Independent Bank Corp. Reports Third Quarter Operating Net Income of $18.6 Million

ROCKLAND, Mass.--()--Independent Bank Corp. (NASDAQ: INDB), parent of Rockland Trust Company, today announced 2015 third quarter net income of $18.6 million, or $0.71 per diluted share as compared to $17.5 million, or $0.67 per diluted share in the prior quarter. The second quarter of 2015 contained items which the Company considers non-core, such as merger and acquisition expenses, gains and losses on the sale of fixed income securities, and impairment on acquired facilities. The third quarter contained no such items. When excluding non-core items, net operating earnings for the third quarter of $18.6 million, or $0.71 per diluted share, increased by 4.1% and 4.4%, respectively, as compared to the prior quarter’s net operating earnings of $17.9 million, or $0.68 per diluted share.

“Loan growth improved and asset quality remained strong during the third quarter,” said Christopher Oddleifson, the President and Chief Executive Officer of Independent and Rockland Trust. “Rockland Trust has steadily increased earnings due to the disciplined efforts of my colleagues, who face intense competition every day. We remain focused on responsible, relationship-based growth and expansion.”

BALANCE SHEET

Total assets of $7.1 billion at September 30, 2015 decreased by $60.4 million, or 0.8%, from the prior quarter and increased by $751.1 million, or 11.8%, as compared to the year ago period, inclusive of the acquisition of Peoples Federal Bancshares ("Peoples").

The commercial loan portfolio increased by $49.1 million, or 1.3% (5.0% annualized) over the prior quarter, led by growth in the commercial real estate and construction sectors, as business activity continued to remain strong throughout the Company's footprint. The home equity portfolio also continued to experience growth due to sustained direct mail campaigns with an increase of 1.9% (7.6% annualized) over the prior quarter, while the residential mortgage portfolio remained stable in the third quarter. These factors contributed to growth in total loans at September 30, 2015 of $63.3 million, or 1.2% (4.6% annualized) over the prior quarter. Compared to the prior year period, total loans increased by $550.3 million, or 11.1%, inclusive of the Peoples acquisition.

Total deposits at September 30, 2015 decreased by $55.7 million, or 0.9% from the prior quarter and increased by $612.4 million, or 11.5% over the prior year period, inclusive of the acquisition of Peoples. Core deposits decreased by $41.2 million, or 3.1% on an annualized basis from the prior quarter, and represent 87.8% of total deposits at September 30, 2015, consistent with prior quarter levels. The decline in total and core deposits for the quarter was due in part to an outflow from a large short-term deposit related to the Company’s tax section 1031 exchange business as well as seasonal declines in government banking deposits. Total cost of deposits remained low at 20 basis points during the quarter, reflecting the Company’s continued emphasis on its core deposit customer base.

The securities portfolio increased by $10.6 million from the prior quarter to $814.4 million at September 30, 2015, due primarily to the purchase of $50.6 million of additional securities, offset by principal paydowns during the quarter. The securities portfolio comprised 11.4% of total assets as of September 30, 2015.

Stockholders’ equity at September 30, 2015 rose to $759.2 million, an increase of 2.1% from June 30, 2015. Compared to the year ago period, stockholders’ equity has increased by $132.0 million, or 21.0%, fueled primarily by the Peoples acquisition and strong earnings results. The strong growth in capital led to a further increase in the Company’s tangible book value per share of $0.59, or 2.9%, during the third quarter, to $20.81, which is 11.5% above the prior year level. In addition, the Company’s tangible common ratio of 7.88% represents an increase of 30 basis points from the prior quarter.

NET INTEREST INCOME

Net interest income increased to $55.0 million for the third quarter as compared to $53.7 million in the linked quarter, driven primarily by higher average earning asset levels. During the third quarter, the Company’s net interest margin decreased by four basis points from the prior quarter to 3.39%. The decline is reflective of increased liquid asset levels along with ongoing pressure on loan yields, partially offset by a three basis point positive impact from a security prepayment.

NONINTEREST INCOME

The Company recorded noninterest income of $19.2 million during the third quarter, which represents a $1.0 million, or 5.0%, decrease from the linked quarter. Significant changes in noninterest income in the third quarter compared to the prior quarter included the following:

  • Deposit account fees and interchange and ATM fees increased by $471,000, or 5.7%.
  • Investment management income decreased by $547,000, or 9.9%, primarily driven by seasonal tax preparation fees earned during the second quarter and an overall market driven decline in assets under administration, which decreased by 1.5% to $2.5 billion.
  • Mortgage banking income increased by $254,000, or 20.7%, driven primarily by increased volume.
  • Loan level derivative income decreased $462,000 due to lower volume based on customer demand.
  • During the second quarter, the Company recorded gains of $798,000 on sales of fixed income securities. There were no such gains in the third quarter.
  • Other noninterest income increased $78,000, or 3.8%, mainly due to increases in dividend income from the Company's investment in Federal Home Loan Bank ("FHLB") stock.

