(Mark
One)
|
|||
þ
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
||
For
the quarterly period ended September
30,
2006
|
|||
Or
|
|||
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Michigan
|
38-2604669
|
|||
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|||
1070
East Main Street, Owosso, Michigan
|
48867
|
|||
(Address
of principal executive offices)
|
(Zip
Code)
|
|||
(989)
725-7337
|
||||
(Registrant's
telephone number, including area code)
|
||||
(Former
name, former address and former fiscal year, if changed since last
report)
|
Common
Stock Outstanding as of October 31, 2006:
|
|
Common
Stock, $5 Par Value Per Share
|
74,648,000
Shares
|
PART
I.
|
FINANCIAL
INFORMATION
|
||
Item
1.
|
Financial
Statements (Unaudited)
|
||
Consolidated
Balance Sheets as of September 30, 2006 and December 31, 2005
|
2
|
||
Consolidated
Statements of Income for the Three and Nine Months Ended September
30,
2006 and 2005
|
3
|
||
Consolidated
Statements of Cash Flows for the Nine Months Ended September 30,
2006 and
2005
|
4
|
||
Notes
to Consolidated Financial Statements
|
5
-
12
|
||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
13
- 26
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
27
- 29
|
|
Item
4.
|
Controls
and Procedures
|
29
|
|
PART
II.
|
OTHER
INFORMATION
|
||
Item
1.
|
Legal
Proceedings
|
30
|
|
Item
2.
|
Purchases
of Equity Securities by the Issuer and Affiliated
Purchasers
|
30
|
|
Item
6.
|
Exhibits
|
30
|
|
SIGNATURE
|
31
|
||
Exhibit
12 -
|
Calculations
of Ratios of Earnings to Combined Fixed Charges
|
||
Exhibits
31(a)-(b) -
|
Certifications
of the Principal Executive Officer and Principal Financial
Officer
|
||
Exhibits
32(a)-(b) -
|
Certifications
of the Chief Executive Officer and Chief Financial Officer
|
|
(Dollars
in thousands)
|
September
30,
2006
|
December
31, 2005
|
|||||
|
(Unaudited)
|
(Note
1)
|
|
||||
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
53,119
|
$
|
52,527
|
|||
Mortgage
loans held for sale
|
107,659
|
38,259
|
|||||
Securities
available for sale, at market
|
896,446
|
861,623
|
|||||
Securities
held to maturity, at cost
|
207,239
|
227,262
|
|||||
Loans,
net of unearned income
|
4,666,230
|
4,628,258
|
|||||
Less
allowance for loan losses
|
(44,284
|
)
|
(42,122
|
)
|
|||
Net
loans
|
4,621,946
|
4,586,136
|
|||||
Federal
Home Loan Bank stock, at cost
|
79,406
|
80,525
|
|||||
Premises
and equipment
|
25,538
|
26,586
|
|||||
Bank
owned life insurance
|
118,423
|
116,519
|
|||||
Other
assets
|
98,472
|
92,329
|
|||||
Total
assets
|
$
|
6,208,248
|
$
|
6,081,766
|
|||
LIABILITIES
|
|||||||
Noninterest-bearing
deposits
|
$
|
267,223
|
$
|
284,932
|
|||
Interest-bearing
deposits:
|
|||||||
NOW
accounts
|
175,271
|
187,190
|
|||||
Savings
and money market accounts
|
771,625
|
932,048
|
|||||
Retail
certificates of deposit
|
1,204,849
|
1,102,188
|
|||||
Wholesale
deposits
|
615,851
|
636,585
|
|||||
Total
interest-bearing deposits
|
2,767,596
|
2,858,011
|
|||||
Total
deposits
|
3,034,819
|
3,142,943
|
|||||
Federal
funds purchased and other short-term borrowings
|
763,803
|
709,300
|
|||||
Short-term
FHLB advances
|
300,000
|
218,000
|
|||||
Long-term
FHLB advances and security repurchase agreements
|
1,576,439
|
1,489,432
|
|||||
Accrued
expenses and other liabilities
|
56,208
|
67,632
|
|||||
Long-term
debt
|
50,000
|
50,000
|
|||||
Total
liabilities
|
5,781,269
|
5,677,307
|
|||||
SHAREHOLDERS’
EQUITY
|
|||||||
Preferred
stock, $25 stated value: $2.25 cumulative and convertible; 5,000,000
shares authorized, none issued and outstanding
|
-
|
-
|
|||||
Common
stock, $5 par value, 100,000,000 shares authorized; 74,631,000 and
74,976,000 issued and outstanding, respectively
|
373,156
|
374,882
|
|||||
Capital
surplus
|
34,819
|
36,721
|
|||||
Retained
earnings
|
27,520
|
3,114
|
|||||
Accumulated
other comprehensive loss
|
(8,516
|
)
|
(10,258
|
)
|
|||
Total
shareholders’ equity
|
426,979
|
404,459
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
6,208,248
|
$
|
6,081,766
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
(In
thousands, except per share data)
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Interest
Income:
|
|||||||||||||
Interest
and fees on loans
|
$
|
81,160
|
$
|
70,556
|
$
|
233,524
|
$
|
202,477
|
|||||
Interest
on investment securities and FHLB stock dividends
|
13,794
|
12,795
|
42,444
|
37,452
|
|||||||||
Total
interest income
|
94,954
|
83,351
|
275,968
|
239,929
|
|||||||||
Interest
Expense:
|
|||||||||||||
Deposits
|
25,876
|
19,118
|
70,038
|
50,973
|
|||||||||
Short-term
borrowings
|
15,257
|
9,147
|
40,826
|
23,092
|
|||||||||
Long-term
FHLB advances and security repurchase agreements
|
17,444
|
15,931
|
50,428
|
47,480
|
|||||||||
Long-term
debt
|
1,075
|
1,075
|
3,225
|
3,225
|
|||||||||
Total
interest expense
|
59,652
|
45,271
|
164,517
|
124,770
|
|||||||||
Net
interest income
|
35,302
|
38,080
|
111,451
|
115,159
|
|||||||||
