Independent Bank Corp. Reports First Quarter Operating Net Income of $15.8 Million

ROCKLAND, Mass.--()--Independent Bank Corp. (NASDAQ: INDB), parent of Rockland Trust Company, today announced 2015 first quarter net income of $9.5 million, or $0.38 per diluted share as compared to $16.0 million, or $0.66 per diluted share in the prior quarter. The decrease in the Company’s earnings was largely attributable to merger and acquisition costs of $6.3 million, net of tax, recognized during the first quarter, relating to the February 20, 2015 acquisition of Peoples Federal Bancshares, Inc. (“Peoples”). When excluding these expenses and other items that the Company considers to be non-core, net operating earnings for the first quarter were $15.8 million, or $0.63 per diluted share, versus the prior quarter’s net operating earnings of $16.6 million, or $0.69 per diluted share, representing decreases of 4.5% and 8.7%, respectively.

“During the first quarter of 2015 we welcomed Peoples customers to Rockland Trust in a seamless manner due to superb teamwork on the part of many of my colleagues,” said Christopher Oddleifson, President and Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “Although the severe winter weather and competitive pressures made organic loan growth challenging, our asset quality remains pristine due to our credit underwriting discipline. Rockland Trust is stronger than ever and well positioned to take advantage of opportunities in Boston and the other markets we serve.”

PEOPLES ACQUISITION

The Peoples acquisition added eight full-service branches, $463.9 million in loans and $432.3 million in deposits, at fair value. Total consideration of $141.8 million was paid with stock and cash, with the Company issuing 2,052,137 shares of common stock and paying $55.4 million in cash, in the aggregate, to Peoples 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 $ 41,957
Investments 43,585
Loans 463,927
Premises and Equipment 9,346
Goodwill 30,662
Core Deposit and Other Intangibles 3,936
Other Assets   46,920
Total Assets Acquired $ 640,333
Liabilities:
Deposits $ 432,250
Borrowings 51,209
Other Liabilities   15,054
Total Liabilities Assumed $ 498,513
Purchase Price $ 141,820

For further detail on the loans and deposits acquired, see the organic growth table provided in the financial schedules accompanying this release.

BALANCE SHEET

Total assets of $6.9 billion at March 31, 2015 increased by $546.2 million, or 8.6%, from the prior quarter and by $685.2 million, or 11.0%, as compared to the year ago period, inclusive of the acquisition of Peoples.

Inclusive of the Peoples acquisition, total loans at March 31, 2015 grew by $422.4 million, or 8.5% over the prior quarter and by $585.8 million, or 12.2% over the prior year period. On an organic basis, total loans declined slightly by $41.5 million, or 3.4% on an annualized basis in the first quarter. Growth in the commercial real estate, construction, and home equity portfolios was countered by declines in the commercial and industrial and residential loans portfolios as heightened competition and severe weather served to restrain loan closings and line utilization. Compared to a year ago, total loans grew organically by $121.9 million, or 2.5%.

Inclusive of the Peoples acquisition, total deposits at March 31, 2015 grew by $460.2 million, or 8.8% over the prior quarter and by $556.5 million, or 10.9% over the prior year period. On an organic basis, core deposits continued their steady growth with a rise of $47.0 million, or 4.2% on an annualized basis over the prior quarter and now represent 86.7% of total deposits. Total cost of deposits increased by one basis point as a result of the acquired deposit base, yet remained low at 0.21% for the quarter, reflecting the Company’s continued emphasis on lower cost funding. Compared to a year ago, total deposits grew organically by $124.2 million, or 2.4%.

The securities portfolio increased from the prior quarter to $782.3 million at March 31, 2015. The increase of $58.3 million was due primarily to the acquired Peoples portfolio of $43.6 million. The securities portfolio comprised 11.3% of total assets as of March 31, 2015.

Stockholders’ equity at March 31, 2015 rose to $732.9 million, an increase of 14.4% from the prior quarter, primarily as a result of the stock issued as consideration for the Peoples acquisition. Compared to the year ago period, stockholders’ equity has increased by $130.3 million, or 21.6%. The strong growth in capital led to an increase in the Company’s tangible book value per share, which increased by $0.64, or 3.3% during the first quarter, to $19.82. The Company’s tangible common ratio of 7.73% also reflected a strong increase from the prior quarter.

