Market Overview

Independent Bank Corp. Reports First Quarter Net Income of $35.2 Million

Share:

Record Quarterly Earnings Led by Strong Fundamentals

Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of
Rockland Trust Company, today announced 2019 first quarter net income of
$35.2 million, or $1.25 per diluted share, compared to net income of
$29.9 million, or $1.07 per diluted share, reported in the fourth
quarter of 2018. Excluding merger and acquisition expenses incurred in
both quarters, operating net income was $36.7 million, or $1.30 per
diluted share during the first quarter of 2019 compared to $35.9
million, or $1.29 per diluted share during the prior quarter.

"Rockland Trust started 2019 with a strong first quarter, driven by loan
growth and a rising net interest margin," said Christopher Oddleifson,
the Chief Executive Officer of Independent Bank Corp. and Rockland Trust
Company. "We closed the Blue Hills Bank acquisition and welcomed many
new colleagues to Rockland Trust on the first day of the second quarter,
and are focused on completing the customer and branch conversion over
the weekend of June 8, 2019. Rockland Trust is able to consistently
succeed at both organic growth and the seamless integration of other
banks due to the hard work of my deeply committed and extremely talented
colleagues."

BALANCE SHEET

Total assets of $9.0 billion at March 31, 2019 increased by $145.9
million, or 1.6% from the prior quarter, and by $907.0 million, or
11.2%, as compared to the year ago period, inclusive of the 2018 fourth
quarter acquisition of MNB Bancorp, parent of the Milford National Bank
and Trust Company ("MNB").

Total loans rose by $70.7 million, or 1.0% (4.2% annualized) over the
prior quarter. This increase was led by strong growth of $57.0 million,
or 21.1% on an annualized basis, in commercial and industrial loans,
especially in corporate and asset-based lending, whereas commercial
construction and commercial real estate balances remained relatively
flat on a combined basis. Residential real estate also increased $11.9
million, or 5.2% on an annualized basis, driven primarily by jumbo loan
production. Inclusive of the MNB acquisition, total loans increased by
$614.8 million, or 9.7% when compared to the year ago period.

Total deposits experienced modest seasonal growth, increasing by $36.5
million, or 0.5% (2.0% annualized) from the prior quarter. Strong growth
in money market deposits was offset by declines in demand deposit
balances, which included outflows of funds into the company's investment
management group portfolio as well as a $39 million decrease
attributable to its more volatile section 1031 tax-free exchange
business.  The total cost of deposits increased by five basis points in
the first quarter to 0.39%. Inclusive of the acquired MNB deposits,
total deposits increased by $712.1 million, or 10.6%, when compared to
the year ago period. A portion of the increase from the year ago period
is also attributable to the discontinuance and transition of $141.2
million in customer repurchase agreements, which were previously
classified as borrowings.

The securities portfolio increased by $7.9 million, or 0.7%, compared to
the prior quarter, due to the purchases of $30.5 million, offset by
paydowns on existing securities.

The Company's total borrowings increased by a net $49.3 million, or
19.1%, compared to the prior quarter. The increase was attributable to
funding needs for the cash portion of the April 1, 2019 Blue Hills
Bancorp, Inc. ("BHB") acquisition, and included a $125.0 million credit
facility comprised of a $50.0 million line of credit and a $75.0 million
term loan. In addition, during the first quarter, the Company issued
$50.0 million of subordinated debt in anticipation of paying down
existing subordinated debt that is scheduled to lose its regulatory
capital treatment, along with other borrowings. Partially offsetting
these increases was a decrease in Federal Home Loan Bank overnight
borrowings of $122.1 million.

Stockholders' equity at March 31, 2019 rose to $1.1 billion, an increase
of 2.9% from December 31, 2018, driven by continued strong earnings
retention, as well as an increase in accumulated other comprehensive
income. Stockholders' equity increased by 15.5% when compared to the
year ago period, due primarily to the issuance of common stock
associated with the MNB acquisition. Book value per share increased
$1.03, or 2.7%, during the first quarter. The Company's ratio of common
equity to assets of 12.28% increased by 15 basis points from the prior
quarter and by 46 basis points from the same period a year ago. The
Company's tangible book value per share rose by $1.07, or 3.7%, to
$29.64 from the prior quarter and is now 13.9% higher than the year ago
period, inclusive of the added goodwill from the MNB acquisition. The
Company's ratio of tangible common equity to tangible assets of 9.56% at
March 31, 2019 is 21 basis points higher than the prior quarter and 44
basis points above the year ago period.

