Talmer Bancorp Reports Net Income of $9.44 Million

TROY, Mich. — Talmer Bancorp Inc., holding company of Talmer Bank and Trust, Thursday reported first-quarter net income of $9.44 million, or 13 cents per share and 12 cents per diluted share.

This compares to fourth-quarter net income of $12.50 million, or 16 cents per diluted share, and first-quarter 2014 net income of $38.23 million, or 52 cents per diluted share.

The year-ago quarter “included a $42 million bargain-purchase gain related to the acquisition of Talmer West Bank,” the company noted.

Said the president and CEO, David Provost, in a prepared statement, “We continue to execute our strategic plans to build a leading Midwest community bank. …

“We are pleased with our core operating results and note that our reported earnings were significantly impacted by two substantial non-core items: $3.3 million of transaction and integration-related expenses and a $4.1 million detriment to earnings due to the change in fair value of our loan servicing rights. The negative impact … was approximately seven cents per diluted common share. We expect to see incremental improvement in our core operating efficiency in the second quarter reflecting the success of integrating our two most recent acquisitions [First Huron Corp., parent of Signature Bank, and Talmer West Bank].”

Highlights Talmer cited in its earnings release:

• Net total loans rose by $227.3 million as those of Talmer Bank and Trust grew $245.1 million.
• Total deposits increased $229.7 million to $4.8 billion from the preceding quarter. Total deposit growth included $201.5 million acquired at fair value from Signature Bank.
• Net interest income dropped slightly to $51.0 million, $500,000 less than at the end of the fourth quarter. For the quarter ended March 31, 2014, it was $48.21 million.
• The net interest margin declined 0.09% to $3.80% from Dec. 31, a decline attributed to “the increased negative accretion of the Federal Deposit Insurance Corp. indemnification asset.” Excluding that, Talmer said, the core net interest margin was 3.76% compared to $3.64% for the fourth quarter.
• Noninterest income (fees and commissions) rose $5.6 million during the quarter to $21.4 million. The increase was attributed to “an increase in accelerated discount on acquired loans of $4.5 million and a $3.7 million increase in net gain on sales of loans” from the mortgages its bankers originated during the quarter. The figure for the quarter ended March 31, 2014 was $57.74 million.
• Noninterest expense – wages and benefits, rents, data processing, merger, marketing, professional fees, FDIC premiums, separation compensation – rose $8.5 million during the quarter to $56.60 million. Talmer attributed the rise to integration-related expenses from its acquisition of First of Huron, an increase of $2.2 million in repossessed real estate and operating expenses related to Signature Bank. Noninterest expense for the year-ago quarter was $65.45 million.

Key performance ratios for the quarters ended March 31 and Dec. 31 and March 31, 2014:

• Return on average assets, 0.62%, 0.85%, 2.75%.
• Return on average equity, 4.97%, 6.63%, 22.15%.
• Net interest margin (fully taxable equivalent), 3.80%, 3.89%, 3.95%.
• Core efficiency ratio, 68.60%, 67.09%, 82.12%.

SOURCE: Talmer Bancorp Inc.

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