NET INTEREST INCOME

Net interest income increased to $51.2 million for the first quarter as compared to $49.8 million in the linked quarter, reflective of higher earning asset levels and a higher loan yield. During the first quarter, the Company’s net interest margin increased by eight basis points from the prior quarter to 3.50%, driven mainly by a four basis point accretion adjustment related to early payoffs on loans acquired along with lower liquid balances.

NONINTEREST INCOME

The Company recorded noninterest income of $16.6 million during the first quarter, which represents a $1.9 million, or 10.4%, decrease from the linked quarter. Significant changes in noninterest income in the first quarter compared to the prior quarter included the following:

  • Deposit account fees and interchange and ATM fees decreased by $624,000, or 7.9%, mainly due to seasonal and weather related reductions in customer activity.
  • Investment management income increased by $220,000, or 4.5%, and assets under administration increased by 3.4%.
  • The income from the cash surrender value of life insurance policies decreased $133,000, or 14.6%, due to the timing of dividends received on certain policies which occurred during the prior quarter.
  • Loan level derivative income declined $608,000 due to decreased volume.
  • Other noninterest income decreased $893,000, or 32.4%, mainly due to capital gain distributions of $403,000 on the Company’s equity security portfolio during the fourth quarter of 2014 and an income decrease of $247,000 on a Community Reinvestment Act investment. Additionally, the Company recorded no gains on sale of fixed income securities during the quarter, as compared to $121,000 in the prior quarter.

NONINTEREST EXPENSE

Inclusive of merger and acquisition costs, the Company recorded noninterest expense of $55.0 million during the first quarter, a $10.6 million, or 23.9%, increase from the prior quarter. Significant changes in noninterest expense in the first quarter compared to the prior quarter included the following:

  • Salaries and employee benefits increased $817,000, or 3.3%, due primarily to the addition of Peoples, as well as increases in equity compensation, medical insurance and a seasonal increase in payroll taxes. These increases were partially offset by decreases in performance based incentives and commissions.
  • Occupancy and equipment expense increased $1.0 million, or 19.6%, mainly due to higher snow removal costs, as well as general expense increases due to the addition of Peoples facilities.
  • The Company incurred $10.2 million in merger and acquisition costs related to the Peoples acquisition that closed on February 20, 2015.
  • Other noninterest expenses decreased by $875,000, or 7.4%, as the Company experienced lower costs related to mortgage operations, loan workouts, debit cards, ATM expense, and other losses and charge-offs. These decreases were offset by an increase of $227,000 in advertising expenses due to the rollout of a spring marketing campaign.

The Company generated a return on average assets and a return on average common equity of 0.58% and 5.58%, respectively, in the first quarter, as compared to 0.99% and 9.93% in the prior quarter. On an operating basis, the return on average assets and the return on average common equity for the three months ended March 31, 2015 were 0.97% and 9.33%, respectively, as compared to 1.02% and 10.29%, respectively, for the prior quarter.

ASSET QUALITY

Asset quality metrics remained strong during the first quarter, due to the Company’s ongoing credit discipline and prudent resolution of problem loans. For the first quarter, total net charge-offs declined to $85,000, or 0.01% of average loans on an annualized basis, compared to 0.13% for the quarter ending December 31, 2014. The low charge-off levels were reflective of significant recoveries recognized by the Company during the first quarter. In light of the exceptionally low net charge-off level and an organic decline in the loan portfolio, application of current accounting guidelines resulted in a slight reduction in the allowance for loan losses in the first quarter and a corresponding negative provision for loan losses of $500,000 as compared to a provision of $1.8 million in the prior quarter. Nonperforming loans increased during the first quarter by $2.8 million to $30.3 million, and represent 0.56% of total loans at March 31, 2015, as compared to 0.55% of total loans at December 31, 2014. In addition, nonperforming assets were $40.3 million at the end of the first quarter, as compared to $38.9 million in the prior quarter. Delinquency as a percentage of loans was 0.53% at March 31, 2015, a decrease of twenty seven basis points from the prior quarter.

The allowance for loan losses was $54.5 million at March 31, 2015, as compared to $55.1 million at December 31, 2014. The Company’s allowance for loan losses as a percentage of loans was 1.01% and 1.11% at March 31, 2015 and December 31, 2014, respectively. Loans acquired in connection with the Peoples acquisition have been recorded at fair value, including a reduction for estimated credit losses, and without carryover of the respective portfolio’s historical allowance for loan losses. Excluding these recently acquired loans at March 31, 2015, the allowance for loan losses would have been approximately 1.11% of total loans.