NET INTEREST INCOME

Net interest income for the first quarter increased 2.8% to $82.5
million compared to $80.3 million in the prior quarter, due to solid
average earning asset growth, including a full quarter of the MNB
acquired assets, and a higher net interest margin. The net interest
margin rose to 4.14%, compared to 4.05% in the prior quarter, as the
Company continues to benefit from its asset sensitive position as rising
yields on earning assets continued to outpace higher funding costs.

NONINTEREST INCOME

Noninterest income of $21.5 million in the first quarter of 2019 was
$2.0 million, or 8.3%, lower than the prior quarter. Significant changes
in noninterest income in the first quarter compared to the prior quarter
included the following:

  • Deposit account and interchange and ATM fees decreased by $792,000, or
    8.2%, due to seasonal decreases in overdraft fees and debit card usage.
  • Investment management income increased by $121,000, or 1.8%, due
    primarily to the increase in assets under administration, partially
    offset by reduced retail commissions. Assets under administration at
    March 31, 2019 rose by 10.4% over the prior quarter to $4.0 billion.
  • Mortgage banking income decreased by $135,000, or 14.3%, due to a
    seasonal decrease in volume.
  • Loan level derivative income decreased by $185,000, or 22.4%, as a
    result of decreased customer demand in the quarter.
  • Other noninterest income decreased $808,000, or 19.0%. The prior
    quarter included a gain of $1.1 million on the sale of a previously
    closed branch facility, with no such gains in the first quarter of
    2019. There were also decreases in merchant processing income and
    capital gain distributions received on equity securities. Partly
    offsetting these factors were gains of $907,000 on equity securities
    in the first quarter of 2019 compared to none in the prior quarter.

NONINTEREST EXPENSE

Noninterest expense of $56.3 million in the first quarter of 2019 was
$8.1 million, or 12.5%, lower than the prior quarter. Significant
changes in noninterest expense in the first quarter compared to the
prior quarter included the following:

  • Salaries and employee benefits expense increased by $1.3 million, or
    4.0%, due primarily to seasonal increases in payroll taxes, medical
    plan insurance, and certain pension expenses, combined with the impact
    of a full quarter of expenses associated with the MNB acquisition.
    These were offset by decreases in incentive compensation and
    retirement expenses.
  • Occupancy and equipment expense increased by $247,000, or 3.6%, mainly
    due to an increase in snow removal expense, partially offset by a
    decrease in landscaping costs.
  • Merger and acquisition costs decreased to $1.0 million for the first
    quarter, which included $719,000 attributable to the BHB acquisition
    and the remainder associated with the MNB acquisition. The majority of
    these costs include legal, professional fees, and integration costs.
    The prior quarter expense of $8.0 million was primarily related to the
    MNB acquisition.
  • Other noninterest expense decreased by $2.7 million, or 17.0%, due to
    a $1.1 million loss on equity securities that took place in the fourth
    quarter of 2018, as well as decreases in loan workout costs,
    consultant fees and directors fees.

The Company generated a return on average assets and a return on average
common equity of 1.62% and 13.10%, respectively, in the first quarter of
2019, as compared to 1.38% and 11.49%, respectively, for the prior
quarter. On an operating basis, the Company generated a return on
average assets and return on average equity of 1.69% and 13.65%,
respectively, during the first quarter of 2019, as compared to 1.66% and
13.78%, respectively, for the prior quarter.

The Company's effective tax rate increased to 24.6% for the first
quarter as compared to 21.6% in the prior quarter which was primarily
attributable to reduced New Markets Tax Credits benefits in 2019. Both
quarters' tax rates were impacted by various discrete items such as the
impact of excess tax benefits associated with stock compensation
transactions and return to provision adjustments.

ASSET QUALITY

During the first quarter of 2019, the Company recorded total net
charge-offs of $153,000, or 0.01% of average loans on an annualized
basis, consistent with the prior quarter. The provision for loan losses
was $1.0 million for the first quarter of 2019 compared to $1.2 million
in the fourth quarter of 2018, both of which were primarily attributable
to loan growth. Nonperforming loans declined to $43.3 million, or 0.62%
of loans at March 31, 2019 compared to prior quarter balances of $45.4
million, or 0.66% of loans. There were no balances in the other real
estate owned category as of both March 31, 2019 and December 31, 2018.
Total nonperforming assets at March 31, 2019 declined 4.6% when compared
to the prior period, and declined 9.9% as compared to the year ago
period, which included other real estate owned of $358,000. At March 31,
2019, delinquency as a percentage of loans was 0.25%, representing a
decrease of 42 basis points from the prior quarter, driven by the
restructuring of loans associated with a large commercial loan customer.

