurements.
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ended December 31, 2018, net interest income increased by $99.8 million to $1.1 billion from $950.3 million for the year ended December 31, 2017.
• | The net interest margin, calculated on a tax-equivalent basis, was 4.01% for the quarter ended December 31, 2018 compared to 3.51% for the immediately preceding quarter ended September 30, 2018 and 3.52% for the quarter ended December 31, 2017. Significant factors contributing to the increase in the net interest margin from the comparable quarter of the prior year were (i) an increase in accretion related to covered loans and (ii) increases in yields on other categories of interest earning assets; offset by (iii) an increase in the cost of interest bearing liabilities and (iv) the impact on tax equivalent yields of the reduction in the statutory federal income tax rate. |
• | During the quarter ended December 31, 2018, the Company repurchased approximately 4.7 million shares of its common stock for an aggregate purchase price of $150 million. During the year ended December 31, 2018, the Company repurchased approximately 8.4 million shares of its common stock for an aggregate purchase price of $300 million. |
• | On January 22, 2019 the Board of Directors of the Company authorized the repurchase of up to an additional $150 million in shares of its outstanding common stock, subject to any applicable regulatory approvals. Any repurchases will be made in accordance with applicable securities laws from time to time in open market or private transactions. The extent to which the Company repurchases shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, the Company’s capital position, regulatory requirements and other considerations. No time limit was set for the completion of the share repurchase program, and the program may be suspended or discontinued at any time. |
• | Book value per common share grew to $29.49 at December 31, 2018 from $28.32 at December 31, 2017 while tangible book value per common share increased to $28.71 from $27.59 over the same period. |
• | As previously disclosed, on November 28, 2018, the operating agreement between the Bank and the Office of the Comptroller of the Currency ("OCC") was terminated. |
Capital
The Company and its banking subsidiary continue to exceed all regulatory guidelines required to be considered well capitalized. The Company’s and BankUnited, N.A.'s regulatory capital ratios at December 31, 2018 were as follows:
BankUnited, Inc. | BankUnited, N.A. | ||||
Tier 1 leverage | 9.0 | % | 9.6 | % | |
Common Equity Tier 1 ("CET1") risk-based capital | 12.6 | % | 13.5 | % | |
Tier 1 risk-based capital | 12.6 | % | 13.5 | % | |
Total risk-based capital | 13.1 | % | 14.0 | % | |
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Covered loans
During the quarter ended December 31, 2018, the Bank executed a portfolio sale of certain covered loans and OREO. Covered loans with UPB totaling approximately $260 million and covered OREO totaling $5.2 million were sold during the quarter ended December 31, 2018. In conjunction with the sale, the FDIC indemnification asset was amortized to zero as of December 31, 2018 as expectations of losses eligible for indemnification with respect to any retained loans prior to final termination of the Single Family Shared-Loss Agreement are insignificant.
The table below summarizes the impact on pre-tax earnings of the covered asset sale, accretion on covered loans and amortization of the indemnification asset for the quarter ended December 31, 2018 (in thousands):
Three Months Ended December 31, 2018 | |||
Accretion on covered loans | $ | 121,349 | |
Amortization of the FDIC indemnification asset | (128,911 | ) | |
Gain on sale of covered loans and OREO | 169 | ||
Net loss on FDIC indemnification related to sale of covered loans and OREO | (1,644 | ) | |
Net impact on pre-tax earnings | $ | (9,037 | ) |
The amount of accretion on covered loans and amortization of the FDIC indemnification asset recognized in the financial statements differed from estimates previously disclosed primarily because the price received in the loan sale was higher than initially estimated.
Covered loans with UPB totaling $401 million and a carrying value of $201 million as of December 31, 2018 were retained in portfolio. Based on our updated estimates of expected cash flows, we expect total accretion on the retained covered loans over their expected remaining lives to approximate $287 million. The primary reason this amount differs from estimates previously disclosed is changes in prepayment assumptions. The yield on the retained loans as of December 31, 2018 was 32.9%.
Non-Loss Share Earnings
The table below presents the trend of Non-Loss Share earnings over the last three years:
Year Ended | Quarter Ended | ||||||||||||||||||||||||||||||||||
12/31/2016 | 3/31/2017 | 6/30/2017 | 9/30/2017 | (4) 12/31/2017 | 3/31/2018 | 6/30/2018 | 9/30/2018 | 12/31/2018 | |||||||||||||||||||||||||||
Non-Loss Share EPS(1)(2) | $ | 1.52 | $ | 0.44 | $ | 0.47 | $ | 0.50 | $ | 0.62 | $ | 0.54 | $ | 0.59 | $ | 0.64 | $ | 0.59 | |||||||||||||||||
EPS, Loss Share Contribution(1)(2)(3) | 0.57 | 0.13 | 0.13 | 0.12 | 0.24 | 0.23 | 0.23 | 0.26 | (0.09 | ) | |||||||||||||||||||||||||
Diluted Earnings Per Common Share | $ | 2.09 | $ | 0.57 | $ | 0.60 | $ | 0.62 | $ | 0.86 | $ | 0.77 | $ | 0.82 | $ | 0.90 | $ | 0.50 | |||||||||||||||||
(1) | Non-loss share EPS and EPS, Loss Share Contribution are non-GAAP measures. See section entitled "Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measurements to their comparable GAAP financial measurements. |
(2) | Loss Share Contribution is defined as the excess of Loss Share Earnings (generally defined as accretion on covered loans net of amortization of the FDIC indemnification asset) over the hypothetical amount of interest income that could have been earned if the average balance of covered loans and the indemnification asset were instead assumed to be invested in securities at the weighted average yield earned on the Company’s investment securities portfolio as reported for each respective quarter, net of related income taxes. See section entitled "Supplemental Calculations - Calculation of Loss Share Contribution and Non-Loss Share Earnings Per Share and Calculation of Hypothetical Interest Income on Alternate Assets" below for details of the calculation. |
(3) | See section entitled "Supplemental Calculations - Calculation of Loss Share Contribution and Non-Loss Share Earnings Per Share" below for details of the calculation. |
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(4) | EPS for the quarter ended December 31, 2017 is shown net of discrete income tax benefit and related professional fees. EPS, net of discrete income tax benefit and related professional fees is a non-GAAP financial measure. See section entitled "Non-GAAP Financial Measures" below for reconciliation of this measure to the GAAP measure of earnings per common share, diluted. |
Loans and Leases
Loans, including premiums, discounts and deferred fees and costs, totaled $22.0 billion at December 31, 2018 compared to $21.4 billion at December 31, 2017. Non-covered loans grew to $21.8 billion while covered loans declined to $201 million at December 31, 2018.
A comparison of non-covered loan and lease portfolio composition at the dates indicated follows (dollars in thousands):
December 31, 2018 | September 30, 2018 | December 31, 2017 | ||||||||||||||||||
Residential and other consumer loans | $ | 4,747,604 | 21.8 | % | $ | 4,563,578 | 21.0 | % | $ | 4,196,080 | 19.8 | % | ||||||||
Multi-family | 2,585,421 | 11.9 | % | 2,762,998 | 12.8 | % | 3,218,953 | 15.4 | % | |||||||||||
Non-owner occupied commercial real estate | 4,688,880 | 21.5 | % | 4,567,589 | 21.4 | % | 4,474,801 | 21.5 | % | |||||||||||
Construction and land | 226,840 | 1.0 | % | 244,619 | 1.1 | % | 310,484 | 1.5 | % | |||||||||||
Owner occupied commercial real estate | 2,119,880 | 9.7 | % | 2,091,978 | 9.7 | % | 2,012,742 | 9.7 | % | |||||||||||
Commercial and industrial | 4,790,201 | 22.1 | % | 4,708,545 | 21.9 | % | 4,137,827 | 19.9 | % | |||||||||||
Commercial lending subsidiaries | 2,616,806 | 12.0 | % | 2,620,097 | 12.1 | % | 2,562,499 | 12.2 | % | |||||||||||
$ | 21,775,632 | 100.0 | % | $ | 21,559,404 | 100.0 | % | $ | 20,913,386 | 100.0 | % | |||||||||
Equipment under operating lease, net | $ | 702,354 | $ | 661,677 | $ | 599,502 | ||||||||||||||
Residential and other consumer loans grew by $184 million for the quarter ended December 31, 2018. Multi-family loans declined by $178 million for the quarter ended December 31, 2018, primarily due to continued run-off of the New York portfolio, which decreased by $146 million. Commercial and industrial loans, inclusive of owner occupied commercial real estate, grew by $110 million for the quarter ended December 31, 2018, driven largely by growth in both the Florida and New York portfolios, partially offset by mortgage warehouse lending, which decreased by $105 million and the sale of taxi medallion loans.
