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þ
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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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o
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Montana
(State or other jurisdiction of incorporation or organization)
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81-0331430
(IRS Employer Identification No.)
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401 North 31st Street
Billings, Montana
(Address of principal executive offices)
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59116
(Zip Code)
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Class A common stock
(Title of each class)
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NASDAQ Stock Market
(Name of each exchange on which registered)
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þ
Large accelerated filer
|
o
Accelerated filer
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o
Non-accelerated filer
(Do not check if a smaller reporting company)
|
o
Smaller reporting company
|
o
Emerging growth company
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|
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Class A common stock
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33,580,995
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Class B common stock
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22,907,947
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FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
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Index
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December 31, 2017
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Page Nos.
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Item 1
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Item 1A
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Item 1B
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Item 2
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Item 3
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Item 4
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Item 5
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Item 6
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Item 7
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Item 7A
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Item 8
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Item 9
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Item 9A
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Item 9B
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Item 10
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Item 11
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Item 12
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Item 13
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Item 14
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Item 15
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Financial Statement Schedules (None required)
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Item 16
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Form 10-K Summary (None)
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Deposit Market Share and Branch Locations by State
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|||||
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% of Market Deposits
(1)
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Deposit Market Share Rank
(1)
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Number of Branches
(2)
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Montana
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17.75%
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1st
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46
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Idaho
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2.59
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11th
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14
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Oregon
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2.63
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8th
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28
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South Dakota
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0.15
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12th
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15
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Washington
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0.07
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58th
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4
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Wyoming
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15.49
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2nd
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19
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Total
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|
|
|
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126
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•
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demand for our products and services may decline;
|
•
|
loan delinquencies, problem assets, and foreclosures may increase;
|
•
|
collateral for loans, especially real estate, may decline in value;
|
•
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future borrowing power of our customers may be reduced;
|
•
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the value of our securities portfolio may decline; and
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•
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the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us.
|
•
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Consumer Financial Protection Bureau (“CFPB”) Supervisory Authority
. The CFPB has broad rule-making authority to implement new consumer protection rules and regulations, including the authority to prohibit “unfair, deceptive or abusive acts and practices.” The CFPB has examination and enforcement authority over all banks and bank holding companies with more than $10 billion in total consolidated assets, and accordingly, assumes examination and enforcement authority over us.
|
•
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The Durbin Amendment
. The Durbin Amendment to the Dodd-Frank Act provides that the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction is the sum of 21 cents per transaction, a 1 cent fraud prevention adjustment, and 5 basis points multiplied by the value of the transaction. As a result, we can expect our future annual interchange revenue to decline by approximately $11.5 million. This rule applies to us July 1, 2018; as such we expect a negative impact of approximately $5.8 million in the second half of 2018.
|
•
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Changes to Deposit Insurance Assessments
. The Dodd-Frank Act broadened the base for FDIC insurance assessments and assessments are now based on the average consolidated total assets less average tangible equity capital of a financial institution. In addition, the Dodd-Frank Act established 1.35% as the minimum DIF reserve ratio and has adopted a plan under which it will meet the statutory minimum fund reserve ratio of 1.35% by September 30, 2020. The Dodd-Frank Act requires the FDIC to offset the effect on institutions with assets less than $10 billion of the increase in the statutory minimum fund reserve ratio to 1.35% from the former statutory minimum of 1.15%. Due to our asset size, we will no longer be entitled to benefit from the historical offset we have received. Any additional future premium increases or special assessments could have a material adverse effect on our business, financial condition, and results of operations.
|
•
|
Annual stress tests
. We will be required to conduct annual stress tests to determine whether our capital planning assessment of our capital adequacy and our risk management practices adequately protect us and our affiliates in the event of an economic downturn. The results of the annual stress tests are reported to the Federal Reserve Board, and must be considered as part of the Company’s capital planning and risk management practices. Compliance with the annual stress testing requirements, part of which must be publicly disclosed, may be misinterpreted by the market generally or our customers and, as a result, may adversely affect our stock price, ability to retain our customers, or compete for new business opportunities.
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Well-Capitalized Minimums
|
|
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Minimum Regulatory
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Minimum Ratio + Capital
|
|
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|
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Capital Ratio
|
Conservation Buffer
|
For the Company
|
For the Bank
|
The Company
|
The Bank
|
Common Equity Tier 1 Capital Ratio
|
4.50%
|
5.75%
|
N/A
|
6.50%
|
11.04%
|
11.46%
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Tier 1 Capital Ratio
|
6.00%
|
7.25%
|
6.00%
|
8.00%
|
11.93%
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11.46%
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Total Capital Ratio
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8.00%
|
9.25%
|
10.00%
|
10.00%
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12.76%
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12.29%
|
Tier 1 Leverage Ratio
|
4.00%
|
N/A
|
N/A
|
5.00%
|
8.86%
|
8.48%
|
•
|
prevailing market conditions;
|
•
|
our historical performance and capital structure;
|
•
|
estimates of our business potential and earnings prospects;
|
•
|
an overall assessment of our management;
|
•
|
conversion by our Class B shareholders of their shares into Class A common stock to liquidate their holdings;
|
•
|
our performance relative to our peers;
|
•
|
market demand for our shares;
|
•
|
perceptions of the banking industry in general;
|
•
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political influences on investor sentiment; and
|
•
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consumer confidence.
|
•
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a majority of the board of directors consist of independent directors;
|
•
|
the compensation of officers be determined, or recommended to the board of directors for determination, by a majority of the independent directors or a compensation committee comprised solely of independent directors; and
|
•
|
director nominees be selected, or recommended for the board of directors’ selection, by a majority of the independent directors or a nominating committee comprised solely of independent directors with a written charter or board resolution addressing the nomination process.
|
•
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100,000,000
shares are designated as Class A common stock;
|
•
|
100,000,000
shares are designated as Class B common stock; and
|
•
|
100,000
shares are designated as preferred stock.
|
•
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when the aggregate number of shares of our Class B common stock is less than 20% of the aggregate number of shares of our Class A common stock and Class B common stock then outstanding; or
|
•
|
upon any transfer, whether or not for value, except for transfers to the holder’s spouse, certain of the holder’s relatives, the trustees of certain trusts established for their benefit, corporations and partnerships wholly-owned by the holders and their relatives, the holder’s estate and other holders of Class B common stock.
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Quarter Ended
|
|
High
|
|
Low
|
|
|
|
|
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March 31, 2016
|
|
$28.92
|
|
$24.92
|
June 30, 2016
|
|
29.55
|
|
26.44
|
September 30, 2016
|
|
32.56
|
|
26.89
|
December 31, 2016
|
|
43.10
|
|
30.70
|
March 31, 2017
|
|
45.35
|
|
37.15
|
June 30, 2017
|
|
41.05
|
|
33.70
|
September 30, 2017
|
|
38.40
|
|
33.33
|
December 31, 2017
|
|
41.25
|
|
36.00
|
Dividend Payment
|
|
Amount
Per Share
|
|
Total Cash
Dividends
|
|
|
|
|
|
First quarter 2016
|
|
$0.22
|
|
9,859,940
|
Second quarter 2016
|
|
0.22
|
|
9,847,205
|
Third quarter 2016
|
|
0.22
|
|
9,808,340
|
Fourth quarter 2016
|
|
0.22
|
|
9,838,816
|
First quarter 2017
|
|
0.24
|
|
10,759,965
|
Second quarter 2017
|
|
0.24
|
|
10,791,012
|
Third quarter 2017
|
|
0.24
|
|
13,474,200
|
Fourth quarter 2017
|
|
0.24
|
|
13,557,581
|
|
|
|
|
|
|
Total Number of
|
|
Maximum Number
|
||
|
|
|
|
|
|
Shares Purchased
|
|
of Shares That
|
||
|
|
Total Number
|
|
Average
|
|
as Part of Publicly
|
|
May Yet Be
|
||
|
|
of Shares
|
|
Price Paid
|
|
Announced Plans
|
|
Purchased Under the
|
||
Period
|
|
Purchased (1)
|
|
Per Share
|
|
or Programs
|
|
Plans or Programs
|
||
October 2017
|
|
—
|
|
$
|
—
|
|
|
—
|
|
24,123
|
November 2017
|
|
—
|
|
—
|
|
|
—
|
|
24,123
|
|
December 2017
|
|
10,336
|
|
39.70
|
|
|
—
|
|
24,123
|
|
Total
|
|
10,336
|
|
$
|
39.70
|
|
|
—
|
|
24,123
|
(1)
|
Stock repurchases were redemptions of vested restricted shares tendered in lieu of cash for payment of income tax withholding amounts by participants of the Company's 2015 Equity Compensation Plan.
|
|
|
|||||||||||||||||
Index
|
12/31/12
|
12/31/13
|
12/31/14
|
12/31/15
|
12/31/16
|
12/31/17
|
||||||||||||
First Interstate BancSystem, Inc.
|
$
|
100.00
|
|
$
|
187.20
|
|
$
|
188.12
|
|
$
|
202.45
|
|
$
|
305.58
|
|
$
|
294.89
|
|
NASDAQ Composite
|
100.00
|
|
140.12
|
|
160.78
|
|
171.97
|
|
187.22
|
|
242.71
|
|
||||||
SNL U.S. Bank NASDAQ
|
100.00
|
|
143.73
|
|
148.86
|
|
160.70
|
|
222.81
|
|
234.58
|
|
Five Year Summary
(Dollars in millions except share and per share data)
|
|||||||||||||||
As of or for the year ended December 31,
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||
Selected Balance Sheet Data:
|
|
|
|
|
|
||||||||||
Net loans
|
$
|
7,542.2
|
|
$
|
5,402.3
|
|
$
|
5,169.4
|
|
$
|
4,823.2
|
|
$
|
4,259.5
|
|
Investment securities
|
2,693.2
|
|
2,124.5
|
|
2,057.5
|
|
2,287.1
|
|
2,151.5
|
|
|||||
Total assets
|
12,213.3
|
|
9,063.9
|
|
8,728.2
|
|
8,609.9
|
|
7,564.7
|
|
|||||
Deposits
|
9,934.9
|
|
7,376.1
|
|
7,088.9
|
|
7,006.2
|
|
6,133.8
|
|
|||||
Securities sold under repurchase agreements
|
643.0
|
|
537.6
|
|
510.6
|
|
502.3
|
|
457.4
|
|
|||||
Long-term debt
|
13.1
|
|
28.0
|
|
27.9
|
|
38.1
|
|
36.9
|
|
|||||
Subordinated debentures held by subsidiary trusts
|
82.5
|
|
82.5
|
|
82.5
|
|
82.5
|
|
82.5
|
|
|||||
Common stockholders’ equity
|
$
|
1,427.6
|
|
$
|
982.6
|
|
$
|
950.5
|
|
$
|
908.9
|
|
$
|
801.6
|
|
Selected Income Statement Data:
|
|
|
|
|
|
||||||||||
Interest income
|
$
|
377.8
|
|
$
|
297.4
|
|
$
|
282.4
|
|
$
|
267.1
|
|
$
|
257.7
|
|
Interest expense
|
27.9
|
|
17.7
|
|
18.1
|
|
18.6
|
|
20.7
|
|
|||||
Net interest income
|
349.8
|
|
279.8
|
|
264.4
|
|
248.5
|
|
237.0
|
|
|||||
Provision for loan losses
|
11.1
|
|
10.0
|
|
6.8
|
|
(6.6
|
)
|
(6.1
|
)
|
|||||
Net interest income after provision for loan losses
|
338.8
|
|
269.8
|
|
257.5
|
|
255.1
|
|
243.1
|
|
|||||
Non-interest income
|
141.8
|
|
136.5
|
|
121.5
|
|
111.8
|
|
113.0
|
|
|||||
Non-interest expense
|
323.8
|
|
261.0
|
|
248.6
|
|
237.3
|
|
223.4
|
|
|||||
Income before income taxes
|
156.7
|
|
145.3
|
|
130.5
|
|
129.6
|
|
132.7
|
|
|||||
Income tax expense
|
50.2
|
|
49.6
|
|
43.7
|
|
45.2
|
|
46.6
|
|
|||||
Net income
|
106.5
|
|
95.6
|
|
86.8
|
|
84.4
|
|
86.1
|
|
|||||
Net income available to common shareholders
|
$
|
106.5
|
|
$
|
95.6
|
|
$
|
86.8
|
|
$
|
84.4
|
|
$
|
86.1
|
|
Common Share Data:
|
|
|
|
|
|
||||||||||
Earnings per share:
|
|
|
|
|
|
||||||||||
Basic
|
$
|
2.07
|
|
$
|
2.15
|
|
$
|
1.92
|
|
$
|
1.89
|
|
$
|
1.98
|
|
Diluted
|
2.05
|
|
2.13
|
|
1.90
|
|
1.87
|
|
1.96
|
|
|||||
Dividends per share
|
0.96
|
|
0.88
|
|
0.80
|
|
0.64
|
|
0.41
|
|
|||||
Book value per share (1)
|
25.28
|
|
21.87
|
|
20.92
|
|
19.85
|
|
18.15
|
|
|||||
Tangible book value per share (2)
|
16.04
|
|
16.92
|
|
16.19
|
|
15.07
|
|
13.89
|
|
|||||
Weighted average shares outstanding:
|
|
|
|
|
|
||||||||||
Basic
|
51,429,366
|
|
44,511,774
|
|
45,184,091
|
|
44,615,060
|
|
43,566,681
|
|
|||||
Diluted
|
51,903,209
|
|
44,910,396
|
|
45,646,418
|
|
45,210,561
|
|
44,044,602
|
|
|||||
|
|
|
|
|
|
Five Year Summary (continued)
(Dollars in millions except share and per share data)
|
|||||||||||||||
As of or for the year ended December 31,
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||
Financial Ratios:
|
|
|
|
|
|
||||||||||
Return on average assets
|
0.98
|
%
|
1.10
|
%
|
1.02
|
%
|
1.06
|
%
|
1.16
|
%
|
|||||
Return on average common stockholders' equity
|
8.57
|
|
9.93
|
|
9.37
|
|
9.86
|
|
11.05
|
|
|||||
Return on average tangible common equity (3)
|
12.76
|
|
12.81
|
|
12.23
|
|
12.88
|
|
14.59
|
|
|||||
Average stockholders’ equity to average assets
|
11.45
|
|
11.04
|
|
10.87
|
|
10.77
|
|
10.49
|
|
|||||
Yield on average earning assets
|
3.93
|
|
3.80
|
|
3.70
|
|
3.75
|
|
3.84
|
|
|||||
Cost of average interest bearing liabilities
|
0.39
|
|
0.30
|
|
0.31
|
|
0.34
|
|
0.40
|
|
|||||
Interest rate spread
|
3.54
|
|
3.50
|
|
3.39
|
|
3.41
|
|
3.44
|
|
|||||
Net interest margin (4)
|
3.64
|
|
3.57
|
|
3.46
|
|
3.49
|
|
3.54
|
|
|||||
Efficiency ratio (5)
|
64.77
|
|
61.88
|
|
63.55
|
|
65.24
|
|
63.43
|
|
|||||
Common stock dividend payout ratio (6)
|
46.38
|
|
40.93
|
|
41.65
|
|
33.83
|
|
20.71
|
|
|||||
Loan to deposit ratio
|
76.64
|
|
74.27
|
|
74.01
|
|
69.90
|
|
70.84
|
|
|||||
Asset Quality Ratios:
|
|
|
|
|
|
|
|
|
|
||||||
Non-performing loans to total loans (7)
|
0.95
|
%
|
1.40
|
%
|
1.37
|
%
|
1.32
|
%
|
2.22
|
%
|
|||||
Non-performing assets to total loans and other real estate owned (OREO) (8)
|
1.08
|
|
1.58
|
|
1.49
|
|
1.59
|
|
2.57
|
|
|||||
Non-performing assets to total assets
|
0.68
|
|
0.96
|
|
0.90
|
|
0.91
|
|
1.48
|
|
|||||
Allowance for loan losses to total loans
|
0.95
|
|
1.39
|
|
1.46
|
|
1.52
|
|
1.96
|
|
|||||
Allowance for loan losses to non-performing loans
|
99.40
|
|
99.52
|
|
106.71
|
|
114.58
|
|
88.28
|
|
|||||
Net charge-offs to average loans
|
0.23
|
|
0.20
|
|
0.08
|
|
0.10
|
|
0.21
|
|
|||||
Capital Ratios:
|
|
|
|
|
|
|
|
|
|
|
|||||
Tangible common equity to tangible assets (9)
|
7.75
|
%
|
8.60
|
%
|
8.64
|
%
|
8.22
|
%
|
8.32
|
%
|
|||||
Net tangible common equity to tangible assets (10)
|
8.45
|
|
9.28
|
|
9.35
|
|
8.94
|
|
9.14
|
|
|||||
Tier 1 common capital to total risk weighted assets (11)
|
11.04
|
|
12.65
|
|
12.69
|
|
13.08
|
|
13.31
|
|
|||||
Leverage ratio
|
8.86
|
|
10.11
|
|
10.12
|
|
9.61
|
|
10.08
|
|
|||||
Tier 1 risk-based capital
|
11.93
|
|
13.89
|
|
13.99
|
|
14.52
|
|
14.93
|
|
|||||
Total risk-based capital
|
12.76
|
|
15.13
|
|
15.36
|
|
16.15
|
|
16.75
|
|
|||||
|
|
|
|
|
|
(1)
|
For purposes of computing book value per share, book value equals common stockholders’ equity.
|
(2)
|
Tangible book value per share is a non-GAAP financial measure that management uses to evaluate our capital adequacy. For purposes of computing tangible book value per share, tangible book value equals total common stockholders’ equity less goodwill, and other intangible assets (excluding mortgage servicing rights). Tangible book value per share is calculated as tangible common stockholders’ equity divided by common shares outstanding, and its most directly comparable GAAP financial measure is book value per share. See below our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption “—Non-GAAP Financial Measures” in this Part II, Item 6.
|
(3)
|
Return on average tangible common equity is a non-GAAP financial measure that management uses to evaluate our capital adequacy. For purposes of computing return on average tangible common equity, average tangible common stockholders' equity equals average total stockholders' equity less average goodwill and average other intangible assets (excluding mortgage servicing rights). Return on average tangible common equity is calculated as net income available to common shareholders divided by average tangible common stockholders' equity, and its most directly comparable GAAP financial measure is return on average common stockholders' equity. See below our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption “—Non-GAAP Financial Measures” in this Part II, Item 6.
|
(4)
|
Net interest margin ratio is presented on a fully taxable equivalent, or FTE, basis.
|
(5)
|
In 2017, the Company conformed our efficiency ratio definition to the FDIC definition for all periods presented as non-interest expense less amortization of intangible assets divided by net interest income plus non-interest income.
|
(6)
|
Common stock dividend payout ratio represents dividends per common share divided by basic earnings per common share.
|
(7)
|
Non-performing loans include non-accrual loans and loans past due 90 days or more and still accruing interest.
|
(8)
|
Non-performing assets include non-accrual loans, loans past due 90 days or more and still accruing interest and OREO.
|
(9)
|
Tangible common equity to tangible assets is a non-GAAP financial measure that management uses to evaluate our capital adequacy. For purposes of computing tangible common equity to tangible assets, tangible common equity is calculated as total common stockholders’ equity less goodwill and other intangible assets (excluding mortgage servicing assets), and tangible assets is calculated as total assets less goodwill and other intangible assets (excluding mortgage servicing rights). The most directly comparable GAAP
|
(10)
|
Net tangible common equity to tangible assets is a non-GAAP financial measure that management uses to evaluate our capital adequacy. For purposes of computing net tangible common equity to tangible assets, net tangible common stockholder's equity is calculated as total common stockholders’ equity less goodwill (adjusted for associated deferred tax liability) and other intangible assets (excluding mortgage servicing assets), and tangible assets is calculated as total assets less goodwill and other intangible assets (excluding mortgage servicing rights). The most directly comparable GAAP financial measure to net tangible common equity to tangible assets is common equity to assets. See below our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption “—Non-GAAP Financial Measures” in this Part II, Item 6.
|
(11)
|
For purposes of computing tier 1 common capital to total risk-weighted assets, tier 1 common capital excludes preferred stock and trust preferred securities.
|
Non-GAAP Financial Measures - Five Year Summary
(Dollars in millions except share and per share data)
|
|||||||||||||||
As of December 31,
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||
Total common stockholders’ equity (GAAP)
|
$
|
1,427.6
|
|
$
|
982.6
|
|
$
|
950.5
|
|
$
|
908.9
|
|
$
|
801.6
|
|
Less goodwill and other intangible assets
(excluding mortgage servicing rights)
|
521.8
|
|
222.5
|
|
215.1
|
|
218.9
|
|
188.2
|
|
|||||
Tangible common stockholders’ equity
(Non-GAAP)
|
905.8
|
|
760.1
|
|
735.4
|
|
690.0
|
|
613.4
|
|
|||||
Add deferred tax liability for deductible
goodwill
|
82.6
|
|
60.5
|
|
60.5
|
|
60.5
|
|
60.5
|
|
|||||
Net tangible common stockholders’ equity
(Non-GAAP)
|
$
|
988.4
|
|
$
|
820.6
|
|
$
|
795.9
|
|
$
|
750.5
|
|
$
|
673.9
|
|
Total Assets (GAAP)
|
$
|
12,213.3
|
|
$
|
9,063.9
|
|
$
|
8,728.2
|
|
$
|
8,609.9
|
|
$
|
7,564.7
|
|
Less goodwill and other intangible assets
(excluding mortgage servicing rights)
|
521.8
|
|
222.5
|
|
215.1
|
|
218.9
|
|
188.2
|
|
|||||
Tangible assets (Non-GAAP)
|
$
|
11,691.5
|
|
$
|
8,841.4
|
|
$
|
8,513.1
|
|
$
|
8,391.0
|
|
$
|
7,376.5
|
|
Average Balances:
|
|
|
|
|
|
||||||||||
Total common stockholders’ equity (GAAP)
|
$
|
1,243.7
|
|
$
|
963.5
|
|
$
|
926.1
|
|
$
|
855.9
|
|
$
|
779.5
|
|
Less goodwill and other intangible assets
(excluding mortgage servicing rights)
|
408.9
|
|
216.7
|
|
216.5
|
|
200.7
|
|
189.0
|
|
|||||
Average tangible common stockholders’ equity (Non-GAAP)
|
$
|
834.8
|
|
$
|
746.8
|
|
$
|
709.6
|
|
$
|
655.2
|
|
$
|
590.5
|
|
Common shares outstanding
|
56,465,559
|
|
44,926,176
|
|
45,458,255
|
|
45,788,415
|
|
44,155,063
|
|
|||||
Net income available to common shareholders
|
$
|
106.5
|
|
$
|
95.6
|
|
$
|
86.8
|
|
$
|
84.4
|
|
$
|
86.1
|
|
Book value per common share (GAAP)
|
$
|
25.28
|
|
$
|
21.87
|
|
$
|
20.92
|
|
$
|
19.85
|
|
$
|
18.15
|
|
Tangible book value per common share
(Non-GAAP)
|
16.04
|
|
16.92
|
|
16.19
|
|
15.07
|
|
13.89
|
|
|||||
Tangible common equity to tangible assets (Non-GAAP)
|
7.75
|
%
|
8.60
|
%
|
8.64
|
%
|
8.22
|
%
|
8.32
|
%
|
|||||
Net tangible common equity to tangible assets (Non-GAAP)
|
8.45
|
|
9.28
|
|
9.35
|
|
8.94
|
|
9.14
|
|
|||||
Return on average common tangible equity (Non-GAAP)
|
12.76
|
|
12.81
|
|
12.23
|
|
12.88
|
|
14.59
|
|
•
|
general economic or business conditions, either nationally or regionally;
|
•
|
changes in the interest rate environment or interest rate changes made by the Federal Reserve;
|
•
|
lending risk;
|
•
|
adequacy of the allowance for loan losses and access to low-cost funding sources;
|
•
|
impairment of goodwill;
|
•
|
dependence on the Company’s management team and ability to attract and retain qualified employees;
|
•
|
governmental regulation and changes in regulatory, tax and accounting rules and interpretations;
|
•
|
stringent capital requirements;
|
•
|
future FDIC insurance premium increases;
|
•
|
CFPB restrictions on our ability to originate and sell mortgage loans;
|
•
|
cyber-security risks, including items such as "denial of service," "hacking" and "identity theft";
|
•
|
significant litigation and regulatory proceedings;
|
•
|
inability to meet liquidity requirements;
|
•
|
environmental remediation and other costs;
|
•
|
ineffective internal operational controls;
|
•
|
competitive pressures among depository and other financial institutions may increase significantly;
|
•
|
competitors may have greater financial resources or develop products that enable them to compete more successfully and may be subject to different regulatory standards than us;
|
•
|
reliance on external vendors;
|
•
|
soundness of other financial institutions;
|
•
|
failure of technology and failure to effectively implement technology-driven products and services;
|
•
|
risks associated with introducing and implementing new lines of business, products or services;
|
•
|
failure to execute on strategic or operational plans, including the ability to complete mergers and acquisitions or fully achieve expected cost savings or revenue growth associated with mergers and acquisitions;
|
•
|
deposit attrition, customer loss and/or revenue loss following completed mergers/acquisitions;
|
•
|
anti-takeover provisions;
|
•
|
change in dividend policy and the inability of our bank subsidiary to pay dividends;
|
•
|
uninsured nature of any investment in Class A and Class B common stock;
|
•
|
decline in market price and volatility of Class A and Class B common stock;
|
•
|
voting control of Class B stockholders;
|
•
|
dilution as a result of future equity issuances;
|
•
|
controlled company status; and,
|
•
|
subordination of Class A and Class B common stock to Company debt.
|
|
Year Ended December 31,
|
|||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||||||||
|
Average
Balance
|
Interest
|
Average
Rate
|
|
Average
Balance
|
Interest
|
Average
Rate
|
|
Average
Balance
|
Interest
|
Average
Rate
|
|||||||||||||||
Interest earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Loans (1) (2)
|
$
|
6,675.4
|
|
$
|
327.4
|
|
4.90
|
%
|
|
$
|
5,378.3
|
|
$
|
261.7
|
|
4.87
|
%
|
|
$
|
5,056.8
|
|
$
|
248.0
|
|
4.90
|
%
|
Investment securities (2)
|
2,417.5
|
|
47.6
|
|
1.97
|
|
|
2,093.5
|
|
37.6
|
|
1.80
|
|
|
2,192.0
|
|
37.2
|
|
1.70
|
|
||||||
Interest bearing deposits in banks
|
634.2
|
|
7.1
|
|
1.13
|
|
|
478.9
|
|
2.6
|
|
0.54
|
|
|
508.3
|
|
1.5
|
|
0.30
|
|
||||||
Federal funds sold
|
0.7
|
|
—
|
|
1.27
|
|
|
1.6
|
|
—
|
|
0.70
|
|
|
2.1
|
|
—
|
|
0.58
|
|
||||||
Total interest earnings assets
|
9,727.8
|
|
382.1
|
|
3.93
|
|
|
7,952.3
|
|
301.9
|
|
3.80
|
|
|
7,759.2
|
|
286.7
|
|
3.70
|
|
||||||
Non-earning assets
|
1,133.7
|
|
|
|
|
772.1
|
|
|
|
|
762.5
|
|
|
|
||||||||||||
Total assets
|
$
|
10,861.5
|
|
|
|
|
$
|
8,724.4
|
|
|
|
|
$
|
8,521.7
|
|
|
|
|||||||||
Interest bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Demand deposits
|
$
|
2,553.1
|
|
$
|
5.5
|
|
0.21
|
%
|
|
$
|
2,162.6
|
|
$
|
2.2
|
|
0.10
|
%
|
|
$
|
2,102.0
|
|
$
|
2.1
|
|
0.10
|
%
|
Savings deposits
|
2,739.2
|
|
7.7
|
|
0.28
|
|
|
2,037.4
|
|
2.7
|
|
0.13
|
|
|
1,908.1
|
|
2.5
|
|
0.13
|
|
||||||
Time deposits
|
1,112.7
|
|
8.2
|
|
0.73
|
|
|
1,094.2
|
|
7.8
|
|
0.71
|
|
|
1,172.0
|
|
8.5
|
|
0.72
|
|
||||||
Repurchase agreements
|
587.1
|
|
1.3
|
|
0.21
|
|
|
481.0
|
|
0.4
|
|
0.09
|
|
|
456.3
|
|
0.2
|
|
0.05
|
|
||||||
Other borrowed funds (3)
|
23.9
|
|
1.5
|
|
6.42
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Long-term debt
|
8.0
|
|
0.6
|
|
7.48
|
|
|
28.2
|
|
1.8
|
|
6.43
|
|
|
44.7
|
|
2.3
|
|
5.15
|
|
||||||
Subordinated debentures held by subsidiary trusts
|
82.5
|
|
3.2
|
|
3.85
|
|
|
82.5
|
|
2.8
|
|
3.34
|
|
|
82.5
|
|
2.4
|
|
2.94
|
|
||||||
Total interest bearing liabilities
|
7,106.5
|
|
27.9
|
|
0.39
|
|
|
5,885.8
|
|
17.7
|
|
0.30
|
|
|
5,765.4
|
|
18.1
|
|
0.31
|
|
||||||
Non-interest bearing deposits
|
2,430.9
|
|
|
|
|
1,812.6
|
|
|
|
|
1,774.7
|
|
|
|
||||||||||||
Other non-interest bearing liabilities
|
80.4
|
|
|
|
|
62.4
|
|
|
|
|
55.5
|
|
|
|
||||||||||||
Stockholders’ equity
|
1,243.7
|
|
|
|
|
963.5
|
|
|
|
|
926.1
|
|
|
|
||||||||||||
Total liabilities and stockholders’ equity
|
$
|
10,861.5
|
|
|
|
|
$
|
8,724.4
|
|
|
|
|
$
|
8,521.7
|
|
|
|
|||||||||
Net FTE interest income
|
|
$
|
354.2
|
|
|
|
|
$
|
284.2
|
|
|
|
|
$
|
268.7
|
|
|
|||||||||
Less FTE adjustments (2)
|
|
(4.4
|
)
|
|
|
|
(4.5
|
)
|
|
|
|
(4.3
|
)
|
|
||||||||||||
Net interest income from consolidated statements of income
|
|
$
|
349.8
|
|
|
|
|
$
|
279.8
|
|
|
|
|
$
|
264.4
|
|
|
|||||||||
Interest rate spread
|
|
|
3.54
|
%
|
|
|
|
3.50
|
%
|
|
|
|
3.39
|
%
|
||||||||||||
Net FTE interest margin (4)
|
|
|
3.64
|
%
|
|
|
|
3.57
|
%
|
|
|
|
3.46
|
%
|
||||||||||||
Cost of funds, including non-interest bearing demand deposits (5)
|
|
|
0.29
|
%
|
|
|
|
0.23
|
%
|
|
|
|
0.24
|
%
|
(1)
|
Average loan balances include non-accrual loans. Interest income on loans includes amortization of deferred loan fees net of deferred loan costs, which is not material.
|
(2)
|
Interest income and average rates for tax exempt loans and securities are presented on a fully taxable equivalent, or FTE, basis.
|
(3)
|
Includes interest on federal funds purchased and other borrowed funds. Excludes long-term debt.
|
(4)
|
Net FTE interest margin during the period equals (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.
|
(5)
|
Cost of funds including non-interest bearing demand deposits equals (i) interest expense on interest bearing liabilities, divided by (ii) the sum of average interest bearing liabilities and average non-interest bearing demand deposits.
|
(1)
|
Interest income and average rates for tax exempt loans and securities are presented on a FTE basis.
