ROCKLAND, Mass.--(BUSINESS WIRE)--Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2018 first quarter net income of $27.6 million, or $1.00 per diluted share, compared to net income of $22.1 million, or $0.80 per diluted share, reported in the fourth quarter of 2017. During the fourth quarter of 2017, the Tax Cuts and Jobs Act ("the Tax Act") was signed into law, requiring the Company to revalue its deferred tax assets and liabilities and reassess the value of its low-income housing project investments, resulting in additional tax expense which was considered to be noncore. Excluding these items, operating net income for the fourth quarter was $24.4 million, or $0.89 per diluted share. There were no adjustments to net income during the first quarter of 2018 which the Company considers to be noncore.
“During the first quarter of 2018 Rockland Trust Company set another quarterly earnings per share record and delivered a strong return on both assets and equity for our shareholders,” said Christopher Oddleifson, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “Our increasing net interest margin is a direct result of loan and deposit pricing strategies implemented to prepare for a rising interest rate environment, and asset quality remains pristine as we continue our disciplined approach to loan origination, underwriting, and approval. Our strong financial performance is the outcome created by the Rockland Trust Cycle Of Engagement, in which my engaged colleagues forge enduring relationships with an increasing number of engaged, loyal customers.”
Total assets of $8.1 billion at March 31, 2018 increased by $8.4 million, or 0.1%, from the prior quarter and by $352.3 million, or 4.6%, as compared to the year ago period, inclusive of the 2017 second quarter Island Bancorp, Inc. ("Island Bancorp") acquisition.
Total loans remained relatively flat with the prior quarter, reflective of the rebuilding of the loan pipeline during the quarter along with the intense competitive environment. Growth in the commercial and industrial (increased by $14.7 million, or 6.7% on an annualized basis), small business, and residential real estate loan categories during the first quarter were offset by declines in the commercial real estate, commercial construction, and home equity portfolios. Exclusive of the Island Bancorp acquisition, total loans increased by $142.1 million, or 2.3%, when compared to the year ago period.
Deposit balances in the first quarter of 2018 increased by $22.3 million, or 0.3% from the prior quarter. The Company experienced modest growth in the demand and savings and interest checking categories and the Company's ratio of core deposit balances to total deposits remained over 90% at March 31, 2018. In addition, continued increases in short term rates have driven higher demand for time deposits, which were up 1.6% during the quarter. Exclusive of the Island Bancorp acquisition, total deposits increased by $121.3 million, or 1.9%, when compared to the year ago period. The total cost of deposits increased by two basis points in the first quarter to 0.24%.
The securities portfolio increased by $49.8 million, or 5.3%, compared to the prior quarter due to purchases of $91.2 million, partially offset by paydowns on existing securities, and increased approximately $91.0 million from the year ago period. Effective January 1, 2018, the Company reclassified $20.6 million of securities out of the available for sale category to the equities category to align with newly effective accounting guidance.
The Company's total borrowings of $298.9 million decreased $24.8 million during the first quarter, mainly due to a decline in customer repurchase agreements.
Stockholders' equity at March 31, 2018 rose to $956.1 million, representing an increase of 1.3% from December 31, 2017, due primarily to strong earnings retention, partially offset by a decrease in other comprehensive income, primarily attributable to unrealized losses on available for sale securities. Stockholders' equity increased by 9.0% when compared to the year ago period, driven primarily by the Island Bancorp acquisition, as well as ongoing earnings retention. Book value per share increased $0.37, or 1.1%, during the first quarter compared to the prior quarter, and the Company's ratio of common equity to assets of 11.82% increased by 14 basis points from the prior quarter and by 48 basis points from the same period a year ago. The Company's tangible book value per share rose by $0.42, or 1.6%, to $26.02 in the first quarter compared to the fourth quarter of 2017, and is now 8.8% higher than the year ago period. The Company's ratio of tangible common equity to tangible assets of 9.12% at March 31, 2018 is 16 basis points higher than the prior quarter and 50 basis points higher than the same period a year ago.
NET INTEREST INCOME
Net interest income for the first quarter increased 0.9% to $68.5 million compared to $67.8 million in the prior quarter, due primarily to a higher net interest margin. The net interest margin benefited from the Company's sustained asset sensitive position along with the reinvestment of excess liquidity and increased by 13 basis points compared with the prior quarter to 3.77%.
