Independent Bank Corp. Reports Second Quarter Net Income of $12.8 Million

Strong Commercial Loan and Core Deposit Growth Drive Results

Business Wire

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

Independent Bank Corp., (INDB), parent of Rockland Trust Company, today announced net income for the second quarter of 2013 was $12.8 million, or $0.56 on a diluted earnings per share basis. The results of the second quarter of 2013 represent an increase of $0.02, or 3.7%, on a diluted earnings per share basis as compared to the first quarter of 2013. These quarters contained various items such as merger and acquisition expenses and severance expense, which the Company considers to be non-core in nature. When excluding these items, net operating earnings for the second quarter were $13.2 million, or $0.58 on a diluted earnings per share basis which were comparable to the prior quarter’s net operating results.

Christopher Oddleifson, President and Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company, stated: “The dedicated efforts of my colleagues and our top-notch product set ensures a high-quality banking experience that customers appreciate, resulting in the growth of the Rockland Trust franchise and strong earnings for the quarter. Continued household growth fueled an increase in core deposits, and our commercial lending group had another excellent quarter.”

BALANCE SHEET

Total assets of $5.9 billion at June 30, 2013 have increased by $131.5 million from the prior quarter and increased by $728.0 million, or 14.2%, as compared to the year ago period, inclusive of the acquisition of Central Bancorp, Inc. (“Central”) in November 2012.

Total loans of $4.5 billion at June 30, 2013, have increased by $42.6 million when compared to the prior quarter and have increased by $549.3 million, or 13.8%, when compared to June 30, 2012. The commercial loan portfolio continued its strong growth, rising by $86.7 million, or 11.2% on an annualized basis, during the quarter. Both the commercial and industrial and commercial real estate sectors generated healthy growth during the quarter. Offsetting the growth in the commercial portfolio, the residential portfolio decreased by $41.9 million, or 30.2% on an annualized basis, due to continued high prepayment activity combined with management’s decision to not retain long term fixed rate mortgages on the balance sheet.

Deposit growth was strong, increasing by $125.1 million, or 11.0% on an annualized basis, to $4.7 billion at June 30, 2013. Deposit growth occurred within core deposits, which grew to 84.6% of total deposits as compared to 82.9% last quarter, partially offset by a reduction in time deposits. Total cost of deposits declined slightly to 0.23% for the quarter, reflecting the Company’s continued emphasis on lower cost funding sources.

The securities portfolio of $529.1 million, decreased by $15.7 million during the quarter and represents 9.0% of total assets at June 30, 2013 as compared to 9.5% of total assets at March 31, 2013.

Stockholders’ equity at June 30, 2013 rose to $543.6 million, an increase of 1.1% for the quarter. As compared to the year ago period, stockholders’ equity has increased by $60.0 million, or 12.4%. The Tier 1 common ratio at June 30, 2013 increased to an estimated 9.06%, as compared to 8.96% in the prior quarter. The Company’s tangible common ratio was 6.72%, representing a slight decrease from the prior quarter’s level of 6.76% as a result of the Company’s balance sheet growth combined with the impact of modest securities portfolio price depreciation due to the significant change in rates.

NET INTEREST INCOME

Net interest income was $45.6 million for the second quarter of 2013, a $753,000 increase from the linked quarter due primarily to loan growth. The Company’s net interest margin decreased, modestly by one basis point, to 3.57%, for the second quarter of 2013. Purchase accounting adjustments resulted in a two basis point increase in the net interest margin when compared to the prior quarter.

NONINTEREST INCOME

The Company recorded noninterest income of $16.7 million during the second quarter of 2013 which represents a $968,000, or 6.2%, increase from the prior quarter. Significant changes in noninterest income included the following:

  • Interchange and ATM fees increased by $433,000, or 18.6%, mainly due to seasonal increases in debit card usage.
  • Investment management income increased by $473,000, or 12.2%, driven primarily by seasonal tax preparation fees. Assets under administration remained consistent at $2.3 billion at June 30, 2013, as compared to the linked quarter and were 12.8% above prior year levels.
  • Income from loan level derivatives associated with the Company’s commercial customers increased by $284,000 due to increased loan activity during the second quarter.
  • Mortgage banking income decreased by $612,000, or 26.8%, primarily due to a decrease in refinancing activity due to rising rates.

