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Independent Bank Corp. Reports Second Quarter Net Income of $14.7 Million

Growth in Revenues, Loans, and Core Deposits Drive Strong Results

ROCKLAND, Mass.--(BUSINESS WIRE)--Independent Bank Corp. (NASDAQ: INDB), parent of Rockland Trust Company, today announced 2014 second quarter net income of $14.7 million, or $0.61 per diluted share, increases of 10.2% and 8.9%, respectively, as compared to $13.4 million, or $0.56 per diluted share, in the prior quarter.

“My colleagues, who forge strong customer relationships through exemplary service, are the foundation of our consistency. We remain focused on deepening customer relationships and capitalizing on opportunities in historic markets and in the areas into which we have expanded.”

The first two quarters of 2014 both contained items which the Company considers non-core, such as gains on life insurance benefits, impairment on acquired facilities, and loss on termination of derivatives. When excluding such items, net operating earnings for the second quarter were $15.1 million, or $0.63 per diluted share, versus the prior quarter’s net operating earnings of $12.1 million, or $0.51 per diluted share, representing increases of 24.4% and 23.5%, respectively.

“Rockland Trust has steadily grown loans and deposits through constant attention to banking fundamentals,” said Christopher Oddleifson, President and Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “My colleagues, who forge strong customer relationships through exemplary service, are the foundation of our consistency. We remain focused on deepening customer relationships and capitalizing on opportunities in historic markets and in the areas into which we have expanded.”

BALANCE SHEET

Total assets of $6.3 billion at June 30, 2014 increased by $122.4 million, or 2.0%, from the prior quarter and by $495.7 million, or 8.5%, as compared to the year ago period, inclusive of the acquisition of Mayflower Bancorp, Inc. (“Mayflower”) in November 2013.

Total loans of $4.9 billion at June 30, 2014 increased by $78.2 million, or 6.5%, on an annualized basis, during the second quarter, and by $355.4 million, or 7.9%, when compared to the year ago period. Each major loan category experienced growth in the second quarter. The commercial loan portfolio once again led the way, increasing by $62.0 million, or 7.3%, on an annualized basis from the first quarter of 2014, as origination volumes and loan pipelines remain robust. The commercial and industrial component was especially strong, rising by nearly 15.0% on an annualized basis during the second quarter, as compared to the linked quarter. Modest growth also occurred in the residential real estate and home equity portfolios.

Total deposits of $5.3 billion at June 30, 2014 increased by $183.9 million, or 14.4%, on an annualized basis, during the second quarter, and by $621.7 million, or 13.3%, when compared to the year ago period. Strong growth in each core deposit category continued. Core deposits rose by $206.3 million, or 18.9%, on an annualized basis, from the prior quarter, and as of June 30, 2014, represented 86.6% of total deposits. As a result, the total cost of deposits remained consistent with the prior quarter’s low level of 0.22%, and decreased slightly from 0.23% in the year ago period.

The securities portfolio decreased slightly from the prior quarter by $9.8 million to $714.0 million at June 30, 2014 and represented 11.2% of total assets at June 30, 2014.

Stockholders’ equity at June 30, 2014 rose to $616.5 million, an increase of 2.3% from the prior quarter. As compared to the year ago period, stockholders’ equity has increased by $72.9 million, or 13.4%. The strong growth in capital led to an increase in the Company’s tangible book value per share, which increased by $0.59, or 3.3% during the second quarter to $18.20. The Company’s tangible common ratio for the quarter of 7.05% also reflected a strong increase from the prior quarter.

NET INTEREST INCOME

Net interest income increased to $49.1 million for the second quarter of 2014 as compared to $47.6 million in the linked quarter, reflective of higher earning asset levels. During the second quarter, the Company’s net interest margin remained relatively consistent with the prior quarter, dropping only one basis point to 3.48% as it benefited from stable asset yields and continued low funding costs.