Noninterest income of $19.9 million in the first quarter was $2.1 million, or 9.4% lower than the prior quarter. Significant changes in noninterest income in the first quarter compared to the prior quarter included the following:
- Interchange and ATM fees decreased by $237,000, or 5.4%, driven mainly by higher seasonal debit card activity in the prior quarter.
- Investment management income remained relatively consistent with the prior quarter despite the volatility experienced in the stock market during the first quarter of 2018. Total assets under administration remained at $3.5 billion as of March 31, 2018.
- Mortgage banking income decreased by $481,000, or 35.6%, due primarily to an overall decrease in loan closings reflective of the rising rate environment combined with a greater percentage of loans being retained in the Company's portfolio.
- The lower increase in cash surrender value of life insurance policies of $180,000, or 16.0%, was due primarily to the annual dividend income that was received in the fourth quarter of 2017.
- Loan level derivative income decreased by $662,000, or 59.7%, as a result of decreased customer demand in the quarter.
- Other noninterest income decreased by $353,000, or 11.0%, primarily due to decreases in capital gain distributions received on equity securities and reduced IRS Code Section1031 exchange fees.
Noninterest expense of $53.5 million in the first quarter was $2.0 million, or 3.9% higher than the prior quarter. Significant changes in noninterest expense in the first quarter compared to the prior quarter included the following:
- Salaries and employee benefits expense increased by $767,000, or 2.5%, due primarily to seasonal increases in payroll taxes and medical insurance, partially offset by decreases in incentive compensation and certain retirement plan expenses. A portion of the latter decrease reflects a 2018 accounting change requiring the classification of certain expenses associated with retirement plans to be recognized in other noninterest expense, when in prior years they were included in salaries and employee benefits.
- Occupancy and equipment expense increased by $1.0 million, or 15.9%, mainly due to increases in snow removal costs and accelerated rent expenses associated with a branch closure.
- Other noninterest expense increased by $216,000, or 1.7%, driven by a higher provision for unfunded commitments, unrealized losses on equity securities (governed by new accounting guidance which requires income statement recognition of unrealized gains and losses on equity securities), and the aforementioned reclassification of certain retirement plan expenses. These increases were partially offset by a decrease in consultant fees, mortgage origination costs and director fees.
The Company generated a return on average assets and a return on average common equity of 1.39% and 11.73%, respectively, in the first quarter of 2018, as compared to 1.08% and 9.28%, respectively, for the prior quarter. On an operating basis, the Company generated a return on average assets and return on average equity of 1.20% and 10.28% during the fourth quarter of 2017, respectively. During the first quarter of 2018, there were no adjustments to net income that the Company considers to be non-core.
The Company's effective tax rate was 19.9% for the first quarter, reflecting the decreased corporate federal tax rate associated with the 2017 Tax Act. In addition, the effective tax rate includes the impact of excess tax benefits associated with stock compensation transactions and other discrete items, totaling $1.2 million. Without these items, the effective tax rate for the quarter would have been 23.3%.
During the first quarter, the Company recorded total net charge-offs of $281,000, or 0.02% of average loans on an annualized basis, compared to net charge-offs of $367,000 in the prior quarter. Provision for loan losses was $500,000 for the first quarter of 2018 as compared to $1.3 million in the fourth quarter of 2017. The lower provision reflected both a continued improvement in credit quality as well as lower loan growth. Nonperforming loans decreased by 3.9% to $47.7 million, or 0.75% of loans, at March 31, 2018 from $49.6 million, or 0.78% of loans, at December 31, 2017. Total nonperforming assets decreased to $48.1 million at the end of the first quarter, as compared to $50.3 million at the end of the prior quarter. In the past year, nonperforming asset levels declined by 18.4%. At March 31, 2018 delinquency as a percentage of loans was 0.79%, representing an increase of two basis points from the prior quarter.
The allowance for loan losses was $60.9 million at March 31, 2018, as compared to $60.6 million at December 31, 2017. The Company’s allowance for loan losses as a percentage of loans was 0.96% and 0.95% at March 31, 2018 and December 31, 2017, respectively.
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 20, 2018. 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: 10116694 and will be available through May 4, 2018. Additionally, a webcast replay will be available until April 20, 2019.
ABOUT INDEPENDENT BANK CORP.