NONINTEREST EXPENSE

The Company recorded noninterest expense of $42.2 million during the second quarter of 2013 which represents a $756,000, or 1.8%, decrease from the prior quarter. Significant changes in noninterest expense included the following:

  • Merger and acquisition expenses associated with the Central Bancorp., Inc. and Mayflower Bancorp., Inc. acquisitions were $754,000 for the second quarter, representing a decrease of $591,000 from the linked quarter. As previously announced the Company has reached a definitive agreement to acquire Mayflower Bancorp, Inc. which is expected to close in the fourth quarter of 2013.
  • Salaries and employee benefits decreased by $1.1 million, or 4.9%, largely as a result of a decline in salary, payroll taxes, overtime, and increased deferred loan origination salary costs, offset by increased incentive program expenses.
  • Occupancy and equipment expense decreased $330,000, or 6.3%, as a result of higher snow removal costs in the first quarter of 2013.
  • Other noninterest expenses increased by $1.2 million, or 10.0%, mainly due to an increase in advertising expense of $307,000 due to new marketing campaigns, mortgage operation costs of $371,000 due to the Company’s transition to an outsourced provider, and loan work-out costs of $264,000.

The Company generated a return on average assets and a return on average common equity in the second quarter of 2013 of 0.89% and 9.40%, respectively, as compared to 0.88% and 9.25% for the quarter ended March 31, 2013. On an operating basis, the return on average assets and the return on average common equity were 0.93% and 9.74%, respectively, in the second quarter, as compared to 0.96% and 10.04% in the first quarter.

ASSET QUALITY

The provision for loan losses was $3.1 million for the second quarter compared to $1.3 million for the quarter ended March 31, 2013. The provision for loan losses exceeded net charge-offs in both periods as the Company continues to prudently add to loan loss reserves in line with recent loan growth trends. For the quarter, net charge-offs increased to $2.0 million, or 0.18%, on an annualized basis of average loans as compared to $1.2 million, or 0.11%, in the prior quarter. Nonperforming loans increased by $3.4 million to $36.5 million, or 0.81%, of total loans at June 30, 2013, from $33.1 million, or 0.74% of total loans at March 31, 2013, primarily due to higher nonaccrual home equity loans. Nonperforming assets increased to $48.1 million at the end of the second quarter compared to $46.8 million in the linked quarter. Delinquency as a percentage of loans decreased to 1.03% at June 30, 2013 compared to 1.05% at March 31, 2013.

The allowance for loan losses was $53.0 million at June 30, 2013, an increase of $1.1 million from the prior quarter levels. The Company’s allowance for loan losses was 1.17% and 1.15% as a percentage of total loans at June 30, 2013 and December 31, 2012, respectively.

Christopher Oddleifson and Denis K. Sheahan, Chief Financial Officer of Independent Bank Corp. and Rockland Trust Company, will host a conference call to discuss second quarter earnings at 10:00 a.m. Eastern Time on Friday, July 12, 2013. 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 Pass code: 10030410. The webcast replay will be available until July 12, 2014.

Rockland Trust is a full-service commercial bank headquartered in Massachusetts with $5.9 billion in assets. The sole bank subsidiary of Independent Bank Corp. (INDB), Rockland Trust provides a wide range of consumer, business, investment, and insurance products and services.  Named a Boston Globe "Best Place to Work" for four consecutive years and one of America's "Best Banks" by Forbes for three consecutive years, Rockland Trust's network consists of 75 retail branches, 10 commercial lending offices, four investment management, and three residential lending centers throughout Eastern Massachusetts and Rhode Island. To find out why Rockland Trust is the bank "Where Each Relationship Matters®", please visit www.RocklandTrust.com. Member FDIC. 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. Actual results may differ from those contemplated by these statements. The Company wishes to caution readers not to place undue reliance on any forward-looking statements. 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.