Asset Quality and Allowance for Loan and Lease Losses
For the quarters ended December 31, 2018 and 2017, the Company recorded provisions for loan losses of $12.6 million and $5.2 million, respectively, substantially all of which related to non-covered loans. For the years ended December 31, 2018 and 2017, the Company recorded provisions for loan losses of $25.9 million and $68.7 million, respectively, substantially all of which related to non-covered loans. The Company recorded provisions of $14.0 million and $8.6 million related to taxi medallion loans for the quarters ended December 31, 2018 and December 31, 2017, respectively. For the years ended December 31, 2018 and 2017, the provision related to taxi medallion loans totaled $26.2 million and $58.2 million, respectively.
The most significant factor impacting the increase in the provision for loan losses related to non-covered loans for the quarter ended December 31, 2018 as compared to the quarter ended December 31, 2017 was the increase in the provision related to taxi medallion loans resulting from the sale of substantially the entire portfolio. Additional contributing factors included (i) a $5 million release during the quarter ended December 31, 2017 of reserves related to the impact of hurricanes partially offset by (ii) lower loan growth and (iii) a net decrease in the provision related to certain quantitative and qualitative loss factors.
Significant factors impacting the decrease in the provision for loan losses related to non-covered loans for the year ended December 31, 2018 as compared to the year ended December 31, 2017 were (i) a decrease in the provision related to taxi medallion loans; (ii) lower loan growth; (iii) a net decrease in the provision related to certain quantitative and qualitative loss factors; partially offset by (iv) an increase in the provision related to specific reserves for loans other than taxi medallion loans.
Non-performing loans totaled $129.9 million or 0.59% of total loans at December 31, 2018, compared to $173.4 million or 0.81% of total loans at December 31, 2017. The ratios of the allowance for loan and lease losses to total loans and to non-performing loans were 0.50% and 84.63%, respectively, at December 31, 2018, compared to 0.68% and 83.53%, at December 31, 2017. The ratio of net charge-offs to average loans was 0.28% for the year ended December 31, 2018, compared to 0.38% for the year ended December 31, 2017. The ratio of net charge-offs of taxi medallion loans to average loans was 0.18% for the year ended December 31, 2018, compared to 0.28% for the year ended December 31, 2017. The most significant
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factor impacting the decline in the ratio of non-performing loans to total loans at December 31, 2018 compared to December 31, 2017 was the sale of the taxi medallion loan portfolio during the quarter ended December 31, 2018. The most significant factors impacting the decline in the ratio of the allowance for loan and lease losses to total loans were (i) the elimination of the reserve related to taxi medallion loans in conjunction with the sale of those loans; (ii) a decrease in certain loss factors; and (iii) a decline in total criticized, classified and impaired loans, which typically carry higher reserves on a percentage basis, as a percentage of total loans.
The following table summarizes the activity in the allowance for loan and lease losses for the periods indicated (in thousands):
Three Months Ended December 31, 2018 | Three Months Ended December 31, 2017 | ||||||||||||||||||||||
Covered Loans | Non-Covered Loans | Total | Covered Loans | Non-Covered Loans | Total | ||||||||||||||||||
Balance at beginning of period | $ | 14 | $ | 124,726 | $ | 124,740 | $ | 4,848 | $ | 153,725 | $ | 158,573 | |||||||||||
Provision (recovery) | 235 | 12,348 | 12,583 | (1,335 | ) | 6,509 | 5,174 | ||||||||||||||||
Charge-offs | (221 | ) | (30,883 | ) | (31,104 | ) | (3,272 | ) | (16,832 | ) | (20,104 | ) | |||||||||||
Recoveries | 2 | 3,710 | 3,712 | 17 | 1,135 | 1,152 | |||||||||||||||||
Balance at end of period | $ | 30 | $ | 109,901 | $ | 109,931 | $ | 258 | $ | 144,537 | $ | 144,795 | |||||||||||
Year ended December 31, 2018 | Year ended December 31, 2017 | ||||||||||||||||||||||
Covered Loans | Non-Covered Loans | Total | Covered Loans | Non-Covered Loans | Total | ||||||||||||||||||
Balance at beginning of period | $ | 258 | $ | 144,537 | $ | 144,795 | $ | 2,100 | $ | 150,853 | $ | 152,953 | |||||||||||
Provision | 752 | 25,173 | 25,925 | 1,358 | 67,389 | 68,747 | |||||||||||||||||
Charge-offs | (1,200 | ) | (65,884 | ) | (67,084 | ) | (3,327 | ) | (77,866 | ) | (81,193 | ) | |||||||||||
Recoveries | 220 | 6,075 | 6,295 | 127 | 4,161 | 4,288 | |||||||||||||||||
Balance at end of period | $ | 30 | $ | 109,901 | $ | 109,931 | $ | 258 | $ | 144,537 | $ | 144,795 | |||||||||||
Charge-offs related to taxi medallion loans totaled $25.0 million and $9.5 million for the quarters ended December 31, 2018 and 2017, respectively, and $38.4 million and $56.6 million for the years ended December 31, 2018 and 2017.
Deposits
At December 31, 2018, deposits totaled $23.5 billion compared to $21.9 billion at December 31, 2017. The average cost of total deposits was 1.52% for the quarter ended December 31, 2018, compared to 1.35% for the immediately preceding quarter ended September 30, 2018, and 0.94% for the quarter ended December 31, 2017. The average cost of total deposits was 1.28% for the year ended December 31, 2018, compared to 0.83% for the year ended December 31, 2017.
Net interest income
Net interest income for the quarter ended December 31, 2018 increased to $295.1 million from $238.8 million for the quarter ended December 31, 2017. Net interest income was $1.1 billion for the year ended December 31, 2018, compared to $950.3 million for the year ended December 31, 2017. Increases in interest income were partially offset by increases in interest expense. The increases in interest income were primarily attributable to increases in the average balances of loans and investment securities and related average yields, particularly on the covered loans. Interest expense increased due to increases in average interest bearing deposits and the cost of funds.
The Company’s net interest margin, calculated on a tax-equivalent basis, was 4.01% for the quarter ended December 31, 2018, compared to 3.51% for the immediately preceding quarter ended September 30, 2018 and 3.52% for the quarter ended December 31, 2017. Net interest margin, calculated on a tax-equivalent basis, was 3.67% for the year ended December 31, 2018, compared to 3.65% for the year ended December 31, 2017.
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The most significant factor impacting the increases in net interest margin for the quarter and year ended December 31, 2018 compared to the quarter and year ended December 31, 2017 was the increase in the yield on covered loans to 147.37% and 86.13%, respectively, for the quarter and year ended December 31, 2018 from 60.90% and 55.22% for the quarter and year ended December 31, 2017. This increase reflected accelerated accretion related to the final covered loan sale that occurred during the quarter ended December 31, 2018. This acceleration resulted from changes in both the expected timing of cash flows from the final loan sale and in the estimated selling price of loans included in the sale compared to assumptions previously modeled.