Independent Bank Corp. has approximately $8.1 billion in assets and is the holding company for Rockland Trust Company, a full-service commercial bank headquartered in Massachusetts. Named in 2017 to The Boston Globe’s “Top Places to Work” list for the ninth consecutive year, Rockland Trust offers a wide range of banking, investment, and insurance services. The Bank serves businesses and individuals through approximately 100 retail branches, commercial and residential lending centers, and investment management offices in eastern Massachusetts, including Greater Boston, the South Shore, the Cape and Islands, and Rhode Island. Rockland Trust also offers a full suite of mobile, online, and telephone banking services. The Company 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 or volatility in the local real estate market;
- adverse changes in asset quality including an unanticipated credit deterioration in our loan portfolio including those related to one or more large commercial relationships;
- 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 expense, resulting from failure to comply with general tax laws, changes in tax laws, or failure to comply with requirements of the federal New Markets Tax Credit program;
- unexpected changes in market interest rates for interest earning assets and/or interest bearing liabilities;
- 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;
- a deterioration of the credit rating for U.S. long-term sovereign debt;
- our inability to adapt to changes in information technology, including changes to industry accepted delivery models driven by a migration to the internet as a means of service delivery;
- 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 synergies from merger transactions in the amounts or in the timeframe anticipated;
- inability to retain customers and employees, including those acquired in previous acquisitions;
- the effect of laws and regulations regarding the financial services industry including, but not limited to, the Dodd-Frank Wall Street Reform and the Consumer Protection Act and regulatory uncertainty surrounding these laws and regulations;
- 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;
- cyber security attacks or intrusions that could adversely impact our businesses; 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 described in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q (“Risk Factors”). Except as required by law, the Company disclaims any intent or obligation to update publicly any such forward-looking statements, whether in response to new information, future events or otherwise. Any public statements or disclosures by the Company following this release which modify or impact any of the forward-looking statements contained in this release will be deemed to modify or supersede such statements in this release. In addition to the information set forth in this press release, you should carefully consider the Risk Factors.
This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This information includes operating net income and operating EPS, tangible book value per share and the tangible common equity ratio, and return on average assets and return on average equity on an operating basis.
Operating net income and operating EPS exclude items that management believes are unrelated to its core banking business such as merger and acquisition expenses, and other items, such as one-time adjustments as a result of changes in laws and regulations. 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 items.
Management also supplements its evaluation of financial performance with analysis of tangible book value per share (which is computed by dividing stockholders' equity less goodwill and identifiable intangible assets, or "tangible common equity", by common shares outstanding), the tangible common equity ratio (which is computed by dividing tangible common equity by tangible assets, defined as total assets less goodwill and other intangibles)and with analysis of return on average assets and return on average common equity on an operating basis. The Company has included information on tangible book value per share, the tangible common equity ratio, and return on average assets and return on average common equity on an operating basis because management believes that investors may find it useful to have access to the same analytical tool used by management. As a result of merger and acquisition activity, the Company has recognized goodwill and other intangible assets in conjunction with business combination accounting principles. Excluding the impact of goodwill and other intangibles in measuring asset and capital values for the ratios provided, along with other bank standard capital ratios, provides a framework to compare the capital adequacy of the Company to other companies in the financial services industry.