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, which is a non-GAAP financial measure, excludes 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 to measure the strength of the Company’s core banking business and to identify trends that may to some extent be obscured by such gains or losses. The Company has included information on operating earnings 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. Non-GAAP operating earnings 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 non-GAAP operating earnings can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP operating earnings 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 2013 vs. Jun 2013 vs.
(Unaudited Dollars in thousands)     2013       2013       2012     Mar 2013 Jun 2012
 
Assets
Cash and due from banks $ 139,672 $ 70,434 $ 65,826 98.30 % 112.18 %
Interest earning deposits with banks 197,266 129,406 121,029 52.44 % 62.99 %
Fed funds sold - - 1,524 0.00 % -100.00 %
Securities
Securities available for sale 303,855 335,693 338,331 -9.48 % -10.19 %
Securities held to maturity   225,278     209,090     188,450   7.74 % 19.54 %
Total securities 529,133 544,783 526,781 -2.87 % 0.45 %
 
Loans held for sale 32,497 36,790 22,310 -11.67 % 45.66 %
Loans
Commercial and industrial 742,343 702,486 625,695 5.67 % 18.64 %
Commercial real estate 2,150,833 2,123,778 1,912,563 1.27 % 12.46 %
Commercial construction 231,719 211,984 149,990 9.31 % 54.49 %
Small business   77,283     77,220     79,738   0.08 % -3.08 %
Total commercial 3,202,178 3,115,468 2,767,986 2.78 % 15.69 %
Residential real estate 509,185 547,649 389,053 -7.02 % 30.88 %
Residential construction 4,366 7,764 14,960 -43.77 % -70.82 %
Home equity - 1st position 481,542 481,935 466,136 -0.08 % 3.31 %
Home equity - 2nd position   310,908     310,695     310,717   0.07 % 0.06 %
Total consumer real estate 1,306,001 1,348,043 1,180,866 -3.12 % 10.60 %
Other consumer   21,932     23,967     31,937   -8.49 % -31.33 %
Total loans   4,530,111     4,487,478     3,980,789   0.95 % 13.80 %
Less - allowance for loan losses   (52,976 )   (51,906 )   (48,403 ) 2.06 % 9.45 %
Net loans 4,477,135 4,435,572 3,932,386 0.94 % 13.85 %
Federal Home Loan Bank stock 38,674 38,674 33,564 0.00 % 15.22 %
Bank premises and equipment 56,344 55,160 49,384 2.15 % 14.09 %
Goodwill and core deposit intangible 161,089 161,616 139,924 -0.33 % 15.13 %
Other assets   220,785     248,685     231,836   -11.22 % -4.77 %
Total assets $ 5,852,595   $ 5,721,120   $ 5,124,564   2.30 % 14.21 %
 
Liabilities and Stockholders' Equity
Deposits
Demand deposits $ 1,283,301 $ 1,199,623 $ 1,070,279 6.98 % 19.90 %
Savings and interest checking accounts 1,798,495 1,711,477 1,560,523 5.08 % 15.25 %
Money market 884,696 872,044 807,796 1.45 % 9.52 %
Time certificates of deposit   709,971     768,266     639,535   -7.59 % 11.01 %
Total deposits 4,676,463 4,551,410 4,078,133 2.75 % 14.67 %
Borrowings
Federal Home Loan Bank and other borrowings 261,456 267,091 189,522 -2.11 % 37.96 %
Wholesale repurchase agreements 50,000 50,000 50,000 0.00 % 0.00 %
Customer repurchase agreements 141,826 129,618 144,838 9.42 % -2.08 %
Junior subordinated debentures 74,018 74,073 61,857 -0.07 % 19.66 %
Subordinated debentures   30,000     30,000     30,000   0.00 % 0.00 %
Total borrowings 557,300 550,782 476,217 1.18 % 17.03 %
Total deposits and borrowings 5,233,763 5,102,192 4,554,350 2.58 % 14.92 %
Other liabilities 75,227 81,353 86,622 -7.53 % -13.15 %
Stockholders' equity
Common stock 226 226 214 0.00 % 5.61 %
Additional paid in capital 272,165 270,927 236,279 0.46 % 15.19 %
Retained earnings 278,611 270,891 251,429 2.85 % 10.81 %
Accumulated other comprehensive loss, net of tax   (7,397 )   (4,469 )   (4,330 ) 65.52 % 70.83 %
Total stockholders' equity   543,605     537,575     483,592   1.12 % 12.41 %
Total liabilities and stockholders' equity $ 5,852,595   $ 5,721,120   $ 5,124,564   2.30 % 14.21 %
 
         
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended
(Unaudited Dollars in thousands) % Change % Change
June 30, March 31, June 30, Jun 2013 vs. Jun 2013 vs.
  2013     2013     2012   Mar 2013 Jun 2012
 