Other offsetting contributing factors included:
• | The tax-equivalent yield on non-covered loans increased to 4.18% and 4.00%, respectively, for the quarter and the year ended December 31, 2018, compared to 3.80% and 3.75% for the quarter and year ended December 31, 2017. The most significant factor contributing to the increased yield on non-covered loans was the impact of increases in benchmark interest rates. |
• | The tax-equivalent yield on investment securities increased to 3.59% and 3.35%, respectively, for the quarter and year ended December 31, 2018 from 2.89% and 3.02% for the quarter and year ended December 31, 2017. |
• | Tax-equivalent yields on non-covered loans and investment securities and the net interest margin were each negatively impacted by approximately 0.09% for the quarter ended December 31, 2018 as compared to the quarter ended December 31, 2017 as a result of the reduction in the statutory federal income tax rate. For the year ended December 31, 2018 as compared to the year ended December 31, 2017, the tax rate change negatively impacted the net interest margin by approximately 0.08%. |
• | Growth of non-covered loans and investment securities at yields lower than the overall yield on interest earning assets, which is impacted by the yield on covered loans. |
• | The average rate on interest bearing liabilities increased to 1.95% and 1.66%, respectively for the quarter and year ended December 31, 2018, from 1.25% and 1.12% for the quarter and year ended December 31, 2017, reflecting higher average rates on both interest bearing deposits and FHLB advances. Increases in the cost of interest bearing liabilities primarily reflect increases in market interest rates and extension of the duration of FHLB advances. |
Non-interest income
Non-interest income totaled $33.3 million and $132.0 million, respectively, for the quarter and year ended December 31, 2018 compared to $46.5 million and $157.9 million, respectively, for the quarter and year ended December 31, 2017.
Significant factors contributing to the decreases in non-interest income for the quarter and year ended December 31, 2018 compared to the quarter and year ended December 31, 2017 included (i) decreases of $4.1 million and $30.3 million, respectively, in gain on investment securities; (ii) decreases of $17.5 million and $6.8 million, respectively, in gain on sale of covered loans, inclusive of the impact of FDIC indemnification; partially offset by (iii) increases of $2.2 million and $7.8 million, respectively, in lease financing income and (iv) increases of $5.4 million and $7.7 million, respectively, in fair value adjustments of residential mortgage servicing rights. All of the Company's residential mortgage servicing rights were sold in the quarter ended December 31, 2018.
Gain on investment securities for the year ended December 31, 2017 included gains from the sale of certain securities formerly covered under the Commercial Shared-Loss Agreement and originally acquired at significant discounts in the FSB Acquisition.
Non-interest expense
Non-interest expense totaled $246.7 million and $740.5 million, respectively, for the quarter and year ended December 31, 2018 compared to $161.3 million and $635.0 million for the quarter and year ended December 31, 2017. The most significant component of the increases in non-interest expense was the increase in amortization of the FDIC indemnification asset. Amortization of the FDIC indemnification asset was $128.9 million and $261.8 million, respectively, for the quarter and year ended December 31, 2018, compared to $41.1 million and $176.5 million for the quarter and year ended December 31, 2017. The increased amortization related in large part to the execution of the final covered loan sale pursuant to the Single Family Shared-Loss Agreement, as discussed above.
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Provision for income taxes
The effective income tax rate was 24.2% and 21.8% for the quarter and year ended December 31, 2018, compared to (251.3)% and (51.9)% for the quarter and year ended December 31, 2017. The effective income tax rates for the quarter and year ended December 31, 2017 reflect a discrete income tax benefit of $327.9 million recognized during the fourth quarter 2017. Excluding the impact of the discrete income tax benefit and the impact of the change in the federal statutory income tax rate on deferred tax assets and liabilities existing on the date of enactment of the Tax Cuts and Jobs Act of 2017 ("TCJA"), the effective income tax rate(2) was 27.6% and 30.1%, respectively, for the quarter and year ended December 31, 2017.
These declines in the effective income tax rate were primarily attributable to the reduction of the statutory corporate federal income tax rate from 35% to 21%, effective January 1, 2018. The effective income tax rate differed from the statutory federal income tax rate of 21% for the quarter and year ended December 31, 2018 and of 35% for the quarter and year ended December 31, 2017 due primarily to income not subject to tax, offset by state income taxes.
Earnings Conference Call and Presentation
A conference call to discuss quarterly results will be held at 9:00 a.m. ET on Wednesday, January 23, 2019 with Chairman, President and Chief Executive Officer, Rajinder P. Singh, and Chief Financial Officer, Leslie N. Lunak.
The earnings release and slides with supplemental information relating to the release will be available on the Investor Relations page under About Us on www.bankunited.com prior to the call. The call may be accessed via a live Internet webcast at www.bankunited.com or through a dial in telephone number at (855) 798-3052 (domestic) or (234) 386-2812 (international). The name of the call is BankUnited, Inc. and the confirmation number for the call is 2889075. A replay of the call will be available from 12:00 p.m. ET on January 23rd through 11:59 p.m. ET on January 30th by calling (855) 859-2056 (domestic) or (404) 537-3406 (international). The pass code for the replay is 2889075. An archived webcast will also be available on the Investor Relations page of www.bankunited.com.
About BankUnited, Inc. and the FSB Acquisition
BankUnited, Inc., with total assets of $32.2 billion at December 31, 2018, is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida with 80 banking centers in 15 Florida counties and 5 banking centers in the New York metropolitan area at December 31, 2018.
On May 21, 2009, BankUnited acquired substantially all of the assets and assumed all of the non-brokered deposits and substantially all other liabilities of BankUnited, FSB from the FDIC, in a transaction referred to as the FSB Acquisition. Concurrently with the FSB Acquisition, BankUnited entered into two loss sharing agreements, or the Loss Sharing Agreements, which covered certain legacy assets, including the entire legacy loan portfolio and OREO, and certain purchased investment securities. Assets covered by the Loss Sharing Agreements are referred to as “covered assets” (or, in certain cases, “covered loans”). The Loss Sharing Agreements do not apply to subsequently purchased or originated loans or other assets. Effective May 22, 2014 and consistent with the terms of the Loss Sharing Agreements, loss share coverage was terminated for those commercial loans and OREO and certain investment securities that were previously covered under the Loss Sharing Agreements. Pursuant to the terms of the Loss Sharing Agreements, the covered assets are subject to a stated loss threshold whereby the FDIC will reimburse BankUnited for 80% of losses, including certain interest and expenses, up to the $4.0 billion stated threshold and 95% of losses in excess of the $4.0 billion stated threshold. The amount of cumulative losses incurred on the covered assets, as of December 31, 2018, is approximately $3.4 billion. Cumulative reimbursements received or receivable from the FDIC under the Loss Sharing Agreements for claims filed for incurred losses as of December 31, 2018 totaled $2.7 billion.
(2) Effective income tax rate, excluding the impact of the discrete income tax benefit and the impact of the change in the federal statutory income tax rate on deferred income tax assets and liabilities existing at the date of enactment of the TCJA is a non-GAAP measure. See section entitled "Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measurements to their comparable GAAP financial measurements.
7
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company’s current views with respect to, among other things, future events and financial performance.
The Company generally identifies forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this press release are based on the historical performance of the Company and its subsidiaries or on the Company’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations contemplated by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions, including (without limitations) those relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, the Company’s actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive. The Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. Information on these factors can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 which is available at the SEC’s website (www.sec.gov).
Contact
BankUnited, Inc.
Investor Relations:
Leslie N. Lunak, 786-313-1698
llunak@bankunited.com
Source: BankUnited, Inc.
