Independent Bank Corp. Reports Fourth Quarter Operating Net Income of $19.5 Million

Record Operating Earnings Per Share in 2015 of $2.76

ROCKLAND, Mass.--()--Independent Bank Corp. (NASDAQ: INDB), parent of Rockland Trust Company, today announced 2015 fourth quarter net income of $19.5 million, or $0.74 per diluted share, as compared to $18.6 million, or $0.71 per diluted share in the prior quarter. Net income for the full year was $65.0 million, or $2.50 on a diluted earnings per share basis, as compared to $59.8 million, or $2.49 on a diluted earnings per share basis in the prior year. The full year net income contained items which the Company considers non-core, such as merger and acquisition expenses and gains and losses on the sale of fixed income securities. There were no such items in the second half of the year. On an operating basis, the full year income was $71.7 million, or $2.76 on a diluted earnings per share basis, an increase of $11.8 million, and $0.26 over the prior year, respectively.

“Our core deposit growth was very strong and our loan growth steady, due to my engaged colleagues delivering consistent value to our customers. We enter 2016 with good momentum and a clear, disciplined focus upon the priorities of our customers.”

“Rockland Trust achieved record-setting operating earnings in 2015,” said Christopher Oddleifson, the President and Chief Executive Officer of Independent Bank Corp. and Rockland Trust. “Our core deposit growth was very strong and our loan growth steady, due to my engaged colleagues delivering consistent value to our customers. We enter 2016 with good momentum and a clear, disciplined focus upon the priorities of our customers.”

BALANCE SHEET

Total assets of $7.2 billion at December 31, 2015 increased by $74.5 million, or 1.0%, from the prior quarter and by $845.1 million, or 13.3%, as compared to the year ago period, inclusive of the acquisition of Peoples Federal Bancshares, Inc. ("Peoples").

The commercial loan portfolio increased by $44.0 million, or 1.1% (4.4% annualized), over the prior quarter, led by growth in the commercial construction and business banking sectors, as origination volumes remained solid across the Company's footprint. The home equity portfolio also continued to experience robust growth due to active customer outreach, with an increase of 2.2% (8.7% annualized) over the prior quarter. These factors contributed to growth in total loans at December 31, 2015 of $49.6 million, or 0.9% (3.6% annualized), compared to the balance at September 30, 2015. Compared to the prior year period, total loans increased by $577.0 million, or 11.6%, inclusive of the Peoples acquisition.

Total deposits increased by $75.8 million, or 1.3%, from the prior quarter, driven by strong core deposit growth, especially in the demand and savings categories. Core deposits rose by $111.3 million, or 8.5% on an annualized basis, from the prior quarter, and represent 88.6% of total deposits at December 31, 2015. Compared to the prior year period, total deposits increased $780.2 million, or 15.0%, inclusive of the Peoples acquisition. Total cost of deposits remained low at 20 basis points during the fourth quarter, reflecting the Company’s success in growing its core deposit customer base.

The securities portfolio increased by $30.7 million from the prior quarter to $845.1 million at December 31, 2015, due primarily to the purchase of $68.3 million of additional securities, offset by principal paydowns during the quarter. The securities portfolio comprised 11.7% of total assets as of December 31, 2015.

Stockholders’ equity at December 31, 2015 rose to $771.5 million, an increase of 1.6% from September 30, 2015. Compared to the year ago period, stockholders’ equity has increased by $130.9 million, or 20.4%, fueled primarily by the Peoples acquisition and record earnings results. The strong growth in capital led to a $0.48 increase, or 2.3%, in the Company’s tangible book value per share during the fourth quarter compared to the third quarter of 2015. The December 31, 2015 tangible book value per share of $21.29 represents an 11.0% increase above the prior year level. In addition, the Company’s ratio of common equity to tangible assets of 7.98% represents an increase of 10 basis points from the prior quarter and of 54 basis points from the prior year.

NET INTEREST INCOME

Net interest income for the fourth quarter was $54.9 million, remaining relatively consistent with the prior quarter as the effect of higher earning asset levels and a lower net interest margin basically offset each other. During the fourth quarter, the Company’s net interest margin decreased by five basis points from the prior quarter to 3.34%. The decline is attributable to increased liquid asset levels along with a reduction in loan and investment yields which continue to be impacted by the prolonged low rate environment. Investment yields were also primarily lower in the fourth quarter of 2015 due to a security prepayment benefit realized in the third quarter.