NONINTEREST INCOME

The Company recorded noninterest income of $16.9 million during the second quarter of 2014, which represents a $659,000, or 3.8%, decrease from the linked quarter. Significant changes in noninterest income included the following:

  • Interchange and ATM fees rose by $347,000, or 11.7%, due to the ongoing addition of core checking customers, as well as increased seasonal debit card usage.
  • Investment management income increased by $533,000, or 11.6%, primarily driven by seasonal tax preparation fees as well as continued growth in assets under administration, which were $2.4 billion at June 30, 2014, a 3.5% increase from the linked quarter.
  • Mortgage banking income increased by $390,000, or 80.1%, primarily due to the increase in volume during the quarter.
  • The Company recorded gains on life insurance benefits in the amount of $337,000 and $1.6 million for the first and second quarter of 2014, respectively.
  • Loan level derivative income decreased by $422,000, or 56.6%, due to the mix of commercial loan closings during the quarter.
  • Other noninterest income decreased by $209,000, or 11.0%, mainly due to gains on sale of fixed assets of $256,000 recognized in the prior quarter.

NONINTEREST EXPENSE

The Company recorded noninterest expense of $43.0 million during the second quarter of 2014 which represents a $1.1 million, or 2.6%, increase from the prior quarter. Significant changes in noninterest expense included the following:

  • Salaries and employee benefits decreased $237,000, or 1.0%, during the second quarter due to a decrease in payroll taxes, partially offset by incentive compensation increases.
  • Occupancy and equipment expense decreased $845,000, or 13.8%, due to decreases in snow removal costs and impairments recorded on acquired facilities in the first quarter of 2014.
  • During the second quarter, the Company used excess liquidity to repay $75.0 million of Federal Home Loan Bank borrowings and terminated associated derivative positions which resulted in the recognition of a loss on termination of $1.1 million.
  • Other noninterest expenses increased by $1.1 million, or 11.0%, mainly due to increases in advertising of $425,000, other losses and charge-offs of $288,000, consultant fees of $251,000, and mortgage operations expense of $164,000.

The Company generated a return on average assets and a return on average common equity of 0.94% and 9.65%, respectively, in the second quarter, as compared to 0.88% and 9.02% in the first quarter of 2014. On an operating basis, the return on average assets and the return on average common equity for the three months ended June 30, 2014 were 0.96% and 9.87%, respectively, as compared to 0.80% and 8.17%, respectively, for the first quarter of 2014.

ASSET QUALITY

All asset quality metrics improved notably during the second quarter of 2014, due to the Company’s prudent resolution of nonperforming loans and the impact in the first quarter of a single commercial real estate loan that was partially charged-off. For the second quarter, total net charge-offs were $1.3 million, or 0.11%, of average loans on an annualized basis, a decrease of $2.8 million when compared to the prior quarter. The provision for loan losses was $2.3 million for the second quarter, as compared to $4.5 million for the quarter ended March 31, 2014. Nonperforming loans also decreased significantly during the quarter by $8.8 million to $27.4 million, or 0.56% of total loans, at June 30, 2014, from $36.2 million, or 0.75% of total loans, at March 31, 2014. In addition nonperforming assets decreased to $39.7 million at the end of the second quarter of 2014, as compared to $46.5 million in the linked quarter. Delinquency as a percentage of loans declined as well to 0.70% at June 30, 2014, as compared to 0.85% at March 31, 2014.

The allowance for loan losses was $54.5 million at June 30, 2014, as compared to $53.6 million for the prior quarter. The Company’s allowance for loan losses as a percentage of loans remained consistent at 1.12% for both June 30, 2014 and March 31, 2014.

CONFERENCE CALL INFORMATION

Christopher Oddleifson, Chief Executive Officer and Robert Cozzone, Chief Financial Officer will host a conference call to discuss second quarter earnings at 10:00 a.m. Eastern Time on Friday, July 18, 2014. Internet access to the call is available on the Company’s website at www.rocklandtrust.com or via telephonic access by dial-in at 1-888-317-6016 reference: INDB. A replay of the call will be available by calling 1-877-344-7529. Replay Conference Number: 10048506. The webcast replay will be available until July 18, 2015.

ABOUT INDEPENDENT BANK CORP.

Independent Bank Corp. has approximately $6.3 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 and through telephone banking, mobile banking, and the Internet. To find out why Rockland Trust is the bank “Where Each Relationship Matters ®”, please visit www.rocklandtrust.com. Rockland Trust is an FDIC Member and an Equal Housing Lender.