NONINTEREST EXPENSE

The Company recorded noninterest expense of $47.0 million during the third quarter, a $1.6 million, or 3.3%, decrease from the prior quarter. Significant changes in noninterest expense in the third quarter compared to the prior quarter included the following:

  • Salaries and employee benefits increased $367,000, or 1.4%, due primarily to increases in salaries and performance-based commissions. These increases were partially offset by decreases in payroll taxes, medical insurance and retirement plans.
  • Occupancy and equipment expense decreased $229,000, or 4.0%, mainly due to reductions in seasonal maintenance costs and an impairment charge relating to an acquired facility incurred in the prior quarter.
  • The Company incurred $271,000 in merger and acquisition costs during the second quarter of 2015, related to the Peoples acquisition. There were no such costs incurred during the third quarter.
  • The Company incurred a loss of $1.1 million on the sale of pooled trust preferred and mortgage backed securities during the second quarter. There was no such loss during the third quarter.
  • Other noninterest expenses decreased by $235,000, or 1.8%, driven primarily by lower advertising costs and reduced levels of other losses and charge-offs, offset by increases in loan workout costs and mortgage related expenses.

The Company generated a return on average assets and a return on average common equity of 1.03% and 9.75%, respectively, in the third quarter, as compared to 1.00% and 9.43%, respectively, for the prior quarter. On an operating basis, the return on average assets and the return on average common equity for the three months ended September 30, 2015 were 1.03% and 9.75%, respectively, as compared to 1.03% and 9.65%, respectively, for the prior quarter.

ASSET QUALITY

Asset quality metrics remained strong during the third quarter with total net charge-offs of $590,000, or 0.04% of average loans on an annualized basis, compared to 0.02% for the quarter ending June 30, 2015. The provision for loan losses was $800,000 for the third quarter as compared to $700,000 in the second quarter. Nonperforming loans increased during the third quarter by $3.4 million to $29.6 million, and represent 0.54% of total loans at September 30, 2015, as compared to 0.48% at June 30, 2015. Inclusive of a reduction in other real estate owned, total nonperforming assets increased to $32.1 million at the end of the third quarter, from $31.3 million at the end of the prior quarter. Delinquency as a percentage of loans was 0.43% at September 30, 2015, a decrease of six basis points from the prior quarter.

The allowance for loan losses was $55.2 million at September 30, 2015, as compared to $55.0 million at June 30, 2015. The Company’s allowance for loan losses as a percentage of loans was 1.00% and 1.01% at September 30, 2015 and June 30, 2015, respectively, inclusive of the Peoples portfolio.

CONFERENCE CALL INFORMATION

Christopher Oddleifson, Chief Executive Officer and Robert Cozzone, Chief Financial Officer will host a conference call to discuss third quarter earnings at 10:00 a.m. Eastern Time on Friday, October 16, 2015. 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: 10072927 and will available through October 30, 2015. Additionally, a webcast replay will be available until October 16, 2016.

ABOUT INDEPENDENT BANK CORP.

Independent Bank Corp. has approximately $7.1 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:

  • 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;
  • adverse changes in the local real estate market;
  • 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;
  • changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System;
  • higher than expected tax rates and any changes in and any failure by the Company to comply with tax laws generally and requirements of the federal New Markets Tax Credit program;
  • unexpected changes in market interest rates for interest earning assets and/or interest bearing liabilities;
  • adverse changes in asset quality including an unanticipated credit deterioration in our loan portfolio;
  • unexpected increased competition in the Company’s market area;
  • 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;
  • a deterioration in the conditions of the securities markets;
  • our inability to adapt to changes in information technology;
  • electronic fraudulent activity within the financial services industry, especially in the commercial banking sector;
  • adverse changes in consumer spending and savings habits;
  • the inability to realize expected revenue synergies from the Peoples Federal Bancshares merger in the amounts or in the timeframe anticipated;
  • inability to retain customers and employees, including those of Peoples Federal Bancshares;
  • the effect of new laws and regulations regarding the financial services industry including, but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act;
  • changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) generally applicable to the Company’s business;
  • 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; and
  • 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 included 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, return on average assets and return on average common equity calculated on an operating basis. The non-GAAP financial measures, including operating earnings and operating EPS, exclude gain or loss due to items that management believes are unrelated to its core banking business and will not have a material financial impact on operating results in future periods, such as gains or losses on the sales of securities, 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. The Company has included information on these non-GAAP measures because management believes that investors may find it useful to have access to the same analytical tool used by management and may also find that it facilitates the comparison 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 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 and operating EPS, are not necessarily comparable to non-GAAP performance measures which may be presented by other companies.

