Cadence Bancorporation (NYSE: CADE) (“Cadence”) today announced net income for the quarter ended March 31, 2021, of $106.4 million or $0.84 per share, compared to net income of $200.6 million or $1.57 per share for the quarter ended December 31, 2020, and a net loss of ($399.3) million or ($3.15) per share for the quarter ended March 31, 2020. Adjusted net income⁽¹⁾, excluding non-routine income and expenses⁽²⁾, was $104.7 million or $0.83 per share for the quarter ended March 31, 2021, compared to $199.7 million or $1.57 per share for the quarter ended December 31, 2020, and compared to $12.5 million or $0.10 per share for the quarter ended March 31, 2020. The fourth quarter of 2020 net income included accelerated hedge revenue of $129.5 million ($169.2 million pretax), and the first quarter of 2020 net loss included goodwill impairment of $412.9 million ($443.7 million pretax).

Chairman and Chief Executive Officer of Cadence Bancorporation, Paul B. Murphy, Jr. commented, “We are excited to report a strong start to 2021 at Cadence. The bank extended our trend of excellent operating results with pre-tax, pre-provision revenue (PPNR) as a percent of assets at 1.86%. As announced last week, we are very excited about the pending merger with BancorpSouth and it has been well received with our bankers, clients, and communities.”

First Quarter 2021 Highlights:

First quarter 2021 highlights are as follows:

• Adjusted pre-tax pre-provision net revenue⁽¹⁾ (“PPNR”) remained strong at $86.4 million or 1.86% of average assets, compared to fourth quarter 2020 PPNR of $260.0 million (or $90.8 million excluding the fourth quarter accelerated hedge revenue).
• The allowance for credit losses (“ACL”) incorporated a ($48.3) million provision release compared to a $2.8 million provision in the linked quarter reflecting meaningful improvement in current economic forecasts resulting from a decrease in COVID-19 driven stress. The ACL remained robust at 2.49% of total loans, down from 2.89% at December 31, 2020. Excluding Paycheck Protection Program (“PPP”) loans, our ACL to loans ratio was 2.67% at March 31, 2021, down from 3.12% at December 31, 2020. Our ratio of ACL to total nonperforming loans decreased slightly to 250% from 266% at December 31, 2020.
• Our tax equivalent net interest margin (“NIM”) was 3.22%, down 32 basis points from prior quarter. The NIM decline was driven by increased excess liquidity due to net declines in average loan balances combined with lower hedge income accretion. The decline was partially mitigated by a continued decline in total deposit costs, which decreased 5 basis points in the quarter to 0.20%.
• Our adjusted efficiency ratio⁽¹⁾ remained stable at 53.1%.
• Our capital ratios remained strong, with the Common Equity Tier 1 ratio increasing to 14.2% and total risk weighted capital remaining at 14.7%.
• Annualized returns on average assets and tangible common equity were 2.29% and 22.8%, respectively.
• Adjusted annualized returns on average assets⁽¹⁾ and adjusted tangible common equity⁽¹⁾ were 2.25% and 22.44%, respectively.
• We purchased approximately 1.6 million shares of our common stock during the quarter at a cost of $30.0 million. Given the previously announced pending merger with BancorpSouth, the stock buyback activity has been placed on hold.

Balance Sheet:

Total assets were $18.8 billion as of March 31, 2021, an increase of $87.8 million or 0.5% from December 31, 2020, and an increase of $1.6 billion or 9.1% from March 31, 2020. The linked quarter increase was driven by an increase in investment securities, partially offset by decreases in loans.

Cash and Cash Equivalents at March 31, 2021, totaled $1.9 billion as compared to $2.1 billion at December 31, 2020 and compared to $0.6 billion at March 31, 2020. The $165.4 million decrease in the first quarter of 2021 was driven by investment in securities.