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 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”). Operating earnings and operating EPS, which are non-GAAP financial measures, 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 June 30, March 31, June 30, Jun 2014 vs. Jun 2014 vs.
(Unaudited dollars in thousands)     2014         2014         2013       Mar 2014     Jun 2013
 
Assets
Cash and due from banks $ 119,326 $ 142,349 $ 139,672 -16.17 % -14.57 %
Interest-earning deposits with banks 151,538 74,934 197,266 102.23 % -23.18 %
Securities
Securities available for sale 340,081 348,258 303,855 -2.35 % 11.92 %
Securities held to maturity   373,888     375,556     225,278   -0.44 % 65.97 %
Total securities 713,969 723,814 529,133 -1.36 % 34.93 %
 
Loans held for sale 16,125 6,788 32,497 137.55 % -50.38 %
Loans
Commercial and industrial 853,327 822,509 742,343 3.75 % 14.95 %
Commercial real estate 2,300,633 2,282,939 2,150,833 0.78 % 6.96 %
Commercial construction 252,222 239,536 231,719 5.30 % 8.85 %
Small business   78,955     78,147     77,283   1.03 % 2.16 %
Total commercial 3,485,137 3,423,131 3,202,178 1.81 % 8.84 %
Residential real estate 541,601 538,626 513,551 0.55 % 5.46 %
Home equity - 1st position 503,149 499,095 481,542 0.81 % 4.49 %
Home equity - subordinate positions   337,666     328,190     310,908   2.89 % 8.61 %
Total consumer real estate 1,382,416 1,365,911 1,306,001 1.21 % 5.85 %
Other consumer   17,947     18,227     21,932   -1.54 % -18.17 %
Total loans   4,885,500     4,807,269     4,530,111   1.63 % 7.85 %
Less - allowance for loan losses   (54,538 )   (53,629 )   (52,976 ) 1.69 % 2.95 %
Net loans 4,830,962 4,753,640 4,477,135 1.63 % 7.90 %
Federal Home Loan Bank stock 37,350 39,926 38,674 -6.45 % -3.42 %
Bank premises and equipment 64,166 64,433 56,344 -0.41 % 13.88 %
Goodwill and core deposit intangible 181,460 182,051 161,089 -0.32 % 12.65 %
Other assets   233,422     237,985     220,785   -1.92 % 5.72 %
Total assets $ 6,348,318   $ 6,225,920   $ 5,852,595   1.97 % 8.47 %
 
Liabilities and Stockholders' Equity
Deposits
Demand deposits $ 1,462,761 $ 1,399,717 $ 1,283,301 4.50 % 13.98 %
Savings and interest checking accounts 2,096,029 2,032,204 1,798,495 3.14 % 16.54 %
Money market 1,036,513 957,052 884,696 8.30 % 17.16 %
Time certificates of deposit   702,858     725,286     709,971   -3.09 % -1.00 %
Total deposits 5,298,161 5,114,259 4,676,463 3.60 % 13.29 %
Borrowings
Federal Home Loan Bank borrowings 60,174 140,228 261,456 -57.09 % -76.99 %
Customer repurchase agreements and other short-term borrowings 131,766 128,485 141,826 2.55 % -7.09 %
Wholesale repurchase agreements 50,000 50,000 50,000 0.00 % 0.00 %
Junior subordinated debentures 73,797 73,852 74,018 -0.07 % -0.30 %
Subordinated debentures   30,000     30,000     30,000   0.00 % 0.00 %
Total borrowings 345,737 422,565 557,300 -18.18 % -37.96 %
Total deposits and borrowings 5,643,898 5,536,824 5,233,763 1.93 % 7.84 %
Other liabilities 87,931 86,540 75,227 1.61 % 16.89 %
Stockholders' equity
Common stock 236 236 226 0.00 % 4.42 %
Additional paid in capital 307,720 306,156 272,165 0.51 % 13.06 %
Retained earnings 310,226 301,218 278,611 2.99 % 11.35 %
Accumulated other comprehensive loss, net of tax   (1,693 )   (5,054 )   (7,397 ) -66.50 % -77.11 %
Total stockholders' equity   616,489     602,556     543,605   2.31 % 13.41 %
Total liabilities and stockholders' equity $ 6,348,318   $ 6,225,920   $ 5,852,595   1.97 % 8.47 %
 

                             
 
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended
(Unaudited dollars in thousands) % Change % Change
June 30, March 31, June 30, Jun 2014 vs. Jun 2014 vs.
  2014     2014     2013   Mar 2014 Jun 2013
 