NONINTEREST INCOME

The Company recorded noninterest income of $19.8 million during the fourth quarter, which represents a $577,000, or 3.0%, increase from the linked quarter. Significant changes in noninterest income in the fourth quarter compared to the prior quarter included the following:

  • Deposit account fees and interchange and ATM fees decreased by $98,000, or 1.1%.
  • Investment management income increased by $139,000, or 2.8%, primarily driven by an increase in assets under administration of 5.1% to $2.7 billion.
  • Mortgage banking income decreased by $149,000, or 10.1%, caused primarily by lighter volume typically associated with the holiday months.
  • Other noninterest income increased $590,000, or 27.4%, mainly due to discounted purchases of Massachusetts historical tax credits, capital gain distributions on equity securities, and increases in other various fees.

NONINTEREST EXPENSE

The Company recorded noninterest expense of $46.5 million during the third quarter, a $545,000, or 1.2%, decrease from the prior quarter. Significant changes in noninterest expense in the fourth quarter compared to the prior quarter included the following:

  • Salaries and employee benefits increased slightly by $92,000, or 0.3%, due primarily to increases in salaries and retirement plan benefits, offset by decreases in commissions and stock compensation.
  • Other noninterest expenses decreased by $818,000, or 6.4%, driven primarily by lower advertising costs and decreases in loan workout costs, partly offset by increases in consultant fees and provision for unfunded commitments.

The Company generated a return on average assets and a return on average common equity of 1.07% and 10.03%, respectively, in the fourth quarter, as compared to 1.03% and 9.75%, respectively, for the prior quarter.

ASSET QUALITY

Asset quality metrics remained strong during the fourth quarter with total net recoveries of $120,000, compared to net charge-offs of $590,000 or 0.04% of average loans on an annualized basis for the third quarter. The provision for loan losses was $500,000 for the fourth quarter as compared to $800,000 in the third quarter. Nonperforming loans decreased during the fourth quarter by $1.9 million to $27.7 million, and represent 0.50% of total loans at December 31, 2015, as compared to 0.54% at September 30, 2015. Total nonperforming assets decreased to $29.8 million at the end of the fourth quarter, from $32.1 million at the end of the prior quarter. Delinquency as a percentage of loans was 0.56% at December 31, 2015, an increase of thirteen basis points from the prior quarter.

The allowance for loan losses was $55.8 million at December 31, 2015, as compared to $55.2 million at September 30, 2015. The Company’s allowance for loan losses as a percentage of loans was 1.01% and 1.00% at December 31, 2015 and September 30, 2015, respectively.

CONFERENCE CALL INFORMATION

Christopher Oddleifson, Chief Executive Officer and Robert Cozzone, Chief Financial Officer will host a conference call to discuss fourth quarter earnings at 10:00 a.m. Eastern Time on Friday, January 22, 2016. 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: 10077735 and will available through February 5, 2016. Additionally, a webcast replay will be available until January 22, 2017.

ABOUT INDEPENDENT BANK CORP.

Independent Bank Corp. has approximately $7.2 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, as well as through telephone banking, mobile banking, and the Internet. Rockland Trust is an FDIC Member and an Equal Housing Lender. To find out why Rockland Trust is the bank “Where Each Relationship Matters ®”, please visit www.rocklandtrust.com.

This press release contains certain “forward-looking statements” with respect to the financial condition, results of operations and business of the Company. These statements may be identified by such forward-looking terminology as “expect,” “achieve,” “plan,” “believe,” “future,” “positioned,” “continued,” “will,” “would,” “potential,” or similar statements or variations of such terms. Actual results may differ from those contemplated by these forward-looking statements.

Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:

  • a weakening in the United States economy in general and the regional and local economies within the New England region and the Company’s market area;
  • adverse changes in the local real estate market;
  • acquisitions may not produce results at levels or within time frames originally anticipated and may result in unforeseen integration issues or impairment of goodwill and/or other intangibles;
  • changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System;
  • higher than expected tax rates and any changes in and any failure by the Company to comply with tax laws generally and requirements of the federal New Markets Tax Credit program;
  • unexpected changes in market interest rates for interest earning assets and/or interest bearing liabilities;
  • adverse changes in asset quality including an unanticipated credit deterioration in our loan portfolio;
  • unexpected increased competition in the Company’s market area;
  • unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather or other external events;
  • a deterioration in the conditions of the securities markets;
  • our inability to adapt to changes in information technology;
  • electronic fraudulent activity within the financial services industry, especially in the commercial banking sector;
  • adverse changes in consumer spending and savings habits;
  • the inability to realize expected revenue synergies from the Peoples Federal Bancshares merger in the amounts or in the timeframe anticipated;
  • inability to retain customers and employees, including those of Peoples Federal Bancshares;
  • the effect of new laws and regulations regarding the financial services industry including, but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act;
  • changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) generally applicable to the Company’s business;
  • changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters; and
  • other unexpected material adverse changes in our operations or earnings.

