BancorpSouth Reports Record Annual Earnings; Declares Quarterly Dividend

PRNewswire 23-Jan-2019 4:30 PM

TUPELO, Miss., Jan. 23, 2019 /PRNewswire/ -- BancorpSouth Bank (NYSE:BXS) (the "Company") today announced financial results for the quarter and year ended December 31, 2018.

Annual highlights for 2018 included:

• Record net income of $221.3 million, or $2.23 per diluted share.
      
• Net interest margin – excluding accretable yield – increased to 3.64 percent from 3.54 percent for 2017.
    
• Improvement in cost structure; operating efficiency ratio – excluding mortgage servicing rights ("MSR") – improved to 66.6 percent compared to 67.8 percent for 2017.
    
• Continued strong credit quality reflected by provision for credit losses of $4.5 million for the year; net charge-offs of $2.6 million for 2018, which represents 0.02 percent of average loans.
     
• Recognized a one-time tax benefit of $11.3 million, or $0.11 per diluted share, as a result of a voluntary contribution to the Company's pension plan as well as a tax accounting method change related to the recognition of certain software development costs.
    
• Net operating income – excluding MSR – of $220.7 million, or $2.23 per diluted share, which represents an increase of 34.3 percent on a per share basis compared to 2017.
    
• Completed mergers with Central Community Corporation, Ouachita Bancshares Corp., and Icon Capital Corporation – collectively contributing $1.9 billion in loans and $2.5 billion in deposits.
    
• Repurchased 6 million shares of outstanding common stock at a weighted average price of $31.19 per share.

Highlights for the fourth quarter of 2018 included:

• Reported quarterly net income of $47.1 million, or $0.47 per diluted share.
    
• Earnings were impacted by a negative pre-tax MSR valuation adjustment of $8.1 million.
   
• Completed operational integration of Icon Capital Corporation merger; recorded merger-related expenses of $4.5 million for the quarter.
    
• Net operating income – excluding MSR – of $56.4 million, or $0.57 per diluted share, which represents an increase of 39.0 percent on a per share basis compared to the fourth quarter of 2017.
    
• Net interest margin – excluding accretable yield – increased to 3.71 percent compared with 3.62 percent for the third quarter of 2018.
    
• Announced the signing of definitive merger agreements with Casey Bancorp, Inc., the parent company of Grand Bank of Texas, and Merchants Trust, Inc., the parent company of Merchants Bank.
    
• Repurchased approximately 3 million shares of outstanding common stock at a weighted average price of $30.22 per share.

The Company reported net income of $47.1 million, or $0.47 per diluted share, for the fourth quarter of 2018 compared with net income of $37.5 million, or $0.41 per diluted share, for the fourth quarter of 2017 and net income of $66.7 million, or $0.67 per diluted share, for the third quarter of 2018.  The Company reported net operating income – excluding MSR – of $56.4 million, or $0.57 per diluted share, for the fourth quarter of 2018 compared with $36.8 million, or $0.41 per diluted share, for the fourth quarter of 2017 and $55.0 million, or $0.56 per diluted share, for the third quarter of 2018. 

Additionally, the Company reported net income of $221.3 million, or $2.23 per diluted share, for the year ended December 31, 2018 compared with $153.0 million, or $1.67 per diluted share, for the year ended December 31, 2017.  The Company reported net operating income – excluding MSR – of $220.7 million, or $2.23 per diluted share, for the year ended December 31, 2018 compared with $152.0 million, or $1.66 per diluted share, for the year ended December 31, 2017. 

Net operating income – excluding MSR – is a non-GAAP financial measure used by management to assess the core operating performance of the Company.  This measure excludes items such as recognized securities gains and losses, MSR valuation adjustments, restructuring charges, merger-related expenses, and other one-time charges. 

At its regular quarterly meeting today, the Board of Directors of the Company declared a quarterly cash dividend of $0.17 per share of common stock.  The dividend is payable April 1, 2019 to shareholders of record at the close of business on March 15, 2019.