|
Non-interest income
(Dollars in millions)
|
||||||||||||||||||
|
Year Ended December 31,
|
|
% Change
|
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 vs 2016
|
|
2016 vs 2015
|
|
||||||||
Payment services revenues
|
$
|
43.3
|
|
|
$
|
34.4
|
|
|
$
|
32.8
|
|
|
25.9
|
%
|
|
4.9
|
%
|
|
Mortgage banking revenues
|
28.9
|
|
|
37.2
|
|
|
30.0
|
|
|
(22.3
|
)
|
|
24.0
|
|
|
|||
Wealth management revenues
|
21.1
|
|
|
20.5
|
|
|
19.9
|
|
|
2.9
|
|
|
3.0
|
|
|
|||
Service charges on deposit accounts
|
21.3
|
|
|
18.4
|
|
|
17.0
|
|
|
15.8
|
|
|
8.2
|
|
|
|||
Other service charges, commissions and fees
|
13.4
|
|
|
11.5
|
|
|
10.4
|
|
|
16.5
|
|
|
10.6
|
|
|
|||
Loss on termination of interest rate swap
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|
NM
|
|
|
NM
|
|
|
|||
Investment securities gains, net
|
0.7
|
|
|
0.3
|
|
|
0.1
|
|
|
NM
|
|
|
NM
|
|
|
|||
Other income
|
14.3
|
|
|
10.0
|
|
|
11.3
|
|
|
43.0
|
|
|
(11.5
|
)
|
|
|||
Non-recurring litigation recovery
|
—
|
|
|
4.2
|
|
|
—
|
|
|
(100.0
|
)
|
|
NM
|
|
|
|||
Total non-interest income
|
$
|
141.8
|
|
|
$
|
136.5
|
|
|
$
|
121.5
|
|
|
3.9
|
%
|
|
12.3
|
%
|
|
Non-interest expense
(Dollars in millions)
|
||||||||||||||||||
|
Year Ended December 31,
|
|
% Change
|
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 vs 2016
|
|
2016 vs 2015
|
|
||||||||
Salaries and wages
|
$
|
122.7
|
|
|
$
|
108.7
|
|
|
$
|
101.5
|
|
|
13.0
|
%
|
|
7.1
|
%
|
|
Employee benefits
|
37.6
|
|
|
35.2
|
|
|
31.3
|
|
|
6.8
|
|
|
12.5
|
|
|
|||
Outsourced technology services
|
25.1
|
|
|
20.5
|
|
|
10.1
|
|
|
22.4
|
|
|
103.0
|
|
|
|||
Occupancy, net
|
22.4
|
|
|
17.7
|
|
|
17.9
|
|
|
26.6
|
|
|
(1.1
|
)
|
|
|||
Furniture and equipment
|
11.5
|
|
|
9.6
|
|
|
15.5
|
|
|
19.8
|
|
|
(38.1
|
)
|
|
|||
OREO expense, net of income
|
0.5
|
|
|
—
|
|
|
(1.5
|
)
|
|
100.0
|
|
|
(100.0
|
)
|
|
|||
Professional fees
|
6.8
|
|
|
5.0
|
|
|
6.5
|
|
|
36.0
|
|
|
(23.1
|
)
|
|
|||
FDIC insurance premiums
|
4.6
|
|
|
4.5
|
|
|
4.9
|
|
|
2.2
|
|
|
(8.2
|
)
|
|
|||
Mortgage servicing rights amortization
|
3.0
|
|
|
3.0
|
|
|
2.4
|
|
|
—
|
|
|
25.0
|
|
|
|||
Mortgage servicing rights impairment recovery
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
100.0
|
|
|
(100.0
|
)
|
|
|||
Core deposit intangibles amortization
|
5.4
|
|
|
3.4
|
|
|
3.4
|
|
|
58.8
|
|
|
—
|
|
|
|||
Other expenses
|
57.1
|
|
|
50.6
|
|
|
50.9
|
|
|
12.8
|
|
|
(0.6
|
)
|
|
|||
Loss contingency expense
|
—
|
|
|
—
|
|
|
5.0
|
|
|
NM
|
|
|
(100.0
|
)
|
|
|||
Acquisition related expenses
|
27.2
|
|
|
2.8
|
|
|
0.8
|
|
|
871.4
|
|
|
250.0
|
|
|
|||
Total non-interest expense
|
$
|
323.8
|
|
|
$
|
261.0
|
|
|
$
|
248.6
|
|
|
24.1
|
%
|
|
5.0
|
%
|
|
Quarterly Results
(Dollars in millions except per share data)
|
|
|
|
|
|
||||||||||
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Full
Year
|
||||||||||
Year Ended December 31, 2017:
|
|
|
|
|
|
||||||||||
Interest income
|
$
|
74.4
|
|
$
|
85.8
|
|
$
|
108.8
|
|
$
|
108.7
|
|
$
|
377.7
|
|
Interest expense
|
5.5
|
|
6.5
|
|
8.0
|
|
7.9
|
|
27.9
|
|
|||||
Net interest income
|
68.9
|
|
79.3
|
|
100.8
|
|
100.8
|
|
349.8
|
|
|||||
Provision for loan losses
|
1.7
|
|
2.3
|
|
3.5
|
|
3.5
|
|
11.0
|
|
|||||
Net interest income after provision for loan losses
|
67.2
|
|
77.0
|
|
97.3
|
|
97.3
|
|
338.8
|
|
|||||
Non-interest income
|
29.1
|
|
37.1
|
|
38.3
|
|
37.2
|
|
141.7
|
|
|||||
Non-interest expense
|
63.7
|
|
80.4
|
|
94.6
|
|
85.1
|
|
323.8
|
|
|||||
Income before income taxes
|
32.6
|
|
33.7
|
|
41.0
|
|
49.4
|
|
156.7
|
|
|||||
Income tax expense
|
9.4
|
|
11.8
|
|
13.7
|
|
15.2
|
|
50.1
|
|
|||||
Net income
|
$
|
23.2
|
|
$
|
21.9
|
|
$
|
27.3
|
|
$
|
34.2
|
|
$
|
106.5
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per common share
|
$
|
0.52
|
|
$
|
0.46
|
|
$
|
0.49
|
|
$
|
0.61
|
|
$
|
2.07
|
|
Diluted earnings per common share
|
0.51
|
|
0.45
|
|
0.48
|
|
0.61
|
|
2.05
|
|
|||||
Dividends paid per common share
|
0.24
|
|
0.24
|
|
0.24
|
|
0.24
|
|
0.96
|
|
Quarterly Results
(Dollars in millions except per share data)
|
|
|
|
|
|
||||||||||
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Full
Year
|
||||||||||
Year Ended December 31, 2016:
|
|
|
|
|
|
||||||||||
Interest income
|
$
|
72.4
|
|
$
|
72.0
|
|
$
|
74.9
|
|
$
|
78.2
|
|
$
|
297.4
|
|
Interest expense
|
4.4
|
|
4.3
|
|
4.4
|
|
4.6
|
|
17.7
|
|
|||||
Net interest income
|
68.0
|
|
67.6
|
|
70.5
|
|
73.6
|
|
279.7
|
|
|||||
Provision for loan losses
|
4.0
|
|
2.6
|
|
2.4
|
|
1.1
|
|
10.0
|
|
|||||
Net interest income after provision for loan losses
|
64.0
|
|
65.1
|
|
68.1
|
|
72.5
|
|
269.7
|
|
|||||
Non-interest income
(1)
|
28.6
|
|
37.9
|
|
35.2
|
|
34.8
|
|
136.5
|
|
|||||
Non-interest expense
(1)
|
62.3
|
|
63.8
|
|
65.4
|
|
69.5
|
|
261.0
|
|
|||||
Income before income taxes
|
30.3
|
|
39.2
|
|
37.9
|
|
37.8
|
|
145.2
|
|
|||||
Income tax expense
|
10.2
|
|
13.6
|
|
12.8
|
|
13.0
|
|
49.6
|
|
|||||
Net income
|
$
|
20.1
|
|
$
|
25.6
|
|
$
|
25.1
|
|
$
|
24.8
|
|
$
|
95.6
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per common share
|
$
|
0.45
|
|
$
|
0.58
|
|
$
|
0.57
|
|
$
|
0.56
|
|
$
|
2.15
|
|
Diluted earnings per common share
|
0.45
|
|
0.57
|
|
0.56
|
|
0.55
|
|
2.13
|
|
|||||
Dividends paid per common share
|
0.22
|
|
0.22
|
|
0.22
|
|
0.22
|
|
0.88
|
|
(1)
|
To improve comparability between periods presented above, we have included the standard costs of originating residential mortgage loans sold to secondary investors in salaries and wages expense, rather than as an offset to mortgage banking revenues. This reclassification resulted in an increase in mortgage banking revenues for each of the first three quarters of 2016 and an offsetting increase in salaries and wages expense during the same periods. This reclassification had no impact on previously reported net income.
|
Non-Performing Assets and Troubled Debt Restructurings
(Dollars in thousands)
|
|||||||||||||||
As of December 31,
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||
Non-performing loans:
|
|
|
|
|
|
||||||||||
Non-accrual loans
|
$
|
69.4
|
|
$
|
72.8
|
|
$
|
66.3
|
|
$
|
62.2
|
|
$
|
94.5
|
|
Accruing loans past due 90 days or more
|
3.1
|
|
3.8
|
|
5.6
|
|
2.5
|
|
2.2
|
|
|||||
Total non-performing loans
|
72.5
|
|
76.6
|
|
71.9
|
|
64.7
|
|
96.7
|
|
|||||
OREO
|
10.1
|
|
10.0
|
|
6.3
|
|
13.6
|
|
15.5
|
|
|||||
Total non-performing assets
|
$
|
82.6
|
|
$
|
86.6
|
|
$
|
78.2
|
|
$
|
78.3
|
|
$
|
112.2
|
|
|
|
|
|
|
|
||||||||||
Troubled debt restructurings not included above (1)
|
$
|
12.6
|
|
$
|
22.3
|
|
$
|
15.4
|
|
$
|
21.0
|
|
$
|
21.8
|
|
|
|
|
|
|
|
||||||||||
Non-performing loans to total loans (2)
|
0.95
|
%
|
1.40
|
%
|
1.37
|
%
|
1.32
|
%
|
2.22
|
%
|
|||||
Non-performing assets to total loans and OREO (3)
|
1.08
|
|
1.58
|
|
1.49
|
|
1.59
|
|
2.57
|
|
|||||
Non-performing assets to total assets (4)
|
0.68
|
|
0.96
|
|
0.90
|
|
0.91
|
|
1.48
|
|
|||||
Allowance for loan losses to non-performing loans (5)
|
99.40
|
|
99.52
|
|
106.71
|
|
114.58
|
|
88.28
|
|
(1)
|
Accruing loans modified in troubled debt restructurings are not considered non-performing loans. While still considered impaired under applicable accounting guidance, these loans are performing as agreed under their modified terms and management expects performance to continue.
|
(2)
|
Including accruing troubled debt restructurings described in footnote 1, the ratio of non-performing loans to total loans would be
1.12%
,
1.81%
,
1.67%
,
1.75%
and
2.73%
as of
December 31, 2017
,
2016
,
2015
,
2014
and
2013
, respectively.
|
(3)
|
Including accruing troubled debt restructurings described in footnote 1, the ratio of non-performing assets to total loans and OREO would be
1.25%
,
1.98%
,
1.78%
,
2.02%
and
3.07%
as of
December 31, 2017
,
2016
,
2015
,
2014
and
2013
, respectively.
|
(4)
|
Including accruing troubled debt restructurings described in footnote 1, the ratio of non-performing assets to total assets would be
0.78%
,
1.20%
,
1.07%
,
1.15%
and
1.77%
as of
December 31, 2017
,
2016
,
2015
,
2014
and
2013
, respectively.
|
(5)
|
Including accruing troubled debt restructurings described in footnote 1, the ratio of allowance for loan losses to non-performing loans would be
84.72%
,
77.04%
,
87.89%
,
86.57%
and
72.05%
as of
December 31, 2017
,
2016
,
2015
,
2014
, and
2013
, respectively.
|
(1)
|
Specific valuation allowances associated with impaired loans. Specific valuation allowances are determined based on assessment of the fair value of the collateral underlying the loans as determined through independent appraisals, the present value of future cash flows, observable market prices and any relevant qualitative or environmental factors impacting the loan. No specific valuation allowances are recorded for impaired loans that are adequately secured.
|
(2)
|
Historical valuation allowances based on loan loss experience for similar loans with similar characteristics and trends. Historical valuation allowances are determined by applying percentage loss factors to the credit exposures from outstanding loans. For commercial, agricultural and real estate loans, loss factors are applied based on the internal risk classifications of these loans. For consumer loans, loss factors are applied on a portfolio basis. For commercial,
|
Allowance for Loan Losses
(Dollars in millions)
|
|||||||||||||||
As of and for the year ended December 31,
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||
Balance at the beginning of period
|
$
|
76.2
|
|
$
|
76.8
|
|
$
|
74.2
|
|
$
|
85.3
|
|
$
|
100.5
|
|
Charge-offs:
|
|
|
|
|
|
||||||||||
Real estate
|
|
|
|
|
|
||||||||||
Commercial
|
2.4
|
|
3.5
|
|
0.3
|
|
2.0
|
|
4.4
|
|
|||||
Construction
|
0.8
|
|
0.7
|
|
2.4
|
|
0.3
|
|
3.5
|
|
|||||
Residential
|
1.2
|
|
1.0
|
|
0.7
|
|
0.7
|
|
2.2
|
|
|||||
Agricultural
|
—
|
|
—
|
|
0.7
|
|
—
|
|
0.1
|
|
|||||
Consumer
|
11.3
|
|
8.6
|
|
5.6
|
|
4.9
|
|
4.6
|
|
|||||
Commercial
|
6.8
|
|
5.8
|
|
1.7
|
|
6.0
|
|
5.7
|
|
|||||
Agricultural
|
0.4
|
|
0.2
|
|
0.2
|
|
0.1
|
|
—
|
|
|||||
Total charge-offs
|
22.9
|
|
19.8
|
|
11.6
|
|
14.0
|
|
20.5
|
|
|||||
Recoveries:
|
|
|
|
|
|
||||||||||
Real estate
|
|
|
|
|
|
||||||||||
Commercial
|
0.9
|
|
0.5
|
|
1.8
|
|
1.0
|
|
3.6
|
|
|||||
Construction
|
0.2
|
|
1.8
|
|
0.9
|
|
2.0
|
|
2.0
|
|
|||||
Residential
|
0.3
|
|
0.3
|
|
0.4
|
|
0.4
|
|
0.4
|
|
|||||
Agricultural
|
—
|
|
0.6
|
|
—
|
|
—
|
|
—
|
|
|||||
Consumer
|
4.2
|
|
2.8
|
|
2.6
|
|
2.3
|
|
2.1
|
|
|||||
Commercial
|
2.1
|
|
3.2
|
|
1.7
|
|
3.8
|
|
3.3
|
|
|||||
Agricultural
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Total recoveries
|
7.7
|
|
9.2
|
|
7.4
|
|
9.5
|
|
11.4
|
|
|||||
Net charge-offs
|
15.2
|
|
10.6
|
|
4.2
|
|
4.5
|
|
9.1
|
|
|||||
Provision for loan losses
|
11.1
|
|
10.0
|
|
6.8
|
|
(6.6
|
)
|
(6.1
|
)
|
|||||
Balance at end of period
|
$
|
72.1
|
|
$
|
76.2
|
|
$
|
76.8
|
|
$
|
74.2
|
|
$
|
85.3
|
|
Period end loans
|
$
|
7,614.3
|
|
$
|
5,478.5
|
|
$
|
5,246.2
|
|
$
|
4,897.4
|
|
$
|
4,344.9
|
|
Average loans
|
6,675.4
|
|
5,378.3
|
|
5,056.8
|
|
4,602.9
|
|
4,281.7
|
|
|||||
Net charge-offs to average loans
|
0.23
|
%
|
0.20
|
%
|
0.08
|
%
|
0.10
|
%
|
0.21
|
%
|
|||||
Allowance to period-end loans
|
0.95
|
|
1.39
|
|
1.46
|
|
1.52
|
|
1.96
|
|
Securities Maturities and Yield
(Dollars in millions)
|
|||||||
|
Book
Value
|
% of Total
Investment
Securities
|
Weighted
Average
FTE Yield
|
||||
U.S. Treasuries
|
|
|
|
||||
Maturing within one year
|
$
|
2.6
|
|
0.10
|
%
|
1.18
|
%
|
Maturing in one to five years
|
0.6
|
|
0.02
|
|
1.46
|
|
|
Mark-to-market adjustments on securities available-for-sale
|
—
|
|
—
|
|
NA
|
|
|
Total
|
3.2
|
|
0.12
|
|
1.23
|
|
|
U.S. Government agency securities
|
|
|
|
||||
Maturing within one year
|
71.0
|
|
2.64
|
|
1.20
|
|
|
Maturing in one to five years
|
381.5
|
|
14.17
|
|
1.68
|
|
|
Maturing in five to ten years
|
136.8
|
|
5.08
|
|
2.39
|
|
|
Mark-to-market adjustments on securities available-for-sale
|
(8.0
|
)
|
(0.30
|
)
|
NA
|
|
|
Total
|
581.3
|
|
21.59
|
|
1.79
|
|
|
Mortgage-backed securities
|
|
|
|
||||
Maturing within one year
|
425.3
|
|
15.79
|
|
2.53
|
|
|
Maturing in one to five years
|
1,112.2
|
|
41.30
|
|
1.64
|
|
|
Maturing in five to ten years
|
157.1
|
|
5.83
|
|
2.67
|
|
|
Maturing after ten years
|
101.5
|
|
3.77
|
|
3.33
|
|
|
Mark-to-market adjustments on securities available-for-sale
|
(12.4
|
)
|
(0.46
|
)
|
NA
|
|
|
Total
|
1,783.7
|
|
66.23
|
|
2.03
|
|
|
Marketable CDs
|
|
|
|
||||
Maturing in one to five years
|
3.0
|
|
0.11
|
|
1.89
|
|
|
Mark-to-market adjustments on securities available-for-sale
|
—
|
|
—
|
|
NA
|
|
|
Total
|
3.0
|
|
0.11
|
|
1.89
|
|
|
Tax exempt securities
|
|
|
|
||||
Maturing within one year
|
11.5
|
|
0.43
|
|
3.06
|
|
|
Maturing in one to five years
|
64.3
|
|
2.39
|
|
3.47
|
|
|
Maturing in five to ten years
|
89.4
|
|
3.32
|
|
4.32
|
|
|
Maturing after ten years
|
7.2
|
|
0.27
|
|
5.23
|
|
|
Mark-to-market adjustments on securities available-for-sale
|
—
|
|
—
|
|
NA
|
|
|
Total
|
172.4
|
|
6.41
|
|
3.96
|
|
|
Corporate securities
|
|
|
|
||||
Maturing within one year
|
15.1
|
|
0.56
|
|
1.84
|
|
|
Maturing in one to five years
|
128.5
|
|
4.77
|
|
1.89
|
|
|
Maturing after ten years
|
6.0
|
|
0.22
|
|
5.75
|
|
|
Mark-to-market adjustments on securities available-for-sale
|
(0.2
|
)
|
(0.01
|
)
|
NA
|
|
|
Total
|
149.4
|
|
5.54
|
|
2.04
|
|
|
Other securities
|
|
|
|
||||
Maturing within one year
|
0.1
|
|
—
|
|
7.85
|
|
|
Maturing in five to ten years
|
0.1
|
|
—
|
|
7.52
|
|
|
Mark-to-market adjustments on securities available-for-sale
|
—
|
|
—
|
|
NA
|
|
|
Total
|
0.2
|
|
—
|
|
7.66
|
|
|
Total
|
$
|
2,693.2
|
|
100.00
|
%
|
1.97
|
%
|
Deposits
(Dollars in millions)
|
|||||||||||||||||||||||||
As of December 31,
|
2017
|
Percent
|
2016
|
Percent
|
2015
|
Percent
|
2014
|
Percent
|
2013
|
Percent
|
|||||||||||||||
Non-interest bearing demand
|
$
|
2,900.0
|
|
29.2
|
%
|
$
|
1,906.3
|
|
25.8
|
%
|
$
|
1,823.7
|
|
25.6
|
%
|
$
|
1,791.4
|
|
25.6
|
%
|
$
|
1,491.7
|
|
24.3
|
%
|
Interest bearing:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Demand
|
2,787.5
|
|
28.1
|
|
2,276.5
|
|
30.9
|
|
2,178.4
|
|
30.8
|
|
2,133.3
|
|
30.4
|
|
1,848.8
|
|
30.2
|
|
|||||
Savings
|
3,095.4
|
|
31.2
|
|
2,141.8
|
|
29.0
|
|
1,955.2
|
|
27.6
|
|
1,843.4
|
|
26.3
|
|
1,602.5
|
|
26.1
|
|
|||||
Time, $100 or more
|
432.0
|
|
4.3
|
|
461.4
|
|
6.3
|
|
487.4
|
|
6.9
|
|
520.1
|
|
7.4
|
|
492.1
|
|
8.0
|
|
|||||
Time, other
|
720.0
|
|
7.2
|
|
590.1
|
|
8.0
|
|
644.2
|
|
9.1
|
|
718.1
|
|
10.3
|
|
698.7
|
|
11.4
|
|
|||||
Total interest bearing
|
7,034.9
|
|
70.8
|
|
5,469.8
|
|
74.2
|
|
5,265.2
|
|
74.4
|
|
5,214.9
|
|
74.4
|
|
4,642.1
|
|
75.7
|
|
|||||
Total deposits
|
$
|
9,934.9
|
|
100.0
|
%
|
$
|
7,376.1
|
|
100.0
|
%
|
$
|
7,088.9
|
|
100.0
|
%
|
$
|
7,006.3
|
|
100.0
|
%
|
$
|
6,133.8
|
|
100.0
|
%
|
Securities Sold Under Repurchase Agreements
(Dollars in millions)
|
|||||||||
As of and for the year ended December 31,
|
2017
|
2016
|
2015
|
||||||
Securities sold under repurchase agreements:
|
|
|
|
||||||
Balance at period end
|
$
|
643.0
|
|
$
|
537.6
|
|
$
|
510.6
|
|
Average balance
|
587.1
|
|
481.0
|
|
456.3
|
|
|||
Maximum amount outstanding at any month-end
|
704.4
|
|
537.6
|
|
510.6
|
|
|||
Average interest rate:
|
|
|
|
||||||
During the year
|
0.21
|
%
|
0.09
|
%
|
0.05
|
%
|
|||
At period end
|
0.26
|
|
0.18
|
|
0.07
|
|
Contractual Obligations
(Dollars in millions)
|
|||||||||||||||
|
Payments Due
|
||||||||||||||
|
Within
One Year
|
One Year to
Three Years
|
Three Years
to Five Years
|
After
Five Years
|
Total
|
||||||||||
Deposits without a stated maturity
|
$
|
8,783.0
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
8,783.0
|
|
Time deposits
|
740.3
|
|
321.8
|
|
89.2
|
|
0.6
|
|
1,151.9
|
|
|||||
Securities sold under repurchase agreements
|
643.0
|
|
—
|
|
—
|
|
—
|
|
643.0
|
|
|||||
Other borrowed funds (1)
|
20.0
|
|
—
|
|
—
|
|
—
|
|
20.0
|
|
|||||
Long-term debt obligations (2)
|
—
|
|
—
|
|
5.0
|
|
6.6
|
|
11.6
|
|
|||||
Capital lease obligations
|
0.1
|
|
0.2
|
|
0.2
|
|
1.0
|
|
1.5
|
|
|||||
Operating lease obligations
|
6.0
|
|
10.9
|
|
8.7
|
|
18.5
|
|
44.1
|
|
|||||
Purchase obligations (3)
|
1.1
|
|
—
|
|
—
|
|
—
|
|
1.1
|
|
|||||
Subordinated debentures held by subsidiary trusts (4)
|
—
|
|
—
|
|
—
|
|
82.5
|
|
82.5
|
|
|||||
Total contractual obligations
|
$
|
10,193.5
|
|
$
|
332.9
|
|
$
|
103.1
|
|
$
|
109.2
|
|
$
|
10,738.7
|
|
(1)
|
Included in other borrowed funds are tax deposits made by customers pending subsequent withdrawal by the federal government and a fixed rate subordinated term loan bearing interest of
6.81%
and maturing on
January 9, 2018
. For additional information concerning other borrowed funds, see “Notes to Consolidated Financial Statements — Long Term Debt and Other Borrowed Funds” included in Part IV, Item 15.
|
(2)
|
Long-term debt obligations consists of a fixed rate note payable bearing interest of
2.28%
and maturing on
July 29, 2022
; fixed rate note payable bearing interest of
6.24%
and maturing on
September 6, 2032
; and, a fixed rate note payable bearing interest of
1.00%
and maturing
December 31, 2041
. For additional information concerning long-term debt, see “Notes to Consolidated Financial Statements — Long Term Debt and Other Borrowed Funds” included in Part IV, Item 15.
|
(3)
|
Purchase obligations relate to obligations under construction contracts to build or renovate banking offices.
|
(4)
|
The subordinated debentures are unsecured, with various interest rates and maturities from
December 15, 2037
through
April 1, 2038
. Interest distributions are payable quarterly; however, we may defer interest payments at any time for a period not exceeding 20 consecutive quarters. For additional information concerning the subordinated debentures, see “Notes to Consolidated Financial Statements — Subordinated Debentures Held by Subsidiary Trusts” included in Part IV, Item 15.
|
Interest Rate Sensitivity Gaps
(Dollars in thousands)
|
|||||||||||||||
|
Projected Maturity or Repricing
|
||||||||||||||
|
Three
Months
or Less
|
Three
Months to
One Year
|
One
Year to
Five Years
|
After
Five Years
|
Total
|
||||||||||
Interest earning assets:
|
|
|
|
|
|
||||||||||
Loans (1)
|
$
|
2,646.6
|
|
$
|
1,273.9
|
|
$
|
3,141.0
|
|
$
|
483.4
|
|
$
|
7,544.9
|
|
Investment securities (2)
|
164.7
|
|
441.5
|
|
1,385.3
|
|
701.7
|
|
2,693.2
|
|
|||||
Interest bearing deposits in banks
|
562.3
|
|
—
|
|
—
|
|
—
|
|
562.3
|
|
|||||
Federal funds sold
|
0.1
|
|
—
|
|
—
|
|
—
|
|
0.1
|
|
|||||
Total interest earning assets
|
$
|
3,373.7
|
|
$
|
1,715.4
|
|
$
|
4,526.3
|
|
$
|
1,185.1
|
|
$
|
10,800.5
|
|
Interest bearing liabilities:
|
|
|
|
|
|
||||||||||
Interest bearing demand accounts (3)
|
$
|
776.0
|
|
$
|
630.0
|
|
$
|
1,381.5
|
|
$
|
—
|
|
$
|
2,787.5
|
|
Savings deposits (3)
|
1,741.5
|
|
727.0
|
|
626.9
|
|
—
|
|
3,095.4
|
|
|||||
Time deposits, $100 or more
|
88.6
|
|
175.9
|
|
167.5
|
|
—
|
|
432.0
|
|
|||||
Other time deposits
|
225.2
|
|
250.6
|
|
154.3
|
|
89.8
|
|
719.9
|
|
|||||
Securities sold under repurchase agreements
|
643.0
|
|
—
|
|
—
|
|
—
|
|
643.0
|
|
|||||
Other borrowed funds
|
20.0
|
|
—
|
|
—
|
|
—
|
|
20.0
|
|
|||||
Long-term debt
|
—
|
|
0.1
|
|
5.4
|
|
7.6
|
|
13.1
|
|
|||||
Subordinated debentures held by subsidiary trusts
|
82.5
|
|
—
|
|
—
|
|
—
|
|
82.5
|
|
|||||
Total interest bearing liabilities
|
$
|
3,576.8
|
|
$
|
1,783.6
|
|
$
|
2,335.6
|
|
$
|
97.4
|
|
$
|
7,793.4
|
|
Rate gap
|
$
|
(203.1
|
)
|
$
|
(68.2
|
)
|
$
|
2,190.7
|
|
$
|
1,087.7
|
|
$
|
3,007.1
|
|
Cumulative rate gap
|
(203.1
|
)
|
(271.3
|
)
|
1,919.4
|
|
3,007.1
|
|
|
||||||
Cumulative rate gap as a percentage of total interest earning assets
|
(1.88
|
)%
|
(2.51
|
)%
|
17.77
|
%
|
27.84
|
%
|
27.84
|
%
|
(1)
|
Does not include non-accrual loans of
$69.4 million
. Variable rate loans are included in the three months or less category in the above table although certain of these loans have reached interest rate floors and may not immediately reprice.
|
(2)
|
Adjusted to reflect: (a) expected shorter maturities based upon our historical experience of early prepayments of principal, and (b) the redemption of callable securities on their next call date.
|
(3)
|
Interest bearing demand and savings deposits, while technically subject to immediate withdrawal, actually display sensitivity characteristics that generally fall within one to five years. Their allocation is presented based on those sensitivity characteristics. If these deposits were included in the three month or less category, the above table would reflect a negative three month gap of $3.6 million, a negative cumulative one year gap of $2.3 million and a positive cumulative one to five year gap of $1.9 million.
|
|
|
Number of Securities
|
|
|
|
Number of Securities
|
|
|
to be Issued Upon
|
|
Weighted Average
|
|
Remaining Available
|
|
|
Exercise of
|
|
Exercise Price of
|
|
For Future Issuance
|
|
|
Outstanding Options,
|
|
Outstanding Options,
|
|
Under Equity
|
Plan Category
|
|
Warrants and Rights
|
|
Warrants and Rights
|
|
Compensation Plans(1)
|
|
|
|
|
|
|
|
Equity compensation plans
|
|
|
|
|
|
|
approved by shareholders(2)
|
|
642,255
|
|
$16.13
|
|
1,954,046
|
|
|
|
|
|
|
|
Equity compensation plans not
|
|
|
|
|
|
|
approved by shareholders
|
|
NA
|
NA
|
NA
|
(1)
|
Excludes number of securities to be issued upon exercise of outstanding options, warrants and rights.
|
|
|
(2)
|
Represents stock options issued pursuant to the 2015 Equity Compensation Plan, as amended and restated. For additional information, see “Notes to Consolidated Financial Statements—Stock Based Compensation” included in financial statements included Part IV, Item 15 of this report.