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”). This information includes operating earnings and operating EPS calculated on an operating basis. The non-GAAP financial measures, including operating earnings and operating EPS, exclude gain or loss due to items that management believes are unrelated to its core banking business and will not have a material financial impact on operating results in future periods, such as gains or losses on the sales of securities, merger and acquisition expenses, and other items. The Company’s management uses operating earnings and operating EPS to measure the strength of the Company’s core banking business and to identify trends that may to some extent be obscured by such excluded gains or losses. 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 by common shares outstanding. 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, operating EPS, and tangible book value per share 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
December 31, September 30, December 31, Dec 2015 vs. Dec 2015 vs.
2015 2015 2014 Sept 2015 Dec 2014  
Assets
Cash and due from banks $ 84,813 $ 160,721 $ 143,342 (47.23

)%

(40.83

)%

Interest-earning deposits with banks 190,952 89,607 34,912 113.10 % 446.95 %
Securities
Securities - trading 356 454 (21.59

)%

100.00

%

Securities - available for sale 367,249 365,792 348,554 0.40 % 5.36 %
Securities held to maturity 477,507   448,139   375,453   6.55 % 27.18 %
Total securities 845,112 814,385 724,007 3.77 % 16.73 %
Loans held for sale (at fair value) 5,990 11,476 6,888 (47.80

)%

(13.04

)%

Loans
Commercial and industrial 843,276 862,512 860,839 (2.23 )% (2.04

)%

Commercial real estate 2,653,434 2,659,342 2,347,323 (0.22 )% 13.04 %
Commercial construction 373,368 308,214 265,994 21.14 % 40.37 %
Small business 96,246   92,278   85,247   4.30 % 12.90 %
Total commercial 3,966,324   3,922,346   3,559,403   1.12 % 11.43 %
Residential real estate 638,606 651,937 530,259 (2.04 )% 20.43 %
Home equity - first position 543,092 531,364 513,518 2.21 % 5.76 %
Home equity - subordinate positions 384,711   376,530   350,345   2.17 % 9.81 %
Total consumer real estate 1,566,409   1,559,831   1,394,122   0.42 % 12.36 %
Other consumer 14,988   15,944   17,208   (6.00 )% (12.90

)%

Total loans 5,547,721   5,498,121   4,970,733   0.90 % 11.61 %
Less: allowance for loan losses (55,825 ) (55,205 ) (55,100 ) 1.12 % 1.32 %
Net loans 5,491,896   5,442,916   4,915,633   0.90 % 11.72 %
Federal Home Loan Bank stock 14,431 37,485 33,233 (61.50 )% (56.58

)%

Bank premises and equipment, net 75,663 73,738 64,074 2.61 % 18.09 %
Goodwill and core deposit intangible 212,909 213,612 180,306 (0.33 )% 18.08 %
Other assets 288,272   291,549   262,517   (1.12

)%

9.81 %
Total assets $ 7,210,038   $ 7,135,489   $ 6,364,912   1.04 % 13.28 %
 
Liabilities and Stockholders' Equity
Deposits
Demand deposits $ 1,846,593 $ 1,778,051 $ 1,462,200 3.85 % 26.29 %
Savings and interest checking accounts 2,370,141 2,305,636 2,108,486 2.80 % 12.41 %
Money market 1,089,139 1,119,913 990,160 (2.75

) %

10.00 %
Time certificates of deposit 684,830   711,263   649,620   (3.72

) %

5.42 %
Total deposits 5,990,703   5,914,863   5,210,466   1.28 % 14.97 %
Borrowings
Federal home loan bank borrowings 102,080 104,133 70,080 (1.97

) %

45.66 %
Customer repurchase agreements and other short-term borrowings 133,958 138,449 147,890 (3.24

) %

(9.42

)%

Wholesale repurchase agreements 50,000 n/a (100.00

)%

Junior subordinated debentures 73,464 73,520 73,685 (0.08

) %

(0.30

)%

Subordinated debentures 35,000   35,000   65,000   % (46.15

)%

Total borrowings 344,502   351,102   406,655   (1.88

) %

(15.28

)%

Total deposits and borrowings 6,335,205   6,265,965   5,617,121   1.11 % 12.78 %
Other liabilities 103,370 110,321 107,264 (6.30

) %

(3.63

)%

Stockholders' equity
Common stock 260 260 237 % 9.70 %
Additional paid in capital 405,486 404,089 311,978 0.35 % 29.97 %
Retained earnings 368,169 355,537 330,444 3.55 % 11.42 %
Accumulated other comprehensive loss, net of tax (2,452 ) (683 ) (2,132

)

259.00 % 15.01 %
Total stockholders' equity 771,463   759,203   640,527   1.61 % 20.44 %
Total liabilities and stockholders' equity $ 7,210,038   $ 7,135,489   $ 6,364,912   1.04 % 13.28 %
 
CONSOLIDATED STATEMENTS OF INCOME            
(Unaudited dollars in thousands)
Three Months Ended
        % Change % Change
December 31, September 30, December 31,

Dec 2015 vs.