Loans at March 31, 2021 totaled $12.4 billion as compared to $12.7 billion at December 31, 2020, a decrease of $353.8 million or 2.8%. Loans decreased $1.0 billion or 7.7% from $13.4 billion at March 31, 2020. PPP loans declined by $131.0 million in the first quarter, with the remaining non-PPP loan decline of $222.8 million being driven by net paydowns and payoffs partially offset by approximately $1.0 billion in loan fundings in the quarter. Notable linked quarter decreases, excluding PPP loans, included General C&I, down $138 million; Energy & Production, down $23 million, and Restaurant, down $33 million. These declines were partially offset by an increase in CRE balances largely due to construction draws in the industrial and multifamily categories.

Investment Securities at March 31, 2021 totaled $3.9 billion as compared to $3.3 billion at December 31, 2020 and $2.5 billion at March 31, 2020. Securities as a percent of earning assets was 19.1%, 18.6% and 14.7% at March 31, 2021, December 31, 2020, and March 31, 2020, respectively. The increase in securities from both the prior year and linked quarter is a result of increased balance sheet liquidity resulting from growth in deposits and decreases in net loans. Securities acquired during the first quarter include primarily U.S. government agency and agency pass-through residential mortgage-backed securities.

Total Deposits at March 31, 2021 were $16.1 billion, an increase of $77.0 million or 0.5% from December 31, 2020 and up $1.6 billion or 11.3% from March 31, 2020. Non-interest bearing deposits were $5.6 billion or 34.4% of total deposits at March 31, 2021, up from $5.0 billion or 31.4% of total deposits at December 31, 2020 and $4.0 billion or 27.3% at March 31, 2020. Total cost of deposits declined to 0.20% for the first quarter 2021, meaningfully lower than both the fourth quarter 2020 cost of 0.25% and the first quarter 2020 cost of 0.96%.

Total Borrowings at March 31, 2021 were $333.0 million, a decrease of $39.7 million from $372.7 million at December 31, 2020 and $372.4 million at March 31, 2020 due to repayment of $40 million in callable sub-debt at an annual rate of 4.91%.

Shareholders’ equity was $2.1 billion at March 31, 2021, a decrease of $28.6 million or 1.3% from December 31, 2020 and a decrease of $21.0 million or 1.0% from March 31, 2020. The linked quarter decrease included a decline of $86.9 million in other comprehensive income including a $68.8 million decrease in unrealized gains on investment securities available-for-sale, $18.9 million in cash dividends and $30.0 million in common stock buybacks, partially offset by quarterly net income of $106.4 million.

Tangible common shareholders’ equity⁽¹⁾ was $2.0 billion at March 31, 2021, down $23.6 million or 1.2% from December 31, 2020 and virtually unchanged from March 31, 2020. The linked quarter decrease resulted from the same factors noted above.

• Total shareholders’ equity to total assets and tangible equity to tangible assets were 11.1% and 10.6%, respectively, at March 31, 2021 compared to 11.3% and 10.7% at December 31, 2020 and 12.3% and 11.5%, respectively, at March 31, 2020.
• Tangible book value per share⁽¹⁾ was $15.80 as of March 31, 2021, a slight decrease of $0.03 or 0.2% from $15.83 as of December 31, 2020, and an increase of $0.15 or 1.0% from $15.65 as of March 31, 2020.
• Total shares outstanding at March 31, 2021 were 124.7 million.

Quarter end regulatory capital ratios remained robust and increased during the quarter as follows:

Asset Quality:

Credit quality metrics during the first quarter of 2021 reflected some notable improvements including lower net-charge offs and declines in nonperforming and criticized loan balances.