Interest income
Interest on fed funds sold and short term investments $ 69 $ 38 $ 21 81.58 % 228.57 %
Interest and dividends on securities 4,727 4,687 3,517 0.85 % 34.40 %
Interest on loans 49,393 48,204 47,720 2.47 % 3.51 %
Interest on loans held for sale   96     51     237   88.24 % -59.49 %
Total interest income 54,285 52,980 51,495 2.46 % 5.42 %
Interest expense
Interest on deposits 2,789 2,791 2,543 -0.07 % 9.67 %
Interest on borrowed funds   2,443     2,583     3,337   -5.42 % -26.79 %
Total interest expense   5,232     5,374     5,880   -2.64 % -11.02 %
Net interest income 49,053 47,606 45,615 3.04 % 7.54 %
Less - provision for loan losses   2,250     4,502     3,100   -50.02 % -27.42 %
Net interest income after provision for loan losses 46,803 43,104 42,515 8.58 % 10.09 %
Noninterest income
Deposit account fees 4,463 4,359 4,343 2.39 % 2.76 %
Interchange and ATM fees 3,322 2,975 2,761 11.66 % 20.32 %
Investment management 5,136 4,603 4,357 11.58 % 17.88 %
Mortgage banking income 877 487 1,669 80.08 % -47.45 %
Increase in cash surrender value of life insurance policies 721 722 786 -0.14 % -8.27 %
Gain on life insurance benefits 337 1,627 - -79.29 % 100.00 %
Net gain (loss) on sale of equity securities (20 ) 91 4 -121.98 % -600.00 %
Loan level derivative income 324 746 816 -56.57 % -60.29 %
Other noninterest income   1,697     1,906     1,956   -10.97 % -13.24 %
Total noninterest income 16,857 17,516 16,692 -3.76 % 0.99 %
Noninterest expense
Salaries and employee benefits 22,843 23,080 21,594 -1.03 % 5.78 %
Occupancy and equipment 5,301 6,146 4,919 -13.75 % 7.77 %
Data processing and facilities management 1,179 1,253 1,201 -5.91 % -1.83 %
FDIC assessment 966 905 934 6.74 % 3.43 %
Merger and acquisition - 77 754 -100.00 % -100.00 %
Loss on termination of derivatives 1,122 - - 100.00 % 100.00 %
Other noninterest expense   11,569     10,426     12,762   10.97 % -9.34 %
Total noninterest expense 42,980 41,887 42,164 2.61 % 1.94 %
Income before income taxes   20,680     18,733     17,043   10.39 % 21.34 %
Provision for income taxes   5,934     5,350     4,285   10.92 % 38.48 %
Net income $ 14,746   $ 13,383   $ 12,758   10.18 % 15.58 %
 
Basic earnings per share $ 0.62 $ 0.56 $ 0.56 10.71 % 10.71 %
Diluted earnings per share $ 0.61 $ 0.56 $ 0.56 8.93 % 8.93 %
Basic average shares 23,897,413 23,819,065 22,888,155
Diluted average shares 23,991,973 23,919,238 22,940,299
 

Performance ratios

Net interest margin (FTE) 3.48 % 3.49 % 3.57 %
Return on average assets 0.94 % 0.88 % 0.89 %
Return on average common equity 9.65 % 9.02 % 9.40 %
 

Reconciliation table - non-GAAP financial information

Net income $ 14,746 $ 13,383 $ 12,758 10.18 % 15.58 %
Noninterest income components
Less - gain on life insurance benefits (tax exempt) (337 ) (1,627 ) -
Noninterest expense components
Add - loss on termination of derivatives, net of tax 663 - -
Add - merger & acquisition expenses, net of tax - 66 458
Add - impairment on acquired facilities, net of tax   -     298     -      
Net operating earnings $ 15,072   $ 12,120   $ 13,216   24.36 % 14.04 %
 
Diluted earnings per share, on an operating basis $ 0.63   $ 0.51   $ 0.58   23.53 % 8.62 %
 

                 
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended % Change
June 30, June 30, Jun 2014 vs.
  2014     2013   Jun 2013
 
