HOME BANCSHARES INC - Quarter Report: 2018 September (Form 10-Q)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 10-Q

 

 

(Mark One)

☑	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2018

or

 

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition period from                  to                 

Commission File Number: 000-51904

 

 

HOME BANCSHARES, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Arkansas		71-0682831
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

719 Harkrider, Suite 100, Conway, Arkansas		72032
(Address of principal executive offices)		(Zip Code)

(501) 339-2929

(Registrant’s telephone number, including area code)

Not Applicable

Former name, former address and former fiscal year, if changed since last report

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ☑    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ☑    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer		☑		Accelerated filer		☐
Non-accelerated filer		☐		Smaller reporting company		☐
				Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☑

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practical date.

Common Stock Issued and Outstanding: 172,932,360 shares as of November 2, 2018.

 

 

 

HOME BANCSHARES, INC.

FORM 10-Q

September 30, 2018

INDEX

 

				Page No.
Part I:		Financial Information
Item 1:		Financial Statements
		Consolidated Balance Sheets – September  30, 2018 (Unaudited) and December 31, 2017			4
		Consolidated Statements of Income (Unaudited) – Three and nine months ended September 30, 2018 and 2017			5
		Consolidated Statements of Comprehensive Income (Unaudited) – Three and nine months ended September 30, 2018 and 2017			6
		Consolidated Statements of Stockholders’ Equity (Unaudited) – Nine months ended September 30, 2018 and 2017			6
		Consolidated Statements of Cash Flows (Unaudited) – Nine months ended September 30, 2018 and 2017			7
		Condensed Notes to Consolidated Financial Statements (Unaudited)			8-52
		Report of Independent Registered Public Accounting Firm			53
Item 2:		Management’s Discussion and Analysis of Financial Condition and Results of Operations			54-91
Item 3:		Quantitative and Qualitative Disclosures About Market Risk			91-94
Item 4:		Controls and Procedures			94
Part II:		Other Information
Item 1:		Legal Proceedings			94
Item 1A:		Risk Factors			95
Item 2:		Unregistered Sales of Equity Securities and Use of Proceeds			95
Item 3:		Defaults Upon Senior Securities			95
Item 4:		Mine Safety Disclosures			95
Item 5:		Other Information			95
Item 6:		Exhibits			95-97
Signatures					98

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of our statements contained in this document, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” 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. Forward-looking statements relate to future events or our future financial performance and include statements about the competitiveness of the banking industry, potential regulatory obligations, our entrance and expansion into other markets, including through potential acquisitions, our other business strategies and other statements that are not historical facts. Forward-looking statements are not guarantees of performance or results. When we use words like “may,” “plan,” “contemplate,” “anticipate,” “believe,” “intend,” “continue,” “expect,” “project,” “predict,” “estimate,” “could,” “should,” “would,” and similar expressions, you should consider them as identifying forward-looking statements, although we may use other phrasing. These forward-looking statements involve risks and uncertainties and are based on our beliefs and assumptions, and on the information available to us at the time that these disclosures were prepared. These forward-looking statements involve risks and uncertainties and may not be realized due to a variety of factors, including, but not limited to, the following:

 

•

the effects of future local, regional, national and international economic conditions, including inflation or a decrease in commercial real estate and residential housing values;

 

•

changes in the level of nonperforming assets and charge-offs, and credit risk generally;

 

•

the risks of changes in interest rates or the level and composition of deposits, loan demand and the values of loan collateral, securities and interest-sensitive assets and liabilities;

 

•

the effect of any mergers, acquisitions or other transactions to which we or our bank subsidiary may from time to time be a party, including our ability to successfully integrate any businesses that we acquire;

 

•

the risk that expected cost savings and other benefits from acquisitions may not be fully realized or may take longer to realize than expected;

 

•

the possibility that an acquisition does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all;

 

•

the reaction to a proposed acquisition transaction of the respective companies’ customers, employees and counterparties;

 

•

diversion of management time on acquisition-related issues;

 

•

the ability to enter into and/or close additional acquisitions;

 

•

the availability of and access to capital on terms acceptable to us;

 

•

increased regulatory requirements and supervision that apply as a result of our exceeding $10 billion in total assets;

 

•

legislation and regulation affecting the financial services industry as a whole, and the Company and its subsidiaries in particular, including the effects resulting from the reforms enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the adoption of regulations by regulatory bodies under the Dodd-Frank Act;

 

•

governmental monetary and fiscal policies, as well as legislative and regulatory changes, including as a result of initiatives of the administration of President Donald J. Trump;

 

•

the effects of terrorism and efforts to combat it;

 

•

political instability;

 

•

risks associated with our customer relationship with the Cuban government and our correspondent banking relationship with Banco Internacional de Comercio, S.A. (BICSA), a Cuban commercial bank, through our recently completed acquisition of Stonegate Bank;

 

•

the ability to keep pace with technological changes, including changes regarding cybersecurity;

•

an increase in the incidence or severity of fraud, illegal payments, security breaches or other illegal acts impacting our bank subsidiary or our customers;

 

•

the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating regionally, nationally and internationally, together with competitors offering banking products and services by mail, telephone and the Internet;

 

•

the effect of changes in accounting policies and practices and auditing requirements, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters;

 

•

higher defaults on our loan portfolio than we expect; and

 

•

the failure of assumptions underlying the establishment of our allowance for loan losses or changes in our estimate of the adequacy of the allowance for loan losses.