"The financial results for 2018 reflect several meaningful accomplishments achieved by our team through continued hard work and dedication," remarked Dan Rollins, BancorpSouth Chairman and Chief Executive Officer.  "Our earnings for the year are a record for our Company, both in terms of net income of $221.3 million and diluted earnings per share of $2.23, which represents an increase of over 30 percent on a per share basis.  Additionally, our Company exceeded $18 billion in total assets for the first time in our history.  This growth was achieved through continued organic loan growth combined with the closing and integration of the first three bank transactions that our Company has completed since 2007.  We were particularly pleased with our ability to achieve approximately 10 percent organic loan growth in Texas."

"Most recently, we closed the merger with Icon Capital Corporation effective October 1, 2018 and completed the operational systems integration later in the fourth quarter.  This growth, combined with a continued focus on controlling expenses, aided us in improving our operating efficiency ratio – excluding MSR – to 66.6 percent for 2018.   Additionally, we reported an increase in our net interest margin for the year while maintaining stable credit quality.  Finally, in addition to the capital deployed in our growth efforts, we repurchased 6 million shares of our Company's stock during the year."

"As we look specifically at fourth quarter results, the story and accomplishments are a microcosm of our annual results.  First, we are excited about the recent transaction announcements with Merchants Bank and Grand Bank of Texas.  We are optimistic about the value they will add to our bank and we look forward to having them formally join our team in 2019.  As we look at our financial results for the quarter, we are pleased to report another record quarter of net operating income – excluding MSR – which increased to $0.57 per share compared to $0.56 per share for the third quarter of 2018 despite seasonal quarterly headwinds associated with several of our product offerings.  The increase in earnings was achieved largely through improvement in our net interest margin – excluding accretable yield – which increased to 3.71 percent for the fourth quarter compared to 3.62 percent for the third quarter of 2018.   Finally, of the 6 million shares repurchased during 2018, approximately 3 million were repurchased during the fourth quarter."

Net Interest Revenue

Net interest revenue was $152.9 million for the fourth quarter of 2018, an increase of 25.9 percent from $121.4 million for the fourth quarter of 2017 and an increase of 7.6 percent from $142.1 million for the third quarter of 2018.  The fully taxable equivalent net interest margin was 3.80 percent for the fourth quarter of 2018 compared with 3.58 percent for the fourth quarter of 2017 and 3.67 percent for the third quarter of 2018.  Yields on net loans and leases were 4.94 percent for the fourth quarter of 2018 compared with 4.36 percent for the fourth quarter of 2017 and 4.72 percent for the third quarter of 2018, while yields on total interest earning assets were 4.45 percent for the fourth quarter of 2018 compared with 3.90 percent for the fourth quarter of 2017 and 4.21 percent for the third quarter of 2018.  The net interest margin, excluding accretable yield, was 3.71 percent for the fourth quarter of 2018 compared with 3.62 percent for the third quarter of 2018 while yields on net loans and leases, excluding accretable yield, were 4.83 percent for the fourth quarter of 2018 compared with 4.64 percent for the third quarter of 2018.  Purchase accounting accretion did not impact the net interest margin or net loan and lease yields for the fourth quarter of 2017.  The average cost of deposits was 0.52 percent for the fourth quarter of 2018 compared with 0.27 percent for the fourth quarter of 2017 and 0.43 percent for the third quarter of 2018.

Asset, Deposit and Loan Activity

Total assets were $18.0 billion at December 31, 2018 compared with $15.3 billion at December 31, 2017.  Loans and leases, net of unearned income, were $13.1 billion at December 31, 2018 compared with $11.1 billion at December 31, 2017.  Total deposits were $14.1 billion at December 31, 2018 compared with $11.9 billion at December 31, 2017.  These balance sheet comparisons include the impact of the acquisitions of Central Community Corporation and Ouachita Bancshares Corp., each of which closed effective January 15, 2018, and the acquisition of Icon Capital Corporation, which closed effective October 1, 2018.  Balance sheet totals for these three banks at the time of closing are disclosed in the "Transactions" section of this news release.

Provision for Credit Losses and Allowance for Credit Losses

Earnings for the fourth quarter of 2018 reflect a provision for credit losses of $1.0 million, compared with a provision of $0.5 million for the fourth quarter of 2017 and no provision for the third quarter of 2018.  Net charge-offs for the fourth quarter of 2018 were $1.9 million, compared with net charge-offs of $1.8 million for the fourth quarter of 2017 and net recoveries of $1.1 million for the third quarter of 2018.  The allowance for credit losses was $120.1 million, or 0.92 percent of net loans and leases, at December 31, 2018, compared with $118.2 million, or 1.07 percent of net loans and leases, at December 31, 2017 and $121.0 million, or 0.97 percent of net loans and leases, at September 30, 2018.  The allowance for credit losses coverage metrics were impacted by loans acquired in the acquisitions that closed during the first and fourth quarters of 2018.

