Independent Bank Corp. Reports $13.4 Million of First Quarter Net Income and GAAP Diluted EPS of $0.56

Business Wire

ROCKLAND, Mass.--(BUSINESS WIRE)--

Independent Bank Corp. (INDB), parent of Rockland Trust Company, today announced 2014 first quarter net income of $13.4 million, or $0.56 per diluted share, as compared to $10.6 million, or $0.45 per diluted share, in the prior quarter.

Both quarters contained items, such as gains on life insurance benefits, merger and acquisition expenses and impairment on acquired facilities, which the Company considers non-core. When excluding such items, net operating earnings for the first quarter were $12.1 million, or $0.51 per diluted share, versus the prior quarter’s net operating earnings of $14.2 million, or $0.61 per diluted share. First quarter results were impacted by a charge-off on a single commercial real estate loan.

“Due to the extraordinary customer service provided by my many colleagues, Rockland Trust has started 2014 with strong loan and deposit growth,” said Christopher Oddleifson, President and Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “Rockland Trust is well respected throughout eastern Massachusetts and Rhode Island and is increasingly viewed as the bank of choice in the markets we serve. While the competitive environment remains challenging, we anticipate that Rockland Trust’s disciplined approach and relentless attention to fundamentals has us well positioned for continued growth and success.”

BALANCE SHEET

Total assets of $6.2 billion at March 31, 2014 increased by $126.7 million, or 2.1% from the prior quarter and by $504.8 million, or 8.8%, as compared to the year ago period, inclusive of the acquisition of Mayflower Bancorp, Inc. (“Mayflower”).

Total loans of $4.8 billion at March 31, 2014 increased by $89.0 million, or 7.6% on an annualized basis, from the prior quarter, and increased by $319.8 million, or 7.1%, when compared to the year ago period. The commercial loan portfolio continued to be the major driver increasing by $88.6 million, or 10.8% on an annualized basis, from the fourth quarter of 2013. The commercial and industrial component was especially strong, growing by nearly 20% on an annualized basis during the first quarter, as compared to the linked quarter.

Total deposits of $5.1 billion at March 31, 2014 increased by $127.8 million, or 10.4% on an annualized basis, during the first quarter, as compared to the linked quarter and by $562.8 million, or 12.4%, when compard to the year ago period, inclusive of the Mayflower acquisition. Strong deposit growth was led heavily by the core deposit categories, which increased by $146.2 million, or 13.9% on an annualized basis, from the prior quarter, and as of March 31, 2014, represented 85.6% of total deposits. The total cost of deposits decreased slightly to 0.22% for the quarter as compared to 0.23% in the linked quarter, and 0.24% in the year ago quarter, reflecting the Company’s continued emphasis on lower cost funding sources.

The securities portfolio increased by $16.3 million to $723.8 million at March 31, 2014 compared to the quarter ended December 31, 2013, and continues to represent 11.6% of total assets at March 31, 2014. Security purchases continue to be primarily comprised of agency mortgage-backed securities.

Stockholders’ equity at March 31, 2014 rose to $602.6 million, an increase of 1.9% from the prior quarter. As compared to the year ago period, stockholders’ equity has increased by $65.0 million, or 12.1%. The strong growth in capital led to an increase in the Company’s tangible book value per share, which increased $0.43 in the quarter to $17.61. The Company’s estimated tangible common ratio for the quarter of 6.96% is consistent with the prior quarter.

NET INTEREST INCOME

Net interest income was $47.6 million for the first quarter of 2014, compared to $46.9 million in the linked quarter. During the first quarter, the Company’s net interest margin increased by 4 basis points to 3.49%, benefiting from stable earning asset yields, a slightly lower cost of funds, and a lower average cash position, as some excess cash was used to pay down borrowings.