• Net charge-offs for the first quarter of 2021 were $12.1 million or 0.39% annualized of average loans compared to $21.2 million or 0.64% annualized and $32.5 million or 0.99% annualized for the quarters ended December 31, 2020 and March 31, 2020, respectively. The current quarter charge-offs included $10.7 million in General C&I and $2.1 million in Energy.
• Provision for credit losses was a release of ($48.3) million for the first quarter of 2021 as compared to $2.8 million for the fourth quarter of 2020 and $83.4 million for the first quarter of 2020. The current quarter’s release was driven by improved economic conditions and forecasts, as well as continued improvements in nonperforming and criticized loans. The first quarter 2021 provision release included $29.5 million release in the CRE segment (including releases of $11.1 million in the Hospitality category), $9.6 million release in the C&I segment (including releases of $9.5 million in the Restaurant category) and $7.9 million release in the Consumer segment.
• The ACL was $308.0 million or 2.49% of total loans as of March 31, 2021, as compared to $367.2 million or 2.89% of total loans as of December 31, 2020 and $245.2 million or 1.83% of total loans as of March 31, 2020. Excluding PPP loans, the ACL was 2.67% of total loans at March 31, 2021, down from 3.12% at December 31, 2020.
• The ACL for our $261.4 million Hospitality-CRE portfolio decreased to 14.8% of total loans at March 31, 2021 compared 19.5% at December 31, 2020. The ACL for our $804.7 million Restaurant portfolio (excluding PPP loans) decreased to 5.3% of total loans at March 31, 2021 as compared to 6.3% at December 31, 2020.
• Total nonperforming loans (“NPL”) as a percent of total loans were 1.00% at March 31, 2021, compared to 1.08% at December 31, 2020 and 1.19% at March 31, 2020. NPL totaled $123.4 million, $138.0 million and $159.7 million as of March 31, 2021, December 31, 2020 and March 31, 2020, respectively. The linked quarter decline was due primarily to payoffs, upgrades, and net charge-offs.
• The ACL to NPL was 249.7% as of March 31, 2021, as compared to 266.1% as of December 31, 2020 and 153.6% as of March 31, 2020.
• Total criticized loans at March 31, 2021 were $816.3 million or 6.6% of total loans as compared to $871.7 million or 6.9% at December 31, 2020 and $665.7 million or 5.0% at March 31, 2020. The linked quarter decrease was primarily in Restaurant, Energy, Healthcare, and Hospitality-CRE.
• COVID related loan payment deferrals totaled $97 million at March 31, 2021, down from $179 million at December 31, 2020.
• Loans 30-89 days past due were 0.40% of total loans at March 31, 2021, compared to 0.36% at December 31, 2020 and 0.19% at March 31, 2020.

Total Revenue:

Total operating revenue⁽¹⁾ for the first quarter of 2021 was $186.4 million, down $180.0 million or 49.1% from the fourth quarter of 2020 and down $2.1 million or 1.1% from the first quarter of 2020. The fourth quarter of 2020 included $169.2 million in accelerated hedge revenue.

Net interest income for the first quarter of 2021 was $142.7 million, a decrease of $14.0 million or 8.9% from the fourth quarter of 2020 and a decrease of $10.7 million or 7.0% from the first quarter of 2020. Compared to the linked quarter, the net interest income decline included $5.8 million in lower hedge income, $3.0 million due to fewer days in the quarter, $4.0 million due primarily to lower average loan balances and other balance sheet mix shifts, $1.0 million in lower non-PPP loan fees and $0.8 million in lower PPP loan income, partially offset by $2.0 million in lower funding costs driven by lower rates on deposits.

Our NIM for the first quarter of 2021 was 3.22% as compared to 3.54% for the linked quarter and 3.80% for the first quarter of 2020. Excluding the impact of PPP loans, the first quarter 2021 NIM decreased by 34 basis points to 3.24% from 3.58% in the linked quarter, with lower average loan balances, lower hedge income and lower loan fees attributing 20, 14 and 3 basis points of the decline, respectively, partially offset by 5 basis points of improvement from lower deposit costs.