Total non-performing assets were $106.0 million, or 0.81 percent of net loans and leases, at December 31, 2018 compared with $84.5 million, or 0.76 percent of net loans and leases, at December 31, 2017, and $70.3 million, or 0.56 percent of net loans and leases, at September 30, 2018.  Other real estate owned was $9.3 million at December 31, 2018 compared with $6.0 million at December 31, 2017 and $4.3 million at September 30, 2018.  Increases within each of these balances compared to the third quarter of 2018 were primarily due to loans acquired during the fourth quarter.

Noninterest Revenue

Noninterest revenue was $59.0 million for the fourth quarter of 2018, compared with $63.1 million for the fourth quarter of 2017 and $71.6 million for the third quarter of 2018.  These results include a negative MSR valuation adjustment of $8.1 million for the fourth quarter of 2018, compared with a positive MSR valuation adjustment of $2.4 million for the fourth quarter of 2017 and a positive MSR valuation adjustment of $1.5 million for the third quarter of 2018.  Valuation adjustments in the MSR asset are driven primarily by fluctuations in interest rates period over period.   

Excluding the MSR valuation adjustment, mortgage banking revenue was $4.8 million for the fourth quarter of 2018, compared with $4.9 million for the fourth quarter of 2017 and $5.0 million for the third quarter of 2018.  Mortgage origination volume for the fourth quarter of 2018 was $305.0 million, compared with $308.4 million for the fourth quarter of 2017 and $384.8 million for the third quarter of 2018.  Of the total mortgage origination volume for the fourth quarter of 2018, $47.3 million was portfolio loans, compared with $48.1 million for the fourth quarter of 2017 and $95.4 million for the third quarter of 2018.

Credit card, debit card, and merchant fee revenue was $9.9 million for the fourth quarter of 2018, compared with $9.5 million for the fourth quarter of 2017 and $9.9 million for the third quarter of 2018.  Deposit service charge revenue was $11.7 million for the fourth quarter of 2018, compared with $10.3 million for the fourth quarter of 2017 and $11.3 million for the third quarter of 2018.  Wealth management revenue was $5.5 million for the fourth quarter of 2018, compared with $5.6 million for the fourth quarter of 2017 and $6.0 million for the third quarter of 2018.  Other noninterest revenue was $7.0 million for the fourth quarter of 2018, compared with $4.1 million for the fourth quarter of 2017 and $6.3 million for the third quarter of 2018.

Insurance commission revenue was $28.0 million for the fourth quarter of 2018, compared with $25.8 million for the fourth quarter of 2017 and $31.7 million for the third quarter of 2018.  New accounting guidance, which became effective January 1, 2018, impacted the Company's accounting for insurance commission revenue.  Previously, contingent commissions were recognized as revenue in the period of receipt; however, under the new guidance, the Company is required to estimate and accrue for contingent commissions throughout the year.  While this guidance impacted the comparability of quarterly results, annual results were not impacted.  For the year, insurance commission revenue increased 2.8 percent from $118.4 million for 2017 to $121.8 million for 2018.

Noninterest Expense

Noninterest expense for the fourth quarter of 2018 was $152.3 million, compared with $125.9 million for the fourth quarter of 2017 and $142.4 million for the third quarter of 2018.  Salaries and employee benefits expense was $92.0 million for the fourth quarter of 2018 compared with $77.3 million for the fourth quarter of 2017 and $89.6 million for the third quarter of 2018.  Occupancy expense was $12.1 million for the fourth quarter of 2018, compared with $10.1 million for the fourth quarter of 2017 and $11.7 million for the third quarter of 2018.  Other noninterest expense was $42.5 million for the fourth quarter of 2018, compared with $32.2 million for the fourth quarter of 2017 and $34.1 million for the third quarter of 2018.  Additionally, merger-related expense for the fourth quarter of 2018 was $4.5 million, compared with merger-related expense of $0.7 million for the fourth quarter of 2017 and $0.9 million for the third quarter of 2018. 