NONINTEREST INCOME

The Company recorded noninterest income of $17.5 million during the first quarter of 2014 which is consistent with the prior quarter levels. Significant changes in noninterest income included the following:

  • Deposit account fees decreased by $417,000, or 8.7%, due to a decrease in overdraft fees driven largely by seasonal spending trends by customers.
  • Investment management income increased by $187,000, or 4.2%, primarily due to strong sales, particularly in the retail channel, as well as continued growth in assets under administration, which were $2.3 billion at March 31, 2014, a 2.8% increase from the linked quarter.
  • Mortgage banking income decreased $454,000, or 48.3%, reflective of the decline in volume during the quarter, as well as a decrease of approximately $100,000 related to the change in fair value of the mortgage servicing asset.
  • The Company recorded gains on life insurance benefits in the amount of $1.6 million for the quarter, as compared to $227,000 in the prior quarter.
  • During the fourth quarter of 2013, the Company recognized a gain of $258,000 on the sale of two private label collateralized mortgage obligations. There were no such sales during the first quarter of 2014.
  • Other noninterest income decreased by $350,000 or 15.5%, due to decreases in (i) capital gain distributions on equity securities used to fund the Company’s Rabbi Trust of $260,000, (ii) gains on sale of other real estate owned of $171,000, and (iii) 1031 exchange fees of $127,000 recorded in the prior quarter. These decreases were offset by increases in gains on sale of fixed assets of $244,000.

NONINTEREST EXPENSE

The Company recorded noninterest expense of $41.9 million during the first quarter of 2014 which represents a $6.0 million, or 12.4%, decrease from the prior quarter. Significant changes in noninterest expense included the following:

  • Merger and acquisition expenses were only $77,000 for the first quarter, as compared to $6.2 million in the prior quarter, all of which were related to the Mayflower acquisition which closed in November of 2013.
  • Occupancy and equipment expense increased $1.2 million, or 25.2%, due to higher snow removal costs of $681,000 and impairment on acquired facilities of $503,000.
  • Other noninterest expenses decreased by $1.3 million, or 10.7%, mainly due to decreases in consultant fees of $472,000, a decrease in loan work-out costs of $361,000, and a decrease in debit card expense of $171,000 due to lower volume.

The Company generated a return on average assets and a return on average common equity of 0.88% and 9.02%, respectively, in the first quarter, as compared to 0.70% and 7.29% in the fourth quarter of 2013. On an operating basis, the return on average assets and the return on average common equity for the three months ended March 31, 2014 were 0.80% and 8.17%, respectively, compared to 0.94% and 9.81% in the fourth quarter of 2013, respectively.

ASSET QUALITY

The provision for loan losses was $4.5 million for the first quarter compared to $3.2 million for the quarter ended December 31, 2013. For the quarter, net charge-offs were $4.1 million, or 0.35% of average loans on an annualized basis, and represented an increase of $639,000 when compared to the prior quarter. Nonperforming loans increased by $1.5 million to $36.2 million, or 0.75% of total loans, at March 31, 2014, from $34.7 million, or 0.73% of total loans, at December 31, 2013. The increase in net charge-offs and nonperforming loans in the first quarter was primarily attributable to a single commercial real estate loan from a prior acquisition. Nonperforming assets increased to $46.5 million at the end of the first quarter of 2014, compared to $43.8 million in the linked quarter. Delinquency as a percentage of loans decreased to 0.85% at March 31, 2014, compared to 0.86% at December 31, 2013.

The allowance for loan losses was $53.6 million at March 31, 2014, compared to $53.2 million for the prior quarter. The Company’s allowance for loan losses was 1.12% and 1.13% of total loans at March 31, 2014 and December 31, 2013, 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 4:30 p.m. Eastern Time on Thursday, April 17, 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: 10043328. The webcast replay will be available until April 17, 2015.

ABOUT INDEPENDENT BANK CORP.

Independent Bank Corp. has approximately $6.2 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 March 31, December 31, March 31, Mar 2014 vs. Mar 2014 vs.
(Unaudited dollars in thousands)     2014       2013       2013       Dec 2013   Mar 2013
 
Assets
Cash and due from banks $ 142,349 $ 168,106 $ 70,434 -15.32 % 102.10 %
Interest-earning deposits with banks 74,934 48,219 129,406 55.40 % -42.09 %
Securities
Securities available for sale 348,258 356,862 335,693 -2.41 % 3.74 %
Securities held to maturity   375,556     350,652     209,090   7.10 % 79.61 %
Total securities 723,814 707,514 544,783 2.30 % 32.86 %
 