 

INDEPENDENT BANK CORP. FINANCIAL SUMMARY

CONSOLIDATED BALANCE SHEETS
(Unaudited dollars in thousands)      

 

   

 

   

 

    % Change     % Change

September 30,
2015

June 30,
2015

September 30,
2014

Sept 2015 vs.
Jun 2015

Sept 2015 vs.
Sept 2014

Assets
Cash and due from banks $ 160,721 100,054 98,810 60.63 % 62.66 %
Interest-earning deposits with banks 89,607 295,722 126,522

(69.70)

%

(29.18)

%

Securities
Securities - trading 454 489

(7.16)

%

100.00%
Securities - available for sale 365,792 375,001 361,455

(2.46)

%

1.20 %
Securities held to maturity 448,139   428,339   372,418   4.62 % 20.33 %
Total securities 814,385 803,829 733,873 1.31 % 10.97 %
 
Loans held for sale (at fair value) 11,476 10,728 12,580 6.97 %

(8.78)

%

Loans
Commercial and industrial 862,512 873,105 842,833

(1.21)

%

2.33 %
Commercial real estate 2,659,342 2,630,062 2,338,641 1.11 % 13.71 %
Commercial construction 308,214 278,692 276,593 10.59 % 11.43 %
Small business 92,278   91,367   81,435   1.00 % 13.31 %
Total commercial 3,922,346   3,873,226   3,539,502   1.27 % 10.82 %
Residential real estate 651,937 653,370 536,822

(0.22)

%

21.44 %
Home equity - first position 531,364 526,370 509,903 0.95 % 4.21 %
Home equity - subordinate positions 376,530   364,523   344,743   3.29 % 9.22 %
Total consumer real estate 1,559,831   1,544,263   1,391,468   1.01 % 12.10 %
Other consumer 15,944   17,293   16,885  

(7.80)

%

(5.57)

%

Total loans 5,498,121   5,434,782   4,947,855   1.17 % 11.12 %
Less: allowance for loan losses (55,205 ) (54,995 ) (55,005 ) 0.38 % 0.36 %
Net loans 5,442,916   5,379,787   4,892,850   1.17 % 11.24 %
Federal Home Loan Bank stock 37,485 37,485 33,233 % 12.79

%

Bank premises and equipment, net 73,738 74,143 64,186

(0.55)

%

14.88 %
Goodwill and core deposit intangible 213,612 214,331 180,871

(0.34)

%

18.10 %
Other assets 291,549   279,842   241,503   4.18 % 20.72 %
Total assets 7,135,489   7,195,921   6,384,428  

(0.84)

%

11.76 %
 
Liabilities and Stockholders' Equity
Deposits
Demand deposits 1,778,051 $ 1,832,971 $ 1,493,116

(3.00)

%

19.08 %
Savings and interest checking accounts 2,305,636 2,285,968 2,070,617 0.86 % 11.35 %
Money market 1,119,913 1,125,888 1,066,237

(0.53)

%

5.03 %
Time certificates of deposit 711,263   725,703   672,464  

(1.99)

%

5.77 %
Total deposits 5,914,863   5,970,530   5,302,434  

(0.93)

%

11.55 %
Borrowings
Federal home loan bank borrowings 104,133 108,190 60,127

(3.75)

%

73.19 %
Customer repurchase agreements and other short-term borrowings 138,449 119,439 153,192 15.92 %

(9.62)

%

Wholesale repurchase agreements 50,000 50,000

(100.00)

%

(100.00)

%

Junior subordinated debentures 73,520 73,576 73,741

(0.08)

%

(0.30)

%

Subordinated debentures 35,000   35,000   30,000   %

16.67

%

Total borrowings 351,102   386,205   367,060  

(9.09)

%

(4.35)

%

Total deposits and borrowings 6,265,965   6,356,735   5,669,494  

(1.43)

%

10.52 %
Other liabilities 110,321 95,869 87,752 15.07 % 25.72 %
Stockholders' equity
Common stock 260 259 237 0.39 % 9.70 %
Additional paid in capital 404,089 401,437 308,723 0.66 % 30.89 %
Retained earnings 355,537 343,757 320,226 3.43 % 11.03 %
Accumulated other comprehensive loss, net of tax (683 ) (2,136 ) (2,004 )

(68.02)

%

(65.92)

%

Total stockholders' equity 759,203   743,317   627,182   2.14 % 21.05 %
Total liabilities and stockholders' equity 7,135,489   7,195,921   6,384,428  