• Our total funding costs continued to decline in the quarter, down $2.0 million to 0.29% compared to 0.35% in the prior quarter. Total deposit costs declined by 5 basis points to 0.20% for the current quarter compared to 0.25% for the linked quarter, and total interest-bearing liability costs declined by 8 basis points to 0.43% from 0.51% in the linked quarter. Average interest-bearing liabilities increased by $343.2 million or 3.2% from the prior quarter to $11.2 billion, and average noninterest-bearing deposits increased by $110.6 million or 2.1% from the prior quarter to $5.4 billion.
• Yield on loans excluding accretion and hedge income was 3.84% in the current quarter, down 5 basis points from 3.89% in the linked quarter. Excluding the impact of PPP loans, this yield was 3.91% in the current quarter, down from 3.98% for the linked quarter, with approximately 4 basis points of the 7 basis point decline due to lower fee recognition as a result of fewer loan payoffs in the first quarter. Average loans declined $586.9 million or 4.4% from the prior quarter to $12.7 billion.
• PPP loans averaged $877.6 million in the first quarter at a yield of 2.95%, down from $1,023.1 million in the linked quarter.
• Hedge income and collar gain recognition for the first quarter of 2021 was $14.1 million as compared to $19.9 million for the prior quarter.
• Accretion on acquired loans totaled $5.8 million for the first quarter of 2021 as compared to $5.9 million for the prior quarter.
• Yield on investment securities declined to 1.69% in the current quarter compared to 1.87% in linked quarter, with the lower yield reflecting the impact of securities purchased in the current and prior quarter. Average investment securities increased $244.4 million or 7.6% from the prior quarter to $3.4 billion.
• Average federal funds sold and short-term investments increased by $668.5 million or 53.2% from the prior quarter as a result of increased balance sheet liquidity, with yields falling to 0.15% compared to 0.18% linked quarter.
• Total earning asset yields declined to 3.49% in the current quarter compared to 3.85% in the linked quarter, with average balances increasing by $326.1 million or 1.8% to $18.0 billion.
• Excess liquidity in the first quarter negatively impacted the NIM by an estimated 24 basis points compared to 14 basis points in the linked quarter.

Noninterest income for the first quarter of 2021 was $43.7 million, a decrease of $166.0 million or 79.2% from the linked quarter, and an increase of $8.6 million or 24.6% from the same period of 2020 and. Adjusted noninterest income⁽¹⁾ for the first quarter of 2021 was $41.4 million, a decrease of $167.0 million or 80.1% from the linked quarter, and an increase of $9.4 million or 29.2% from the first quarter of 2020.

• The linked quarter decrease was driven by the hedge revenue of $169.2 million that occurred in the fourth quarter of 2020. The first quarter of 2021 also included increases of $1.3 million, $1.1 million, and $0.9 million in earnings from limited partnerships, SBA income and securities gains, respectively. These items were partially offset by decreases of $0.9 million in both mortgage banking income and in credit related fees related to volumes.
• Noninterest income as a percent of total revenue for the first quarter of 2021 was 23.4% as compared to 57.2% for the linked quarter and 18.6% for the first quarter of 2020.

Noninterest expense for the first quarter of 2021 was $97.8 million, compared to $105.3 million for the linked quarter and compared to $537.7 million for the same period of 2020. The first quarter of 2020 included a non-cash goodwill impairment charge of $443.7 million. Adjusted noninterest expense⁽¹⁾, which excludes the impact of non-routine items⁽²⁾, was $97.8 million, down $7.3 million or 6.9% from the linked quarter and up $5.3 million or 5.7% from the first quarter of 2020. The linked quarter decrease in noninterest expenses resulted from:

• A decrease of $2.8 million in personnel costs driven by a decrease of $7.4 million in equity compensation and annual incentive compensation as the prior quarter included accrual adjustments resulting from improved company performance. This decrease was partially mitigated by a seasonal increase of $4.2 million in payroll taxes and employee benefits.
• A decrease of $1.5 million in FDIC insurance assessment due to decreased nonperforming and criticized assets as well as quarterly net earnings trends.
• A decrease of $1.2 million in other noninterest expenses due to decreased expenses related to foreclosed real estate.

Adjusted efficiency ratio⁽¹⁾ for the first quarter of 2021 was 53.1%, compared to the linked quarter ratio of 28.8% and the prior year’s first quarter ratio of 49.9%. The linked quarter adjusted ratio included the hedge non-interest income of $169.2 million which did not recur in first quarter 2021.

Taxes:

The effective tax rate for the first quarter of 2021 was 22.3% compared to 22.4% for the linked quarter and 7.7% for the first quarter of 2020.