Loans held for sale 6,788 8,882 36,790 -23.58 % -81.55 %
Loans
Commercial and industrial 822,509 784,202 702,486 4.88 % 17.09 %
Commercial real estate 2,282,939 2,249,260 2,123,778 1.50 % 7.49 %
Commercial construction 239,536 223,859 211,984 7.00 % 13.00 %
Small business   78,147     77,240     77,220   1.17 % 1.20 %
Total commercial 3,423,131 3,334,561 3,115,468 2.66 % 9.88 %
Residential real estate 538,626 541,443 555,413 -0.52 % -3.02 %
Home equity - 1st position 499,095 497,075 481,935 0.41 % 3.56 %
Home equity subordinate positions   328,190     325,066     310,695   0.96 % 5.63 %
Total consumer real estate 1,365,911 1,363,584 1,348,043 0.17 % 1.33 %
Other consumer   18,227     20,162     23,967   -9.60 % -23.95 %
Total loans   4,807,269     4,718,307     4,487,478   1.89 % 7.13 %
Less - allowance for loan losses   (53,629 )   (53,239 )   (51,906 ) 0.73 % 3.32 %
Net loans 4,753,640 4,665,068 4,435,572 1.90 % 7.17 %
Federal Home Loan Bank stock 39,926 39,926 38,674 0.00 % 3.24 %
Bank premises and equipment 64,433 64,950 55,160 -0.80 % 16.81 %
Goodwill and core deposit intangible 182,051 182,642 161,616 -0.32 % 12.64 %
Other assets   237,985     213,927     248,685   11.25 % -4.30 %
Total assets $ 6,225,920   $ 6,099,234   $ 5,721,120   2.08 % 8.82 %
 
Liabilities and Stockholders' Equity
Deposits
Demand deposits $ 1,399,717 $ 1,369,432 $ 1,199,623 2.21 % 16.68 %
Savings and interest checking accounts 2,032,204 1,940,153 1,711,477 4.74 % 18.74 %
Money market 957,052 933,205 872,044 2.56 % 9.75 %
Time certificates of deposit   725,286     743,628     768,266   -2.47 % -5.59 %
Total deposits 5,114,259 4,986,418 4,551,410 2.56 % 12.37 %
Borrowings
Federal Home Loan Bank borrowings 140,228 140,294 262,091 -0.05 % -46.50 %
Customer repurchase agreements and other short-term borrowings 128,485 154,288 134,618 -16.72 % -4.56 %
Wholesale repurchase agreements 50,000 50,000 50,000 0.00 % 0.00 %
Junior subordinated debentures 73,852 73,906 74,073 -0.07 % -0.30 %
Subordinated debentures   30,000     30,000     30,000   0.00 % 0.00 %
Total borrowings 422,565 448,488 550,782 -5.78 % -23.28 %
Total deposits and borrowings 5,536,824 5,434,906 5,102,192 1.88 % 8.52 %
Other liabilities 86,540 72,788 81,353 18.89 % 6.38 %
Stockholders' equity
Common stock 236 235 226 0.43 % 4.42 %
Additional paid in capital 306,156 305,179 270,927 0.32 % 13.00 %
Retained earnings 301,218 293,560 270,891 2.61 % 11.20 %
Accumulated other comprehensive loss, net of tax   (5,054 )   (7,434 )   (4,469 ) -32.02 % 13.09 %
Total stockholders' equity   602,556     591,540     537,575   1.86 % 12.09 %
Total liabilities and stockholders' equity $ 6,225,920   $ 6,099,234   $ 5,721,120   2.08 % 8.82 %
 
 
             
 
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended
(Unaudited dollars in thousands) % Change % Change
March 31, December 31, March 31, Mar 2014 vs. Mar 2014 vs.
2014 2013 2013 Dec 2013 Mar 2013
 