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this Cautionary Note. Our actual results may differ significantly from those we discuss in these forward-looking statements. For other factors, risks and uncertainties that could cause our actual results to differ materially from estimates and projections contained in these forward-looking statements, see the “Risk Factors” sections of our Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2018.

PART I: FINANCIAL INFORMATION

Item 1:    Financial Statements

Home BancShares, Inc.

Consolidated Balance Sheets

 

(In thousands, except share data)		September 30, 2018				December 31, 2017
		(Unaudited)
Assets
Cash and due from banks		$	208,681			$	166,915
Interest-bearing deposits with other banks			323,376				469,018
Cash and cash equivalents			532,057				635,933
Federal funds sold			500				24,109
Investment securities – available-for-sale			1,744,430				1,663,517
Investment securities – held-to-maturity			199,266				224,756
Loans receivable			10,832,815				10,331,188
Allowance for loan losses			(110,191	)			(110,266	)
Loans receivable, net			10,722,624				10,220,922
Bank premises and equipment, net			233,652				237,439
Foreclosed assets held for sale			13,507				18,867
Cash value of life insurance			148,014				146,866
Accrued interest receivable			48,909				45,708
Deferred tax asset, net			79,548				76,564
Goodwill			958,408				927,949
Core deposit and other intangibles			44,484				49,351
Other assets			187,339				177,779
Total assets		$	14,912,738			$	14,449,760
Liabilities and Stockholders’ Equity
Deposits:
Demand and non-interest-bearing		$	2,482,857			$	2,385,252
Savings and interest-bearing transaction accounts			6,420,951				6,476,819
Time deposits			1,720,930				1,526,431
Total deposits			10,624,738				10,388,502
Securities sold under agreements to repurchase			142,146				147,789
FHLB and other borrowed funds			1,363,851				1,299,188
Accrued interest payable and other liabilities			72,381				41,959
Subordinated debentures			368,596				368,031
Total liabilities			12,571,712				12,245,469
Stockholders’ equity:
Common stock, par value $0.01; shares authorized 200,000,000 in 2018 and 2017; shares issued and outstanding 174,134,811 in 2018 and 173,632,983 in 2017			1,741				1,736
Capital surplus			1,668,106				1,675,318
Retained earnings			701,900				530,658
Accumulated other comprehensive loss			(30,721	)			(3,421	)
Total stockholders’ equity			2,341,026				2,204,291
Total liabilities and stockholders’ equity		$	14,912,738			$	14,449,760

See Condensed Notes to Consolidated Financial Statements.

 

4

Home BancShares, Inc.

Consolidated Statements of Income

 

		Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands, except per share data)		2018				2017				2018				2017
		(Unaudited)
Interest income:
Loans		$	166,334			$	113,269			$	467,395			$	331,763
Investment securities
Taxable			9,011				7,071				26,960				18,983
Tax-exempt			3,427				3,032				9,801				8,942
Deposits – other banks			1,273				538				3,408				1,573
Federal funds sold			6				3				24				9
Total interest income			180,051				123,913				507,588				361,270
Interest expense:
Interest on deposits			21,412				8,535				54,382				20,831
Federal funds purchased			—				—				1				—
FHLB and other borrowed funds			7,055				3,408				15,880				10,707
Securities sold under agreements to repurchase			472				232				1,220				593
Subordinated debentures			5,202				4,969				15,374				10,203
Total interest expense			34,141				17,144				86,857				42,334
Net interest income			145,910				106,769				420,731				318,936
Provision for loan losses			—				35,023				4,322				39,324
Net interest income after provision for loan losses			145,910				71,746				416,409				279,612
Non-interest income:
Service charges on deposit accounts			6,992				6,408				19,847				18,356
Other service charges and fees			9,041				8,490				28,993				25,983
Trust fees			437				365				1,262				1,130
Mortgage lending income			3,691				3,172				9,825				9,713
Insurance commissions			463				472				1,668				1,482
Increase in cash value of life insurance			735				478				2,119				1,251
Dividends from FHLB, FRB, FNBB & other			1,288				834				3,765				2,455
Gain on acquisitions			—				—				—				3,807
Gain on sale of SBA loans			47				163				491				738
Gain (loss) on sale of branches, equipment and other assets, net			(102	)			(1,337	)			(95	)			(962	)
Gain (loss) on OREO, net			836				335				2,287				849
Gain (loss) on securities, net			—				136				—				939
Other income			2,419				1,941				9,163				6,603
Total non-interest income			25,847				21,457				79,325				72,344
Non-interest expense:
Salaries and employee benefits			37,825				28,510				107,315				83,965
Occupancy and equipment			8,148				7,887				25,650				21,602
Data processing expense			3,461				2,853				10,786				8,439
Other operating expenses			16,689				31,596				48,980				62,984
Total non-interest expense			66,123				70,846				192,731				176,990
Income before income taxes			105,634				22,357				303,003				174,966
Income tax expense			25,350				7,536				73,630				63,192
Net income		$	80,284			$	14,821			$	229,373			$	111,774
Basic earnings per share		$	0.46			$	0.10			$	1.32			$	0.78
Diluted earnings per share		$	0.46			$	0.10			$	1.32			$	0.78

See Condensed Notes to Consolidated Financial Statements.

 

5

Home BancShares, Inc.