Dec 2015 vs.
2015 2015 2014 Sept 2015 Dec 2014
Interest income
Interest on federal funds sold and short-term investments $ 137 $ 121 $ 76 13.22 % 80.26 %
Interest and dividends on securities 5,218 5,486 4,741 (4.89 )% 10.06 %
Interest and fees on loans 54,463 54,557 49,911 (0.17 )% 9.12 %
Interest on loans held for sale 52   64   99   (18.75 )% (47.47 )%
Total interest income 59,870 60,228 54,827 (0.59 )% 9.20 %
Interest expense
Interest on deposits 2,940 2,951 2,725 (0.37 )% 7.89 %
Interest on borrowings 2,045   2,232   2,282   (8.38 )% (10.39 )%
Total interest expense 4,985   5,183   5,007   (3.82 )% (0.44 )%
Net interest income 54,885 55,045 49,820 (0.29 )% 10.17 %
Provision for loan losses 500   800   1,750   (37.50 )% (71.43 )%
Net interest income after provision for loan losses 54,385 54,245 48,070 0.26 % 13.14 %
Noninterest income
Deposit account fees 4,694 4,754 4,587 (1.26 )% 2.33 %
Interchange and ATM fees 3,911 3,949 3,303 (0.96 )% 18.41 %
Investment management 5,120 4,981 4,887 2.79 % 4.77 %
Mortgage banking income 1,331 1,480 1,004 (10.07 )% 32.57 %
Increase in cash surrender value of life insurance policies 1,007 958 911 5.11 % 10.54 %
Gain on sale of fixed income securities 121 n/a (100.00 )%
Gain (loss) on sale of equity securities, net 1 (47 ) 100.00% (102.13 )%
Loan level derivative income 1,013 968 1,026 4.65 % (1.27 )%
Other noninterest income 2,747   2,157   2,681   27.35 % 2.46 %
Total noninterest income 19,824 19,247 18,473 3.00 % 7.31 %
Noninterest expenses
Salaries and employee benefits 26,777 26,685 24,471 0.34 % 9.42 %
Occupancy and equipment expenses 5,511 5,443 5,347 1.25 % 3.07 %
Data processing & facilities management 1,168 1,112 1,156 5.04 % 1.04 %
FDIC assessment 986 1,020 942 (3.33 )% 4.67 %
Merger and acquisition expense 586 n/a (100.00 )%
Loss on sale of fixed income securities 21 n/a (100.00 )%
Loss on sale of equity securities 91

100.00

%

100.00

%

Other noninterest expenses 11,953   12,771   11,841   (6.41 )% 0.95 %
Total noninterest expenses 46,486 47,031 44,364 (1.16 )% 4.78 %
Income before income taxes 27,723 26,461 22,179 4.77 % 25.00 %
Provision for income taxes 8,268   7,867   6,201   5.10 % 33.33 %
Net Income $ 19,455   $ 18,594   $ 15,978   4.63 % 21.76 %
 
Basic earnings per share $ 0.74 $ 0.71 $ 0.67 4.23 % 10.45 %
Diluted earnings per share $ 0.74 $ 0.71 $ 0.66 4.23 % 12.12 %
Weighted average common shares (basic) 26,238,004 26,200,261 23,968,320
Weighted average common shares (diluted) 26,290,776 26,264,114 24,055,132
 

Performance ratios

Net interest margin (FTE) 3.34 % 3.39 % 3.42 %
Return on average assets 1.07 % 1.03 % 0.99 %
Return on average common equity 10.03 % 9.75 % 9.93 %
 

Reconciliation table - non-GAAP financial information

Net income $ 19,455 $ 18,594 $ 15,978 4.63 % 21.76 %
Noninterest income components
Less - gain on sale of fixed income securities, net of tax (72 )
Noninterest expense components
Add - loss on sale of fixed income securities, net of tax

13

Add - merger & acquisition expenses, net of tax 404
Other components:
Add - Adjustment for tax effect of previously incurred merger and acquisition expense     235          
Net operating earnings $ 19,455   $ 18,594   $ 16,558   4.63 % 17.50 %
Diluted earnings per share, on an operating basis $ 0.74   $ 0.71   $ 0.69   4.23 % 7.25 %
 
CONSOLIDATED STATEMENTS OF INCOME        
(Unaudited dollars in thousands)    
Twelve Months Ended