These non-GAAP measures should not be viewed as a substitute for operating results and other financial measures determined in accordance with GAAP. An item which management deems to be non-core and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP performance measures, including operating earnings, operating EPS, tangible book value per share, the tangible common equity ratio, and return on average assets and return on average equity on an operating basis 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|
|Mar 2018 vs.||Mar 2018 vs.|
|Dec 2017||Mar 2017|
|Cash and due from banks||$||102,623||$||103,485||$||94,662||(0.83||)%||8.41||%|
|Interest-earning deposits with banks||62,925||109,631||125,411||(42.60||)%||(49.82||)%|
|Available for sale||445,750||447,498||401,837||(0.39||)%||10.93||%|
|Held to maturity||528,861||497,688||502,123||6.26||%||5.32||%|
|Loans held for sale (at fair value)||3,937||4,768||3,398||(17.43||)%||15.86||%|
|Commercial and industrial||903,214||888,528||881,329||1.65||%||2.48||%|
|Commercial real estate||3,102,271||3,116,561||3,027,305||(0.46||)%||2.48||%|
|Residential real estate||761,331||754,329||653,999||0.93||%||16.41||%|
|Home equity - first position||617,164||612,990||595,828||0.68||%||3.58||%|
|Home equity - subordinate positions||434,288||439,098||412,943||(1.10||)%||5.17||%|
|Total consumer real estate||1,812,783||1,806,417||1,662,770||0.35||%||9.02||%|
|Less: allowance for loan losses||(60,862||)||(60,643||)||(62,318||)||0.36||%||(2.34||)%|
|Federal Home Loan Bank stock||13,027||11,597||11,497||12.33||%||13.31||%|
|Bank premises and equipment, net||95,214||94,722||82,027||0.52||%||16.08||%|
|Other intangible assets||8,462||9,341||9,087||(9.41||)%||(6.88||)%|
|Cash surrender value of life insurance policies||152,568||151,528||145,560||0.69||%||4.81||%|
|Other real estate owned and other foreclosed assets||358||612||3,404||(41.50||)%||(89.48||)%|
|Liabilities and Stockholders' Equity|
|Savings and interest checking accounts||2,606,257||2,599,922||2,542,667||0.24||%||2.50||%|
|Time certificates of deposit||654,755||644,301||615,852||1.62||%||6.32||%|
|Federal Home Loan Bank borrowings||53,257||53,264||50,811||(0.01||)%||4.81||%|
|Customer repurchase agreements||137,914||162,679||145,772||(15.22||)%||(5.39||)%|
|Junior subordinated debentures, net||73,075||73,073||73,067||—||%||0.01||%|
|Subordinated debentures, net||34,693||34,682||34,647||0.03||%||0.13||%|
|Total deposits and borrowings||7,050,450||7,052,951||6,774,971||(0.04||)%||4.07||%|
|Additional paid in capital||479,715||479,430||452,048||0.06||%||6.12||%|
|Accumulated other comprehensive loss, net of tax||(8,195||)||(1,831||)||(639||)||347.57||%||1,182.47||%|
|Total stockholders' equity||956,059||943,809||877,480||1.30||%||8.96||%|
|Total liabilities and stockholders' equity||$||8,090,410||$||8,082,029||$||7,738,114||0.10||%||4.55||%|
|CONSOLIDATED STATEMENTS OF INCOME|
|(Unaudited, dollars in thousands, except per share data)|
|Three Months Ended|
|% Change||% Change|
|Mar 2018 vs.||Mar 2018 vs.|
|Dec 2017||Mar 2017|
|Interest on federal funds sold and short-term investments||$||311||$||604||$||207||(48.5||)%||50.24||%|
|Interest and dividends on securities||6,235||5,864||5,393||6.33||%||15.61||%|
|Interest and fees on loans||67,184||66,384||58,793||1.21||%||14.27||%|
|Interest on loans held for sale||19||24||14||(20.83||)%||35.71||%|
|Total interest income||73,749||72,876||64,407||1.20||%||14.50||%|
|Interest on deposits||3,935||3,692||2,767||6.58||%||42.21||%|
|Interest on borrowings||1,343||1,352||1,440||(0.67||)%||(6.74||)%|
|Total interest expense||5,278||5,044||4,207||4.64||%||25.46||%|
|Net interest income||68,471||67,832||60,200||0.94||%||13.74||%|
|Provision for loan losses||500||1,300||600||(61.54||)%||(16.67||)%|
|Net interest income after provision for loan losses||67,971||66,532||59,600||2.16||%||14.05||%|
|Deposit account fees||4,431||4,485||4,544||(1.20||)%||(2.49||)%|
|Interchange and ATM fees||4,173||4,410||3,922||(5.37||)%||6.40||%|
|Mortgage banking income||870||1,351||957||(35.60||)%||(9.09||)%|
|Increase in cash surrender value of life insurance policies||947||1,127||964||(15.97||)%||(1.76||)%|