Consolidated Statements of Comprehensive Income

 

		Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands)		2018				2017				2018				2017
		(Unaudited)
Net income		$	80,284			$	14,821			$	229,373			$	111,774
Net unrealized gain (loss) on available-for-sale securities			(6,979	)			(4,065	)			(35,957	)			6,681
Less: reclassification adjustment for realized (gains) losses included in income			—				(136	)			—				(939	)
Other comprehensive (loss) income, before tax effect			(6,979	)			(4,201	)			(35,957	)			5,742
Tax effect on other comprehensive income			2,867				1,648				9,647				(2,253	)
Other comprehensive income (loss)			(4,112	)			(2,553	)			(26,310	)			3,489
Comprehensive income		$	76,172			$	12,268			$	203,063			$	115,263

Home BancShares, Inc.

Consolidated Statements of Stockholders’ Equity

Nine Months Ended September 30, 2018 and 2017

 

(In thousands, except share data)		Common Stock				Capital Surplus				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Total
Balances at January 1, 2017			1,405				869,737				455,948				400				1,327,490
Comprehensive income:
Net income			—				—				111,774				—				111,774
Other comprehensive income (loss)			—				—				—				3,489				3,489
Net issuance of 160,237 shares of common stock from exercise of stock options			2				847				—				—				849
Issuance of 2,738,038 shares of common stock from acquisition of GHI, net of issuance costs of approximately $195			27				77,290				—				—				77,317
Issuance of 30,863,658 shares of common stock from acquisition of Stonegate, net of issuance costs of approximately $630			309				741,324												741,633
Repurchase of 800,000 shares of common stock			(8	)			(19,530	)											(19,538	)
Share-based compensation net issuance of 231,766 shares of restricted common stock			2				4,974				—				—				4,976
Cash dividends – Common Stock, $0.29 per share			—				—				(41,274	)			—				(41,274	)
Balances at September 30, 2017 (unaudited)		$	1,737			$	1,674,642			$	526,448			$	3,889			$	2,206,716
Comprehensive income:
Net income			—				—				23,309				—				23,309
Other comprehensive income (loss)			—				—				—				(7,310	)			(7,310	)
Net issuance of 24,879 shares of common stock from exercise of stock options			—				233				—				—				233
Repurchase of 57,800 shares of common stock			(1	)			(1,286	)			—				—				(1,287	)
Share-based compensation			—				1,729				—				—				1,729
Cash dividends – Common Stock, $0.11 per share			—				—				(19,099	)			—				(19,099	)
Balances at December 31, 2017		$	1,736			$	1,675,318			$	530,658			$	(3,421	)		$	2,204,291
Comprehensive income:
Net Income			—				—				229,373				—				229,373
Other comprehensive income (loss)			—				—				—				(26,310	)			(26,310	)
Net issuance of 176,821 shares of common stock from exercise of stock options			2				1,255				—				—				1,257
Issuance of 1,250,000 shares of common stock from acquisition of Shore Premier Finance			13				28,188				—				—				28,201
Impact of adoption of new accounting standards(1)			—				—				990				(990	)			—
Repurchase of 1,863,400 shares of common stock			(19	)			(43,151	)			—				—				(43,170	)
Share-based compensation net issuance of 956,125 shares of restricted common stock			9				6,496				—				—				6,505
Cash dividends – Common Stock, $0.34 per share			—				—				(59,121	)			—				(59,121	)
Balances at September 30, 2018 (unaudited)		$	1,741			$	1,668,106			$	701,900			$	(30,721	)		$	2,341,026

 

(1)	Represents the impact of adopting Accounting Standard Update (“ASU”) 2016-01. See Note 1 to the consolidated financial statements for more information.

See Condensed Notes to Consolidated Financial Statements.

 

6

Home BancShares, Inc.

Consolidated Statements of Cash Flows

 

		Nine Months Ended September 30,
(In thousands)		2018				2017
		(Unaudited)
Operating Activities
Net income		$	229,373			$	111,774
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation			9,156				8,634
Investment amortization			16,033				12,087
Accretion of purchased loans			(32,021	)			(23,319	)
Share-based compensation			6,505				4,976
Gain on assets			(3,436	)			(1,720	)
Gain on acquisitions			—				(3,807	)
Provision for loan losses			4,322				39,324
Deferred income tax effect			14,593				(15,867	)
Increase in cash value of life insurance			(2,119	)			(1,251	)
Originations of mortgage loans held for sale			(258,520	)			(243,948	)
Proceeds from sales of mortgage loans held for sale			262,900				250,784
Changes in assets and liabilities:
Accrued interest receivable			(2,377	)			(1,814	)
Other assets			(17,485	)			(22,642	)
Accrued interest payable and other liabilities			28,547				(35,436	)
Net cash provided by operating activities			255,471				77,775
Investing Activities
Net decrease (increase) in federal funds sold			23,609				(1,480	)
Net increase in loans, excluding purchased loans			(119,723	)			(92,015	)
Purchases of investment securities – available-for-sale			(380,847	)			(522,329	)
Proceeds from maturities of investment securities – available-for-sale			252,795				120,785
Proceeds from sale of investment securities – available-for-sale			1,064				28,368
Purchases of investment securities – held-to-maturity			—				(219	)
Proceeds from maturities of investment securities – held-to-maturity			25,007				48,144
Proceeds from sale of investment securities – held-to-maturity			—				491
Proceeds from foreclosed assets held for sale			17,744				13,315
Proceeds from sale of SBA Loans			7,938				13,630
Purchases of premises and equipment, net			(5,070	)			(4,383	)
Return of investment on cash value of life insurance			1,325				592
Net cash (paid) proceeds received – market acquisitions			(377,411	)			227,845
Net cash used in investing activities			(553,569	)			(167,256	)
Financing Activities
Net increase in deposits, excluding deposits acquired			236,236				536,891
Net (decrease) increase in securities sold under agreements to repurchase			(5,643	)			2,078
Net increase (decrease) in FHLB and other borrowed funds			64,663				(350,230	)
Proceeds from exercise of stock options			1,257				849
Proceeds from issuance of subordinated notes			—				297,201
Repurchase of common stock			(43,170	)			(19,538	)
Common stock issuance costs – market acquisitions			—				(825	)
Dividends paid on common stock			(59,121	)			(41,274	)
Net cash provided by used in financing activities			194,222				425,152
Net change in cash and cash equivalents			(103,876	)			335,671
Cash and cash equivalents – beginning of year			635,933				216,649
Cash and cash equivalents – end of period		$	532,057			$	552,320

