Talmer Reports 4Q Net Income of $12.5 Million

TROY, Mich. — Talmer Bancorp Inc., holding company of Talmer Bank and Trust, reports fourth-quarter net income of $12.5 million, or 16 cents per diluted share, and full-year net income of $90.85 million, or $1.30 a share.

These figures compare to third-quarter net income of $19.52 million, or 26 cents per share, fourth-quarter 2013 income of $12.55 million, or 18 cents a share, and full-year 2013 income of $98.56 million, or $1.41 per diluted share.

Talmer attributed the decline in net income for the quarter ended Dec. 31 from the preceding quarter to “a third-quarter benefit of a $14.4 million gain on sales of branches partially offset by a $3.2 million decrease in total noninterest expense.”

Talmer announced that its board of directors declared a cash dividend of a penny per share of its Class A common stock payable Feb. 20 to its shareholders of record Feb. 9.

In a prepared statement, the president and CEO, David Provost, said, “We are pleased at our consistent progress in substantially improving our core operating efficiency and sustaining strong organic loan growth. Looking forward, our lending pipelines are strong and we plan to make further incremental improvements in our operating efficiency in early 2015 given the anticipated first-quarter completion of First of Huron Corp. …”

Key performance ratios for the quarters ended Dec. 31, Sept. 30 and Dec. 31, 2013:

• Return on average assets, 0.85%, 1.36%, 1.08%.
• Return on average equity, 6.63%, 10.56%, 8.24%.
• Net interest margin (fully taxable equivalent, using a 35% rate), 3.89%, 4.05%, 3.72%.
• Core efficiency ratio, 67.09%, 70.81%, 88.22%.

Net interest income was $2.99 million compared to $1.51 million the preceding quarter and $3.25 million the same quarter a year ago. Noninterest income (includes deposit fees, mortgage banking and other fees, net gains on sale of loans) over the same periods was $15.83 million, $29.97 million and $6.58 million respectively.

The decrease from the third quarter was attributed “primarily [to] the result of a $14.4 million gain on sales of our Wisconsin branches and our single branch in New Mexico recognized in the third quarter.”

Talmer distinguished between the efficiency ratio and core efficiency ratio. “The efficiency ratio is a measure of noninterest expense as a percent of net interest income and noninterest income,” the company explains. “The fourth-quarter core efficiency ratio begins with the efficiency ratio and then excludes certain items management deems not related to regular operations [such as] the fair-value adjustment to our loan servicing rights of $3.7 million, transaction and integration-related costs o $329,000 and the FDIC loss-sharing income of $244,000.”

The company said it’s surpassed its goal of getting its core efficiency ratio below 70% by the fourth quarter.

Total deposits rose $63.3 million during the last quarter to $4.5 billion, Talmer reported.

Noninterest expense (includes wages and benefits, data processing, rents, marketing, legal fees and Federal Deposit Insurance Corp. premiums) fell to $48.1 million from $51.26 million the previous quarter and $53.01 million the year-ago quarter. Said Talmer, “The decline primarily reflects decreases in salaries and employee benefits of $4.2 million, occupancy and equipment expense of $1.1 million and data processing fees of $821,000 …”

On its credit quality, Talmer increased its total net provision for loan losses by $1.5 million to $3 million for the fourth quarter. Its asset quality ratios remain steady. Net charge-offs to average loans, excluding covered loans, fell to 0.18% from 0.25% the third quarter.

Nonperforming assets as a percentage of total assets were 1.78% at Dec. 31 compared to 1.73% at Sept. and 1.55% at Dec. 31, 2013. Nonperforming loans as a percentage of total loans were 1.34%, 1.38% and 1.40% at the same dates.

“All of our acquired loan portfolios are continuing to perform significantly better than initially anticipated,” said Talmer, which has grown basically by acquiring troubled or failing banks. It credited this development to an improving economy “and the efforts made by our special-assets [loan workout] team that manages our acquired loan portfolios,” who, among other things, restructure loans so more of what’s owed can be repaid.

SOURCE: Talmer Bancorp Inc.

Published by The Business Journal, Youngstown, Ohio.

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