8
BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In thousands, except share and per share data)
December 31, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Cash and due from banks: | |||||||
Non-interest bearing | $ | 9,392 | $ | 35,246 | |||
Interest bearing | 372,681 | 159,336 | |||||
Cash and cash equivalents | 382,073 | 194,582 | |||||
Investment securities (including securities recorded at fair value of $8,156,878 and $6,680,832) | 8,166,878 | 6,690,832 | |||||
Non-marketable equity securities | 267,052 | 265,989 | |||||
Loans held for sale | 36,992 | 34,097 | |||||
Loans (including covered loans of $201,376 and $503,118) | 21,977,008 | 21,416,504 | |||||
Allowance for loan and lease losses | (109,931 | ) | (144,795 | ) | |||
Loans, net | 21,867,077 | 21,271,709 | |||||
FDIC indemnification asset | — | 295,635 | |||||
Bank owned life insurance | 263,340 | 252,462 | |||||
Equipment under operating lease, net | 702,354 | 599,502 | |||||
Goodwill and other intangible assets | 77,718 | 77,796 | |||||
Other assets | 400,842 | 664,382 | |||||
Total assets | $ | 32,164,326 | $ | 30,346,986 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Liabilities: | |||||||
Demand deposits: | |||||||
Non-interest bearing | $ | 3,621,254 | $ | 3,071,032 | |||
Interest bearing | 1,771,465 | 1,757,581 | |||||
Savings and money market | 11,261,746 | 10,715,024 | |||||
Time | 6,819,758 | 6,334,842 | |||||
Total deposits | 23,474,223 | 21,878,479 | |||||
Federal funds purchased | 175,000 | — | |||||
Federal Home Loan Bank advances | 4,796,000 | 4,771,000 | |||||
Notes and other borrowings | 402,749 | 402,830 | |||||
Other liabilities | 392,521 | 268,615 | |||||
Total liabilities | 29,240,493 | 27,320,924 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Common stock, par value $0.01 per share, 400,000,000 shares authorized; 99,141,374 and 106,848,185 shares issued and outstanding | 991 | 1,068 | |||||
Paid-in capital | 1,220,147 | 1,498,227 | |||||
Retained earnings | 1,697,822 | 1,471,781 | |||||
Accumulated other comprehensive income | 4,873 | 54,986 | |||||
Total stockholders' equity | 2,923,833 | 3,026,062 | |||||
Total liabilities and stockholders' equity | $ | 32,164,326 | $ | 30,346,986 | |||
9
BANKUNITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Interest income: | |||||||||||||||
Loans | $ | 342,434 | $ | 262,276 | $ | 1,198,241 | $ | 1,001,862 | |||||||
Investment securities | 67,695 | 46,683 | 233,091 | 188,307 | |||||||||||
Other | 4,667 | 3,686 | 17,812 | 14,292 | |||||||||||
Total interest income | 414,796 | 312,645 | 1,449,144 | 1,204,461 | |||||||||||
Interest expense: | |||||||||||||||
Deposits | 87,647 | 50,772 | 284,563 | 170,933 | |||||||||||
Borrowings | 32,096 | 23,047 | 114,488 | 83,256 | |||||||||||
Total interest expense | 119,743 | 73,819 | 399,051 | 254,189 | |||||||||||
Net interest income before provision for loan losses | 295,053 | 238,826 | 1,050,093 | 950,272 | |||||||||||
Provision for (recovery of) loan losses (including $235, $(1,335), $752 and $1,358 for covered loans) | 12,583 | 5,174 | 25,925 | 68,747 | |||||||||||
Net interest income after provision for loan losses | 282,470 | 233,652 | 1,024,168 | 881,525 | |||||||||||
Non-interest income: | |||||||||||||||
Income from resolution of covered assets, net | 862 | 5,384 | 11,551 | 27,450 | |||||||||||
Net loss on FDIC indemnification | (2,274 | ) | (8,046 | ) | (4,199 | ) | (22,220 | ) | |||||||
Deposit service charges and fees | 3,366 | 3,291 | 14,040 | 12,997 | |||||||||||
Gain on sale of loans, net (including $993, $18,988, $5,732 and $17,406 related to covered loans) | 2,904 | 20,988 | 15,864 | 27,589 | |||||||||||
Gain on investment securities, net | 221 | 4,272 | 3,159 | 33,466 | |||||||||||
Lease financing | 16,000 | 13,770 | 61,685 | 53,837 | |||||||||||
Other non-interest income | 12,249 | 6,882 | 29,922 | 24,785 | |||||||||||
Total non-interest income | 33,328 | 46,541 | 132,022 | 157,904 | |||||||||||
Non-interest expense: | |||||||||||||||
Employee compensation and benefits | 56,812 | 59,438 | 254,997 | 237,824 | |||||||||||
Occupancy and equipment | 13,544 | 14,235 | 55,899 | 58,100 | |||||||||||
Amortization of FDIC indemnification asset | 128,911 | 41,115 | 261,763 | 176,466 | |||||||||||
Deposit insurance expense | 4,174 | 5,184 | 18,984 | 22,011 | |||||||||||
Professional fees | 5,767 | 11,103 | 16,539 | 23,676 | |||||||||||
Technology and telecommunications | 9,015 | 7,947 | 35,136 | 31,252 | |||||||||||
Depreciation of equipment under operating lease | 11,363 | 9,360 | 40,025 | 35,015 | |||||||||||
Other non-interest expense | 17,092 | 12,889 | 57,197 | 50,624 | |||||||||||
Total non-interest expense | 246,678 | 161,271 | 740,540 | 634,968 | |||||||||||
Income before income taxes | 69,120 | 118,922 | 415,650 | 404,461 | |||||||||||
Provision (benefit) for income taxes | 16,717 | (298,872 | ) | 90,784 | (209,812 | ) | |||||||||
Net income | $ | 52,403 | $ | 417,794 | $ | 324,866 | $ | 614,273 | |||||||
Earnings per common share, basic | $ | 0.50 | $ | 3.80 | $ | 3.01 | $ | 5.60 | |||||||
Earnings per common share, diluted | $ | 0.50 | $ | 3.79 | $ | 2.99 | $ | 5.58 | |||||||
10
BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
Three Months Ended December 31, | ||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||
Average Balance | Interest (1) | Yield/ Rate (1)(2) | Average Balance | Interest (1) | Yield/ Rate (1)(2) | |||||||||||||||||
Assets: | ||||||||||||||||||||||
Interest earning assets: | ||||||||||||||||||||||
Non-covered loans | $ | 21,456,281 | $ | 225,531 | 4.18 | % | $ | 20,393,782 | $ | 194,775 | 3.80 | % | ||||||||||
Covered loans | 329,368 | 121,349 | 147.37 | % | 494,856 | 75,347 | 60.90 | % | ||||||||||||||
Total loans | 21,785,649 | 346,880 | 6.35 | % | 20,888,638 | 270,122 | 5.15 | % | ||||||||||||||
Investment securities (3) | 7,693,718 | 68,958 | 3.59 | % | 6,921,032 | 50,026 | 2.89 | % | ||||||||||||||
Other interest earning assets | 514,389 | 4,667 | 3.60 | % | 500,949 | 3,686 | 2.92 | % | ||||||||||||||
Total interest earning assets | 29,993,756 | 420,505 | 5.59 | % | 28,310,619 | 323,834 | 4.56 | % | ||||||||||||||
Allowance for loan and lease losses | (124,029 | ) | (154,857 | ) | ||||||||||||||||||
Non-interest earning assets | 1,798,183 | 1,768,515 | ||||||||||||||||||||
Total assets | $ | 31,667,910 | $ | 29,924,277 | ||||||||||||||||||
Liabilities and Stockholders' Equity: | ||||||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||||||
Interest bearing demand deposits | $ | 1,696,557 | 5,489 | 1.28 | % | $ | 1,652,150 | 3,960 | 0.95 | % | ||||||||||||
Savings and money market deposits | 10,706,427 | 45,433 | 1.68 | % | 10,241,065 | 24,655 | 0.96 | % | ||||||||||||||