|Gain on sale of equity securities||—||—||4||n/a||nm|
|Loan level derivative income||447||1,109||606||(59.69||)%||(26.24||)%|
|Other noninterest income||2,853||3,206||2,301||(11.01||)%||23.99||%|
|Total noninterest income||19,863||21,914||18,912||(9.36||)%||5.03||%|
|Salaries and employee benefits||31,100||30,333||28,324||2.53||%||9.80||%|
|Occupancy and equipment expenses||7,408||6,391||6,158||15.91||%||20.30||%|
|Data processing and facilities management||1,286||1,256||1,272||2.39||%||1.10||%|
|Merger and acquisition expense||—||—||484||n/a||nm|
|Loss on sale of equity securities||—||10||3||nm||nm|
|Other noninterest expenses||12,859||12,643||11,749||1.71||%||9.45||%|
|Total noninterest expenses||53,451||51,467||48,773||3.85||%||9.59||%|
|Income before income taxes||34,383||36,979||29,739||(7.02||)%||15.62||%|
|Provision for income taxes||6,828||14,915||9,014||(54.22||)%||(24.25||)%|
|(nm - the percentage is not meaningful)|
|Weighted average common shares (basic)||27,486,573||27,445,739||27,029,640|
|Common share equivalents||67,381||77,615||81,283|
|Weighted average common shares (diluted)||27,553,954||27,523,354||27,110,923|
|Basic earnings per share||$||1.00||$||0.80||$||0.77||25.00||%||29.87||%|
|Diluted earnings per share||$||1.00||$||0.80||$||0.76||25.00||%||31.58||%|
Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP):
|Noninterest expense components|
|Add - merger and acquisition expenses||—||—||484|
|Noncore items, gross||—||—||484|
|Less - net tax benefit associated with noncore items (1)||—||—||(153||)|
|2017 Tax Act: revaluation of net deferred tax assets||—||1,895||—|
|2017 Tax Act: revaluation of LIHTC investments||—||466||—|
|Total tax impact||—||2,361||(153||)|
|Noncore items, net of tax||—||2,361||331|
|Operating net income||$||27,555||$||24,425||$||21,056||12.81||%||30.87||%|
|Diluted earnings per share, on an operating basis||$||1.00||$||0.89||$||0.78||12.36||%||28.21||%|
|(1) The net tax benefit associated with noncore items is determined by assessing whether each noncore item is included or excluded from net taxable income and applying the Company's combined marginal tax rate to only those items included in net taxable income.|
|Net interest margin (FTE)||3.77||%||3.64||%||3.51||%|
|Return on average assets GAAP (calculated by dividing net income by average assets)||1.39||%||1.08||%||1.10||%|
|Return on average assets on an operating basis (calculated by dividing net operating earnings by average assets)||1.39||%||1.20||%||1.12||%|
|Return on average common equity GAAP (calculated by dividing net income by average common equity)||11.73||%||9.28||%||9.59||%|
|Return on average common equity on an operating basis (calculated by dividing net operating earnings by average common equity)||11.73||%||10.28||%||9.74||%|
|(Unaudited, dollars in thousands)||Nonperforming Assets At|
|Commercial & industrial loans||$||30,751||$||32,055||$||36,877|
|Commercial real estate loans||2,997||3,123||4,792|
|Small business loans||412||230||207|
|Residential real estate loans||7,646||8,129||7,139|
|Total nonperforming loans||47,713||49,638||55,052|
|Other real estate owned||358||612||3,404|
|Total nonperforming assets||$||48,071||$||50,250||$||58,456|
|Nonperforming loans/gross loans||0.75||%||0.78||%||0.91||%|
|Nonperforming assets/total assets||0.59||%||0.62||%||0.76||%|
|Allowance for loan losses/nonperforming loans||127.56||%||122.17||%||113.20||%|
|Allowance for loan losses/total loans||0.96||%||0.95||%||1.03||%|
|Delinquent loans/total loans||0.79||%||0.77||%||0.58||%|
|Nonperforming Assets Reconciliation for the Three Months Ended|
|Nonperforming assets beginning balance||$||50,250||$||53,175||$||61,580|
|New to nonperforming||2,001||2,363||3,948|
|Loans transferred to other real estate owned/other assets||—||—||(457||)|
|Loans restored to performing status||(690||)||(369||)||(629||)|
|New to other real estate owned||—||—||457|
|Valuation write down||—||(39||)||—|
|Sale of other real estate owned||(254||)||(2,195||)||(1,226||)|
|Nonperforming assets ending balance||$||48,071||$||50,250||$||58,456|
|Net Charge-Offs (Recoveries)|
|Three Months Ended|
|Net charge-offs (recoveries)|
|Commercial and industrial loans||$||121||$||165||$||(187||)|