Provision
for loan losses
|
2,450
|
1,400
|
5,600
|
4,300
|
|||||||||
Net
interest income after provision for loan losses
|
32,852
|
36,680
|
105,851
|
110,859
|
|||||||||
Noninterest
Income:
|
|||||||||||||
Service
charges
|
3,230
|
3,318
|
9,538
|
9,007
|
|||||||||
Mortgage
banking income
|
3,093
|
4,760
|
7,112
|
13,817
|
|||||||||
Gain
on sale of securities
|
41
|
447
|
109
|
1,174
|
|||||||||
Gain
on sale of SBA loans
|
559
|
628
|
1,376
|
1,581
|
|||||||||
Income
from bank owned life insurance
|
1,023
|
1,083
|
2,983
|
3,176
|
|||||||||
Other
noninterest income
|
638
|
775
|
2,704
|
2,180
|
|||||||||
Total
noninterest income
|
8,584
|
11,011
|
23,822
|
30,935
|
|||||||||
Noninterest
Expense:
|
|||||||||||||
Salaries
and employee benefits
|
10,994
|
15,337
|
34,720
|
41,103
|
|||||||||
Occupancy
expense of premises
|
2,415
|
2,603
|
7,539
|
7,799
|
|||||||||
Equipment
expense
|
1,347
|
1,565
|
4,200
|
4,788
|
|||||||||
Other
noninterest expense
|
3,520
|
4,393
|
12,866
|
14,339
|
|||||||||
Merger
related expense
|
105
|
-
|
105
|
-
|
|||||||||
Total
noninterest expense
|
18,381
|
23,898
|
59,430
|
68,029
|
|||||||||
Income
before income taxes
|
23,055
|
23,793
|
70,243
|
73,765
|
|||||||||
Provision
for income taxes
|
6,847
|
6,571
|
21,222
|
21,761
|
|||||||||
Net
Income
|
$
|
16,208
|
$
|
17,222
|
$
|
49,021
|
$
|
52,004
|
|||||
Basic
earnings per share
|
$
|
.22
|
$
|
.23
|
$
|
.66
|
$
|
.68
|
|||||
Diluted
earnings per share
|
$
|
.22
|
$
|
.22
|
$
|
.65
|
$
|
.67
|
|||||
Average
common shares outstanding - diluted
|
75,251
|
76,577
|
75,305
|
77,486
|
|||||||||
Cash
dividends declared per common share
|
$
|
.11
|
$
|
.10
|
$
|
.33
|
$
|
.30
|
Nine
Months Ended
|
|||||||
September
30,
|
|||||||
(In
thousands)
|
2006
|
2005
|
|||||
Cash
Flows From Operating Activities:
|
|||||||
Net
income
|
$
|
49,021
|
$
|
52,004
|
|||
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities:
|
|||||||
Depreciation
and amortization
|
5,513
|
7,139
|
|||||
Stock-based
compensation expense
|
1,532
|
1,859
|
|||||
Net
gains on sale of securities available for sale
|
(109
|
)
|
(1,174
|
)
|
|||
Net
gains on sale of commercial and residential real estate
loans
|
(2,081
|
)
|
(4,725
|
)
|
|||
Proceeds
from sale of mortgage loans held for sale
|
328,507
|
542,411
|
|||||
Origination
of mortgage loans held for sale
|
(397,907
|
)
|
(528,937
|
)
|
|||
Net
decrease in other assets
|
(6,774
|
)
|
(23,258
|
)
|
|||
Net
(decrease) increase in other liabilities
|
(11,424
|
)
|
620
|
||||
Other,
net
|
2,181
|
129
|
|||||
Total
adjustments
|
(80,562
|
)
|
(5,936
|
)
|
|||
Net
cash (used in) provided by operating activities
|
(31,541
|
)
|
46,068
|
||||
Cash
Flows From Investing Activities:
|
|||||||
Proceeds
from sale of securities available for sale
|
15,431
|
198,159
|
|||||
Proceeds
from calls and principal payments of securities available for
sale
|
49,629
|
89,843
|
|||||
Proceeds
from principal payments of securities held to maturity
|
19,944
|
36,459
|
|||||
Purchases
of securities available for sale
|
(98,035
|
)
|
(473,354
|
)
|
|||
Purchases
of securities held to maturity
|
-
|
(50,921
|
)
|
||||
Proceeds
from sale of commercial and residential real estate loans
|
119,359
|
259,952
|
|||||
Net
increase in loans made to customers
|
(155,876
|
)
|
(406,415
|
)
|
|||
Purchases
of premises and equipment
|
(2,622
|
)
|
(4,556
|
)
|
|||
Net
cash used in investing activities
|
(52,170
|
)
|
(350,833
|
)
|
|||
Cash
Flows From Financing Activities:
|
|||||||
Net
(decrease) increase in total deposits
|
(108,124
|
)
|
168,396
|
||||
Net
increase in short-term borrowings
|
54,503
|
180,475
|
|||||
Net
increase (decrease) in short-term FHLB advances
|
82,000
|
(25,000
|
)
|
||||
Proceeds
from long-term FHLB advances and security repurchase
agreements
|
214,485
|
113,250
|
|||||
Payments
on long-term FHLB advances and security repurchase
agreements
|
(127,931
|
)
|
(64,612
|
)
|
|||
Net
proceeds from issuance of common shares
|
1,905
|
7,282
|
|||||
Excess
tax benefits of stock-based awards
|
603
|
-
|
|||||
Repurchase
of common shares
|
(8,507
|
)
|
(37,235
|
)
|
|||
Dividends
paid on common shares
|
(24,631
|
)
|
(23,067
|
)
|
|||
Net
cash provided by financing activities
|
84,303
|
319,489
|
|||||
Net
increase in cash and cash equivalents
|
592
|
14,724
|
|||||
Cash
and cash equivalents at beginning of period
|
52,527
|
53,671
|
|||||
Cash
and cash equivalents at end of period
|
$
|
53,119
|
$
|
68,395
|
(In
thousands)
|
2006
|
2005
|
|||||
Cash
paid during the period for:
|
|||||||
Interest
|
$
|
164,049
|
$
|
123,874
|
|||
Income
taxes
|
$
|
24,700
|
$
|
22,229
|
|||
Non-cash
investing activities:
|
|||||||
Loan
charge-offs
|
$
|
4,377
|
$
|
5,442
|
|||
Loans
transferred to other real estate owned
|
$
|
15,599
|
$
|
16,540
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
(In
thousands)
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Net