Income Tax Expense

Income tax expense for the third quarter of 2018 included a one-time tax benefit of $11.3 million as a result of a voluntary contribution to the Company's pension plan as well as a tax accounting method change related to the recognition of certain software development costs. 

Capital Management

The Company's equity capitalization is comprised entirely of common stock.  The Company's ratio of shareholders' equity to assets was 12.25 percent at December 31, 2018, compared with 11.20 percent at December 31, 2017 and 12.27 percent at September 30, 2018.  The ratio of tangible shareholders' equity to tangible assets was 8.46 percent at December 31, 2018, compared with 9.31 percent at December 31, 2017 and 8.96 percent at September 30, 2018.

During the fourth quarter of 2018, the Company repurchased 2,973,416 shares of its outstanding common stock at a weighted average price of $30.22 per share pursuant to its share repurchase program which is intended to comply with Rules 10b-18 and 10b5-1 promulgated under the Securities and Exchange Act of 1934, as amended.  For the full year 2018, the Company repurchased 6,000,000 shares of its outstanding common stock at a weighted average price of $31.19 per share.  As of December 31, 2018, the Company had 3,000,000 remaining shares available for repurchase under its current share repurchase authorization, which expires on December 31, 2019.  

Estimated regulatory capital ratios at December 31, 2018 were calculated in accordance with the Basel III capital framework.  The Company is a "well capitalized" bank, as defined by federal regulations, at December 31, 2018, with Tier 1 risk-based capital of 10.85 percent and total risk-based capital of 11.68 percent, compared with required minimum levels of 8 percent and 10 percent, respectively, in order to qualify for "well capitalized" classification. 

Summary

Rollins concluded, "We are very pleased with the progress we made as a company in 2018.  While the benefits associated with the Tax Cuts and Jobs Act of 2017 contributed to the improvement in many of our return metrics and also impacted comparability to prior periods, we saw improvement in many other fundamental operating metrics as well.  As expected, we reported a meaningful increase in our net interest margin, which contributed to the growth in our net interest income.  Stable credit quality, including a low level of net charge-offs, resulted in a modest provision for credit losses of $4.5 million for the year.  Finally, our efforts to continue to improve our cost structure are evident in the improvement in our operating efficiency.   As we look to 2019, our focus will remain much the same.  We continue to emphasize the importance of organic growth to our team while also looking for additional strategic opportunities.  We will also work to take the steps necessary to complete our two pending merger transactions while working to realize additional cost savings associated with the merger transactions we closed in 2018.   Most importantly, we will focus on continuing to manage and deploy capital in a manner that maximizes value for our shareholders."

TRANSACTIONS

Casey Bancorp, Inc.

On November 13, 2018, the Company announced the signing of a definitive merger agreement ("Grand Bank Merger Agreement") with Casey Bancorp, Inc. and its wholly owned subsidiary, Grand Bank of Texas, (collectively referred to as "Grand Bank"), pursuant to which Grand Bank agreed to be merged with and into the Company (the "Grand Bank Merger").  Grand Bank operates 4 full-service banking offices in the cities of Dallas, Grand Prairie, Horseshoe Bay and Marble Falls, all in Texas.  As of December 31, 2018, Grand Bank, on a consolidated basis, reported total assets of $344.0 million, total loans of $256.6 million and total deposits of $314.7 million.  Under the terms of the Grand Bank Merger Agreement, the Company expects to issue approximately 1,275,000 shares of the Company's common stock plus $11.0 million in cash for all outstanding shares of Casey Bancorp, Inc.'s capital stock.  For more information regarding the Grand Bank Merger, see our Current Report on Form 8-K that was filed with the Federal Deposit Insurance Corporation ("FDIC") on November 13, 2018.  The Grand Bank Merger Agreement has been unanimously approved by the Boards of Directors of both the Company and Grand Bank. Grand Bank has agreed to convene a meeting of its shareholders to vote upon the approval of the Grand Bank Merger Agreement. Subject to the satisfaction of all closing conditions, including the receipt of all required regulatory approvals, the Grand Bank Merger is expected to be completed during the first half of 2019, although the Company can provide no assurance that the merger will close during this time period or at all.

