Exhibit 99.1
Shareholder Relations NEWS RELEASE
288 Union Street,
Rockland, MA 02370
INDEPENDENT BANK CORP. REPORTS FOURTH QUARTER NET INCOME OF $17.2 MILLION
Solid quarter reflects successful implementation of recent acquisition
Rockland, Massachusetts (January 19, 2017) Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2016 fourth quarter net income of $17.2 million, or $0.64 per diluted share, compared to $20.5 million, or $0.78 per diluted share, reported in the prior quarter. Net income for the full year was $76.6 million, or $2.90 on a diluted earnings per share basis, as compared to $65.0 million, or $2.50 per diluted share in the prior year. The current quarter and full year net income includes items that the Company considers to be noncore, such as merger and acquisition expenses, loss on extinguishment of debt and gains or losses on the sale of securities. When excluding these items and their related tax impact, net income for the fourth quarter was $20.2 million, or $0.76 on a diluted earnings per share basis, versus $20.6 million, or $0.78 per diluted share in the prior quarter. In addition, on an operating basis, full year net income was $80.4 million, or $3.04 on a diluted earnings per share basis, as compared to $71.7 million, or $2.76 per diluted share in the prior year.
“Rockland Trust’s financial performance reached new heights in 2016 as we achieved another annual earnings per share record,” said Christopher Oddleifson, the President and Chief Executive Officer of Independent Bank Corp. and Rockland Trust. “In 2016 my colleagues' devotion to superior customer service produced steady organic growth in both loans and deposits. Those efforts were complemented by the Bank of Cape Cod acquisition, which we announced early in 2016 and closed during the fourth quarter.”
NEW ENGLAND BANCORP ACQUISITION
On November 10, 2016, the Company acquired New England Bancorp ("NEB"), the parent company of Bank of Cape Cod. This resulted in the addition of one location in Osterville, Massachusetts while three of the former NEB branches were consolidated into existing Rockland Trust locations. The transaction included the acquisition of $225.7 million in loans and the assumption of $175.7 million in deposits, each at fair value. Total consideration of $41.7 million consisted primarily of 672,665 shares of Independent Bank Corp. common stock issued to New England Bancorp shareholders. The following table provides the purchase price allocation of net assets acquired for this transaction:
|
| | | |
| Net Assets Acquired at Fair Value |
| (Dollars in thousands) |
| Assets | |
| Cash | $ | 9,679 |
|
| Loans | 225,731 |
|
| Premises and equipment | 201 |
|
| Goodwill | 20,443 |
|
| Core deposit intangible | 670 |
|
| Other assets | 19,197 |
|
| Total assets acquired | $ | 275,921 |
|
| Liabilities | |
| Deposits | $ | 175,686 |
|
| Borrowings | 51,150 |
|
| Other liabilities | 7,344 |
|
| Total liabilities assumed | $ | 234,180 |
|
| Purchase price | $ | 41,741 |
|
For further detail on the loans and deposits acquired, see the organic growth table provided near the end of the financial schedules accompanying this release.
BALANCE SHEET
Total assets of $7.7 billion at December 31, 2016 increased by $207.4 million, or 2.8%, from the prior quarter and by $499.9 million, or 6.9%, as compared to the year ago period, inclusive of the NEB acquisition.
Exclusive of the acquisition, total loans grew in the fourth quarter by $27.7 million, or 1.9% on an annualized basis, and increased by $226.2 million, or 4.1%, when compared to the year ago period. This reflected the continued modest growth in the various commercial portfolios, which increased by $30.8 million, or 3.0% on an annualized basis, from the third quarter of 2016. The increase in the commercial real estate portfolio was driven mainly by the reclassification of construction loans that converted to permanent loans. On the consumer side, the home equity portfolio continued to benefit from a healthy housing market and successful marketing efforts, increasing organically by $16.6 million, or 6.8% on an annualized basis, during the fourth quarter. The residential mortgage portfolio was impacted by refinancings and net paydowns, declining organically by $18.9 million, or 11.9% on an annualized basis in the fourth quarter.
Exclusive of the acquisition, deposits decreased by $32.9 million, or 2.1% on an annualized basis during the fourth quarter, as compared to the linked quarter, attributable to a $49.1 million decrease in time deposits. This decrease in time deposits was partially due to the Company's planned run-off of higher cost, noncore deposits. Alternatively, core deposits increased organically by $16.2 million in the fourth quarter, and represent 89.9% of total deposits at December 31, 2016. Despite the addition of the higher cost NEB deposits, the total cost of deposits remained at 0.17% for the quarter, reflecting the Company’s continued emphasis on lower cost funding sources.
The securities portfolio increased by $32.9 million from the prior quarter due to $70.4 million in purchases of agency collateralized mortgage obligations and $23.0 million of agency mortgage pass-thru securities, offset by paydowns on existing securities. The higher yield curve towards the end of the fourth quarter was viewed as an opportunity to deploy some excess liquidity. Total securities of $851.5 million at December 31, 2016 comprised 11.0% of total assets of the Company at December 31, 2016.
The Company's FHLB borrowings remained unchanged at $50.8 million at December 31, 2016. All of NEB's FHLB borrowings of $51.2 million were paid off shortly after the acquisition closed and resulted in no prepayment penalty, as the borrowings were booked to fair value as part of the acquisition accounting.
Stockholders' equity at December 31, 2016 rose to $864.7 million, an increase of 5.7% from September 30, 2016 and 12.1% from the year ago period, primarily due to the NEB acquisition and continued strong earnings retention. In addition, book value per share increased $0.93, or 3.0%, during the fourth quarter and the Company's ratio of common equity to assets of 11.22% increased 31 basis points from the prior quarter end and 52 basis points from the same period a year ago. Despite the increased goodwill from the NEB acquisition and the impact of the higher rates on the valuation of the available for sale securities portfolio, the Company's tangible book value per share rose by $0.37, or 1.6%, in the fourth quarter compared to the third quarter, and its ratio of tangible common equity to tangible assets of 8.47% represents an increase of 14 basis points from the prior quarter and 49 basis points from the same period a year ago.
NET INTEREST INCOME
Net interest income for the fourth quarter was $58.8 million, representing a $1.1 million, or 1.9%, increase over the prior quarter. The increase was mainly attributable to higher levels of interest earning assets, inclusive of the NEB acquisition. The Company’s net interest margin decreased by four basis points from the prior quarter to 3.36%, driven primarily by a seven basis point decrease resulting from lower prepayment penalties on the commercial real estate portfolio, partially offset by increases in market rates during the quarter.
NONINTEREST INCOME
Noninterest income totaled $21.8 million in the fourth quarter, which represents a $1.3 million, or 6.6%, increase from the prior quarter. Significant changes in noninterest income in the fourth quarter compared to the prior quarter included the following:
| |
| • | Deposit account fees and interchange and ATM fees decreased by $130,000, or 1.5%, driven mainly by seasonality. |
| |
| • | Investment management income increased by $180,000, or 3.3%, due to an increase in retail investments and insurance-related income as well as continued growth in assets under administration, which increased 1.2% to $2.9 billion as of December 31, 2016. |
| |
| • | Mortgage banking income increased by $186,000, or 9.5%, driven mainly by impairment recovery on the Company's mortgage servicing asset due to the higher rate environment. |
| |
| • | The increase in cash surrender value of life insurance policies of $125,000, or 12.7%, was due to annual dividend income. |
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| • | Loan level derivative income increased by $718,000, or 88.6%, due to higher customer demand in the fourth quarter. |
| |
| • | Other noninterest income increased $266,000, or 11.1%, mainly due to an increase in certain loan fees and capital gain distributions received on equity securities, partially offset by decreases in income from a Community Reinvestment Act investment as well as 1031 tax exchange income. |
NONINTEREST EXPENSE
The Company recorded noninterest expense of $51.6 million during the fourth quarter, which represents a $4.8 million, or 10.2%, increase from the prior quarter. Significant changes in noninterest expense in the fourth quarter compared to the prior quarter included the following:
| |
| • | Salaries and employee benefits expense decreased by $320,000, or 1.2%, due primarily to decreases in the valuation of the Company's split dollar liability related to bank-owned life insurance policies, as a result of interest rate movements. |
| |
| • | Occupancy and equipment expenses increased by $507,000, or 9.3%, mainly due to accelerated depreciation of leasehold improvements relating to a branch closing in the fourth quarter. |
| |
| • | Data processing expense decreased by $256,000, or 18.3%, due mainly to one-time costs incurred during the third quarter of 2016 associated with implementation of new software. |
| |
| • | Merger and acquisition costs amounted to $4.8 million for the quarter as compared to $151,000 in the prior quarter. The majority of the expenses related to compensation and severance agreements, as well as legal and consulting fees associated with the fourth quarter closing of the NEB acquisition. Also included in this amount was approximately $483,000 of expenses incurred related to the pending acquisition of Island Bancorp, Inc., which is expected to close in the second quarter of 2017. |
| |
| • | Other noninterest expense increased by $236,000, or 2.0%, driven primarily by higher provisions for unfunded commitments and consultant fees, partially offset by lower advertising, recruitment, and legal expenses. |
The Company generated a return on average assets and a return on average common equity of 0.89% and 8.07%, respectively, in the fourth quarter, as compared to 1.09% and 9.98%, respectively, for the prior quarter. Additionally, on an operating basis, the Company generated a return on average assets and return on average common equity of 1.05% and 9.51%, respectively, in the fourth quarter, as compared to 1.10% and 10.03%, respectively, for the prior quarter.