income
|
$
|
16,208
|
$
|
17,222
|
$
|
49,021
|
$
|
52,004
|
|||||
Unrealized
holding gains (losses) on securities, net of tax (credit) of $5,320,
($1,464), $976 and ($649), respectively
|
9,880
|
(2,719
|
)
|
1,813
|
(1,206
|
)
|
|||||||
Reclassification
adjustment for gains included in net income, net of tax of $14, $156,
$38
and $411, respectively
|
(27
|
)
|
(291
|
)
|
(71
|
)
|
(763
|
)
|
|||||
Net
unrealized gains (losses) on securities, net of tax
|
9,853
|
(3,010
|
)
|
1,742
|
(1,969
|
)
|
|||||||
Comprehensive
income
|
$
|
26,061
|
$
|
14,212
|
$
|
50,763
|
$
|
50,035
|
(In
thousands)
|
September
30, 2006
|
December
31, 2005
|
|||||
Core
Deposit Intangible Asset:
|
|||||||
Gross
carrying amount
|
$
|
10,883
|
$
|
10,883
|
|||
Accumulated
amortization
|
8,523
|
7,880
|
|||||
Net
book value
|
$
|
2,360
|
$
|
3,003
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
(In
thousands, except per share data)
|
2006
|
2005(1)
|
2006
|
2005(1)
|
|||||||||
Numerator
for basic and diluted earnings per share:
|
|||||||||||||
Net
income
|
$
|
16,208
|
$
|
17,222
|
$
|
49,021
|
$
|
52,004
|
|||||
Denominator
for basic earnings per share - weighted-average shares
|
74,570
|
75,740
|
74,653
|
76,630
|
|||||||||
Effect
of dilutive securities:
|
|||||||||||||
Stock
options
|
642
|
778
|
611
|
795
|
|||||||||
Warrants
|
39
|
59
|
41
|
61
|
|||||||||
Dilutive
potential common shares
|
681
|
837
|
652
|
856
|
|||||||||
Denominator
for diluted earnings per share—adjusted weighted-average shares for
assumed conversions
|
75,251
|
76,577
|
75,305
|
77,486
|
|||||||||
Basic
earnings per share
|
$
|
.22
|
$
|
.23
|
$
|
.66
|
$
|
.68
|
|||||
Diluted
earnings per share
|
$
|
.22
|
$
|
.22
|
$
|
.65
|
$
|
.67
|
|||||
(In
thousands)
|
Commercial
|
Retail
|
Mortgage
|
Treasury
and
Other
|
Consolidated
|
|||||||||||
For
the Three Months Ended September 30, 2006
|
||||||||||||||||
Net
interest income from external customers
|
$
|
33,856
|
$
|
(10,920
|
)
|
$
|
2,920
|
$
|
9,446
|
$
|
35,302
|
|||||
Internal
funding
|
(16,204
|
)
|
34,565
|
(1,794
|
)
|
(16,567
|
)
|
-
|
||||||||
Net
interest income
|
17,652
|
23,645
|
1,126
|
(7,121
|
)
|
35,302
|
||||||||||
Provision
for loan losses(1)
|
982
|
-
|
23
|
1,445
|
2,450
|
|||||||||||
Noninterest
income
|
989
|
3,285
|
3,141
|
1,169
|
8,584
|
|||||||||||
Noninterest
expense
|
2,294
|
7,424
|
3,289
|
5,374
|
18,381
|
|||||||||||
Income
before taxes
|
15,365
|
19,506
|
955
|
(12,771
|
)
|
23,055
|
||||||||||
Income
taxes
|
5,378
|
6,827
|
334
|
(5,692
|
)
|
6,847
|
||||||||||
Net
income
|
$
|
9,987
|
$
|
12,679
|
$
|
621
|
$
|
(7,079
|
)
|
$
|
16,208
|
|||||
Depreciation
and amortization
|
$
|
20
|
$
|
680
|
$
|
212
|
$
|
991
|
$
|
1,903
|
||||||
Capital
expenditures
|
$
|
-
|
$
|
57
|
$
|
2
|
$
|
62
|
$
|
121
|
||||||
Net
identifiable assets (in millions)
|
$
|
1,772
|
$
|
2,718
|
$
|
184
|
$
|
1,534
|
$
|
6,208
|
||||||
Return
on equity(2)
|
22.62
|
%
|
39.08
|
%
|
25.50
|
%
|
n/m
|
15.48
|
%
|
|||||||
Return
on assets
|
2.26
|
%
|
1.86
|
%
|
1.27
|
%
|
n/m
|
1.03
|
%
|
|||||||
Efficiency
ratio
|
12.31
|
%
|
27.57
|
%
|
77.08
|
%
|
n/m
|
41.09
|
%
|
(In
thousands)
|
Commercial
|
Retail
|
Mortgage
|
Treasury
and
Other
|
Consolidated
|
|||||||||||
For
the Three Months Ended September 30, 2005
|
||||||||||||||||
Net
interest income from external customers
|
$
|
28,041
|
$
|
(7,920
|
)
|
$
|
3,881
|
$
|
14,078
|
$
|
38,080
|
|||||
Internal
funding
|
(11,950
|
)
|
34,512
|
(1,993
|
)
|
(20,569
|
)
|
-
|
||||||||
Net
interest income
|
16,091
|
26,592
|
1,888
|
(6,491
|
)
|
38,080
|
||||||||||
Provision
for loan losses(1)
|
1,155
|
195
|
162
|
(112
|
)
|
1,400
|
||||||||||
Noninterest
income
|
1,020
|
3,385
|
5,563
|
1,043
|
11,011
|
|||||||||||
Noninterest
expense
|
3,055
|
8,293
|
4,972
|
7,578
|
23,898
|
|||||||||||
Income
before taxes
|
12,901
|
21,489
|
2,317
|
(12,914
|
)
|
23,793
|
||||||||||
Income
taxes
|
4,516
|
7,521
|
811
|
(6,277
|
)
|
6,571
|
||||||||||
Net
income
|
$
|
8,385
|
$
|
13,968
|
$
|
1,506
|
$
|
(6,637
|
)
|
$
|
17,222
|
|||||
Depreciation
and amortization
|
$
|
25
|
$
|
714
|
$
|
488
|
$
|
1,398
|
$
|
2,625
|
||||||
Capital
expenditures
|
$
|
4
|
$
|
2,152
|
$
|
19
|
$
|
218
|
$
|
2,393
|
||||||
Net
identifiable assets (in millions)
|
$
|
1,659
|
$
|
2,940
|
$
|
240
|
$
|
1,242
|
$
|
6,081
|
||||||
Return
on equity(2)
|
20.38
|
%
|
40.08
|
%
|
44.23
|
%
|
n/m
|
16.87
|
%
|
|||||||
Return
on assets
|
2.04
|
%
|
1.91
|
%
|
2.21
|
%
|
n/m
|
1.14
|
%
|
|||||||
Efficiency
ratio
|
17.85
|
%
|
27.66
|
%
|
66.73
|
%
|
n/m
|
48.26
|
%
|
(1)
|
The
provision for loan losses for each segment reflects net charge-offs
in
each segment and the maintenance of a fixed allowance for loan losses
to
loans ratio.
|
(2)
|
Capital
is allocated as a percentage of assets of 10% and 5% for the commercial
and mortgage banking segments, respectively and is allocated as a
percentage of deposits of 5% for the retail segment.