|
(a)
|
1. Our audited consolidated financial statements follow.
|
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
|
|||||||
December 31,
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
||||
Cash and due from banks
|
$
|
196,495
|
|
|
$
|
146,779
|
|
Federal funds sold
|
146
|
|
|
95
|
|
||
Interest bearing deposits in banks
|
562,345
|
|
|
635,149
|
|
||
Total cash and cash equivalents
|
758,986
|
|
|
782,023
|
|
||
Investment securities:
|
|
|
|
||||
Available-for-sale
|
2,208,712
|
|
|
1,611,698
|
|
||
Held-to-maturity (estimated fair values of $483,349 and $513,273 at December 31, 2017 and 2016, respectively)
|
484,494
|
|
|
512,770
|
|
||
Total investment securities
|
2,693,206
|
|
|
2,124,468
|
|
||
Loans held for investment
|
7,567,720
|
|
|
5,416,750
|
|
||
Mortgage loans held for sale
|
46,635
|
|
|
61,794
|
|
||
Total loans
|
7,614,355
|
|
|
5,478,544
|
|
||
Less allowance for loan losses
|
72,147
|
|
|
76,214
|
|
||
Net loans
|
7,542,208
|
|
|
5,402,330
|
|
||
Premises and equipment, net of accumulated depreciation
|
241,862
|
|
|
194,457
|
|
||
Goodwill
|
444,704
|
|
|
212,820
|
|
||
Company-owned life insurance
|
260,551
|
|
|
198,116
|
|
||
Other real estate owned (“OREO”)
|
10,053
|
|
|
10,019
|
|
||
Accrued interest receivable
|
38,031
|
|
|
29,852
|
|
||
Mortgage servicing rights, net of accumulated amortization and impairment reserve
|
24,770
|
|
|
18,457
|
|
||
Deferred tax asset, net
|
4,028
|
|
|
—
|
|
||
Core deposit intangibles, net of accumulated amortization
|
49,109
|
|
|
9,648
|
|
||
Other assets
|
145,747
|
|
|
81,705
|
|
||
Total assets
|
$
|
12,213,255
|
|
|
$
|
9,063,895
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Deposits:
|
|
|
|
||||
Non-interest bearing
|
$
|
2,900,042
|
|
|
$
|
1,906,257
|
|
Interest bearing
|
7,034,829
|
|
|
5,469,853
|
|
||
Total deposits
|
9,934,871
|
|
|
7,376,110
|
|
||
Securities sold under repurchase agreements
|
642,961
|
|
|
537,556
|
|
||
Accounts payable and accrued expenses
|
86,596
|
|
|
44,923
|
|
||
Accrued interest payable
|
5,599
|
|
|
5,421
|
|
||
Deferred tax liability, net
|
—
|
|
|
6,839
|
|
||
Long-term debt
|
13,126
|
|
|
27,970
|
|
||
Other borrowed funds
|
20,009
|
|
|
6
|
|
||
Subordinated debentures held by subsidiary trusts
|
82,477
|
|
|
82,477
|
|
||
Total liabilities
|
10,785,639
|
|
|
8,081,302
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Nonvoting noncumulative preferred stock without par value; authorized 100,000 shares; no shares issued or outstanding as of December 31, 2017 and 2016
|
—
|
|
|
—
|
|
||
Common stock
|
686,991
|
|
|
296,071
|
|
||
Retained earnings
|
752,588
|
|
|
694,650
|
|
||
Accumulated other comprehensive income (loss), net
|
(11,963
|
)
|
|
(8,128
|
)
|
||
Total stockholders’ equity
|
1,427,616
|
|
|
982,593
|
|
||
Total liabilities and stockholders’ equity
|
$
|
12,213,255
|
|
|
$
|
9,063,895
|
|
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
|
|||||||||||
Year Ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Interest income:
|
|
|
|
|
|
||||||
Interest and fees on loans
|
$
|
324,769
|
|
|
$
|
259,219
|
|
|
$
|
246,015
|
|
Interest and dividends on investment securities:
|
|
|
|
|
|
||||||
Taxable
|
42,697
|
|
|
32,160
|
|
|
30,861
|
|
|||
Exempt from federal taxes
|
3,156
|
|
|
3,447
|
|
|
3,998
|
|
|||
Interest on deposits in banks
|
7,146
|
|
|
2,589
|
|
|
1,537
|
|
|||
Interest on federal funds sold
|
9
|
|
|
11
|
|
|
12
|
|
|||
Total interest income
|
377,777
|
|
|
297,426
|
|
|
282,423
|
|
|||
Interest expense:
|
|
|
|
|
|
||||||
Interest on deposits
|
21,367
|
|
|
12,662
|
|
|
13,107
|
|
|||
Interest on securities sold under repurchase agreements
|
1,253
|
|
|
429
|
|
|
231
|
|
|||
Interest on other borrowed funds
|
1,537
|
|
|
—
|
|
|
—
|
|
|||
Interest on long-term debt
|
599
|
|
|
1,815
|
|
|
2,300
|
|
|||
Interest on subordinated debentures held by subsidiary trusts
|
3,178
|
|
|
2,755
|
|
|
2,422
|
|
|||
Total interest expense
|
27,934
|
|
|
17,661
|
|
|
18,060
|
|
|||
Net interest income
|
349,843
|
|
|
279,765
|
|
|
264,363
|
|
|||
Provision for loan losses
|
11,053
|
|
|
9,991
|
|
|
6,822
|
|
|||
Net interest income after provision for loan losses
|
338,790
|
|
|
269,774
|
|
|
257,541
|
|
|||
Non-interest income:
|
|
|
|
|
|
||||||
Payment services revenues
|
43,308
|
|
|
34,374
|
|
|
32,750
|
|
|||
Mortgage banking revenues
|
28,896
|
|
|
37,222
|
|
|
29,973
|
|
|||
Wealth management revenues
|
21,067
|
|
|
20,460
|
|
|
19,907
|
|
|||
Service charges on deposit accounts
|
21,276
|
|
|
18,426
|
|
|
17,031
|
|
|||
Other service charges, commissions and fees
|
13,358
|
|
|
11,506
|
|
|
10,404
|
|
|||
Loss on termination of interest rate swap
|
(1,132
|
)
|
|
—
|
|
|
—
|
|
|||
Investment securities gains, net
|
718
|
|
|
330
|
|
|
137
|
|
|||
Other income
|
14,262
|
|
|
10,028
|
|
|
11,313
|
|
|||
Non-recurring litigation recovery
|
—
|
|
|
4,150
|
|
|
—
|
|
|||
Total non-interest income
|
141,753
|
|
|
136,496
|
|
|
121,515
|
|
|||
Non-interest expense:
|
|
|
|
|
|
||||||
Salaries and wages
|
122,751
|
|
|
108,684
|
|
|
101,451
|
|
|||
Employee benefits
|
37,561
|
|
|
35,193
|
|
|
31,324
|
|
|||
Occupancy, net
|
22,410
|
|
|
17,714
|
|
|
17,879
|
|
|||
Furniture and equipment
|
11,467
|
|
|
9,584
|
|
|
15,524
|
|
|||
Outsourced technology services
|
25,087
|
|
|
20,547
|
|
|
10,124
|
|
|||
FDIC insurance premiums
|
4,605
|
|
|
4,548
|
|
|
4,858
|
|
|||
Professional fees
|
6,847
|
|
|
4,990
|
|
|
6,458
|
|
|||
OREO expense, net of income
|
467
|
|
|
(44
|
)
|
|
(1,475
|
)
|
|||
Mortgage servicing rights amortization
|
3,038
|
|
|
2,957
|
|
|
2,434
|
|
|||
Mortgage servicing rights impairment recovery
|
(93
|
)
|
|
(35
|
)
|
|
(97
|
)
|
|||
Core deposit intangibles amortization
|
5,438
|
|
|
3,427
|
|
|
3,388
|
|
|||
Other expenses
|
57,087
|
|
|
50,625
|
|
|
50,936
|
|
|||
Loss contingency expense
|
—
|
|
|
—
|
|
|
5,000
|
|
|||
Acquisition related expenses
|
27,156
|
|
|
2,821
|
|
|
795
|
|
|||
Total non-interest expense
|
323,821
|
|
|
261,011
|
|
|
248,599
|
|
|||
Income before income tax expense
|
156,722
|
|
|
145,259
|
|
|
130,457
|
|
|||
Income tax expense
|
50,201
|
|
|
49,623
|
|
|
43,662
|
|
|||
Net income
|
$
|
106,521
|
|
|
$
|
95,636
|
|
|
$
|
86,795
|
|
|
|
|
|
|
|
||||||
Basic earnings per common share
|
$
|
2.07
|
|
|
$
|
2.15
|
|
|
$
|
1.92
|
|
Diluted earnings per common share
|
2.05
|
|
|
2.13
|
|
|
1.90
|
|
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
|
|||||||||||
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Net income
|
$
|
106,521
|
|
|
$
|
95,636
|
|
|
$
|
86,795
|
|
Other comprehensive income (loss) before tax:
|
|
|
|
|
|
||||||
Investment securities available-for-sale:
|
|
|
|
|
|
||||||
Change in net unrealized gains (losses) during the period
|
(6,545
|
)
|
|
(19,379
|
)
|
|
3,151
|
|
|||
Reclassification adjustment for net gains included in income
|
(718
|
)
|
|
(330
|
)
|
|
(137
|
)
|
|||
Change in unamortized loss on available-for-sale investment securities transferred into held-to-maturity
|
1,858
|
|
|
1,858
|
|
|
1,611
|
|
|||
Change in net unrealized gain (loss) on derivatives
|
(1,095
|
)
|
|
(203
|
)
|
|
165
|
|
|||
Reclassification adjustment for derivative net losses included in income
|
1,132
|
|
|
—
|
|
|
—
|
|
|||
Defined benefit post-retirement benefit plans:
|
|
|
|
|
|
||||||
Change in net actuarial loss
|
(1,264
|
)
|
|
3,983
|
|
|
58
|
|
|||
Other comprehensive income (loss), before tax
|
(6,632
|
)
|
|
(14,071
|
)
|
|
4,848
|
|
|||
Deferred tax benefit (expense) related to other comprehensive income (loss)
|
2,797
|
|
|
5,537
|
|
|
(1,908
|
)
|
|||
Other comprehensive income (loss), net of tax
|
(3,835
|
)
|
|
(8,534
|
)
|
|
2,940
|
|
|||
Comprehensive income
|
$
|
102,686
|
|
|
$
|
87,102
|
|
|
$
|
89,735
|
|
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share and per share data)
|
|||||||||||||||
|
Common
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
Stockholders’
Equity
|
||||||||
Balance at December 31, 2014
|
$
|
323,596
|
|
|
$
|
587,862
|
|
|
$
|
(2,534
|
)
|
|
$
|
908,924
|
|
Net income
|
—
|
|
|
86,795
|
|
|
—
|
|
|
86,795
|
|
||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
2,940
|
|
|
2,940
|
|
||||
Common stock transactions:
|
|
|
|
|
|
|
|
||||||||
793,077 common shares purchased and retired
|
(20,647
|
)
|
|
—
|
|
|
—
|
|
|
(20,647
|
)
|
||||
21,414 common shares issued
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
169,577 non-vested common shares issued
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
19,184 non-vested common shares forfeited or canceled
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
261,080 stock options exercised, net of 89,358 shares tendered in payment of option price and income tax withholding amounts
|
3,369
|
|
|
—
|
|
|
—
|
|
|
3,369
|
|
||||
Tax benefit of stock-based compensation
|
1,443
|
|
|
—
|
|
|
—
|
|
|
1,443
|
|
||||
Stock-based compensation expense
|
3,959
|
|
|
—
|
|
|
—
|
|
|
3,959
|
|
||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common ($0.80 per share)
|
—
|
|
|
(36,290
|
)
|
|
—
|
|
|
(36,290
|
)
|
||||
Balance at December 31, 2015
|
311,720
|
|
|
638,367
|
|
|
406
|
|
|
950,493
|
|
||||
Net income
|
—
|
|
|
95,636
|
|
|
—
|
|
|
95,636
|
|
||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
(8,534
|
)
|
|
(8,534
|
)
|
||||
Common stock transactions:
|
|
|
|
|
|
|
|
||||||||
1,015,389 common shares purchased and retired
|
(26,854
|
)
|
|
—
|
|
|
—
|
|
|
(26,854
|
)
|
||||
16,347 common shares issued
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
190,239 non-vested common shares issued
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
29,844 non-vested common shares forfeited or canceled
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
336,598 stock options exercised, net of 104,643 shares tendered in payment of option price and income tax withholding amounts
|
4,683
|
|
|
—
|
|
|
—
|
|
|
4,683
|
|
||||
Tax benefit of stock-based compensation
|
2,146
|
|
|
—
|
|
|
—
|
|
|
2,146
|
|
||||
Stock-based compensation expense
|
4,376
|
|
|
—
|
|
|
—
|
|
|
4,376
|
|
||||
Cash dividends declared:
|
|
|
|
|
|
|
|
||||||||
Common ($0.88 per share)
|
—
|
|
|
(39,353
|
)
|
|
—
|
|
|
(39,353
|
)
|
||||
Balance at December 31, 2016
|
$
|
296,071
|
|
|
$
|
694,650
|
|
|
$
|
(8,128
|
)
|
|
$
|
982,593
|
|
Net income
|
—
|
|
|
106,521
|
|
|
—
|
|
|
106,521
|
|
||||
Other comprehensive loss, net of tax benefit
|
—
|
|
|
—
|
|
|
(3,835
|
)
|
|
(3,835
|
)
|
||||
Common stock transactions:
|
|
|
|
|
|
|
|
||||||||
33,063 common shares purchased and retired
|
(1,348
|
)
|
|
—
|
|
|
—
|
|
|
(1,348
|
)
|
||||
11,267,676 common shares issued
|
385,969
|
|
|
—
|
|
|
—
|
|
|
385,969
|
|
||||
140,246 non-vested common shares issued
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
53,571 non-vested common shares forfeited or canceled
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
218,095 stock options exercised, net of 67,792 shares tendered in payment of option price and income tax withholding amounts
|
2,431
|
|
|
—
|
|
|
—
|
|
|
2,431
|
|
||||
Stock-based compensation expense
|
3,868
|
|
|
—
|
|
|
—
|
|
|
3,868
|
|
||||
Cash dividends declared:
|
|
|
|
|
|
|
|
||||||||
Common ($0.96 per share)
|
—
|
|
|
(48,583
|
)
|
|
—
|
|
|
(48,583
|
)
|
||||
Balance at December 31, 2017
|
$
|
686,991
|
|
|
$
|
752,588
|
|
|
$
|
(11,963
|
)
|
|
$
|
1,427,616
|
|
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|||||||||||
Year Ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
106,521
|
|
|
$
|
95,636
|
|
|
$
|
86,795
|
|
Adjustments to reconcile net income from operations to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Provision for loan losses
|
11,053
|
|
|
9,991
|
|
|
6,822
|
|
|||
Net (gain) loss on disposal of property and equipment
|
137
|
|
|
621
|
|
|
(731
|
)
|
|||
Depreciation and amortization
|
18,432
|
|
|
19,480
|
|
|
18,313
|
|
|||
Net premium amortization on investment securities
|
11,616
|
|
|
12,520
|
|
|
14,880
|
|
|||
Net (gain) loss on investment securities transactions
|
(718
|
)
|
|
(330
|
)
|
|
(137
|
)
|
|||
Realized and unrealized net gains on mortgage banking activities
|
(25,174
|
)
|
|
(26,806
|
)
|
|
(21,748
|
)
|
|||
Net loss (gain) on sale of OREO
|
59
|
|
|
(925
|
)
|
|
(2,991
|
)
|
|||
Write-down of OREO and other assets pending disposal
|
406
|
|
|
792
|
|
|
1,013
|
|
|||
Net (gain) on sale of Health Savings Accounts
|
(3,068
|
)
|
|
—
|
|
|
—
|
|
|||
Mortgage servicing rights recovery
|
(93
|
)
|
|
(35
|
)
|
|
(97
|
)
|
|||
Deferred income tax expense (benefit)
|
20,917
|
|
|
3,369
|
|
|
12,449
|
|
|||
Net increase in cash surrender value of company-owned life insurance policies
|
(5,397
|
)
|
|
(4,477
|
)
|
|
(3,432
|
)
|
|||
Stock-based compensation expense
|
3,868
|
|
|
4,376
|
|
|
3,959
|
|
|||
Tax benefits from stock-based compensation
|
—
|
|
|
2,146
|
|
|
1,443
|
|
|||
Excess tax benefits from stock-based compensation
|
—
|
|
|
(1,566
|
)
|
|
(1,184
|
)
|
|||
Originations of mortgage loans held for sale
|
(945,200
|
)
|
|
(1,113,292
|
)
|
|
(1,148,098
|
)
|
|||
Proceeds from sales of mortgage loans held for sale
|
990,266
|
|
|
1,125,365
|
|
|
1,164,804
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
(Increase) decrease in interest receivable
|
(574
|
)
|
|
(1,053
|
)
|
|
(101
|
)
|
|||
Decrease (increase) in other assets
|
(6,063
|
)
|
|
(2,214
|
)
|
|
(3,622
|
)
|
|||
Increase (decrease) in interest payable
|
178
|
|
|
445
|
|
|
(1,006
|
)
|
|||
Increase (decrease) in accounts payable and accrued expenses
|
(22,483
|
)
|
|
(5,973
|
)
|
|
(11,931
|
)
|
|||
Net cash provided by operating activities
|
154,683
|
|
|
118,070
|
|
|
115,400
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of investment securities:
|
|
|
|
|
|
||||||
Held-to-maturity
|
(12,793
|
)
|
|
(18,173
|
)
|
|
(45,179
|
)
|
|||
Available-for-sale
|
(614,267
|
)
|
|
(905,940
|
)
|
|
(474,846
|
)
|
|||
Proceeds from maturities, pay-downs, calls and sales of investment securities:
|
|
|
|
|
|
||||||
Held-to-maturity
|
97,407
|
|
|
112,563
|
|
|
118,406
|
|
|||
Available-for-sale
|
426,221
|
|
|
814,598
|
|
|
648,683
|
|
|||
Purchase of company-owned life insurance
|
—
|
|
|
—
|
|
|
(30,000
|
)
|
|||
Extensions of credit to customers, net of repayments
|
(99,722
|
)
|
|
(168,321
|
)
|
|
(327,878
|
)
|
|||
Recoveries of loans charged-off
|
7,749
|
|
|
9,249
|
|
|
7,432
|
|
|||
Proceeds from sales of OREO
|
5,913
|
|
|
5,325
|
|
|
15,644
|
|
|||
Acquisition of intangible assets
|
(28,013
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from the sale of Health Savings Accounts
|
6,138
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of loan production office
|
—
|
|
|
932
|
|
|
—
|
|
|||
Acquisition of bank and bank holding company, net of cash and cash equivalents, received
|
91,779
|
|
|
18,554
|
|
|
(1,636
|
)
|
|||
Capital expenditures, net of proceeds from sales
|
(10,977
|
)
|
|
(11,879
|
)
|
|
(5,965
|
)
|
|||
Net cash provided by (used in) investing activities
|
$
|
(130,565
|
)
|
|
$
|
(143,092
|
)
|
|
$
|
(95,339
|
)
|
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In thousands)
|
|||||||||||
Year Ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Net increase (decrease) in deposits
|
$
|
(110,216
|
)
|
|
$
|
77,586
|
|
|
$
|
19,160
|
|
Net increase (decrease) in securities sold under repurchase agreements
|
105,405
|
|
|
8,871
|
|
|
6,385
|
|
|||
Net increase (decrease) in other borrowed funds
|
64
|
|
|
4
|
|
|
(7
|
)
|
|||
Repayments of long-term debt
|
92
|
|
|
(65
|
)
|
|
(16,538
|
)
|
|||
Advances on long-term debt
|
5,000
|
|
|
150
|
|
|
5,103
|
|
|||
Write-off of debt issuance costs
|
—
|
|
|
—
|
|
|
7
|
|
|||
Proceeds from issuance of common stock
|
2,431
|
|
|
4,683
|
|
|
3,369
|
|
|||
Excess tax benefits from stock-based compensation
|
—
|
|
|
1,566
|
|
|
1,184
|
|
|||
Purchase and retirement of common stock
|
(1,348
|
)
|
|
(26,854
|
)
|
|
(20,647
|
)
|
|||
Dividends paid to common stockholders
|
(48,583
|
)
|
|
(39,353
|
)
|
|
(36,290
|
)
|
|||
Net cash provided by (used in) financing activities
|
(47,155
|
)
|
|
26,588
|
|
|
(38,274
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
(23,037
|
)
|
|
1,566
|
|
|
(18,213
|
)
|
|||
Cash and cash equivalents at beginning of period
|
782,023
|
|
|
780,457
|
|
|
798,670
|
|
|||
Cash and cash equivalents at end of period
|
$
|
758,986
|
|
|
$
|
782,023
|
|
|
$
|
780,457
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Cash paid during the period for income taxes
|
$
|
28,759
|
|
|
$
|
54,419
|
|
|
$
|
27,335
|
|
Cash paid during the period for interest expense
|
27,757
|
|
|
17,200
|
|
|
18,933
|
|
|||
|
|
|
|
|
|
||||||
Supplemental disclosures of noncash investing and financing activities:
|
|
|
|
|
|
||||||
Transfer of loans to loans held for sale
|
$
|
3,009
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Transfer from long-term debt to other borrowed funds
|
20,000
|
|
|
—
|
|
|
—
|
|
|||
Transfer of loans to other real estate owned
|
5,219
|
|
|
7,648
|
|
|
5,560
|
|
|||
Capitalization of internally originated mortgage servicing rights
|
5,563
|
|
|
5,758
|
|
|
3,614
|
|
|||
|
|
|
|
|
|
||||||
Supplemental schedule of noncash investing activities from acquisitions:
|
|
|
|
|
|
||||||
Investment securities available for sale
|
$
|
424,302
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment securities held to maturity
|
57,307
|
|
|
—
|
|
|
—
|
|
|||
Loans held for sale
|
10,253
|
|
|
—
|
|
|
—
|
|
|||
Loans
|
2,079,336
|
|
|
—
|
|
|
—
|
|
|||
Premises and equipment
|
46,732
|
|
|
—
|
|
|
—
|
|
|||
Goodwill
|
231,886
|
|
|
—
|
|
|
—
|
|
|||
Core deposit intangible
|
47,968
|
|
|
—
|
|
|
—
|
|
|||
Mortgage servicing rights
|
3,491
|
|
|
—
|
|
|
—
|
|
|||
Interest receivable
|
7,605
|
|
|
—
|
|
|
—
|
|
|||
Company-owned life insurance
|
57,038
|
|
|
—
|
|
|
—
|
|
|||
Deferred tax assets
|
28,640
|
|
|
—
|
|
|
—
|
|
|||
Other real estate owned
|
1,192
|
|
|
—
|
|
|
—
|
|
|||
Other assets
|
31,572
|
|
|
—
|
|
|
—
|
|
|||
Total noncash assets acquired
|
$
|
3,027,322
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Liabilities assumed:
|
|
|
|
|
|
||||||
Deposits
|
$
|
(2,668,976
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Accounts payable and accrued expenses
|
(64,156
|
)
|
|
—
|
|
|
—
|
|
|||
Total liabilities assumed
|
$
|
(2,733,132
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
(2)
|
ACQUISITIONS
|
|
As Recorded
|
Fair Value
|
|
As Recorded
|
||||||
As of May 30, 2017
|
by Cascade
|
Adjustments
|
|
by the Company
|
||||||
|
|
|
|
|
||||||
Assets acquired:
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
246.8
|
|
$
|
—
|
|
|
$
|
246.8
|
|
Investment securities
|
476.7
|
|
4.9
|
|
(1)
|
481.6
|
|
|||
Loans held for investment
|
2,111.0
|
|
(31.7
|
)
|
(2)
|
2,079.3
|
|
|||
Mortgage loans held for sale
|
10.3
|
|
—
|
|
|
10.3
|
|
|||
Allowance for loan losses
|
(24.0
|
)
|
24.0
|
|
(3)
|
—
|
|
|||
Premises and equipment
|
46.6
|
|
0.1
|
|
(4)
|
46.7
|
|
|||
Other real estate owned ("OREO")
|
1.2
|
|
—
|
|
|
1.2
|
|
|||
Core deposit intangible assets
|
—
|
|
48.0
|
|
(5)
|
48.0
|
|
|||
Deferred tax assets, net
|
47.6
|
|
(19.0
|
)
|
(6)
|
28.6
|
|
|||
Other assets
|
98.6
|
|
1.1
|
|
(7)
|
99.7
|
|
|||
Total assets acquired
|
3,014.8
|
|
27.4
|
|
|
3,042.2
|
|
|||
|
|
|
|
|
||||||
Liabilities assumed:
|
|
|
|
|
||||||
Deposits
|
2,669.9
|
|
(0.9
|
)
|
(8)
|
2,669.0
|
|
|||
Accounts payable and accrued expense
|
62.2
|
|
1.9
|
|
(9)
|
64.1
|
|
|||
Total liabilities assumed
|
2,732.1
|
|
1.0
|
|
|
2,733.1
|
|
|||
|
|
|
|
|
||||||
Net assets acquired
|
$
|
282.7
|
|
$
|
26.4
|
|
|
$
|
309.1
|
|
|
|
|
|
|
||||||
Consideration paid:
|
|
|
|
|
||||||
Cash
|
|
|
|
$
|
155.0
|
|
||||
Class A common stock
|
|
|
|
386.0
|
|
|||||
Total consideration paid
|
|
|
|
$
|
541.0
|
|
||||
|
|
|
|
|
||||||
Goodwill
|
|
|
|
$
|
231.9
|
|
||||
|
|
|
|
|
Explanation of fair value adjustments. Note marks for the deferred tax assets, loans held for investment, and accounts payable and accrued expenses were adjusted due to loan and deferred compensation valuation adjustments since prior quarter reporting. Certain other balances have been reclassified, none of which are material. The adjustments had no impact on 2017 earnings and a net reduction to goodwill of $0.3 million from third quarter reported balances.
|
|
(1)
|
Write up of the book value of investments to their estimated fair values on the date of acquisition based upon quotes obtained from an independent third party pricing service.
|
(2)
|
Write down of the book value of loans to their estimated fair values. Shared National Credits (SNC) were recorded at quoted sales prices where available. The fair value of the remaining loans was estimated using cash flow projections based on the remaining maturity and repricing terms, adjusted for estimated future credit losses and prepayments and discounted to present value using a risk-adjusted market rate for similar loans. The fair value of collateral dependent loans acquired with deteriorated credit quality was estimated based on the Company's analysis of the fair value of each loan's underlying collateral, discounted using market-derived rates of return with consideration given to the period of time and costs associated with foreclosure and disposition of the collateral.
|
(3)
|
Adjustment to remove the Cascade allowance for loan losses at acquisition date, as the credit risk is included in the fair value adjustment for loans receivable described in (2) above.
|
(4)
|
Write up of the book value of premises and equipment to their estimated fair values on the date of acquisition based upon appraisals obtained from an independent third party appraiser or broker's opinion of value.
|
(5)
|
Adjustment represents the value of the core deposit base assumed in the acquisition based upon valuation from an independent accounting and advisory firm.
|
(6)
|
Adjustment consists of the write-off of pre-existing deferred tax assets and purchase accounting adjustments as a result of the acquisition.
|
(7)
|
Adjustment consists of various other assets recorded as a result of the acquisition, including mortgage servicing rights, SBA servicing rights, and favorable leases offset by reductions to the fair value of other items.
|
(8)
|
Decrease in book value of time deposits to their estimated fair values based upon interest rates of similar time deposits with similar terms on the date of acquisition based upon valuation from an independent accounting and advisory firm.
|
(9)
|
Increase in fair value due to credit card incentive program, unfavorable leases, write-off of balance sheet reserve, and swap liability offset.