(0.84)

%

11.76 %
 
 
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited dollars in thousands)       Three Months Ended     % Change     % Change
      September 30,     June 30,     September 30, Sept 2015 vs. Sept 2015 vs.
2015 2015 2014 June 2015 Sept 2014
Interest income
Interest on federal funds sold and short-term investments $ 121 $ 60 $ 96 101.67 % 26.04 %
Interest and dividends on securities 5,486 4,882 4,599 12.37 % 19.29 %
Interest and fees on loans 54,557 54,016 49,514 1.00 % 10.18 %
Interest on loans held for sale 64   58     159   10.34 %

(59.75)

%

Total interest income 60,228 59,016 54,368 2.05 % 10.78 %
Interest expense
Interest on deposits 2,951 2,922 2,735 0.99 % 7.90 %
Interest on borrowed funds 2,232   2,347     2,070  

(4.90)

%

7.83 %
Total interest expense 5,183   5,269     4,805  

(1.63)

%

7.87 %
Net interest income 55,045 53,747 49,563 2.42 % 11.06 %
Provision for loan losses 800   700     1,901   14.29 %

(57.92)

%

Net interest income after provision for loan losses 54,245 53,047 47,662 2.26 % 13.81 %
Noninterest income
Deposit account fees 4,754 4,465 4,656 6.47 % 2.10 %
Interchange and ATM fees 3,949 3,767 3,375 4.83 % 17.01 %
Investment management 4,981 5,528 5,016

(9.90)

%

(0.70)

%

Mortgage banking income 1,480 1,226 1,015 20.72 % 45.81 %
Increase in cash surrender value of life insurance policies 958 949 774 0.95 % 23.77 %
Gain on sale of fixed income securities 798

(100.00)

%

n/a
Gain on sale of equity securities 19 67

(100.00)

%

(100.00)

%

Loan level derivative income 968 1,430 381

(32.31)

%

154.07 %
Other noninterest income 2,157   2,079     1,814   3.75 % 18.91 %
Total noninterest income 19,247 20,261 17,098

(5.00)

%

12.57 %
Noninterest expenses
Salaries and employee benefits 26,685 26,318 23,651 1.39 % 12.83 %
Occupancy and equipment expenses 5,443 5,672 5,027

(4.04)

%

8.28 %
Data processing & facilities management 1,112 1,228 1,178

(9.45)

%

(5.60)

%

FDIC assessment 1,020 1,017 957 0.29 % 6.58 %
Merger and acquisition expense 271 677

(100.00)

%

(100.00)

%

Loss on sale of fixed income securities 1,124

(100.00)

%

n/a
Loss on sale of equity securities 8

(100.00)

%

n/a
Other noninterest expenses 12,771   13,006     11,117  

(1.81)

%

14.88 %
Total noninterest expenses 47,031 48,644 42,607

(3.32)

%

10.38 %
Income before income taxes 26,461 24,664 22,153 7.29 % 19.45 %
Provision for income taxes 7,867   7,213     6,415   9.07 % 22.63 %
Net Income $ 18,594   $ 17,451   $ 15,738   6.55 % 18.15 %
 
Basic earnings per share $ 0.71

$

0.67

$

0.66

5.97 % 7.58 %
Diluted earnings per share $ 0.71

$

0.67

$

0.66

5.97 % 7.58 %
Weighted average common shares (basic) 26,200,261 26,149,593 23,911,678
Weighted average common shares (diluted) 26,264,114 26,221,412 24,002,363
 

Performance ratios

Net interest margin (FTE) 3.39 % 3.43 % 3.42 %
Return on average assets 1.03 % 1.00 % 0.99 %
Return on average common equity 9.75 % 9.43 % 9.97 %
 

Reconciliation table - non-GAAP financial information

Net income $ 18,594 $ 17,451 $ 15,738 6.55 % 18.15 %
Noninterest income components
Less - gain on sale of fixed income securities, net of tax (473 )
Noninterest expense components
Add - loss on sale of fixed income securities, net of tax 667
Add - merger & acquisition expenses, net of tax 155 400
Add - impairment on acquired facilities, net of tax   65     12      
Net operating earnings $ 18,594   $ 17,865   $ 16,150   4.08 % 15.13 %
Diluted earnings per share, on an operating basis $ 0.71   $ 0.68   $ 0.67   4.41 % 5.97 %
 
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited dollars in thousands)       Nine Months Ended     % Change
September 30,     September 30, Sept 2015 vs.
2015 2014 Sept 2014
 