% Change

December 31, December 31, Dec 2015 vs.
2015 2014 Dec 2014
 
Interest income
Interest on federal funds sold and short-term investments $ 349 $ 279 25.09 %
Interest and dividends on securities 20,247 18,754 7.96 %
Interest and fees on loans 214,724 197,021 8.99 %
Interest on loans held for sale 225   405   (44.44 )%
Total interest income 235,545 216,459 8.82 %
Interest expense
Interest on deposits 11,576 11,039 4.86 %
Interest on borrowings 9,041   9,378   (3.59 )%
Total interest expense 20,617   20,417   0.98 %
Net interest income 214,928 196,042 9.63 %
Provision for loan losses 1,500   10,403   (85.58 )%
Net interest income after provision for loan losses 213,428 185,639 14.97 %
Noninterest income
Deposit account fees 18,078 18,065 0.07 %
Interchange and ATM fees 14,728 12,975 13.51 %
Investment management 20,735 19,642 5.56 %
Mortgage banking income 5,163 3,384 52.57 %
Increase in cash surrender value of life insurance policies 3,692 3,128 18.03 %
Gain on life insurance benefits 1,964 (100.00 )%
Gain on sale of fixed income securities 798 121 559.50 %
Gain (loss) on sale of equity securities, net 20 91 (78.02 )%
Loan level derivative income 3,830 2,477 54.62 %
Other noninterest income 8,844   8,096   9.24 %
Total noninterest income 75,888 69,943 8.50 %
Noninterest expenses
Salaries and employee benefits 105,068 94,044 11.72 %
Occupancy and equipment expenses 23,020 21,820 5.50 %
Data processing & facilities management 4,631 4,765 (2.81 )%
FDIC assessment 3,979 3,770 5.54 %
Merger and acquisition expense 10,501 1,339 684.24 %
Loss on sale of fixed income securities 1,124 21 5,252.38 %
Loss on sale of equity securities 99

100.00

%

Loss on termination of derivatives 1,122 (100.00 )%
Other noninterest expenses 48,716   44,957   8.36 %
Total noninterest expenses 197,138 171,838 14.72 %
Income before income taxes 92,178   83,744   10.07 %
Provision for income taxes 27,218   23,899   13.89 %
Net Income $ 64,960   $ 59,845   8.55 %
 
Basic earnings per share $ 2.51 $ 2.50 0.40 %
Diluted earnings per share $ 2.50 $ 2.49 0.40 %
Basic average shares 25,891,382 23,899,562
Diluted average shares 25,959,948 23,993,377
 

Performance ratios

Net interest margin (FTE) 3.42 % 3.45 %
Return on average assets 0.93 % 0.95 %
Return on average common equity 8.79 % 9.66 %
 

Reconciliation table - non-GAAP financial information

Net income $ 64,960 $ 59,845 8.55 %
Noninterest income components
Less - gain on sale of fixed income securities, net of tax (473 ) (72 )
Less - gain on life insurance benefits, tax exempt (1,964 )
Noninterest expense components
Add - loss on extinguishment of debt, net of tax 72
Add - loss on termination of derivatives, net of tax 663
Add - loss on sale of fixed income securities, net of tax 667 13
Add - merger & acquisition expenses, net of tax 6,442 1,105
Add - impairment on acquired facilities, net of tax 65   310      
Net operating earnings $ 71,733   $ 59,900   19.75 %
 
Diluted earnings per share, on an operating basis $ 2.76   $ 2.50   10.40 %
           
RECONCILIATION TABLE - NON-GAAP FINANCIAL INFORMATION
(Unaudited dollars in thousands)
                         
Three Months Ended Twelve Months Ended
            % Change % Change
December 31, September 30, December 31, Dec 2015 vs.     Dec 2015 vs. December 31, December 31, Dec 2015 vs.
2015 2015 2014 Sept 2015 Dec 2014 2015 2014 Dec 2014
 
Noninterest income GAAP $ 19,824 $ 19,247 $ 18,473 3.00 % 7.31 % $ 75,888 $ 69,943 8.50 %
Less - gain on sale of fixed income securities 121 n/a (100.00 )% 798 121 559.50 %
Less - gain on life insurance benefits       n/a   n/a     1,964   (100.00 )%
Total noninterest income as adjusted $ 19,824   $ 19,247   $ 18,352   3.00 % 8.02 % $ 75,090   $ 67,858   10.66 %
 
Noninterest expense GAAP $ 46,486 $ 47,031 $ 44,364 (1.16 )% 4.78 % $ 197,138 $ 171,838 14.72 %
Less - loss on extinguishment of debt n/a n/a 122

100.00

%

Less - loss on termination of derivatives n/a n/a

1,122

 

(100)