|
|
December 31, 2017
|
||
Legal and professional fees
|
$
|
9.6
|
|
Employee expenses
|
5.1
|
|
|
Technology conversion and contract termination
|
10.2
|
|
|
Other
|
2.3
|
|
|
Total acquisition related expenses
|
$
|
27.2
|
|
Contractually required principal and interest payments
|
$
|
49.7
|
|
Contractual cash flows not expected to be collected ("non-accretable discount")
|
24.7
|
|
|
Cash flows expected to be collected
|
25.0
|
|
|
Interest component of cash flows expected to be collected ("accretable discount")
|
1.9
|
|
|
Fair value of acquired credit-impaired loans
|
$
|
23.1
|
|
Contractually required principal and interest payments
|
$
|
2,098.1
|
|
Contractual cash flows not expected to be collected
|
23.3
|
|
|
Fair value at acquisition
|
$
|
2,066.5
|
|
Year ended December 31, (unaudited)
|
2017
|
2016
|
||||
Interest income
|
$
|
420.8
|
|
$
|
392.7
|
|
Non-interest income
|
153.3
|
|
165.9
|
|
||
Total revenues
|
$
|
574.1
|
|
$
|
558.6
|
|
|
|
|
||||
Net income
|
$
|
126.4
|
|
$
|
72.3
|
|
|
|
|
||||
EPS - basic
|
$
|
2.03
|
|
$
|
1.30
|
|
EPS - diluted
|
2.01
|
|
1.29
|
|
(3)
|
GOODWILL AND CORE DEPOSIT INTANGIBLES
|
Goodwill
|
||||||||||||
|
Year Ended December 31,
|
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|
||||||
Net carrying value at beginning of period
|
$
|
212.8
|
|
|
$
|
204.5
|
|
|
$
|
205.6
|
|
|
Acquisitions and measurement period adjustments
|
231.9
|
|
|
8.3
|
|
|
(1.1
|
)
|
|
|||
Net carrying value at end of period
|
$
|
444.7
|
|
|
$
|
212.8
|
|
|
$
|
204.5
|
|
|
Core deposit intangibles ("CDI")
|
||||||||||||
|
Year Ended December 31,
|
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|
||||||
CDI, net, beginning of period
|
$
|
9.7
|
|
|
$
|
10.6
|
|
|
$
|
13.3
|
|
|
Established through acquisitions
|
48.0
|
|
|
2.5
|
|
|
0.7
|
|
|
|||
Reductions due to sale of accounts
|
(3.2
|
)
|
|
—
|
|
|
—
|
|
|
|||
Current period amortization
|
5.4
|
|
|
3.4
|
|
|
3.4
|
|
|
|||
Total CDI, net, at end of period
|
$
|
49.1
|
|
|
$
|
9.7
|
|
|
$
|
10.6
|
|
|
Years ending December 31,
|
|
|
||
2018
|
$
|
6.9
|
|
|
2019
|
6.6
|
|
|
|
2020
|
6.2
|
|
|
|
2021
|
5.7
|
|
|
|
2022
|
5.3
|
|
|
|
Thereafter
|
18.4
|
|
|
|
Total
|
$
|
49.1
|
|
|
(4)
|
INVESTMENT SECURITIES
|
December 31, 2017
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
||||||||
Available-for-Sale
|
|
|
|
|
||||||||
U.S. Treasury notes
|
$
|
3.2
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3.2
|
|
Obligations of U.S. government agencies
|
569.5
|
|
—
|
|
(8.0
|
)
|
561.5
|
|
||||
U.S. agency residential mortgage-backed securities &
collateralized mortgage obligations
|
1,474.1
|
|
3.8
|
|
(15.4
|
)
|
1,462.5
|
|
||||
Private mortgage-backed securities
|
91.5
|
|
—
|
|
(0.8
|
)
|
90.7
|
|
||||
Corporate Securities
|
88.0
|
|
0.1
|
|
(0.3
|
)
|
87.8
|
|
||||
Other investments
|
3.0
|
|
—
|
|
—
|
|
3.0
|
|
||||
Total
|
$
|
2,229.3
|
|
$
|
3.9
|
|
$
|
(24.5
|
)
|
$
|
2,208.7
|
|
December 31, 2017
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
||||||||
Held-to Maturity
|
|
|
|
|
||||||||
State, county and municipal securities
|
$
|
172.4
|
|
$
|
2.6
|
|
$
|
(0.6
|
)
|
$
|
174.4
|
|
Corporate securities
|
61.6
|
|
0.1
|
|
(0.3
|
)
|
61.4
|
|
||||
Obligations of U.S. government agencies
|
19.8
|
|
—
|
|
(0.2
|
)
|
19.6
|
|
||||
U.S agency residential mortgage-backed securities &
collateralized mortgage obligations |
230.5
|
|
8.8
|
|
(11.6
|
)
|
227.7
|
|
||||
Other investments
|
0.2
|
|
—
|
|
—
|
|
0.2
|
|
||||
Total
|
$
|
484.5
|
|
$
|
11.5
|
|
$
|
(12.7
|
)
|
$
|
483.3
|
|
December 31, 2016
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
||||||||
Available-for-Sale
|
|
|
|
|
||||||||
U.S. Treasury notes
|
$
|
3.6
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3.6
|
|
Obligations of U.S. government agencies
|
397.4
|
|
0.3
|
|
(6.4
|
)
|
391.3
|
|
||||
U.S. agency residential mortgage-backed securities &
collateralized mortgage obligations
|
1,220.9
|
|
6.4
|
|
(13.6
|
)
|
1,213.7
|
|
||||
Private mortgage-backed securities
|
0.1
|
|
—
|
|
—
|
|
0.1
|
|
||||
Other investments
|
3.0
|
|
—
|
|
—
|
|
3.0
|
|
||||
Total
|
$
|
1,625.0
|
|
$
|
6.7
|
|
$
|
(20.0
|
)
|
$
|
1,611.7
|
|
December 31, 2016
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
||||||||
Held-to Maturity
|
|
|
|
|
||||||||
State, county and municipal securities
|
$
|
160.2
|
|
$
|
2.7
|
|
$
|
(0.5
|
)
|
$
|
162.4
|
|
Corporate securities
|
53.0
|
|
0.2
|
|
(0.2
|
)
|
53.0
|
|
||||
Obligations of U.S. government agencies
|
19.8
|
|
—
|
|
(0.2
|
)
|
19.6
|
|
||||
U.S. agency residential mortgage-backed securities &
collateralized mortgage obligations
|
279.6
|
|
7.8
|
|
(9.2
|
)
|
278.2
|
|
||||
Other investments
|
0.2
|
|
—
|
|
—
|
|
0.2
|
|
||||
Total
|
$
|
512.8
|
|
$
|
10.7
|
|
$
|
(10.1
|
)
|
$
|
513.4
|
|
|
Less than 12 Months
|
12 Months or More
|
Total
|
|||||||||||||||
December 31, 2017
|
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
||||||||||||
Available-for-Sale
|
|
|
|
|
|
|
||||||||||||
Obligations of U.S. government agencies
|
$
|
284.9
|
|
$
|
(3.4
|
)
|
$
|
266.1
|
|
$
|
(4.6
|
)
|
$
|
551.0
|
|
$
|
(8.0
|
)
|
U.S. agency residential mortgage-backed
securities & collateralized mortgage
obligations
|
670.1
|
|
(6.2
|
)
|
439.2
|
|
(9.2
|
)
|
1,109.3
|
|
(15.4
|
)
|
||||||
Private mortgage-backed securities
|
74.0
|
|
(0.8
|
)
|
—
|
|
—
|
|
74.0
|
|
(0.8
|
)
|
||||||
Corporate securities
|
51.3
|
|
(0.3
|
)
|
—
|
|
—
|
|
51.3
|
|
(0.3
|
)
|
||||||
Total
|
$
|
1,080.3
|
|
$
|
(10.7
|
)
|
$
|
705.3
|
|
$
|
(13.8
|
)
|
$
|
1,785.6
|
|
$
|
(24.5
|
)
|
|
Less than 12 Months
|
12 Months or More
|
Total
|
|||||||||||||||
December 31, 2017
|
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
||||||||||||
Held-to-Maturity
|
|
|
|
|
|
|
||||||||||||
State, county and municipal securities
|
$
|
53.3
|
|
$
|
(0.4
|
)
|
$
|
12.3
|
|
$
|
(0.2
|
)
|
$
|
65.6
|
|
$
|
(0.6
|
)
|
Corporate securities
|
41.2
|
|
(0.2
|
)
|
5.0
|
|
(0.1
|
)
|
46.2
|
|
(0.3
|
)
|
||||||
U.S. agency residential mortgage-backed
securities & collateralized mortgage obligations |
76.4
|
|
(9.1
|
)
|
60.5
|
|
(2.5
|
)
|
136.9
|
|
(11.6
|
)
|
||||||
Obligations of U.S. government agencies
|
9.7
|
|
—
|
|
9.9
|
|
(0.2
|
)
|
19.6
|
|
(0.2
|
)
|
||||||
Total
|
$
|
180.6
|
|
$
|
(9.7
|
)
|
$
|
87.7
|
|
$
|
(3.0
|
)
|
$
|
268.3
|
|
$
|
(12.7
|
)
|
|
Less than 12 Months
|
12 Months or More
|
Total
|
|||||||||||||||
December 31, 2016
|
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
||||||||||||
Available-for-Sale
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury notes
|
$
|
0.6
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
0.6
|
|
$
|
—
|
|
Obligations of U.S. government agencies
|
316.5
|
|
(6.4
|
)
|
—
|
|
—
|
|
316.5
|
|
(6.4
|
)
|
||||||
U.S. agency residential mortgage-backed
securities & collateralized mortgage
obligations
|
746.3
|
|
(13.1
|
)
|
15.8
|
|
(0.5
|
)
|
762.1
|
|
(13.6
|
)
|
||||||
Total
|
$
|
1,063.4
|
|
$
|
(19.5
|
)
|
$
|
15.8
|
|
$
|
(0.5
|
)
|
$
|
1,079.2
|
|
$
|
(20.0
|
)
|
|
Less than 12 Months
|
12 Months or More
|
Total
|
|||||||||||||||
December 31, 2016
|
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
||||||||||||
Held-to-Maturity
|
|
|
|
|
|
|
||||||||||||
State, county and municipal securities
|
$
|
42.5
|
|
$
|
(0.5
|
)
|
$
|
2.8
|
|
$
|
—
|
|
$
|
45.3
|
|
$
|
(0.5
|
)
|
Corporate securities
|
32.5
|
|
(0.2
|
)
|
—
|
|
—
|
|
$
|
32.5
|
|
$
|
(0.2
|
)
|
||||
U.S. agency residential mortgage-backed
securities & collateralized mortgage obligations |
$
|
108.8
|
|
$
|
(7.9
|
)
|
$
|
20.0
|
|
$
|
(1.3
|
)
|
$
|
128.8
|
|
$
|
(9.2
|
)
|
Obligations of U.S. government agencies
|
$
|
19.6
|
|
$
|
(0.2
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
19.6
|
|
$
|
(0.2
|
)
|
Total
|
$
|
203.4
|
|
$
|
(8.8
|
)
|
$
|
22.8
|
|
$
|
(1.3
|
)
|
$
|
226.2
|
|
$
|
(10.1
|
)
|
|
Available-for-Sale
|
|
Held-to-Maturity
|
||||||||||
December 31, 2017
|
Amortized
Cost
|
Estimated
Fair Value
|
|
Amortized
Cost
|
Estimated
Fair Value
|
||||||||
Within one year
|
$
|
450.7
|
|
$
|
447.5
|
|
|
$
|
76.1
|
|
$
|
76.7
|
|
After one year but within five years
|
1,422.7
|
|
1,409.3
|
|
|
266.2
|
|
263.1
|
|
||||
After five years but within ten years
|
277.6
|
|
274.2
|
|
|
111.7
|
|
113.3
|
|
||||
After ten years
|
78.3
|
|
77.7
|
|
|
30.5
|
|
30.2
|
|
||||
Total
|
$
|
2,229.3
|
|
$
|
2,208.7
|
|
|
$
|
484.5
|
|
$
|
483.3
|
|
(5)
|
LOANS
|
December 31,
|
2017
|
|
2016
|
||||
Real estate loans:
|
|
|
|
||||
Commercial
|
$
|
2,822.9
|
|
|
$
|
1,834.4
|
|
Construction:
|
|
|
|
||||
Land acquisition & development
|
348.7
|
|
|
208.5
|
|
||
Residential
|
240.2
|
|
|
147.9
|
|
||
Commercial
|
119.4
|
|
|
125.6
|
|
||
Total construction loans
|
708.3
|
|
|
482.0
|
|
||
Residential
|
1,487.4
|
|
|
1,027.4
|
|
||
Agricultural
|
158.2
|
|
|
170.2
|
|
||
Total real estate loans
|
5,176.8
|
|
|
3,514.0
|
|
||
Consumer:
|
|
|
|
||||
Indirect consumer
|
784.7
|
|
|
752.4
|
|
||
Other consumer
|
175.1
|
|
|
148.1
|
|
||
Credit card
|
74.6
|
|
|
69.8
|
|
||
Total consumer loans
|
1,034.4
|
|
|
970.3
|
|
||
Commercial
|
1,215.4
|
|
|
797.9
|
|
||
Agricultural
|
136.2
|
|
|
132.9
|
|
||
Other, including overdrafts
|
4.9
|
|
|
1.6
|
|
||
Loans held for investment
|
7,567.7
|
|
|
5,416.7
|
|
||
Mortgage loans held for sale
|
46.6
|
|
|
61.8
|
|
||
Total loans
|
$
|
7,614.3
|
|
|
$
|
5,478.5
|
|
December 31,
|
2017
|
|
2016
|
||||
Outstanding principal
|
$
|
38.2
|
|
|
$
|
35.8
|
|
Carrying value:
|
|
|
|
||||
Loans on accrual status
|
24.9
|
|
|
21.9
|
|
||
Total carrying value
|
$
|
24.9
|
|
|
$
|
21.9
|
|
Year Ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Beginning balance
|
$
|
6.8
|
|
|
$
|
6.7
|
|
|
$
|
5.8
|
|
Acquisitions
|
1.9
|
|
|
1.1
|
|
|
0.4
|
|
|||
Accretion income
|
(2.9
|
)
|
|
(2.5
|
)
|
|
(2.9
|
)
|
|||
Additions
|
0.1
|
|
|
—
|
|
|
0.6
|
|
|||
Reductions due to exit events
|
(1.5
|
)
|
|
(1.1
|
)
|
|
(0.5
|
)
|
|||
Reclassifications from nonaccretable differences
|
2.9
|
|
|
2.6
|
|
|
3.3
|
|
|||
Ending balance
|
$
|
7.3
|
|
|
$
|
6.8
|
|
|
$
|
6.7
|
|
|
|
|
|
Total Loans
|
|
|
|
||||||||||||||
|
30 - 59
|
60 - 89
|
> 90
|
30 or More
|
|
|
|
||||||||||||||
|
Days
|
Days
|
Days
|
Days
|
Current
|
Non-accrual
|
Total
|
||||||||||||||
As of December 31, 2017
|
Past Due
|
Past Due
|
Past Due
|
Past Due
|
Loans
|
Loans
|
Loans
|
||||||||||||||
Real estate
|
|
|
|
|
|
|
|
||||||||||||||
Commercial
|
$
|
2.9
|
|
$
|
0.5
|
|
$
|
0.3
|
|
$
|
3.7
|
|
$
|
2,792.4
|
|
$
|
26.8
|
|
$
|
2,822.9
|
|
Construction:
|
|
|
|
|
|
|
|
|
|
||||||||||||
Land acquisition & development
|
7.3
|
|
0.3
|
|
0.3
|
|
7.9
|
|
337.8
|
|
3.0
|
|
348.7
|
|
|||||||
Residential
|
2.1
|
|
—
|
|
—
|
|
2.1
|
|
236.4
|
|
1.7
|
|
240.2
|
|
|||||||
Commercial
|
—
|
|
—
|
|
—
|
|
—
|
|
115.6
|
|
3.8
|
|
119.4
|
|
|||||||
Total construction loans
|
9.4
|
|
0.3
|
|
0.3
|
|
10.0
|
|
689.8
|
|
8.5
|
|
708.3
|
|
|||||||
Residential
|
13.3
|
|
1.4
|
|
0.4
|
|
15.1
|
|
1,464.1
|
|
8.2
|
|
1,487.4
|
|
|||||||
Agricultural
|
0.3
|
|
—
|
|
0.2
|
|
0.5
|
|
154.3
|
|
3.4
|
|
158.2
|
|
|||||||
Total real estate loans
|
25.9
|
|
2.2
|
|
1.2
|
|
29.3
|
|
5,100.6
|
|
46.9
|
|
5,176.8
|
|
|||||||
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Indirect consumer
|
7.8
|
|
2.1
|
|
0.4
|
|
10.3
|
|
772.6
|
|
1.8
|
|
784.7
|
|
|||||||
Other consumer
|
1.6
|
|
0.5
|
|
0.1
|
|
2.2
|
|
172.6
|
|
0.3
|
|
175.1
|
|
|||||||
Credit card
|
0.9
|
|
0.6
|
|
0.7
|
|
2.2
|
|
72.4
|
|
—
|
|
74.6
|
|
|||||||
Total consumer loans
|
10.3
|
|
3.2
|
|
1.2
|
|
14.7
|
|
1,017.6
|
|
2.1
|
|
1,034.4
|
|
|||||||
Commercial
|
3.9
|
|
1.7
|
|
0.7
|
|
6.3
|
|
1,189.5
|
|
19.6
|
|
1,215.4
|
|
|||||||
Agricultural
|
1.8
|
|
0.1
|
|
—
|
|
1.9
|
|
133.5
|
|
0.8
|
|
136.2
|
|
|||||||
Other, including overdrafts
|
—
|
|
—
|
|
—
|
|
—
|
|
4.9
|
|
—
|
|
4.9
|
|
|||||||
Loans held for investment
|
41.9
|
|
7.2
|
|
3.1
|
|
52.2
|
|
7,446.1
|
|
69.4
|
|
7,567.7
|
|
|||||||
Mortgage loans originated for sale
|
—
|
|
—
|
|
—
|
|
—
|
|
46.6
|
|
—
|
|
46.6
|
|
|||||||
Total loans
|
$
|
41.9
|
|
$
|
7.2
|
|
$
|
3.1
|
|
$
|
52.2
|
|
$
|
7,492.7
|
|
$
|
69.4
|
|
$
|
7,614.3
|
|
|
|
|
|
Total Loans
|
|
|
|
||||||||||||||
|
30 - 59
|
60 - 89
|
> 90
|
30 or More
|
|
|
|
||||||||||||||
|
Days
|
Days
|
Days
|
Days
|
Current
|
Non-accrual
|
Total
|
||||||||||||||
As of December 31, 2016
|
Past Due
|
Past Due
|
Past Due
|
Past Due
|
Loans
|
Loans
|
Loans
|
||||||||||||||
Real estate
|
|
|
|
|
|
|
|
||||||||||||||
Commercial
|
$
|
7.3
|
|
$
|
1.1
|
|
$
|
0.3
|
|
$
|
8.7
|
|
$
|
1,799.5
|
|
$
|
26.2
|
|
$
|
1,834.4
|
|
Construction:
|
|
|
|
|
|
|
|
|
|
||||||||||||
Land acquisition & development
|
0.6
|
|
0.4
|
|
0.3
|
|
1.3
|
|
202.2
|
|
5.0
|
|
208.5
|
|
|||||||
Residential
|
0.9
|
|
0.3
|
|
—
|
|
1.2
|
|
146.2
|
|
0.5
|
|
147.9
|
|
|||||||
Commercial
|
—
|
|
—
|
|
—
|
|
—
|
|
124.8
|
|
0.8
|
|
125.6
|
|
|||||||
Total construction loans
|
1.5
|
|
0.7
|
|
0.3
|
|
2.5
|
|
473.2
|
|
6.3
|
|
482.0
|
|
|||||||
Residential
|
4.0
|
|
1.3
|
|
0.7
|
|
6.0
|
|
1,015.0
|
|
6.4
|
|
1,027.4
|
|
|||||||
Agricultural
|
0.3
|
|
0.3
|
|
—
|
|
0.6
|
|
165.3
|
|
4.3
|
|
170.2
|
|
|||||||
Total real estate loans
|
13.1
|
|
3.4
|
|
1.3
|
|
17.8
|
|
3,453.0
|
|
43.2
|
|
3,514.0
|
|
|||||||
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Indirect consumer
|
8.4
|
|
2.3
|
|
0.7
|
|
11.4
|
|
740.2
|
|
0.8
|
|
752.4
|
|
|||||||
Other consumer
|
1.3
|
|
0.2
|
|
0.2
|
|
1.7
|
|
146.1
|
|
0.3
|
|
148.1
|
|
|||||||
Credit card
|
0.5
|
|
0.3
|
|
0.6
|
|
1.4
|
|
68.4
|
|
—
|
|
69.8
|
|
|||||||
Total consumer loans
|
10.2
|
|
2.8
|
|
1.5
|
|
14.5
|
|
954.7
|
|
1.1
|
|
970.3
|
|
|||||||
Commercial
|
3.2
|
|
0.7
|
|
0.7
|
|
4.6
|
|
767.9
|
|
25.4
|
|
797.9
|
|
|||||||
Agricultural
|
1.5
|
|
0.4
|
|
—
|
|
1.9
|
|
128.0
|
|
3.0
|
|
132.9
|
|
|||||||
Other, including overdrafts
|
—
|
|
—
|
|
0.3
|
|
0.3
|
|
1.3
|
|
—
|
|
1.6
|
|
|||||||
Loans held for investment
|
28.0
|
|
7.3
|
|
3.8
|
|
39.1
|
|
5,304.9
|
|
72.7
|
|
5,416.7
|
|
|||||||
Mortgage loans originated for sale
|
—
|
|
—
|
|
—
|
|
—
|
|
61.8
|
|
—
|
|
61.8
|
|
|||||||
Total loans
|
$
|
28.0
|
|
$
|
7.3
|
|
$
|
3.8
|
|
$
|
39.1
|
|
$
|
5,366.7
|
|
$
|
72.7
|
|
$
|
5,478.5
|
|
|
December 31, 2017
|
||||||||||||||
|
Unpaid
Total
Principal
Balance
|
Recorded
Investment
With No
Allowance
|
Recorded
Investment
With
Allowance
|
Total
Recorded
Investment
|
Related
Allowance
|
||||||||||
Real estate:
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
45.6
|
|
$
|
20.9
|
|
$
|
14.1
|
|
$
|
35.0
|
|
$
|
3.9
|
|
Construction:
|
|
|
|
|
|
||||||||||
Land acquisition & development
|
10.0
|
|
3.4
|
|
0.5
|
|
3.9
|
|
—
|
|
|||||
Residential
|
1.8
|
|
1.7
|
|
—
|
|
1.7
|
|
—
|
|
|||||
Commercial
|
4.7
|
|
0.4
|
|
3.5
|
|
3.9
|
|
2.2
|
|
|||||
Total construction loans
|
16.5
|
|
5.5
|
|
4.0
|
|
9.5
|
|
2.2
|
|
|||||
Residential
|
11.5
|
|
8.2
|
|
2.0
|
|
10.2
|
|
0.1
|
|
|||||
Agricultural
|
3.7
|
|
3.6
|
|
—
|
|
3.6
|
|
—
|
|
|||||
Total real estate loans
|
77.3
|
|
38.2
|
|
20.1
|
|
58.3
|
|
6.2
|
|
|||||
Commercial
|
29.5
|
|
12.4
|
|
11.4
|
|
23.8
|
|
4.4
|
|
|||||
Agricultural
|
1.1
|
|
0.8
|
|
0.3
|
|
1.1
|
|
0.2
|
|
|||||
Total
|
$
|
107.9
|
|
$
|
51.4
|
|
$
|
31.8
|
|
$
|
83.2
|
|
$
|
10.8
|
|
|
December 31, 2016
|
||||||||||||||
|
Unpaid
Total
Principal
Balance
|
Recorded
Investment
With No
Allowance
|
Recorded
Investment
With
Allowance
|
Total
Recorded
Investment
|
Related
Allowance
|
||||||||||
Real estate:
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
57.0
|
|
$
|
24.4
|
|
$
|
21.4
|
|
$
|
45.8
|
|
$
|
2.8
|
|
Construction:
|
|
|
|
|
|
||||||||||
Land acquisition & development
|
12.1
|
|
4.3
|
|
1.8
|
|
6.1
|
|
0.8
|
|
|||||
Residential
|
1.6
|
|
0.2
|
|
0.6
|
|
0.8
|
|
—
|
|
|||||
Commercial
|
4.8
|
|
3.9
|
|
0.7
|
|
4.6
|
|
0.7
|
|
|||||
Total construction loans
|
18.5
|
|
8.4
|
|
3.1
|
|
11.5
|
|
1.5
|
|
|||||
Residential
|
8.2
|
|
4.1
|
|
2.5
|
|
6.6
|
|
0.3
|
|
|||||
Agricultural
|
5.1
|
|
4.5
|
|
0.2
|
|
4.7
|
|
—
|
|
|||||
Total real estate loans
|
88.8
|
|
41.4
|
|
27.2
|
|
68.6
|
|
4.6
|
|
|||||
Commercial
|
40.3
|
|
13.2
|
|
19.2
|
|
32.4
|
|
9.3
|
|
|||||
Agricultural
|
3.7
|
|
3.3
|
|
0.4
|
|
3.7
|
|
0.1
|
|
|||||
Total
|
$
|
132.8
|
|
$
|
57.9
|
|
$
|
46.8
|
|
$
|
104.7
|
|
$
|
14.0
|
|
|
December 31, 2015
|
||||||||||||||
|
Unpaid
Total
Principal
Balance
|
Recorded
Investment
With No
Allowance
|
Recorded
Investment
With
Allowance
|
Total
Recorded
Investment
|
Related
Allowance
|
||||||||||
Real estate:
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
58.2
|
|
$
|
27.9
|
|
$
|
17.6
|
|
$
|
45.5
|
|
$
|
3.4
|
|
Construction:
|
|
|
|
|
|
||||||||||
Land acquisition & development
|
15.5
|
|
7.2
|
|
0.8
|
|
8.0
|
|
0.3
|
|
|||||
Residential
|
1.0
|
|
0.3
|
|
—
|
|
0.3
|
|
—
|
|
|||||
Commercial
|
1.3
|
|
0.3
|
|
0.7
|
|
1.0
|
|
0.7
|
|
|||||
Total construction loans
|
17.8
|
|
7.8
|
|
1.5
|
|
9.3
|
|
1.0
|
|
|||||
Residential
|
7.1
|
|
3.6
|
|
2.3
|
|
5.9
|
|
0.4
|
|
|||||
Agricultural
|
6.4
|
|
5.6
|
|
0.2
|
|
5.8
|
|
—
|
|
|||||
Total real estate loans
|
89.5
|
|
44.9
|
|
21.6
|
|
66.5
|
|
4.8
|
|
|||||
Commercial
|
29.6
|
|
10.8
|
|
13.7
|
|
24.5
|
|
6.5
|
|
|||||
Agricultural
|
1.3
|
|
0.6
|
|
0.4
|
|
1.0
|
|
0.3
|
|
|||||
Total
|
$
|
120.4
|
|
$
|
56.3
|
|
$
|
35.7
|
|
$
|
92.0
|
|
$
|
11.6
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
Average Recorded Investment
|
Income Recognized
|
|
Average Recorded Investment
|
Income Recognized
|
|
Average Recorded Investment
|
Income Recognized
|
||||||||||||
Real estate:
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial
|
$
|
40.4
|
|
$
|
0.3
|
|
|
$
|
46.9
|
|
$
|
0.2
|
|
|
$
|
39.2
|
|
$
|
0.8
|
|
Construction:
|
|
|
|
|
|
|
|
|
||||||||||||
Land acquisition & development
|
5.0
|
|
—
|
|
|
8.0
|
|
0.1
|
|
|
8.3
|
|
0.1
|
|
||||||
Residential
|
1.3
|
|
—
|
|
|
0.8
|
|
—
|
|
|
0.3
|
|
—
|
|
||||||
Commercial
|
4.2
|
|
—
|
|
|
2.9
|
|
—
|
|
|
1.9
|
|
—
|
|
||||||
Total construction loans
|
10.5
|
|
—
|
|
|
11.7
|
|
0.1
|
|
|
10.5
|
|
0.1
|
|
||||||
Residential
|
8.4
|
|
—
|
|
|
6.2
|
|
—
|
|
|
4.1
|
|
—
|
|
||||||
Agricultural
|
4.2
|
|
—
|
|
|
4.4
|
|
—
|
|
|
7.2
|
|
—
|
|
||||||
Total real estate loans
|
63.5
|
|
0.3
|
|
|
69.2
|
|
0.3
|
|
|
61.0
|
|
0.9
|
|
||||||
Commercial
|
28.1
|
|
0.2
|
|
|
30.1
|
|
0.3
|
|
|
18.5
|
|
0.1
|
|
||||||
Agricultural
|
2.4
|
|
—
|
|
|
1.8
|
|
—
|
|
|
0.9
|
|
—
|
|
||||||
Total
|
$
|
94.0
|
|
$
|
0.5
|
|
|
$
|
101.1
|
|
$
|
0.6
|
|
|
$
|
80.4
|
|
$
|
1.0
|
|
|
|
Number of Notes
|
|
Type of Concession
|
Principal Balance at Restructure Date
|
||||||||||||||
Year Ended December 31, 2017
|
|
|
Interest only period
|
Extension of terms or maturity
|
Interest rate adjustment
|
Other
|
|||||||||||||
Real estate:
|
|
|
|
|
|
|
|
|
|||||||||||
Commercial
|
|
5
|
|
|
$
|
1.5
|
|
$
|
0.4
|
|
$
|
—
|
|
$
|
0.9
|
|
$
|
2.8
|
|
Agriculture
|
|
1
|
|
|
—
|
|
0.8
|
|
—
|
|
—
|
|
0.8
|
|
|||||
Total real estate loans
|
|
6
|
|
|
1.5
|
|
1.2
|
|
—
|
|
0.9
|
|
3.6
|
|
|||||
Commercial
|
|
17
|
|
|
1.2
|
|
2.0
|
|
—
|
|
6.0
|
|
9.2
|
|
|||||
Agriculture
|
|
1
|
|
|
—
|
|
0.1
|
|
—
|
|
—
|
|
0.1
|
|
|||||
Total
|
|
24
|
|
|
$
|
2.7
|
|
$
|
3.3
|
|
$
|
—
|
|
$
|
6.9
|
|
$
|
12.9
|
|
|
|
Number of Notes
|
|
Type of Concession
|
Principal Balance at Restructure Date
|
||||||||||||||
Year ended December 31, 2016
|
|
|
Interest only period
|
Extension of terms or maturity
|
Interest rate adjustment
|
Other
|
|||||||||||||
Real estate:
|
|
|
|
|
|
|
|
|
|||||||||||
Commercial
|
|
18
|
|
|
$
|
0.4
|
|
$
|
5.5
|
|
$
|
0.2
|
|
$
|
1.8
|
|
$
|
7.9
|
|
Commercial construction
|
|
1
|
|
|
—
|
|
3.7
|
|
—
|
|
—
|
|
3.7
|
|
|||||
Residential
|
|
1
|
|
|
—
|
|
0.1
|
|
—
|
|
—
|
|
0.1
|
|
|||||
Total real estate loans
|
|
20
|
|
|
0.4
|
|
9.3
|
|
0.2
|
|
1.8
|
|
11.7
|
|
|||||
Commercial
|
|
13
|
|
|
4.4
|
|
0.4
|
|
—
|
|
3.3
|
|
8.1
|
|
|||||
Agriculture
|
|
2
|
|
|
—
|
|
0.3
|
|
—
|
|
—
|
|
0.3
|
|
|||||
Total
|
|
35
|
|
|
$
|
4.8
|
|
$
|
10.0
|
|
$
|
0.2
|
|
$
|
5.1
|
|
$
|
20.1
|
|
|
|
Number of Notes
|
|
Type of Concession
|
Principal Balance at Restructure Date
|
||||||||||||||
Year ended December 31, 2015
|
|
|
Interest only period
|
Extension of terms or maturity
|
Interest rate adjustment
|
Other
|
|||||||||||||
Commercial real estate
|
|
2
|
|
|
$
|
—
|
|
$
|
0.6
|
|
$
|
—
|
|
$
|
0.1
|
|
$
|
0.7
|
|
Consumer
|
|
1
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Commercial
|
|
12
|
|
|
—
|
|
8.7
|
|
3.3
|
|
0.5
|
|
12.5
|
|
|||||
Total
|
|
15
|
|
|
$
|
—
|
|
$
|
9.3
|
|
$
|
3.3
|
|
$
|
0.6
|
|
$
|
13.2
|
|
Year ended December 31, 2017
|
|
Number of Notes
|
|
Balance
|
|||
Commercial
|
|
1
|
|
|
$
|
1.3
|
|
Total
|
|
1
|
|
|
$
|
1.3
|
|
As of December 31, 2017
|
Other Assets
Especially
Mentioned
|
Substandard
|
Doubtful
|
Total
Criticized
Loans
|
||||||||
Real estate:
|
|
|
|
|
||||||||
Commercial
|
$
|
78.0
|
|
$
|
96.4
|
|
$
|
10.3
|
|
$
|
184.7
|
|
Construction:
|
|
|
|
|
||||||||
Land acquisition & development
|
3.2
|
|
16.4
|
|
—
|
|
19.6
|
|
||||
Residential
|
2.3
|
|
1.7
|
|
0.5
|
|
4.5
|
|
||||
Commercial
|
2.4
|
|
3.6
|
|
3.5
|
|
9.5
|
|
||||
Total construction loans
|
7.9
|
|
21.7
|
|
4.0
|
|
33.6
|
|
||||
Residential
|
3.9
|
|
12.5
|
|
1.9
|
|
18.3
|
|
||||
Agricultural
|
4.3
|
|
19.1
|
|
—
|
|
23.4
|
|
||||
Total real estate loans
|
94.1
|
|
149.7
|
|
16.2
|
|
260.0
|
|
||||
Consumer:
|
|
|
|
|
||||||||
Indirect consumer
|
0.8
|
|
2.2
|
|
0.3
|
|
3.3
|
|
||||
Other consumer
|
0.4
|
|
0.7
|
|
0.2
|
|
1.3
|
|
||||
Total consumer loans
|
1.2
|
|
2.9
|
|
0.5
|
|
4.6
|
|
||||
Commercial
|
54.7
|
|
56.3
|
|
11.1
|
|
122.1
|
|
||||
Agricultural
|
5.1
|
|
8.3
|
|
0.4
|
|
13.8
|
|
||||
Total
|
$
|
155.1
|
|
$
|
217.2
|
|
$
|
28.2
|
|
$
|
400.5
|
|
As of December 31, 2016
|
Other Assets
Especially
Mentioned
|
Substandard
|
Doubtful
|
Total
Criticized
Loans
|
||||||||
Real estate:
|
|
|
|
|
||||||||
Commercial
|
$
|
85.3
|
|
$
|
85.3
|
|
$
|
10.8
|
|
$
|
181.4
|
|
Construction:
|
|
|
|
|
||||||||
Land acquisition & development
|
13.4
|
|
6.2
|
|
1.4
|
|
21.0
|
|
||||
Residential
|
0.4
|
|
1.6
|
|
0.7
|
|
2.7
|
|
||||
Commercial
|
1.6
|
|
6.3
|
|
0.7
|
|
8.6
|
|
||||
Total construction loans
|
15.4
|
|
14.1
|
|
2.8
|
|
32.3
|
|
||||
Residential
|
5.0
|
|
12.5
|
|
0.8
|
|
18.3
|
|
||||
Agricultural
|
3.8
|
|
17.8
|
|
—
|
|
21.6
|
|
||||
Total real estate loans
|
109.5
|
|
129.7
|
|
14.4
|
|
253.6
|
|
||||
Consumer:
|
|
|
|
|
||||||||
Indirect consumer
|
0.8
|
|
1.5
|
|
0.1
|
|
2.4
|
|
||||
Other consumer
|
0.7
|
|
1.0
|
|
0.3
|
|
2.0
|
|
||||
Total consumer loans
|
1.5
|
|
2.5
|
|
0.4
|
|
4.4
|
|
||||
Commercial
|
46.4
|
|
29.3
|
|
21.2
|
|
96.9
|
|
||||
Agricultural
|
6.2
|
|
10.7
|
|
0.4
|
|
17.3
|
|
||||
Total
|
$
|
163.6
|
|
$
|
172.2
|
|
$
|
36.4
|
|
$
|
372.2
|
|
(6)
|
ALLOWANCE FOR LOAN LOSSES
|
Year ended December 31, 2017
|
Real Estate
|
Consumer
|
Commercial
|
Agriculture
|
Other
|
Total
|
||||||||||||
Allowance for loan losses:
|
|
|
|
|
|
|
||||||||||||
Beginning balance
|
$
|
28.6
|
|
$
|
7.7
|
|
$
|
38.1
|
|
$
|
1.8
|
|
$
|
—
|
|
$
|
76.2
|
|
Provision charged (credited) to operating
expense
|
6.0
|
|
8.1
|
|
(2.8
|
)
|
(0.2
|
)
|
—
|
|
11.1
|
|
||||||
Less loans charged-off
|
(4.4
|
)
|
(11.3
|
)
|
(6.8
|
)
|
(0.4
|
)
|
—
|
|
(22.9
|
)
|
||||||
Add back recoveries of loans previously charged-off
|
1.4
|
|
4.2
|
|
2.1
|
|
—
|
|
—
|
|
7.7
|
|
||||||
Ending balance
|
$
|
31.6
|
|
$
|
8.7
|
|
$
|
30.6
|
|
$
|
1.2
|
|
$
|
—
|
|
$
|
72.1
|
|
|
|
|
|
|
|
|
||||||||||||
Individually evaluated for impairment
|
$
|
6.2
|
|
$
|
—
|
|
$
|
4.4
|
|
$
|
0.2
|
|
$
|
—
|
|
$
|
10.8
|
|
Collectively evaluated for impairment
|
25.4
|
|
8.7
|
|
26.2
|
|
1.0
|
|
—
|
|
61.3
|
|
||||||
Ending balance
|
$
|
31.6
|
|
$
|
8.7
|
|
$
|
30.6
|
|
$
|
1.2
|
|
$
|
—
|
|
$
|
72.1
|
|
|
|
|
|
|
|
|
||||||||||||
Total loans:
|
|
|
|
|
|
|
||||||||||||
Individually evaluated for impairment
|
$
|
58.3
|
|
$
|
—
|
|
$
|
23.8
|
|
$
|
1.1
|
|
$
|
—
|
|
$
|
83.2
|
|
Collectively evaluated for impairment
|
5,118.5
|
|
1,034.4
|
|
1,191.6
|
|
135.1
|
|
4.9
|
|
7,484.5
|
|
||||||
Total loans held for investment
|
$
|
5,176.8
|
|
$
|
1,034.4
|
|
$
|
1,215.4
|
|
$
|
136.2
|
|
$
|
4.9
|
|
$
|
7,567.7
|
|