|
n/m
|
-- Not
meaningful
|
(In
thousands)
|
Commercial
|
Retail
|
Mortgage
|
Treasury
and
Other
|
Consolidated
|
|||||||||||
For
the Nine Months Ended September 30, 2006
|
||||||||||||||||
Net
interest income from external customers
|
$
|
97,078
|
$
|
(28,669
|
)
|
$
|
7,803
|
$
|
35,239
|
$
|
111,451
|
|||||
Internal
funding
|
(44,359
|
)
|
102,287
|
(4,689
|
)
|
(53,239
|
)
|
-
|
||||||||
Net
interest income
|
52,719
|
73,618
|
3,114
|
(18,000
|
)
|
111,451
|
||||||||||
Provision
for loan losses(1)
|
2,290
|
100
|
277
|
2,933
|
5,600
|
|||||||||||
Noninterest
income
|
3,297
|
9,738
|
9,354
|
1,433
|
23,822
|
|||||||||||
Noninterest
expense
|
7,723
|
22,904
|
11,251
|
17,552
|
59,430
|
|||||||||||
Income
before taxes
|
46,003
|
60,352
|
940
|
(37,052
|
)
|
70,243
|
||||||||||
Income
taxes
|
16,101
|
21,123
|
329
|
(16,331
|
)
|
21,222
|
||||||||||
Net
income
|
$
|
29,902
|
$
|
39,229
|
$
|
611
|
$
|
(20,721
|
)
|
$
|
49,021
|
|||||
Depreciation
and amortization
|
$
|
56
|
$
|
2,052
|
$
|
663
|
$
|
2,742
|
$
|
5,513
|
||||||
Capital
expenditures
|
$
|
1
|
$
|
1,969
|
$
|
134
|
$
|
518
|
$
|
2,622
|
||||||
Net
identifiable assets (in millions)
|
$
|
1,772
|
$
|
2,718
|
$
|
184
|
$
|
1,534
|
$
|
6,208
|
||||||
Return
on equity(2)
|
22.89
|
%
|
39.77
|
%
|
8.87
|
%
|
n/m
|
15.85
|
%
|
|||||||
Return
on assets
|
2.29
|
%
|
1.89
|
%
|
0.44
|
%
|
n/m
|
1.05
|
%
|
|||||||
Efficiency
ratio
|
13.79
|
%
|
27.48
|
%
|
90.24
|
%
|
n/m
|
43.13
|
%
|
(In
thousands)
|
Commercial
|
Retail
|
Mortgage
|
Treasury
and
Other
|
Consolidated
|
|||||||||||
For
the Nine Months Ended September 30, 2005
|
||||||||||||||||
Net
interest income from external customers
|
$
|
78,165
|
$
|
(20,762
|
)
|
$
|
10,149
|
$
|
47,607
|
$
|
115,159
|
|||||
Internal
funding
|
(32,511
|
)
|
98,624
|
(5,085
|
)
|
(61,028
|
)
|
-
|
||||||||
Net
interest income
|
45,654
|
77,862
|
5,064
|
(13,421
|
)
|
115,159
|
||||||||||
Provision
for loan losses(1)
|
3,063
|
732
|
400
|
105
|
4,300
|
|||||||||||
Noninterest
income
|
2,610
|
9,241
|
14,687
|
4,397
|
30,935
|
|||||||||||
Noninterest
expense
|
8,999
|
24,362
|
14,894
|
19,774
|
68,029
|
|||||||||||
Income
before taxes
|
36,202
|
62,009
|
4,457
|
(28,903
|
)
|
73,765
|
||||||||||
Income
taxes
|
12,671
|
21,703
|
1,560
|
(14,173
|
)
|
21,761
|
||||||||||
Net
income
|
$
|
23,531
|
$
|
40,306
|
$
|
2,897
|
$
|
(14,730
|
)
|
$
|
52,004
|
|||||
Depreciation
and amortization
|
$
|
79
|
$
|
2,181
|
$
|
1,353
|
$
|
3,526
|
$
|
7,139
|
||||||
Capital
expenditures
|
$
|
20
|
$
|
2,736
|
$
|
82
|
$
|
1,718
|
$
|
4,556
|
||||||
Net
identifiable assets (in millions)
|
$
|
1,659
|
$
|
2,940
|
$
|
240
|
$
|
1,242
|
$
|
6,081
|
||||||
Return
on equity(2)
|
19.57
|
%
|
38.81
|
%
|
31.15
|
%
|
n/m
|
16.88
|
%
|
|||||||
Return
on assets
|
1.96
|
%
|
1.85
|
%
|
1.56
|
%
|
n/m
|
1.16
|
%
|
|||||||
Efficiency
ratio
|
18.65
|
%
|
27.97
|
%
|
75.41
|
%
|
n/m
|
46.09
|
%
|
(1)
|
The
provision for loan losses for each segment reflects net charge-offs
in
each segment and the maintenance of a fixed allowance for loan losses
to
loans ratio.
|
(2)
|
Capital
is allocated as a percentage of assets of 10% and 5% for the commercial
and mortgage banking segments, respectively and is allocated as a
percentage of deposits of 5% for the retail segment.
|
n/m
|
-- Not
meaningful
|
Three
Months Ended
|
Nine
Months Ended
|
||||||
September
30,
|
September
30,
|
||||||
(Dollars
in thousands, except per share data)
|
2005
|
2005
|
|||||
Net
income (as reported)
|
$
|
17,222
|
$
|
52,004
|
|||
Add:
Stock-based employee compensation expense included in reported net
income,
net of related tax effects
|
452
|
1,208
|
|||||
Deduct:
Total stock-based employee compensation expense determined under
fair
value based method for all awards, net of related tax
effects
|
(505
|
)
|
(1,396
|
)
|
|||
Net
income (pro forma)
|
$
|
17,169
|
$
|
51,816
|
|||
Basic
earnings per share (as reported)
|
$
|
.23
|
$
|
.68
|
|||
Basic
earnings per share (pro forma)
|
.23
|
.68
|
|||||
Diluted
earnings per share (as reported)
|
$
|
.22
|
$
|
.67
|
|||
Diluted
earnings per share (pro forma)
|
.22
|
.67
|
|||||
Weighted
|
|||||||||||||
Weighted-
|
Average
|
Aggregate
|
|||||||||||
Average
|
Remaining
|
Intrinsic
|
|||||||||||
Number
of
|
Exercise
|
Contractual
|
Value
|
||||||||||
Options
|
Price
|
Term
|
(in
thousands)
|
||||||||||
Outstanding
at January 1, 2006
|
2,367,472
|
$
|
7.05
|
||||||||||
Granted
|
3,600
|
12.40
|
|||||||||||
Exercised
|
(272,197
|
)
|
5.74
|
||||||||||
Forfeited,
cancelled and expired
|
(7,550
|
)
|
8.91
|
||||||||||
Outstanding
at September 30, 2006
|
2,091,325
|
$
|
7.23
|
3.3
|
$
|
12,767
|
|||||||
Exercisable
at September 30, 2006
|
2,083,893
|
$
|
7.21
|
3.3
|
$
|
12,756
|
Weighted-Average
|
|||||||
Grant
Date
|
|||||||
Shares
|
Fair
Value
|
||||||
Nonvested
at January 1, 2006
|
795,998
|
$
|
11.811
|
||||
Granted
|
91,144
|
12.270
|
|||||
Vested
|
(120,726
|
)
|
12.776
|
||||
Forfeited
|
(46,751
|
)
|
11.747
|
||||
Nonvested
at September 30, 2006
|
719,665
|
$
|
11.711
|
(In
thousands)
|
September
30,
2006
|
December
31,
2005
|
|||||
Financial
instruments whose contract amounts represent credit risk:
|
|||||||
Commitments
to fund residential real estate loans
|
$
|
141,216
|
$
|
201,846
|
|||
Commitments
to fund commercial real estate construction loans and lines of
credit
|
344,526
|
375,054
|
|||||
Commitments