See Condensed Notes to Consolidated Financial Statements.

 

7

Home BancShares, Inc.

Condensed Notes to Consolidated Financial Statements

(Unaudited)

1. Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Home BancShares, Inc. (the “Company” or “HBI”) is a bank holding company headquartered in Conway, Arkansas. The Company is primarily engaged in providing a full range of banking services to individual and corporate customers through its wholly-owned community bank subsidiary – Centennial Bank (sometimes referred to as “Centennial” or the “Bank”). The Bank has branch locations in Arkansas, Florida, South Alabama and New York City. The Company is subject to competition from other financial institutions. The Company also is subject to the regulation of certain federal and state agencies and undergoes periodic examinations by those regulatory authorities.

A summary of the significant accounting policies of the Company follows:

Operating Segments

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Bank is the only significant subsidiary upon which management makes decisions regarding how to allocate resources and assess performance. Each of the branches of the Bank provide a group of similar banking services, including such products and services as commercial, real estate and consumer loans, time deposits, checking and savings accounts. The individual bank branches have similar operating and economic characteristics. While the chief decision maker monitors the revenue streams of the various products, services and branch locations, operations are managed, and financial performance is evaluated on a Company-wide basis. Accordingly, all of the banking services and branch locations are considered by management to be aggregated into one reportable operating segment.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, the valuation of investment securities, the valuation of foreclosed assets and the valuations of assets acquired, and liabilities assumed in business combinations. In connection with the determination of the allowance for loan losses and the valuation of foreclosed assets, management obtains independent appraisals for significant properties.

Principles of Consolidation

The consolidated financial statements include the accounts of HBI and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Various items within the accompanying consolidated financial statements for previous years have been reclassified to provide more comparative information. These reclassifications had no effect on net earnings or stockholders’ equity.

Interim financial information

The accompanying unaudited consolidated financial statements as of September 30, 2018 and 2017 have been prepared in condensed format, and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

 

8

The information furnished in these interim statements reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for each respective period presented. Such adjustments are of a normal recurring nature. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter or for the full year. The interim financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2017 Form 10-K, filed with the Securities and Exchange Commission.

Revenue Recognition.

Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. The majority of our revenue-generating transactions are not subject to ASC Topic 606, including revenue generated from financial instruments, such as our loans, letters of credit and investment securities, as these activities are subject to other GAAP discussed elsewhere within our disclosures. Descriptions of our revenue-generating activities that are within the scope of ASC Topic 606, which are presented in our income statements as components of non-interest income are as follows:

 

•

Service charges on deposit accounts – These represent general service fees for monthly account maintenance and activity or transaction-based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer). Payment for such performance obligations are generally received at the time the performance obligations are satisfied.

 

•

Other service charges and fees – These represent credit card interchange fees and Centennial CFG loan fees. The interchange fees are recorded in the period the performance obligation is satisfied which is generally the cash basis based on agreed upon contracts. The Centennial CFG loan fees are based on loan or other negotiated agreements with customers and are accounted for under ASC Topic 310.

 

•

Mortgage lending income – This represents fee income on secondary market lending which is accounted for under ASC Topic 310 and transfer of loans based on a “bid” agreement with the investor which is accounted for under ASC Topic 860, Transfers and Servicing.

Earnings per Share

Basic earnings per share is computed based on the weighted-average number of shares outstanding during each year. Diluted earnings per share is computed using the weighted-average shares and all potential dilutive shares outstanding during the period. The following table sets forth the computation of basic and diluted earnings per share (“EPS”) for the following periods:

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2018				2017				2018				2017
		(In thousands)
Net income		$	80,284			$	14,821			$	229,373			$	111,774
Average shares outstanding			174,440				144,238				173,870				143,111
Effect of common stock options			427				749				524				728
Average diluted shares outstanding			174,867				144,987				174,394				143,839
Basic earnings per share		$	0.46			$	0.10			$	1.32			$	0.78
Diluted earnings per share		$	0.46			$	0.10			$	1.32			$	0.78

 

9

2. Business Combinations

Acquisition of Shore Premier Finance

On June 30, 2018, the Company, completed the acquisition of Shore Premier Finance (“SPF”), a division of Union Bank & Trust of Richmond, Virginia, the bank subsidiary of Union Bankshares Corporation. The Company paid a purchase price of approximately $377.4 million in cash, subject to certain post-closing adjustments, and 1,250,000 shares of HBI common stock valued at approximately $28.2 million. SPF provides direct consumer financing for United States Coast Guard (“USCG”) registered high-end sail and power boats. Additionally, SPF provides inventory floor plan lines of credit to marine dealers, primarily those selling USCG documented vessels.