Interest income
Interest on fed funds sold and short term investments $ 38 $ 65 $ 34 -41.54 % 11.76 %
Interest and dividends on securities 4,687 4,362 3,540 7.45 % 32.40 %
Interest on loans 48,204 48,032 46,978 0.36 % 2.61 %
Interest on loans held for sale   51     112     268   -54.46 % -80.97 %
Total interest income 52,980 52,571 50,820 0.78 % 4.25 %
Interest expense
Interest on deposits 2,791 2,766 2,665 0.90 % 4.73 %
Interest on borrowed funds   2,583     2,900     3,293   -10.93 % -21.56 %
Total interest expense   5,374     5,666     5,958   -5.15 % -9.80 %
Net interest income 47,606 46,905 44,862 1.49 % 6.12 %
Less - provision for loan losses   4,502     3,150     1,300   42.92 % 246.31 %
Net interest income after provision for loan losses 43,104 43,755 43,562 -1.49 % -1.05 %
Noninterest income
Deposit account fees 4,359 4,776 4,217 -8.73 % 3.37 %
Interchange and ATM fees 2,975 2,949 2,328 0.88 % 27.79 %
Investment management 4,603 4,416 3,884 4.23 % 18.51 %
Mortgage banking income 487 941 2,281 -48.25 % -78.65 %
Increase in cash surrender value of life insurance policies 722 904 746 -20.13 % -3.22 %
Gain on life insurance benefits 1,627 227 - 616.74 % 100.00 %
Net gain on sale of nonequity securities - 258 - -100.00 % n/a
Net gain (loss) on sale of equity securities 91 (23 ) - -495.65 % 100.00 %
Loan level derivative income 746 760 532 -1.84 % 40.23 %
Other noninterest income   1,906     2,256     1,736   -15.51 % 9.79 %
Total noninterest income 17,516 17,464 15,724 0.30 % 11.40 %
Noninterest expense
Salaries and employee benefits 23,080 22,931 22,715 0.65 % 1.61 %
Occupancy and equipment 6,146 4,908 5,249 25.22 % 17.09 %
Data processing and facilities management 1,253 1,183 1,184 5.92 % 5.83 %
FDIC assessment 905 926 821 -2.27 % 10.23 %
Merger and acquisition 77 6,219 1,345 -98.76 % -94.28 %
Other noninterest expense   10,426     11,678     11,606   -10.72 % -10.17 %
Total noninterest expense 41,887 47,845 42,920 -12.45 % -2.41 %
Income before income taxes   18,733     13,374     16,366   40.07 % 14.46 %
Provision for income taxes   5,350     2,786     4,114   92.03 % 30.04 %
Net income $ 13,383   $ 10,588   $ 12,252   26.40 % 9.23 %
 
Basic earnings per share $ 0.56 $ 0.45 $ 0.54 24.44 % 3.70 %
Diluted earnings per share $ 0.56 $ 0.45 $ 0.54 24.44 % 3.70 %
Basic average shares 23,819,065 23,383,608 22,823,753
Diluted average shares 23,919,238 23,481,053 22,869,793
 

Performance ratios

Net interest margin (FTE) 3.49 % 3.45 % 3.58 %
Return on average assets 0.88 % 0.70 % 0.88 %
Return on average common equity 9.02 % 7.29 % 9.25 %
 

Reconciliation table - non-GAAP financial information

Net income $ 13,383 $ 10,588 $ 12,252 26.40 % 9.23 %
Noninterest income components
Less - gain on sale of nonequity securities, net of tax - (153 ) -
Less - gain on life insurance benefits (tax exempt) (1,627 ) (227 ) -
Noninterest expense components
Add - severance, net of tax - - 192
Add - merger & acquisition expenses, net of tax 66 4,033 856
Add - impairment on acquired facilities, net of tax   298     -     -      
Net operating earnings $ 12,120   $ 14,241   $ 13,300   -14.89 % -8.87 %
 
Diluted earnings per share, on an operating basis $ 0.51   $ 0.61   $ 0.58   -16.39 % -12.07 %
 
                       

Reconciliation table - non-GAAP financial information

(Unaudited dollars in thousands) Three Months Ended
% Change
March 31, December 31, March 31, Mar 2014 vs. Mar 2014 vs.
2014 2013 2013 Dec 2013 Mar 2013  
 
Noninterest income GAAP $ 17,516 $ 17,464 $ 15,724 0.30 % 11.40 %
Less - net gain on sale of nonequity securities - (258 ) - -100.00 % n/a
Less - gain on life insurance benefits   (1,627 )   (227 )   -     616.74 %   100.00 %
Total noninterest income as adjusted $ 15,889   $ 16,979   $ 15,724     -6.42 %   1.05 %
 
Noninterest expense GAAP $ 41,887 $ 47,845 $ 42,920 -12.45 % -2.41 %
Less - severance - - (325 ) n/a -100.00 %
Less - merger and acquisition expenses (77 ) (6,219 ) (1,345 ) -98.76 % -94.28 %
Less - impairment on acquired facilities   (503 )   -     -     -100.00 %   -100.00 %
Total noninterest expense as adjusted $ 41,307   $ 41,626   $ 41,250     -0.77 %   0.14 %
 