to fund the pipeline of commercial real estate loans
|
164,542
|
225,878
|
|||||
Other
unused commitments to extend credit
|
400,888
|
418,158
|
|||||
Standby
letters of credit
|
108,548
|
125,338
|
Three
Months Ended
September
30, 2006
|
Three
Months Ended
September
30, 2005
|
||||||||||||||||||
(Dollars
in thousands)
|
Average
Balance
|
Interest
|
Average
Rate
|
Average
Balance
|
Interest
|
Average
Rate
|
|||||||||||||
Average
Assets:
|
|||||||||||||||||||
Short-term
investments
|
$
|
1,454
|
$
|
12
|
3.53
|
%
|
$
|
1,125
|
$
|
9
|
3.26
|
%
|
|||||||
Mortgage
loans held for sale
|
62,634
|
1,025
|
6.55
|
123,039
|
1,811
|
5.89
|
|||||||||||||
Securities
available for sale: (1)
|
|||||||||||||||||||
Taxable
|
681,533
|
8,566
|
5.03
|
620,465
|
7,142
|
4.60
|
|||||||||||||
Tax-exempt
|
218,541
|
2,900
|
5.26
|
203,673
|
2,762
|
5.38
|
|||||||||||||
Securities
held to maturity
|
211,498
|
2,399
|
4.54
|
246,915
|
2,795
|
4.53
|
|||||||||||||
Portfolio
loans:
(2)
|
|||||||||||||||||||
Commercial
loans
|
1,785,509
|
34,103
|
7.47
|
1,662,161
|
28,295
|
6.66
|
|||||||||||||
Residential
real estate mortgage loans
|
2,284,742
|
32,025
|
5.61
|
2,138,468
|
28,017
|
5.24
|
|||||||||||||
Installment
loans
|
715,830
|
14,007
|
7.76
|
752,278
|
12,433
|
6.56
|
|||||||||||||
Total
loans, net of unearned income
|
4,786,081
|
80,135
|
6.63
|
4,552,907
|
68,745
|
5.98
|
|||||||||||||
Federal
Home Loan Bank stock (at cost)
|
79,717
|
805
|
4.01
|
80,518
|
965
|
4.75
|
|||||||||||||
Total
interest-earning assets
|
6,041,458
|
95,842
|
6.29
|
5,828,642
|
84,229
|
5.73
|
|||||||||||||
Allowance
for loan losses
|
(43,543
|
)
|
(42,098
|
)
|
|||||||||||||||
Cash
and due from banks
|
44,338
|
51,647
|
|||||||||||||||||
Other
assets
|
239,668
|
212,929
|
|||||||||||||||||
Total
assets
|
$
|
6,281,921
|
$
|
6,051,120
|
|||||||||||||||
Average
Liabilities and Shareholders’ Equity:
|
|||||||||||||||||||
Interest-bearing
demand deposits
|
$
|
179,763
|
$
|
379
|
0.84
|
%
|
$
|
193,258
|
$
|
266
|
0.55
|
%
|
|||||||
Savings
and money market accounts
|
797,106
|
5,019
|
2.50
|
998,537
|
4,738
|
1.88
|
|||||||||||||
Retail
certificates of deposit
|
1,197,760
|
12,836
|
4.25
|
1,031,360
|
8,693
|
3.34
|
|||||||||||||
Wholesale
deposits
|
590,560
|
7,642
|
5.13
|
584,836
|
5,421
|
3.68
|
|||||||||||||
Total
interest-bearing deposits
|
2,765,189
|
25,876
|
3.71
|
2,807,991
|
19,118
|
2.70
|
|||||||||||||
Short-term
borrowings
|
1,159,512
|
15,257
|
5.15
|
1,022,939
|
9,147
|
3.50
|
|||||||||||||
Long-term
FHLB advances and security repurchase agreements
|
1,577,589
|
17,444
|
4.33
|
1,425,914
|
15,931
|
4.37
|
|||||||||||||
Long-term
debt
|
50,000
|
1,075
|
8.60
|
50,000
|
1,075
|
8.60
|
|||||||||||||
Total
interest-bearing liabilities
|
5,552,290
|
59,652
|
4.23
|
5,306,844
|
45,271
|
3.36
|
|||||||||||||
Noninterest-bearing
deposits
|
273,060
|
292,012
|
|||||||||||||||||
Other
liabilities
|
37,865
|
43,931
|
|||||||||||||||||
Total
liabilities
|
5,863,215
|
5,642,787
|
|||||||||||||||||
Shareholders’
equity
|
418,706
|
408,333
|
|||||||||||||||||
Total
liabilities and shareholders’ equity
|
$
|
6,281,921
|
$
|
6,051,120
|
|||||||||||||||
Net
interest income/rate spread (FTE)
|
$
|
36,190
|
2.06
|
%
|
$
|
38,958
|
2.37
|
%
|
|||||||||||
FTE
adjustment
|
$
|
888
|
$
|
878
|
|||||||||||||||
Impact
of noninterest-
|
|||||||||||||||||||
bearing
sources of funds
|
0.34
|
%
|
0.30
|
%
|
|||||||||||||||
Net
interest margin (FTE)
|
2.40
|
%
|
2.67
|
%
|
|||||||||||||||
(1)
|
To
compare the tax-exempt asset yields to taxable yields, amounts are
adjusted to pretax equivalents based on the marginal corporate Federal
tax
rate of 35%.
|
(2)
|
Non-accrual
loans and overdrafts are included in average
balances.
|
Increase
(decrease) due to change in:
|
Volume(1)
|
Rate(1)
|
Net
Change
|
|||||||
Interest
Income:
|
||||||||||
Short-term
investments
|
$
|
2
|
$
|
1
|
$
|
3
|
||||
Mortgage
loans held for sale
|
(970
|
)
|
184
|
(786
|
)
|
|||||
Securities
available for sale:
|
||||||||||
Taxable
|
730
|
694
|
1,424
|
|||||||
Tax-exempt
|
199
|
(61
|
)
|
138
|
||||||
Securities
held to maturity
|
(402
|
)
|
6
|
(396
|
)
|
|||||
Portfolio
loans:
(2)
|
||||||||||
Commercial
loans
|
2,201
|
3,607
|
5,808
|
|||||||
Residential
real estate mortgage loans
|
1,972
|
2,036
|
4,008
|
|||||||
Installment
loans
|
(616
|
)
|
2,190
|
1,574
|
||||||
Total
loans, net of unearned income
|
3,557
|
7,833
|
11,390
|
|||||||
Federal
Home Loan Bank stock (at cost)
|
(10
|
)
|
(150
|
)
|
(160
|
)
|
||||
Total
interest income
|
3,106
|
8,507
|
11,613
|
|||||||
Interest
Expense:
|
||||||||||
Interest-bearing
demand deposits
|
(20
|
)
|
133
|
113
|
||||||
Savings
and money market
|
(1,068
|
)
|
1,349
|
281
|
||||||
Retail
certificates of deposit
|
1,541
|
2,602
|
4,143
|
|||||||
Wholesale
deposits
|
54
|
2,167
|
2,221
|
|||||||
Total
interest-bearing deposits
|
507
|
6,251
|
6,758
|
|||||||
Short-term
borrowings
|
1,348
|
4,762
|
6,110
|
|||||||
Long-term
FHLB advances and security repurchase agreements
|
1,656
|
(143
|
)
|
1,513
|
||||||
Long-term
debt
|
-
|
-
|
-
|
|||||||
Total
interest expense
|
3,511
|
10,870
|
14,381
|
|||||||
Net
interest income (FTE)
|
$
|
(405
|
)
|
$
|
(2,363
|
)
|
$
|
(2,768
|
)
|
(1)
|
Variances
attributable jointly to volume and rate changes are allocated to
volume
and rate in proportion to the relationship of the absolute dollar
amount
of the change in each.