CONFERENCE CALL INFORMATION

Christopher Oddleifson, Chief Executive Officer and Robert Cozzone, Chief Financial Officer will host a conference call to discuss first quarter earnings at 10:00 a.m. Eastern Time on Friday, April 17, 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: 10062760 and will available through May 1, 2015. Additionally, a webcast replay will be available until April 17, 2016.

ABOUT INDEPENDENT BANK CORP.

Independent Bank Corp. has approximately $6.9 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, which was named to Sandler 2014 Sm-All Stars list of top performing small-cap banks and thrifts in the country, 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;
  • a further deterioration of the credit rating for U.S. long-term sovereign debt;
  • 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.

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, and the allowance for loan losses excluding the loans acquired from Peoples. 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
     
 
                                 
% Change % Change
CONSOLIDATED BALANCE SHEETS March 31, December 31, March 31, Mar 2015 vs. Mar 2015 vs.
(Unaudited dollars in thousands)         2015           2014           2014         Dec 2014       Mar 2014
 
Assets
Cash and due from banks $ 108,804 $ 143,342 $ 142,349 -24.09 % -23.57 %
Interest-earning deposits with banks 47,470 34,912 74,934 35.97 % -36.65 %
Securities
Securities - trading 494 - - 100.00 % 100.00 %
Securities - available for sale 387,038 348,554 348,258 11.04 % 11.14 %
Securities - held to maturity   394,745     375,453     375,556   5.14 % 5.11 %
Total securities 782,277 724,007 723,814 8.05 % 8.08 %
 
Loans held for sale 9,507 6,888 6,788 38.02 % 40.06 %
Loans
Commercial and industrial 829,380 860,839 822,509 -3.65 % 0.84 %
Commercial real estate 2,606,444 2,347,323 2,282,939 11.04 % 14.17 %
Commercial construction 291,666 265,994 239,536 9.65 % 21.76 %
Small business   87,709     85,247     78,147   2.89 % 12.24 %
Total commercial 3,815,199 3,559,403 3,423,131 7.19 % 11.45 %
Residential real estate 681,379 530,259 538,626 28.50 % 26.50 %
Home equity - 1st position 519,978 513,518 499,095 1.26 % 4.18 %
Home equity - subordinate positions   356,938     350,345     328,190   1.88 % 8.76 %
Total consumer real estate 1,558,295 1,394,122 1,365,911 11.78 % 14.08 %
Other consumer   19,624     17,208     18,227   14.04 % 7.66 %
Total loans   5,393,118     4,970,733     4,807,269   8.50 % 12.19 %
Less - allowance for loan losses   (54,515 )   (55,100 )   (53,629 ) -1.06 % 1.65 %
Net loans 5,338,603 4,915,633 4,753,640 8.60 % 12.31 %
Federal Home Loan Bank stock 37,485 33,233 39,926 12.79 % -6.11 %
Bank premises and equipment 73,315 64,074 64,433 14.42 % 13.78 %
Goodwill and core deposit intangible 215,058 180,306 182,051 19.27 % 18.13 %
Other assets   298,566     262,517     237,985   13.73 % 25.46 %
Total assets $ 6,911,085   $ 6,364,912   $ 6,225,920   8.58 % 11.01 %
 
Liabilities and Stockholders' Equity
Deposits
Demand deposits $ 1,603,124 $ 1,462,200 $ 1,399,717 9.64 % 14.53 %
Savings and interest checking accounts 2,232,832 2,108,486 2,032,204 5.90 % 9.87 %
Money market 1,088,223 990,160 957,052 9.90 % 13.71 %
Time certificates of deposit   746,533     649,620     725,286   14.92 % 2.93 %