Interest income
Interest on fed funds sold and short term investments $ 106 $ 55 92.73 %
Interest and dividends on securities 9,414 7,057 33.40 %
Interest on loans 97,597 94,699 3.06 %
Interest on loans held for sale   147     505   -70.89 %
Total interest income 107,264 102,316 4.84 %
Interest expense
Interest on deposits 5,579 5,208 7.12 %
Interest on borrowed funds   5,026     6,630   -24.19 %
Total interest expense   10,605     11,838   -10.42 %
Net interest income 96,659 90,478 6.83 %
Less - provision for loan losses   6,752     4,400   53.45 %
Net interest income after provision for loan losses 89,907 86,078 4.45 %
Noninterest income
Deposit account fees 8,821 8,559 3.06 %
Interchange and ATM fees 6,298 5,089 23.76 %
Investment management 9,739 8,242 18.16 %
Mortgage banking income 1,364 3,951 -65.48 %
Increase in cash surrender value of life insurance policies 1,443 1,531 -5.75 %
Gain on life insurance benefits 1,964 - 100.00 %
Net gain (loss) on sale of equity securities 71 (4 ) -1875.00 %
Loan level derivative income 1,070 1,348 -20.62 %
Other noninterest income   3,602     3,698   -2.60 %
Total noninterest income 34,372 32,414 6.04 %
Noninterest expense
Salaries and employee benefits 45,923 44,309 3.64 %
Occupancy and equipment expenses 11,447 10,169 12.57 %
Data processing and facilities management 2,432 2,385 1.97 %
FDIC assessment 1,871 1,755 6.61 %
Merger and acquisition expenses 77 2,099 -96.33 %
Loss on termination of derivatives 1,122 - 100.00 %
Other noninterest expense   21,994     24,366   -9.73 %
Total noninterest expense 84,866 85,083 -0.26 %
Income before income taxes   39,413     33,409   17.97 %
Provision for income taxes   11,284     8,399   34.35 %
Net income $ 28,129   $ 25,010   12.47 %
 
Basic earnings per share $ 1.18 $ 1.09 8.26 %
Diluted earnings per share $ 1.17 $ 1.09 7.34 %
Basic average shares 23,858,456 22,856,132
Diluted average shares 23,956,000 22,905,236
 

Performance ratios

Net interest margin (FTE) 3.48 % 3.58 %
Return on average assets 0.91 % 0.89 %
Return on average common equity 9.34 % 9.33 %
 

Reconciliation table - non-GAAP financial information

Net income $ 28,129 $ 25,010 12.47 %
Noninterest income components
Less - gain on life insurance benefits, tax exempt (1,964 ) -
Noninterest expense components
Add - loss on termination of derivatives, net of tax 663 -
Add - severance, net of tax - 192
Add - merger & acquisition expenses, net of tax 66 1,314
Add - impairment on acquired facilities, net of tax   298     -    
Net operating earnings $ 27,192   $ 26,516   2.55 %
 
Diluted earnings per share, on an operating basis $ 1.14   $ 1.16   -1.72 %
 

                                   

Reconciliation table - non-GAAP financial information

(Unaudited dollars in thousands)       Three Months Ended Six Months Ended
% Change % Change
June 30, March 31, June 30, Jun 2014 vs. Jun 2014 vs. June 30, June 30, Jun 2014 vs.
2014 2014 2013 Mar 2014 Jun 2013 2014 2013 Jun 2013
 
Noninterest income GAAP $ 16,857 $ 17,516 $ 16,692 -3.76 % 0.99 % $ 34,372 $ 32,414 6.04 %
Less - gain on life insurance benefits   (337 )   (1,627 )   -     -79.29 %   100.00 %   (1,964 )   -     100.00 %
Total noninterest income as adjusted $ 16,520   $ 15,889   $ 16,692     3.97 %   -1.03 % $ 32,408   $ 32,414  

 

-0.02 %
 
Noninterest expense GAAP $ 42,980 $ 41,887 $ 42,164 2.61 % 1.94 % $ 84,866 $ 85,083 -0.26 %
Less - loss on termination of derivatives (1,122 ) - - 100.00 % 100.00 % (1,122 ) - 100.00 %
Less - severance - - - n/a n/a - (325 ) -100.00 %
Less - merger and acquisition expenses - (77 ) (754 ) -100.00 % -100.00 %

 