|
(2)
|
Non-accrual
loans and overdrafts are included in average
balances.
|
Nine
Months Ended
September
30, 2006
|
Nine
Months Ended
September
30, 2005
|
||||||||||||||||||
(Dollars
in thousands)
|
Average
Balance
|
Interest
|
Average
Rate
|
Average
Balance
|
Interest
|
Average
Rate
|
|||||||||||||
Average
Assets:
|
|||||||||||||||||||
Short-term
investments
|
$
|
1,120
|
$
|
34
|
4.53
|
%
|
$
|
1,321
|
$
|
22
|
2.20
|
%
|
|||||||
Mortgage
loans held for sale
|
41,237
|
1,992
|
6.44
|
104,960
|
4,630
|
5.88
|
|||||||||||||
Securities
available for sale: (1)
|
|||||||||||||||||||
Taxable
|
689,243
|
25,858
|
5.00
|
595,373
|
20,458
|
4.53
|
|||||||||||||
Tax-exempt
|
218,269
|
8,661
|
5.31
|
209,717
|
8,543
|
5.45
|
|||||||||||||
Securities
held to maturity
|
218,595
|
7,606
|
4.64
|
246,429
|
8,457
|
4.58
|
|||||||||||||
Portfolio
loans:
(2)
|
|||||||||||||||||||
Commercial
loans
|
1,761,263
|
97,818
|
7.32
|
1,620,991
|
78,879
|
6.42
|
|||||||||||||
Residential
real estate mortgage loans
|
2,265,865
|
93,354
|
5.49
|
2,143,661
|
83,982
|
5.22
|
|||||||||||||
Installment
loans
|
722,374
|
40,360
|
7.47
|
745,385
|
34,986
|
6.28
|
|||||||||||||
Total
loans, net of unearned income
|
4,749,502
|
231,532
|
6.47
|
4,510,037
|
197,847
|
5.83
|
|||||||||||||
Federal
Home Loan Bank stock (at cost)
|
80,231
|
2,903
|
4.84
|
80,645
|
2,646
|
4.39
|
|||||||||||||
Total
interest-earning assets
|
5,998,197
|
278,586
|
6.17
|
5,748,482
|
242,603
|
5.60
|
|||||||||||||
Allowance
for loan losses
|
(42,989
|
)
|
(41,950
|
)
|
|||||||||||||||
Cash
and due from banks
|
43,826
|
49,922
|
|||||||||||||||||
Other
assets
|
235,414
|
210,018
|
|||||||||||||||||
Total
assets
|
$
|
6,234,448
|
$
|
5,966,472
|
|||||||||||||||
Average
Liabilities and Shareholders’ Equity:
|
|||||||||||||||||||
Interest-bearing
demand deposits
|
$
|
181,177
|
$
|
972
|
0.72
|
%
|
$
|
197,853
|
$
|
718
|
0.49
|
%
|
|||||||
Savings
and money market accounts
|
834,997
|
14,009
|
2.24
|
1,019,600
|
12,837
|
1.68
|
|||||||||||||
Retail
certificates of deposit
|
1,171,433
|
34,514
|
3.94
|
977,798
|
23,600
|
3.23
|
|||||||||||||
Wholesale
deposits
|
580,587
|
20,543
|
4.73
|
564,508
|
13,818
|
3.27
|
|||||||||||||
Total
interest-bearing deposits
|
2,768,194
|
70,038
|
3.38
|
2,759,759
|
50,973
|
2.47
|
|||||||||||||
Short-term
borrowings
|
1,131,765
|
40,826
|
4.76
|
997,970
|
23,092
|
3.05
|
|||||||||||||
Long-term
FHLB advances and security repurchase agreements
|
1,559,322
|
50,428
|
4.26
|
1,422,232
|
47,480
|
4.40
|
|||||||||||||
Long-term
debt
|
50,000
|
3,225
|
8.60
|
50,000
|
3,225
|
8.60
|
|||||||||||||
Total
interest-bearing liabilities
|
5,509,281
|
164,517
|
3.96
|
5,229,961
|
124,770
|
3.16
|
|||||||||||||
Noninterest-bearing
deposits
|
269,958
|
282,875
|
|||||||||||||||||
Other
liabilities
|
42,931
|
42,783
|
|||||||||||||||||
Total
liabilities
|
5,822,170
|
5,555,619
|
|||||||||||||||||
Shareholders’
equity
|
412,278
|
410,853
|
|||||||||||||||||
Total
liabilities and shareholders’ equity
|
$
|
6,234,448
|
$
|
5,966,472
|
|||||||||||||||
Net
interest income/rate spread (FTE)
|
$
|
114,069
|
2.21
|
%
|
$
|
117,833
|
2.44
|
%
|
|||||||||||
FTE
adjustment
|
$
|
2,618
|
$
|
2,674
|
|||||||||||||||
Impact
of noninterest-
|
|||||||||||||||||||
bearing
sources of funds
|
0.32
|
%
|
0.29
|
%
|
|||||||||||||||
Net
interest margin (FTE)
|
2.53
|
%
|
2.73
|
%
|
|||||||||||||||
(1)
|
To
compare the tax-exempt asset yields to taxable yields, amounts are
adjusted to pretax equivalents based on the marginal corporate Federal
tax
rate of 35%.
|
(2)
|
Non-accrual
loans and overdrafts are included in average
balances.