Interest income
Interest on fed funds sold and short term investments $ 21 $ 34 $ 19 -38.24 % 10.53 %
Interest and dividends on securities 3,517 3,540 4,438 -0.65 % -20.75 %
Interest on loans 47,720 46,978 43,813 1.58 % 8.92 %
Interest on loans held for sale   237     268     156   -11.57 % 51.92 %
Total interest income 51,495 50,820 48,426 1.33 % 6.34 %
Interest expense
Interest on deposits 2,543 2,665 2,687 -4.58 % -5.36 %
Interest on borrowed funds   3,337     3,293     3,111   1.34 % 7.26 %
Total interest expense   5,880     5,958     5,798   -1.31 % 1.41 %
Net interest income 45,615 44,862 42,628 1.68 % 7.01 %
Less - provision for loan losses   3,100     1,300     8,500   138.46 % -63.53 %
Net interest income after provision for loan losses 42,515 43,562 34,128 -2.40 % 24.58 %
Noninterest income
Deposit account fees 4,343 4,217 3,923 2.99 % 10.71 %
Interchange and ATM fees 2,761 2,328 2,399 18.60 % 15.09 %
Investment management 4,357 3,884 3,827 12.18 % 13.85 %
Mortgage banking income 1,669 2,281 1,463 -26.83 % 14.08 %
Increase in cash surrender value of life insurance policies 786 746 741 5.36 % 6.07 %
Loan level derivative income 816 532 1,371 53.38 % -40.48 %
Gross Change on Write-Down of Certain Investments to Fair Value 90 (281 ) (106 ) -132.03 % -184.91 %
Less: Portion of Other-Than-Temporary Impairment Losses Recognized in OCI   (90 )   281     30   -132.03 % -400.00 %
Net Loss on Write-Down of Certain Investments to Fair Value - - (76 ) n/a -100.00 %
Other noninterest income   1,960     1,736     1,335   12.90 % 46.82 %
Total noninterest income 16,692 15,724 14,983 6.16 % 11.41 %
Noninterest expense
Salaries and employee benefits 21,594 22,715 19,775 -4.94 % 9.20 %
Occupancy and equipment expenses 4,919 5,249 4,234 -6.29 % 16.18 %
Data processing and facilities management 1,201 1,184 1,099 1.44 % 9.28 %
FDIC assessment 934 821 830 13.76 % 12.53 %
Merger and acquisition expenses 754 1,345 672 -43.94 % 12.20 %
Other noninterest expense   12,762     11,606     10,389   9.96 % 22.84 %
Total noninterest expense 42,164 42,920 36,999 -1.76 % 13.96 %
Income before income taxes   17,043     16,366     12,112   4.14 % 40.71 %
Provision for income taxes   4,285     4,114     3,238   4.16 % 32.33 %
Net income $ 12,758   $ 12,252   $ 8,874   4.13 % 43.77 %
 
Basic earnings per share $ 0.56 $ 0.54 $ 0.41 3.70 % 36.59 %
Diluted earnings per share $ 0.56 $ 0.54 $ 0.41 3.70 % 36.59 %
Basic average shares 22,888,155 22,823,753 21,623,827
Diluted average shares 22,940,299 22,869,793 21,644,204
 

Performance ratios

Net interest margin (FTE) 3.57 % 3.58 % 3.80 %
Return on average assets 0.89 % 0.88 % 0.71 %
Return on average common equity 9.40 % 9.25 % 7.34 %
 

Reconciliation table - non-GAAP financial information

Net income $ 12,758 $ 12,252 $ 8,874 4.13 % 43.77 %
Noninterest expense components
Add - severance, net of tax - 192 -
Add - merger & acquisition expenses, net of tax   458     856     397      
Net operating earnings $ 13,216   $ 13,300   $ 9,271   -0.63 % 42.55 %
 
Diluted earnings per share, on an operating basis $ 0.58   $ 0.58   $ 0.43   0.00 % 34.88 %
 
 
CONSOLIDATED STATEMENTS OF INCOME
  Six Months Ended   % Change
June 30,   June 30, Jun 2013 vs.
  2013     2012   Jun 2012
 