%

Less - loss on sale of fixed income securities 21 n/a (100.00 )% 1,124 21 5,252.38 %
Less - merger and acquisition expenses 586 n/a (100.00 )% 10,501 1,339 684.24 %
Less - impairment on acquired facilities       n/a   n/a   109   524   (79.20 )%
Total noninterest expense as adjusted $ 46,486   $ 47,031   $ 43,757   (1.16 )% 6.24 % $ 185,282   $

168,832

 

9.74

%
 

ASSET QUALITY

 
Nonperforming Assets At
December 31,   September 30,   December 31,
2015 2015 2014
 
Nonperforming loans
Commercial & industrial loans $ 3,699 $ 4,114 $ 2,822
Commercial real estate loans 8,160 9,006 7,590
Small business loans 239 159 246
Residential real estate loans 8,795 9,106 8,803
Home equity 6,742 7,142 8,038
Other consumer 55   40   13  
Total nonperforming loans $ 27,690   $ 29,567   $ 27,512  
Nonaccrual securities 3,640
Other real estate owned 2,159   2,532   7,742  
Total nonperforming assets $ 29,849   $ 32,099   $ 38,894  
 
Nonperforming loans/gross loans 0.50 % 0.54 % 0.55 %
Nonperforming assets/total assets 0.41 % 0.45 % 0.61 %
Allowance for loan losses/nonperforming loans 201.61 % 186.71 % 200.28 %
Gross loans/total deposits 92.61 % 92.95 % 95.40 %
Allowance for loan losses/total loans 1.01 % 1.00 % 1.11 %
 
Nonperforming Assets Reconciliation for the Three Months Ended
December 31, September 30, December 31,
2015 2015 2014
Nonperforming assets beginning balance $ 32,099 $ 31,274 $ 38,557
New to Nonperforming 3,455 8,348 9,287
Loans charged-off (1,130 ) (1,165 ) (2,325 )
Loans paid-off (2,965 ) (1,799 ) (4,119 )
Loans transferred to other real estate owned/other assets (539 ) (209 )
Loans restored to performing status (1,248 ) (1,409 ) (1,230 )
New to other real estate owned 1,151 209
Sale of other real estate owned (270 ) (3,460 ) (3,206 )
Net capital improvements to other real estate owned (2 ) 196 1,483
Other (90 ) (498 ) 447  
Nonperforming assets ending balance $ 29,849   $ 32,099   $ 38,894  
   
Net Charge-Offs
For the Three Months Ended     For the Twelve Months Ended
December 31,     September 30,     December 31, December 31,     December 31,
2015 2015 2014 2015 2014
 
Net charge-offs (recoveries)
Commercial & industrial loans $ (211 ) $ 475 $ 91 $ 417 $ 1,635
Commercial real estate loans 27 (124 ) 1,099 (743 ) 5,050
Small business loans (6 ) (55 ) 29 3 330
Residential real estate loans (38 ) 34 117 152 402
Home equity (71 ) 119 154 354 501
Other consumer 179   141   165   592   624  
Total net charge-offs (recoveries) $ (120 ) $ 590   $ 1,655   $ 775   $ 8,542  
 
Net charge-offs (recoveries) to average loans (annualized) (0.01 )% 0.04 % 0.13 % 0.01 % 0.18 %
 
             
Troubled Debt Restructurings At
December 31, September 30, December 31,
2015 2015 2014
Troubled debt restructurings on accrual status $ 32,849 $ 37,477 $ 38,382
Troubled debt restructurings on nonaccrual status 5,225   5,201   5,248  
Total troubled debt restructurings $ 38,074   $ 42,678   $ 43,630  
 
FINANCIAL RATIOS & CAPITAL ADEQUACY
December 31, September 30, December 31,
2015 2015 2014
Book value per common share $ 29.40 $ 28.96 $ 26.69
Tangible book value per share $ 21.29 $ 20.81 $ 19.18
Tangible common capital/tangible assets 7.98 % 7.88 % 7.44 %
 
Common equity tier 1 capital ratio (1) 10.46 % 10.31 % n/a
Tier one leverage capital ratio (1) 9.32 % 9.21 % 8.84 %
(1) Estimated number for December 31, 2015.
 

INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION

                                 
(Unaudited - dollars in thousands)

 

Three Months Ended

 

December 31, 2015

 

September 30, 2015

December 31, 2014
Interest Interest Interest

 

Average

Earned/ Yield/

 

Average

Earned/ Yield/ Average Earned/ Yield/

 

Balance

  Paid Rate

 

Balance

  Paid   Rate Balance   Paid   Rate
Interest-earning assets
Interest-earning deposits with banks, federal funds sold, and short term investments $ 214,191 $ 137 0.25 % $ 192,205 $ 121 0.25 % $120,647

$

76

0.25 %
Securities
Securities - trading

 

394

%

 

479

%

Securities - taxable investments

 

815,778

5,186 2.52 %

 

802,146

5,455 2.70 % 726,417 4,708 2.57

%

Securities - nontaxable
investments (1)   4,891   49   3.97 %   4,895   48   3.89 % 5,670     51   3.57

%

Total securities

 

821,063

5,235 2.53 %

 

807,520

5,503 2.70 % 732,087 4,759 2.58 %
Loans held for sale

 

9,422

52 2.19 %

 

10,196

64 2.49 % 11,972 99 3.28 %
Loans
Commercial and industrial

 

844,460

8,254 3.88 %

 

871,976

8,608 3.92 % 845,113 8,207 3.85 %
Commercial real estate (1)

 

2,641,570

26,872 4.04 %

 

2,649,676

27,449 4.11 % 2,358,236 24,689 4.15 %
Commercial construction

 

355,749

3,676 4.10 %

 

290,052

3,057 4.18 % 259,218 2,895 4.43 %
Small business

 

93,521

  1,272   5.40 %

 

91,331

  1,237   5.37 % 82,417     1,143   5.50 %
Total commercial

 

3,935,300

40,074 4.04 %

 

3,903,035

40,351 4.10 % 3,544,984 36,934 4.13 %
Residential real estate

 

645,448

6,151 3.78 %

 

650,039

6,490 3.96 % 534,527 5,465 4.06 %
Home equity

 

919,531

  8,127   3.51 %

 

896,257

  7,690   3.40 % 859,994   7,507   3.46 %
Total consumer real estate

 

1,564,979

14,278 3.62 %

 

1,546,296

14,180 3.64 % 1,394,521 12,972 3.69 %
Other consumer

 

15,783

  470   11.81 %

 

17,033

  383   8.92 % 16,534     387   9.29 %
Total loans

 

5,516,062

  54,822   3.94 %

 

5,466,364

  54,914   3.99 % 4,956,039     50,293   4.03 %
Total interest-earning assets $ 6,560,738   $ 60,246   3.64 % $ 6,476,285   $ 60,602   3.71 % $5,820,745    

$

55,227

  3.76 %
Cash and due from banks

 

117,285

 

116,975

120,228
Federal Home Loan Bank stock

 

14,431

 

37,485

33,233
Other assets

 

521,481

 

 

512,921

  435,254  
Total assets $ 7,213,935   $ 7,143,666   $6,409,460  
Interest-bearing liabilities
Deposits
Savings and interest checking accounts $ 2,324,827 $ 915 0.16 % $ 2,274,861 $ 897 0.16 % $2,129,340

$

871

0.16 %
Money market

 

1,127,013

718 0.25 %

 

1,120,290

742 0.26 % 1,010,401 653 0.26 %
Time deposits

 

694,641

  1,307   0.75 %

 

717,225

  1,312   0.73 % 658,533     1,201   0.72 %
Total interest-bearing deposits

 

4,146,481

2,940 0.28 %

 

4,112,376

2,951 0.28 % 3,798,274 2,725 0.28 %
Borrowings
Federal Home Loan Bank borrowings

 

104,023

571 2.18 %

 

107,489

571 2.11 % 60,974 456 2.97 %
Customer repurchase agreements and other short-term borrowings

 

146,287

49 0.13 %

 

142,704

48 0.13 % 156,041 52 0.13 %
Wholesale repurchase agreements

 

%

 

29,348

162 2.19 % 50,000 292

2.32

%
Junior subordinated debentures

 

73,493

1,016 5.48 %

 

73,549

1,014 5.47 % 73,712 1,012 5.45 %
Subordinated debentures

 

35,000

  409   4.64 %

 

35,000

  437   4.95 % 47,120     470   3.96 %
Total borrowings

 

358,803

  2,045   2.26 %

 

388,090

  2,232   2.28 % 387,847     2,282   2.33 %
Total interest-bearing liabilities $ 4,505,284   $ 4,985   0.44 % $ 4,500,466   $ 5,183   0.46 % $4,186,121    

$

5,007

  0.47 %
Demand deposits

 

1,833,133

 

1,789,288

1,493,464
Other liabilities

 

106,226  

 

97,475  

91,726

 
Total liabilities

$

6,444,643

 

$

6,387,229

 

$5,771,311

 
Stockholders' equity

 

769,292

 

756,437

638,149

Total liabilities and stockholders' equity

$

7,213,935

 

$

7,143,666

 

$6,409,460

 
 
Net interest income

$

55,261

 

$

55,419

   

$

50,220

 
 
Interest rate spread (2) 3.20 % 3.25 % 3.29 %
 
Net interest margin (3) 3.34 % 3.39 % 3.42 %
 
Supplemental Information
Total deposits, including demand deposits $ 5,979,614 $ 2,940 $ 5,901,664 $ 2,951