|
Increase
(decrease) due to change in:
|
Volume(1)
|
Rate(1)
|
Net
Change
|
|||||||
Interest
Income:
|
||||||||||
Short-term
investments
|
$
|
(4
|
)
|
$
|
16
|
$
|
12
|
|||
Mortgage
loans held for sale
|
(3,043
|
)
|
405
|
(2,638
|
)
|
|||||
Securities
available for sale:
|
||||||||||
Taxable
|
3,257
|
2,143
|
5,400
|
|||||||
Tax-exempt
|
343
|
(225
|
)
|
118
|
||||||
Securities
held to maturity
|
(961
|
)
|
110
|
(851
|
)
|
|||||
Portfolio
loans:
(2)
|
||||||||||
Commercial
loans
|
7,228
|
11,711
|
18,939
|
|||||||
Residential
real estate mortgage loans
|
4,913
|
4,459
|
9,372
|
|||||||
Installment
loans
|
(1,111
|
)
|
6,485
|
5,374
|
||||||
Total
loans, net of unearned income
|
11,030
|
22,655
|
33,685
|
|||||||
Federal
Home Loan Bank stock (at cost)
|
(14
|
)
|
271
|
257
|
||||||
Total
interest income
|
10,608
|
25,375
|
35,983
|
|||||||
Interest
Expense:
|
||||||||||
Interest-bearing
demand deposits
|
(65
|
)
|
319
|
254
|
||||||
Savings
and money market
|
(2,602
|
)
|
3,774
|
1,172
|
||||||
Retail
certificates of deposit
|
5,173
|
5,741
|
10,914
|
|||||||
Wholesale
deposits
|
403
|
6,322
|
6,725
|
|||||||
Total
interest-bearing deposits
|
2,909
|
16,156
|
19,065
|
|||||||
Short-term
borrowings
|
3,423
|
14,311
|
17,734
|
|||||||
Long-term
FHLB advances and security repurchase agreements
|
4,462
|
(1,514
|
)
|
2,948
|
||||||
Long-term
debt
|
-
|
-
|
-
|
|||||||
Total
interest expense
|
10,794
|
28,953
|
39,747
|
|||||||
Net
interest income (FTE)
|
$
|
(186
|
)
|
$
|
(3,578
|
)
|
$
|
(3,764
|
)
|
(1)
|
Variances
attributable jointly to volume and rate changes are allocated to
volume
and rate in proportion to the relationship of the absolute dollar
amount
of the change in each.
|
(2)
|
Non-accrual
loans and overdrafts are included in average
balances.
|
Investment
Securities
|
|||||||||||||
(In
thousands)
|
Gross
Amortized Cost
|
Gross
Unrealized Gains
|
Gross
Unrealized Losses
|
Fair
Value
|
|||||||||
Securities
Available For Sale (Estimated Fair Value):
|
|||||||||||||
U.S.
Government agency securities
|
$
|
351,765
|
$
|
21
|
$
|
5,734
|
$
|
346,052
|
|||||
Collateralized
mortgage obligations
|
250,233
|
330
|
4,603
|
245,960
|
|||||||||
Mortgage-backed
securities
|
93,206
|
2
|
2,001
|
91,207
|
|||||||||
Municipal
and other securities
|
214,343
|
321
|
1,437
|
213,227
|
|||||||||
Total
securities available for sale
|
$
|
909,547
|
$
|
674
|
$
|
13,775
|
$
|
896,446
|
|||||
Securities
Held To Maturity (At Cost):
|
|||||||||||||
Collateralized
mortgage obligations
|
$
|
177,380
|
$
|
-
|
$
|
5,564
|
$
|
171,816
|
|||||
Mortgage-backed
securities
|
29,859
|
-
|
846
|
29,013
|
|||||||||
Total
securities held to maturity
|
$
|
207,239
|
$
|
-
|
$
|
6,410
|
$
|
200,829
|
September
30, 2006
|
December
31, 2005
|
||||||||||||
(Dollars
in thousands)
|
Amount
|
Percent
|
Amount
|
Percent
|
|||||||||
Commercial
loans:
|
|||||||||||||
Commercial
and industrial
|
$
|
28,588
|
0.6
|
%
|
$
|
28,314
|
0.6
|
%
|
|||||
Real
estate construction
|
436,392
|
9.4
|
360,999
|
7.8
|
|||||||||
Commercial
real estate mortgage
|
1,326,769
|
28.4
|
1,308,557
|
28.3
|
|||||||||
Total
commercial loans
|
1,791,749
|
38.4
|
1,697,870
|
36.7
|
|||||||||
Residential
real estate mortgages
|
2,163,438
|
46.4
|
2,193,128
|
47.4
|
|||||||||
Installment
loans:
|
|||||||||||||
Home
equity lines of credit
|
329,530
|
7.1
|
390,373
|
8.4
|
|||||||||
Home
equity term loans
|
214,710
|
4.6
|
170,352
|
3.7
|
|||||||||
Other
consumer loans
|
166,803
|
3.5
|
176,535
|
3.8
|
|||||||||
Total
installment loans
|
711,043
|
15.2
|
737,260
|
15.9
|
|||||||||
Total
portfolio loans
|
$
|
4,666,230
|
100.0
|
%
|
$
|
4,628,258
|
100.0
|
%
|
September
30,
|
December
31,
|
||||||
(Dollars
in thousands)
|
2006
|
2005
|
|||||
Non-Performing
Assets:
|
|||||||
Non-accrual
loans:
|
|||||||
Commercial
|
$
|
42,293
|
$
|
27,344
|
|||
Residential
real estate mortgages
|
16,602
|
19,026
|
|||||
Installment
|
2,500
|
2,413
|
|||||
Total
non-accrual loans
|
61,395
|
48,783
|
|||||
Other
real estate owned:
|
|||||||
Commercial
|
6,431
|
8,575
|
|||||
Residential
real estate mortgages
|
8,146
|
3,029
|
|||||
Installment
|
890
|
712
|
|||||
Total
other real estate owned
|
15,467
|
12,316
|
|||||
Total
non-performing assets
|
$
|
76,862
|
$
|
61,099
|
|||
Non-performing
assets as a percentage of:
|
|||||||
Portfolio
loans and OREO
|
1.64
|
%
|
1.32
|
%
|
|||
Total
assets
|
1.24
|
%
|
1.00
|
%
|
Nine
Months Ended
September
30,
|
|||||||
(Dollars
in thousands)
|
2006
|
2005
|
|||||
Allowance
for loan losses:
|
|||||||
Balance
at January 1
|
$
|
42,122
|
$
|
41,818
|
|||
Loans
charged off
|
(4,377
|
)
|
(5,442
|
)
|
|||
Recoveries
of loans previously charged off
|
939
|
1,270
|
|||||
Net
charge-offs
|
(3,438
|
)
|
(4,172
|
)
|
|||
Provision
charged to expense
|
5,600
|
4,300
|
|||||
Balance
at September 30
|
$
|
44,284
|
$
|
41,946
|
|||
Annualized
net charge-offs as a percentage of average loans
|
.10
|
%
|
.12
|
%
|
|||
Allowance
for loan losses as a percentage of total portfolio loans outstanding
at
period-end
|
.95
|
%
|
.91
|
%
|
|||
Allowance
for loan losses as a percentage of non-performing loans
|
72.13
|
%
|
105.10
|
%
|
September
30,
|
December
31,
|
||||||
(In
thousands)
|
2006
|
2005
|
|||||
Gross
recorded investment in impaired loans (period-end)
|
$
|
42,293
|
$
|
27,344
|
|||
Impaired
loans requiring a specific allocated allowance
|
34,206
|
21,625
|
|||||
Specific
impairment allowance
|
8,995
|
5,332
|
|||||
September
30, 2006
|
December
31, 2005
|
||||||||||||||||||
(Dollars
in thousands)
|
Ending
Balance
|
Average
Balance
|
Average
Rate
During
Period
|
Ending
Balance
|
Average
Balance
|
|
Average
Rate
During
Year
|
||||||||||||
Federal
funds purchased
|
$
|
643,000
|
$
|
569,265
|
4.97
|
%
|
$
|
472,000
|
$
|
457,625
|
3.41
|
%
|
|||||||
Security