INTEREST INCOME
Interest on Fed Funds Sold and Short Term Investments $ 55 $ 51 7.84 %
Interest and Dividends on Securities 7,057 8,994 -21.54 %
Interest on Loans 94,699 86,891 8.99 %
Interest on Loans Held for Sale   505     286   76.57 %
Total Interest Income 102,316 96,222 6.33 %
INTEREST EXPENSE
Interest on Deposits 5,208 5,426 -4.02 %
Interest on Borrowed Funds   6,630     6,316   4.97 %
Total Interest Expense   11,838     11,742   0.82 %
Net Interest Income 90,478 84,480 7.10 %
Less - Provision for Loan Losses   4,400     10,100   -56.44 %
Net Interest Income after Provision for Loan Losses 86,078 74,380 15.73 %
NONINTEREST INCOME
Deposit Account Fees 8,559 7,812 9.56 %
Interchange and ATM Fees 5,089 4,767 6.75 %
Investment Management 8,242 7,390 11.53 %
Mortgage Banking Income 3,951 2,793 41.46 %
Increase in Cash Surrender Value of Life Insurance Policies 1,531 1,454 5.30 %
Loan Level Derivative Income 1,348 1,699 -20.66 %
Gross Change on Write-Down of Certain Investments to Fair Value 372 168 121.43 %
Less: Portion of Other-Than-Temporary Impairment Losses Recognized in OCI   (372 )   (244 ) 52.46 %
Net Loss on Write-Down of Certain Investments to Fair Value - (76 ) -100.00 %
Other Noninterest Income   3,694     3,054   20.96 %
Total Noninterest Income 32,414 28,893 12.19 %
NONINTEREST EXPENSE
Salaries and Employee Benefits 44,309 41,211 7.52 %
Occupancy and Equipment Expenses 10,169 8,534 19.16 %
Data Processing and Facilities Management 2,385 2,274 4.88 %
FDIC Assessment 1,755 1,579 11.15 %
Merger and acquisition expenses 2,099 672 212.35 %
Other Noninterest Expense   24,366     20,086   21.31 %
Total Noninterest Expense 85,083 74,356 14.43 %
INCOME BEFORE INCOME TAXES   33,409     28,917   15.53 %
PROVISION FOR INCOME TAXES   8,399     7,860   6.86 %
NET INCOME $ 25,010   $ 21,057   18.77 %
 
BASIC EARNINGS PER SHARE $ 1.09 $ 0.98 11.22 %
DILUTED EARNINGS PER SHARE $ 1.09 $ 0.97 12.37 %
BASIC AVERAGE SHARES 22,856,132 21,592,416
DILUTED AVERAGE SHARES 22,905,236 21,614,667
 

PERFORMANCE RATIOS

Net Interest Margin (FTE) 3.58 % 3.81 %
Return on Average Assets 0.89 % 0.86 %
Return on Average Common Equity 9.33 % 8.81 %
 

RECONCILIATION TABLE - NON-GAAP FINANCIAL INFORMATION

NET INCOME $ 25,010 $ 21,057 18.77 %
Noninterest Expense Components
Add - severance, net of tax 192 -
Add - merger & acquisition expenses, net of tax   1,314     397    
NET OPERATING EARNINGS $ 26,516   $ 21,454   23.59 %
 
Diluted Earnings Per Share, on an Operating Basis $ 1.16   $ 0.99   17.17 %
 
                 

Reconciliation table - non-GAAP financial information

(Unaudited Dollars in thousands) Three Months Ended Six Months Ended
% Change % Change % Change
June 30, March 31, June 30, Jun 2013 vs. Jun 2013 vs. June 30, June 30, Jun 2013 vs.
  2013     2013     2012   Mar 2013 Jun 2012   2013     2012   Jun 2012
 
 
Noninterest expense GAAP $ 42,164 $ 42,920 $ 36,999 -1.76 % 13.96 % $ 85,083 $ 74,356 14.43 %
Less - severance - (325 ) - 100.00 % n/a (325 ) - -100.00 %
Less - merger and acquisition expenses   (754 )   (1,345 )   (672 )   -43.94 %   12.20 %   (2,099 )   (672 ) 212.35 %
Total noninterest expense as adjusted $ 41,410   $ 41,250   $ 36,327     0.39 %   13.99 % $ 82,659   $ 73,684   12.18 %
 
 
 
 

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,
  2013     2013     2012     2013       2013     2012     2013     2012  
 