Interest income
Interest on federal funds sold and short-term investments $ 212 $ 203 4.43 %
Interest and dividends on securities 15,029 14,013 7.25 %
Interest and fees on loans 160,261 147,111 8.94 %
Interest on loans held for sale 173   306  

(43.46)

%

Total interest income 175,675 161,633 8.69 %
Interest expense
Interest on deposits 8,636 8,314 3.87 %
Interest on borrowed funds 6,997   7,095  

(1.38)

%

Total interest expense 15,633   15,409   1.45 %
Net interest income 160,042 146,224 9.45 %
Provision for loan losses 1,000   8,653  

(88.44)

%

Net interest income after provision for loan losses 159,042 137,571 15.61 %
Noninterest income
Deposit account fees 13,385 13,478

(0.69)

%

Interchange and ATM fees 10,817 9,672 11.84 %
Investment management 15,616 14,755 5.84 %
Mortgage banking income 3,832 2,379 61.08 %
Increase in cash surrender value of life insurance policies 2,685 2,217 21.11 %
Gain on life insurance benefits 1,964

(100.00)

%

Gain on sale of fixed income securities

798

100.00

%

Gain on sale of equity securities 19 138

(86.23)

%

Loan level derivative income 2,816 1,452 93.94 %
Other noninterest income 6,096   5,414   12.60 %
Total noninterest income 56,064 51,469 8.93 %
Noninterest expenses
Salaries and employee benefits 78,291 69,574 12.53 %
Occupancy and equipment expenses 17,509 16,474 6.28 %
Data processing & facilities management 3,462 3,609

(4.07)

%

FDIC assessment 2,993 2,828 5.83 %
Merger and acquisition expense 10,501 754 1,292.71 %

Loss on sale of fixed income securities

1,124

100.00

%

Loss on sale of equity securities

8

100.00

%

Loss on termination of derivatives 1,122

(100.00)

%

Other noninterest expenses 36,764   33,113   11.03 %
Total noninterest expenses 150,652 127,474 18.18 %
Income before income taxes 64,454   61,566   4.69 %
Provision for income taxes 18,949   17,699   7.06 %
Net Income $ 45,505   $ 43,867   3.73 %
 
Basic earnings per share $ 1.77 $ 1.84

(3.80)

%

Diluted earnings per share $ 1.76 $ 1.83

(3.83)

%

Basic average shares 25,774,571 23,876,391
Diluted average shares 25,847,492 23,971,711
 

Performance ratios

Net interest margin (FTE) 3.44 % 3.46 %
Return on average assets 0.88 % 0.94 %
Return on average common equity 8.35 % 9.56 %
 

Reconciliation table - non-GAAP financial information

Net income $ 45,505 $ 43,867 3.73 %
Noninterest income components
Less - gain on sale of fixed income securities, net of tax (473 )
Less - gain on life insurance benefits, tax exempt (1,964 )
Noninterest expense components
Add - loss on extinguishment of debt, net of tax 72
Add - loss on termination of derivatives, net of tax 663
Add - loss on sale of fixed income securities, net of tax 667
Add - merger & acquisition expenses, net of tax 6,442 466
Add - impairment on acquired facilities, net of tax 65   310    
Net operating earnings $ 52,278   $ 43,342   20.62 %
 
Diluted earnings per share, on an operating basis

$2.02

 

$1.81

  11.60 %
 
 

Reconciliation table - non-GAAP financial information

(Unaudited dollars in thousands)       Three Months Ended         Nine Months Ended  
              % Change         % Change

 

 

 

 

   

 

 

 

 

September 30,
2015

June 30,
2015

September 30,
2014

 

Sept 2015 vs.
June 2015

Sept 2015 vs.
Sept 2014

September 30,
2015

September 30,
2014

Sept 2015 vs.
Sept 2014

 
 
Noninterest income GAAP $ 19,247 $ 20,261 $ 17,098

(5.00)

%

12.57 % $ 56,064 $ 51,469 8.93 %
Less - gain on sale of fixed income securities

 

798

(100.00)

%

n/a 798

100.00

%

Less - gain on life insurance benefits

 

 

  n/a n/a   1,964  

(100.00)

%

Total noninterest income as adjusted $ 19,247   $ 19,463   $ 17,098  

(1.11)

%

12.57 % $ 55,266   $ 49,505   11.64 %
 
Noninterest expense GAAP $ 47,031 $ 48,644 $ 42,607

(3.32)

%

10.38 % $ 150,652 $ 127,474 18.18 %
Less - loss on extinguishment of debt n/a n/a 122

100.00

%

Less - loss on termination of derivatives

n/a n/a 1,122

(100.00)

%

Less - loss on sale of fixed income securities 1,124

(100.00)

%

n/a 1,124

100.00

%

Less - merger and acquisition expenses 271 677

(100.00)