Dividend:

On April 22, 2021, the board of directors of Cadence Bancorporation declared a quarterly cash dividend in the amount of $0.15 per share of outstanding common stock, representing an annualized dividend of $0.60 per share. The dividend will be paid on May 14, 2021 to holders of record of Cadence’s Class A common stock on May 7, 2021.

Supplementary Financial Tables (Unaudited):

Supplementary financial tables (unaudited) are included in this release following the customary disclosure information.

First Quarter 2021 Earnings Conference Call:

Cadence Bancorporation executive management will host a conference call to discuss first quarter 2021 results on Thursday, April 22, 2021, at 7:30 a.m. CT / 8:30 a.m. ET. Slides to be presented by management on the conference call can be viewed by visiting www.cadencebancorporation.com and selecting “Events & Presentations” then “Presentations”.

Conference Call Access:

To access the conference call, please dial one of the following numbers approximately 10-15 minutes prior to the start time to allow time for registration and use the Elite Entry Number provided below.

For those unable to participate in the live presentation, a replay will be available through May 6, 2021. To access the replay, please use the following numbers:

Webcast Access:

The call and corresponding presentation slides will be webcast live on the home page of the Company’s website: www.cadencebancorporation.com.

About Cadence Bancorporation:

Cadence Bancorporation (NYSE: CADE), headquartered in Houston, Texas, is a regional financial holding company with $18.8 billion in total assets as of March 31, 2021. Its wholly owned subsidiary, Cadence Bank, N.A., operates 98 branch locations in Alabama, Florida, Georgia, Mississippi, Tennessee, and Texas, and provides corporations, middle-market companies, small businesses and consumers with a full range of innovative banking and financial solutions. Services and products include commercial and business banking, treasury management, specialized lending, asset-based lending, commercial real estate, SBA lending, foreign exchange, wealth management, investment and trust services, financial planning, retirement plan management, payroll and insurance services, consumer banking, consumer loans, mortgages, home equity lines and loans, and credit cards. Clients have access to leading-edge online and mobile solutions, interactive teller machines, and more than 55,000 ATMs. The Cadence team of approximately 1,800 associates is committed to exceeding customer expectations and helping their clients succeed financially.

Cautionary Statement Regarding Forward-Looking Information

Certain statements in this communication may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended with respect to BancorpSouth Bank’s and Cadence Bancorporation’s and Cadence Bank’s (together, “Cadence”) beliefs, plans, goals, expectations, and estimates. Forward-looking statements are not a representation of historical information but instead pertain to future operations, strategies, financial results or other developments. 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,” “continue,” “seek,” “intend,” “estimate,” “expect,” “foresee,” “hope,” “intend,” “may,” “might,” “plan,” “should,” “predict,” “project,” “goal,” “outlook,” “potential,” “will,” “will result,” “will likely result,” 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 terms, timing and closing of the proposed transaction.