repurchase agreements
|
120,803
|
177,592
|
3.44
|
237,300
|
268,056
|
3.11
|
|||||||||||||
Total
short-term borrowings
|
$
|
763,803
|
$
|
746,857
|
4.61
|
%
|
$
|
709,300
|
$
|
725,681
|
3.30
|
%
|
September
30, 2006
|
December
31, 2005
|
||||||||||||||||||
(Dollars
in thousands)
|
Ending
Balance
|
Average
Balance
|
Average
Rate
During
Period
|
Ending
Balance
|
Average
Balance
|
Average
Rate
During
Year
|
|||||||||||||
Short-term
FHLB advances
|
$
|
300,000
|
$
|
384,908
|
5.04
|
%
|
$
|
218,000
|
$
|
234,930
|
3.40
|
%
|
September
30, 2006
|
December
31, 2005
|
||||||||||||
(Dollars
in thousands)
|
Ending
Balance
|
Average
Rate
At
Period-End
|
Ending
Balance
|
Average
Rate
At
Year-End
|
|||||||||
Long-term
FHLB advances:
|
|||||||||||||
Bullet
advances
|
$
|
201,111
|
3.85
|
%
|
$
|
226,748
|
3.77
|
%
|
|||||
Putable
advances
|
720,000
|
4.86
|
750,000
|
4.85
|
|||||||||
Total
long-term FHLB advances
|
921,111
|
4.64
|
976,748
|
4.59
|
|||||||||
Long-term
security repurchase agreements
|
655,328
|
3.73
|
512,684
|
3.10
|
|||||||||
Total
long-term FHLB advances and security
|
|||||||||||||
repurchase
agreements
|
$
|
1,576,439
|
4.26
|
%
|
$
|
1,489,432
|
4.08
|
%
|
September
30,
2006
|
December
31,
2005
|
||||||
Total
capital to risk-weighted assets (1)
|
12.50
|
%
|
12.32
|
%
|
|||
Tier
1 capital to risk-weighted assets (1)
|
11.41
|
11.24
|
|||||
Tier
1 capital to average assets (1)
|
7.68
|
7.57
|
(1)
|
As
defined by the regulations.
|
·
|
significantly
increased competition from banking and non-banking
institutions;
|
·
|
inflation
and changes in the interest rate environment that reduce our margins
or
reduce the fair value of financial instruments;
|
·
|
general
political, industry and economic conditions, either domestically
or
internationally, that are different than expected;
|
·
|
adverse
developments concerning credit quality in our business segments that
may
result in increases in our provisions for loan losses, nonperforming
assets, potential problem loans, net charge-offs and reserve for
credit
losses could cause earnings to decline;
|
·
|
instruments,
systems and strategies that are used to hedge or otherwise manage
our
exposure to various types of market, credit, operational and
enterprise-wide risk could be less effective than anticipated, and
we may
not be able to effectively mitigate risk exposures in particular
market
environments or against particular types of risk;
|
·
|
customer
borrowing, repayment, investment and deposit practices generally
may be
less favorable than anticipated;
|
·
|
the
mix of interest rates and maturities of our interest earning assets
and
interest-bearing liabilities (primarily loans and deposits) may be
less
favorable than expected;
|
·
|
interest
rate margin compression may be greater than expected;
|
·
|
adverse
changes in the securities markets;
|
·
|
legislative
or regulatory changes, actions or reinterpretations that adversely
affect
our business;
|
·
|
the
ability to enter new markets successfully and capitalize on growth
opportunities;
|
·
|
effects
of and changes in trade, monetary and fiscal policies and laws, including
interest rate policies of the Federal Reserve Board;
|
·
|
timely
development of and acceptance of new products and
services;
|
·
|
changes
in consumer spending, borrowing and savings habits;
|
·
|
effect
of changes in accounting policies and practices, as may be adopted
by the
bank regulatory agencies, the Financial Accounting Standards Board
or
other regulatory agencies;
|
·
|
changes
in our organization, compensation and benefit plans;
|
·
|
costs
and effects of new litigation or changes in existing litigation and
unexpected or adverse outcomes in such litigation; and
|
·
|
our
success in managing the foregoing factors and the risks associated
with or
inherent in the foregoing.
|
ITEM
3:
|
Quantitative
and Qualitative Disclosures About Market
Risk
|
Change
in market interest rates in basis points
|
+200
|
+100
|
+50
|
-50
|
-100
|
-200
|
|||||||||||||
Projected
change in net interest income over next twelve months
|
-8.00
|
%
|
-3.52
|
%
|
-1.65
|
%
|
2.06
|
%
|
3.16
|
%
|
2.33
|
%
|
Year
of Maturity
|
|||||||||||||
(Dollars
in thousands)
|
2006
|
2007
|
2008
|
Total
|
|||||||||
Receive
fixed/pay floating swaps:(1)
|
|||||||||||||
Notional
amount
|
$
|
-
|
$
|
36,300
|
$
|
37,000
|
$
|
73,300
|
|||||
Fair
value gain/(loss)
|
-
|
(744
|
)
|
(1,046
|
)
|
(1,790
|
)
|
||||||
Weighted
average:
|
|||||||||||||
Receive
rate
|
-
|
%
|
2.92
|
%
|
3.24
|
%
|
3.08
|
%
|
|||||
Pay
rate
|
-
|
%
|
4.99
|
%
|
5.60
|
%
|
5.30
|
%
|
|||||
(1)
|
Variable
interest rates - which generally are based on the one-month and
three-month LIBOR in effect on the date of
repricing.
|
ITEM
4:
|
Controls
and Procedures
|
PART
II -
|
OTHER
INFORMATION
|
Item
1.
|
Legal
Proceedings
|
Item
2.
|
Purchases
of Equity Securities by the Issuer and Affiliated
Purchasers
|
Item
6.
|
Exhibits
|
(12)
|
Computations
of ratios of earnings to fixed
charges.*
|
(31)(a)
|
Certification
of Principal Executive Officer of Republic Bancorp Inc. Pursuant
to 15
U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of
2002)*
|
(31)(b)
|
Certification
of Principal Financial Officer of Republic Bancorp Inc. Pursuant
to 15
U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of
2002)*
|
(32)(a)
|
Certification
of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350
(Section
906 of the Sarbanes-Oxley Act of
2002).*
|
(32)(b)
|
Certification
of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350
(Section
906 of the Sarbanes-Oxley Act 0f
2002)*
|
REPUBLIC
BANCORP INC.
|
||||
(Registrant)
|
||||
Date:
November 8, 2006
|
BY:
|
/s/
Thomas F. Menacher
|
||
Thomas
F. Menacher
Executive
Vice President, Treasurer and Chief Financial Officer
(Principal
Financial and Accounting Officer)
|