%

(100.00)

%

10,501 754 1,292.71 %
Less - impairment on acquired facilities   109   21  

(100.00)

%

(100.00)

%

109   524  

(79.20)

%

Total noninterest expense as adjusted $ 47,031   $ 47,140   $ 41,909  

(0.23)

%

12.22 % $ 138,796   $ 125,074   10.97 %
 
       

Asset quality

Nonperforming Assets At
September 30,       June 30,       September 30,
2015 2015 2014
 
Nonperforming loans
Commercial & industrial loans $ 4,114 $ 3,767 $ 2,321
Commercial real estate loans 9,006 6,824 6,512
Small business loans 159 198 278
Residential real estate loans 9,106 8,086 9,305
Home equity 7,142 7,238 7,672
Other consumer 40   37   31  
Total nonperforming loans $ 29,567   $ 26,150   $ 26,119  
Nonaccrual securities 2,806
Other assets in possession 30
Other real estate owned 2,532   5,124   9,602  
Total nonperforming assets $ 32,099   $ 31,274   $ 38,557  
 
Nonperforming loans/gross loans 0.54 % 0.48 % 0.53 %
Nonperforming assets/total assets 0.45 % 0.43 % 0.60 %
Allowance for loan losses/nonperforming loans 186.71 % 210.31 % 210.59 %
Gross loans/total deposits 92.95 % 91.03 % 93.31 %
Allowance for loan losses/total loans 1.00 % 1.01 % 1.11 %
 
Nonperforming Assets Reconciliation for the Three Months Ended
September 30, June 30, September 30,
2015 2015 2014
Nonperforming assets beginning balance $ 31,274 $ 40,348 $ 39,661
New to Nonperforming 8,348 4,326 4,972
Loans charged-off (1,165 ) (1,099 ) (1,906 )
Loans paid-off (1,799 ) (4,264 ) (1,833 )
Loans transferred to other real estate owned/other assets (539 ) (629 ) (783 )
Loans restored to performing status (1,409 ) (2,566 ) (1,705 )
New to other real estate owned 1,151 941 783
Sale of other real estate owned (3,460 ) (2,153 ) (1,480 )
Capital improvements to other real estate owned 196 100 896
Net change in nonaccrual securities (3,723 )
Other (498 ) (7 ) (48 )
Nonperforming assets ending balance $ 32,099   $ 31,274   $ 38,557  
 
       
Net Charge-Offs
For the Three Months Ended     For the Nine Months Ended
September 30,     June 30,     September 30, September 30,     September 30,
2015 2015 2014 2015 2014
 
Net charge-offs
Commercial & industrial loans $ 475 $ (29 ) $ 498 $ 628 $ 1,544
Commercial real estate loans (124 ) (102 ) 634 (770 ) 3,951
Small business loans (55 ) (19 ) 44 9 301
Residential real estate loans 34 16 21 190 285
Home equity 119 217 93 425 347
Other consumer 141   137   144   413   459  
Total net charge-offs $ 590   $ 220   $ 1,434   $ 895   $ 6,887  
 
Net charge-offs to average loans (annualized) 0.04 % 0.02 % 0.12 % 0.02 % 0.19 %
 
               
Troubled Debt Restructurings At
September 30, June 30, September 30,
2015 2015 2014
Troubled debt restructurings on accrual status $ 37,477 $ 36,750 $ 40,140
Troubled debt restructurings on nonaccrual status 5,201   5,623   5,709  
Total troubled debt restructurings $ 42,678   $ 42,373   $ 45,849  
 
September 30, June 30, September 30,

Financial ratios

2015 2015 2014
Book value per common share $ 28.96 $ 28.42 $ 26.23
Tangible book value per share $ 20.81 $ 20.22 $ 18.66
Tangible common capital/tangible assets 7.88 % 7.58 % 7.19 %
 

Capital adequacy

Common equity tier 1 capital ratio (1) 10.33 % 10.20 % n/a
Tier one leverage capital ratio (1) 9.21 % 9.21 % 8.75 %
(1) Estimated number for September 30, 2015.
 