(77 ) (2,099 ) -96.33 %
Less - impairment on acquired facilities   -     (503 )   -     -100.00 %   n/a     (503 )   -     100.00 %
Total noninterest expense as adjusted $ 41,858   $ 41,307   $ 41,410     1.34 %   1.08 % $ 83,164   $ 82,659     0.61 %
 
 
 
 

Asset quality

Nonperforming Assets Net Charge-Offs Net Charge-Offs
At For the Three Months Ending For the Six Months Ending
June 30, March 31, June 30, June 30, March 31, June 30, June 30, June 30,
2014 2014 2013 2014   2014 2013 2014 2013
 
Nonperforming loans
Commercial & industrial loans $ 2,368 $ 3,299 $ 3,009 $ 342 $ 704 $ 1,199 $ 1,046 $ 1,486
Commercial real estate loans 6,586 13,970 10,134 463 2,854 188 3,317 595
Small business loans 433 788 698 36 221 239 257 345
Residential real estate loans 10,812 11,000 12,496 136 128

 

100 264 161
Home equity 7,151 7,062 10,024 253 1 227 254 483
Other consumer   66     52     188     111     204     78     315       189  
Total nonperforming loans / total net charge-offs $ 27,416   $ 36,171   $ 36,549   $ 1,341   $ 4,112   $ 2,031   $ 5,453     $ 3,259  
Nonaccrual securities 2,570 2,353 2,169
Other assets in possession 163 167 176
Other real estate owned   9,512     7,830     9,211  
Total nonperforming assets $ 39,661   $ 46,521   $ 48,105  
 
Nonperforming loans/gross loans 0.56 % 0.75 % 0.81 %
Allowance for loan losses/nonperforming loans 198.93 % 148.27 % 144.95 %
Gross loans/total deposits 92.21 % 94.00 % 96.87 %
Allowance for loan losses/total loans 1.12 % 1.12 % 1.17 %
 
Net charge-offs to average loans (quarter annualized) 0.11 % 0.35 % 0.18 %
Net charge-offs to average loans (year-to-date) 0.23 % 0.15 %
 
Three Months Ending
June 30, March 31, June 30,

Nonperforming assets reconciliation

2014 2014 2013

 

Nonperforming assets beginning balance $ 46,521 $ 43,833 $ 46,815
New to Nonperforming 5,109 10,369 11,907
Loans charged-off (2,150 ) (4,566 ) (2,479 )
Loans paid-off (7,615 ) (1,367 ) (4,543 )
Loans transferred to other real estate owned/other assets (3,509 ) (746 ) (368 )
Loans restored to performing status (491 ) (2,062 ) (1,087 )
New to other real estate owned 3,511 746 368
Sale of other real estate owned (2,169 ) (590 ) (3,793 )
Capital improvements to other real estate owned 432 444 1,158
Other   22     460     127  
Nonperforming assets ending balance $ 39,661   $ 46,521   $ 48,105  
 
 
Troubled Debt Restructurings
At
June 30, March 31, June 30,
2014 2014 2013
Troubled debt restructurings on accrual status $ 38,925 $ 40,329 $ 38,898
Troubled debt restructurings on nonaccrual status   7,499     6,998     9,777  
Total troubled debt restructurings $ 46,424     $ 47,327     $ 48,675  
 
 
June 30, March 31, June 30,

Financial ratios

2014 2014 2013

Book value per common share

$ 25.79 $ 25.23 $ 23.73
Tangible book value per share $ 18.20 $ 17.61 $ 16.70
Tangible common capital/tangible assets 7.05 % 6.96 % 6.72 %
 

Capital adequacy

Tier one leverage capital ratio (1) 8.62 % 8.60 % 8.56 %
(1) Estimated number for June 30, 2014.

                               

INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION

     
(Unaudited - dollars in thousands) Three Months Ended
June 30, 2014   March 31, 2014     June 30, 2013
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 $ 110,631 $ 69 0.25 % $ 61,356 $ 38 0.25 % $ 34,379 $ 21 0.25 %
Securities
Taxable investment securities 718,971 4,690 2.62 % 706,355 4,650 2.67 % 533,823 3,506 2.63 %
Nontaxable investment securities (1)   6,107   63 4.14 %   6,143   63 4.16 %   916   18 7.88 %
Total securities 725,078 4,753 2.63 % 712,498 4,713 2.68 % 534,739 3,524 2.64 %
Loans held for sale 9,548 96 4.03 % 6,041 51 3.42 % 35,945 237 2.64 %
Loans
Commercial and industrial 845,848 8,140 3.86 % 816,467 7,942 3.94 % 735,517 7,338 4.00 %
Commercial real estate (1) 2,284,621 24,723 4.34 % 2,281,778 24,204 4.30 % 2,149,662 24,242 4.52 %
Commercial construction 242,465 2,617 4.33 % 228,818 2,346 4.16 % 224,453 2,307 4.12 %
Small business   78,852   1,087   5.53 %   77,503   1,069   5.59 %   77,747   1,092 5.63 %
Total commercial 3,451,786 36,567 4.25 % 3,404,566 35,561 4.24 % 3,187,379 34,979 4.40 %
Residential real estate 540,178 5,320 3.95 % 540,382 5,166 3.88 % 537,138 5,389 4.02 %
Home equity   835,134   7,345   3.53 %   823,890   7,258   3.57 %   793,381   7,069 3.57 %
Total consumer real estate 1,375,312 12,665 3.69 % 1,364,272 12,424 3.69 % 1,330,519 12,458 3.76 %
Other consumer   17,819   449 10.11 %   19,226   485 10.23 %   23,099   517 8.98 %
Total loans   4,844,917     49,681   4.11 %   4,788,064     48,470   4.11 %   4,540,997     47,954   4.24 %
Total interest-earning assets $ 5,690,174   $ 54,599   3.85 % $ 5,567,959   $ 53,272   3.88 % $ 5,146,060   $ 51,736   4.03 %
Cash and due from banks 114,797 140,788 131,214
Federal Home Loan Bank stock 38,228 39,926 38,674
Other assets   422,739   405,367   405,721
Total assets $ 6,265,938 $ 6,154,040 $ 5,721,669
Interest-bearing liabilities
Deposits
Savings and interest checking accounts $ 2,041,213 $ 918 0.18 % $ 1,962,983 $ 889 0.18 % $ 1,681,666 $ 674 0.16 %
Money market 1,003,485 607 0.24 % 997,817 619 0.25 % 873,412 550 0.25 %
Time deposits   715,481     1,264   0.71 %   733,018     1,281   0.71 %   722,486     1,319   0.73 %
Total interest-bearing deposits $ 3,760,179 $ 2,789 0.30 % $ 3,693,818 $ 2,789 0.31 % $ 3,277,564 $ 2,543 0.31 %
Borrowings
Federal Home Loan Bank borrowings $ 131,561 $ 862 2.63 % $ 151,273 $ 1,002 2.69 % $ 305,741 $ 1,433 1.88 %
Customer repurchase agreements and other short-term borrowings 135,831 44 0.13 % 138,536 55 0.16 % 135,657 65 0.19 %
Wholesale repurchase agreements 50,000 289 2.32 % 50,000 286 2.32 % 50,000 289 2.32 %
Junior subordinated debentures 73,824 994 5.40 % 73,884 992 5.45 % 74,045 1,009 5.47 %
Subordinated debentures   30,000     254   3.40 %   30,000     248   3.35 %   30,000     541   7.23 %
Total borrowings $ 421,216   $ 2,443   2.33 % $ 443,693   $ 2,583   2.36 % $ 595,443   $ 3,337   2.25 %
Total interest-bearing liabilities $ 4,181,395   $ 5,232   0.50 % $ 4,137,511   $ 5,372   0.53 % $ 3,873,007   $ 5,880   0.61 %
Demand deposits 1,387,906 1,347,559 1,227,294
Other liabilities   83,903   67,259   77,177
Total liabilities $ 5,653,204 $ 5,552,329 $ 5,177,478
Stockholders' equity   612,734   601,711   544,191
Total liabilities and stockholders' equity $ 6,265,938 $ 6,154,040 $ 5,721,669
 
Net interest income $ 49,367 $ 47,900 $ 45,856
 
Interest rate spread (2) 3.35 % 3.35 % 3.42 %
 
Net interest margin (3) 3.48 % 3.49 % 3.57 %
 
Supplemental Information
Total deposits, including demand deposits $ 5,148,085 $ 2,789 $ 5,041,377 $ 2,789 $ 4,504,858 $ 2,543
Cost of total deposits 0.22 % 0.22 % 0.23 %
Total funding liabilities, including demand deposits $ 5,569,301 $ 5,232 $ 5,485,070 $ 5,372 $ 5,100,301 $ 5,880
Cost of total funding liabilities 0.38 % 0.40 % 0.46 %
 
 
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $314,000, $291,000, and $241,000 for the three months ended June 30, 2014, March 31, 2014, and June 30, 2013, 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.
 

