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Management Discussion

• Net income available to common shareholders for the three months ended March 31, 2021 was $70.6 million, with diluted earnings per share of $1.05, compared to $23.4 million or $0.35 per diluted share, respectively, for the first quarter of 2020.  Excluding after-tax restructuring and merger-related expenses (non-GAAP measure) in both periods, for the three months ended March 31, 2021, net income available to common shareholders was $71.3 million, or $1.06 per diluted share, as compared to $27.5 million or $0.41 per diluted share, respectively, in the prior year quarter.
• Net interest income decreased $3.7 million or 3.1% in the first quarter of 2021 compared to the same quarter of 2020, reflecting lower loan yields, due to repricing of existing loans and new lower rates offered in the current market environment, lower purchase accounting related accretion and lower rates on investment securities, partially offset by lower interest on deposits and borrowings.  As a result of the lower rates, the net interest margin decreased by 27 basis points to 3.27% in the first quarter of 2021 as compared to the first quarter of 2020.  Over the same time period, the yield on earning assets decreased a total of 68 basis points and the cost of interest bearing liabilities decreased 54 basis points.  Average loan balances increased by 5.0% from the first quarter of 2020, mainly attributable to participation in the PPP loan program, while average deposits, excluding certificates of deposit, increased 24.6% over the same time period, due mostly to stimulus deposits and increased personal savings.   Accretion from acquisitions benefited the first quarter 2021 net interest margin by 13 basis points, as compared to 22 basis points in the prior year period.  Lastly, the forgiveness of existing and the funding of new PPP loans positively impacted the first quarter 2021 net interest margin by a net 11 basis points.
• Improved macroeconomic factors, which include lower unemployment projections, utilized in the CECL calculation drove a net benefit of provision for credit losses and resulted in a negative provision of $28.0 million in the first quarter of 2021 as compared to a provision of $29.8 million in the first quarter of 2020.  Annualized net charge-offs, as a percentage of average portfolio loans, were 0.02% and 0.18% for the first quarter of 2021 and 2020, respectively.