Time deposits | 6,941,282 | 36,725 | 2.10 | % | 6,408,592 | 22,157 | 1.37 | % | ||||||||||||||
Total interest bearing deposits | 19,344,266 | 87,647 | 1.80 | % | 18,301,807 | 50,772 | 1.10 | % | ||||||||||||||
Federal funds purchased | 104,946 | 591 | 2.25 | % | — | — | — | % | ||||||||||||||
FHLB advances | 4,552,522 | 26,206 | 2.28 | % | 4,810,674 | 17,734 | 1.46 | % | ||||||||||||||
Notes and other borrowings | 402,753 | 5,299 | 5.26 | % | 403,219 | 5,313 | 5.27 | % | ||||||||||||||
Total interest bearing liabilities | 24,404,487 | 119,743 | 1.95 | % | 23,515,700 | 73,819 | 1.25 | % | ||||||||||||||
Non-interest bearing demand deposits | 3,572,189 | 3,173,075 | ||||||||||||||||||||
Other non-interest bearing liabilities | 657,887 | 441,801 | ||||||||||||||||||||
Total liabilities | 28,634,563 | 27,130,576 | ||||||||||||||||||||
Stockholders' equity | 3,033,347 | 2,793,701 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 31,667,910 | $ | 29,924,277 | ||||||||||||||||||
Net interest income | $ | 300,762 | $ | 250,015 | ||||||||||||||||||
Interest rate spread | 3.64 | % | 3.31 | % | ||||||||||||||||||
Net interest margin | 4.01 | % | 3.52 | % | ||||||||||||||||||
(1) | On a tax-equivalent basis where applicable |
(2) | Annualized |
(3) | At fair value except for securities held to maturity |
11
BANKUNITED, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
Years Ended December 31, | ||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||
Average Balance | Interest (1) | Yield/ Rate (1) | Average Balance | Interest (1) | Yield/ Rate (1) | |||||||||||||||||
Assets: | ||||||||||||||||||||||
Interest earning assets: | ||||||||||||||||||||||
Non-covered loans | $ | 21,169,705 | $ | 847,588 | 4.00 | % | $ | 19,478,071 | $ | 730,701 | 3.75 | % | ||||||||||
Covered loans | 427,437 | 368,161 | 86.13 | % | 544,279 | 300,540 | 55.22 | % | ||||||||||||||
Total loans | 21,597,142 | 1,215,749 | 5.63 | % | 20,022,350 | 1,031,241 | 5.15 | % | ||||||||||||||
Investment securities (2) | 7,124,372 | 238,602 | 3.35 | % | 6,658,145 | 201,363 | 3.02 | % | ||||||||||||||
Other interest earning assets | 506,154 | 17,812 | 3.52 | % | 543,338 | 14,292 | 2.63 | % | ||||||||||||||
Total interest earning assets | 29,227,668 | 1,472,163 | 5.04 | % | 27,223,833 | 1,246,896 | 4.58 | % | ||||||||||||||
Allowance for loan and lease losses | (136,758 | ) | (156,471 | ) | ||||||||||||||||||
Non-interest earning assets | 1,878,284 | 1,758,032 | ||||||||||||||||||||
Total assets | $ | 30,969,194 | $ | 28,825,394 | ||||||||||||||||||
Liabilities and Stockholders' Equity: | ||||||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||||||
Interest bearing demand deposits | $ | 1,627,828 | 18,391 | 1.13 | % | $ | 1,586,390 | 12,873 | 0.81 | % | ||||||||||||
Savings and money market deposits | 10,634,970 | 146,324 | 1.38 | % | 9,730,101 | 80,397 | 0.83 | % | ||||||||||||||
Time deposits | 6,617,006 | 119,848 | 1.81 | % | 6,094,336 | 77,663 | 1.27 | % | ||||||||||||||
Total interest bearing deposits | 18,879,804 | 284,563 | 1.51 | % | 17,410,827 | 170,933 | 0.98 | % | ||||||||||||||
Federal funds purchased | 48,940 | 1,035 | 2.11 | % | — | — | — | % | ||||||||||||||
FHLB advances | 4,637,247 | 92,234 | 1.99 | % | 4,869,690 | 61,996 | 1.27 | % | ||||||||||||||
Notes and other borrowings | 402,795 | 21,219 | 5.27 | % | 402,921 | 21,259 | 5.28 | % | ||||||||||||||
Total interest bearing liabilities | 23,968,786 | 399,051 | 1.66 | % | 22,683,438 | 254,188 | 1.12 | % | ||||||||||||||
Non-interest bearing demand deposits | 3,389,191 | 3,069,565 | ||||||||||||||||||||
Other non-interest bearing liabilities | 538,575 | 443,019 | ||||||||||||||||||||
Total liabilities | 27,896,552 | 26,196,022 | ||||||||||||||||||||
Stockholders' equity | 3,072,642 | 2,629,372 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 30,969,194 | $ | 28,825,394 | ||||||||||||||||||
Net interest income | $ | 1,073,112 | $ | 992,708 | ||||||||||||||||||
Interest rate spread | 3.38 | % | 3.46 | % | ||||||||||||||||||
Net interest margin | 3.67 | % | 3.65 | % | ||||||||||||||||||
(1) | On a tax-equivalent basis where applicable |
(2) | At fair value except for securities held to maturity |
12
BANKUNITED, INC. AND SUBSIDIARIES
EARNINGS PER COMMON SHARE
(In thousands except share and per share amounts)
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
c | 2018 | 2017 | 2018 | 2017 | |||||||||||
Basic earnings per common share: | |||||||||||||||
Numerator: | |||||||||||||||
Net income | $ | 52,403 | $ | 417,794 | $ | 324,866 | $ | 614,273 | |||||||
Distributed and undistributed earnings allocated to participating securities | (2,363 | ) | (15,865 | ) | (13,047 | ) | (23,250 | ) | |||||||
Income allocated to common stockholders for basic earnings per common share | $ | 50,040 | $ | 401,929 | $ | 311,819 | $ | 591,023 | |||||||
Denominator: | |||||||||||||||
Weighted average common shares outstanding | 101,955,583 | 106,829,796 | 104,916,865 | 106,574,448 | |||||||||||
Less average unvested stock awards | (1,177,290 | ) | (1,108,945 | ) | (1,171,994 | ) | (1,104,035 | ) | |||||||
Weighted average shares for basic earnings per common share | 100,778,293 | 105,720,851 | 103,744,871 | 105,470,413 | |||||||||||
Basic earnings per common share | $ | 0.50 | $ | 3.80 | $ | 3.01 | $ | 5.60 | |||||||
Diluted earnings per common share: | |||||||||||||||
Numerator: | |||||||||||||||
Income allocated to common stockholders for basic earnings per common share | $ | 50,040 | $ | 401,929 | $ | 311,819 | $ | 591,023 | |||||||
Adjustment for earnings reallocated from participating securities | (10 | ) | (130 | ) | (195 | ) | (263 | ) | |||||||
Income used in calculating diluted earnings per common share | $ | 50,030 | $ | 401,799 | $ | 311,624 | $ | 590,760 | |||||||
Denominator: | |||||||||||||||
Weighted average shares for basic earnings per common share | 100,778,293 | 105,720,851 | 103,744,871 | 105,470,413 | |||||||||||
Dilutive effect of stock options | 181,141 | 351,083 | 332,505 | 387,074 | |||||||||||
Weighted average shares for diluted earnings per common share | 100,959,434 | 106,071,934 | 104,077,376 | 105,857,487 | |||||||||||
Diluted earnings per common share | $ | 0.50 | $ | 3.79 | $ | 2.99 | $ | 5.58 | |||||||
13
BANKUNITED, INC. AND SUBSIDIARIES
SELECTED RATIOS
Three Months Ended December 31, | Years Ended December 31, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Financial ratios (5) | ||||||||||||
Return on average assets | 0.66 | % | 5.54 | % | 1.05 | % | 2.13 | % | ||||
Return on average stockholders’ equity | 6.85 | % | 59.33 | % | 10.57 | % | 23.36 | % | ||||
Net interest margin (4) | 4.01 | % | 3.52 | % | 3.67 | % | 3.65 | % | ||||
December 31, 2018 | December 31, 2017 | ||||