                           
Six Months Ended
June 30, 2014 June 30, 2013
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 $ 86,130 $ 106 0.25 % $ 43,712 $ 55 0.25 %
Securities
Taxable investment securities 712,698 9,340 2.64 % 528,715 7,035 2.68 %
Nontaxable investment securities (1)   6,125   126 4.15 %   916   37 8.15 %
Total securities 718,823 9,466 2.66 % 529,631 7,072 2.69 %
Loans held for sale 7,805 147 3.80 % 38,901 505 2.62 %
Loans
Commercial and industrial 831,239 16,083 3.90 % 714,517 14,176 4.00 %
Commercial real estate (1) 2,283,207 48,925 4.32 % 2,135,820 47,968 4.53 %
Commercial construction 235,679 4,963 4.25 % 211,947 4,323 4.11 %
Small business   78,181   2,156 5.56 %   77,717   2,152 5.58 %
Total commercial 3,428,306 72,127 4.24 % 3,140,001 68,619 4.41 %
Residential real estate 540,280 10,486 3.91 % 558,757 11,307 4.08 %
Home equity   829,543   14,603 3.55 %   795,282   14,163 3.59 %
Total consumer real estate 1,369,823 25,089 3.69 % 1,354,039 25,470 3.79 %
Other consumer   18,519   934 10.17 %   24,485   1,081 8.90 %
Total loans   4,816,648   98,150 4.11 %   4,518,525   95,170 4.25 %
Total interest-earning assets $ 5,629,406 $ 107,869 3.86 % $ 5,130,769 $ 102,802 4.04 %
Cash and due from banks 127,721 100,106
Federal Home Loan Bank stock 39,072 39,853
Other assets   414,099   413,055
Total assets $ 6,210,298 $ 5,683,783
Interest-bearing liabilities
Deposits
Savings and interest checking accounts $ 2,002,314 $ 1,808 0.18 % $ 1,647,222 $ 1,380 0.17 %
Money market 1,000,667 1,226 0.25 % 870,922 1,129 0.26 %
Time deposits   724,201   2,546 0.71 %   740,396   2,700 0.74 %
Total interest-bearing deposits $ 3,727,182 $ 5,580 0.30 % $ 3,258,540 $ 5,209 0.32 %
Borrowings
Federal Home Loan Bank borrowings $ 141,362 $ 1,864 2.66 % $ 288,744 $ 2,811 1.96 %
Customer repurchase agreements and other short-term borrowings 137,176 99 0.15 % 145,606 155 0.21 %
Wholesale repurchase agreements 50,000 574 2.32 % 50,000 574 2.32 %
Junior subordinated debentures 73,854 1,986 5.42 % 74,074 2,009 5.47 %
Subordinated debentures   30,000   502 3.37 %   30,000   1,080 7.26 %
Total borrowings $ 432,392 $ 5,025 2.34 % $ 588,424 $ 6,629 2.27 %
Total interest-bearing liabilities $ 4,159,574 $ 10,605 0.51 % $ 3,846,964 $ 11,838 0.62 %
Demand deposits 1,367,844 1,214,126
Other liabilities   75,627   81,945
Total liabilities $ 5,603,045 $ 5,143,035
Stockholders' equity   607,253   540,748
Total liabilities and stockholders' equity $ 6,210,298 $ 5,683,783
 
Net interest income $ 97,264 $ 90,964
 
Interest rate spread (2) 3.35 % 3.42 %
 
Net interest margin (3) 3.48 % 3.58 %
 
Supplemental Information
Total deposits, including demand deposits $ 5,095,026 $ 5,580 $ 4,472,666 $ 5,209
Cost of total deposits 0.22 % 0.23 %
Total funding liabilities, including demand deposits $ 5,527,418 $ 10,605 $ 5,061,090 $ 11,839
Cost of total funding liabilities 0.39 % 0.47 %
 
 
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $605,000 and $486,000 for the six months ended June 30, 2014 and 2013, 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