Including the effects of known purchase accounting adjustments, as of acquisition date, SPF had approximately $377.0 million in total assets, including $376.2 million in total loans and $1.9 million in assumed liabilities, which resulted in tentative goodwill of $30.5 million being recorded. The purchase price allocation and certain fair value measurements remain preliminary due to the timing of the acquisition. The Company will continue to review the estimated fair values of loans and intangible assets and to evaluate the assumed tax positions and contingencies.

This portfolio of loans is now housed in a division of Centennial known as Shore Premier Finance. The SPF division of Centennial is responsible for servicing the acquired loan portfolio and originating new loan production. In connection with this acquisition and the creation of the SPF division of Centennial, Centennial has opened a new loan production office in Chesapeake, Virginia. Through this loan production office, the SPF division of Centennial will continue its vision to build out a lending platform focusing on commercial and consumer marine loans.

The Company has determined that the acquisition of the net assets of SPF constitutes a business combination as defined by the ASC Topic 805. Accordingly, the assets acquired are presented at their fair values as required. Fair values were determined based on the requirements of ASC Topic 820. In many cases, the determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change.

Acquisition of Stonegate Bank

On September 26, 2017, the Company, completed the acquisition of all of the issued and outstanding shares of common stock of Stonegate Bank (“Stonegate”), and merged Stonegate into Centennial. The Company paid a purchase price to the Stonegate shareholders of approximately $792.4 million for the Stonegate acquisition. Under the terms of the merger agreement, shareholders of Stonegate received 30,863,658 shares of HBI common stock valued at approximately $742.3 million plus approximately $50.1 million in cash in exchange for all outstanding shares of Stonegate common stock. In addition, the holders of outstanding stock options of Stonegate received approximately $27.6 million in cash in connection with the cancellation of their options immediately before the acquisition closed, for a total transaction value of approximately $820.0 million.

Including the effects of the purchase accounting adjustments, as of acquisition date, Stonegate had approximately $2.89 billion in total assets, $2.37 billion in loans and $2.53 billion in customer deposits. Stonegate formerly operated its banking business from 24 locations in key Florida markets with significant presence in Broward and Sarasota counties.

The Company has determined that the acquisition of the net assets of Stonegate constitutes a business combination as defined by the ASC Topic 805. Accordingly, the assets acquired and liabilities assumed are presented at their fair values as required. Fair values were determined based on the requirements of ASC Topic 820. In many cases, the determination of these fair values required

 

10

management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. The following schedule is a breakdown of the assets acquired and liabilities assumed as of the acquisition date:

 

		Stonegate Bank
		Acquired from Stonegate				Fair Value Adjustments				As Recorded by HBI
		(Dollars in thousands)
Assets
Cash and due from banks		$	100,958			$	—			$	100,958
Interest-bearing deposits with other banks			135,631				—				135,631
Federal funds sold			1,515				—				1,515
Investment securities			103,041				474				103,515
Loans receivable			2,446,149				(74,067	)			2,372,082
Allowance for loan losses			(21,507	)			21,507				—
Loans receivable, net			2,424,642				(52,560	)			2,372,082
Bank premises and equipment, net			38,868				(3,572	)			35,296
Foreclosed assets held for sale			4,187				(801	)			3,386
Cash value of life insurance			48,000				—				48,000
Accrued interest receivable			7,088				—				7,088
Deferred tax asset, net			27,340				11,990				39,330
Goodwill			81,452				(81,452	)			—
Core deposit and other intangibles			10,505				20,364				30,869
Other assets			9,598				255				9,853
Total assets acquired		$	2,992,825			$	(105,302	)		$	2,887,523
Liabilities
Deposits
Demand and non-interest-bearing		$	585,959			$	—			$	585,959
Savings and interest-bearing transaction accounts			1,776,256				—				1,776,256
Time deposits			163,567				(85	)			163,482
Total deposits			2,525,782				(85	)			2,525,697
FHLB borrowed funds			32,667				184				32,851
Securities sold under agreements to repurchase			26,163				—				26,163
Accrued interest payable and other liabilities			8,100				(484	)			7,616
Subordinated debentures			8,345				1,489				9,834
Total liabilities assumed			2,601,057				1,104				2,602,161
Equity
Total equity assumed			391,768				(391,768	)			—
Total liabilities and equity assumed		$	2,992,825			$	(390,664	)			2,602,161
Net assets acquired											285,362
Purchase price											792,370
Goodwill										$	507,008

 

11

The following is a description of the methods used to determine the fair values of significant assets and liabilities presented above:

Cash and due from banks, interest-bearing deposits with other banks and federal funds sold – The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.

Investment securities – Investment securities were acquired from Stonegate with an approximately $474,000 adjustment to market value based upon quoted market prices.

Loans – Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and current discount rates. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns.

The Company evaluated $2.37 billion of the loans purchased in conjunction with the acquisition in accordance with the provisions of FASB ASC Topic 310-20, Nonrefundable Fees and Other Costs, which were recorded with a $73.3 million discount. As a result, the fair value discount on these loans is being accreted into interest income over the weighted average life of the loans using a constant yield method. The remaining $74.3 million of loans evaluated were considered purchased credit impaired loans within the provisions of FASB ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, and were recorded with a $23.3 million discount. These purchase credit impaired loans will recognize interest income through accretion of the difference between the carrying amount of the loans and the expected cash flows. The acquired Stonegate loan balance and the fair value adjustment on loans receivable includes $22.6 million of discount on purchased loans, respectively.

Bank premises and equipment – Bank premises and equipment were acquired from Stonegate with a $3.6 million adjustment to market value. This represents the difference between current appraisals completed in connection with the acquisition and book value acquired.