Merchants Trust, Inc.

On November 13, 2018, the Company announced the signing of a definitive merger agreement ("Merchants Merger Agreement") with Merchants Trust, Inc. and its wholly owned subsidiary, Merchants Bank, (collectively referred to as "Merchants"), pursuant to which Merchants agreed to be merged with and into the Company (the  "Merchants Merger").  Merchants, which is based in Jackson, Alabama, operates 6 full-service banking offices in Clarke and Mobile counties in Alabama.  As of December 31, 2018, Merchants, on a consolidated basis, reported total assets of $219.1 million, total loans of $152.9 million and total deposits of $192.3 million.  Under the terms of the Merchants Merger Agreement, the Company expects to issue approximately 950,000 shares of the Company's common stock plus $8.0 million in cash for all outstanding shares of Merchants Trust, Inc.'s capital stock.  For more information regarding the Merchants Merger, see our Current Report on Form 8-K that was filed with the FDIC on November 13, 2018.  The Merchants Merger Agreement has been unanimously approved by the Boards of Directors of both the Company and Merchants. Merchants has agreed to convene a meeting of its shareholders to vote upon the approval of the Merchants Merger Agreement. Subject to the satisfaction of all closing conditions, including the receipt of all required regulatory approvals, the Merchants Merger is expected to be completed during the first half of 2019, although the Company can provide no assurance that the merger will close during this time period or at all.

Icon Capital Corporation

Effective October 1, 2018, the Company completed the merger with Icon Capital Corporation and its wholly owned subsidiary, Icon Bank of Texas, National Association (collectively referred to as "Icon"), pursuant to which Icon was merged with and into the Company (the "Icon Merger").  Icon was headquartered in Houston, Texas and operated 7 full-service banking offices in the Houston, Texas metropolitan area.  As of October 1, 2018, Icon, on a consolidated basis, reported total assets of $760.4 million, total loans of $650.4 million and total deposits of $675.8 million.  Under the terms of the definitive merger agreement, the Company issued approximately 4,125,000 shares of the Company's common stock plus $17.5 million in cash, $7 million of which was placed in a separate non-interest bearing escrow account that is to be paid if certain conditions are met, as described in the Current Report on Form 8-K filed with the FDIC on October 1, 2018, for all outstanding shares of Icon Capital Corporation's capital stock.  For more information regarding the Icon Merger, see our Current Report on Form 8-K that was filed with the FDIC on October 1, 2018.  The purchase accounting for this transaction is considered provisional as management continues to identify and assess information regarding the nature of the acquired assets and liabilities and reviews the associated valuation assumptions and methodologies.

Central Community Corporation

Effective January 15, 2018, the Company completed the merger with Central Community Corporation ("CCC"), headquartered in Temple, Texas, pursuant to which CCC merged with and into the Company (the "CCC Merger").  CCC was the parent company of First State Bank Central Texas ("First State Bank"), which was headquartered in Austin, Texas.  First State Bank operated 31 full-service banking offices in central Texas.  As of January 15, 2018, CCC, on a consolidated basis, reported total assets of $1.4 billion, total loans of $712.2 million and total deposits of $1.2 billion.  Under the terms of the definitive merger agreement, the Company issued approximately 7,250,000 shares of the Company's common stock plus $28.5 million in cash for all outstanding shares of CCC's capital stock.  For more information regarding the CCC Merger, see our Current Report on Form 8-K that was filed with the FDIC on January 16, 2018.  The purchase accounting for this transaction is considered provisional as management continues to identify and assess information regarding the nature of the acquired assets and liabilities and reviews the associated valuation assumptions and methodologies.

Ouachita Bancshares Corp.

Effective January 15, 2018, the Company completed the merger with Ouachita Bancshares Corp., parent company of Ouachita Independent Bank (collectively referred to as "OIB"), headquartered in Monroe, Louisiana, pursuant to which OIB was merged with and into the Company (the "OIB Merger").  OIB operated 11 full-service banking offices along the I-20 corridor and had a loan production office in Madison, Mississippi.  As of January 15, 2018, OIB, on a consolidated basis, reported total assets of $707.1 million, total loans of $495.6 million and total deposits of $653.4 million.  Under the terms of the definitive merger agreement, the Company issued approximately 3,675,000 shares of the Company's common stock plus $22.875 million in cash for all outstanding shares of Ouachita Bancshares Corp.'s capital stock.  For more information regarding the OIB Merger, see our Current Report on Form 8-K that was filed with the FDIC on January 16, 2018.  The purchase accounting for this transaction is considered provisional as management continues to identify and assess information regarding the nature of the acquired assets and liabilities and reviews the associated valuation assumptions and methodologies.