|Commercial real estate loans||(20||)||(3||)||(31||)|
|Small business loans||15||26||4|
|Residential real estate loans||37||23||11|
|Total net charge-offs (recoveries)||$||281||$||367||$||(152||)|
|Net charge-offs (recoveries) to average loans (annualized)||0.02||%||0.02||%||(0.01||)%|
|Troubled Debt Restructurings At|
|Troubled debt restructurings on accrual status||$||25,617||$||25,852||$||25,575|
|Troubled debt restructurings on nonaccrual status||5,637||6,067||5,439|
|Total troubled debt restructurings||$||31,254||$||31,919||$||31,014|
|BALANCE SHEET AND CAPITAL RATIOS|
|Gross loans/total deposits||94.23||%||94.45||%||93.72||%|
|Common equity tier 1 capital ratio (1)||11.43||%||11.20||%||10.89||%|
|Tier one leverage capital ratio (1)||10.32||%||10.04||%||9.92||%|
|Common equity to assets ratio GAAP||11.82||%||11.68||%||11.34||%|
|Tangible common equity to tangible assets ratio (2)||9.12||%||8.96||%||8.62||%|
|Book value per share GAAP||$||34.75||$||34.38||$||32.44|
|Tangible book value per share (2)||$||26.02||$||25.60||$||23.92|
(1) Estimated number for March 31, 2018.
(2) See Appendix A for detailed reconciliation from GAAP to Non-GAAP ratios.
INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION
|(Unaudited, dollars in thousands)||Three Months Ended|
|March 31, 2018||December 31, 2017||March 31, 2017|
|Balance||Paid (1)||Rate||Balance||Paid (1)||Rate||Balance||Paid (1)||Rate|
|Interest-earning deposits with banks, federal funds sold, and short term investments||$||81,934||$||311||1.54||%||$||185,073||$||604||1.29||%||$||105,007||$||207||0.80||%|
|Securities - trading||1,433||—||—||%||1,297||—||—||%||999||—||—||%|
|Securities - taxable investments||967,221||6,219||2.61||%||922,904||5,847||2.51||%||875,417||5,367||2.49||%|
|Securities - nontaxable investments (1)||2,262||20||3.59||%||2,365||25||4.19||%||3,793||40||4.28||%|
|Loans held for sale||2,753||19||2.80||%||6,763||24||1.41||%||2,725||14||2.08||%|
|Commercial and industrial||879,336||9,615||4.43||%||856,272||9,135||4.23||%||880,765||8,642||3.98||%|
|Commercial real estate (1)||3,107,437||33,289||4.34||%||3,104,885||33,455||4.27||%||3,029,344||30,215||4.05||%|
|Residential real estate||755,996||7,501||4.02||%||754,605||7,400||3.89||%||643,672||6,099||3.84||%|
|Total consumer real estate||1,807,018||17,706||3.97||%||1,805,420||17,555||3.86||%||1,640,612||14,807||3.66||%|
|Total interest-earning assets||7,389,898||$||73,926||4.06||%||7,426,776||$||73,256||3.91||%||7,005,654||$||64,790||3.75||%|
|Cash and due from banks||97,605||98,397||94,955|
|Federal Home Loan Bank stock||13,016||11,597||13,108|
|Savings and interest checking accounts||$||2,563,186||$||1,093||0.17||%||$||2,556,355||$||1,052||0.16||%||$||2,479,373||$||763||0.12||%|
|Total interest-bearing deposits||4,547,980||3,935||0.35||%||4,529,787||3,692||0.32||%||4,372,786||2,767||0.26||%|
|Federal Home Loan Bank borrowings||73,040||260||1.44||%||53,267||262||1.95||%||66,556||403||2.46||%|
|Customer repurchase agreements||155,768||66||0.17||%||178,917||79||0.18||%||157,305||56||0.14||%|
|Junior subordinated debentures||73,074||590||3.27||%||73,072||584||3.17||%||73,085||554||3.07||%|
|Total interest-bearing liabilities||4,884,549||$||5,278||0.44||%||4,869,718||$||5,044||0.41||%||4,704,373||$||4,207||0.36||%|
|Total liabilities and stockholders' equity||$||8,046,035||$||8,093,814||$||7,654,128|
|Net interest income||$||68,648||$||68,212||$||60,583|
|Interest rate spread (2)||3.62||%||3.50||%||3.39||%|
|Net interest margin (3)||3.77||%||3.64||%||3.51||%|
|Total deposits, including demand deposits||$||6,677,497||$||3,935||$||6,731,653||$||3,692||$||6,360,365||$||2,767|
|Cost of total deposits||0.24||%||0.22||%||0.18||%|
|Total funding liabilities, including demand deposits||$||7,014,066||$||5,278||$||7,071,584||$||5,044||$||6,691,952||$||4,207|
|Cost of total funding liabilities||0.31||%||0.28||%||0.25||%|
(1) The total amount of adjustment to present interest income and yield
on a fully tax-equivalent basis is $177,000, $380,000, and $383,000 for
the three months ended March 31, 2018, December 31, 2017, and March 31,
2017, respectively, determined by applying the Company's marginal tax
rates in effect during each respective quarter.