Foreclosed assets held for sale – These assets are presented at the estimated fair values that management expects to receive when the properties are sold, net of related costs of disposal.

Cash value of life insurance – Cash value of life insurance was acquired from Stonegate at market value.

Accrued interest receivable – Accrued interest receivable was acquired from Stonegate at market value.

Deferred tax asset – The current and deferred income tax assets and liabilities are recorded to reflect the differences in the carrying values of the acquired assets and assumed liabilities for financial reporting purposes and the cost basis for federal income tax purposes, at the Company’s statutory federal and state income tax rate which was 39.225% at the time of acquisition.

Core deposit intangible – This intangible asset represents the value of the relationships that Stonegate had with its deposit customers. The fair value of this intangible asset was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, cost of the deposit base, and the net maintenance cost attributable to customer deposits. The Company recorded $30.9 million of core deposit intangible.

Deposits – The fair values used for the demand and savings deposits that comprise the transaction accounts acquired, by definition equal the amount payable on demand at the acquisition date. The $85,000 fair value adjustment applied for time deposits was because the weighted average interest rate of Stonegate’s certificates of deposits were estimated to be below the current market rates.

FHLB borrowed funds – The fair value of FHLB borrowed funds is estimated based on borrowing rates currently available to the Company for borrowings with similar terms and maturities.

Securities sold under agreements to repurchase – Securities sold under agreements to repurchase were acquired from Stonegate at market value.

Accrued interest payable and other liabilities – Accrued interest payable and other liabilities were acquired from Stonegate at market value.

 

12

Subordinated debentures – The fair value of subordinated debentures is estimated based on borrowing rates currently available to the Company for borrowings with similar terms and maturities.

The unaudited pro-forma combined consolidated financial information presents how the combined financial information of HBI and Stonegate might have appeared had the businesses actually been combined. The following schedule represents the unaudited pro forma combined financial information as of the years ended December 31, 2017 and 2016, assuming the acquisition was completed as of January 1, 2017 and 2016, respectively:

 

		Years Ended December 31,
		2017				2016
		(In thousands, except per share data)
Total interest income		$	610,697			$	538,258
Total non-interest income			107,179				95,555
Net income available to all shareholders			143,979				206,081
Basic earnings per common share		$	0.79			$	1.20
Diluted earnings per common share			0.79				1.20

The unaudited pro-forma consolidated financial information is presented for illustrative purposes only and does not indicate the financial results of the combined company had the companies actually been combined at the beginning of the period presented and had the impact of possible significant revenue enhancements and expense efficiencies from in-market cost savings, among other factors, been considered and, accordingly, does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the combined company would have been had the companies been combined during this period.

Acquisition of The Bank of Commerce

On February 28, 2017, the Company completed its acquisition of all of the issued and outstanding shares of common stock of The Bank of Commerce (“BOC”), a Florida state-chartered bank that operated in the Sarasota, Florida area, pursuant to an acquisition agreement, dated December 1, 2016, by and between HBI and Bank of Commerce Holdings, Inc. (“BCHI”), parent company of BOC. The Company merged BOC with and into Centennial effective as of the close of business on February 28, 2017.

The acquisition of BOC was conducted in accordance with the provisions of Section 363 of the United States Bankruptcy Code (the “Bankruptcy Code”) pursuant to a voluntary petition for relief under Chapter 11 of the Bankruptcy Code filed by BCHI with the United States Bankruptcy Court for the Middle District of Florida (the “Bankruptcy Court”). The sale of BOC by BCHI was subject to certain bidding procedures approved by the Bankruptcy Court, under which the Company submitted an initial bid to purchase the outstanding shares of BOC and was deemed to be the successful bidder after a subsequent auction was held. The Bankruptcy Court entered a final order on December 9, 2016 approving the sale of BOC to the Company pursuant to and in accordance with the acquisition agreement.

Under the terms of the acquisition agreement, the Company paid an aggregate of approximately $4.2 million in cash for the acquisition, which included the purchase of all outstanding shares of BOC common stock, the discounted purchase of certain subordinated debentures issued by BOC from the existing holders of the subordinated debentures, and an expense reimbursement to BCHI for approved administrative claims in connection with the bankruptcy proceeding.

BOC formerly operated three branch locations in the Sarasota, Florida area. Including the effects of the purchase accounting adjustments, as of acquisition date, BOC had approximately $178.1 million in total assets, $118.5 million in loans after $5.8 million of loan discounts, and $139.8 million in deposits.

 

13

The Company has determined that the acquisition of the net assets of BOC constitutes a business combination as defined by the ASC Topic 805. Accordingly, the assets acquired and liabilities assumed are presented at their fair values as required. Fair values were determined based on the requirements of ASC Topic 820. In many cases, the determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. The following schedule is a breakdown of the assets acquired and liabilities assumed as of the acquisition date:

 