 

INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION

 
(Unaudited - dollars in thousands)       Three Months Ended
September 30, 2015     June 30, 2015     September 30, 2014
    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 $ 192,205 $ 121 0.25 % $ 97,274 $ 60 0.25 % $ 153,314 $ 96 0.25 %
Securities
Securities - trading 479 % 500 %
Securities - taxable investments 802,146 5,455 2.70 % 787,023 4,852 2.47 % 704,021 4,563 2.57 %
Securities - nontaxable investments (1)   4,895     48   3.89 %   5,044     47   3.74 %   5,861     55   3.72 %
Total securities 807,520 5,503 2.70 % 792,567 4,899 2.48 % 709,882 4,618 2.58 %
Loans held for sale 10,196 64 2.49 % 9,726 58 2.39 % 16,812 159 3.75 %
Loans
Commercial and industrial 871,976 8,608 3.92 % 860,242 8,499 3.96 % 842,672 8,150 3.84 %
Commercial real estate (1) 2,649,676 27,449 4.11 % 2,613,347 26,762 4.11 % 2,302,181 24,252 4.18 %
Commercial construction 290,052 3,057 4.18 % 291,658 3,204 4.41 % 266,534 2,824 4.20 %
Small business   91,331     1,237   5.37 %   88,884     1,219   5.50 %   80,114     1,133   5.61 %
Total commercial 3,903,035 40,351 4.10 % 3,854,131 39,684 4.13 % 3,491,501 36,359 4.13 %
Residential real estate 650,039 6,490 3.96 % 666,325 6,750 4.06 % 537,669 5,511 4.07 %
Home equity   896,257     7,690   3.40 %   885,618     7,541   3.42 %   847,365     7,459   3.49 %
Total consumer real estate 1,546,296 14,180 3.64 % 1,551,943 14,291 3.69 % 1,385,034 12,970 3.72 %
Other consumer   17,033     383   8.92 %   18,016     399   8.88 %   17,139     412   9.54 %
Total loans   5,466,364     54,914   3.99 %   5,424,090     54,374   4.02 %   4,893,674     49,741   4.03 %
Total interest-earning assets $ 6,476,285   $ 60,602   3.71 % $ 6,323,657   $ 59,391   3.77 % $ 5,773,682   $ 54,614   3.75 %
Cash and due from banks 116,975 91,479 78,375
Federal Home Loan Bank stock 37,485 37,485 34,576
Other assets   512,921     525,239     426,661  
Total assets $ 7,143,666   $ 6,977,860   $ 6,313,294  
Interest-bearing liabilities
Deposits
Savings and interest checking accounts $ 2,274,861 $ 897 0.16 % $ 2,232,790 $ 883 0.16 % $ 2,067,132 $ 895 0.17 %
Money market 1,120,290 742 0.26 % 1,113,748 742 0.27 % 1,027,830 608 0.23 %
Time deposits   717,225     1,312   0.73 %   730,825     1,297   0.71 %   686,195     1,232   0.71 %
Total interest-bearing deposits

4,112,376

2,951

0.28

%

4,077,363

2,922

0.29 %

3,781,157

2,735

0.29 %
Borrowings
Federal Home Loan Bank borrowings

107,489

571

2.11 %

117,557

565

1.93 %

60,151

462

3.05 %
Customer repurchase agreements and other short-term borrowings 142,704 48 0.13 % 125,495 50 0.16 % 146,804 49 0.13 %
Wholesale repurchase agreements 29,348 162 2.19 % 50,000 298 2.39 % 50,000 292 2.32 %
Junior subordinated debentures 73,549 1,014 5.47 % 73,604 1,003 5.47 % 73,771 1,010 5.43 %
Subordinated debentures   35,000     437   4.95 %   35,000     431   4.94 %   30,000     257   3.40 %
Total borrowings  

388,090

   

2,232

  2.28 %  

401,656

   

2,347

  2.34 %  

360,726

   

2,070

  2.28 %
Total interest-bearing liabilities $ 4,500,466   $ 5,183   0.46 % $ 4,479,019   $ 5,269   0.47 % $ 4,141,883   $ 4,805   0.46 %
Demand deposits 1,789,288 1,653,485 1,459,105
Other liabilities  

97,475

   

102,901

   

86,052

 
Total liabilities

$

6,387,229

 

$

 

6,235,405

$

5,687,040

Stockholders' equity  

756,437

   

742,455

   

626,254

 
Total liabilities and stockholders' equity

$

7,143,666

 

$

6,977,860

 

$

6,313,294

 
 
Net interest income

$

55,419

 

$

54,122

 

$

49,809

 
 
Interest rate spread (2) 3.25 % 3.30 % 3.29 %
 
Net interest margin (3) 3.39 % 3.43 % 3.42 %
 
Supplemental Information
Total deposits, including demand deposits

$

5,901,664

$

2,951

$

5,730,848

$

2,922

$

5,240,262

$

2,735

Cost of total deposits 0.20 % 0.20 % 0.21 %
Total funding liabilities, including demand deposits

$

6,289,754

$

5,183

$

6,132,504

$

5,269

$

5,600,988

4,805
Cost of total funding liabilities 0.33 % 0.34 % 0.34 %

 

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $374,000, $375,000, and $246,000 for the three months ended September 30, 2015, June 30, 2015, and September 30, 2014, respectively.
(2) Interest rate spread represents the difference between the 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.