Cadence cautions readers not to place undue reliance on the forward-looking statements contained in this communication, in that actual results could differ materially from those indicated in such forward-looking statements as a result of a variety of factors, many of which are beyond the control of BancorpSouth Bank and Cadence. The factors that could cause actual results to differ materially include the following: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between BancorpSouth Bank and Cadence; the outcome of any legal proceedings that may be instituted against BancorpSouth Bank or Cadence; the possibility that the proposed transaction will not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated; the ability of BancorpSouth Bank and Cadence to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of either or both parties to the proposed transaction; the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where BancorpSouth Bank and Cadence do business; certain restrictions during the pendency of the proposed transaction that may impact the parties’ ability to pursue certain business opportunities or strategic transactions; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management’s attention from ongoing business operations and opportunities; the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or at all and to successfully integrate Cadence’s operations and those of BancorpSouth Bank; such integration may be more difficult, time consuming or costly than expected; revenues following the proposed transaction may be lower than expected; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction; BancorpSouth Bank and Cadence’s success in executing their respective business plans and strategies and managing the risks involved in the foregoing; the dilution caused by BancorpSouth Bank’s issuance of additional shares of its capital stock in connection with the proposed transaction; business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic market areas; economic, market, operational, liquidity, credit and interest rate risks associated with our business; deteriorating asset quality and higher loan charge-offs; the laws and regulations applicable to our business; our ability to achieve organic loan and deposit growth and the composition of such growth; increased competition in the financial services industry, nationally, regionally or locally; our ability to maintain our historical earnings trends; our ability to raise additional capital to implement our business plan; material weaknesses in our internal control over financial reporting; systems failures or interruptions involving our information technology and telecommunications systems or third-party servicers; the composition of our management team and our ability to attract and retain key personnel; the fiscal position of the U.S. federal government and the soundness of other financial institutions; the composition of our loan portfolio, including the identity of our borrowers and the concentration of loans in energy-related industries and in our specialized industries; the portion of our loan portfolio that is comprised of participations and shared national credits; the amount of nonperforming and classified assets we hold; the extent of the impact of the COVID-19 pandemic on us and our customers, counterparties, employees and third-party service providers, and the impacts to our business, financial position, results of operations, and prospects; and other factors that may affect future results of BancorpSouth Bank and Cadence; and the other factors discussed in “Risk Factors” in BancorpSouth Bank’s Annual Report on Form 10-K for the year ended December 31, 2020 and BancorpSouth Bank’s other filings with the Federal Deposit Insurance Corporation (the “FDIC”), which are available at https://www.fdic.gov/ and in the “Investor Relations” section of BancorpSouth Bank’s website, https://www.bancorpsouth.com/, under the heading “Public Filings,” and in Cadence’s Annual Report on Form 10-K for the year ended December 31, 2020 and in Cadence’s other filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available at http://www.sec.gov and in the “Investor Relations” section of Cadence’s website, https://cadencebancorporation.com/, under the heading “SEC Filings.” BancorpSouth Bank and Cadence assume no obligation to update the information in this communication, except as otherwise required by law.

Additional Information and Where to Find It

This communication may be deemed to be solicitation material in respect of the proposed transaction by BancorpSouth Bank and Cadence. In connection with the proposed acquisition, BancorpSouth Bank and Cadence intend to file relevant materials with the FDIC and SEC, respectively, including the parties’ joint proxy statement on Schedule 14A, which shall include an offering circular with respect to the common stock of BancorpSouth Bank. STOCKHOLDERS OF BANCORPSOUTH BANK AND CADENCE ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE FDIC AND SEC WHEN THEY BECOME AVAILABLE, INCLUDING THE JOINT PROXY STATEMENT/OFFERING CIRCULAR, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain the documents free of charge at the FDIC’s website, https://www.fdic.gov/, and the SEC’s website, http://www.sec.gov, and the Cadence stockholders will receive information at an appropriate time on how to obtain transaction-related documents free of charge from Cadence. Such documents are not currently available.

Participants in Solicitation

BancorpSouth Bank and its directors and executive officers, and Cadence and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the holders of BancorpSouth Bank common stock and the holders of Cadence common stock in respect of the proposed transaction. Information about the directors and executive officers of BancorpSouth Bank is set forth in the proxy statement for BancorpSouth Bank’s 2021 Annual Meeting of Stockholders, which was filed with the FDIC on March 12, 2021. Information about the directors and executive officers of Cadence is set forth in the proxy statement for Cadence’s 2021 Annual Meeting of Stockholders, which was filed with the SEC on March 26, 2021. Investors may obtain additional information regarding the interest of such participants by reading the joint proxy statement/offering circular regarding the proposed transaction when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.

About Non-GAAP Financial Measures

Certain of the financial measures and ratios we present, including “efficiency ratio,” “adjusted efficiency ratio,” “adjusted noninterest expenses,” “adjusted operating revenue,” “tangible common equity ratio,” “tangible book value per share” and “return on average tangible common equity”, “adjusted return on average tangible common equity”, “adjusted return on average assets”, “adjusted diluted earnings per share”, and “pre-tax, pre-provision net revenue” are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis.

We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.

These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance. A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables (Table 10).