Nonperforming loans
Commercial & industrial loans $ 3,009 $ 3,188 $ 4,404 $ 1,199 $ 287 $ 4,594 $ 1,486 $ 4,409
Commercial real estate loans 10,134 9,355 9,371 $ 188 407 2,133 595 2,737
Small business loans 698 680 588 $ 239 106 90 345 208
Residential real estate loans 12,496 11,950 9,939 $ 100 61 105 161 214
Home equity 10,024 7,687 6,768 $ 227 256 1,373 483 2,110
Other consumer   188     231     252   $ 78     111     142     189       279  
Total Nonperforming Loans / Total Net Charge-offs $ 36,549   $ 33,091   $ 31,322   $ 2,031   $ 1,228   $ 8,437   $ 3,259     $ 9,957  
Nonaccrual securities 2,169 1,903 1,259
Other assets in possession 176 176 1
Other real estate owned   9,211     11,645     11,275  
Total nonperforming assets $ 48,105   $ 46,815   $ 43,857  
 
Nonperforming loans/gross loans 0.81 % 0.74 % 0.79 %
Allowance for loan losses/nonperforming loans 144.95 % 156.86 % 154.53 %
Gross loans/total deposits 96.87 % 98.60 % 97.61 %
Allowance for loan losses/total loans 1.17 % 1.16 % 1.22 %
 
Net charge-offs to average loans (quarter annualized) 0.18 % 0.11 % 0.86 %
Net charge-offs to average loans (year-to-date) 0.15 % 0.52 %
Troubled Debt Restructurings
At
June 30, March 31, June 30,
  2013     2013     2012  
Troubled debt restructurings on accrual status $ 38,898 $ 41,682 $ 40,184
Troubled debt restructurings on nonaccrual status   9,777       8,748       4,561  
Total troubled debt restructurings $ 48,675     $ 50,430     $ 44,745  
 
Three Months Ending Three Months Ending Three Months Ending
June 30, March 31, June 30,

Nonperforming assets reconciliation

  2013     2013     2012  
Nonperforming assets beginning balance $ 46,815 $ 42,427 $ 40,736
New to Nonperforming 11,907 10,243 18,895
Loans charged-off (2,479 ) (1,574 ) (8,768 )
Loans paid-off (4,543 ) (2,402 ) (2,934 )
Loans transferred to other real estate owned/other assets (368 ) (771 ) (3,579 )
Loans restored to accrual status (1,087 ) (1,096 ) (3,946 )
New to other real estate owned 368 771 3,579
Sale of other real estate owned (3,793 ) (918 ) (383 )
Other   1,285     135     257  
Nonperforming assets ending balance $ 48,105   $ 46,815   $ 43,857  
 
 
 
June 30, March 31, June 30,

Financial ratios

  2013     2013     2012  
Book value per common share $ 23.73 $ 23.50 $ 22.36

Tangible common book value per share (proforma to include the tax deductibility of goodwill) - non-GAAP

$ 17.56 $ 17.31 $ 16.80
Tangible common capital/tangible assets 6.72 % 6.76 % 6.89 %

Tangible common capital/tangible asset (proforma to include the tax deductibility of goodwill) - non-GAAP

7.04 % 7.09 % 7.26 %
 

Capital adequacy

Tier one leverage capital ratio (1) 8.56 % 8.51 % 8.68 %
Tier one common ratio (1) 9.06 % 8.96 % 9.13 %
(1) Estimated number for June 30, 2013
 
                 

INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION

 
(Unaudited - Dollars in thousands) Three Months Ended
June 30, 2013   March 31, 2013

 