Asset quality ratios | |||||
Non-performing loans to total loans (1) (3) | 0.59 | % | 0.81 | % | |
Non-performing assets to total assets (2) | 0.43 | % | 0.61 | % | |
Allowance for loan and lease losses to total loans (3) | 0.50 | % | 0.68 | % | |
Allowance for loan and lease losses to non-performing loans (1) | 84.63 | % | 83.53 | % | |
Net charge-offs to average loans | 0.28 | % | 0.38 | % | |
(1) | We define non-performing loans to include non-accrual loans, and loans, other than ACI loans and government insured residential loans, that are past due 90 days or more and still accruing. Contractually delinquent ACI loans and government insured residential loans on which interest continues to be accreted or accrued are excluded from non-performing loans. |
(2) | Non-performing assets include non-performing loans, OREO and other repossessed assets. |
(3) | Total loans include premiums, discounts, and deferred fees and costs. |
(4) | On a tax-equivalent basis. |
(5) | Annualized for the three month periods. |
14
Supplemental Calculations
Calculation of Loss Share Contribution and Non-Loss Share Earnings Per Share
Non-Loss Share Earnings are calculated by removing the total Loss Share Contribution from Net Income. The Loss Share Contribution is a hypothetical presentation of the impact of the covered loans and FDIC indemnification asset on earnings for each respective quarter, reflecting the excess of Loss Share Earnings over hypothetical interest income that could have been earned on alternative assets (in millions except share and per share data):
Year Ended | Quarter Ended | ||||||||||||||||||||||||||||||||||
(3) 12/31/2016 | 3/31/2017 | (3) 6/30/2017 | (3) 9/30/2017 | (3) 12/31/2017 | 3/31/2018 | (3) 6/30/2018 | 9/30/2018 | 12/31/2018 | |||||||||||||||||||||||||||
Net Income As Reported (2) | $ | 225.7 | $ | 62.3 | $ | 66.4 | $ | 67.8 | $ | 94.8 | $ | 85.2 | $ | 89.9 | $ | 97.3 | $ | 52.4 | |||||||||||||||||
Calculation of Loss Share Contribution: | |||||||||||||||||||||||||||||||||||
Interest Income - Covered Loans (Accretion) | $ | 301.6 | $ | 75.2 | $ | 76.6 | $ | 73.5 | $ | 75.3 | $ | 81.3 | $ | 84.2 | $ | 81.3 | $ | 121.3 | |||||||||||||||||
Net impact of sale of covered loans | 16.5 | 10.4 | 1.0 | ||||||||||||||||||||||||||||||||
Amortization of FDIC Indemnification Asset | (160.1 | ) | (44.5 | ) | (45.7 | ) | (45.2 | ) | (41.1 | ) | (40.3 | ) | (44.3 | ) | (48.3 | ) | (128.9 | ) | |||||||||||||||||
Loss Share Earnings (Loss) | 141.5 | 30.7 | 30.9 | 28.2 | 50.7 | 41.0 | 40.0 | 43.4 | (6.6 | ) | |||||||||||||||||||||||||
Hypothetical interest income on alternate assets (1) | (38.2 | ) | (8.2 | ) | (7.5 | ) | (7.1 | ) | (6.1 | ) | (5.9 | ) | (5.9 | ) | (4.9 | ) | (3.8 | ) | |||||||||||||||||
Loss Share Contribution, pre-tax | 103.3 | 22.5 | 23.4 | 21.1 | 44.6 | 35.1 | 34.1 | 38.5 | (10.3 | ) | |||||||||||||||||||||||||
Income taxes (4) | (40.8 | ) | (8.9 | ) | (9.2 | ) | (8.3 | ) | (17.6 | ) | (9.3 | ) | (9.0 | ) | (10.2 | ) | 2.7 | ||||||||||||||||||
Loss Share Contribution, after tax | $ | 62.5 | $ | 13.6 | $ | 14.2 | $ | 12.8 | $ | 27.0 | $ | 25.8 | $ | 25.0 | $ | 28.3 | $ | (7.6 | ) | ||||||||||||||||
Net Income as reported, minus Loss Share Contribution | $ | 163.2 | $ | 48.7 | $ | 52.2 | $ | 55.0 | $ | 67.9 | $ | 59.4 | $ | 64.9 | $ | 69.0 | $ | 60.0 | |||||||||||||||||
EPS, Loss Share Contribution | $ | 0.57 | $ | 0.13 | $ | 0.13 | $ | 0.12 | $ | 0.24 | $ | 0.23 | $ | 0.23 | $ | 0.26 | $ | (0.09 | ) | ||||||||||||||||
Non-Loss Share EPS | 1.52 | 0.44 | 0.47 | 0.50 | 0.62 | 0.54 | 0.59 | 0.64 | 0.59 | ||||||||||||||||||||||||||
Diluted Earnings Per Common Share, as Reported | $ | 2.09 | $ | 0.57 | $ | 0.60 | $ | 0.62 | $ | 0.86 | $ | 0.77 | $ | 0.82 | $ | 0.90 | $ | 0.50 | |||||||||||||||||
(1) | See section entitled "Supplemental Calculations - Calculation of Hypothetical Interest Income on Alternate Assets" below for calculation of these amounts and underlying assumptions. |
(2) Net income and diluted earnings per common share for the three months ended December 31, 2017 are presented net of non-GAAP adjustments to remove a discrete income tax benefit and related professional fees recognized in that period. See section entitled "Non-GAAP Financial Measures" below.
(3) Calculation variances of $0.1 million in the table above are due to rounding.
(4) An assumed marginal tax rate of 39.5% was applied to the quarter ended December 31, 2017 and all prior periods; a marginal rate of 26.5% was applied to subsequent periods reflecting the reduction of the statutory federal income tax rate.
15
Calculation of Hypothetical Interest Income on Alternate Assets
The hypothetical interest income calculated below reflects the estimated income that may have been earned if the average balance of covered loans and the FDIC indemnification asset were liquidated and the proceeds assumed to be invested in securities at the weighted average yield on the Company’s investment securities portfolio as reported for each respective quarter. Historically, cash received from the repayment, sale, or other resolution of covered loans and cash payments received from the FDIC under the terms of the Shared Loss Agreement have generally been reinvested in non-covered loans or investment securities. There is no assurance that the hypothetical results illustrated below would have been achieved if the covered loans and FDIC indemnification asset had been liquidated and proceeds reinvested in the respective quarters (dollars in millions):
Year Ended | Quarter Ended | ||||||||||||||||||||||||||||||||||
12/31/2016 | 3/31/2017 | 6/30/2017 | 9/30/2017 | 12/31/2017 | 3/31/2018 | 6/30/2018 | 9/30/2018 | 12/31/2018 | |||||||||||||||||||||||||||
Average Balances (1) | |||||||||||||||||||||||||||||||||||
Avg Covered Loans | $ | 721 | $ | 596 | $ | 553 | $ | 533 | $ | 521 | $ | 499 | $ | 476 | $ | 408 | $ | 329 | |||||||||||||||||
Avg FDIC Indemnification Asset | 637 | 488 | 433 | 378 | 323 | 278 | 231 | 170 | 91 | ||||||||||||||||||||||||||
Avg Loss Share Asset | $ | 1,358 | $ | 1,084 | $ | 986 | $ | 911 | $ | 844 | $ | 777 | $ | 707 | $ | 578 | $ | 420 | |||||||||||||||||
Yield | |||||||||||||||||||||||||||||||||||
Yield on securities- reported (2) | 2.84 | % | 3.01 | % | 3.05 | % | 3.14 | % | 2.89 | % | 3.04 | % | 3.33 | % | 3.41 | % | 3.59 | % | |||||||||||||||||
Hypothetical interest income on alternate assets | $ | 38.2 | $ | 8.2 | $ | 7.5 | $ | 7.1 | $ | 6.1 | $ | 5.9 | $ | 5.9 | $ | 4.9 | $ | 3.8 | |||||||||||||||||
(1) | Calculated as the simple average of beginning and ending balances reported for each period. |
(2) The weighted average yield on the Company’s investment securities as reported for the applicable quarter.