 
 
 

Asset quality

Nonperforming Assets Net Charge-Offs
At For the Three Months Ending

 

March 31, December 31, March 31, March 31, December 31, March 31,
2014 2013 2013 2014 2013 2013
 
Nonperforming loans
Commercial & industrial loans $ 3,299 $ 4,178 $ 3,188 $ 704 $ 83 $ 287
Commercial real estate loans 13,970 11,834 9,355 2,854 2,567 407
Small business loans 788 633 680 221 112 106
Residential real estate loans 11,000 10,791 11,950 128 113 61
Home equity 7,062 7,068 7,687 1 354 256
Other consumer   52     155     231     204     244     111  
Total nonperforming loans / total net charge-offs $ 36,171   $ 34,659   $ 33,091   $ 4,112   $ 3,473   $ 1,228  
Nonaccrual securities 2,353 1,541 1,903
Other assets in possession 167 167 176
Other real estate owned   7,830     7,466     11,645  
Total nonperforming assets $ 46,521   $ 43,833   $ 46,815  
 
Nonperforming loans/gross loans 0.75 % 0.73 % 0.74 %
Allowance for loan losses/nonperforming loans 148.27 % 153.61 % 156.86 %
Gross loans/total deposits 94.00 % 94.62 % 98.60 %
Allowance for loan losses/total loans 1.12 % 1.13 % 1.16 %
 
Net charge-offs to average loans (quarter annualized) 0.35 % 0.30 % 0.11 %
Troubled Debt Restructurings
At
March 31, December 31, March 31,
2014 2013 2013
Troubled debt restructurings on accrual status $ 40,329 $ 38,410 $ 41,682
Troubled debt restructurings on nonaccrual status   6,998       7,454       8,748  
Total troubled debt restructurings $ 47,327     $ 45,864     $ 50,430  
 
Three Months Ending
March 31, December 31, March 31,

Nonperforming assets reconciliation

2014 2013 2013
Nonperforming assets beginning balance $ 43,833 $ 48,879 $ 42,427
New to Nonperforming 10,369 12,275 10,243
Loans charged-off (4,566 ) (4,097 ) (1,574 )
Loans paid-off (1,367 ) (7,073 ) (2,402 )
Loans transferred to other real estate owned/other assets (746 ) (523 ) (771 )
Loans restored to performing status (2,062 ) (3,374 ) (1,096 )
New to other real estate owned 746 523 771
Acquired other real estate owned - 419 -
Sale of other real estate owned (590 ) (2,386 ) (918 )
Capital improvements to other real estate owned 444 510 304
Other   460     (1,320 )   (169 )
Nonperforming assets ending balance $ 46,521   $ 43,833   $ 46,815  
 
 
 
March 31, December 31, March 31,

Financial ratios

2014 2013 2013
Book value per common share $ 25.23 $ 24.85 $ 23.50
Tangible book value per share $ 17.61 $ 17.18 $ 16.44
Tangible common capital/tangible assets 6.96 % 6.91 % 6.76 %
 

Capital adequacy

Tier one leverage capital ratio (1) 8.60 % 8.64 % 8.51 %
(1) Estimated number for March 31, 2014.
 

INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION

                   
       