 

 

 

$5,291,738

 

$

2,725

Cost of total deposits 0.20 % 0.20 % 0.20 %
Total funding liabilities, including demand deposits

$

6,338,417

$

 4,985

$

6,289,754

$

 5,183

$5,679,585

 

 

$

 5,007

Cost of total funding liabilities 0.31 % 0.33 % 0.35 %
 
 
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $376,000, $374,000, and $400,000 for the three months ended December 31, 2015, September 30, 2015, and December 31, 2014, respectively.
(2) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
 
  Twelve Months Ended
December 31, 2015   December 31, 2014
  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 $ 138,694 $ 349 0.25 % $ 111,764 $ 279 0.25 %
Securities
Securities - trading 389 % -
Securities - taxable investments 787,781 20,120 2.55 % 713,969 18,610 2.61 %
Securities - nontaxable investments (1) 5,101   195   3.82 % 5,944   233   3.92 %
Total securities 793,271 20,315 2.56 % 719,913 18,843 2.62 %
Loans held for sale 9,244 225 2.43 % 11,125 405 3.64 %
Loans
Commercial and industrial 858,043 33,569 3.91 % 837,618 32,442 3.87 %
Commercial real estate (1) 2,590,482 106,801 4.12 % 2,306,901 97,971 4.25 %
Commercial construction 304,545 12,838 4.22 % 249,389 10,682 4.28 %
Small business 90,081   4,900   5.44 % 79,736   4,431   5.56 %
Total commercial 3,843,151 158,108 4.11 % 3,473,644 145,526 4.19 %
Residential real estate 641,218 25,603 3.99 % 538,171 21,462 3.99 %
Home equity 892,920   30,777   3.45 % 841,710   29,568   3.51 %
Total consumer real estate 1,534,138 56,380 3.68 % 1,379,881 51,030 3.70 %
Other consumer 17,175   1,664   9.69 % 17,672   1,732   9.80 %
Total loans 5,394,464   216,152   4.01 % 4,871,197   198,288   4.07 %
Total interest-earning assets $ 6,335,673   $ 237,041   3.74 % $ 5,713,999   $ 217,815   3.81 %
Cash and due from banks 110,202 113,394
Federal Home Loan Bank stock 31,080 36,467
Other assets 513,495   422,598  
Total assets $ 6,990,450   $ 6,286,458  
Interest-bearing liabilities
Deposits
Savings and interest checking accounts $ 2,242,245 $ 3,556 0.16 % $ 2,087,973 $ 3,573 0.17 %
Money market 1,102,892 2,878 0.26 % 972,664 2,487 0.26 %
Time deposits 708,094   5,142   0.73 % 698,070   4,979   0.71 %
Total interest-bearing deposits 4,053,231 11,576 0.29 % 3,758,707 11,039 0.29 %
Borrowings
Federal Home Loan Bank borrowings 106,686 2,208 2.07 % 100,631 2,784 2.77 %
Customer repurchase agreements and other short-term borrowings 138,363 210 0.15 % 144,358 200 0.14 %
Wholesale repurchase agreements 32,192 746 2.32 % 50,000 1,158 2.32 %
Junior subordinated debentures 73,576 4,026 5.47 % 73,797 4,008 5.43 %
Subordinated debentures 39,110   1,851   4.73 % 34,315   1,228   3.58 %
Total borrowings 389,927   9,041   2.32 % 403,101   9,378   2.33 %
Total interest-bearing liabilities $ 4,443,158   $ 20,617   0.46 % $ 4,161,808   $ 20,417   0.49 %
Demand deposits 1,704,253 1,422,510
Other liabilities 103,839   82,310  
Total liabilities $ 6,251,250 $ 5,666,628
Stockholders' equity 739,200   619,830  
Total liabilities and stockholders' equity $ 6,990,450   $ 6,286,458  
 
Net interest income $ 216,424   $ 197,398  
 
Interest rate spread (2) 3.28 % 3.32 %
 
Net interest margin (3) 3.42 % 3.45 %
 
Supplemental Information
Total deposits, including demand deposits $ 5,757,484 $ 11,576 $ 5,181,217 $ 11,039
Cost of total deposits 0.20 % 0.21 %
Total funding liabilities, including demand deposits $ 6,147,411 $ 20,617 $ 5,584,318 $ 20,417
Cost of total funding liabilities 0.34 % 0.37 %
 
 
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.5 million and $1.4 million for the nine months ended December 31, 2015 and 2014, respectively.
(2) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
 
Certain amounts in prior year financial statement have been reclassified to conform to the current year's presentation.

Contacts

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

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