Year ended December 31, 2016
|
Real Estate
|
Consumer
|
Commercial
|
Agriculture
|
Other
|
Total
|
||||||||||||
Allowance for loan losses:
|
|
|
|
|
|
|
||||||||||||
Beginning balance
|
$
|
52.3
|
|
$
|
5.1
|
|
$
|
18.8
|
|
$
|
0.6
|
|
$
|
—
|
|
$
|
76.8
|
|
Provision charged (credited) to operating
expense
|
(21.7
|
)
|
8.4
|
|
21.9
|
|
1.4
|
|
—
|
|
10.0
|
|
||||||
Less loans charged-off
|
(5.2
|
)
|
(8.6
|
)
|
(5.8
|
)
|
(0.2
|
)
|
—
|
|
(19.8
|
)
|
||||||
Add back recoveries of loans previously charged-off
|
3.2
|
|
2.8
|
|
3.2
|
|
—
|
|
—
|
|
9.2
|
|
||||||
Ending balance
|
$
|
28.6
|
|
$
|
7.7
|
|
$
|
38.1
|
|
$
|
1.8
|
|
$
|
—
|
|
$
|
76.2
|
|
|
|
|
|
|
|
|
||||||||||||
Individually evaluated for impairment
|
$
|
4.6
|
|
$
|
—
|
|
$
|
9.3
|
|
$
|
0.1
|
|
$
|
—
|
|
$
|
14.0
|
|
Collectively evaluated for impairment
|
24.0
|
|
7.7
|
|
28.8
|
|
1.7
|
|
—
|
|
62.2
|
|
||||||
Ending balance
|
$
|
28.6
|
|
$
|
7.7
|
|
$
|
38.1
|
|
$
|
1.8
|
|
$
|
—
|
|
$
|
76.2
|
|
|
|
|
|
|
|
|
||||||||||||
Total loans:
|
|
|
|
|
|
|
||||||||||||
Individually evaluated for impairment
|
$
|
68.6
|
|
$
|
—
|
|
$
|
32.4
|
|
$
|
3.7
|
|
$
|
—
|
|
$
|
104.7
|
|
Collectively evaluated for impairment
|
3,445.4
|
|
970.3
|
|
765.5
|
|
129.2
|
|
1.6
|
|
5,312.0
|
|
||||||
Total loans held for investment
|
$
|
3,514.0
|
|
$
|
970.3
|
|
$
|
797.9
|
|
$
|
132.9
|
|
$
|
1.6
|
|
$
|
5,416.7
|
|
Year ended December 31, 2015
|
Real Estate
|
Consumer
|
Commercial
|
Agriculture
|
Other
|
Total
|
||||||||||||
Allowance for loan losses:
|
|
|
|
|
|
|
||||||||||||
Beginning balance
|
$
|
53.9
|
|
$
|
5.0
|
|
$
|
14.3
|
|
$
|
1.0
|
|
$
|
—
|
|
$
|
74.2
|
|
Provision charged (credited) to operating
expense
|
(0.6
|
)
|
3.2
|
|
4.4
|
|
(0.2
|
)
|
—
|
|
6.8
|
|
||||||
Less loans charged-off
|
(4.1
|
)
|
(5.7
|
)
|
(1.7
|
)
|
(0.2
|
)
|
—
|
|
(11.7
|
)
|
||||||
Add back recoveries of loans previously charged-off
|
3.1
|
|
2.6
|
|
1.8
|
|
—
|
|
—
|
|
7.5
|
|
||||||
Ending balance
|
$
|
52.3
|
|
$
|
5.1
|
|
$
|
18.8
|
|
$
|
0.6
|
|
$
|
—
|
|
$
|
76.8
|
|
|
|
|
|
|
|
|
||||||||||||
Individually evaluated for impairment
|
$
|
4.8
|
|
$
|
—
|
|
$
|
6.5
|
|
$
|
0.3
|
|
$
|
—
|
|
$
|
11.6
|
|
Collectively evaluated for impairment
|
47.5
|
|
5.1
|
|
12.3
|
|
0.3
|
|
—
|
|
65.2
|
|
||||||
Ending balance
|
$
|
52.3
|
|
$
|
5.1
|
|
$
|
18.8
|
|
$
|
0.6
|
|
$
|
—
|
|
$
|
76.8
|
|
|
|
|
|
|
|
|
||||||||||||
Total loans:
|
|
|
|
|
|
|
||||||||||||
Individually evaluated for impairment
|
$
|
66.5
|
|
$
|
—
|
|
$
|
24.5
|
|
$
|
1.0
|
|
$
|
—
|
|
$
|
92.0
|
|
Collectively evaluated for impairment
|
3,346.6
|
|
844.4
|
|
767.9
|
|
141.2
|
|
1.3
|
|
5,101.4
|
|
||||||
Total loans held for investment
|
$
|
3,413.1
|
|
$
|
844.4
|
|
$
|
792.4
|
|
$
|
142.2
|
|
$
|
1.3
|
|
$
|
5,193.4
|
|
(7)
|
PREMISES AND EQUIPMENT
|
December 31,
|
2017
|
|
2016
|
||||
Land
|
$
|
49.4
|
|
|
$
|
39.8
|
|
Buildings and improvements
|
257.1
|
|
|
218.3
|
|
||
Furniture and equipment
|
97.7
|
|
|
88.6
|
|
||
|
404.2
|
|
|
346.7
|
|
||
Less accumulated depreciation
|
(162.3
|
)
|
|
(152.2
|
)
|
||
Premises and equipment, net
|
$
|
241.9
|
|
|
$
|
194.5
|
|
(8)
|
COMPANY-OWNED LIFE INSURANCE
|
December 31,
|
2017
|
|
2016
|
||||
Key executive, principal shareholder
|
$
|
4.2
|
|
|
$
|
4.0
|
|
Key executive split dollar
|
4.9
|
|
|
4.8
|
|
||
Group life
|
251.5
|
|
|
189.3
|
|
||
Total
|
$
|
260.6
|
|
|
$
|
198.1
|
|
(9)
|
OTHER REAL ESTATE OWNED
|
Year Ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Balance at beginning of year
|
$
|
10.0
|
|
|
$
|
6.3
|
|
|
$
|
13.6
|
|
Acquisitions
|
1.2
|
|
|
1.1
|
|
|
—
|
|
|||
Additions
|
5.4
|
|
|
7.6
|
|
|
5.6
|
|
|||
Valuation adjustments
|
(0.4
|
)
|
|
(0.6
|
)
|
|
(0.2
|
)
|
|||
Dispositions
|
(6.1
|
)
|
|
(4.4
|
)
|
|
(12.7
|
)
|
|||
Balance at end of year
|
$
|
10.1
|
|
|
$
|
10.0
|
|
|
$
|
6.3
|
|
(10)
|
DERIVATIVES AND HEDGING ACTIVITIES
|
|
December 31, 2017
|
||||||||||||||||||||||
|
Gross Amounts Recognized
|
|
Gross Amounts Offset in the Balance Sheet
|
|
Net Amounts in the Balance Sheet
|
|
Financial Instruments
|
|
Fair Value of Financial Collateral in the Balance Sheet
|
|
Net Amount
|
||||||||||||
Financial Assets
|
|||||||||||||||||||||||
Interest rate swap contracts
|
$
|
7.5
|
|
|
$
|
—
|
|
|
$
|
7.5
|
|
|
$
|
2.4
|
|
|
$
|
—
|
|
|
$
|
5.1
|
|
Mortgage related derivatives
|
1.3
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
||||||
Total derivatives
|
8.8
|
|
|
—
|
|
|
8.8
|
|
|
2.4
|
|
|
—
|
|
|
6.4
|
|
||||||
Total assets
|
$
|
8.8
|
|
|
$
|
—
|
|
|
$
|
8.8
|
|
|
$
|
2.4
|
|
|
$
|
—
|
|
|
$
|
6.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financial Liabilities
|
|||||||||||||||||||||||
Interest rate swap contracts
|
$
|
7.8
|
|
|
$
|
—
|
|
|
$
|
7.8
|
|
|
$
|
2.4
|
|
|
$
|
3.3
|
|
|
$
|
2.1
|
|
Mortgage related derivatives
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||||
Total derivatives
|
7.9
|
|
|
—
|
|
|
7.9
|
|
|
2.4
|
|
|
3.3
|
|
|
2.2
|
|
||||||
Repurchase agreements
|
643.0
|
|
|
—
|
|
|
643.0
|
|
|
—
|
|
|
643.0
|
|
|
—
|
|
||||||
Total liabilities
|
$
|
650.9
|
|
|
$
|
—
|
|
|
$
|
650.9
|
|
|
$
|
2.4
|
|
|
$
|
646.3
|
|
|
$
|
2.2
|
|
|
December 31, 2016
|
||||||||||||||||||||||
|
Gross Amounts Recognized
|
|
Gross Amounts Offset in the Balance Sheet
|
|
Net Amounts in the Balance Sheet
|
|
Financial Instruments
|
|
Fair Value of Financial Collateral in the Balance Sheet
|
|
Net Amount
|
||||||||||||
Financial Assets
|
|||||||||||||||||||||||
Interest rate swap contracts
|
$
|
1.3
|
|
|
$
|
—
|
|
|
$
|
1.3
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
0.8
|
|
Mortgage related derivatives
|
1.4
|
|
|
—
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
||||||
Total derivatives
|
2.7
|
|
|
—
|
|
|
2.7
|
|
|
0.5
|
|
|
—
|
|
|
2.2
|
|
||||||
Total assets
|
$
|
2.7
|
|
|
$
|
—
|
|
|
$
|
2.7
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
2.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financial Liabilities
|
|||||||||||||||||||||||
Interest rate swap contracts
|
$
|
1.3
|
|
|
$
|
—
|
|
|
$
|
1.3
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
0.8
|
|
Total derivatives
|
1.3
|
|
|
—
|
|
|
1.3
|
|
|
0.5
|
|
|
—
|
|
|
0.8
|
|
||||||
Repurchase agreements
|
537.6
|
|
|
—
|
|
|
537.6
|
|
|
—
|
|
|
537.6
|
|
|
—
|
|
||||||
Total liabilities
|
$
|
538.9
|
|
|
$
|
—
|
|
|
$
|
538.9
|
|
|
$
|
0.5
|
|
|
$
|
537.6
|
|
|
$
|
0.8
|
|
As of or For The Year Ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Derivatives designated as hedges:
|
|
|
|
|
|
||||||
Amount of loss recognized in other comprehensive income (effective portion)
|
$
|
(1.1
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
0.2
|
|
Reclassification adjustment for derivative net (gains) losses included in income
|
1.1
|
|
|
—
|
|
|
—
|
|
|||
Non-hedging interest rate derivatives:
|
|
|
|
|
|
||||||
Amount of gain (loss) recognized in other non-interest income
|
—
|
|
|
0.1
|
|
|
—
|
|
|||
Amount of net fee income recognized in other non-interest income
|
0.8
|
|
|
0.9
|
|
|
0.1
|
|
|||
Amount of net gains (losses) recognized in mortgage banking revenues
|
(1.7
|
)
|
|
1.4
|
|
|
—
|
|
(11)
|
MORTGAGE SERVICING RIGHTS
|
Year Ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Balance at beginning of year
|
$
|
18.7
|
|
|
$
|
15.9
|
|
|
$
|
14.4
|
|
Acquisitions of mortgage servicing rights
|
3.5
|
|
|
—
|
|
|
0.3
|
|
|||
Originations of mortgage servicing rights
|
5.6
|
|
|
5.8
|
|
|
3.6
|
|
|||
Amortization expense
|
(3.0
|
)
|
|
(3.0
|
)
|
|
(2.4
|
)
|
|||
Balance at end of year
|
24.8
|
|
|
18.7
|
|
|
15.9
|
|
|||
Less valuation reserve
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|||
Balance at end of year, net of valuation reserve
|
$
|
24.8
|
|
|
$
|
18.5
|
|
|
$
|
15.7
|
|
|
|
|
|
|
|
||||||
Principal balance of serviced loans underlying mortgage servicing rights
|
$
|
3,636.7
|
|
|
$
|
3,127.5
|
|
|
$
|
2,906.2
|
|
Mortgage servicing rights as a percentage of serviced loans
|
0.68
|
%
|
|
0.59
|
%
|
|
0.54
|
%
|
(12)
|
DEPOSITS
|
December 31,
|
2017
|
|
2016
|
||||
Non-interest bearing demand
|
$
|
2,900.0
|
|
|
$
|
1,906.3
|
|
Interest bearing:
|
|
|
|
||||
Demand
|
2,787.5
|
|
|
2,276.5
|
|
||
Savings
|
3,095.4
|
|
|
2,141.8
|
|
||
Time, $100 and over
|
432.0
|
|
|
461.4
|
|
||
Time, other
|
720.0
|
|
|
590.1
|
|
||
Total interest bearing
|
7,034.9
|
|
|
5,469.8
|
|
||
Total deposits
|
$
|
9,934.9
|
|
|
$
|
7,376.1
|
|
|
Time, $100
and Over
|
|
Total Time
|
||||
Due within 3 months or less
|
$
|
88.6
|
|
|
$
|
313.8
|
|
Due after 3 months and within 6 months
|
65.3
|
|
|
167.3
|
|
||
Due after 6 months and within 12 months
|
110.6
|
|
|
259.2
|
|
||
Due after 12 months
|
167.5
|
|
|
411.6
|
|
||
Total
|
$
|
432.0
|
|
|
$
|
1,151.9
|
|
(13)
|
LONG-TERM DEBT AND OTHER BORROWED FUNDS
|
December 31,
|
2017
|
|
2016
|
||||
Parent Company:
|
|
|
|
||||
6.81% subordinated term loan maturing January 9, 2018, principal due at maturity, interest payable quarterly
|
$
|
—
|
|
|
$
|
20.0
|
|
Subsidiaries:
|
|
|
|
||||
8.00% capital lease obligation with term ending October 25, 2029
|
1.4
|
|
|
1.5
|
|
||
6.24% note payable maturing September 6, 2032, principal due at maturity, interest payable monthly
|
1.6
|
|
|
1.5
|
|
||
2.28% note payable maturing July 29, 2022, principal due at maturity, interest payable monthly
|
5.0
|
|
|
5.0
|
|
||
1.00% note payable maturing December 31, 2041, interest only payable quarterly until December 31, 2025 and then principal and interest until maturity
|
5.1
|
|
|
—
|
|
||
Total long-term debt
|
$
|
13.1
|
|
|
$
|
28.0
|
|
(14)
|
SUBORDINATED DEBENTURES HELD BY SUBSIDIARY TRUSTS
|
(15)
|
CAPITAL STOCK AND DIVIDEND RESTRICTIONS
|
(16)
|
EARNINGS PER COMMON SHARE
|
Year Ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Net income, basic and diluted
|
$
|
106.5
|
|
|
$
|
95.6
|
|
|
$
|
86.8
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding for basic earnings per share computation
|
51,429,366
|
|
|
44,511,774
|
|
|
45,184,091
|
|
|||
Dilutive effects of stock-based compensation
|
473,843
|
|
|
398,622
|
|
|
462,327
|
|
|||
Weighted average common shares outstanding for diluted earnings per common share computation
|
51,903,209
|
|
|
44,910,396
|
|
|
45,646,418
|
|
|||
|
|
|
|
|
|
||||||
Basic earnings per common share
|
$
|
2.07
|
|
|
$
|
2.15
|
|
|
$
|
1.92
|
|
Diluted earnings per common share
|
2.05
|
|
|
2.13
|
|
|
1.90
|
|
(17)
|
REGULATORY CAPITAL
|
|
Actual
|
|
Adequately Capitalized
Basel III
Phase-In Schedule
|
|
Adequately Capitalized
Basel III
Fully Phased-In
|
|
Well Capitalized (1)
|
||||||||||||||||
|
Amount
|
Ratio
|
|
Amount
|
Ratio
|
|
Amount
|
Ratio
|
|
Amount
|
Ratio
|
||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total risk-based capital:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Consolidated
|
$
|
1,112.5
|
|
12.76
|
%
|
|
$
|
806.5
|
|
9.25
|
%
|
|
$
|
915.5
|
|
10.50
|
%
|
|
$
|
871.9
|
|
10.00
|
%
|
FIB
|
1,066.6
|
|
12.29
|
|
|
802.7
|
|
9.25
|
|
|
911.2
|
|
10.50
|
|
|
867.8
|
|
10.00
|
|
||||
Tier 1 risk-based capital:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Consolidated
|
1,040.3
|
|
11.93
|
|
|
632.1
|
|
7.25
|
|
|
741.1
|
|
8.50
|
|
|
697.5
|
|
8.00
|
|
||||
FIB
|
994.4
|
|
11.46
|
|
|
629.1
|
|
7.25
|
|
|
737.6
|
|
8.50
|
|
|
694.2
|
|
8.00
|
|
||||
Common equity tier 1 risk-based capital:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Consolidated
|
962.4
|
|
11.04
|
|
|
501.3
|
|
5.75
|
|
|
610.3
|
|
7.00
|
|
|
566.7
|
|
6.50
|
|
||||
FIB
|
994.4
|
|
11.46
|
|
|
499.0
|
|
5.75
|
|
|
607.4
|
|
7.00
|
|
|
564.1
|
|
6.50
|
|
||||
Leverage capital ratio:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Consolidated
|
1,040.3
|
|
8.86
|
|
|
469.9
|
|
4.00
|
|
|
469.9
|
|
4.00
|
|
|
587.4
|
|
5.00
|
|
||||
FIB
|
994.4
|
|
8.48
|
|
|
469.1
|
|
4.00
|
|
|
469.1
|
|
4.00
|
|
|
586.3
|
|
5.00
|
|
|
Actual
|
|
Adequately Capitalized
Basel III
Phase-In Schedule
|
|
Adequately Capitalized
Basel III
Fully Phased-In
|
|
Well Capitalized (1)
|
||||||||||||||||
|
Amount
|
Ratio
|
|
Amount
|
Ratio
|
|
Amount
|
Ratio
|
|
Amount
|
Ratio
|
||||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total risk-based capital:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Consolidated
|
$
|
974.5
|
|
15.13
|
%
|
|
$
|
555.7
|
|
8.63
|
%
|
|
$
|
676.1
|
|
10.50
|
%
|
|
$
|
643.9
|
|
10.00
|
%
|
FIB
|
842.0
|
|
13.13
|
|
|
553.5
|
|
8.63
|
|
|
673.4
|
|
10.50
|
|
|
641.3
|
|
10.00
|
|
||||
Tier 1 risk-based capital:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Consolidated
|
894.3
|
|
13.89
|
|
|
426.9
|
|
6.63
|
|
|
547.3
|
|
8.50
|
|
|
515.1
|
|
8.00
|
|
||||
FIB
|
765.8
|
|
11.94
|
|
|
425.2
|
|
6.63
|
|
|
545.1
|
|
8.50
|
|
|
513.1
|
|
8.00
|
|
||||
Common equity tier 1 risk-based capital:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Consolidated
|
814.3
|
|
12.65
|
|
|
330.3
|
|
5.13
|
|
|
450.7
|
|
7.00
|
|
|
418.5
|
|
6.50
|
|
||||
FIB
|
765.8
|
|
11.94
|
|
|
329.0
|
|
5.13
|
|
|
448.9
|
|
7.00
|
|
|
416.9
|
|
6.50
|
|
||||
Leverage capital ratio:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Consolidated
|
894.3
|
|
10.11
|
|
|
353.8
|
|
4.00
|
|
|
353.8
|
|
4.00
|
|
|
442.3
|
|
5.00
|
|
||||
FIB
|
765.8
|
|
8.69
|
|
|
352.3
|
|
4.00
|
|
|
352.3
|
|
4.00
|
|
|
440.4
|
|
5.00
|
|
(18)
|
COMMITMENTS AND CONTINGENCIES
|
|
Third
Parties
|
|
Related
Entity
|
|
Total
|
||||||
For the year ending December 31:
|
|
|
|
|
|
||||||
2018
|
$
|
3.5
|
|
|
$
|
2.5
|
|
|
$
|
6.0
|
|
2019
|
3.3
|
|
|
2.5
|
|
|
5.8
|
|
|||
2020
|
2.6
|
|
|
2.5
|
|
|
5.1
|
|
|||
2021
|
2.1
|
|
|
2.5
|
|
|
4.6
|
|
|||
2022
|
1.6
|
|
|
2.5
|
|
|
4.1
|
|
|||
Thereafter
|
9.4
|
|
|
9.1
|
|
|
18.5
|
|
|||
Total
|
$
|
22.5
|
|
|
$
|
21.6
|
|
|
$
|
44.1
|
|
(19)
|
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
|
(20)
|
INCOME TAXES
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
24.3
|
|
|
$
|
40.3
|
|
|
$
|
26.7
|
|
State
|
5.0
|
|
|
5.9
|
|
|
4.5
|
|
|||
Total current
|
29.3
|
|
|
46.2
|
|
|
31.2
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
18.4
|
|
|
2.9
|
|
|
11.1
|
|
|||
State
|
2.5
|
|
|
0.5
|
|
|
1.4
|
|
|||
Total deferred
|
20.9
|
|
|
3.4
|
|
|
12.5
|
|
|||
Total income tax expense
|
$
|
50.2
|
|
|
$
|
49.6
|
|
|
$
|
43.7
|
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Tax expense at the statutory tax rate
|
$
|
54.9
|
|
|
$
|
50.8
|
|
|
$
|
45.7
|
|
Increase (decrease) in tax resulting from:
|
|
|
|
|
|
||||||
Tax-exempt income
|
(4.5
|
)
|
|
(4.4
|
)
|
|
(4.1
|
)
|
|||
State income tax, net of federal income tax benefit
|
4.9
|
|
|
4.3
|
|
|
3.8
|
|
|||
Benefit of stock-based compensation plans
|
(2.6
|
)
|
|
—
|
|
|
—
|
|
|||
Federal tax credits
|
(2.4
|
)
|
|
(2.1
|
)
|
|
(2.3
|
)
|
|||
Benefit due to enactment of federal tax reform
|
(2.2
|
)
|
|
—
|
|
|
—
|
|
|||
Other, net
|
2.2
|
|
|
1.0
|
|
|
0.6
|
|
|||
Tax expense at effective tax rate
|
$
|
50.2
|
|
|
$
|
49.6
|
|
|
$
|
43.7
|
|
December 31,
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
||||
Loans, principally due to allowance for loan losses
|
$
|
18.0
|
|
|
$
|
30.1
|
|
Loan discount
|
6.7
|
|
|
3.1
|
|
||
Investment securities, unrealized losses
|
5.6
|
|
|
6.6
|
|
||
Employee benefits
|
11.5
|
|
|
9.3
|
|
||
Non-performing loan interest
|
1.1
|
|
|
1.2
|
|
||
Other real estate owned write-downs and carrying costs
|
0.6
|
|
|
1.3
|
|
||
Tax credit carryforwards
(1)
|
3.7
|
|
|
—
|
|
||
Net operating loss carryforwards
(2)
|
8.7
|
|
|
—
|
|
||
Other
|
4.7
|
|
|
2.5
|
|
||
Deferred tax assets
|
60.6
|
|
|
54.1
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Fixed assets, principally differences in bases and depreciation
|
(6.7
|
)
|
|
(4.7
|
)
|
||
Deferred loan costs
|
(1.7
|
)
|
|
(3.0
|
)
|
||
Investment in joint venture partnership, principally due to differences in depreciation of partnership assets
|
(0.8
|
)
|
|
(1.2
|
)
|
||
Prepaid amounts
|
(0.6
|
)
|
|
(1.5
|
)
|
||
Government agency stock dividends
|
(1.6
|
)
|
|
(2.3
|
)
|
||
Goodwill and core deposit intangibles
|
(38.1
|
)
|
|
(42.4
|
)
|
||
Mortgage servicing rights
|
(5.7
|
)
|
|
(5.5
|
)
|
||
Other
|
(1.4
|
)
|
|
(0.3
|
)
|
||
Deferred tax liabilities
|
(56.6
|
)
|
|
(60.9
|
)
|
||
Net deferred tax assets (liabilities)
|
$
|
4.0
|
|
|
$
|
(6.8
|
)
|
(21)
|
STOCK-BASED COMPENSATION
|
|
Number of
Shares
|
|
Weighted-Average
Exercise Price
|
|
Weighted-Average
Remaining
Contract Life
|
|||
Outstanding options, beginning of year
|
940,843
|
|
|
$
|
16.77
|
|
|
|
Exercised
|
(285,887
|
)
|
|
18.15
|
|
|
|
|
Forfeited
|
(12,701
|
)
|
|
17.86
|
|
|
|
|
Outstanding options, end of year
|
642,255
|
|
|
$
|
16.13
|
|
|
2.34 years
|
Outstanding options exercisable, end of year
|
642,255
|
|
|
$
|
16.13
|
|
|
2.34 years
|
|
Number of
Shares
|
|
Weighted-Average
Measurement Date
Fair Value
|
|||
Restricted stock, beginning of year
|
317,055
|
|
|
$
|
26.22
|
|
Granted
|
140,246
|
|
|
41.46
|
|
|
Vested
|
(111,224
|
)
|
|
26.14
|
|
|
Forfeited
|
(53,571
|
)
|
|
27.96
|
|
|
Restricted stock, end of year
|
292,506
|
|
|
$
|
33.24
|
|
(22)
|
EMPLOYEE BENEFIT PLANS
|
(23)
|
OTHER COMPREHENSIVE INCOME
|
Year ended December 31, 2017
|
Before Tax Amount
|
Tax Expense (Benefit)
|
Net of Tax Amount
|
||||||
Investment securities available-for sale:
|
|
|
|
||||||
Change in net unrealized loss during period
|
$
|
(6.5
|
)
|
$
|
(2.7
|
)
|
$
|
(3.8
|
)
|
Reclassification adjustment for net gains included in net income
|
(0.7
|
)
|
(0.3
|
)
|
(0.4
|
)
|
|||
Change in unamortized loss on available-for-sale securities transferred into held-to-maturity
|
1.8
|
|
0.7
|
|
1.1
|
|
|||
Change in net unrealized loss on derivatives
|
(1.1
|
)
|
(0.4
|
)
|
(0.7
|
)
|
|||
Reclassification adjustment for derivative net (gains) losses included in net income
|
1.1
|
|
0.4
|
|
0.7
|
|
|||
Defined benefits post-retirement benefit plan:
|
|
|
|
||||||
Change in net actuarial loss (gain)
|
(1.2
|
)
|
(0.5
|
)
|
(0.7
|
)
|
|||
Total other comprehensive loss
|
$
|
(6.6
|
)
|
$
|
(2.8
|
)
|
$
|
(3.8
|
)
|
Year ended December 31, 2016
|
Before Tax Amount
|
Tax Expense (Benefit)
|
Net of Tax Amount
|
||||||
Investment securities available-for sale:
|
|
|
|
||||||
Change in net unrealized loss during period
|
$
|
(19.4
|
)
|
$
|
(7.6
|
)
|
$
|
(11.8
|
)
|
Reclassification adjustment for net gains included in net income
|
(0.3
|
)
|
(0.1
|
)
|
(0.2
|
)
|
|||
Unamortized premium on available-to-sale securities transferred into held-for-maturity
|
1.9
|
|
0.7
|
|
1.2
|
|
|||
Change in net unrealized gain on derivatives
|
(0.2
|
)
|
(0.1
|
)
|
(0.1
|
)
|
|||
Defined benefits post-retirement benefit plan:
|
|
|
|
||||||
Change in net actuarial loss
|
4.0
|
|
1.6
|
|
2.4
|
|
|||
Total other comprehensive loss
|
$
|
(14.0
|
)
|
$
|
(5.5
|
)
|
$
|
(8.5
|
)
|
Year ended December 31, 2015
|
Before Tax Amount
|
Tax Expense (Benefit)
|
Net of Tax Amount
|
||||||
Investment securities available-for sale:
|
|
|
|
||||||
Change in net unrealized loss during period
|
$
|
3.1
|
|
$
|
1.2
|
|
$
|
1.9
|
|
Reclassification adjustment for net gains included in net income
|
(0.2
|
)
|
(0.1
|
)
|
(0.1
|
)
|
|||
Change in unamortized gain on available-for-sale securities transferred into held-to-maturity
|
1.6
|
|
0.6
|
|
1.0
|
|
|||
Change in net unrealized gain on derivatives
|
0.2
|
|
0.1
|
|
0.1
|
|
|||
Defined benefits post-retirement benefit plan:
|
|
|
|
||||||
Change in net actuarial loss
|
0.1
|
|
0.1
|
|
—
|
|
|||
Total other comprehensive income
|
$
|
4.8
|
|
$
|
1.9
|
|
$
|
2.9
|
|
Year ended December 31,
|
2017
|
|
2016
|
||||
Net unrealized gain (loss) on investment securities available-for-sale
|
$
|
(13.2
|
)
|
|
$
|
(10.1
|
)
|
Net actuarial gain (loss) on defined benefit post-retirement benefit plans
|
1.3
|
|
|
2.0
|
|
||
Net unrealized gain (loss) on derivatives
|
—
|
|
|
—
|
|
||
Net accumulated other comprehensive income (loss)
|
$
|
(11.9
|
)
|
|
$
|
(8.1
|
)
|
(24)
|
CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)
|
December 31,
|
2017
|
|
2016
|
||||
Condensed balance sheets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
42.3
|
|
|
$
|
138.4
|
|
Investment in subsidiaries, at equity:
|
|
|
|
||||
Bank subsidiary
|
1,432.3
|
|
|
932.0
|
|
||
Total investment in subsidiaries
|
1,432.3
|
|
|
932.0
|
|
||
Advances to subsidiaries, net
|
25.7
|
|
|
—
|
|
||
Other assets
|
61.7
|
|
|
35.4
|
|
||
Total assets
|
$
|
1,562.0
|
|
|
$
|
1,105.8
|
|
|
|
|
|
||||
Other liabilities
|
$
|
51.9
|
|
|
$
|
18.0
|
|
Advances from subsidiaries, net
|
—
|
|
|
2.7
|
|
||
Long-term debt
|
—
|
|
|
20.0
|
|
||
Subordinated debentures held by subsidiary trusts
|
82.5
|
|
|
82.5
|
|
||
Total liabilities
|
134.4
|
|
|
123.2
|
|
||
Stockholders’ equity
|
1,427.6
|
|
|
982.6
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,562.0
|
|
|
$
|
1,105.8
|
|
Years Ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Condensed statements of income:
|
|
|
|
|
|
||||||
Dividends from subsidiaries
|
$
|
150.0
|
|
|
$
|
140.0
|
|
|
$
|
70.0
|
|
Other interest income
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Other income, primarily management fees from subsidiaries
|
18.0
|
|
|
15.1
|
|
|
13.2
|
|
|||
Total income
|
168.1
|
|
|
155.1
|
|
|
83.2
|
|
|||
Salaries and benefits
|
21.8
|
|
|
18.8
|
|
|
16.3
|
|
|||
Interest expense
|
4.7
|
|
|
4.1
|
|
|
3.8
|
|
|||
Acquisition expenses
|
25.3
|
|
|
1.5
|
|
|
0.8
|
|
|||
Other operating expenses, net
|
13.0
|
|
|
10.4
|
|
|
9.9
|
|
|||
Total expenses
|
64.8
|
|
|
34.8
|
|
|
30.8
|
|
|||
Earnings before income tax benefit
|
103.3
|
|
|
120.3
|
|
|
52.4
|
|
|||
Income tax benefit
|
(14.2
|
)
|
|
(7.7
|
)
|
|
(7.0
|
)
|
|||
Income before undistributed earnings of subsidiaries
|
117.5
|
|
|
128.0
|
|
|
59.4
|
|
|||
Undistributed earnings of subsidiaries
|
(11.0
|
)
|
|
(32.4
|
)
|
|
27.4
|
|
|||
Net income
|
$
|
106.5
|
|
|
$
|
95.6
|
|
|
$
|
86.8
|
|
Years Ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Condensed statements of cash flows:
|
|
|
|
|
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
106.5
|
|
|
$
|
95.6
|
|
|
$
|
86.8
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
||||||
Undistributed earnings of subsidiaries
|
11.0
|
|
|
32.4
|
|
|
(27.4
|
)
|
|||
Stock-based compensation expense
|
3.9
|
|
|
4.4
|
|
|
3.9
|
|
|||
Tax benefits from stock-based compensation
|
—
|
|
|
2.1
|
|
|
1.4
|
|
|||
Excess tax benefits from stock-based compensation
|
—
|
|
|
(1.6
|
)
|
|
(1.2
|
)
|
|||
Other, net
|
14.7
|
|
|
(0.8
|
)
|
|
(11.3
|
)
|
|||
Net cash provided by operating activities
|
136.1
|
|
|
132.1
|
|
|
52.2
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Capital distributions from nonbank subsidiaries
|
18.0
|
|
|
2.0
|
|
|
—
|
|
|||
Acquisition of intangible assets
|
(28.0
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition of bank holding company, net of cash and cash equivalents received
|
(128.3
|
)
|
|
—
|
|
|
(7.2
|
)
|
|||
Investment in subsidiary
|
(18.0
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
$
|
(156.3
|
)
|
|
$
|
2.0
|
|
|
$
|
(7.2
|
)
|
Years Ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Net (decrease) increase in advances from nonbank subsidiaries
|
$
|
(28.4
|
)
|
|
$
|
9.1
|
|
|
$
|
(2.0
|
)
|
Repayment of long-term debt
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|||
Proceeds from issuance of common stock, net of stock issuance costs
|
2.4
|
|
|
4.7
|
|
|
3.4
|
|
|||
Excess tax benefits from stock-based compensation
|
—
|
|
|
1.6
|
|
|
1.2
|
|
|||
Purchase and retirement of common stock
|
(1.3
|
)
|
|
(26.9
|
)
|
|
(20.6
|
)
|
|||
Dividends paid to common stockholders
|
(48.6
|
)
|
|
(39.4
|
)
|
|
(36.3
|
)
|
|||
Net cash used in financing activities
|
(75.9
|
)
|
|
(50.9
|
)
|
|
(55.3
|
)
|
|||
Net change in cash and cash equivalents
|
(96.1
|
)
|
|
83.2
|
|
|
(10.3
|
)
|
|||
Cash and cash equivalents, beginning of year
|
138.4
|
|
|
55.2
|
|
|
65.5
|
|
|||
Cash and cash equivalents, end of year
|
$
|
42.3
|
|
|
$
|
138.4
|
|
|
$
|
55.2
|
|
(25)
|
FAIR VALUE MEASUREMENTS
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
As of December 31, 2017
|
Balance
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Investment securities available-for-sale:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury Notes