(2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
Organic Loan and Deposit Growth
|(Unaudited, dollars in thousands)|
|Island Bancorp Balances Acquired||Organic Growth/(Decline)||Organic Growth/(Decline) %|
|Commercial and industrial||$||903,214||$||881,329||$||4,271||$||17,614||2.00||%|
|Commercial real estate||3,102,271||3,027,305||44,510||30,456||1.01||%|
|Residential real estate||761,331||653,999||87,450||19,882||3.04||%|
|Total consumer real estate||1,812,783||1,662,770||106,371||43,642||2.62||%|
|Total other consumer||9,188||10,415||236||(1,463||)||(14.05||)%|
|Savings and interest checking accounts||2,606,257||2,542,667||47,095||16,495||0.65||%|
|Time certificates of deposit||654,755||615,852||14,971||23,932||3.89||%|
Certain amounts in prior year financial statements have been reclassified to conform to the current year's presentation.
(Unaudited, dollars in thousands, except per share data)
The following table summarizes the calculation of the Company's tangible common equity ratio and tangible book value per share at the dates indicated:
|Tangible common equity|
|Stockholders' equity (GAAP)||$||956,059||$||943,809||$||877,480||(a)|
|Less: Goodwill and other intangibles||240,268||241,147||230,613|
|Tangible common equity||$||715,791||$||702,662||$||646,867||(b)|
|Less: Goodwill and other intangibles||240,268||241,147||230,613|
|Common equity to assets ratio (GAAP)||11.82||%||11.68||%||11.34||%||(a/c)|
|Tangible common equity to tangible assets ratio (Non-GAAP)||9.12||%||8.96||%||8.62||%||(b/d)|
|Book value per share (GAAP)||$||34.75||$||34.38||$||32.44||(a/e)|
|Tangible book value per share (Non-GAAP)||$||26.02||$||25.60||$||23.92||(b/e)|
(Unaudited, dollars in thousands)
The following table summarizes the impact of noncore items on of the Company's calculation of noninterest income and noninterest expense, as well as the impact of noncore items on noninterest income as a percentage of total revenue and the efficiency ratio for the periods indicated:
|Three Months Ended|
|Net interest income (GAAP)||$||68,471||$||67,832||$||60,200||(a)|
|Noninterest income (GAAP)||$||19,863||$||21,914||$||18,912||(b)|
|Noninterest income on an operating basis (Non-GAAP)||$||19,863||$||21,914||$||18,912||(c)|
|Noninterest expense (GAAP)||$||53,451||$||51,467||$||48,773||(d)|
|Merger and acquisition expense||—||—||484|
|Noninterest expense on an operating basis (Non-GAAP)||$||53,451||$||51,467||$||48,289||(e)|
|Total revenue (GAAP)||$||88,334||$||89,746||$||79,112||(a+b)|
|Total operating revenue (Non-GAAP)||$||88,334||$||89,746||$||79,112||(a+c)|
|Noninterest income as a % of total revenue (GAAP based)||22.49||%||24.42||%||23.91||%||(b/(a+b))|
|Noninterest income as a % of total revenue on an operating basis (Non-GAAP)||22.49||%||24.42||%||23.91||%||(c/(a+c))|
|Efficiency ratio (GAAP based)||60.51||%||57.35||%||61.65||%||(d/(a+b))|
|Efficiency ratio on an operating basis (Non-GAAP)||60.51||%||57.35||%||61.04||%||(e/(a+c))|