Non-GAAP Measures and Ratios

This news release presents certain financial measures and ratios that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP").  A discussion regarding these non-GAAP measures and ratios, including reconciliations of non-GAAP measures to the most directly comparable GAAP measures and definitions for non-GAAP ratios, appears under the caption "Reconciliation of Non-GAAP Measures and Other Non-GAAP Ratio Definitions"  beginning on page 23 of this news release.

Conference Call and Webcast

The Company will conduct a conference call to discuss its fourth quarter and year end 2018 financial results on January 24, 2019, at 10:00 a.m. (Central Time).  This conference call will be an interactive session between management and analysts. Shareholders and other interested parties may listen to this live conference call via Internet webcast by accessing www.BancorpSouth.investorroom.com/Webcasts. The webcast will also be available in archived format at the same address.

About BancorpSouth Bank

BancorpSouth Bank (NYSE:BXS) is headquartered in Tupelo, Mississippi, with approximately $18 billion in assets.  BancorpSouth operates approximately 285 full service branch locations as well as additional mortgage, insurance, and loan production offices in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas, including an insurance location in Illinois.  BancorpSouth is committed to a culture of respect, diversity, and inclusion in both its workplace and communities. To learn more, visit our Community Commitment page at www.bancorpsouth.com.  Like us on Facebook; follow us on Twitter: @MyBXS; or connect with us through LinkedIn.

Forward-Looking Statements

Certain statements contained in this news release may not be based upon historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward- looking statements may be identified by their reference to a future period or periods or by the use of forward-looking terminology such as "anticipate," "believe," "could," "estimate," "expect," "foresee," "hope," "intend," "may," "might," "plan," "will," or "would" or future or conditional verb tenses and variations or negatives of such terms. These forward-looking statements include, without limitation, those relating to the benefits, costs, synergies and financial and operational impact of the Icon, CCC, OIB, Grand Bank and Merchants mergers on the Company, the acceptance by customers of Icon, CCC, OIB, Grand Bank and Merchants of the Company's products and services after the closing of the mergers, the opportunities to enhance market share in certain markets and market acceptance of the Company generally in new markets, the Company's ability to operate its regulatory compliance programs consistent with federal, state and local laws, including its Bank Secrecy Act ("BSA") and anti-money laundering ("AML") compliance program and its fair lending compliance program, the Company's compliance with the consent order it entered into with the Consumer Financial Protection Bureau and the United States Department of Justice related to the Company's fair lending practices (the "Consent Order"), the impact of the Tax Cuts and Jobs Act of 2017 on the Company and its operations and financial performance, amortization expense for intangible assets, goodwill impairments, loan impairment, utilization of appraisals and inspections for real estate loans, maturity, renewal or extension of construction, acquisition and development loans, net interest revenue, fair value determinations, the amount of the Company's non-performing loans and leases, credit quality, credit losses, liquidity, off-balance sheet commitments and arrangements, valuation of mortgage servicing rights, allowance and provision for credit losses, early identification and resolution of credit issues, utilization of non-GAAP financial measures, the ability of the Company to collect all amounts due according to the contractual terms of loan agreements, the Company's reserve for losses from representation and warranty obligations, the Company's foreclosure process related to mortgage loans, the resolution of non-performing loans that are collaterally dependent, real estate values, fully-indexed interest rates, interest rate risk, interest rate sensitivity, the impact of interest rates on loan yields, calculation of economic value of equity, impaired loan charge-offs, diversification of the Company's revenue stream, the growth of the Company's insurance business and commission revenue, the growth of the Company's customer base and loan, deposit and fee revenue sources, liquidity needs and strategies, sources of funding, net interest margin, declaration and payment of dividends, the utilization of the Company's share repurchase program, the implementation and execution of cost saving initiatives, improvement in the Company's efficiencies, operating expense trends, future acquisitions, dispositions and other strategic growth opportunities and initiatives and the impact of certain claims and ongoing, pending or threatened litigation, administrative and investigatory matters.