ASSET QUALITY
During the fourth quarter, the Company recorded total net charge-offs of $639,000, or 0.04% of average loans on an annualized basis, compared to net charge-offs of $472,000 in the prior quarter. The provision for loan losses increased to $4.0 million for the fourth quarter versus $950,000 in the third quarter of 2016, reflecting a $3.6 million specific loan loss reserve for one large commercial relationship which was placed on nonaccrual status in the fourth quarter. This action accounted for the increase in nonperforming loans to $57.4 million, or 0.96% of loans at December 31, 2016 from $24.8 million, or 0.43% at September 30, 2016. Total nonperforming assets likewise increased to $61.6 million at the end of the fourth quarter, from $26.6 million at the end of the prior quarter. Delinquency as a percentage of loans remained low at 0.33% at December 31, 2016, a decrease of eleven basis points from the prior quarter, as this single commercial relationship was current on payments as of year end. The decision to place the credits associated with the relationship on nonaccrual resulted from an expectation that the borrower will no longer be able to make full interest and principal payments.
The allowance for loan losses was $61.6 million at December 31, 2016, as compared to $58.2 million at September 30, 2016. The Company’s allowance for loan losses as a percentage of loans was 1.03% and 1.01% as of December 31, 2016 and September 30, 2016, respectively.
CONFERENCE CALL INFORMATION
Christopher Oddleifson, Chief Executive Officer and Robert Cozzone, Chief Financial Officer will host a conference call to discuss fourth quarter earnings at 10:00 a.m. Eastern Time on Friday, January 20, 2017. Internet access to the call is available on the Company’s website at www.rocklandtrust.com or via telephonic access by dial-in at 1-888-336-7153 reference: INDB. A replay of the call will be available by calling 1-877-344-7529, Replay Conference Number: 10098161 and will be available through February 3, 2017. Additionally, a webcast replay will be available until January 20, 2018.
ABOUT INDEPENDENT BANK CORP.
Independent Bank Corp. has approximately $7.7 billion in assets and is the holding company for Rockland Trust Company, a full-service commercial bank headquartered in Massachusetts. Rockland Trust offers a wide range of banking, investment, and insurance services to businesses and individuals through retail branches, commercial lending offices, investment management offices, and residential lending centers located in Eastern Massachusetts and Rhode Island, as well as through telephone banking, mobile banking, and the Internet. Rockland Trust is an FDIC Member and an Equal Housing Lender. To find out why Rockland Trust is the bank “Where Each Relationship Matters ®”, please visit www.rocklandtrust.com.
This press release contains certain “forward-looking statements” with respect to the financial condition, results of operations and business of the Company. These statements may be identified by such forward-looking terminology as “expect,” “achieve,” “plan,” “believe,” “future,” “positioned,” “continued,” “will,” “would,” “potential,” or similar statements or variations of such terms. Actual results may differ from those contemplated by these forward-looking statements.
Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:
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| • | a weakening in the United States economy in general and the regional and local economies within the New England region and the Company’s market area; |
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| • | adverse changes in the local real estate market; |
| |
| • | adverse changes in asset quality including an unanticipated credit deterioration in our loan portfolio including those related to one or more large commercial relationships; |
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| • | acquisitions may not produce results at levels or within time frames originally anticipated and may result in unforeseen integration issues or impairment of goodwill and/or other intangibles; |
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| • | changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; |
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| • | higher than expected tax expense, resulting from failure to comply with general tax laws, changes in tax laws, or failure to comply with requirements of the federal New Markets Tax Credit program; |
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| • | unexpected changes in market interest rates for interest earning assets and/or interest bearing liabilities; |
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| • | unexpected increased competition in the Company’s market area; |
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| • | unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather or other external events; |
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| • | a deterioration in the conditions of the securities markets; |
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| • | a deterioration of the credit rating for U.S. long-term sovereign debt; |
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| • | our inability to adapt to changes in information technology; |
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| • | electronic fraudulent activity within the financial services industry, especially in the commercial banking sector; |
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| • | adverse changes in consumer spending and savings habits; |
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| • | failure to consummate or delay in consummating the acquisition of Island Bancorp, which is subject to certain standard conditions, including approval of the transaction by Island Bancorp shareholders and receipt of required regulatory approvals; |
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| • | the inability to realize expected revenue synergies from merger transactions in the amounts or in the timeframe anticipated; |
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| • | inability to retain customers and employees, including those of previous mergers; |
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| • | the effect of laws and regulations regarding the financial services industry including, but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act; |
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| • | changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) generally applicable to the Company’s business; |
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| • | changes in accounting policies, practices and standards, 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; |
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| • | cyber security attacks or intrusions that could adversely impact our businesses; and |
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| • | other unexpected material adverse changes in our operations or earnings. |
The Company wishes to caution readers not to place undue reliance on any forward-looking statements as the Company’s business and its forward-looking statements involve substantial known and unknown risks and uncertainties described in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q (“Risk Factors”). Except as required by law, the Company disclaims any intent or obligation to update publicly any such forward-looking statements, whether in response to new information, future events or otherwise. Any public statements or disclosures by the Company following this release which modify or impact any of the forward-looking statements contained in this release will be deemed to modify or supersede such statements in this release. In addition to the information set forth in this press release, you should carefully consider the Risk Factors.
This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This information includes operating earnings and operating EPS, tangible book value per share and the tangible common equity ratio, also return on average assets and return on average equity on an operating basis. Operating earnings and operating EPS exclude items that management believes are unrelated to its core banking business such as gains or losses on the sales of securities, loss on extinguishment of debt, merger and acquisition expenses, and other items. The Company’s management uses operating earnings and operating EPS to measure the strength of the Company’s core banking business and to identify trends that may to some extent be obscured by such excluded gains or losses.
Management also supplements its evaluation of financial performance with analysis of tangible book value per share (which is computed by dividing stockholders' equity less goodwill and identifiable intangible assets, or "tangible common equity", by common shares outstanding) and with the tangible common equity ratio (which is computed by dividing tangible common equity by tangible assets). The Company has included information on tangible book value per share and the tangible common equity ratio because management believes that investors may find it useful to have access to the same analytical tool used by management. As a result of merger and acquisition activity, the Company has recognized goodwill and other intangible assets in conjunction with business combination accounting principles. Excluding the impact of goodwill and other intangibles in measuring asset and capital values for the ratios provided, along with other bank standard capital ratios, provides a framework to compare the capital adequacy of the Company to other companies in the financial services industry.
These non-GAAP measures should not be viewed as a substitute for operating results and other financial measures determined in accordance with GAAP. An item which management deems to be non-core and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP performance measures, including operating earnings, operating EPS, tangible book value per share and the tangible common equity ratio are not necessarily comparable to non-GAAP performance measures which may be presented by other companies.