		The Bank of Commerce
		Acquired from BOC				Fair Value Adjustments				As Recorded by HBI
		(Dollars in thousands)
Assets
Cash and due from banks		$	4,610			$	—			$	4,610
Interest-bearing deposits with other banks			14,360				—				14,360
Investment securities			25,926				(113	)			25,813
Loans receivable			124,289				(5,751	)			118,538
Allowance for loan losses			(2,037	)			2,037				—
Loans receivable, net			122,252				(3,714	)			118,538
Bank premises and equipment, net			1,887				—				1,887
Foreclosed assets held for sale			8,523				(3,165	)			5,358
Accrued interest receivable			481				—				481
Deferred tax asset, net			—				4,198				4,198
Core deposit intangible			—				968				968
Other assets			1,880				—				1,880
Total assets acquired		$	179,919			$	(1,826	)		$	178,093
Liabilities
Deposits
Demand and non-interest-bearing		$	27,245			$	—			$	27,245
Savings and interest-bearing transaction accounts			32,300				—				32,300
Time deposits			79,945				270				80,215
Total deposits			139,490				270				139,760
FHLB borrowed funds			30,000				42				30,042
Accrued interest payable and other liabilities			564				(255	)			309
Total liabilities assumed		$	170,054			$	57				170,111
Net assets acquired											7,982
Purchase price											4,175
Pre-tax gain on acquisition										$	3,807

The following is a description of the methods used to determine the fair values of significant assets and liabilities presented above:

Cash and due from banks and interest-bearing deposits with other banks – The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.

Investment securities – Investment securities were acquired from BOC with an $113,000 adjustment to market value based upon quoted market prices.

Loans – Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and current discount rates. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns.

 

14

The Company evaluated $106.8 million of the loans purchased in conjunction with the acquisition in accordance with the provisions of FASB ASC Topic 310-20, Nonrefundable Fees and Other Costs, which were recorded with a $3.0 million discount. As a result, the fair value discount on these loans is being accreted into interest income over the weighted-average life of the loans using a constant yield method. The remaining $17.5 million of loans evaluated were considered purchased credit impaired loans within the provisions of FASB ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, and were recorded with a $2.8 million discount. These purchase credit impaired loans will recognize interest income through accretion of the difference between the carrying amount of the loans and the expected cash flows.

Bank premises and equipment – Bank premises and equipment were acquired from BOC at market value.

Foreclosed assets held for sale – These assets are presented at the estimated fair values that management expects to receive when the properties are sold, net of related costs to sell.

Accrued interest receivable – Accrued interest receivable was acquired from BOC at market value.

Deferred tax asset – The current and deferred income tax assets and liabilities are recorded to reflect the differences in the carrying values of the acquired assets and assumed liabilities for financial reporting purposes and the cost basis for federal income tax purposes, at the Company’s statutory federal and state income tax rate which was 39.225% at the time of acquisition.

Core deposit intangible – This intangible asset represents the value of the relationships that BOC had with its deposit customers. The fair value of this intangible asset was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, cost of the deposit base, and the net maintenance cost attributable to customer deposits. The Company recorded $968,000 of core deposit intangible.

Deposits – The fair values used for the demand and savings deposits that comprise the transaction accounts acquired, by definition equal the amount payable on demand at the acquisition date. The $270,000 fair value adjustment applied for time deposits was because the weighted-average interest rate of BOC’s certificates of deposits was estimated to be above the current market rates.

FHLB borrowed funds – The fair value of FHLB borrowed funds is estimated based on borrowing rates currently available to the Company for borrowings with similar terms and maturities.

Accrued interest payable and other liabilities – The fair value used represents the adjustment of certain estimated liabilities from BOC.

The Company’s operating results for the period ended December 31, 2017, include the operating results of the acquired assets and assumed liabilities subsequent to the acquisition date. Due to the fair value adjustments recorded and the fact BOC total assets acquired are less than 5% of total assets as of December 31, 2017 excluding BOC as recorded by HBI as of acquisition date, historical results are not believed to be material to the Company’s results, and thus no pro-forma information is presented.

Acquisition of Giant Holdings, Inc.

On February 23, 2017, the Company completed its acquisition of Giant Holdings, Inc. (“GHI”), parent company of Landmark Bank, N.A. (“Landmark”), pursuant to a definitive agreement and plan of merger whereby GHI merged with and into HBI and, immediately thereafter, Landmark merged with and into Centennial. The Company paid a purchase price to the GHI shareholders of approximately $96.0 million for the GHI acquisition. Under the terms of the agreement, shareholders of GHI received 2,738,038 shares of the Company’s common stock valued at approximately $77.5 million as of February 23, 2017, plus approximately $18.5 million in cash in exchange for all outstanding shares of GHI common stock.

GHI formerly operated six branch locations in the Ft. Lauderdale, Florida area. Including the effects of the purchase accounting adjustments, as of acquisition date, GHI had approximately $398.1 million in total assets, $327.8 million in loans after $8.1 million of loan discounts, and $304.0 million in deposits.

 

15

The Company has determined that the acquisition of the net assets of GHI constitutes a business combination as defined by the ASC Topic 805. Accordingly, the assets acquired and liabilities assumed are presented at their fair values as required. Fair values were determined based on the requirements of ASC Topic 820. In many cases, the determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. The following schedule is a breakdown of the assets acquired and liabilities assumed as of the acquisition date:

 