(Unaudited - dollars in thousands) Three Months Ended
March 31, 2014     December 31, 2013   March 31, 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 $ 61,356 $ 38 0.25 % $ 104,749 $ 65 0.25 % $ 53,149 $ 34 0.26 %
Securities
Taxable investment securities 706,355 4,650 2.67 % 646,708 4,339 2.66 % 523,550 3,529 2.73 %
Nontaxable investment securities (1)   6,143   63 4.16 %   3,394   35 4.09 %   916   18 7.97 %
Total securities 712,498 4,713 2.68 % 650,102 4,374 2.67 % 524,466 3,547 2.74 %
Loans held for sale 6,041 51 3.42 % 12,553 112 3.54 % 41,890 268 2.59 %
Loans
Commercial and industrial 816,467 7,941 3.94 % 770,729 7,707 3.97 % 693,284 6,838 4.00 %
Commercial real estate (1) 2,281,778 24,205 4.30 % 2,231,793 24,386 4.34 % 2,121,824 23,729 4.54 %
Commercial construction 228,818 2,346 4.16 % 221,010 2,335 4.19 % 199,303 2,016 4.10 %
Small business   77,503   1,069   5.59 %   75,607   1,072   5.63 %   77,688   1,060 5.53 %
Total commercial 3,404,566 35,561 4.24 % 3,299,139 35,500 4.27 % 3,092,099 33,643 4.41 %
Residential real estate 540,382 5,166 3.88 % 518,742 4,973 3.80 % 580,617 5,918 4.13 %
Home equity   823,890   7,258   3.57 %   813,466   7,321   3.57 %   797,204   7,094 3.61 %
Total consumer real estate 1,364,272 12,424 3.69 % 1,332,208 12,294 3.66 % 1,377,821 13,012 3.83 %
Other consumer   19,226   485 10.23 %   20,177   479 9.42 %   25,884   561 8.79 %
Total loans   4,788,064     48,470   4.11 %   4,651,524     48,273   4.12 %   4,495,804     47,216   4.26 %
Total interest-earning assets $ 5,567,959   $ 53,272   3.88 % $ 5,418,928   $ 52,824   3.87 % $ 5,115,309   $ 51,065   4.05 %
Cash and due from banks 140,788 165,667 68,653
Federal Home Loan Bank stock 39,926 39,300 41,045
Other assets   405,367   393,365   420,470
Total assets $ 6,154,040 $ 6,017,260 $ 5,645,477
Interest-bearing liabilities
Deposits
Savings and interest checking accounts $ 1,962,983 $ 889 0.18 % $ 1,883,026 $ 915 0.19 % $ 1,612,395 $ 707 0.18 %
Money market 997,817 619 0.25 % 917,744 582 0.25 % 868,405 578 0.27 %
Time deposits   733,018     1,281   0.71 %   718,432     1,269   0.70 %   758,504     1,380   0.74 %
Total interest-bearing deposits $ 3,693,818 $ 2,789 0.31 % $ 3,519,202 $ 2,766 0.31 % $ 3,239,304 $ 2,665 0.33 %
Borrowings
Federal Home Loan Bank borrowings $ 151,273 $ 1,002 2.69 % $ 179,743 $ 1,258 2.78 % $ 271,558 $ 1,378 2.06 %
Customer repurchase agreements and other short-term borrowings 138,536 55 0.16 % 160,415 72 0.18 % 155,666 91 0.24 %
Wholesale repurchase agreements 50,000 286 2.32 % 50,000 292 2.32 % 50,000 286 2.32 %
Junior subordinated debentures 73,884 992 5.45 % 73,933 1,019 5.47 % 74,104 999 5.47 %
Subordinated debentures   30,000     248   3.35 %   30,000     259   3.43 %   30,000     539   7.29 %
Total borrowings $ 443,693   $ 2,583   2.36 % $ 494,091   $ 2,900   2.33 % $ 581,328   $ 3,293   2.30 %
Total interest-bearing liabilities $ 4,137,511   $ 5,372   0.53 % $ 4,013,293   $ 5,666   0.56 % $ 3,820,632   $ 5,958   0.63 %
Demand deposits 1,347,559 1,353,155 1,200,810
Other liabilities   67,259   74,660   86,769
Total liabilities $ 5,552,329 $ 5,441,108 $ 5,108,211
Stockholders' equity   601,711   576,152   537,266
Total liabilities and stockholders' equity $ 6,154,040 $ 6,017,260 $ 5,645,477
 
Net interest income $ 47,900 $ 47,158 $ 45,107
 
Interest rate spread (2) 3.35 % 3.31 % 3.42 %
 
Net interest margin (3) 3.49 % 3.45 % 3.58 %
 
Supplemental Information
Total deposits, including demand deposits $ 5,041,377 $ 2,789 $ 4,872,357 $ 2,766 $ 4,440,114 $ 2,665
Cost of total deposits 0.22 % 0.23 % 0.24 %
Total funding liabilities, including demand deposits $ 5,485,070 $ 5,372 $ 5,366,448 $ 5,666 $ 5,021,442 $ 5,958
Cost of total funding liabilities 0.40 % 0.42 % 0.48 %
 
 
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $291,000, $253,000, and $245,000 for the three months ended March 31, 2014, December 31, 2013, and March 31, 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.

 

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

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