Contacts:
Chris Oddleifson
President and Chief Executive Officer
(781) 982-6660
Robert Cozzone
Chief Financial Officer and Treasurer
(781) 982-6723
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| | | | | | | | | | | | | | | | | |
| INDEPENDENT BANK CORP. FINANCIAL SUMMARY | | | | | | |
| CONSOLIDATED BALANCE SHEETS | | | | |
| (Unaudited dollars in thousands) | | | | | | | % Change | | % Change |
| | December 31
2016 | | September 30
2016 | | December 31
2015 | | Dec 2016 vs. | | Dec 2016 vs. |
| | | | | Sept 2016 | | Dec 2015 |
| Assets | | | | | | | | | |
| Cash and due from banks | $ | 97,196 |
| | $ | 92,185 |
| | $ | 84,813 |
| | 5.44 | % | | 14.60 | % |
| Interest-earning deposits with banks | 191,899 |
| | 265,618 |
| | 190,952 |
| | (27.75 | )% | | 0.50 | % |
| Securities | | | | | | | | | |
| Securities - trading | 804 |
| | 809 |
| | 356 |
| | (0.62 | )% | | 125.84 | % |
| Securities - available for sale | 363,644 |
| | 387,008 |
| | 367,249 |
| | (6.04 | )% | | (0.98 | )% |
| Securities - held to maturity | 487,076 |
| | 430,763 |
| | 477,507 |
| | 13.07 | % | | 2.00 | % |
| Total securities | 851,524 |
| | 818,580 |
| | 845,112 |
| | 4.02 | % | | 0.76 | % |
| Loans held for sale (at fair value) | 6,139 |
| | 13,334 |
| | 5,990 |
| | (53.96 | )% | | 2.49 | % |
| Loans | | | | | | |
|
| | |
| Commercial and industrial | 902,053 |
| | 857,713 |
| | 843,276 |
| | 5.17 | % | | 6.97 | % |
| Commercial real estate | 3,010,798 |
| | 2,787,660 |
| | 2,653,434 |
| | 8.00 | % | | 13.47 | % |
| Commercial construction | 320,391 |
| | 376,245 |
| | 373,368 |
| | (14.85 | )% | | (14.19 | )% |
| Small business | 122,726 |
| | 115,054 |
| | 96,246 |
| | 6.67 | % | | 27.51 | % |
| Total commercial | 4,355,968 |
| | 4,136,672 |
| | 3,966,324 |
| | 5.30 | % | | 9.82 | % |
| Residential real estate | 644,426 |
| | 632,685 |
| | 638,606 |
| | 1.86 | % | | 0.91 | % |
| Home equity - first position | 577,006 |
| | 559,867 |
| | 543,092 |
| | 3.06 | % | | 6.24 | % |
| Home equity - subordinate positions | 411,141 |
| | 405,245 |
| | 384,711 |
| | 1.45 | % | | 6.87 | % |
| Total consumer real estate | 1,632,573 |
| | 1,597,797 |
| | 1,566,409 |
| | 2.18 | % | | 4.22 | % |
| Other consumer | 11,064 |
| | 11,664 |
| | 14,988 |
| | (5.14 | )% | | (26.18 | )% |
| Total loans | 5,999,605 |
| | 5,746,133 |
| | 5,547,721 |
| | 4.41 | % | | 8.15 | % |
| Less: allowance for loan losses | (61,566 | ) | | (58,205 | ) | | (55,825 | ) | | 5.77 | % | | 10.28 | % |
| Net loans | 5,938,039 |
| | 5,687,928 |
| | 5,491,896 |
| | 4.40 | % | | 8.12 | % |
| Federal Home Loan Bank stock | 11,497 |
| | 11,304 |
| | 14,431 |
| | 1.71 | % | | (20.33 | )% |
| Bank premises and equipment, net | 78,480 |
| | 76,429 |
| | 75,663 |
| | 2.68 | % | | 3.72 | % |
| Goodwill and other intangibles | 231,374 |
| | 210,834 |
| | 212,909 |
| | 9.74 | % | | 8.67 | % |
| Other assets | 303,227 |
| | 325,797 |
| | 287,703 |
| | (6.93 | )% | | 5.40 | % |
| Total assets | $ | 7,709,375 |
| | $ | 7,502,009 |
| | $ | 7,209,469 |
| | 2.76 | % | | 6.93 | % |
| Liabilities and Stockholders' Equity | | | | | | | | | |
| Deposits | | | | | | | | | |
| Demand deposits | $ | 2,057,086 |
| | $ | 2,024,235 |
| | $ | 1,846,593 |
| | 1.62 | % | | 11.40 | % |
| Savings and interest checking accounts | 2,469,237 |
| | 2,417,195 |
| | 2,370,141 |
| | 2.15 | % | | 4.18 | % |
| Money market | 1,236,778 |
| | 1,198,959 |
| | 1,089,139 |
| | 3.15 | % | | 13.56 | % |
| Time certificates of deposit | 649,152 |
| | 629,071 |
| | 684,830 |
| | 3.19 | % | | (5.21 | )% |
| Total deposits | 6,412,253 |
| | 6,269,460 |
| | 5,990,703 |
| | 2.28 | % | | 7.04 | % |
| Borrowings | | | | | | | | | |
| Federal Home Loan Bank borrowings | 50,819 |
| | 50,826 |
| | 102,080 |
| | (0.01 | )% | | (50.22 | )% |
| Customer repurchase agreements and other short-term borrowings | 176,913 |
| | 140,914 |
| | 133,958 |
| | 25.55 | % | | 32.07 | % |
| Junior subordinated debentures | 73,107 |
| | 73,157 |
| | 73,306 |
| | (0.07 | )% | | (0.27 | )% |
| Subordinated debentures | 34,635 |
| | 34,624 |
| | 34,589 |
| | 0.03 | % | | 0.13 | % |
| Total borrowings | 335,474 |
| | 299,521 |
| | 343,933 |
| | 12.00 | % | | (2.46 | )% |
| Total deposits and borrowings | 6,747,727 |
| | 6,568,981 |
| | 6,334,636 |
| | 2.72 | % | | 6.52 | % |
| Other liabilities | 96,958 |
| | 114,786 |
| | 103,370 |
| | (15.53 | )% | | (6.20 | )% |
| Stockholders' equity | | | | | | | | | |
| Common stock | 268 |
| | 261 |
| | 260 |
| | 2.68 | % | | 3.08 | % |
| Additional paid in capital | 451,664 |
| | 409,731 |
| | 405,486 |
| | 10.23 | % | | 11.39 | % |
|
| | | | | | | | | | | | | | | | | |
| Retained earnings | 414,095 |
| | 404,750 |
| | 368,169 |
| | 2.31 | % | | 12.47 | % |
| Accumulated other comprehensive income (loss), net of tax | (1,337 | ) | | 3,500 |
| | (2,452 | ) | | (138.20 | )% | | (45.47 | )% |
| Total stockholders' equity | 864,690 |
| | 818,242 |
| | 771,463 |
|
| 5.68 | % | | 12.08 | % |
| Total liabilities and stockholders' equity | $ | 7,709,375 |
| | $ | 7,502,009 |
| | $ | 7,209,469 |
| | 2.76 | % | | 6.93 | % |
|
| | | | | | | | | | | | | | | | | |
| CONSOLIDATED STATEMENTS OF INCOME | | | | | |
| (Unaudited dollars in thousands, except per share data) | | | | | |
| | Three Months Ended | | | | |
| | | | | | | | % Change | | % Change |
| | December 31
2016 | | September 30
2016 | | December 31
2015 | | Dec 2016 vs. | | Dec 2016 vs. |
| | | | | Sept 2016 | | Dec 2015 |
| Interest income | | | | | | | | | |
| Interest on federal funds sold and short-term investments | $ | 423 |
| | $ | 387 |
| | $ | 137 |
| | 9.3 | % | | 208.76 | % |
| Interest and dividends on securities | 5,379 |
| | 5,062 |
| | 5,218 |
| | 6.26 | % | | 3.09 | % |
| Interest and fees on loans | 57,561 |
| | 56,778 |
| | 54,463 |
| | 1.38 | % | | 5.69 | % |
| Interest on loans held for sale | 65 |
| | 81 |
| | 52 |
| | (19.75 | )% | | 25.00 | % |
| Total interest income | 63,428 |
| | 62,308 |
| | 59,870 |
| | 1.80 | % | | 5.94 | % |
| Interest expense | | | | | | | | | |
| Interest on deposits | 2,801 |
| | 2,733 |
| | 2,940 |
| | 2.49 | % | | (4.73 | )% |
| Interest on borrowings | 1,875 |
| | 1,907 |
| | 2,045 |
| | (1.68 | )% | | (8.31 | )% |
| Total interest expense | 4,676 |
| | 4,640 |
| | 4,985 |
| | 0.78 | % | | (6.20 | )% |
| Net interest income | 58,752 |
| | 57,668 |
| | 54,885 |
| | 1.88 | % | | 7.05 | % |
| Provision for loan losses | 4,000 |
| | 950 |
| | 500 |
| | 321.05 | % | | 700.00 | % |
| Net interest income after provision for loan losses | 54,752 |
| | 56,718 |
| | 54,385 |
| | (3.47 | )% | | 0.67 | % |
| Noninterest income | | | | | | | | | |
| Deposit account fees | 4,522 |
| | 4,622 |
| | 4,694 |
| | (2.16 | )% | | (3.66 | )% |
| Interchange and ATM fees | 4,160 |
| | 4,190 |
| | 3,911 |
| | (0.72 | )% | | 6.37 | % |
| Investment management | 5,626 |
| | 5,446 |
| | 5,120 |
| | 3.31 | % | | 9.88 | % |
| Mortgage banking income | 2,149 |
| | 1,963 |
| | 1,331 |