Total deposits

5,670,712 5,210,466 5,114,259 8.83 % 10.88 %
Borrowings
Federal Home Loan Bank borrowings 108,246 70,080 140,228 54.46 % -22.81 %
Customer repurchase agreements and other short-term borrowings 128,138 147,890 128,485 -13.36 % -0.27 %
Wholesale repurchase agreements 50,000 50,000 50,000 0.00 % 0.00 %
Junior subordinated debentures 73,631 73,685 73,852 -0.07 % -0.30 %
Subordinated debentures   35,000     65,000     30,000   -46.15 % 16.67 %
Total borrowings 395,015 406,655 422,565 -2.86 % -6.52 %
Total deposits and borrowings 6,065,727 5,617,121 5,536,824 7.99 % 9.55 %
Other liabilities 112,472 107,264 86,540 4.86 % 29.97 %
Stockholders' equity
Common stock 259 237 236 9.28 % 9.75 %
Additional paid in capital 399,936 311,978 306,156 28.19 % 30.63 %
Retained earnings 333,104 330,444 301,218 0.80 % 10.59 %
Accumulated other comprehensive loss, net of tax   (413 )   (2,132 )   (5,054 ) -80.63 % -91.83 %
Total stockholders' equity   732,886     640,527     602,556   14.42 % 21.63 %
Total liabilities and stockholders' equity $ 6,911,085   $ 6,364,912   $ 6,225,920   8.58 % 11.01 %
 
 

                         
 
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended
(Unaudited dollars in thousands) % Change % Change
March 31, December 31, March 31, Mar 2015 vs. Mar 2015 vs.
  2015     2014     2014   Dec 2014 Mar 2014
 
Interest income
Interest on fed funds sold and short term investments $ 30 $ 76 $ 38 -60.53 % -21.05 %
Interest and dividends on securities 4,661 4,741 4,687 -1.69 % -0.55 %
Interest on loans 51,687 49,911 48,204 3.56 % 7.23 %
Interest on loans held for sale   51     99     51   -48.48 % 0.00 %

Total interest income

56,429 54,827 52,980 2.92 % 6.51 %
Interest expense
Interest on deposits 2,763 2,725 2,791 1.39 % -1.00 %
Interest on borrowed funds   2,417     2,282     2,583   5.92 % -6.43 %
Total interest expense   5,180     5,007     5,374   3.46 % -3.61 %
Net interest income 51,249 49,820 47,606 2.87 % 7.65 %
Less - provision for loan (benefit) losses   (500 )   1,750     4,502   -128.57 % -111.11 %
Net interest income after provision for loan losses 51,749 48,070 43,104 7.65 % 20.06 %
Noninterest income
Deposit account fees 4,166 4,587 4,359 -9.18 % -4.43 %
Interchange and ATM fees 3,100 3,303 2,975 -6.15 % 4.20 %
Investment management 5,107 4,887 4,603 4.50 % 10.95 %
Mortgage banking income 1,126 1,004 487 12.15 % 131.21 %
Increase in cash surrender value of life insurance policies 778 911 722 -14.60 % 7.76 %
Gain on life insurance benefits - - 1,627 n/a -100.00 %
Loan level derivative income 418 1,026 746 -59.26 % -43.97 %
Other noninterest income   1,862     2,755     1,997   -32.41 % -6.76 %

Total noninterest income

16,557 18,473 17,516 -10.37 % -5.47 %
Noninterest expense
Salaries and employee benefits 25,288 24,471 23,080 3.34 % 9.57 %
Occupancy and equipment 6,394 5,347 6,146 19.58 % 4.04 %
Data processing and facilities management 1,122 1,156 1,253 -2.94 % -10.45 %
FDIC assessment 956 942 905 1.49 % 5.64 %
Merger and acquisition 10,230 586 77 1645.73 % 13185.71 %
Other noninterest expense   10,987     11,862     10,426   -7.38 % 5.38 %
Total noninterest expense 54,977 44,364 41,887 23.92 % 31.25 %
Income before income taxes   13,329     22,179     18,733   -39.90 % -28.85 %
Provision for income taxes   3,869     6,201     5,350   -37.61 % -27.68 %

Net income

$ 9,460   $ 15,978   $ 13,383   -40.79 % -29.31 %
 
Basic earnings per share $ 0.38 $ 0.67 $ 0.56 -43.28 % -32.14 %
Diluted earnings per share $ 0.38 $ 0.66 $ 0.56 -42.42 % -32.14 %
Basic average shares 24,959,865 23,968,320 23,819,065
Diluted average shares 25,040,080 24,055,132 23,919,238
 

Performance ratios

Net interest margin (FTE) 3.50 % 3.42 % 3.49 %
Return on average assets 0.58 % 0.99 % 0.88 %
Return on average common equity 5.58 % 9.93 % 9.02 %
 