16
Non-GAAP Financial Measures
Net income and diluted earnings per common share, in each case excluding the impact of Loss Share Contribution, as defined in the section entitled "Non-Loss Share Earnings" above, are non-GAAP financial measures. Management believes disclosure of these measures provides readers with information that may be useful in understanding the impact of the covered loans and FDIC indemnification asset on the Company’s earnings. The following table reconciles these non-GAAP financial measurements to the comparable GAAP financial measurements of net income and diluted earnings per common share for the periods indicated (in millions except share and per share data. Shares in thousands):
Year Ended | Quarter Ended | ||||||||||||||||||||||||||||||||||
(2)(3) 12/31/2016 | 3/31/2017 | 6/30/2017 | 9/30/2017 | 12/31/2017 | 3/31/2018 | 6/30/2018 | 9/30/2018 | 12/31/2018 | |||||||||||||||||||||||||||
Net Income (GAAP) (1) | $ | 225.7 | $ | 62.3 | $ | 66.4 | $ | 67.8 | $ | 94.8 | $ | 85.2 | $ | 89.9 | $ | 97.3 | $ | 52.4 | |||||||||||||||||
Less Loss Share Contribution | (62.5 | ) | (13.6 | ) | (14.2 | ) | (12.8 | ) | (27.0 | ) | (25.8 | ) | (25.0 | ) | (28.3 | ) | 7.6 | ||||||||||||||||||
Net Income as reported, minus Loss Share Contribution | $ | 163.2 | $ | 48.7 | $ | 52.2 | $ | 55.0 | $ | 67.8 | $ | 59.4 | $ | 64.9 | $ | 69.0 | $ | 60.0 | |||||||||||||||||
Diluted earnings per common share, excluding Loss Share Contribution: | |||||||||||||||||||||||||||||||||||
Diluted earnings per common share (GAAP) (1) | $ | 2.09 | $ | 0.57 | $ | 0.60 | $ | 0.62 | $ | 0.86 | $ | 0.77 | $ | 0.82 | $ | 0.90 | $ | 0.50 | |||||||||||||||||
Less: Net impact on diluted earnings per common share of Loss Share Contribution (non-GAAP) | (0.57 | ) | (0.13 | ) | (0.13 | ) | (0.12 | ) | (0.24 | ) | (0.23 | ) | (0.23 | ) | (0.26 | ) | 0.09 | ||||||||||||||||||
Diluted earnings per common share, excluding the impact of Loss Share Contribution (non-GAAP) | $ | 1.52 | $ | 0.44 | $ | 0.47 | $ | 0.50 | $ | 0.62 | $ | 0.54 | $ | 0.59 | $ | 0.64 | $ | 0.59 | |||||||||||||||||
Impact on diluted earnings per common share of Loss Share Contribution: | |||||||||||||||||||||||||||||||||||
Loss Share Contribution | $ | 62.5 | $ | 13.6 | $ | 14.2 | $ | 12.8 | $ | 27.0 | $ | 25.8 | $ | 25.0 | $ | 28.3 | $ | (7.6 | ) | ||||||||||||||||
Weighted average shares for diluted earnings per share (GAAP) | 414,624 | 105,378 | 103,138 | 106,073 | 106,072 | 105,934 | 105,471 | 104,384 | 100,959 | ||||||||||||||||||||||||||
Impact on diluted earnings per common share of Loss Share Contribution (non-GAAP) | 0.60 | 0.13 | 0.14 | 0.12 | 0.25 | 0.24 | 0.24 | 0.27 | (0.08 | ) | |||||||||||||||||||||||||
Impact on diluted earnings per common share of Loss Share Contribution: | |||||||||||||||||||||||||||||||||||
Loss Share Contribution, net of tax, allocated to participating securities | (2.5 | ) | (0.5 | ) | (0.5 | ) | (0.5 | ) | (1.0 | ) | (1.0 | ) | (1.0 | ) | (1.0 | ) | (1.0 | ) | |||||||||||||||||
Weighted average shares for diluted earnings per share (GAAP) | 414,624 | 105,378 | 103,138 | 106,073 | 106,072 | 105,934 | 105,471 | 104,384 | 100,959 | ||||||||||||||||||||||||||
Impact on diluted earnings per common share of Loss Share Contribution allocated to participating securities (non-GAAP) | (0.03 | ) | — | (0.01 | ) | — | (0.01 | ) | (0.01 | ) | (0.01 | ) | (0.01 | ) | (0.01 | ) | |||||||||||||||||||
Net impact on diluted earnings per common share of Loss Share Contribution (non-GAAP) | $ | 0.57 | $ | 0.13 | $ | 0.13 | $ | 0.12 | $ | 0.24 | $ | 0.23 | $ | 0.23 | $ | 0.26 | $ | (0.09 | ) | ||||||||||||||||
(1) | Net income and diluted earnings per common share for the three months ended December 31, 2017 are net of non-GAAP adjustments to remove a discrete income tax benefit and related professional fees recognized in that period. See below for reconciliation of these non-GAAP financial measurements to their comparable GAAP financial measurements. |
(2) | Net impact on diluted earnings per share of Loss Share Contribution (non-GAAP) adjusted for rounding. |
17
(3) | Calculation variances of $0.1 million in the table above are due to rounding. |
Non-GAAP Financial Measures (continued)
Net income and earnings per diluted common share, in each case excluding the impact of a discrete income tax benefit and related professional fees are non-GAAP financial measures. Management believes disclosure of these measures enhances readers' ability to compare the Company's financial performance for the three months and year ended December 31, 2017 to that of other periods presented. The following table reconciles these non-GAAP financial measurements to the comparable GAAP financial measurements of net income and earnings per diluted share for the three months and year ended December 31, 2017 (in thousands except share and per share data):
Three Months Ended December 31, 2017 | Year Ended December 31, 2017 | ||||||
Net income excluding the impact of a discrete income tax benefit and related professional fees: | |||||||
Net income (GAAP) | $ | 417,794 | $ | 614,273 | |||
Less discrete income tax benefit | (327,945 | ) | (327,945 | ) | |||
Add back related professional fees, net of tax of $1,802 | 4,995 | 4,995 | |||||
Net income excluding the impact of a discrete income tax benefit and related professional fees (non-GAAP) | $ | 94,844 | $ | 291,323 | |||
Diluted earnings per common share, excluding the impact of a discrete income tax benefit and related professional fees: | |||||||
Diluted earnings per common share (GAAP) | $ | 3.79 | $ | 5.58 | |||
Less impact on diluted earnings per common share of discrete income tax benefit and related professional fees, before allocation to participating securities (non-GAAP) | (3.04 | ) | (3.05 | ) | |||
Less impact on diluted earnings per common share of discrete income tax benefit and related professional fees allocated to participating securities (non-GAAP) | 0.12 | 0.12 | |||||
Diluted earnings per common share, excluding the impact of a discrete income tax benefit and related professional fees (non-GAAP)(1) | $ | 0.86 | $ | 2.65 | |||
Impact on diluted earnings per common share of discrete income tax benefit and related professional fees: | |||||||
Discrete income tax benefit and related professional fees, net of tax | $ | 322,950 | $ | 322,950 | |||
Weighted average shares for diluted earnings per share (GAAP) | 106,071,934 | 105,857,487 | |||||
Impact on diluted earnings per common share of discrete income tax benefit and related professional fees, before allocation to participating securities (non-GAAP) | $ | 3.04 | $ | 3.05 | |||
Impact on diluted earnings per common share of discrete income tax benefit and related professional fees allocated to participating securities: | |||||||
Discrete income tax benefit and related professional fees, net of tax, allocated to participating securities | $ | (12,354 | ) | $ | (12,424 | ) | |
Weighted average shares for diluted earnings per share (GAAP) | 106,071,934 | 105,857,487 | |||||
Impact on diluted earnings per common share of discrete income tax benefit and related professional fees allocated to participating securities (non-GAAP) | $ | (0.12 | ) | $ | (0.12 | ) | |
(1) | Amount for the three months ended December 31, 2017 adjusted for rounding. |
18
The effective tax rate excluding the impact of the discrete income tax benefit and the impact of the change in the federal statutory rate on existing deferred tax assets and liabilities is a non-GAAP financial measure. Management believes disclosure of this measure enhances readers' ability to compare the Company's financial performance for the current period to that of other periods presented. The following table reconciles this non-GAAP financial measurement to the comparable GAAP financial measurement of the effective tax rate for the three months and year ended December 31, 2017 (dollars in thousands):
Three Months Ended December 31, 2017 | Year Ended December 31, 2017 | |||||||
Effective income tax rate, excluding the impact of a discrete income tax benefit and impact of enactment of the Tax Cuts and Jobs Act of 2017: | ||||||||
Effective income tax rate (GAAP) | (251.3 | )% | (51.9 | )% | ||||
Less impact on effective income tax rate of discrete income tax benefit and enactment of the Tax Cuts and Jobs Act of 2017 (non-GAAP) | 278.9 | % | 82.0 | % | ||||
Effective income tax rate, excluding the impact of a discrete income tax benefit and enactment of the Tax Cuts and Jobs Act of 2017 (non-GAAP) | 27.6 | % | 30.1 | % | ||||
Impact on effective income tax rate of discrete income tax benefit and enactment of the Tax Cuts and Jobs Act of 2017 (non-GAAP): | ||||||||
Discrete income tax benefit | $ | (327,945 | ) | $ | (327,945 | ) | ||
Tax benefit recognized from enactment of the Tax Cuts and Jobs Act of 2017 | (3,744 | ) | (3,744 | ) | ||||
$ | (331,689 | ) | $ | (331,689 | ) | |||
Income before income taxes (GAAP) | 118,922 | 404,461 | ||||||
Impact on effective income tax rate of discrete income tax benefit and enactment of the Tax Cuts and Jobs Act of 2017 (non-GAAP) | (278.9 | )% | (82.0 | )% | ||||
Tangible book value per common share is a non-GAAP financial measure. Management believes this measure is relevant to understanding the capital position and performance of the Company. Disclosure of this non-GAAP financial measure also provides a meaningful base for comparison to other financial institutions. The following table reconciles the non-GAAP financial measurement of tangible book value per common share to the comparable GAAP financial measurement of book value per common share at December 31, 2018 (in thousands except share and per share data):
Total stockholders’ equity | $ | 2,923,833 | ||
Less: goodwill and other intangible assets | 77,718 | |||
Tangible stockholders’ equity | $ | 2,846,115 | ||
Common shares issued and outstanding | 99,141,374 | |||
Book value per common share | $ | 29.49 | ||
Tangible book value per common share | $ | 28.71 | ||
19
Exhibit 99.2
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company’s current views with respect to, among other things, future events and financial performance.