| | 9.48 | % | | 61.46 | % |
| Increase in cash surrender value of life insurance policies | 1,109 |
| | 984 |
| | 1,007 |
| | 12.70 | % | | 10.13 | % |
| Gain on sale of equity securities | 1 |
| | — |
| | 1 |
| | 100.00% |
| | — | % |
| Loan level derivative income | 1,528 |
| | 810 |
| | 1,013 |
| | 88.64 | % | | 50.84 | % |
| Other noninterest income | 2,667 |
| | 2,401 |
| | 2,747 |
| | 11.08 | % | | (2.91 | )% |
| Total noninterest income | 21,762 |
| | 20,416 |
| | 19,824 |
| | 6.59 | % | | 9.78 | % |
| Noninterest expenses | | | | | | | | | |
| Salaries and employee benefits | 27,075 |
| | 27,395 |
| | 26,777 |
| | (1.17 | )% | | 1.11 | % |
| Occupancy and equipment expenses | 5,940 |
| | 5,433 |
| | 5,511 |
| | 9.33 | % | | 7.78 | % |
| Data processing and facilities management | 1,144 |
| | 1,400 |
| | 1,168 |
| | (18.29 | )% | | (2.05 | )% |
| FDIC assessment | 725 |
| | 725 |
| | 986 |
| | — | % | | (26.47 | )% |
| Merger and acquisition expense | 4,764 |
| | 151 |
| | — |
| | 3,054.97 | % | | 100.00% |
|
| Loss on sale of equity securities | — |
| | — |
| | 91 |
| | n/a |
| | (100.00 | )% |
| Other noninterest expenses | 11,989 |
| | 11,753 |
| | 11,953 |
| | 2.01 | % | | 0.30 | % |
| Total noninterest expenses | 51,637 |
| | 46,857 |
| | 46,486 |
| | 10.20 | % | | 11.08 | % |
| Income before income taxes | 24,877 |
| | 30,277 |
| | 27,723 |
| | (17.84 | )% | | (10.27 | )% |
| Provision for income taxes | 7,698 |
| | 9,793 |
| | 8,268 |
| | (21.39 | )% | | (6.89 | )% |
| Net Income | $ | 17,179 |
| | $ | 20,484 |
| | $ | 19,455 |
| | (16.13 | )% | | (11.70 | )% |
| | | | | | | | | | |
| Weighted average common shares (basic) | 26,710,029 |
| | 26,324,316 |
| | 26,238,004 |
| | | | |
| Common share equivalents | 60,022 |
| | 53,072 |
| | 52,772 |
| | | | |
| Weighted average common shares (diluted) | 26,770,051 |
| | 26,377,388 |
| | 26,290,776 |
| | | | |
| | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | |
| Basic earnings per share | $ | 0.64 |
| | $ | 0.78 |
| | $ | 0.74 |
| | (17.95 | )% | | (13.51 | )% |
| Diluted earnings per share | $ | 0.64 |
| | $ | 0.78 |
| | $ | 0.74 |
| | (17.95 | )% | | (13.51 | )% |
| | | | | | | | | | |
| Reconciliation of Net Income (GAAP) to Operating Earnings (Non-GAAP): | | | | | | | | |
| Net income | $ | 17,179 |
| | $ | 20,484 |
| | $ | 19,455 |
| | | | |
| Noninterest expense components | | | | | | | | | |
| Add - merger and acquisition expenses | 4,764 |
| | 151 |
| | — |
| | | | |
| Noncore items, gross | 4,764 |
| | 151 |
| | — |
| | | | |
| Less - net tax benefit associated with noncore items (1) | (1,702 | ) | | (61 | ) | | — |
| | | | |
| Noncore items, net of tax | 3,062 |
| | 90 |
| | — |
| | | | |
| Net operating earnings | $ | 20,241 |
| | $ | 20,574 |
| | $ | 19,455 |
| | (1.62 | )% | | 4.04 | % |
| | | | | | | | | | |
| Diluted earnings per share, on an operating basis | $ | 0.76 |
| | $ | 0.78 |
| | $ | 0.74 |
| | (2.56 | )% | | 2.70 | % |
| (1) The net tax benefit associated with noncore items is determined by assessing whether each noncore item is included or excluded from net taxable income and applying the Company's combined marginal tax rate to only those items included in net taxable income. |
| | | | | | | | | | |
| Performance ratios | | | | | | | | | |
| Net interest margin (FTE) | 3.36 | % | | 3.40 | % | | 3.34 | % | | | | |
| Return on average assets GAAP (calculated by dividing net income by average assets) | 0.89 | % | | 1.09 | % | | 1.07 | % | | | | |
| Return on average assets on an operating basis (calculated by dividing net operating earnings by average assets) | 1.05 | % | | 1.10 | % | | 1.07 | % | | | | |
| Return on average common equity GAAP (calculated by dividing net income by average common equity) | 8.07 | % | | 9.98 | % | | 10.03 | % | | | | |
| Return on average common equity on an operating basis (calculated by dividing net operating earnings by average common equity) | 9.51 | % | | 10.03 | % | | 10.03 | % | | | | |
|
| | | | | | | | | | | |
| CONSOLIDATED STATEMENTS OF INCOME | | | | | |
| (Unaudited dollars in thousands, except per share data) | | | | |
| | | Years Ended | | |
| | | | | | | % Change |
| | | December 31
2016 | | December 31
2015 | | Dec 2016 vs. |
| | | | | Dec 2015 |
| | | | | | | |
| Interest income | | | | | | |
| Interest on federal funds sold and short-term investments | | $ | 1,190 |
| | $ | 349 |
| | 240.97 | % |
| Interest and dividends on securities | | 20,968 |
| | 20,247 |
| | 3.56 | % |
| Interest and fees on loans | | 224,244 |
| | 214,724 |
| | 4.43 | % |
| Interest on loans held for sale | | 235 |
| | 225 |
| | 4.44 | % |
| Total interest income | | 246,637 |
| | 235,545 |
| | 4.71 | % |
| Interest expense | | | | | |
|
|
| Interest on deposits | | 11,140 |
| | 11,576 |
| | (3.77 | )% |
| Interest on borrowings | | 7,653 |
| | 9,041 |
| | (15.35 | )% |
| Total interest expense | | 18,793 |
| | 20,617 |
| | (8.85 | )% |
| Net interest income | | 227,844 |
| | 214,928 |
| | 6.01 | % |
| Provision for loan losses | | 6,075 |
| | 1,500 |
| | 305.00 | % |
| Net interest income after provision for loan losses | | 221,769 |
| | 213,428 |
| | 3.91 | % |
| Noninterest income | | | | | |
|
|
| Deposit account fees | | 18,085 |
| | 18,078 |
| | 0.04 | % |
| Interchange and ATM fees | | 16,210 |
| | 14,728 |
| | 10.06 | % |
| Investment management | | 21,809 |
| | 20,735 |
| | 5.18 | % |
| Mortgage banking income | | 6,607 |
| | 5,163 |
| | 27.97 | % |
| Increase in cash surrender value of life insurance policies | | 4,089 |
| | 3,692 |
| | 10.75 | % |
| Gain on sale of fixed income securities | | — |
| | 798 |
| | (100.00 | )% |
| Gain on sale of equity securities | | 6 |
| | 20 |
| | (70.00 | )% |
|
| | | | | | | | | | | |
| Loan level derivative income | | 6,155 |
| | 3,830 |
| | 60.70 | % |
| Other noninterest income | | 9,467 |
| | 8,844 |
| | 7.04 | % |
| Total noninterest income | | 82,428 |
| | 75,888 |
| | 8.62 | % |
| Noninterest expenses | | | | | |
|
|
| Salaries and employee benefits | | 108,636 |
| | 105,068 |
| | 3.40 | % |
| Occupancy and equipment expenses | | 22,867 |
| | 23,020 |
| | (0.66 | )% |
| Data processing and facilities management | | 4,975 |
| | 4,631 |
| | 7.43 | % |
| FDIC assessment | | 3,380 |
| | 3,979 |
| | (15.05 | )% |
| Merger and acquisition expense | | 5,455 |
| | 10,501 |
| | (48.05 | )% |
| Loss on extinguishment of debt | | 437 |
| | 122 |
| | 258.20 | % |
| Loss on sale of fixed income securities | | — |
| | 1,124 |
| | (100.00 | )% |
| Loss on sale of equity securities | | 32 |
| | 99 |
| | (67.68 | )% |
| Other noninterest expenses | | 46,340 |
| | 48,594 |
| | (4.64 | )% |
| Total noninterest expenses | | 192,122 |
| | 197,138 |
| | (2.54 | )% |
| Income before income taxes | | 112,075 |
| | 92,178 |
| | 21.59 | % |
| Provision for income taxes | | 35,427 |
| | 27,218 |
| | 30.16 | % |
| Net Income | | $ | 76,648 |
| | $ | 64,960 |
| | 17.99 | % |
| | | | | | | |
| Weighted average common shares (basic) | | 26,404,071 |