Reconciliation table - non-GAAP financial information

Net income $ 9,460 $ 15,978 $ 13,383 -40.79 % -29.31 %
Noninterest income components
Less - gain on sale of fixed income securities, net of tax - (72 ) -
Less - gain on life insurance benefits (tax exempt) - - (1,627 )
Noninterest expense components
Add - loss on extinguishmnet of debt 72 - -
Add - loss on sale of fixed income securities - 13 -
Add - merger & acquisition expenses, net of tax 6,287 404 66
Add - impairment on acquired facilities, net of tax - - 298
Other components:
Add - Adjustment for tax effect of previously incurred merger and acquisition expenses   -     235     -      
Net operating earnings $ 15,819   $ 16,558   $ 12,120   -4.47 % 30.52 %
 
Diluted earnings per share, on an operating basis $ 0.63   $ 0.69   $ 0.51   -8.70 % 23.53 %
 
 

                           
 

Reconciliation table - non-GAAP financial information

(Unaudited dollars in thousands) Three Months Ended
% Change
March 31, December 31, March 31, Mar 2015 vs. Mar 2015 vs.
  2015     2014     2014   Dec 2014 Mar 2014
 
Noninterest income GAAP $ 16,557 $ 18,473 $ 17,516 -10.37 % -5.47 %
Less - net gain on sale of fixed income securities - (121 ) - -100.00 % n/a
Less - gain on life insurance benefits   -     -     (1,627 )   n/a     -100.00 %
Total noninterest income as adjusted $ 16,557   $ 18,352   $ 15,889     -9.78 %   4.20 %
 
Noninterest expense GAAP $ 54,977 $ 44,364 $ 41,887 23.92 % 31.25 %
Less - loss on sale of fixed income securities - (21 ) - -100.00 % n/a
Less - loss on extinguishment of debt (122 ) - - 100.00 % 100.00 %
Less - merger and acquisition expenses (10,230 ) (586 ) (77 ) 1645.73 % 13185.71 %
Less - impairment on acquired facilities   -     -     (503 )   n/a     -100.00 %
Total noninterest expense as adjusted $ 44,625   $ 43,757   $ 41,307     1.98 %   8.03 %
 
 
 
 

Asset quality

Nonperforming Assets Net Charge-Offs
At For the Three Months Ended
March 31, December 31, March 31, March 31, December 31, March 31,
  2015     2014     2014     2015       2014     2014  
 
Nonperforming loans
Commercial & industrial loans $ 4,542 $ 2,822 $ 3,299 $ 182 $ 91 $ 704
Commercial real estate loans 8,770 7,590 13,970 (544 ) 1,099 2,854
Small business loans 267 246 788 83 29 221
Residential real estate loans 8,693 8,803 11,000 140 117 128
Home equity 8,015 8,038 7,062 89 154 1
Other consumer   53     13     52     135     165     204  
Total nonperforming loans / total net charge-offs $ 30,340   $ 27,512   $ 36,171   $ 85   $ 1,655   $ 4,112  
Nonaccrual securities 3,723 3,640 2,353
Other assets in possession - - 167
Other real estate owned   6,285     7,742     7,830  
Total nonperforming assets $ 40,348   $ 38,894   $ 46,521  
 
Nonperforming loans/gross loans 0.56 % 0.55 % 0.75 %
Nonperforming assets/total assets 0.58 % 0.61 % 0.75 %
Allowance for loan losses/nonperforming loans 179.68 % 200.28 % 148.27 %
Gross loans/total deposits 95.10 % 95.40 % 94.00 %
Allowance for loan losses/total loans 1.01 % 1.11 % 1.12 %
 
Net charge-offs to average loans (quarter annualized) 0.01 % 0.13 % 0.35 %
 
Three Months Ended
March 31, December 31, March 31,

Nonperforming assets reconciliation

    2015     2014     2014  
Nonperforming assets beginning balance $ 38,894 $ 38,557 $ 43,833
New to Nonperforming 11,523 9,287 10,369
Loans charged-off (1,525 ) (2,325 ) (4,566 )

 

Loans paid-off (5,923 ) (4,119 ) (1,367 )
Loans transferred to other real estate owned/other assets (354 ) (209 ) (746 )
Loans restored to performing status (891 ) (1,230 ) (2,062 )
New to other real estate owned 354 209 746
Sale of other real estate owned (1,633 ) (3,206 ) (590 )
Capital improvements to other real estate owned 665 1,483 444
Other   (762 )   447     460  
Nonperforming assets ending balance $ 40,348   $ 38,894   $ 46,521  
 