The Company cautions readers not to place undue reliance on the forward-looking statements contained in this news release, in that actual results could differ materially from those indicated in such forward-looking statements as a result of a variety of factors. These factors may include, but are not limited to, the Company's ability to operate its regulatory compliance programs consistent with federal, state and local laws, including its BSA/AML compliance program and its fair lending compliance program, the Company's ability to successfully implement and comply with the Consent Order, the ability of the Company to meet expectations regarding the benefits, costs, synergies, and financial and operational impact of the Icon, CCC, OIB, Grand Bank and Merchants mergers, the possibility that any of the anticipated benefits, costs, synergies and financial and operational improvements of the Icon, CCC, OIB, Grand Bank and Merchants mergers will not be realized or will not be realized as expected, the ability of the Company and Grand Bank and Merchants to complete the Grand Bank Merger and Merchants Merger, the ability of the Company and Grand Bank and Merchants to satisfy the conditions to the completion of the Grand Bank Merger and Merchants Merger, including the approval of the merger transaction by Grand Bank's shareholders and Merchants' shareholders and the receipt of all regulatory approvals required for the Grand Bank Merger and Merchants Merger on the terms expected in the Grand Bank Merger Agreement and the Merchants Merger Agreement, the ability of the Company and Grand Bank and Merchants to meet expectations regarding the timing, completion and accounting and tax treatments of the Grand Bank Merger and Merchants Merger, the possibility that any of the anticipated benefits of the Grand Bank Merger and Merchants Merger will not be realized or will not be realized as expected, the failure of the Grand Bank Merger or Merchants Merger to close for any other reason, the effect of any announcements regarding the Grand Bank Merger or Merchants Merger on the Company's operating results, the possibility that the Grand Bank Merger and Merchants Merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events, the lack of availability of the Company's filings mandated by the Exchange Act from the SEC's publicly available website after November 1, 2017, the impact of any ongoing pending or threatened litigation, administrative and investigatory matters involving the Company, conditions in the financial markets and economic conditions generally, the adequacy of the Company's provision and allowance for credit losses to cover actual credit losses, the credit risk associated with real estate construction, acquisition and development loans, limitations on the Company's ability to declare and pay dividends, the availability of capital on favorable terms if and when needed, liquidity risk, governmental regulation, including the Dodd-Frank Act, and supervision of the Company's operations, the short-term and long-term impact of changes to banking capital standards on the Company's regulatory capital and liquidity, the impact of regulations on service charges on the Company's core deposit accounts,  the susceptibility of the Company's business to local economic and environmental conditions, the soundness of other financial institutions, changes in interest rates, the impact of monetary policies and economic factors on the Company's ability to attract deposits or make loans, volatility in capital and credit markets, reputational risk, the impact of the Tax Cuts and Jobs Act of 2017 on the Company and its operations and financial performance, the impact of the loss of any key Company personnel, the impact of hurricanes or other adverse weather events, any requirement that the Company write down goodwill or other intangible assets, diversification in the types of financial services the Company offers, the growth of the Company's insurance business and commission revenue, the growth of the Company's loan, deposit and fee revenue sources, the Company's ability to adapt its products and services to evolving industry standards and consumer preferences, competition with other financial services companies, risks in connection with completed or potential acquisitions, dispositions and other strategic growth opportunities and initiatives, the Company's growth strategy, interruptions or breaches in the Company's information system security, the failure of certain third-party vendors to perform, unfavorable ratings by rating agencies, dilution caused by the Company's issuance of any additional shares of its common stock to raise capital or acquire other banks, bank holding companies, financial holding companies and insurance agencies, the utilization of the Company's share repurchase program, the implementation and execution of cost saving initiatives, other factors generally understood to affect the assets, business, cash flows, financial condition, liquidity, prospects and/or results of operations of financial services companies and other factors detailed from time to time in the Company's press and news releases, reports and other filings with the FDIC. Forward-looking statements speak only as of the date that they were made, and, except as required by law, the Company does not undertake any obligation to update or revise forward-looking statements to reflect events or circumstances that occur after the date of this news release.