| | 25,891,382 |
| |
|
|
| Common share equivalents | | 51,847 |
| | 68,566 |
| | |
| Weighted average common shares (diluted) | | 26,455,918 |
| | 25,959,948 |
| | |
| | | | | | | |
| Basic earnings per share | | $ | 2.90 |
| | $ | 2.51 |
| | 15.54 | % |
| Diluted earnings per share | | $ | 2.90 |
| | $ | 2.50 |
| | 16.00 | % |
| | | | | | | |
| Reconciliation of Net Income (GAAP) to Operating Earnings (Non-GAAP): | | | | | |
|
|
| Net Income | | $ | 76,648 |
| | $ | 64,960 |
| | |
| Noninterest income components | | | | | |
|
|
| Less - gain on sale of fixed income securities | | — |
| | (798 | ) | |
|
|
| Noninterest expense components | | | | | |
|
|
| Add - impairment on acquired facilities | | — |
| | 109 |
| |
|
|
| Add - loss on extinguishment of debt | | 437 |
| | 122 |
| |
|
|
| Add - loss on sale of fixed income securities | | — |
| | 1,124 |
| |
|
|
| Add - merger and acquisition expenses | | 5,455 |
| | 10,501 |
| |
|
|
| Noncore items, gross | | 5,892 |
| | 11,058 |
| |
|
|
| Less - net tax benefit associated with noncore items (1) | | (2,163 | ) | | (4,285 | ) | |
|
|
| Noncore items, net of tax | | 3,729 |
| | 6,773 |
| |
|
|
| Net operating earnings | | $ | 80,377 |
| | $ | 71,733 |
| | 12.05 | % |
| | | | | | | |
| Diluted earnings per share, on an operating basis | | $ | 3.04 |
| | $ | 2.76 |
| | 10.14 | % |
| (1) The net tax benefit associated with noncore items is determined by assessing whether each noncore item is included or excluded from net taxable income and applying the Company's combined marginal tax rate to only those items included in net taxable income. |
| | | | | | | |
| Performance ratios | | | | | |
|
|
| Net interest margin (FTE) | | 3.40 | % | | 3.42 | % | | (0.58 | )% |
| Return on average assets GAAP (calculated by dividing net income by average assets) | | 1.04 | % | | 0.93 | % | | 11.83 | % |
| Return on average assets on an operating basis (calculated by dividing net operating earnings by average assets) | | 1.09 | % | | 1.03 | % | | 5.83 | % |
| Return on average common equity GAAP (calculated by dividing net income by average common equity) | | 9.43 | % | | 8.79 | % | | 7.28 | % |
| Return on average common equity on an operating basis (calculated by dividing net operating earnings by average common equity) | | 9.89 | % | | 9.70 | % | | 1.96 | % |
|
| | | | | | | | | | | | |
| ASSET QUALITY | | |
| (Unaudited dollars in thousands) | | Nonperforming Assets At |
| | | December 31
2016 | | September 30
2016 | | December 31
2015 |
| Nonperforming loans | | | | | | |
| Commercial & industrial loans | | $ | 37,455 |
| | $ | 3,065 |
| | $ | 3,699 |
|
| Commercial real estate loans | | 6,266 |
| | 7,399 |
| | 8,160 |
|
| Small business loans | | 302 |
| | 288 |
| | 239 |
|
| Residential real estate loans | | 7,782 |
| | 7,684 |
| | 8,795 |
|
| Home equity | | 5,553 |
| | 6,311 |
| | 6,742 |
|
| Other consumer | | 49 |
| | 46 |
| | 55 |
|
| Total nonperforming loans | | $ | 57,407 |
| | $ | 24,793 |
| | $ | 27,690 |
|
| Other real estate owned | | 4,173 |
| | 1,798 |
| | 2,159 |
|
| Total nonperforming assets | | $ | 61,580 |
| | $ | 26,591 |
| | $ | 29,849 |
|
| | | | | | | |
| Nonperforming loans/gross loans | | 0.96 | % | | 0.43 | % | | 0.50 | % |
| Nonperforming assets/total assets | | 0.80 | % | | 0.35 | % | | 0.41 | % |
| Allowance for loan losses/nonperforming loans | | 107.24 | % | | 234.76 | % | | 201.61 | % |
| Gross loans/total deposits | | 93.56 | % | | 91.65 | % | | 92.61 | % |
| Allowance for loan losses/total loans | | 1.03 | % | | 1.01 | % | | 1.01 | % |
| Delinquent loans/total loans | | 0.33 | % | | 0.44 | % | | 0.56 | % |
| | | | | | | |
| | | Nonperforming Assets Reconciliation for the Three Months Ended |
| | | December 31
2016 | | September 30
2016 | | December 31
2015 |
| | | | | | | |
| Nonperforming assets beginning balance | | $ | 26,591 |
| | $ | 27,473 |
| | $ | 32,099 |
|
| New to nonperforming | | 37,639 |
| | 2,630 |
| | 3,455 |
|
| Loans charged-off | | (1,216 | ) | | (1,143 | ) | | (1,130 | ) |
| Loans paid-off | | (1,934 | ) | | (2,049 | ) | | (2,965 | ) |
| Loans transferred to other real estate owned/other assets | | (945 | ) | | — |
| | — |
|
| Loans restored to performing status | | (997 | ) | | (288 | ) | | (1,248 | ) |
| New to other real estate owned | | 945 |
| | — |
| | — |
|
| Acquired other real estate owned | | 2,100 |
| | — |
| | — |
|
| Valuation write down | | (48 | ) | | (5 | ) | | — |
|
| Sale of other real estate owned | | (681 | ) | | (42 | ) | | (270 | ) |
| Net capital improvements to other real estate owned | | 59 |
| | — |
| | (2 | ) |
| Other | | 67 |
| | 15 |
| | (90 | ) |
| Nonperforming assets ending balance | | $ | 61,580 |
| | $ | 26,591 |
| | $ | 29,849 |
|
|
| | | | | | | | | | | | | | | | | | | | |
| | | Net Charge-Offs (Recoveries) |
| | | Three Months Ended | | Twelve Months Ended |
| | | December 31
2016 | | September 30
2016 | | December 31
2015 | | December 31
2016 | | December 31
2015 |
| Net charge-offs (recoveries) | | | | | | | | | | |
| Commercial and industrial loans | | $ | 553 |
| | $ | (36 | ) | | $ | (211 | ) | | $ | (266 | ) | | $ | 417 |
|
| Commercial real estate loans | | 20 |
| | 217 |
| | 27 |
| | (150 | ) | | (743 | ) |
| Small business loans | | (36 | ) | | 70 |
| | (6 | ) | | 33 |
| | 3 |
|
| Residential real estate loans | | (116 | ) | | (130 | ) | | (38 | ) | | (271 | ) | | 152 |
|
| Home equity | | 47 |
| | 130 |
| | (71 | ) | | 461 |
| | 354 |
|
| Other consumer | | 171 |
| | 221 |
| | 179 |
| | 527 |
| | 592 |
|
| Total net charge-offs (recoveries) | | $ | 639 |
| | $ | 472 |
| | $ | (120 | ) | | $ | 334 |
| | $ | 775 |
|
| | | | | | | | | | | |
| Net charge-offs (recoveries) to average loans (annualized) | | 0.04 | % | | 0.03 | % | | (0.01 | )% | | 0.01 | % | | 0.01 | % |
|
| | | | | | | | | | | | |
| | | Troubled Debt Restructurings At |
| | | December 31
2016 | | September 30
2016 | | December 31
2015 |
| Troubled debt restructurings on accrual status | | $ | 27,093 |
| | $ | 27,644 |
| | $ | 32,849 |
|
| Troubled debt restructurings on nonaccrual status | | 5,199 |
| | 5,910 |
| | 5,225 |
|
| Total troubled debt restructurings | | $ | 32,292 |
| | $ | 33,554 |
| | $ | 38,074 |
|
| | | | | | | |
| CAPITAL ADEQUACY | | | | | | |
| | | December 31
2016 | | September 30
2016 | | December 31
2015 |
| Common equity tier 1 capital ratio (1) | | 10.82 | % | | 10.78 | % | | 10.44 | % |
| Tier one leverage capital ratio (1) | | 9.76 | % | | 9.59 | % | | 9.33 | % |
| Common equity to assets ratio GAAP | | 11.22 | % | | 10.91 | % | | 10.70 | % |
| Tangible common equity to tangible assets ratio (2) | | 8.47 | % | | 8.33 | % | | 7.98 | % |
| Book value per share GAAP | | $ | 32.02 |
| | $ | 31.09 |
| | $ | 29.40 |
|
| Tangible book value per share (2) | | $ | 23.45 |
| | $ | 23.08 |
| | $ | 21.29 |
|
| (1) Estimated number for December 31, 2016. | | | | | | |