		Giant Holdings, Inc.
		Acquired from GHI				Fair Value Adjustments				As Recorded by HBI
		(Dollars in thousands)
Assets
Cash and due from banks		$	41,019			$	—			$	41,019
Interest-bearing deposits with other banks			4,057				1				4,058
Investment securities			1,961				(5	)			1,956
Loans receivable			335,886				(6,517	)			329,369
Allowance for loan losses			(4,568	)			4,568				—
Loans receivable, net			331,318				(1,949	)			329,369
Bank premises and equipment, net			2,111				608				2,719
Cash value of life insurance			10,861				—				10,861
Accrued interest receivable			850				—				850
Deferred tax asset, net			2,286				1,807				4,093
Core deposit and other intangibles			172				3,238				3,410
Other assets			254				(489	)			(235	)
Total assets acquired		$	394,889			$	3,211			$	398,100
Liabilities
Deposits
Demand and non-interest-bearing		$	75,993			$	—			$	75,993
Savings and interest-bearing transaction accounts			139,459				—				139,459
Time deposits			88,219				324				88,543
Total deposits			303,671				324				303,995
FHLB borrowed funds			26,047				431				26,478
Accrued interest payable and other liabilities			14,552				18				14,570
Total liabilities assumed			344,270				773				345,043
Equity
Total equity assumed			50,619				(50,619	)			—
Total liabilities and equity assumed		$	394,889			$	(49,846	)			345,043
Net assets acquired											53,057
Purchase price											96,015
Goodwill										$	42,958

The following is a description of the methods used to determine the fair values of significant assets and liabilities presented above:

Cash and due from banks and interest-bearing deposits with other banks – The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.

Investment securities – Investment securities were acquired from GHI with an approximately $5,000 adjustment to market value based upon quoted market prices.

Loans – Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and current discount rates. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns.

 

16

The Company evaluated $315.6 million of the loans purchased in conjunction with the acquisition in accordance with the provisions of FASB ASC Topic 310-20, Nonrefundable Fees and Other Costs, which were recorded with a $3.6 million discount. As a result, the fair value discount on these loans is being accreted into interest income over the weighted-average life of the loans using a constant yield method. The remaining $20.3 million of loans evaluated were considered purchased credit impaired loans within the provisions of FASB ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, and were recorded with a $4.5 million discount. These purchase credit impaired loans will recognize interest income through accretion of the difference between the carrying amount of the loans and the expected cash flows. The acquired GHI loan balance includes $1.6 million of discount on purchased loans.

Bank premises and equipment – Bank premises and equipment were acquired from GHI with a $608,000 adjustment to market value. This represents the difference between current appraisals completed in connection with the acquisition and book value acquired.

Cash value of life insurance – Cash value of life insurance was acquired from GHI at market value.

Accrued interest receivable – Accrued interest receivable was acquired from GHI at market value.

Deferred tax asset – The current and deferred income tax assets and liabilities are recorded to reflect the differences in the carrying values of the acquired assets and assumed liabilities for financial reporting purposes and the cost basis for federal income tax purposes, at the Company’s statutory federal and state income tax rate which was 39.225% at the time of acquisition.

Core deposit intangible – This intangible asset represents the value of the relationships that GHI had with its deposit customers. The fair value of this intangible asset was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, cost of the deposit base, and the net maintenance cost attributable to customer deposits. The Company recorded $3.4 million of core deposit intangible.

Deposits – The fair values used for the demand and savings deposits that comprise the transaction accounts acquired, by definition equal the amount payable on demand at the acquisition date. The $324,000 fair value adjustment applied for time deposits was because the weighted-average interest rate of GHI’s certificates of deposits was estimated to be above the current market rates.

FHLB borrowed funds – The fair value of FHLB borrowed funds is estimated based on borrowing rates currently available to the Company for borrowings with similar terms and maturities.

Accrued interest payable and other liabilities – The fair value used represents the adjustments of certain estimated liabilities from GHI.

 

17

3. Investment Securities

The amortized cost and estimated fair value of investment securities that are classified as available-for-sale and held-to-maturity are as follows:

 

		September 30, 2018
		Available-for-Sale
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized (Losses)				Estimated Fair Value
		(In thousands)
U.S. government-sponsored enterprises		$	427,722			$	138			$	(7,985	)		$	419,875
Residential mortgage-backed securities			533,106				294				(15,386	)			518,014
Commercial mortgage-backed securities			478,409				87				(14,636	)			463,860
State and political subdivisions			311,117				1,235				(6,202	)			306,150
Other securities			35,554				1,160				(183	)			36,531
Total		$	1,785,908			$	2,914			$	(44,392	)		$	1,744,430

 

		Held-to-Maturity
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized (Losses)				Estimated Fair Value
		(In thousands)
U.S. government-sponsored enterprises		$	3,587			$	—			$	(87	)		$	3,500
Residential mortgage-backed securities			47,670				23				(1,395	)			46,298
Commercial mortgage-backed securities			12,705				—				(370	)			12,335
State and political subdivisions			135,304				1,368				(253	)			136,419
Total		$	199,266			$	1,391			$	(2,105	)		$	198,552

 

		December 31, 2017
		Available-for-Sale
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized (Losses)				Estimated Fair Value
		(In thousands)
U.S. government-sponsored enterprises		$	407,387			$	899			$	(1,982	)		$	406,304
Residential mortgage-backed securities			481,981				538				(4,919	)			477,600
Commercial mortgage-backed securities			497,870				332				(4,430	)			493,772
State and political subdivisions			247,292				3,783				(774	)			250,301
Other securities			34,617				1,225				(302	)			35,540
Total		$	1,669,147			$	6,777			$	(12,407	)		$	1,663,517

 

		Held-to-Maturity
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized (Losses)				Estimated Fair Value
		(In thousands)
U.S. government-sponsored enterprises		$	5,791			$	15			$	(15	)		$	5,791
Residential mortgage-backed securities			56,982				107				(402	)			56,687
Commercial mortgage-backed securities			16,625				114				(40	)			16,699
State and political subdivisions			145,358				3,031				(27	)			148,362
Total		$	224,756			$	3,267			$	(484	)		$	227,539

 

18