The Company generally identifies forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this communication are based on the historical performance of the Company and its subsidiaries or on the Company’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations contemplated by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions, including (without limitations) those relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, the Company’s actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive. The Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. Information on these factors can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 which is available at the SEC’s website (www.sec.gov).
1
Non-Loss Share Earnings
(1) | Non-loss share EPS and EPS, loss share contribution are non-GAAP measures. See section entitled "Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measurements to their comparable GAAP financial measurements. |
(2) | Loss Share Contribution is defined as the excess of Loss Share Earnings (generally defined as accretion on covered loans net of amortization of the FDIC indemnification asset) over the hypothetical amount of interest income that could have been earned if the average balance of covered loans and the indemnification asset were instead assumed to be invested in securities at the weighted average yield earned on the Company’s investment securities portfolio as reported for each respective quarter, net of related income taxes. See section entitled "Calculation of Loss Share Contribution and Non-Loss Share Earnings Per Share" below for details of the calculation. |
(3) | See section entitled "Calculation of Loss Share Contribution and Non-Loss Share Earnings Per Share" below for details of the calculation. |
(4) | EPS for the quarter ended December 31, 2017 is shown net of discrete income tax benefit and related professional fees. EPS, net of discrete income tax benefit and related professional fees is a non-GAAP financial measure. See section entitled "Non-GAAP Financial Measures" below for reconciliation of this measure to the GAAP measure of earnings per common share, diluted. |
2
Calculation of Loss Share Contribution and Non-Loss Share Earnings Per Share
Non-Loss Share Earnings are calculated by removing the total Loss Share Contribution from Net Income. The Loss Share Contribution is a hypothetical presentation of the impact of the covered loans and FDIC indemnification asset on earnings for each respective quarter, reflecting the excess of Loss Share Earnings over hypothetical interest income that could have been earned on alternative assets.
(1) | See section entitled "Calculation of Hypothetical Interest Income on Alternate Assets" below for calculation of these amounts and underlying assumptions. |
(2) Net income and Diluted earnings per common share for the three months ended December 31, 2017 is presented net of non-GAAP adjustments to remove a discrete income tax benefit and related professional fees recognized in that period. See section entitled "Non-GAAP Financial Measures" below.
(3) Calculation variances of $0.1 million in the table above are due to rounding.
(4) An assumed marginal tax rate of 39.5% was applied to the quarter ended December 31, 2017 and all prior periods; a marginal rate of 26.5% was applied to subsequent periods reflecting the reduction of the statutory federal income tax rate.
3
Calculation of Hypothetical Interest Income on Alternate Assets
The hypothetical interest income calculated below reflects the estimated income that may have been earned if the average balance of covered loans and the FDIC indemnification asset were liquidated and the proceeds assumed to be invested in securities at the weighted average yield on the Company’s investment securities portfolio as reported for each respective quarter. Historically, cash received from the repayment, sale, or other resolution of covered loans and cash payments received from the FDIC under the terms of the Shared Loss Agreement have generally been reinvested in non-covered loans or investment securities. There is no assurance that the hypothetical results illustrated below would have been achieved if the covered loans and FDIC indemnification asset had been liquidated and proceeds reinvested in the respective quarters.
(1) | Calculated as the simple average of beginning and ending balances reported for each period. |
(2) The weighted average yield on the Company’s investment securities as reported for the applicable quarter.
4
Non-GAAP Financial Measures
Net income and diluted earnings per common share, in each case excluding the impact of Loss Share Contribution, as defined in the section entitled "Non-Loss Share Earnings" above, are non-GAAP financial measures. Management believes disclosure of these measures provides readers with information that may be useful in understanding the impact of the covered loans and FDIC indemnification asset on the Company’s earnings. The following table reconciles these non-GAAP financial measurements to the comparable GAAP financial measurements of net income and diluted earnings per common share for the periods indicated.
(1) | Net income and Diluted earnings per common share for the three months ended December 31, 2017 are net of non-GAAP adjustments to remove a discrete income tax benefit and related professional fees recognized in that period. See below for reconciliation of these non-GAAP financial measurements to their comparable GAAP financial measurements. |
(2) | Net impact on diluted earnings per share of Loss Share Contribution (non-GAAP) adjusted for rounding. |
(3) | Calculation variances of $0.1 million in the table above are due to rounding. |
5
Non-GAAP Financial Measures (continued)
Net income and earnings per diluted common share, in each case excluding the impact of a discrete income tax benefit and related professional fees are non-GAAP financial measures. Management believes disclosure of these measures enhances readers' ability to compare the Company's financial performance for the three months and year ended December 31, 2017 to that of other periods presented. The following table reconciles these non-GAAP financial measurements to the comparable GAAP financial measurements of net income and earnings per diluted share for the three months and year ended December 31, 2017 (in thousands except share and per share data):
Three Months Ended December 31, 2017 | Year Ended December 31, 2017 | ||||||
Net income excluding the impact of a discrete income tax benefit and related professional fees: | |||||||
Net income (GAAP) | $ | 417,794 | $ | 614,273 | |||
Less discrete income tax benefit | (327,945 | ) | (327,945 | ) | |||
Add back related professional fees, net of tax of $1,802 | 4,995 | 4,995 | |||||
Net income excluding the impact of a discrete income tax benefit and related professional fees (non-GAAP) | $ | 94,844 | $ | 291,323 | |||
Diluted earnings per common share, excluding the impact of a discrete income tax benefit and related professional fees: | |||||||
Diluted earnings per common share (GAAP) | $ | 3.79 | $ | 5.58 | |||
Less impact on diluted earnings per common share of discrete income tax benefit and related professional fees, before allocation to participating securities (non-GAAP) | (3.04 | ) | (3.05 | ) | |||
Less impact on diluted earnings per common share of discrete income tax benefit and related professional fees allocated to participating securities (non-GAAP) | 0.12 | 0.12 | |||||
Diluted earnings per common share, excluding the impact of a discrete income tax benefit and related professional fees (non-GAAP)(1) | $ | 0.86 | $ | 2.65 | |||
Impact on diluted earnings per common share of discrete income tax benefit and related professional fees: | |||||||
Discrete income tax benefit and related professional fees, net of tax | $ | 322,950 | $ | 322,950 | |||
Weighted average shares for diluted earnings per share (GAAP) | 106,071,934 | 105,857,487 | |||||
Impact on diluted earnings per common share of discrete income tax benefit and related professional fees, before allocation to participating securities (non-GAAP) | $ | 3.04 | $ | 3.05 | |||
Impact on diluted earnings per common share of discrete income tax benefit and related professional fees allocated to participating securities: | |||||||
Discrete income tax benefit and related professional fees, net of tax, allocated to participating securities | $ | (12,354 | ) | $ | (12,424 | ) | |
Weighted average shares for diluted earnings per share (GAAP) | 106,071,934 | 105,857,487 | |||||
Impact on diluted earnings per common share of discrete income tax benefit and related professional fees allocated to participating securities (non-GAAP) | $ | (0.12 | ) | $ | (0.12 | ) | |
(1) | Amount for the three months ended December 31, 2017 adjusted for rounding. |
6