| (2) See appendix A for detailed reconciliation from GAAP to Non-GAAP ratios | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION |
| | | | | | | | | | | | | | | | | | | |
| (Unaudited - dollars in thousands) | | Three Months Ended |
| | | December 31, 2016 | | September 30, 2016 | | December 31, 2015 |
| | | | | Interest | | | | | Interest | | | | | Interest | | |
| | | Average | | Earned/ | Yield/ | | Average | | Earned/ | Yield/ | | Average | | Earned/ | | Yield/ |
| | | Balance | | Paid | | Rate | | Balance | | Paid | | Rate | | Balance | | Paid | | Rate |
| Interest-earning assets | | | | | | | | | | | | | | | | | | |
| Interest-earning deposits with banks, federal funds sold, and short term investments | | $ | 307,677 |
| | $ | 423 |
| | 0.55 | % | | $ | 305,728 |
| | $ | 387 |
| | 0.50 | % | | $ | 214,191 |
| | $ | 137 |
| | 0.25 | % |
| Securities | | | | | | | | | | | | | | | | | | |
| Securities - trading | | 801 |
| | — |
| | — | % | | 805 |
| | — |
| | — | % | | 394 |
| | — |
| | — | % |
| Securities - taxable investments | | 831,141 |
| | 5,351 |
| | 2.56 | % | | 815,889 |
| | 5,034 |
| | 2.45 | % | | 815,778 |
| | 5,186 |
| | 2.52 | % |
| Securities - nontaxable investments (1) | | 4,274 |
| | 43 |
| | 4.00 | % | | 4,382 |
| | 43 |
| | 3.90 | % | | 4,891 |
| | 49 |
| | 3.97 | % |
| Total securities | | 836,216 |
| | 5,394 |
| | 2.57 | % | | 821,076 |
| | 5,077 |
| | 2.46 | % | | 821,063 |
| | 5,235 |
| | 2.53 | % |
| Loans held for sale | | 12,812 |
| | 65 |
| | 2.02 | % | | 11,652 |
| | 81 |
| | 2.77 | % | | 9,422 |
| | 52 |
| | 2.19 | % |
| Loans | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | 856,983 |
| | 8,447 |
| | 3.92 | % | | 851,497 |
| | 8,420 |
| | 3.93 | % | | 844,460 |
| | 8,254 |
| | 3.88 | % |
| Commercial real estate (1) | | 2,882,468 |
| | 28,895 |
| | 3.99 | % | | 2,723,832 |
| | 28,466 |
| | 4.16 | % | | 2,641,570 |
| | 26,872 |
| | 4.04 | % |
| Commercial construction | | 354,235 |
| | 3,718 |
| | 4.18 | % | | 370,085 |
| | 3,881 |
| | 4.17 | % | | 355,749 |
| | 3,676 |
| | 4.10 | % |
| Small business | | 117,131 |
| | 1,609 |
| | 5.46 | % | | 111,932 |
| | 1,502 |
| | 5.34 | % | | 93,521 |
| | 1,272 |
| | 5.40 | % |
| Total commercial | | 4,210,817 |
| | 42,669 |
| | 4.03 | % | | 4,057,346 |
| | 42,269 |
| | 4.14 | % | | 3,935,300 |
| | 40,074 |
| | 4.04 | % |
| Residential real estate | | 639,180 |
| | 6,548 |
| | 4.08 | % | | 631,582 |
| | 6,334 |
| | 3.99 | % | | 645,448 |
| | 6,151 |
| | 3.78 | % |
| Home equity | | 979,179 |
| | 8,437 |
| | 3.43 | % | | 958,317 |
| | 8,243 |
| | 3.42 | % | | 919,531 |
| | 8,127 |
| | 3.51 | % |
| Total consumer real estate | | 1,618,359 |
| | 14,985 |
| | 3.68 | % | | 1,589,899 |
| | 14,577 |
| | 3.65 | % | | 1,564,979 |
| | 14,278 |
| | 3.62 | % |
| Other consumer | | 12,370 |
| | 261 |
| | 8.39 | % | | 13,026 |
| | 291 |
| | 8.89 | % | | 15,783 |
| | 470 |
| | 11.81 | % |
| Total loans | | 5,841,546 |
| | 57,915 |
| | 3.94 | % | | 5,660,271 |
| | 57,137 |
| | 4.02 | % | | 5,516,062 |
| | 54,822 |
| | 3.94 | % |
| Total interest-earning assets | | $ | 6,998,251 |
| | $ | 63,797 |
| | 3.63 | % | | $ | 6,798,727 |
| | $ | 62,682 |
| | 3.67 | % | | $ | 6,560,738 |
| | $ | 60,246 |
| | 3.64 | % |
| Cash and due from banks | | 92,836 |
| | | | | | 94,547 |
| | | | | | 117,285 |
| | | | |
| Federal Home Loan Bank stock | | 12,507 |
| | | | | | 11,304 |
| | | | | | 14,431 |
| | | | |
| Other assets | | 552,796 |
| | | | | | 552,247 |
| | | | | | 520,903 |
| | | | |
| Total assets | | $ | 7,656,390 |
| | | | | | $ | 7,456,825 |
| | | | | | $ | 7,213,358 |
| | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | | |
| Deposits | | | | | | | | | | | | | | | | | | |
| Savings and interest checking accounts | | $ | 2,436,751 |
| | $ | 757 |
| | 0.12 | % | | $ | 2,408,498 |
| | $ | 756 |
| | 0.12 | % | | $ | 2,324,827 |
| | $ | 915 |
| | 0.16 | % |
| Money market | | 1,239,411 |
| | 825 |
| | 0.26 | % | | 1,197,382 |
| | 758 |
| | 0.25 | % | | 1,127,013 |
| | 718 |
| | 0.25 | % |
| Time deposits | | 645,611 |
| | 1,219 |
| | 0.75 | % | | 635,635 |
| | 1,219 |
| | 0.76 | % | | 694,641 |
| | 1,307 |
| | 0.75 | % |
| Total interest-bearing deposits | | 4,321,773 |
| | 2,801 |
| | 0.26 | % | | 4,241,515 |
| | 2,733 |
| | 0.26 | % | | 4,146,481 |
| | 2,940 |
| | 0.28 | % |
| Borrowings | | | | | | | | | | | | | | | | | | |
| Federal Home Loan Bank borrowings | | 54,038 |
| | 379 |
| | 2.79 | % | | 51,100 |
| | 391 |
| | 3.04 | % | | 104,023 |
| | 571 |
| | 2.18 | % |
| Customer repurchase agreements and other short-term borrowings | | 162,885 |
| | 59 |
| | 0.14 | % | | 151,982 |
| | 52 |
| | 0.14 | % | | 146,287 |
| | 49 |
| | 0.13 | % |
| Junior subordinated debentures | | 73,132 |
| | 1,011 |
| | 5.50 | % | | 73,184 |
| | 1,037 |
| | 5.64 | % | | 73,333 |
| | 1,016 |
| | 5.48 | % |
| Subordinated debentures | | 34,629 |
| | 427 |
| | 4.91 | % | | 34,617 |
| | 427 |
| | 4.91 | % | | 34,582 |
| | 409 |
| | 4.64 | % |
| Total borrowings | | 324,684 |
| | 1,876 |
| | 2.30 | % | | 310,883 |
| | 1,907 |
| | 2.44 | % | | 358,226 |
| | 2,045 |
| | 2.26 | % |
| Total interest-bearing liabilities | | $ | 4,646,457 |
| | $ | 4,677 |
| | 0.40 | % | | $ | 4,552,398 |
| | $ | 4,640 |
| | 0.41 | % | | $ | 4,504,707 |
| | $ | 4,985 |
| | 0.44 | % |
| Demand deposits | | 2,060,028 |
| | | | | | 1,976,177 |
| | | | | | 1,833,133 |
| | | | |
| Other liabilities | | 103,144 |
| | | | | | 112,018 |
| | | | | | 106,226 |
| | | | |
| Total liabilities | | $ | 6,809,629 |
| | | | | | $ | 6,640,593 |
| | | | | | $ | 6,444,066 |
| | | | |
| Stockholders' equity | | 846,761 |
| | | | | | 816,232 |
| | | | | | 769,292 |
| | | | |
| Total liabilities and stockholders' equity | | $ | 7,656,390 |
| | | | | | $ | 7,456,825 |
| | | | | | $ | 7,213,358 |
| | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Net interest income | | | | $ | 59,120 |
| | | | | | $ | 58,042 |
| | | | | | $ | 55,261 |
| | |
| | | | | | | | | | | | | | | | | | | |
| Interest rate spread (2) | | | | | | 3.23 | % | | | | | | 3.26 | % | | | | | | 3.20 | % |
| | | | | | | | | | | | | | | | | | | |
| Net interest margin (3) | | | | | | 3.36 | % | | | | | | 3.40 | % | | | | | | 3.34 | % |
| | | | | | | | | | | | | | | | | | | |
| Supplemental Information | | | | | | | | | | | | | | | | | | |
| Total deposits, including demand deposits | | $ | 6,381,801 |
| | $ | 2,801 |
| | | | $ | 6,217,692 |
| | $ | 2,733 |
| | | | $ | 5,979,614 |
| | $ | 2,940 |
| | |
| Cost of total deposits | | | | | | 0.17 | % | | | | | | 0.17 | % | | | | | | 0.20 | % |
| Total funding liabilities, including demand deposits | | $ | 6,706,485 |
| | $ | 4,677 |
| | | | $ | 6,528,575 |
| | $ | 4,640 |
| | | | $ | 6,337,840 |
| | $ | 4,985 |
| | |
| Cost of total funding liabilities | | | | | | 0.28 | % | | | | | | 0.28 | % | | | | | | 0.31 | % |
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $369,000, $374,000, and $376,000 for the three months ended December 31, 2016, September 30, 2016, and December 31, 2015, respectively.