 
Troubled Debt Restructurings
At
March 31, December 31, March 31,
  2015     2014     2014  
Troubled debt restructurings on accrual status $ 36,887 $ 38,382 $ 40,329

Troubled debt restructurings on nonaccrual status

  4,899     5,248     6,998  
Total troubled debt restructurings $ 41,786     $ 43,630     $ 47,327  
 
 
March 31, December 31, March 31,

Financial ratios

  2015     2014     2014  
Book value per common share $ 28.05 $ 26.69 $ 25.23
Tangible book value per share $ 19.82 $ 19.18 $ 17.61
Tangible common capital/tangible assets 7.73 % 7.44 % 6.96 %
 

Capital adequacy

Common equity tier 1 capital ratio (1) 9.97 % n/a n/a
Tier one leverage capital ratio (1) 9.52 % 8.84 % 8.60 %
(1) Estimated number for March 31, 2015.
 

                                           
 
INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION
         
(Unaudited - dollars in thousands) Three Months Ended
March 31, 2015     December 31, 2014     March 31, 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 $ 48,698 $ 30 0.25 % $ 120,647 $ 76 0.25 % $ 61,356 $ 38 0.25 %
Securities
Securities - trading 179 - 0.00 % - - - - - -
Securities - taxable investments 745,242 4,627 2.52 % 726,417 4,708 2.57 % 706,355 4,650 2.67 %
Securities - nontaxable investments (1)   5,585   52 3.78 %   5,670   51 3.57 %   6,143   63 4.16 %

Total securities

751,006 4,679 2.53 % 732,088 4,759 2.58 % 712,498 4,713 2.68 %
Loans held for sale 7,603 51 2.72 % 11,972 99 3.28 % 6,041 51 3.42 %
Loans
Commercial and industrial 855,462 8,207 3.89 % 845,113 8,207 3.85 % 816,467 7,941 3.94 %
Commercial real estate (1) 2,454,630 25,720 4.25 % 2,358,236 24,689 4.15 % 2,281,778 24,205 4.30 %
Commercial construction 280,049 2,900 4.20 % 259,218 2,895 4.43 % 228,818 2,346 4.16 %
Small business   86,498   1,172 5.50 %   82,417   1,143 5.50 %   77,503   1,069 5.59 %

Total commercial

3,676,639 37,999 4.19 % 3,544,984 36,934 4.13 % 3,404,566 35,561 4.24 %
Residential real estate 602,490 6,211 4.18 % 534,527 5,465 4.06 % 540,382 5,166 3.88 %
Home equity   869,688   7,419 3.46 %   859,994   7,507 3.46 %   823,890   7,258 3.57 %
Total consumer real estate 1,472,178 13,630 3.75 % 1,394,521 12,972 3.69 % 1,364,272 12,424 3.69 %
Other consumer   17,893   412 9.34 %   16,534   387 9.29 %   19,226   485 10.23 %
Total loans   5,166,710   52,041 4.08 %   4,956,039   50,293 4.03 %   4,788,064   48,470 4.11 %
Total interest-earning assets $ 5,974,017 $ 56,801 3.86 % $ 5,820,745 $ 55,227 3.76 % $ 5,567,959 $ 53,272 3.88 %
Cash and due from banks 114,974 120,228 140,788
Federal Home Loan Bank stock 35,076 33,233 39,926
Other assets   494,042   435,254   405,367
Total assets $ 6,618,109 $ 6,409,460 $ 6,154,040
Interest-bearing liabilities
Deposits
Savings and interest checking accounts $ 2,134,044 $ 862 0.16 % $ 2,129,340 $ 871 0.16 % $ 1,962,983 $ 889 0.18 %
Money market 1,049,472 676 0.26 % 1,010,401 653 0.26 % 997,817 619 0.25 %
Time deposits   689,530   1,225 0.72 %   658,533   1,201 0.72 %   733,018   1,281 0.71 %
Total interest-bearing deposits $ 3,873,046 $ 2,763 0.29 % $ 3,798,274 $ 2,725 0.28 % $ 3,693,818 $ 2,789 0.31 %
Borrowings
Federal Home Loan Bank borrowings $ 97,596 $ 502 2.09 % $ 60,974 $ 456 2.97 % $ 151,273 $ 1,002 2.69 %
Customer repurchase agreements and other short-term borrowings 138,836 63 0.18 % 156,041 52 0.13 % 138,536 55 0.16 %
Wholesale repurchase agreements 50,000 286 2.32 % 50,000 292 2.32 % 50,000 286 2.32 %
Junior subordinated debentures 73,661 992 5.46 % 73,712 1,012 5.45 % 73,884 992 5.45 %
Subordinated debentures   51,667   574 4.51 %   47,120   470 3.96 %   30,000   248 3.35 %
Total borrowings $ 411,760 $ 2,417 2.38 % $ 387,847 $ 2,282 2.33 % $ 443,693 $ 2,583 2.36 %
Total interest-bearing liabilities $ 4,284,806 $ 5,180 0.49 % $ 4,186,121 $ 5,007 0.47 % $ 4,137,511 $ 5,372 0.53 %
Demand deposits 1,536,919 1,493,464 1,347,559
Other liabilities   108,855   91,726   67,259
Total liabilities $ 5,930,580 $ 5,771,311 $ 5,552,329
Stockholders' equity   687,529   638,149   601,711
Total liabilities and stockholders' equity $ 6,618,109 $ 6,409,460 $ 6,154,040
 