June 30, 2012

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 $ 34,379 $ 21 0.25 % $ 53,149 $ 34 0.26 % $ 30,890 $ 19 0.25 %
Securities
Taxable investment securities 533,823 3,506 2.63 % 523,550 3,529 2.73 % 544,822 4,415 3.26 %
Nontaxable investment securities (1)   916   18 7.88 %   916   18 7.97 %   1,938   39 8.09 %
Total securities 534,739 3,524 2.64 % 524,466 3,547 2.74 % 546,760 4,454 3.28 %
Loans held for sale 35,945 237 2.64 % 41,890 268 2.59 % 20,079 156 3.12 %
Loans
Commercial and industrial 735,517 7,338 4.00 % 693,284 6,838 4.00 % 620,364 6,294 4.08 %
Commercial real estate (1) 2,149,662 24,242 4.52 % 2,121,824 23,729 4.54 % 1,896,941 22,973 4.87 %
Commercial construction 224,453 2,307 4.12 % 199,303 2,016 4.10 % 149,627 1,578 4.24 %
Small business   77,747   1,092   5.63 %   77,688   1,060   5.53 %   80,324   1,132 5.67 %
Total commercial 3,187,379 34,979 4.40 % 3,092,099 33,643 4.41 % 2,747,256 31,977 4.68 %
Residential real estate 531,322 5,338 4.03 % 572,715 5,837 4.13 % 393,377 4,267 4.36 %
Residential construction 5,816 51 3.52 % 7,902 81 4.16 % 15,041 161 4.31 %
Home equity   793,381   7,069   3.57 %   797,204   7,094   3.61 %   757,850   6,939 3.68 %
Total consumer real estate 1,330,519 12,458 3.76 % 1,377,821 13,012 3.83 % 1,166,268 11,367 3.92 %
Other consumer   23,099   517 8.98 %   25,884   561 8.79 %   34,261   728 8.55 %
Total loans   4,540,997     47,954   4.24 %   4,495,804     47,216   4.26 %   3,947,785     44,072   4.49 %
Total interest-earning assets $ 5,146,060   $ 51,736   4.03 % $ 5,115,309   $ 51,065   4.05 % $ 4,545,514   $ 48,701   4.31 %
Cash and due from banks 131,214 68,653 63,703
Federal Home Loan Bank stock 38,674 41,045 33,564
Other assets   405,721   420,470   362,746
Total assets $ 5,721,669 $ 5,645,477 $ 5,005,527
Interest-bearing liabilities
Deposits
Savings and interest checking accounts $ 1,681,666 $ 674 0.16 % $ 1,612,395 $ 707 0.18 % $ 1,482,889 $ 687 0.19 %
Money market 873,412 550 0.25 % 868,405 578 0.27 % 799,831 621 0.31 %
Time deposits   722,486     1,319   0.73 %   758,504     1,380   0.74 %   627,250     1,379   0.88 %
Total interest-bearing deposits $ 3,277,564 $ 2,543 0.31 % $ 3,239,304 $ 2,665 0.33 % $ 2,909,970 $ 2,687 0.37 %
Borrowings
Federal Home Loan Bank and other borrowings $ 306,291 $ 1,453 1.90 % $ 279,258 $ 1,420 2.06 % $ 219,846 $ 1,280 2.34 %
Wholesale repurchase agreements 50,000 289 2.32 % 50,000 286 2.32 % 50,000 289 2.32 %
Customer repurchase agreements 135,107 45 0.13 % 147,966 49 0.13 % 145,963 83 0.23 %
Junior subordinated debentures 74,045 1,009 5.47 % 74,104 999 5.47 % 61,857 918 5.97 %
Subordinated debentures   30,000     541   7.23 %   30,000     539   7.29 %   30,000     541   7.25 %
Total borrowings $ 595,443   $ 3,337   2.25 % $ 581,328   $ 3,293   2.30 % $ 507,666   $ 3,111   2.46 %
Total interest-bearing liabilities $ 3,873,007   $ 5,880   0.61 % $ 3,820,632   $ 5,958   0.63 % $ 3,417,636   $ 5,798   0.68 %
Demand deposits 1,227,294 1,200,810 1,023,048
Other liabilities   77,177   86,769   78,430
Total liabilities $ 5,177,478 $ 5,108,211 $ 4,519,114
Stockholders' equity   544,191   537,266   486,413
Total liabilities and stockholders' equity $ 5,721,669 $ 5,645,477 $ 5,005,527
 
Net interest income $ 45,856 $ 45,107 $ 42,903
 
Interest rate spread (2) 3.42 % 3.42 % 3.63 %
 
Net interest margin (3) 3.57 % 3.58 % 3.80 %
 
Supplemental Information
Total deposits, including demand deposits $ 4,504,858 $ 2,543 $ 4,440,114 $ 2,665 $ 3,933,018 $ 2,687
Cost of total deposits 0.23 % 0.24 % 0.27 %
Total funding liabilities, including demand deposits $ 5,100,301 $ 5,880 $ 5,021,442 $ 5,958 $ 4,440,684 $ 5,798
Cost of total funding liabilities 0.46 % 0.48 % 0.53 %
 
 