|
$
|
3.2
|
|
|
$
|
—
|
|
|
$
|
3.2
|
|
|
$
|
—
|
|
Obligations of U.S. government agencies
|
561.5
|
|
|
—
|
|
|
561.5
|
|
|
—
|
|
||||
U.S. agency mortgage-backed securities & collateralized mortgage obligations
|
1,462.5
|
|
|
—
|
|
|
1,462.5
|
|
|
—
|
|
||||
Private mortgage-backed securities
|
90.7
|
|
|
—
|
|
|
90.7
|
|
|
—
|
|
||||
Corporate securities
|
87.9
|
|
|
—
|
|
|
87.9
|
|
|
—
|
|
||||
Other investments
|
3.0
|
|
|
—
|
|
|
3.0
|
|
|
—
|
|
||||
Loans held for sale
|
46.6
|
|
|
—
|
|
|
46.6
|
|
|
—
|
|
||||
Derivative assets:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap contracts
|
7.5
|
|
|
—
|
|
|
7.5
|
|
|
—
|
|
||||
Interest rate lock commitments
|
1.3
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
||||
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|||||||
Interest rate swap contracts
|
7.8
|
|
|
—
|
|
|
7.8
|
|
|
—
|
|
||||
Forward loan sales contracts
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
||||
Deferred compensation plan assets
|
12.2
|
|
|
—
|
|
|
12.2
|
|
|
—
|
|
||||
Deferred compensation plan liabilities
|
12.2
|
|
|
—
|
|
|
12.2
|
|
|
—
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
As of December 31, 2016
|
Balance
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Investment securities available-for-sale:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury Notes
|
$
|
3.6
|
|
|
$
|
—
|
|
|
$
|
3.6
|
|
|
$
|
—
|
|
Obligations of U.S. government agencies
|
391.3
|
|
|
—
|
|
|
391.3
|
|
|
—
|
|
||||
U.S. agency mortgage-backed securities & collateralized mortgage obligations
|
1,213.7
|
|
|
—
|
|
|
1,213.7
|
|
|
—
|
|
||||
Private mortgage-backed securities
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
||||
Other investments
|
3.0
|
|
|
—
|
|
|
3.0
|
|
|
—
|
|
||||
Loans held for sale
|
61.8
|
|
|
—
|
|
|
61.8
|
|
|
—
|
|
||||
Derivative assets:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap contracts
|
1.3
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
||||
Interest rate lock commitments
|
1.1
|
|
|
—
|
|
|
1.1
|
|
|
—
|
|
||||
Forward loan sales contracts
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
||||
Derivative liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap contracts
|
1.3
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
||||
Deferred compensation plan assets
|
10.6
|
|
|
—
|
|
|
10.6
|
|
|
—
|
|
||||
Deferred compensation plan liabilities
|
10.6
|
|
|
—
|
|
|
10.6
|
|
|
—
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
|||||||||||||
As of December 31, 2017
|
Total
|
Quoted Prices
in Active
Markets for
Identical Assets (Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
Gains (Losses)
|
||||||||||
Impaired loans
|
$
|
32.6
|
|
$
|
—
|
|
$
|
—
|
|
$
|
32.6
|
|
$
|
22.2
|
|
Other real estate owned
|
1.3
|
|
—
|
|
—
|
|
1.3
|
|
(1.6
|
)
|
|||||
Long-lived assets to be disposed of by sale
|
0.8
|
|
—
|
|
—
|
|
0.8
|
|
—
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
|||||||||||||
As of December 31, 2016
|
Total
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
Gains (Losses)
|
||||||||||
Impaired loans
|
$
|
39.3
|
|
$
|
—
|
|
$
|
—
|
|
$
|
39.3
|
|
$
|
(25.8
|
)
|
Other real estate owned
|
2.1
|
|
—
|
|
—
|
|
2.1
|
|
(1.7
|
)
|
|||||
Long-lived assets to be disposed of by sale
|
1.3
|
|
—
|
|
—
|
|
1.3
|
|
(1.0
|
)
|
As of December 31, 2017
|
Fair
Value
|
Valuation
Technique
|
Unobservable
Inputs
|
Range
(Weighted Average)
|
|||||
Impaired loans
|
$
|
32.6
|
|
Appraisal
|
Appraisal adjustment
|
0%
|
-
|
78.11%
|
(26.1%)
|
Other real estate owned
|
1.3
|
|
Appraisal
|
Appraisal adjustment
|
8%
|
-
|
96%
|
(11.55%)
|
|
Long-lived assets to be disposed of by sale
|
0.8
|
|
Appraisal
|
Appraisal adjustment
|
0%
|
-
|
0%
|
0%
|
|
|
|
|
|
|
|
|
|
||
As of December 31, 2016
|
Fair
Value
|
Valuation
Technique
|
Unobservable
Inputs
|
Range
(Weighted Average)
|
|||||
Impaired loans
|
$
|
39.3
|
|
Appraisal
|
Appraisal adjustment
|
0%
|
-
|
66%
|
(31%)
|
Other real estate owned
|
2.1
|
|
Appraisal
|
Appraisal adjustment
|
8%
|
-
|
96%
|
(18%)
|
|
Long-lived assets to be disposed of by sale
|
1.3
|
|
Appraisal
|
Appraisal adjustment
|
0%
|
-
|
9%
|
(6%)
|
|
|
|
|
|
|
|
|
|
|
`
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
As of December 31, 2017
|
Carrying Amount
|
Estimated
Fair Value
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
Significant Other
Observable Inputs (Level 2) |
Significant
Unobservable Inputs (Level 3) |
||||||||||
Financial assets:
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents
|
$
|
759.0
|
|
$
|
759.0
|
|
$
|
759.0
|
|
$
|
—
|
|
$
|
—
|
|
Investment securities available-for-sale
|
2,208.7
|
|
2,208.7
|
|
—
|
|
2,208.7
|
|
—
|
|
|||||
Investment securities held-to-maturity
|
484.5
|
|
483.3
|
|
—
|
|
483.3
|
|
—
|
|
|||||
Accrued interest receivable
|
38.0
|
|
38.0
|
|
—
|
|
38.0
|
|
—
|
|
|||||
Mortgage servicing rights, net
|
24.8
|
|
40.1
|
|
—
|
|
40.1
|
|
—
|
|
|||||
Net loans
|
7,542.2
|
|
7,298.8
|
|
—
|
|
7,266.2
|
|
32.6
|
|
|||||
Derivative assets
|
8.8
|
|
8.8
|
|
—
|
|
8.8
|
|
—
|
|
|||||
Deferred compensation plan assets
|
12.2
|
|
12.2
|
|
—
|
|
12.2
|
|
—
|
|
|||||
Total financial assets
|
$
|
11,078.2
|
|
$
|
10,848.9
|
|
$
|
759.0
|
|
$
|
10,057.3
|
|
$
|
32.6
|
|
|
|
|
|
|
|
||||||||||
Financial liabilities:
|
|
|
|
|
|
||||||||||
Total deposits, excluding time deposits
|
$
|
8,783.0
|
|
$
|
8,783.0
|
|
$
|
8,783.0
|
|
$
|
—
|
|
$
|
—
|
|
Time deposits
|
1,151.9
|
|
1,137.9
|
|
—
|
|
1,137.9
|
|
—
|
|
|||||
Securities sold under repurchase agreements
|
643.0
|
|
643.0
|
|
—
|
|
643.0
|
|
—
|
|
|||||
Other borrowed funds
|
20.0
|
|
20.0
|
|
—
|
|
20.0
|
|
—
|
|
|||||
Accrued interest payable
|
5.6
|
|
5.6
|
|
—
|
|
5.6
|
|
—
|
|
|||||
Long-term debt
|
13.1
|
|
11.3
|
|
—
|
|
11.3
|
|
—
|
|
|||||
Subordinated debentures held by subsidiary trusts
|
82.5
|
|
76.7
|
|
—
|
|
76.7
|
|
—
|
|
|||||
Derivative liabilities
|
7.9
|
|
7.9
|
|
—
|
|
7.9
|
|
—
|
|
|||||
Deferred compensation plan liabilities
|
12.2
|
|
12.2
|
|
—
|
|
12.2
|
|
—
|
|
|||||
Total financial liabilities
|
$
|
10,719.2
|
|
$
|
10,697.6
|
|
$
|
8,783.0
|
|
$
|
1,914.6
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
As of December 31, 2016
|
Carrying Amount
|
Estimated
Fair Value
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
Significant Other
Observable Inputs (Level 2) |
Significant
Unobservable Inputs (Level 3) |
||||||||||
Financial assets:
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
782.0
|
|
$
|
782.0
|
|
$
|
782.0
|
|
$
|
—
|
|
$
|
—
|
|
Investment securities available-for-sale
|
1,611.7
|
|
1,611.7
|
|
—
|
|
1,611.7
|
|
—
|
|
|||||
Investment securities held-to-maturity
|
512.8
|
|
513.3
|
|
—
|
|
513.3
|
|
—
|
|
|||||
Accrued interest receivable
|
29.9
|
|
29.9
|
|
—
|
|
29.9
|
|
—
|
|
|||||
Mortgage servicing rights, net
|
18.5
|
|
35.7
|
|
—
|
|
35.7
|
|
—
|
|
|||||
Net loans
|
5,402.3
|
|
5,309.9
|
|
—
|
|
5,270.6
|
|
39.3
|
|
|||||
Derivative assets
|
2.7
|
|
2.7
|
|
—
|
|
2.7
|
|
—
|
|
|||||
Deferred compensation plan assets
|
10.6
|
|
10.6
|
|
—
|
|
10.6
|
|
—
|
|
|||||
Total financial assets
|
$
|
8,370.5
|
|
$
|
8,295.8
|
|
$
|
782.0
|
|
$
|
7,474.5
|
|
$
|
39.3
|
|
|
|
|
|
|
|
||||||||||
Financial liabilities:
|
|
|
|
|
|
||||||||||
Total deposits, excluding time deposits
|
$
|
6,324.5
|
|
$
|
6,324.5
|
|
$
|
6,324.5
|
|
$
|
—
|
|
$
|
—
|
|
Time deposits
|
1,051.6
|
|
1,044.7
|
|
—
|
|
1,044.7
|
|
—
|
|
|||||
Securities sold under repurchase agreements
|
537.6
|
|
537.6
|
|
—
|
|
537.6
|
|
—
|
|
|||||
Other borrowed funds
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Accrued interest payable
|
5.4
|
|
5.4
|
|
—
|
|
5.4
|
|
—
|
|
|||||
Long-term debt
|
28.0
|
|
27.5
|
|
—
|
|
27.5
|
|
—
|
|
|||||
Subordinated debentures held by subsidiary trusts
|
82.5
|
|
73.6
|
|
—
|
|
73.6
|
|
—
|
|
|||||
Derivative liabilities
|
1.3
|
|
1.3
|
|
—
|
|
1.3
|
|
—
|
|
|||||
Deferred compensation plan liabilities
|
10.6
|
|
10.6
|
|
—
|
|
10.6
|
|
—
|
|
|||||
Total financial liabilities
|
$
|
8,041.5
|
|
$
|
8,025.2
|
|
$
|
6,324.5
|
|
$
|
1,700.7
|
|
$
|
—
|
|
(26)
|
RELATED PARTY TRANSACTIONS
|
(27)
|
RECENT AUTHORITATIVE ACCOUNTING GUIDANCE
|
(28)
|
SUBSEQUENT EVENTS
|
(a)
|
2. Financial statement schedules
|
Exhibit
Number
|
|
Description
|
|
|
|
|
Agreement and Plan of Merger between First Interstate BancSystem, Inc. and Cascade Bancorp dated November 17, 2016 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K, File No. 001-34653, filed on November 17, 2016)
|
|
|
|
|
|
Second Amended and Restated Articles of Incorporation dated May 30, 2017 (incorporated herein by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q, File No. 001-34653, filed for the quarter ended June 30, 2017)
|
|
|
|
|
|
Third Amended and Restated Bylaws dated May 24, 2017 (incorporated herein by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q, File No. 001-34653, filed for the quarter ended June 30, 2017)
|
|
|
|
|
10.1
*
|
|
Lease Agreement between Billings 401 Joint Venture and First Interstate Bank Montana dated September 20, 1985 and addendum thereto.
|
|
|
|
10.2
†
|
|
First Interstate BancSystem’s Deferred Compensation Plan dated December 1, 2006 (incorporated herein by reference to Exhibit 10.9 to the Company’s Pre-Effective Amendment No. 3 to Registration Statement on Form S-1, File No. 333-164380, filed on March 23, 2010)
|
|
|
|
10.3
†
|
|
First Amendment to the First Interstate BancSystem’s Deferred Compensation Plan dated October 24, 2008 (incorporated herein by reference to Exhibit 10.10 to the Company’s Pre-Effective Amendment No. 3 to Registration Statement on Form S-1, No. 333-164380, filed on March 23, 2010)
|
|
|
|
10.4
†
|
|
2001 Stock Option Plan, as amended (incorporated herein by reference to Exhibit 4.12 to the Company’s Registration Statement on Form S-8, No. 333-106495, filed on June 25, 2003)
|
|
|
|
10.5
†
|
|
Second Amendment to 2001 Stock Option Plan (incorporated herein by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q, File No. 001-34653, filed for the quarter ended September 30, 2010)
|
|
|
|
10.6
†
|
|
First Interstate BancSystem, Inc. 2006 Equity Compensation Plan, amended and restated as of November 21, 2013 (incorporated herein by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-8, No. 333-193543, filed on January 24, 2014)
|
|
|
|
10.7
*†
|
|
First Interstate BancSystem, Inc. 2015 Equity and Incentive Plan
|
|
|
|
10.8
*†
|
|
First Interstate BancSystem, Inc. 2015 Equity and Incentive Plan Performance Restricted Stock Grant Agreement
|
|
|
|
10.9
*†
|
|
First Interstate BancSystem, Inc. 2015 Equity and Incentive Plan Performance Time Vested Restricted Stock Grant Agreement
|
|
|
|
10.10
*†
|
|
First Interstate BancSystem, Inc. Director Compensation
|
|
|
|
10.11
†
|
|
Executive Employment Agreement between First Interstate BancSystem, Inc. and Kevin P. Riley dated September 23, 2015 (incorporated herein by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q, File No. 001-34653, filed for the quarter ended September 30, 2015)
|
|
|
|
|
Code of Ethics for Chief Executive Officer and Senior Financial Officers (incorporated herein by reference to Exhibit 14.1 to the Company's Annual Report on Form 10-K, File No. 001-34653, filed for the fiscal year ended December 31, 2010)
|
|
|
|
|
21.1
*
|
|
Subsidiaries of First Interstate BancSystem, Inc.
|
|
|
|
23.1
*
|
|
Consent of RSM US LLP Independent Registered Public Accounting Firm
|
|
|
|
31.1
*
|
|
Certification by Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.
|
|
|
|
(b)
|
Exhibits
|
(c)
|
Financial Statements Schedules
|
First Interstate BancSystem, Inc.
|
|
|
||
|
|
|
|
|
By:
|
|
/s/ KEVIN P. RILEY
|
|
February 28, 2018
|
|
|
Kevin P. Riley
|
|
Date
|
|
|
President and Chief Executive Officer
|
|
|
By:
|
/s/ JAMES R. SCOTT
|
|
February 28, 2018
|
|
James R. Scott, Chairman of the Board
|
|
Date
|
|
|
|
|
By:
|
/s/ STEVEN. J. CORNING
|
|
February 28, 2018
|
|
Steven J. Corning, Director
|
|
Date
|
|
|
|
|
By:
|
/s/ DANA L. CRANDALL
|
|
February 28, 2018
|
|
Dana L. Crandall, Director
|
|
Date
|
|
|
|
|
By:
|
/s/ WILLIAM B. EBZERY
|
|
February 28, 2018
|
|
William B. Ebzery, Director
|
|
Date
|
|
|
|
|
By:
|
/s/ CHARLES E. HART, M.D., M.S.
|
|
February 28, 2018
|
|
Charles E. Hart, M.D., M.S., Director
|
|
Date
|
|
|
|
|
By:
|
/s/ CHARLES M. HEYNEMAN
|
|
February 28, 2018
|
|
Charles M. Heyneman, Director
|
|
Date
|
|
|
|
|
By:
|
/s/ DAVID L. JAHNKE
|
|
February 28, 2018
|
|
David L. Jahnke, Director
|
|
Date
|
|
|
|
|
By:
|
/s/ DENNIS L. JOHNSON
|
|
February 28, 2018
|
|
Dennis L. Johnson, Director
|
|
Date
|
|
|
|
|
By:
|
/s/ ROSS E. LECKIE
|
|
February 28, 2018
|
|
Ross E. Leckie, Director
|
|
Date
|
|
|
|
|
By:
|
/s/ PATRICIA L. MOSS
|
|
February 28, 2018
|
|
Patricia L. Moss, Director
|
|
Date
|
|
|
|
|
By:
|
/s/ JAMES R. SCOTT, JR.
|
|
February 28, 2018
|
|
James R. Scott, Jr., Director
|
|
Date
|
|
|
|
|
By:
|
/s/ JONATHAN R. SCOTT
|
|
February 28, 2018
|
|
Jonathan R. Scott, Director
|
|
Date
|
|
|
|
|
By:
|
/s/ RANDALL I. SCOTT
|
|
February 28, 2018
|
|
Randall I. Scott, Director
|
|
Date
|
|
|
|
|
By:
|
/s/ TERESA A. TAYLOR
|
|
February 28, 2018
|
|
Teresa A. Taylor, Director
|
|
Date
|
|
|
|
|
By:
|
/s/ THEODORE H. WILLIAMS
|
|
February 28, 2018
|
|
Theodore H. Williams, Director
|
|
Date
|
|
|
|
|
By:
|
/s/ PETER I. WOLD
|
|
February 28, 2018
|
|
Peter I. Wold, Director
|
|
Date
|
By:
|
/s/ KEVIN P. RILEY
|
|
February 28, 2018
|
|
Kevin P. Riley
President, Chief Executive Officer and Director
(Principal executive officer)
|
|
Date
|
|
|
|
|
By:
|
/s/ MARCY D. MUTCH
|
|
February 28, 2018
|
|
Marcy D. Mutch
Executive Vice President and Chief Financial Officer
(Principal financial and accounting officer)
|
|
Date
|
1.1
|
Affiliate
means a corporation or other entity that, directly or through one or more intermediaries, controls, is controlled by or is under common control with, the Company.
|
1.2
|
Applicable Laws
means the requirements related to or implicated by the administration of the Plan under applicable state corporate law, United States federal and state securities laws, the Code, any stock exchange or quotation system on which the shares of Common Stock are listed or quoted, and the applicable laws of any foreign country or jurisdiction where Awards are granted under the Plan.
|
1.3
|
Award
means any right granted under the Plan, including an Incentive Stock Option, a Non-qualified Stock Option, a Stock Appreciation Right, a Restricted Stock Award, a Restricted Stock Unit Award, or a Performance Compensation Award.
|
1.4
|
Award Agreement
means a written agreement, contract, certificate or other instrument or document evidencing the terms and conditions of an individual Award granted under the Plan which may, in the discretion of the Company, be transmitted electronically to any Participant. Each Award Agreement is subject to the terms and conditions of the Plan.
|
1.5
|
Board
means the Board of Directors of the Company, as constituted at any time.
|
1.6
|
Cause
means:
|
(a)
|
with respect to any Employee: (a) If the Employee is a party to an employment or service agreement with the Company or its Affiliates and such agreement provides for a definition of Cause, the definition contained therein; or (b) if no such agreement exists, or if such agreement does not define Cause: (i) the commission of, or plea of guilty or no contest to, a felony or a crime involving moral turpitude or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or an Affiliate; (ii) conduct that results in or is reasonably likely to result in harm to the reputation or business of the Company or any of its Affiliates; (iii) gross negligence or willful misconduct with respect to the Company or an Affiliate; or (iv) material violation of state or federal securities laws.
|
(b)
|
with respect to any Director, a determination by a majority of the disinterested Board members that the Director has engaged in any of the following: (a) malfeasance in office; (b) gross misconduct or neglect; (c) false or fraudulent misrepresentation inducing the director’s appointment; (d) willful conversion of corporate funds; or (e) repeated failure to participate in Board meetings on a regular basis despite having received proper notice of the meetings in advance.
|
1.7
|
Change in Control
means the date on which one of the following, each referred to as a “Change in Control Event” and each interpreted in accordance with the definition of Change in Control under Code Section 409A and applicable regulations, shall have occurred with respect to the Company:
|
(a)
|
One person (or more than one person acting as a group) acquires ownership of stock of the Company that, together with the stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company; provided that a Change in Control has not occurred if any person (or more than one person acting as a group) owns more than 50% of the total fair market value or total voting power of the Company’s stock and acquires additional stock; and provided further that a person (or more than one person acting as a group) shall not be deemed to have acquired ownership of stock of the Company for purposes of this definition solely by virtue of becoming a member of the Schedule 13D group (as such group composition may be changed from time to time) formed (as contemplated under Section 13(d) of the Exchange Act and the rules promulgated thereunder) in connection with the Company’s 2010 initial public offering of its Common Stock on the Nasdaq Stock Market for purposes of influencing control over the Company to the extent necessary to ensure that the Company qualifies as a “controlled company” under applicable Nasdaq Marketplace Rules;
|
(b)
|
A majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the Board before the date of appointment or election; or
|
(c)
|
One person (or more than one person acting as a group), acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such Acquisitions.
|
1.8
|
Code
means the Internal Revenue Code of 1986, as it may be amended from time to time. Any reference to a section of the Code includes a reference to any regulations promulgated thereunder.
|
1.9
|
Committee
means the Compensation Committee of the Company.
|
1.10
|
Common Stock
means the Class A common stock of the Company, or such other securities of the Company as may be designated by the Committee from time to time in substitution thereof.
|
1.11
|
Company
means First Interstate BancSystem, Inc., a Montana corporation, and any successor thereto.
|
1.12
|
Continuous Service
means that the Participant’s service with the Company or an Affiliate, whether as an Employee or Director, is not interrupted or terminated. The Participant’s Continuous Service has not terminated merely because of a change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee or Director or a change in the entity for which the Participant renders such service. For example, a change in status from an Employee of the Company to a Director of an Affiliate will not constitute an interruption of Continuous Service. In addition, the Committee has the discretion to determine whether Continuous Service has been interrupted in the case of any leave of absence, including sick leave, military leave or any other personal or family leave of absence.
|
1.13
|
Covered Employee
has the same meaning as set forth in Code Section 162(m)(3), as interpreted by Internal Revenue Service Notice 2007-49.
|
1.14
|
Director
means a member of the Board.
|
1.15
|
Disability
means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment; provided, however, for purposes of determining the term of an Incentive Stock Option, the term Disability shall have the meaning ascribed to it under Code Section 22(e)(3). The determination of whether an individual has a Disability shall be determined under procedures established by the Committee. Except in situations where the Committee is determining Disability for purposes of the term of an Incentive Stock Option, the Committee may rely on any determination that a Participant is disabled for purposes of benefits under any long-term disability plan maintained by the Company or any Affiliate in which a Participant participates.
|
1.16
|
Disqualifying Disposition
has the meaning set forth in
Section 6.11.
|
1.17
|
Effective Date
means November 20, 2014, the date as of which this Plan was adopted by the Board.
|
1.18
|
Employee
means any person employed by the Company or an Affiliate; provided, that, for purposes of determining eligibility to receive Incentive Stock Options, an Employee means an employee of the Company or a parent or subsidiary corporation within the meaning of Code Section 424. A Director may also be an Employee, although mere service as a Director or payment of a director’s fee by the Company or an Affiliate shall not be sufficient to constitute “employment” by the Company or an Affiliate.
|
1.19
|
Exchange Act
means the Securities Exchange Act of 1934, as amended.
|
1.20
|
Fair Market Value
means, as of any date, the value of the Common Stock as determined by reference to the closing sale price for the primary trading session in the principal U.S. market for the Common Stock on the first trading date prior to the date of grant.
|
1.21
|
Free Standing Rights
has the meaning set forth in
Section 7.1.
|
1.22
|
Good Reason
means: (a) If an Employee is a party to an employment or service agreement with the Company or its Affiliates and such agreement provides for a definition of Good Reason, the definition contained therein; or (b) if no such agreement exists or if such agreement does not define Good Reason, the occurrence of one or more of the following without the Participant’s express written consent, which circumstances are not remedied by the Company within 30 days of its receipt of a written notice from the Participant describing the applicable circumstances (which notice must be provided by the Participant within 90 days of the Participant’s knowledge of the applicable circumstances): (i) any material, adverse change in the Participant’s duties, responsibilities, authority, title, status or reporting structure; (ii) a material reduction in the Participant’s base salary or bonus opportunity (other than in connection with reductions made to other similarly situated Employees); or (iii) a geographical relocation of the Participant’s principal office location by more than 50 miles.
|
1.23
|
Grant Date
means the date on which the Committee adopts a resolution, or takes other appropriate action, expressly granting an Award to a Participant that specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution, then such date as is set forth in such resolution.
|
1.24
|
Incentive Stock Option
means an Option intended to qualify as an incentive stock option within the meaning of Code Section 422.
|
1.25
|
Incumbent Directors
means individuals who, on the Effective Date, constitute the Board, provided that any individual becoming a Director subsequent to the Effective Date whose election or nomination for election to the Board was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for Director without objection to such nomination) shall be an Incumbent Director. No individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to Directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be an Incumbent Director.
|
1.26
|
Negative Discretion
means the discretion authorized by the Plan to be applied by the Committee to eliminate or reduce the size of a Performance Compensation Award in accordance with
Article 9
of the Plan; provided, that, the exercise of such discretion would not cause the Performance Compensation Award to fail to qualify as “performance-based compensation” under Code Section 162(m).
|
1.27
|
Non-Employee Director
means a Director who is a “non-employee director” within the meaning of Rule 16b-3.
|
1.28
|
Non-qualified Stock Option
means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
|
1.29
|
Officer
means a person who is an officer of the Company within the meaning of Rule 16a-1(f) promulgated under the Exchange Act.