(2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
|
| | | | | | | | | | | | | | | | | | | | | | |
| | | Twelve Months Ended |
| | | December 31, 2016 | | December 31, 2015 |
| | | | | Interest | | | | | | Interest | | |
| | | Average | | Earned/ | | Yield/ | | Average | | Earned/ | | Yield/ |
| | | Balance | | Paid | | Rate | | Balance | | Paid | | Rate |
| Interest-earning assets | | | | | | | | | | | | |
| Interest earning deposits with banks, federal funds sold, and short term investments | | $ | 228,861 |
| | $ | 1,190 |
| | 0.52 | % | | $ | 138,694 |
| | $ | 349 |
| | 0.25 | % |
| Securities | | | | | | | | | | | | |
| Securities - trading | | 701 |
| | — |
| | — | % | | 389 |
| | — |
| | — | % |
| Securities - taxable investments | | 826,131 |
| | 20,851 |
| | 2.52 | % | | 787,781 |
| | 20,120 |
| | 2.55 | % |
| Securities - nontaxable investments (1) | | 4,486 |
| | 180 |
| | 4.01 | % | | 5,101 |
| | 195 |
| | 3.82 | % |
| Total securities | | 831,318 |
| | 21,031 |
| | 2.53 | % | | 793,271 |
| | 20,315 |
| | 2.56 | % |
| Loans held for sale | | 9,213 |
| | 235 |
| | 2.55 | % | | 9,244 |
| | 225 |
| | 2.43 | % |
| Loans | | | | | | | | | | | | |
| Commercial and industrial | | 848,434 |
| | 33,206 |
| | 3.91 | % | | 858,043 |
| | 33,569 |
| | 3.91 | % |
| Commercial real estate (1) | | 2,748,337 |
| | 111,977 |
| | 4.07 | % | | 2,590,482 |
| | 106,801 |
| | 4.12 | % |
| Commercial construction | | 365,590 |
| | 15,094 |
| | 4.13 | % | | 304,545 |
| | 12,838 |
| | 4.22 | % |
| Small business | | 108,619 |
| | 5,875 |
| | 5.41 | % | | 90,081 |
| | 4,900 |
| | 5.44 | % |
| Total commercial | | 4,070,980 |
| | 166,152 |
| | 4.08 | % | | 3,843,151 |
| | 158,108 |
| | 4.11 | % |
| Residential real estate | | 633,313 |
| | 25,487 |
| | 4.02 | % | | 641,218 |
| | 25,603 |
| | 3.99 | % |
| Home equity | | 952,736 |
| | 32,889 |
| | 3.45 | % | | 892,920 |
| | 30,777 |
| | 3.45 | % |
| Total consumer real estate | | 1,586,049 |
| | 58,376 |
| | 3.68 | % | | 1,534,138 |
| | 56,380 |
| | 3.68 | % |
| Other consumer | | 13,398 |
| | 1,185 |
| | 8.84 | % | | 17,175 |
| | 1,664 |
| | 9.69 | % |
| Total loans | | 5,670,427 |
| | 225,713 |
| | 3.98 | % | | 5,394,464 |
| | 216,152 |
| | 4.01 | % |
| Total interest-earning assets | | $ | 6,739,819 |
| | $ | 248,169 |
| | 3.68 | % | | $ | 6,335,673 |
| | $ | 237,041 |
| | 3.74 | % |
| Cash and due from banks | | 91,107 |
| | | | | | 110,202 |
| | | | |
| Federal Home Loan Bank stock | | 12,831 |
| | | | | | 31,080 |
| | | | |
| Other assets | | 544,917 |
| | | | | | 512,908 |
| | | | |
| Total assets | | $ | 7,388,674 |
| | | | | | $ | 6,989,863 |
| | | | |
| Interest-bearing liabilities | | | | | | | | | | | | |
| Deposits | | | | | | | | | | | | |
| Savings and interest checking accounts | | $ | 2,399,147 |
| | $ | 3,173 |
| | 0.13 | % | | $ | 2,242,245 |
| | $ | 3,556 |
| | 0.16 | % |
| Money market | | 1,178,262 |
| | 2,996 |
| | 0.25 | % | | 1,102,892 |
| | 2,878 |
| | 0.26 | % |
| Time deposits | | 649,678 |
| | 4,971 |
| | 0.77 | % | | 708,094 |
| | 5,142 |
| | 0.73 | % |
| Total interest-bearing deposits | | 4,227,087 |
| | 11,140 |
| | 0.26 | % | | 4,053,231 |
| | 11,576 |
| | 0.29 | % |
| Borrowings | | | | | | | | | | | | |
| Federal Home Loan Bank borrowings | | 61,398 |
| | 1,653 |
| | 2.69 | % | | 106,686 |
| | 2,208 |
| | 2.07 | % |
| Customer repurchase agreements and other short-term borrowings | | 149,042 |
| | 208 |
| | 0.14 | % | | 138,363 |
| | 210 |
| | 0.15 | % |
| Wholesale repurchase agreements | | — |
| | — |
| | — | % | | 32,192 |
| | 746 |
| | 2.32 | % |
| Junior subordinated debentures | | 73,207 |
| | 4,083 |
| | 5.58 | % | | 73,407 |
| | 4,026 |
| | 5.47 | % |
| Subordinated debentures | | 34,612 |
| | 1,709 |
| | 4.94 | % | | 38,692 |
| | 1,851 |
| | 4.73 | % |
| Total borrowings | | 318,259 |
| | 7,653 |
| | 2.40 | % | | 389,340 |
| | 9,041 |
| | 2.32 | % |
| Total interest-bearing liabilities | | $ | 4,545,346 |
| | $ | 18,793 |
| | 0.41 | % | | $ | 4,442,571 |
| | $ | 20,617 |
| | 0.46 | % |
| Demand deposits | | 1,924,173 |
| | | | | | 1,704,253 |
| | | | |
| Other liabilities | | 106,766 |
| | | | | | 103,839 |
| | | | |
| Total liabilities | | $ | 6,576,285 |
| | | | | | $ | 6,250,663 |
| | | | |
|
| | | | | | | | | | | | | | | | | | | | | | |
| Stockholders' equity | | 812,389 |
| | | | | | 739,200 |
| | | | |
| Total liabilities and stockholders' equity | | $ | 7,388,674 |
| | | | | | $ | 6,989,863 |
| | | | |
| | | | | | | | | | | | | |
| Net interest income | | | | $ | 229,376 |
| | | | | | $ | 216,424 |
| | |
| | | | | | | | | | | | | |
| Interest rate spread (2) | | | | | | 3.27 | % | | | | | | 3.28 | % |
| | | | | | | | | | | | | |
| Net interest margin (3) | | | | | | 3.40 | % | | | | | | 3.42 | % |
| | | | | | | | | | | | | |
| Supplemental Information | | | | | | | | | | | | |
| Total deposits, including demand deposits | | $ | 6,151,260 |
| | $ | 11,140 |
| | | | $ | 5,757,484 |
| | $ | 11,576 |
| | |
| Cost of total deposits | | | | | | 0.18 | % | | | | | | 0.20 | % |
| Total funding liabilities, including demand deposits | | $ | 6,469,519 |
| | $ | 18,793 |
| | | | $ | 6,146,824 |
| | $ | 20,617 |
| | |
| Cost of total funding liabilities | | | | | | 0.29 | % | | | | | | 0.34 | % |
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.5 million for both the twelve months ended December 31, 2016 and 2015, respectively.