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $241,000, $245,000, and $275,000 for the three months ended June 30, 2013, March 31, 2013, and June 30, 2012, 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, 2013 June 30, 2012
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 $ 43,712 $ 55 0.25 % $ 42,059 $ 51 0.24 %
Securities
Trading Assets 0 - 0.00 % 2,745 38 2.78 %
Taxable Investment Securities 528,715 7,035 2.68 % 537,572 8,904 3.33 %
Nontaxable Investment Securities (1)   916   37 8.15 %   2,216   88 7.99 %
Total Securities: 529,631 7,072 2.69 % 542,533 9,030 3.35 %
Loans Held for Sale 38,901 505 2.62 % 18,634 286 3.09 %
Loans
Commercial and Industrial 714,517 14,176 4.00 % 599,726 12,196 4.09 %
Commercial Real Estate (1) 2,135,820 47,968 4.53 % 1,872,531 45,706 4.91 %
Commercial Construction 211,947 4,323 4.11 % 146,178 3,121 4.29 %
Small Business   77,717   2,152 5.58 %   79,515   2,268   5.74 %
Total Commercial 3,140,001 68,619 4.41 % 2,697,950 63,291 4.72 %
Residential Real Estate 551,904 11,175 4.08 % 401,991 8,733 4.37 %
Residential Construction 6,853 132 3.88 % 13,331 291 4.39 %
Home Equity   795,282   14,163 3.59 %   737,735   13,599   3.71 %
Total Consumer Real Estate 1,354,039 25,470 3.79 % 1,153,057 22,623 3.95 %
Total Other Consumer   24,485   1,081 8.90 %   36,479   1,500 8.27 %
Total Loans   4,518,525     95,170   4.25 %   3,887,486     87,414   4.52 %
Total Interest-Earning Assets $ 5,130,769   $ 102,802   4.04 % $ 4,490,712   $ 96,781   4.33 %
Cash and Due from Banks 100,106 60,965
Federal Home Loan Bank Stock 39,853 34,420
Other Assets   413,055   365,073
Total Assets $ 5,683,783 $ 4,951,170
Interest-Bearing Liabilities
Deposits
Savings and Interest Checking Accounts $ 1,647,222 $ 1,380 0.17 % $ 1,453,672 $ 1,384 0.19 %
Money Market 870,922 1,129 0.26 % 784,861 1,260 0.32 %
Time Deposits   740,396     2,700   0.74 %   626,864     2,782   0.89 %
Total Interest-Bearing Deposits $ 3,258,540 $ 5,209 0.32 % $ 2,865,397 $ 5,426 0.38 %
Borrowings
Federal Home Loan Bank and Other Borrowings $ 292,849 $ 2,872 1.98 % $ 223,105 $ 2,624 2.37 %
Wholesale Repurchase Agreements 50,000 574 2.32 % 50,000 578 2.32 %
Customer Repurchase Agreements 141,501 94 0.13 % 152,226 193 0.25 %
Junior Subordinated Debentures 74,074 2,009 5.47 % 61,857 1,838 5.98 %
Subordinated Debentures   30,000     1,080   7.26 %   30,000     1,083   7.26 %
Total Borrowings $ 588,424   $ 6,629   2.27 % $ 517,188   $ 6,316   2.46 %
Total Interest-Bearing Liabilities $ 3,846,964   $ 11,838   0.62 % $ 3,382,585   $ 11,742   0.70 %
Demand Deposits 1,214,126 1,004,251
Other Liabilities   81,945   83,516
Total Liabilities $ 5,143,035 $ 4,470,352
Stockholders' Equity   540,748   480,818
Total Liabilities and Stockholders' Equity $ 5,683,783 $ 4,951,170
 
Net Interest Income $ 90,964 $ 85,039
 
Interest Rate Spread (2) 3.42 % 3.64 %
 
Net Interest Margin (3) 3.58 % 3.81 %
 
Supplemental Information:
Total Deposits, including Demand Deposits $ 4,472,666 $ 5,209 $ 3,869,648 $ 5,426
Cost of Total Deposits 0.23 % 0.28 %
Total Funding Liabilities, including Demand Deposits $ 5,061,090 $ 11,838 $ 4,386,836 $ 11,743
Cost of Total Funding Liabilities 0.47 % 0.54 %
 
 

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $486,000 and $559,000 for the six months ended June 30, 2013 and 2012, 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.

Contact:
Independent Bank Corp.
Chris Oddleifson, 781-982-6660
President and
Chief Executive Officer
or
Denis K. Sheahan, 781-982-6341
Chief Financial Officer
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