|
1.30
|
Option
means an Incentive Stock Option or a Non-qualified Stock Option granted pursuant to the Plan.
|
1.31
|
Optionholder
means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.
|
1.32
|
Option Exercise Price
means the price at which a share of Common Stock may be purchased upon the exercise of an Option.
|
1.33
|
Outside Director
means a Director who is an “outside director” within the meaning of Code Section 162(m) and Treasury Regulations Section 1.162-27(e)(3) or any successor to such statute and regulation.
|
1.34
|
Participant
means an eligible person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.
|
1.35
|
Performance Compensation Award
means any Award designated by the Committee as a Performance Compensation Award pursuant to
Article 9
of the Plan.
|
1.36
|
Performance Criteria
means the criterion or criteria that the Committee selects for purposes of establishing the Performance Goals for a Performance Period with respect to any Performance Compensation Award under the Plan. The Performance Criteria will be based on the attainment of specific levels of performance of the Company (or Affiliate, division, business unit or operational unit of the Company) and will be based on one or more of the following metrics: (a) net earnings or net income (before or after taxes); (b) basic or diluted earnings per share (before or after taxes); (c) net revenue or net revenue growth; (d) gross revenue; (e) gross profit; (f) net operating profit (before or after taxes); (g) return on assets, capital, invested capital, equity, tangible equity, or tangible common equity; (h) cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital); (i) earnings before or after taxes, interest, depreciation and/or amortization; (j) efficiency ratio; (k) improvements in capital structure; (l) budget and expense management; (m) number of customers or accounts; (n) total assets or asset mix; (o) loans or loan mix; (p) deposits; (q) asset quality; (r) credit quality; (s) regulatory exams; (t) audit results; (u) customer satisfaction; (v) share price (including, but not limited to, growth measures and total shareholder return); (w) expense targets; (x) operating efficiency; (y) working capital targets; (z) enterprise value; and (aa) completion of acquisitions or business expansion.
|
1.37
|
Performance Formula
means, for a Performance Period, the one or more objective formulas applied against the relevant Performance Goal to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, some portion but less than all, or none of the Performance Compensation Award has been earned for the Performance Period.
|
1.38
|
Performance Goals
means, for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon the Performance Criteria. The Committee is authorized at any time during the first 90 days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Code Section 162(m)), or at any time thereafter (but only to the extent the exercise of such authority after such period would not cause the Performance Compensation Awards granted to any Participant for the Performance Period to fail to qualify as “performance-based compensation” under Code Section 162(m)), in its sole and absolute discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period to the extent permitted under Code Section 162(m) in order to prevent the dilution or enlargement of the rights of Participants based on the following events: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles, or other laws or regulatory rules affecting reported results; (d) any reorganization and restructuring programs; (e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 (or any successor or pronouncement thereto) and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year; (f) acquisitions or divestitures; (g) any other specific unusual or nonrecurring events, or objectively determinable category thereof; (h) foreign exchange gains and losses; and (i) a change in the Company’s fiscal year.
|
1.39
|
Performance Period
means the one or more periods of time not less than one fiscal quarter in duration, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance Compensation Award.
|
1.40
|
Permitted Transferee
means: (a) a member of the Optionholder’s immediate family (child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships), any person sharing the Optionholder’s household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the Optionholder) control the management of assets, and any other entity in which these persons (or the Optionholder) own more than 50% of the voting interests; (b) third parties designated by the Committee in connection with a program established and approved by the Committee pursuant to which Participants may receive a cash payment or other consideration in consideration for the transfer of a Non-qualified Stock Option; and (c) such other transferees as may be permitted by the Committee in its sole discretion.
|
1.41
|
Plan
means this First Interstate BancSystem, Inc. 2015 Equity and Incentive Plan, as amended and/or amended and restated from time to time.
|
1.42
|
Related Rights
has the meaning set forth in
Section 7.1.
|
1.43
|
Restricted Period
has the meaning set forth in
Section 5.2.
|
1.44
|
Restricted Stock Award
means any Award granted pursuant to
Section 5.1.
|
1.45
|
Restricted Stock Unit Award
means any Award granted pursuant to
Section 8.1.
|
1.46
|
Rule 16b-3
means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.
|
1.47
|
Securities Act
means the Securities Act of 1933, as amended.
|
1.48
|
Stock Appreciation Right
means the right pursuant to an Award granted under
Section 7.1
to receive, upon exercise, an amount payable in cash or shares equal to the number of shares subject to the Stock Appreciation Right that is being exercised multiplied by the excess of (a) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (b) the exercise price specified in the Stock Appreciation Right Award Agreement.
|
1.49
|
Stock for Stock Exchange
has the meaning set forth in
Section 6.2.
|
1.50
|
Ten Percent Shareholder
means a person who owns (or is deemed to own pursuant to Code Section 424(d)) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any of its Affiliates.
|
2.1
|
A
UTHORITY OF
C
OMMITTEE
. The Plan shall be administered by the Committee, provided that the Board may itself exercise or may delegate to any other person or committee any of the authority granted to the Committee with respect to the Plan. Subject to the terms of the Plan, the Committee’s charter and Applicable Laws, and in addition to other express powers and authorization conferred by this Plan, the Committee shall have the authority:
|
(a)
|
to construe and interpret the Plan and apply its provisions;
|
(b)
|
to promulgate, amend, and rescind rules and regulations relating to the administration of the Plan;
|
(c)
|
to authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;
|
(d)
|
to delegate its authority to a subcommittee or to any officer of the Company;
|
(e)
|
to determine when Awards are to be granted under the Plan and the applicable Grant Date;
|
(f)
|
from time to time to select, subject to the limitations set forth in this Plan, those Participants to whom Awards shall be granted;
|
(g)
|
to determine the number of shares of Common Stock to be made subject to each Award;
|
(h)
|
to determine whether each Option is to be an Incentive Stock Option or a Non-qualified Stock Option;
|
(i)
|
to prescribe the terms and conditions of each Award, including, without limitation, the exercise price and medium of payment and vesting provisions, and to specify the provisions of the Award Agreement relating to such grant;
|
(j)
|
to designate an Award (including a cash incentive) as a Performance Compensation Award and to select the Performance Criteria that will be used to establish the Performance Goals;
|
(k)
|
to amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, or the term of any outstanding Award; provided, however, that if any such amendment impairs a Participant’s rights or increases a Participant’s obligations under his or her Award or creates or increases a Participant’s federal income tax liability with respect to an Award, such amendment shall also be subject to the Participant’s consent;
|
(l)
|
to determine the duration and purpose of leaves of absences which may be granted to a Participant without constituting termination of their employment for purposes of the Plan, which periods shall be no shorter than the periods generally applicable to Employees under the Company’s employment policies;
|
(m)
|
to make decisions with respect to outstanding Awards that may become necessary upon a change in corporate control or an event that triggers anti-dilution adjustments;
|
(n)
|
to interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan and any instrument or agreement relating to, or Award granted under, the Plan; and
|
(o)
|
to exercise discretion to make any and all other determinations which it determines to be necessary or advisable for the administration of the Plan.
|
2.2
|
C
OMMITTEE
D
ECISIONS
F
INAL
. All decisions made by the Committee pursuant to the provisions of the Plan shall be final and binding on the Company and the Participants, unless such decisions are determined by a court having jurisdiction to be arbitrary and capricious.
|
2.3
|
A
WARDS TO
C
OVERED
E
MPLOYEES AND
O
FFICERS
. The Committee may establish procedures and guidelines such that Awards to Covered Employees and Officers will comply with the exemption requirements of Code Section 162(m) and/or Rule 16b-3, in which case the Awards will be determined and made by a subcommittee consisting solely of two or more Non-Employee Directors who are also Outside Directors. In the event that an Award is made to a Covered Employee or an Officer that is not exempt from Rule 16b-3 and/or Code Section162(m), the Award is not void unless otherwise provided in the Award Agreement.
|
2.4
|
A
WARDS TO
N
ON
-O
FFICERS
. Notwithstanding anything to the contrary in this Plan, the Chief Executive Officer of the Company has the authority to make Awards to Employees who are not Covered Employees, Officers or Directors, subject to any limitations or guidelines established by the Committee.
|
2.5
|
I
NDEMNIFICATION
. In addition to such other rights of indemnification as they may have as Directors or members of the Committee, and to the extent allowed by Applicable Laws, the Committee shall be indemnified by the Company against the reasonable expenses, including attorney’s fees, actually incurred in connection with any action, suit or proceeding or in connection with any appeal therein, to which the Committee may be party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted under the Plan, and against all amounts paid by the Committee in settlement thereof (provided, however, that the settlement has been approved by the Company, which approval shall not be unreasonably withheld) or paid by the Committee in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee did not act in good faith and in a manner which such person reasonably believed to be in the best interests of the Company, or in the case of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful; provided, however, that within 60 days after institution of any such action, suit or proceeding, such Committee shall, in writing, offer the Company the opportunity at its own expense to handle and defend such action, suit or proceeding.
|
3.1
|
I
NITIAL
P
OOL
. Subject to adjustment in accordance with
Article 13,
a total of 2,000,000 shares of Common Stock will be available for the grant of Awards under the Plan (all of which are eligible for issuance under Incentive Stock Options). Shares of Common Stock available for distribution under the Plan may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner.
|
3.2
|
A
WARD
L
IMITS
. Subject to adjustment in accordance with
Article 13,
individual limits on Awards in any single calendar year will be: (a) no Employee may be granted Awards of any type with respect to more than 200,000 shares of Common Stock in the aggregate; (b) no Director may be granted Awards of any type with respect to more than 50,000 shares of Common Stock in the aggregate; and (c) no Employee or Director may be granted cash Performance Compensation Awards in an amount exceeding $3,000,000. If an Award (other than a cash Performance Compensation Award) is to be settled in cash, the number of shares of Common Stock on which the Award is based will count toward such individual share limit.
|
3.3
|
R
ECYCLING
. Any shares of Common Stock subject to an Award that is canceled, forfeited or expires prior to exercise or realization, either in full or in part, or to the extent that shares are: (a) tendered in payment of an Option, (b) delivered or withheld by the Company to satisfy any tax withholding obligation, or (c) covered by a stock-settled Stock Appreciation Right or other Awards that were not issued upon the settlement of the Award, then such shares will not again be available for issuance under the Plan.
|
4.1
|
E
LIGIBILITY FOR
S
PECIFIC
A
WARDS
. Incentive Stock Options may be granted only to Employees. Awards other than Incentive Stock Options may be granted to Employees and Directors and those individuals whom the Committee determines are reasonably expected to become Employees and Directors following the Grant Date.
|
4.2
|
T
EN
P
ERCENT
S
HAREHOLDERS
. A Ten Percent Shareholder shall not be granted an Incentive Stock Option unless the Option Exercise Price is at least 110% of the Fair Market Value of the Common Stock at the Grant Date and the Option is not exercisable after the expiration of five years from the Grant Date.
|
5.1
|
G
ENERAL
. A Restricted Stock Award is an Award of actual shares of Common Stock (“Restricted Stock”) that provides that such Restricted Stock may not be sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purpose until the restrictions set forth in the Award Agreement lapse.
|
5.2
|
A
WARD
A
GREEMENT
; R
ESTRICTIONS
. Each Restricted Stock Award granted under the Plan must be evidenced by an Award Agreement that sets forth the restrictions that apply to the vesting of the Award, which restrictions may be either or both: (a) the requirement to continue to perform services for a designated period, and/or (b) the attainment of specified performance goals (which may or may not be intended to qualify the Award as a Performance Compensation Award) that must be achieved during a designated period. The required period for performance of services and/or the achievement of performance goals is referred to as the “Restricted Period.” Each Restricted Stock Award so granted will be subject to the conditions set forth in this
Article 5,
and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. Notwithstanding anything to the contrary in this Section 5.2 or otherwise, the “Restricted Period” may be defined as zero, such that the Award is immediately vested on date of grant.
|
5.3
|
S
HAREHOLDER
R
IGHTS
.
Unless otherwise provided in the Award Agreement, the Participant generally has the rights and privileges of a shareholder as to such Restricted Stock, including the right to vote such Restricted Stock and the right to receive dividends. In the event that the Award Agreement provides that cash dividends and stock dividends with respect to the Restricted Stock will be withheld, they will be held by the Company for the Participant’s account, without interest (unless otherwise provided in the Award Agreement), and will be distributed to the Participant in cash (or at the discretion of the Committee in shares of Common Stock having a Fair Market Value equal to the amount of such dividends) upon the release of restrictions on the shares to which they relate and, if such shares are forfeited, the Participant will also forfeit the right to such dividends.
|
5.4
|
R
ESTRICTIONS
. Restricted Stock awarded to a Participant will be subject to the following restrictions until the expiration of the Restricted Period, and to such other terms and conditions as may be set forth in the applicable Award Agreement: (A) the Participant will not be entitled to delivery of the Common Stock; (B) the shares will be subject to the restrictions on transferability set forth in the Award Agreement; (C) the shares will be subject to forfeiture to the extent provided in the applicable Award Agreement; and (D) to the extent such shares are forfeited, the Common Stock must be returned to the Company, and all rights of the Participant to such shares and as a shareholder with respect to such shares will terminate without further obligation on the part of the Company. The Committee has the authority to remove any or all of the restrictions on the Restricted Stock whenever it may determine that, by reason of changes in Applicable Laws or other changes in circumstances arising after the date the Restricted Stock was granted, such action is appropriate.
|
5.5
|
D
ELIVERY OF
R
ESTRICTED
S
TOCK
. Upon the expiration of the Restricted Period, to the extent the service and/or performance goals applicable to the Restricted Stock are satisfied, the restrictions set forth in
Section 5.4
and the applicable Award Agreement will be of no further force or effect with respect to such shares, and the Company will deliver to the Participant or his or her beneficiary, without charge, the shares of Common Stock (to the nearest full share) and (if applicable) any cash dividends or stock dividends credited to the Participant’s account with respect to such Restricted Stock. No Restricted Stock Award may be granted or settled for a fraction of a share of Common Stock.
|
5.6
|
S
TOCK
R
ESTRICTIONS
. Restricted Stock awarded under the Plan will bear a legend in such form as the Company deems appropriate.
|
6.1
|
O
PTION
P
ROVISIONS
. Each Option granted under the Plan shall be evidenced by an Award Agreement. Each Option so granted shall be subject to the conditions set forth in this
Article 6,
and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. All Options shall be separately designated Incentive Stock Options or Non-qualified Stock Options at the time of grant. Notwithstanding the foregoing, the Company shall have no liability to any Participant or any other person if an Option designated as an Incentive Stock Option fails to qualify as such at any time or if an Option is determined to constitute “nonqualified deferred compensation” within the meaning of Code Section 409A and the terms of such Option do not satisfy the requirements of Code Section 409A. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:
|
(a)
|
Term
. Subject to the provisions of
Section 4.2
regarding Ten Percent Shareholders, no Incentive Stock Option shall be exercisable after the expiration of 10 years from the Grant Date. The term of a Non-qualified Stock Option granted under the Plan shall be determined by the Committee; provided, however, no Non-qualified Stock Option shall be exercisable after the expiration of 10 years from the Grant Date.
|
(b)
|
Exercise Price of an Incentive Stock Option
. Subject to the provisions of
Section 4.2
regarding Ten Percent Shareholders, the Option Exercise Price of each Incentive Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an Option Exercise Price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Code Section 424(a).
|
(c)
|
Exercise Price of a Non-qualified Stock Option
. The Option Exercise Price of each Non-qualified Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, a Non-qualified Stock Option may be granted with an Option Exercise Price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Code Section 409A.
|
6.2
|
C
ONSIDERATION
.
|
(a)
|
The Option Exercise Price of Common Stock acquired pursuant to an Option may be paid, to the extent permitted by applicable statutes and regulations, either:
|
(1)
|
in cash or by certified or bank check at the time the Option is exercised; or
|
(2)
|
only to the extent permitted by the Committee, (i) by delivery to the Company of other Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the Option Exercise Price (or portion thereof) due for the number of shares being acquired, or by means of attestation whereby the Participant identifies for delivery specific shares of Common Stock that have an aggregate Fair Market Value on the date of attestation equal to the Option Exercise Price (or portion thereof) and receives a number of shares of Common Stock equal to the difference between the number of shares thereby purchased and the number of identified attestation shares of Common Stock (a “Stock for Stock Exchange”); (ii) a “cashless” exercise program established with a broker; (iii) by reduction in the number of shares of Common Stock otherwise deliverable upon exercise of such Option with a Fair Market Value equal to the aggregate Option Exercise Price at the time of exercise; (iv) any combination of the foregoing methods; or (v) in any other form of legal consideration that may be acceptable to the Committee.
|
(b)
|
The Committee may impose any conditions on the payment of the Exercise Price, such as holding requirements in the event that the exercise price of Common Stock acquired pursuant to an Option is paid by delivery (or attestation) to the Company of other Common Stock acquired, directly or indirectly from the Company.
|
(c)
|
No Director or executive officer (which for this purpose means executive officer as defined in Rule 3b-7 of the Exchange Act) will be permitted to pay an Exercise Price in any manner that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit by the Company, directly or indirectly, in violation of Section 13(k) of the Exchange Act.
|
6.3
|
T
RANSFERABILITY OF AN
I
NCENTIVE
S
TOCK
O
PTION
. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
|
6.4
|
T
RANSFERABILITY OF A
N
ON
-
QUALIFIED
S
TOCK
O
PTION
. A Non-qualified Stock Option may, in the sole discretion of the Committee, be transferable to a Permitted Transferee, upon written approval by the Committee to the extent provided in the Award Agreement. If the Non-qualified Stock Option does not provide for transferability, then the Non-qualified Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
|
6.5
|
V
ESTING OF
O
PTIONS
. Each Option may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Committee may deem appropriate. The vesting provisions of individual Options may vary. No Option may be exercised for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting and exercisability in the terms of any Award Agreement upon the occurrence of a specified event.
|
6.6
|
T
ERMINATION OF
C
ONTINUOUS
S
ERVICE
. Unless otherwise provided in an Award Agreement or in an employment agreement the terms of which have been approved by the Committee, in the event an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (a) the date three months following the termination of the Optionholder’s Continuous Service or (b) the expiration of the term of the Option as set forth in the Award Agreement; provided that, if the termination of Continuous Service is by the Company for Cause, all outstanding Options (whether or not vested) shall immediately terminate and cease to be exercisable. If, after termination, the Optionholder does not exercise his or her Option within the time specified in the Award Agreement, the Option shall terminate.
|
6.7
|
E
XTENSION OF
T
ERMINATION
D
ATE
. An Optionholder’s Award Agreement may also provide that if the exercise of the Option following the termination of the Optionholder’s Continuous Service for any reason would be prohibited at any time because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act or any other state or federal securities law or the rules of any securities exchange or interdealer quotation system, then the Option shall terminate on the earlier of (a) the expiration of the term of the Option as set forth in the Award Agreement or (b) the expiration of a period after termination of the Participant’s Continuous Service that is three months after the end of the period during which the exercise of the Option would be in violation of such registration or other securities law requirements.
|
6.8
|
D
ISABILITY OF
O
PTIONHOLDER
. Unless otherwise provided in an Award Agreement, in the event that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of time ending on the earlier of (a) the date 12 months following such termination or (b) the expiration of the term of the Option as set forth in the Award Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein or in the Award Agreement, the Option shall terminate.
|
6.9
|
D
EATH OF
O
PTIONHOLDER
. Unless otherwise provided in an Award Agreement, in the event an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the Option upon the Optionholder’s death, but only within the period ending on the earlier of (a) the date 12 months following the date of death or (b) the expiration of the term of such Option as set forth in the Award Agreement. If, after the Optionholder’s death, the Option is not exercised within the time specified herein or in the Award Agreement, the Option shall terminate.
|
6.10
|
I
NCENTIVE
S
TOCK
O
PTION
$100,000 L
IMITATION
. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Non-qualified Stock Options.
|
6.11
|
D
ISQUALIFYING
D
ISPOSITIONS
. Any Participant who makes a “disposition” (as defined in Code Section 424) of all or any portion of shares of Common Stock acquired upon exercise of an Incentive Stock Option within two years from the Grant Date of such Incentive Stock Option or within one year after the issuance of the shares of Common Stock acquired upon exercise of such Incentive Stock Option (a “Disqualifying Disposition”) must immediately advise the Company in writing as to the occurrence of the sale and the price realized upon the sale of such shares of Common Stock.
|
6.12
|
R
EPRICING
. The Committee may not modify the Option Exercise Price in any manner that would constitute a repricing of the Option, without shareholder approval.
|
7.1
|
G
ENERAL
. Each Stock Appreciation Right granted under the Plan shall be evidenced by an Award Agreement. Each Stock Appreciation Right so granted shall be subject to the conditions set forth in this
Article 7,
and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. Stock Appreciation Rights may be granted alone (“Free Standing Rights”) or in tandem with an Option granted under the Plan (“Related Rights”).
|
7.2
|
R
ELATED
R
IGHT
G
RANT
R
EQUIREMENTS
. Any Related Right that relates to a Non-qualified Stock Option may be granted at the same time the Option is granted or at any time thereafter but before the exercise or expiration of the Option. Any Related Right that relates to an Incentive Stock Option must be granted at the same time the Incentive Stock Option is granted.
|
7.3
|
T
ERM OF
S
TOCK
A
PPRECIATION
R
IGHTS
. The term of a Stock Appreciation Right granted under the Plan shall be determined by the Committee; provided, however, no Stock Appreciation Right shall be exercisable later than the tenth anniversary of the Grant Date.
|
7.4
|
V
ESTING OF
S
TOCK
A
PPRECIATION
R
IGHTS
. Each Stock Appreciation Right may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The Stock Appreciation Right may be subject to such other terms and conditions on the time or times when it may be exercised as the Committee may deem appropriate. The vesting provisions of individual Stock Appreciation Rights may vary. No Stock Appreciation Right may be exercised for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting and exercisability in the terms of any Stock Appreciation Right upon the occurrence of a specified event.
|
7.5
|
E
XERCISE AND
P
AYMENT
. Upon exercise of a Stock Appreciation Right, the holder shall be entitled to receive from the Company an amount equal to the number of shares of Common Stock subject to the Stock Appreciation Right that is being exercised multiplied by the excess of (i) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (ii) the exercise price specified in the Stock Appreciation Right or related Option. Payment with respect to the exercise of a Stock Appreciation Right shall be made on the date of exercise. Payment shall be made in the form of shares of Common Stock (with or without restrictions as to substantial risk of forfeiture and transferability, as determined by the Committee in its sole discretion), cash or a combination thereof, as determined by the Committee.
|
7.6
|
E
XERCISE
P
RICE
. The exercise price of a Free Standing Stock Appreciation Right shall be determined by the Committee, but shall not be less than 100% of the Fair Market Value of one share of Common Stock on the Grant Date of such Stock Appreciation Right. A Related Right granted simultaneously with or subsequent to the grant of an Option and in conjunction therewith or in the alternative thereto shall have the same exercise price as the related Option, shall be transferable only upon the same terms and conditions as the related Option, and shall be exercisable only to the same extent as the related Option; provided, however, that a Stock Appreciation Right, by its terms, shall be exercisable only when the Fair Market Value per share of Common Stock subject to the Stock Appreciation Right and related Option exceeds the exercise price per share thereof and no Stock Appreciation Rights may be granted intandem with an Option unless the Committee determines that the requirements of Code Section409A are satisfied.
|
7.7
|
R
EDUCTION IN THE
U
NDERLYING
O
PTION
S
HARES
. Upon any exercise of a Related Right, the number of shares of Common Stock for which any related Option shall be exercisable shall be reduced by the number of shares for which the Stock Appreciation Right has been exercised. The number of shares of Common Stock for which a Related Right shall be exercisable shall be reduced upon any exercise of any related Option by the number of shares of Common Stock for which such Option has been exercised.
|
7.8
|
R
EPRICING
. The Committee may not modify the Exercise Price of a Stock Appreciation Right in any manner that would constitute a repricing of the Stock Appreciation Right, without shareholder approval.
|
8.1
|
G
ENERAL
. A Restricted Stock Unit Award is an Award of hypothetical Common Stock units (“Restricted Stock Units” or “RSUs”)) having a value equal to the Fair Market Value of an identical number of shares of Common Stock that entitles the Participant to payment in cash or shares of Common Stock at the expiration of the Restricted Period. Each RSU Award granted under the Plan must be evidenced by an Award Agreement. Each RSU Award so granted will be subject to the conditions set forth in this
Article 8,
and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement.
|
8.2
|
A
WARD
A
GREEMENT
. The terms and conditions of a grant of Restricted Stock Units shall be reflected in an Award Agreement. No shares of Common Stock will be issued at the time a Restricted Stock Unit is granted, and the Company will not be required to set aside a fund for the payment of any such Award. A Participant has no voting rights with respect to any Restricted Stock Units. At the discretion of the Committee, each Restricted Stock Unit (representing one share of Common Stock) may be credited with cash and stock dividends paid by the Company in respect of one share of Common Stock (“Dividend Equivalents”). If credited, Dividend Equivalents will be withheld by the Company for the Participant’s account, without interest (unless otherwise provided in the Award Agreement). Dividend Equivalents credited to a Participant’s account and attributable to any particular Restricted Stock Unit (and earnings thereon, if applicable) will be distributed in cash or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to the amount of such Dividend Equivalents and earnings, if applicable, to the Participant upon settlement of such Restricted Stock Unit and, if such Restricted Stock Unit is forfeited, the Participant will also forfeit the right to such Dividend Equivalents.
|
8.3
|
R
ESTRICTIONS
.
|
(a)
|
Restricted Stock Units awarded to any Participant will be subject to forfeiture until the expiration of the Restricted Period and satisfaction of any applicable Performance Goals during such period, to the extent provided in the applicable Award Agreement, and to the extent such Restricted Stock Units are forfeited, all rights of the Participant to such Restricted Stock Units will terminate without further obligation on the part of the Company. RSUs will also be subject to such other terms and conditions as may be set forth in the applicable Award Agreement.
|
(b)
|
The Committee has the authority to remove any or all of the restrictions on the Restricted Stock Units whenever it may determine that, by reason of changes in Applicable Laws or other changes in circumstances arising after the date the Restricted Stock Units are granted, such action is appropriate.
|
(c)
|
The Committee may provide for an acceleration of vesting in the terms of any Award Agreement upon the occurrence of a specified event.
|
8.4
|
S
ETTLEMENT OF
R
ESTRICTED
S
TOCK
U
NITS
. Upon the expiration of the Restricted Period with respect to any outstanding Restricted Stock Units, the Company will deliver to the Participant, or his or her beneficiary, without charge, one share of Common Stock for each such outstanding Restricted Stock Unit (“Vested Unit”) and cash equal to any Dividend Equivalents credited with respect to each such Vested Unit and the interest thereon, if any,
or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to such Dividend Equivalents and the interest thereon, if any; provided, however, that, if explicitly provided in the applicable Award Agreement, the Committee may, in its sole discretion, elect to pay cash or part cash and part Common Stock in lieu of delivering only shares of Common Stock for Vested Units. If a cash payment is made in lieu of delivering shares of Common Stock, the amount of such payment will be equal to the Fair Market Value of the Common Stock as of the date on which the Restricted Period lapsed with respect to each Vested Unit.
|
9.1
|
G
ENERAL
. The Committee has the authority, at the time of grant of any Award described in this Plan (other than Options and Stock Appreciation Rights granted with an exercise price equal to or greater than the Fair Market Value per share of Common Stock on the Grant Date), to designate such Award as a Performance Compensation Award in order to qualify such Award as “performance-based compensation” under Code Section 162(m). In addition, the Committee has the authority to make an Award of a cash incentive to any Participant and designate such Award as a Performance Compensation Award in order to qualify such Award as “performance-based compensation” under Code Section 162(m).
|
9.2
|
E
LIGIBILITY
. The Committee will, in its sole discretion, designate within the first 90 days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Code Section 162(m)) which Participants will be eligible to receive Performance Compensation Awards in respect of such Performance Period. However, designation of a Participant eligible to receive an Award hereunder for a Performance Period will not in any manner entitle the Participant to receive payment in respect of any Performance Compensation Award for such Performance Period. The determination as to whether or not such Participant becomes entitled to payment in respect of any Performance Compensation Award will be decided solely in accordance with the provisions of this
Article 9.