Net interest income $ 51,621 $ 50,220 $ 47,900
 
Interest rate spread (2) 3.37 % 3.29 % 3.35 %
 
Net interest margin (3) 3.50 % 3.42 % 3.49 %
 
Supplemental Information
Total deposits, including demand deposits $ 5,409,965 $ 2,763 $ 5,291,738 $ 2,725 $ 5,041,377 $ 2,789
Cost of total deposits 0.21 % 0.20 % 0.22 %
Total funding liabilities, including demand deposits $ 5,821,725 $ 5,180 $ 5,679,585 $ 5,007 $ 5,485,070 $ 5,372
Cost of total funding liabilities 0.36 % 0.35 % 0.40 %
 
 
 

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $372,000, $400,000, and $291,000 for the three months ended March 31, 2015, December 31, 2014, and March 31, 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.

                                               
 
Organic Loan and Deposit Growth
Quarter over Quarter Year over Year
Organic Organic
March 31, December 31, Balance Organic Growth/(Loss) March 31, Organic Growth/(Loss)
  2015   2014 Acquired Growth/(Loss)   %   2014 Growth/(Loss)   %
Loans
Commercial and Industrial $ 829,380 $ 860,839 $ 11,268 $ (42,727 ) -5.0 % $ 822,509 $ (4,397 ) -0.53 %
Commercial Real Estate 2,606,444 2,347,323 249,383 9,738 0.4 % 2,282,939 74,122 3.25 %
Commercial Construction 291,666 265,994 15,299 10,373 3.9 % 239,536 36,831 15.38 %
Small Business   87,709   85,247   120   2,342   2.7 %   78,147   9,442   12.08 %
Total Commercial 3,815,199 3,559,403 276,070 (20,274 ) -0.6 % 3,423,131 115,998 3.39 %
Residential Real Estate 681,379 530,259 175,323 (24,203 ) -4.6 % 538,626 (32,570 ) -6.05 %
Home Equity   876,916   863,863   9,072   3,981   0.5 %   827,285   40,559   4.90 %
Total Consumer Real Estate 1,558,295 1,394,122 184,395 (20,222 ) -1.5 % 1,365,911 7,989 0.58 %
Total Other Consumer   19,624   17,208   3,462   (1,046 ) -6.1 %   18,227   (2,065 ) -11.33 %
Total Loans $ 5,393,118 $ 4,970,733 $ 463,927 $ (41,542 ) -0.8 % $ 4,807,269 $ 121,922   2.54 %
 
Deposits
Demand Deposits $ 1,603,124 $ 1,462,200 $ 71,362 $ 69,562 4.8 % $ 1,399,717 $ 132,045 9.43 %
Savings and Interest Checking Accounts 2,232,832 2,108,486 168,228 (43,882 ) -2.1 % 2,032,204 32,400 1.59 %
Money Market 1,088,223 990,160 76,724 21,339 2.2 % 957,052 54,447 5.69 %
Time Certificates of Deposit   746,533   649,620   115,936   (19,023 ) -2.9 %   725,286   (94,689 ) -13.06 %
Total Deposits $ 5,670,712 $ 5,210,466 $ 432,250 $ 27,996   0.5 % $ 5,114,259 $ 124,203   2.43 %

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