(2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
|
| | | | | | | | | | | | | | | | | | | |
| Organic Loan and Deposit Growth | | | | | | | | | | |
| (Unaudited, dollars in thousands) | | Linked quarter |
| | | December 31
2016 | | September 30
2016 | | Balance Acquired | | Organic Growth/(Loss) | | Organic Growth/(Loss) % |
| Loans | | | | | | | | | | |
| Commercial and industrial | | $ | 902,053 |
| | $ | 857,713 |
| | $ | 35,767 |
| | $ | 8,573 |
| | 1.00 | % |
| Commercial real estate | | 3,010,798 |
| | 2,787,660 |
| | 148,016 |
| | 75,122 |
| | 2.69 | % |
| Commercial construction | | 320,391 |
| | 376,245 |
| | 4,633 |
| | (60,487 | ) | | (16.08 | )% |
| Small business | | 122,726 |
| | 115,054 |
| | 53 |
| | 7,619 |
| | 6.62 | % |
| Total commercial | | 4,355,968 |
| | 4,136,672 |
| | 188,469 |
| | 30,827 |
| | 0.75 | % |
| Residential real estate | | 644,426 |
| | 632,685 |
| | 30,670 |
| | (18,929 | ) | | (2.99 | )% |
| Home equity | | 988,147 |
| | 965,112 |
| | 6,439 |
| | 16,596 |
| | 1.72 | % |
| Total consumer real estate | | 1,632,573 |
| | 1,597,797 |
| | 37,109 |
| | (2,333 | ) | | (0.15 | )% |
| Total other consumer | | 11,064 |
| | 11,664 |
| | 153 |
| | (753 | ) | | (6.46 | )% |
| Total loans | | $ | 5,999,605 |
| | $ | 5,746,133 |
| | $ | 225,731 |
| | $ | 27,741 |
| | 0.48 | % |
| | | | | | | | | | | |
| Deposits | | | | | | | | | | |
| Demand deposits | | $ | 2,057,086 |
| | $ | 2,024,235 |
| | $ | 32,889 |
| | $ | (38 | ) | | — | % |
| Savings and interest checking accounts | | 2,469,237 |
| | 2,417,195 |
| | 32,151 |
| | 19,891 |
| | 0.82 | % |
| Money market | | 1,236,778 |
| | 1,198,959 |
| | 41,449 |
| | (3,630 | ) | | (0.30 | )% |
| Time certificates of deposit | | 649,152 |
| | 629,071 |
| | 69,197 |
| | (49,116 | ) | | (7.81 | )% |
| Total deposits | | $ | 6,412,253 |
| | $ | 6,269,460 |
| | $ | 175,686 |
| | $ | (32,893 | ) | | (0.52 | )% |
| | | | | | | | | | | |
| | | | | | | | | |
| | | Year-To-Date |
| | | December 31
2016 | | December 31
2015 | | Balance Acquired | | Organic Growth/(Loss) | | Organic Growth/(Loss) % |
| Loans | | | | | | | | | | |
| Commercial and industrial | | $ | 902,053 |
| | $ | 843,276 |
| | $ | 35,767 |
| | $ | 23,010 |
| | 2.73 | % |
| Commercial real estate | | 3,010,798 |
| | 2,653,434 |
| | 148,016 |
| | 209,348 |
| | 7.89 | % |
| Commercial construction | | 320,391 |
| | 373,368 |
| | 4,633 |
| | (57,610 | ) | | (15.43 | )% |
| Small business | | 122,726 |
| | 96,246 |
| | 53 |
| | 26,427 |
| | 27.46 | % |
| Total commercial | | 4,355,968 |
| | 3,966,324 |
| | 188,469 |
| | 201,175 |
| | 5.07 | % |
| Residential real estate | | 644,426 |
| | 638,606 |
| | 30,670 |
| | (24,850 | ) | | (3.89 | )% |
| Home equity | | 988,147 |
| | 927,803 |
| | 6,439 |
| | 53,905 |
| | 5.81 | % |
| Total consumer real estate | | 1,632,573 |
| | 1,566,409 |
| | 37,109 |
| | 29,055 |
| | 1.85 | % |
| Total other consumer | | 11,064 |
| | 14,988 |
| | 153 |
| | (4,077 | ) | | (27.20 | )% |
| Total loans | | $ | 5,999,605 |
| | $ | 5,547,721 |
| | $ | 225,731 |
| | $ | 226,153 |
| | 4.08 | % |
| | | | | | | | | | | |
| Deposits | | | | | | | | | | |
| Demand deposits | | $ | 2,057,086 |
| | $ | 1,846,593 |
| | $ | 32,889 |
| | $ | 177,604 |
| | 9.62 | % |
| Savings and interest checking accounts | | 2,469,237 |
| | 2,370,141 |
| | 32,151 |
| | 66,945 |
| | 2.82 | % |
| Money market | | 1,236,778 |
| | 1,089,139 |
| | 41,449 |
| | 106,190 |
| | 9.75 | % |
| Time certificates of deposit | | 649,152 |
| | 684,830 |
| | 69,197 |
| | (104,875 | ) | | (15.31 | )% |
| Total deposits | | $ | 6,412,253 |
| | $ | 5,990,703 |
| | $ | 175,686 |
| | $ | 245,864 |
| | 4.10 | % |
Certain amounts in prior year financial statements have been reclassified to conform to the current year's presentation.
APPENDIX A
(Dollars in thousands, except share and per share data)
The following table summarizes the calculation of the Company's tangible common equity ratio and tangible book value per share for the periods indicated:
|
| | | | | | | | | | | | | |
| | | December 31
2016 | | September 30
2016 | | December 31
2015 | |
| Tangible common equity | | | | | | | |
| Stockholders' equity (GAAP) | | $ | 864,690 |
| | $ | 818,242 |
| | $ | 771,463 |
| (a) |
| Less: Goodwill and other intangibles | | 231,374 |
| | 210,834 |
| | 212,909 |
| |
| Tangible common equity | | 633,316 |
| | 607,408 |
| | 558,554 |
| (b) |
| Tangible assets | | | | | | | |
| Assets (GAAP) | | 7,709,375 |
| | 7,502,009 |
| | 7,209,469 |
| (c) |
| Less: Goodwill and other intangibles | | 231,374 |
| | 210,834 |
| | 212,909 |
| |
| Tangible assets | | $ | 7,478,001 |
| | $ | 7,291,175 |
| | $ | 6,996,560 |
| (d) |
| | | | | | | | |
| Common Shares | | 27,005,813 |
| | 26,320,467 |
| | 26,236,352 |
| (e) |
| | | | | | | | |
| Common equity to assets ratio (GAAP) | | 11.22 | % | | 10.91 | % | | 10.70 | % | (a/c) |
| Tangible common equity to tangible assets ratio (Non-GAAP) | | 8.47 | % | | 8.33 | % | | 7.98 | % | (b/d) |
| Book value per share (GAAP) | | $ | 32.02 |
| | $ | 31.09 |
| | $ | 29.40 |
| (a/e) |
| Tangible book value per share (Non-GAAP) | | $ | 23.45 |
| | $ | 23.08 |
| | $ | 21.29 |
| (b/e) |
APPENDIX B
(Dollars in thousands)
The following table summarizes the impact of noncore items on the calculation of the Company's calculation of noninterest income and noninterest expense, as well as the impact of noncore items on noninterest income as a percentage of total revenue and the efficiency ratio for the periods indicated:
|
| | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Twelve Months Ended | |
| | December 31, 2016 | | September 30, 2016 | | December 31, 2015 | | December 31, 2016 | | December 31, 2015 | |
| Net interest income (GAAP) | $ | 58,752 |
| | $ | 57,668 |
| | $ | 54,885 |
| | $ | 227,844 |
| | $ | 214,928 |
| (a) |
| | | | | | | | | | | |
| Noninterest income (GAAP) | $ | 21,762 |
| | $ | 20,416 |
| | $ | 19,824 |
| | $ | 82,428 |
| | $ | 75,888 |
| (b) |
| Less: | | | | | | | | | | |
| Gain on sale of fixed income securities | — |
| | — |
| | — |
| | — |
| | 798 |
| |
| Noninterest income on an operating basis (Non-GAAP) | $ | 21,762 |
| | $ | 20,416 |
| | $ | 19,824 |
| | $ | 82,428 |
| | $ | 75,090 |
| (c) |
| | | | | | | | | | | |
| Noninterest expense (GAAP) | $ | 51,637 |
| | $ | 46,857 |
| | $ | 46,486 |
| | $ | 192,122 |
| | $ | 197,138 |
| (d) |
| Less: | | | | | | | | | | |
| Impairment on acquired facilities | — |
| | — |
| | — |
| | — |
| | 109 |
| |
| Loss on extinguishment of debt | — |
| | — |
| | — |
| | 437 |
| | 122 |
| |
| Loss on sale of fixed income securities | — |
| | — |
| | — |
| | — |
| | 1,124 |
| |
| Merger and acquisition expense | 4,764 |
| | 151 |
| | — |
| | 5,455 |
| | 10,501 |
| |
| Noninterest expense on an operating basis (Non-GAAP) | $ | 46,873 |
| | $ | 46,706 |
| | $ | 46,486 |
| | $ | 186,230 |
| | $ | 185,282 |
| (e) |
| | | | | | | | | | | |
| Total revenue (GAAP) | $ | 80,514 |
| | $ | 78,084 |
| | $ | 74,709 |
| | $ | 310,272 |
| | $ | 290,816 |
| (a+b) |
| Total operating revenue (Non-GAAP) | $ | 80,514 |
| | $ | 78,084 |
| | $ | 74,709 |
| | $ | 310,272 |
| | $ | 290,018 |
| (a+c) |
| | | | | | | | | | | |
| Ratios | | | | | | | | | | |
| Noninterest income as a % of total revenue (GAAP based) | 27.03 | % | | 26.15 | % | | 26.53 | % | | 26.57 | % | | 26.09 | % | (b/(a+b)) |
| Noninterest income as a % of total revenue on an operating basis (Non-GAAP) | 27.03 | % | | 26.15 | % | | 26.53 | % | | 26.57 | % | | 25.89 | % | (c/(a+c)) |
| Efficiency ratio (GAAP based) | 64.13 | % | | 60.01 | % | | 62.22 | % | | 61.92 | % | | 67.79 | % | (d/(a+b)) |
| Efficiency ratio on an operating basis (Non-GAAP) | 58.22 | % | | 59.82 | % | | 62.22 | % | | 60.02 | % | | 63.89 | % | (e/(a+c)) |