Moreover, designation of a Participant eligible to receive an Award hereunder for a particular Performance Period does not require designation of such Participant eligible to receive an Award hereunder in any subsequent Performance Period and designation of one person as a Participant eligible to receive an Award hereunder does not require designation of any other person as a Participant eligible to receive an Award hereunder in such period or in any other period.
|
9.3
|
D
ISCRETION OF
C
OMMITTEE WITH
R
ESPECT TO
P
ERFORMANCE
C
OMPENSATION
A
WARDS
. With regard to a particular Performance Period, the Committee shall have full discretion to select the length of such Performance Period (provided any such Performance Period will not be less than one fiscal quarter in duration), the types of Performance Compensation Awards to be issued, the Performance Criteria that will be used to establish the Performance Goals, the kinds and/or levels of the Performance Goals that apply to the Company and the Performance Formula. Within the first 90 days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Code Section 162(m)), the Committee will, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with respect to each of the matters enumerated in the immediately preceding sentence of this
Section 9.3
and record the same in writing.
|
9.4
|
P
AYMENT OF
P
ERFORMANCE
C
OMPENSATION
A
WARDS
.
|
(a)
|
Condition to Receipt of Payment
. Unless otherwise provided in the applicable Award Agreement, a Participant must be employed by the Company on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such Performance Period.
|
(b)
|
Limitation
. A Participant is eligible to receive payment in respect of a Performance Compensation Award only to the extent that: (A) the Performance Goals for such period are achieved; and (B) the Performance Formula as applied against such Performance Goals determines that all or some portion of such Participant’s Performance Compensation Award has been earned for the Performance Period.
|
(c)
|
Certification
. The Committee must review and certify in writing whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, calculate and certify in writing the amount of the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee will then determine the actual size of each Participant’s Performance Compensation Award for the Performance Period and, in so doing, may apply Negative Discretion in accordance with
Section 9.4(d)
hereof, if and when it deems appropriate.
|
(d)
|
Use of Discretion
. In determining the actual size of an individual Performance Compensation Award for a Performance Period, the Committee may reduce or eliminate the amount of the Performance Compensation Award earned under the Performance Formula in the Performance Period through the use of Negative Discretion if, in its sole judgment, such reduction or elimination is appropriate. The Committee does not have the discretion to (A) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals for such Performance Period have not been attained or (B) increase a Performance Compensation Award above the maximum amount payable under
Section 9.4(f).
|
(e)
|
Timing of Award Payments
. Performance Compensation Awards granted for a Performance Period will be paid to Participants as soon as administratively practicable following completion of the certifications required by
Section 9.4(c)
.
|
(f)
|
Maximum Award Payable
. Notwithstanding any provision contained in this Plan to the contrary, the maximum Performance Compensation Award payable to any one Participant under the Plan for a Performance Period (excluding any Options and Stock Appreciation Rights) is 200,000 shares of Common Stock or, in the event such Performance Compensation Award is paid in cash, the equivalent cash value thereof on the first or last day of the Performance Period to which such Award relates, as determined by the Committee. The maximum amount that can be paid in any calendar year to any Participant pursuant to a cash incentive Award described in the last sentence of
Section 9.1
is $3,000,000. Furthermore, any Performance Compensation Award that has been deferred may not (between the date as of which the Award is deferred and the payment date) increase (A) with respect to a Performance Compensation Award that is payable in cash, by a measuring factor for each fiscal year greater than a reasonable rate of interest set by the Committee or (B) with respect to a Performance Compensation Award that is payable in shares of Common Stock, by an amount greater than the appreciation of a share of Common Stock from the date such Award is deferred to the payment date.
|
12.1
|
A
CCELERATION OF
E
XERCISABILITY AND
V
ESTING
. The Committee has the power to accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Award stating the time at which it may first be exercised or the time during which it will vest.
|
12.2
|
S
HAREHOLDER
R
IGHTS
. Except as provided in the Plan or an Award Agreement, no Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Award unless and until such Participant has satisfied all requirements for exercise of the Award pursuant to its terms and no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions of other rights for which the record date is prior to the date such Common Stock is issued, except as provided in
Article 13.
|
12.3
|
N
O
E
MPLOYMENT OR
O
THER
S
ERVICE
R
IGHTS
. Nothing in the Plan or any instrument executed or Award granted pursuant thereto confers upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or affects the right of the Company or an Affiliate to terminate (a) the employment of an Employee with or without notice and with or without Cause or (b) the service of a Director pursuant to the By-laws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.
|
12.4
|
T
RANSFER
; A
PPROVED
L
EAVE OF
A
BSENCE
. For purposes of the Plan, no termination of employment by an Employee will be deemed to result from either (a) a transfer to the employment of the Company from an Affiliate or from the Company to an Affiliate, or from one Affiliate to another, or (b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the Employee’s right to reemployment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Committee otherwise so provides in writing, in either case, except to the extent inconsistent with Code Section 409A if the applicable Award is subject thereto.
|
12.5
|
W
ITHHOLDING
O
BLIGATIONS
. To the extent provided by the terms of an Award Agreement and subject to the discretion of the Committee, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under an Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (a) tendering a cash payment; (b) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Award, provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (c) delivering to the Company previously owned and unencumbered shares of Common Stock of the Company.
|
13.1
|
A
DJUSTMENTS
U
PON
C
HANGES IN
S
TOCK
.
|
(a)
|
In the event of changes in the outstanding Common Stock or in the capital structure of the Company by reason of any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate transaction such as any recapitalization, reorganization, merger, consolidation, combination, exchange, or other relevant change in capitalization occurring after the Grant Date of any Award, Awards granted under the Plan and any Award Agreements, the exercise price of Options and Stock Appreciation Rights, the maximum number of shares of Common Stock subject to all Awards stated in
Article 3
and the maximum number of shares of Common Stock with respect to which any one person may be granted Awards during any period stated in
Article 3
will be equitably adjusted or substituted, as to the number, price or kind of a share of Common Stock or other consideration subject to such Awards to the extent necessary to preserve the economic intent of such Award.
|
(b)
|
In the case of adjustments made pursuant to this
Article 13,
unless the Committee specifically determines that such adjustment is in the best interests of the Company or its Affiliates, the Committee will, in the case of Incentive Stock Options, ensure that any adjustments under this
Article 13
will not constitute a modification, extension or renewal of the Incentive Stock Options within the meaning of Code Section 424(h)(3) and in the case of Non-qualified Stock Options, ensure that any adjustments under this
Article 13
will not constitute a modification of such Non-qualified Stock Options within the meaning of Code Section 409A. Any adjustments made under this
Article 13
will be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. Further, with respect to Awards intended to qualify as “performance-based compensation” under Code Section 162(m), any adjustments or substitutions will not cause the Company to be denied a tax deduction on account of Code Section 162(m). The Company shall give each Participant notice of an adjustment hereunder and, upon notice, such adjustment will be conclusive and binding for all purposes.
|
13.2
|
A
SSUMPTION OF
A
WARDS ON
R
EORGANIZATION
E
VENT
. In the event of a Change of Control or merger, reorganization, or other transaction in which the Company is not the surviving entity (each, a “Reorganization Event”), the Committee may provide without further consent or agreement by the Participant, that Awards will be assumed, or substantially equivalent Awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof) with appropriate adjustments as to the number and kind of shares and prices. To the extent Awards are not so assumed by the acquiring or succeeding corporation, the Committee may provide either (a) that outstanding Awards will vest and become exercisable, realizable, or payable, or restrictions applicable to an Award will lapse, prior to or upon consummation of the Reorganization Event (and to the extent not exercised, will be terminated in connection with the Reorganization Event), or (b) that outstanding Awards will be terminated in exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained upon the
|
13.3
|
E
FFECT OF
C
HANGE IN
C
ONTROL
. In the event of a Change in Control (unless an Award has been canceled as provided in
Section 13.2)
, unless otherwise provided in the Award Agreement, Awards will be treated as provided in this
Section 13.3.
|
(a)
|
In the event of a Participant’s termination of Continuous Service without Cause or for Good Reason during the 24-month period following a Change in Control, notwithstanding any provision of the Plan or any applicable Award Agreement to the contrary, all Options and Stock Appreciation Rights will become immediately exercisable with respect to 100% of the shares subject to such Options or Stock Appreciation Rights, and/or the Restricted Period will expire immediately with respect to 100% of the shares of Restricted Stock or Restricted Stock Units as of the date of the Participant’s termination of Continuous Service.
|
(b)
|
With respect to Performance Compensation Awards, in the event of a Participant’s termination of Continuous Service without Cause or for Good Reason, in either case, within 24 months following a Change in Control, all Performance Goals or other vesting criteria will be deemed achieved at the greater of (i) 100% of target levels and (ii) actual performance as of the date of the Change in Control, and all other terms and conditions will be deemed met as of the date of the Participant’s termination of Continuous Service.
|
(c)
|
To the extent practicable, any actions taken by the Committee under the immediately preceding
subsection (a)
and
(b)
will occur in a manner and at a time which allows affected Participants the ability to participate in the Change in Control with respect to the shares of Common Stock subject to their Awards.
|
13.4
|
D
ISSOLUTION OR
L
IQUIDATION
. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of the dissolution or liquidation of the Company.
|
14.1
|
A
MENDMENT OF
P
LAN
. The Board at any time, and from time to time, may amend or terminate the Plan. However, except as provided in this Plan, no amendment will be effective unless approved by the shareholders of the Company to the extent shareholder approval is necessary to satisfy any Applicable Laws.
|
14.2
|
S
HAREHOLDER
A
PPROVAL
. The Board may, in its sole discretion, submit any other amendment to the Plan for shareholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Code Section 162(m) and the regulations thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers.
|
14.3
|
C
ONTEMPLATED
A
MENDMENTS
. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees, Consultants and Directors with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options or to the nonqualified deferred compensation provisions of Code Section 409A and/or to bring the Plan and/or Awards granted under it into compliance therewith.
|
14.4
|
N
O
I
MPAIRMENT OF
R
IGHTS
. Rights under any Award granted before amendment of the Plan may not be impaired by any amendment of the Plan unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.
|
14.5
|
A
MENDMENT OF
A
WARDS
. The Committee at any time, and from time to time, may amend the terms of any one or more Awards; provided, however, that the Committee may not affect any amendment which would otherwise constitute an impairment of the rights under any Award unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.
|
15.1
|
F
ORFEITURE
E
VENTS
. The Committee may specify in an Award Agreement that the Participant’s rights, payments and benefits with respect to an Award will be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events, in addition to applicable vesting conditions of an Award. Such events may include, without limitation, breach of non-competition, non-solicitation, confidentiality, or other restrictive covenants that are contained in the Award Agreement or otherwise applicable to the Participant, a termination of the Participant’s Continuous Service for Cause, or other conduct by the Participant that is detrimental to the business or reputation of the Company and/or its Affiliates.
|
15.2
|
C
LAWBACK
. Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).
|
15.3
|
O
THER
C
OMPENSATION
A
RRANGEMENTS
. Nothing contained in this Plan prevents the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.
|
15.4
|
S
UB
-
PLANS
. The Committee may from time to time establish sub-plans under the Plan for purposes of satisfying blue sky, securities, tax or other laws of various jurisdictions in which the Company intends to grant Awards. Any sub-plans may contain such limitations and other terms and conditions as the Committee determines are necessary or desirable. All sub-plans will be deemed a part of the Plan, but each sub-plan will apply only to the Participants in the jurisdiction for which the sub-plan was designed.
|
15.5
|
D
EFERRAL OF
A
WARDS
. The Committee may establish one or more programs under the Plan to permit selected Participants the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election would entitle the Participant to payment or receipt of shares of Common Stock or other consideration under an Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Committee deems advisable for the administration of any such deferral program.
|
15.6
|
U
NFUNDED
P
LAN
. The Plan is unfunded. Neither the Company, the Board nor the Committee is required to establish any special or separate fund or to segregate any assets to assure the performance of its obligations under the Plan.
|
15.7
|
D
ELIVERY
. Upon exercise of a right granted under this Plan, the Company will issue Common Stock or pay any amounts due within a reasonable period of time thereafter. Subject to any statutory or regulatory obligations the Company may otherwise have, for purposes of this Plan, 30 days will be considered a reasonable period of time.
|
15.8
|
N
O
F
RACTIONAL
S
HARES
. No fractional shares of Common Stock will be issued or delivered pursuant to the Plan. The Committee will determine whether cash, additional Awards or other securities or property will be issued or paid in lieu of fractional shares of Common Stock or whether any fractional shares should be rounded, forfeited or otherwise eliminated.
|
15.9
|
O
THER
P
ROVISIONS
. The Award Agreements authorized under the Plan may contain such other provisions not inconsistent with this Plan, including, without limitation, restrictions upon the exercise of the Awards, as the Committee may deem advisable.
|
15.10
|
S
ECTION
409A
. The Plan is intended to comply with Code Section 409A to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan will be interpreted and administered to be in compliance therewith. Any payments described in the Plan that are due within the “short-term deferral period” as defined in Code Section 409A will not be treated as deferred compensation unless Applicable Laws require otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required to avoid accelerated taxation and tax penalties under Code Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the 6 month period immediately following the Participant’s termination of Continuous Service will instead be paid on the first payroll date after the six-month anniversary of the Participant’s separation from service (or the Participant’s death, if earlier). Notwithstanding the foregoing, neither the Company nor the Committee has any obligation to take any action to prevent the assessment of any excise tax or penalty on any Participant under Code Section 409A and neither the Company nor the Committee will have any liability to any Participant for such tax or penalty.
|
15.11
|
B
ENEFICIARY
D
ESIGNATION
. Each Participant under the Plan may from time to time name any beneficiary or beneficiaries by whom any right under the Plan is to be exercised in case of such Participant’s death. Each designation will revoke all prior designations by the same Participant, must be in a form reasonably prescribed by the Committee and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime.
|
15.12
|
E
XPENSES
. The costs of administering the Plan will be paid by the Company.
|
15.13
|
S
EVERABILITY
. If any of the provisions of the Plan or any Award Agreement is held to be invalid, illegal or unenforceable, whether in whole or in part, such provision will be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions will not be affected thereby.
|
15.14
|
P
LAN
H
EADINGS
. The headings in the Plan are for purposes of convenience only and are not intended to define or limit the construction of the provisions hereof.
|
15.15
|
N
ON
-U
NIFORM
T
REATMENT
. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who are eligible to receive, or actually receive, Awards. Without limiting the generality of the foregoing, the Committee may make non-uniform and selective determinations, amendments and adjustments, and to enter into non-uniform and selective Award Agreements.
|
1.
|
Precedence of Plan
. This Agreement is subject to and will be construed in accordance with the terms and conditions of the First Interstate BancSystem, Inc. 2015 Equity and Incentive Plan (the “Plan”), as now or hereinafter in effect. Any capitalized terms that are used in this Agreement without being defined and that are defined in the Plan will have the meaning specified in the Plan.
|
2.
|
Grant of Restricted Stock Award
. Participant is hereby granted a Restricted Stock Award of the shares of Common Stock listed on the attached Notice of Restricted Stock Award (the “Shares”). In addition. Participant is granted the right to receive additional shares of Common Stock (the “Additional Shares”) as further provided in this Agreement.
|
3.
|
Vesting
.
|
a.
|
Performance Vesting
. To the extent that the following performance criteria are met over the period January 1, 2018 through December 31, 2020 (the “Performance Period”), the Shares will vest and the Additional Shares will be issued on March 15, 2021 (the “Vesting Date”):
|
i.
|
The proportion of Shares that will vest and Additional Shares that will be issued will be based one-half on the percentile ranking of the Company over the Performance Period, relative to the Comparator Banks, as defined below for each of the following metrics (1) Total Shareholder Return (TSR), and (2) return on average equity (ROAE). ROAE will be calculated as an average of the respective measure for each of the twelve quarters of the Performance Period.
|
ii.
|
“Comparator Banks” for this purpose means banks headquartered in the U.S. that are both (1) traded on NYSE, NYSE MKT or Nasdaq throughout the entire Performance Period; and (2) have total assets between 50% and 200% of the Company’s assets as of the beginning of the Performance Period. The Company itself will not be included in the set of Comparator Banks.
|
iii.
|
The TSR calculation will assume dividends paid during the Performance Period are reinvested in shares of stock.
|
iv.
|
The amount, if any, of Shares vested and Additional Shares issued will be determined as follows:
|
1.
|
If the Company’s percentile Rank is less than 35%, 0% of that portion of the Shares will vest on the Vesting Date and 0% of that portion of the Additional Shares will be issued.
|
2.
|
If the Company's percentile rank is greater than or equal to 35% and less than 50%, between 50% and 100% (the actual amount determined by linear interpolation) of that portion of the Shares will vest on the Vesting Date and 0% of that portion of the Additional Shares will be issued.
|
3.
|
If the Company’s percentile rank is greater than or equal to 50% and less than 75%, 100% of that portion of the Shares will vest on the Vesting Date and between 0% and 100% (the actual amount determined by linear interpolation) of that portion of the Additional Shares will be issued.
|
4.
|
If the Company’s percentile rank is greater than or equal to 75%, 100% of that portion of the Shares will vest on the Vesting Date and 100% of that portion of the Additional Shares will be issued.
|
b.
|
Death or Disability
. If Participant separates from service due to death or disability prior to the Vesting Date, the Participant will be entitled to 100% of the Shares regardless of attainment of the performance criteria and the restrictions on such Shares described in Section 4 will be immediately removed. No Additional Shares will be issued.
|
c.
|
Retirement
. If Participant separates from service due to retirement at or after age 65 prior to the Vesting Date, the Participant will remain entitled to the Shares and Additional Shares, subject to attainment of the performance criteria, on the Vesting Date.
|
d.
|
Dissolution or Reorganization
. As provided in the Plan, if the Company is a party to a Reorganization Event in which the Company is not the surviving corporation, the Restricted Stock Award may be assumed or substituted with substantially equivalent awards by the acquiring or succeeding corporation in the Committee’s discretion. To the extent the Restricted Stock Award is not assumed by the acquiring or succeeding corporation, the Committee may provide that (1) the Restricted Stock Award will vest in whole or in part prior to or upon consummation of the Reorganization Event, or (2) that the Restricted Stock Award will be terminated in exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained upon the realization of the Participant’s rights as of the date of the occurrence of the Reorganization Event (and if as of the date of the occurrence of the Reorganization Event the Committee determines in good faith that no amount would have been attained upon the realization of the Participant’s rights, then such Restricted Stock Award may be terminated by the Company without payment).
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e.
|
Termination of Continuous Service in Connection with Change in Control
. In the event of a Participant’s termination of Continuous Service by the Company without Cause or the Participant’s voluntary termination of Continuous Service for Good Reason during the 24-month period following a Change in Control, then:
|
i.
|
the Shares will vest at the greater of (1) 100%, or (2) the percentage that would vest using actual performance as of the date of the Change in Control, and Additional Shares will be issued if actual performance as of the date of the Change in Control meets the levels set forth above, and
|
ii.
|
all other terms and conditions will be deemed met as of the date of the Participant’s termination of Continuous Service.
|
4.
|
Restrictions and Forfeiture
.
|
a.
|
Restricted Period
. The Shares are subject to the restrictions described in this Section 4 during the period between the Grant Date and Vesting Date (the “Restricted Period”).
|
b.
|
Forfeiture
. Except as provided in paragraphs b, c, d, and e of Section 3 above, in the event that Participant terminates Continuous Service with the Company during the Restricted Period, all of the Shares will be forfeited to the Company as of the date of termination of Continuous Service. In addition, to the extent that any of the performance criteria are not satisfied as of the Vesting Date, any unvested Shares will be forfeited to the Company as of the Vesting Date.
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c.
|
Clawback.
Participant acknowledges and agrees that, if Participant is a reporting person of the Company under Section 16 of the Securities Exchange Act of 1934, as amended, any Shares or Additional Shares issued pursuant to this Agreement are subject to the First Interstate BancSystem Clawback Policy, as amended from time to time (the “Policy”, a current copy of which, if applicable, has been provided), which, among other things, authorizes and empowers the Company to recoup any and all Shares or Additional Shares issued pursuant hereto, to the extent Company deems it necessary or appropriate to comply with laws and regulations regarding compensation recapture, including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. To the extent applicable, Participant hereby agrees to abide by the terms of the Policy.
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5.
|
Stock Register and Certificates
. The Shares and Additional Shares may be issued in book entry form. If so, the Company will cause the transfer agent for the Company’s shares of Common Stock to make a book entry record showing ownership for the Shares in Participant’s name subject to the terms and conditions of this Agreement. Participant will be issued an account statement acknowledging Participant’s ownership of the Shares.
|
6.
|
Rights with Respect to Shares
. Participant has the right to vote the Shares (to the extent of the voting rights of said Shares, if any), and to exercise all other rights, powers and privileges of a holder of Common Stock with respect to the Shares, except as set forth in this Agreement and the Plan.
|
7.
|
Responsibility for Taxes
. Participant may complete and file with the Internal Revenue Service an election in substantially the form attached hereto as
Exhibit A
pursuant to Section 83(b) of the Internal Revenue Code to be taxed currently on the fair market value of the Shares, without regard to the vesting restrictions set forth in this Agreement. Participant will be responsible for all taxes associated with the acceptance of the Restricted Stock Award, including any tax liability associated with the representation of fair market value if the election is made pursuant to Section 83(b).
|
8.
|
General Provisions
.
|
a.
|
Withholding
. Participant must reimburse the Company, in cash, by certified or bank cashier’s check, or any other form of legal payment permitted by the Company for any federal, state or local taxes required by law to be withheld with respect to the vesting of the Shares and the issuance of the Additional Shares. The Company has the right to deduct from any salary or other payments to be made to Participant any federal, state or local taxes required by law to be so withheld. The Company’s obligation to deliver the Shares and Additional Shares upon vesting is subject to the payment by Participant of any applicable federal, state and local withholding tax.
|
b.
|
Data Privacy
. In order to administer the Plan, the Company may process personal data about the Participant. Such data includes, but is not limited to, the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about Participant such as home address and business addresses and other contact information, payroll information and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan. By accepting this grant, Participant gives explicit consent to the Company to process any such personal data.
|
c.
|
Consent to Electronic Delivery
. The Company may choose to deliver certain statutory materials relating to the Plan in electronic form. By accepting this grant, Participant agrees that the Company may deliver the Plan prospectus and the Company’s annual report to Participant in an electronic format. If at any time Participant would prefer to receive paper copies of these documents, as Participant is entitled to, please contact AST Equity Plan Solutions at (201) 460-1200 to request paper copies of these documents.
|
d.
|
Fractions
. To the extent that a fractional number of Shares vest or that the Company is obligated to issue a fractional number of Additional Shares, such number will be rounded down to the nearest whole share number.
|
e.
|
Receipt of Plan
. By entering into this Agreement, Participant acknowledges (i) that he or she has received and read a copy of the Plan and (ii) that this Agreement is subject to and will be construed in accordance with the terms and conditions of the Plan, as now or hereinafter in effect.
|
f.
|
Legends
. Restricted Stock awarded under the Plan will bear a legend in such form as the Company deems appropriate.
|
g.
|
Not an Employment Contract
. This Agreement is not an employment contract and nothing in this Agreement may be deemed to create in any way whatsoever any obligation on the part of Participant to remain in the service of the Company, or of the Company to continue Participant in the service of the Company.
|
h.
|
Further Action
. The parties agree to execute such further instruments and to take such further action as reasonably may be necessary to carry out the intent of this Agreement.
|
i.
|
Interpretation
. The interpretations and constructions of any provision of and determinations on any question arising under the Plan or this Agreement will be made by the Company, and all such interpretations, constructions and determinations will be final and conclusive as to all parties. This Agreement, as issued
|
j.
|
Governing Law; Venue
. This Agreement and the rights and obligations of the parties hereto will be governed by and construed in accordance with the laws of the State of Montana. The parties agree that any action brought by either party to interpret or enforce any provision of the Plan or this Agreement must be brought in, and each party agrees to, and does hereby, submit to the jurisdiction and venue of, the appropriate state or federal court for the District of Montana.
|
By:
|
|
|
|
|
|
|
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Title:
|
President and CEO
|
|
Participant Signature
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Address:
|
401 North 31
st
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|
|
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Billings, MT 59116
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|
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|
|
|
|
|
|
Company Name:
|
First Interstate BancSystem, Inc.
|
|
|
|
|
Plan:
|
2015 Equity and Incentive Plan
|
|
|
|
|
Participant ID:
|
|
|
|
|
|
Participant Name:
|
|
|
|
|
|
Participant Address:
|
|
|
|
|
|
Grant/Award Type:
|
Restricted Stock Award (performance based vesting)
|
|
|
|
|
Grant Award at Target:
|
|
|
|
|
|
Grant/Award Date:
|
|
|
|
|
|
Performance Period:
|
January 1, 2018 through December 31, 2020
|
|
Vesting Date
|
Vesting Percent
|
|
March 15, 2021
|
Based on performance criteria as described in agreement.
|
|
1.
|
Precedence of Plan
. This Agreement is subject to and will be construed in accordance with the terms and conditions of the First Interstate BancSystem, Inc. 2015 Equity and Incentive Plan (the “Plan”), as now or hereinafter in effect. Any capitalized terms that are used in this Agreement without being defined and that are defined in the Plan will have the meaning specified in the Plan.
|
2.
|
Grant of Restricted Stock Benefit
. Participant is hereby granted a Restricted Stock Benefit for the number of shares of Common Stock (the Shares) as noted herein.
|
3.
|
Vesting
.
|
a.
|
Time Vesting
. The Shares will vest in three equal portions, on the first, second and third anniversaries of the Grant Date.
|
b.
|
Death, Disability or Retirement of Participant
. If Participant separates from service due to death, disability, or retirement at or after age 65 prior to the Vesting Date, 100% of the Shares will vest.
|
c.
|
Dissolution or Reorganization
. As provided in the Plan, if the Company is a party to a Reorganization Event in which the Company is not the surviving corporation, the Restricted Stock Grant may be assumed or substituted with substantially equivalent grants by the acquiring or succeeding corporation in the Committee’s discretion. To the extent the Restricted Stock Grant is not assumed by the acquiring or succeeding corporation, the Committee may provide that (1) the Restricted Stock Grant will vest in whole or in part prior to or upon consummation of the Reorganization Event, or (2) that the Restricted Stock Grant will be terminated in exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained upon the realization of the Participant’s rights as of the date of the occurrence of the Reorganization Event (and if as of the date of the occurrence of the Reorganization Event the Committee determines in good faith that no amount would have been attained upon the realization of the Participant’s rights, then such Restricted Stock Grant may be terminated by the Company without payment).
|
d.
|
Termination of Continuous Service in Connection with Change in Control
. In the event of a Participant’s termination of Continuous Service by the Company without Cause or the Participant’s voluntary termination of Continuous Service for Good Reason during the 24-month period following a Change in Control, then 100% of the Shares will vest.
|
4.
|
Restrictions and Forfeiture
.
|
a.
|
Restricted Period
. The Shares are subject to the restrictions described in this Section 4 during the period between the Grant Date and Vesting Date (the “Restricted Period”)
|
b.
|
Forfeiture
. Except as provided in paragraphs b, c, and d of Section 3 above, in the event that Participant terminates Continuous Service with the Company during the Restricted Period, all of the Shares will be forfeited to the Company as of the date of termination of Continuous Service.
|
c.
|
Clawback
. Participant acknowledges and agrees that, if Participant is a reporting person of the Company under Section 16 of the Securities Exchange Act of 1934, as amended, any Shares issued pursuant to this Agreement are subject to the First Interstate BancSystem Clawback Policy, as amended from time to time (the “Policy”, a current copy of which, if applicable, has been provided), which, among other things,
|
5.
|
Stock Register and Certificates
. The Shares may be issued in book entry form. If so, the Company will cause the transfer agent for the Company’s shares of Common Stock to make a book entry record showing ownership for the Shares in Participant’s name subject to the terms and conditions of this Agreement. Participant will be issued an account statement acknowledging Participant’s ownership of the Shares.
|
6.
|
Rights with Respect to Shares
. Participant has the right to vote the Shares (to the extent of the voting rights of said Shares, if any), to receive and retain all regular cash dividends and such other distributions as the Board of Directors of the Company may, in its discretion, designate, pay or distribute on the Shares, and to exercise all other rights, powers and privileges of a holder of Common Stock with respect to the Shares, except as set forth in this Agreement and the Plan.
|
7.
|
Responsibility for Taxes
. Participant may complete and file with the Internal Revenue Service an election in substantially the form attached hereto as
Exhibit A
pursuant to Section 83(b) of the Internal Revenue Code to be taxed currently on the fair market value of the Shares, without regard to the vesting restrictions set forth in this Agreement. Participant will be responsible for all taxes associated with the acceptance of the Restricted Stock Award, including any tax liability associated with the representation of fair market value if the election is made pursuant to Section 83(b).
|
8.
|
General Provisions
.
|
a.
|
Withholding
. Participant must reimburse the Company, in cash, by certified or bank cashier’s check, or any other form of legal payment permitted by the Company for any federal, state or local taxes required by law to be withheld with respect to the vesting of the Shares. The Company has the right to deduct from any salary or other payments to be made to Participant any federal, state or local taxes required by law to be so withheld. The Company’s obligation to deliver the Shares upon vesting is subject to the payment by Participant of any applicable federal, state and local withholding tax.
|
b.
|
Data Privacy
. In order to administer the Plan, the Company may process personal data about the Participant. Such data includes, but is not limited to, the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about Participant such as home address and business addresses and other contact information, payroll information and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan. By accepting this grant, Participant gives explicit consent to the Company to process any such personal data.
|
c.
|
Consent to Electronic Delivery
. The Company may choose to deliver certain statutory materials relating to the Plan in electronic form. By accepting this grant, Participant agrees that the Company may deliver the Plan prospectus and the Company’s annual report to Participant in an electronic format. If at any time Participant would prefer to receive paper copies of these documents, as Participant is entitled to, please contact AST Equity Plan Solutions at (201) 460-1200 to request paper copies of these documents.
|
d.
|
Fractions
. To the extent that a fractional number of Shares vest or that the Company is for any reason obligated to issue a fractional number of Shares, such number will be rounded down to the nearest whole share number.
|
e.
|
Receipt of Plan
. By entering into this Agreement, Participant acknowledges (i) that he or she has received and read a copy of the Plan and (ii) that this Agreement is subject to and will be construed in accordance with the terms and conditions of the Plan, as now or hereinafter in effect.
|
f.
|
Legends
. Restricted Stock granted under the Plan will bear a legend in such form as the Company deems appropriate.
|
g.
|
Not an Employment Contract
. This Agreement is not an employment contract and nothing in this Agreement may be deemed to create in any way whatsoever any obligation on the part of Participant to remain in the service of the Company, or of the Company to continue Participant in the service of the Company.
|
h.
|
Further Action
. The parties agree to execute such further instruments and to take such further action as reasonably may be necessary to carry out the intent of this Agreement.
|
i.
|
Interpretation
. The interpretations and constructions of any provision of and determinations on any question arising under the Plan or this Agreement will be made by the Company, and all such interpretations, constructions and determinations will be final and conclusive as to all parties. This Agreement, as issued pursuant to the Plan, constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, representations and understandings. The invalidity or unenforceability of any provision hereof will in no way affect the validity or enforceability of any other provision hereof. This Agreement may be executed in counterparts, all of which will be deemed to be one and the same instrument, and it is sufficient for each party to have executed at least one, but not necessarily the same, counterpart. The headings contained in this Agreement are for reference purposes only and do not affect the meaning or interpretation of this Agreement in any way.
|
j.
|
Governing Law; Venue
. This Agreement and the rights and obligations of the parties hereto will be governed by and construed in accordance with the laws of the State of Montana. The parties agree that any action brought by either party to interpret or enforce any provision of the Plan or this Agreement must be brought in, and each party agrees to, and does hereby, submit to the jurisdiction and venue of, the appropriate state or federal court for the District of Montana.
|
By:
|
|
|
|
|
|
|
|
Title:
|
President and CEO
|
|
Participant Signature
|
|
|
|
|
Address:
|
401 North 31
st
|
|
|
|
Billings, MT 59116
|
|
|
|
|
|
|
|
|
|
|
1.
|
The name, address and social security number of Participant:______________________________________________
|
2.
|
A description of the property with respect to which the election is being made:
|
4.
|
The restrictions to which the property is subject:
|
5.
|
The fair market value on ___________________, 20________, of the property with respect to
|
6.
|
The amount paid for such property: $___________________.
|
7.
|
A copy of this election has been furnished to the Secretary of the Company pursuant to Treasury Regulations Section 1.83-2(e)(7).
|
|
Signature:
|
|
|
|
|
|
Print Name:
|
|
|
|
|
|
Date:
|
|
Company Name:
|
First Interstate BancSystem, Inc.
|
|
|
Plan:
|
2015 Equity and Incentive Plan
|
|
|
Participant ID:
|
|
|
|
Participant Name:
|
|
|
|
Participant Address:
|
|
|
|
Grant/Award Type:
|
|
|
|
Share Amount:
|
|
|
|
Grant/Award Date:
|
|
|
|
Vesting Date
|
Number of Shares
|
Vest Percent
|
02/15/2019
|
|
33.3333%
|
2/15/2020
|
|
33.3333%
|
2/15/2021
|
|
33.3334%
|
Subsidiary
|
|
State of Incorporation or Jurisdiction of Organization
|
|
Business Name
|
First Interstate Bank
|
|
Montana
|
|
First Interstate Bank
|
FI Statutory Trust I
|
|
Connecticut
|
|
FI Statutory Trust I
|
FI Capital Trust II
|
|
Delaware
|
|
FI Capital Trust II
|
FI Statutory Trust III
|
|
Delaware
|
|
FI Statutory Trust III
|
FI Capital Trust IV
|
|
Delaware
|
|
FI Capital Trust IV
|
FI Statutory Trust V
|
|
Delaware
|
|
FI Statutory Trust V
|
FI Statutory Trust VI
|
|
Delaware
|
|
FI Statutory Trust VI
|
Mountain South, LLC
|
|
Montana
|
|
Mountain South, LLC
|
|
|
|
|
|
|
|
|
|
|
/s/ RSM US LLP
|
|
Des Moines, Iowa
|
February 28, 2018
|
1.
|
I have reviewed this annual report on Form 10-K for the fiscal year ended
December 31, 2017
of First Interstate BancSystem, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ KEVIN P. RILEY
|
Kevin P. Riley
President and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K for the fiscal year ended
December 31, 2017
of First Interstate BancSystem, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ MARCY D. MUTCH
|
Marcy D. Mutch
Executive Vice President and
Chief Financial Officer
|
/s/ KEVIN P. RILEY
|
|
Kevin P. Riley
|
|
President and Chief Executive Officer
|
|
|
|
|
|
/s/ MARCY D. MUTCH
|
|
Marcy D. Mutch
|
|
Executive Vice President and
Chief Financial Officer
|
|