     
Nine Months Ended
September 30, 2015       September 30, 2014
    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 $ 113,251 $ 212 0.25 % $ 108,771 $ 203 0.25 %
Securities
Securities - trading 387 % -
Securities - taxable investments 778,346 14,934 2.57 % 709,774 13,903 2.62 %
Securities - nontaxable investments (1) 5,172   146   3.77 % 6,036   181   4.01 %
Total securities 783,905 15,080 2.57 % 715,810 14,084 2.63 %
Loans held for sale 9,185 173 2.52 % 10,840 306 3.77 %
Loans
Commercial and industrial 862,620 25,315 3.92 % 835,092 24,234 3.88 %
Commercial real estate (1) 2,573,265 79,933 4.15 % 2,289,601 73,178 4.27 %
Commercial construction 287,290 9,162 4.26 % 246,077 7,787 4.23 %
Small business 88,922   3,628   5.45 % 78,832   3,289   5.58 %
Total commercial 3,812,097 118,038 4.14 % 3,449,602 108,488 4.20 %
Residential real estate 639,792 19,452 4.06 % 539,400 15,997 3.97 %
Home equity 883,952   22,650   3.43 % 835,549   22,061   3.53 %
Total consumer real estate 1,523,744 42,102 3.69 % 1,374,949 38,058 3.70 %
Other consumer 17,645   1,194   9.05 % 18,054   1,345   9.96 %
Total loans 5,353,486   161,334   4.03 % 4,842,605   147,891   4.08 %
Total interest-earning assets $ 6,259,827   $ 176,799   3.78 % $ 5,678,026   $ 162,484   3.83 %
Cash and due from banks 107,816 111,091
Federal Home Loan Bank stock 36,691 37,557
Other assets 510,802   418,333  
Total assets $ 6,915,136   $ 6,245,007  
Interest-bearing liabilities
Deposits
Savings and interest checking accounts $ 2,214,414 $ 2,640 0.16 % $ 2,024,157 $ 2,703 0.18 %
Money market 1,094,764 2,161 0.26 % 1,009,821 1,834 0.24 %
Time deposits 712,628   3,835   0.72 % 711,393   3,777   0.71 %
Total interest-bearing deposits $ 4,021,806 $ 8,636 0.29 % $ 3,745,371 $ 8,314 0.30 %
Borrowings
Federal Home Loan Bank borrowings 107,584 1,638 2.04 % 113,995 2,327 2.73 %
Customer repurchase agreements and other short-term borrowings 135,692 161 0.16 % 140,421 148 0.14 %
Wholesale repurchase agreements 43,040 746 2.32 % 50,000 866 2.32 %
Junior subordinated debentures 73,604 3,010 5.47 % 73,826 2,996 5.43 %
Subordinated debentures 40,495   1,442   4.76 % 30,000   758   3.38 %
Total borrowings

 

400,415  

 

6,997   2.34 %

 

408,242  

 

7,095   2.32 %
Total interest-bearing liabilities $ 4,422,221   $ 15,633   0.47 % $ 4,153,613   $ 15,409   0.50 %
Demand deposits 1,660,821 1,398,599
Other liabilities 103,035   79,139  
Total liabilities $ 6,186,077 $ 5,631,351
Stockholders' equity 729,059   613,656  
Total liabilities and stockholders' equity $ 6,915,136   $ 6,245,007  
 
Net interest income $ 161,166   $ 147,075  
 
Interest rate spread (2) 3.31 % 3.33 %
 
Net interest margin (3) 3.44 % 3.46 %
 
Supplemental Information
Total deposits, including demand deposits $ 5,682,627 $ 8,636 $ 5,143,970 $ 8,314
Cost of total deposits 0.20 % 0.22 %
Total funding liabilities, including demand deposits $ 6,083,042 $ 15,633 $ 5,552,212 $ 15,409
Cost of total funding liabilities 0.34 % 0.37 %
 
 

 

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.1 million and $851,000 for the nine months ended September 30, 2015 and 2014, respectively.
(2) Interest rate spread represents the difference between the 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.

Certain amounts in prior year financial statement have been reclassified to conform to the current year's presentation.

Contacts

Independent Bank Corp.
Chris Oddleifson, 781-982-6660
President and Chief Executive Officer
or
Robert Cozzone, 781-982-6723
Chief Financial Officer and Treasurer

Contacts

Independent Bank Corp.
Chris Oddleifson, 781-982-6660
President and Chief Executive Officer
or
Robert Cozzone, 781-982-6723
Chief Financial Officer and Treasurer