The allowance for loan losses was $65.1 million at March 31, 2019, as
compared to $64.3 million at December 31, 2018. The Company's allowance
for loan losses as a percentage of loans was 0.93% at both March 31,
2019 and December 31, 2018.

CONFERENCE CALL INFORMATION

Christopher Oddleifson, Chief Executive Officer, Robert Cozzone, Chief
Operating Officer, and Mark Ruggiero, Chief Financial Officer, will host
a conference call to discuss first quarter earnings at 10:00 a.m.
Eastern Time on Monday, April 22, 2019. 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: 10129763 and will be available through May 6, 2019.
Additionally, a webcast replay will be available until April 22, 2020.

ABOUT INDEPENDENT BANK CORP.

Independent Bank Corp. is the holding company for Rockland Trust
Company, a full-service commercial bank headquartered in Massachusetts.
Named in 2018 to The Boston Globe's "Top Places to Work" list for the 10th
consecutive year, Rockland Trust offers a wide range of banking,
investment, and insurance services. The Bank serves businesses and
individuals through approximately 100 retail branches, commercial and
residential lending centers, and investment management offices in
eastern Massachusetts, including Greater Boston, the South Shore, the
Cape and Islands, as well as in Worcester County and Rhode Island.
Rockland Trust also offers a full suite of mobile, online, and telephone
banking services. The Company is an FDIC member and an Equal Housing
Lender. To find out why Rockland Trust is the bank "Where Each
Relationship Matters®", please visit www.rocklandtrust.com.

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

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

  • a weakening in the United States economy in general and the regional
    and local economies within the New England region and the Company's
    market area;
  • adverse changes or volatility in the local real estate market;
  • adverse changes in asset quality including an unanticipated credit
    deterioration in our loan portfolio including those related to one or
    more large commercial relationships;
  • acquisitions may not produce results at levels or within time frames
    originally anticipated and may result in unforeseen integration issues
    or impairment of goodwill and/or other intangibles;
  • inability to raise capital on terms that are favorable;
  • additional regulatory oversight and additional costs associated with
    the Company's increase in assets to over $10 billion;
  • changes in trade, monetary and fiscal policies and laws, including
    interest rate policies of the Board of Governors of the Federal
    Reserve System;
  • higher than expected tax expense, resulting from failure to comply
    with general tax laws, changes in tax laws, or failure to comply with
    requirements of the federal New Markets Tax Credit program;
  • unexpected changes in market interest rates for interest earning
    assets and/or interest bearing liabilities;
  • unexpected increased competition in the Company's market area;
  • unanticipated loan delinquencies, loss of collateral, decreased
    service revenues, and other potential negative effects on our business
    caused by severe weather or other external events;
  • a deterioration in the conditions of the securities markets;
  • a deterioration of the credit rating for U.S. long-term sovereign debt;
  • inability to adapt to changes in information technology, including
    changes to industry accepted delivery models driven by a migration to
    the internet as a means of service delivery;
  • electronic fraudulent activity within the financial services industry,
    especially in the commercial banking sector;
  • adverse changes in consumer spending and savings habits;
  • the inability to realize expected synergies from merger transactions
    in the amounts or in the timeframes anticipated;
  • inability to retain customers and employees, including those acquired
    in the MNB Bancorp and Blue Hills Bancorp, Inc. acquisitions;
  • the effect of laws and regulations regarding the financial services
    industry including, but not limited to, the Dodd-Frank Wall Street
    Reform and the Consumer Protection Act and regulatory uncertainty
    surrounding these laws and regulations;
  • changes in laws and regulations (including laws and regulations
    concerning taxes, banking, securities and insurance) generally
    applicable to the Company's business;
  • changes in accounting policies, practices and standards, as may be
    adopted by the regulatory agencies as well as the Public Company
    Accounting Oversight Board, the Financial Accounting Standards Board,
    and other accounting standard setters;
  • cyber security attacks or intrusions that could adversely impact our
    businesses; and
  • other unexpected material adverse changes in our operations or
    earnings.

The Company wishes to caution readers not to place undue reliance on
any forward-looking statements as the Company's business and its
forward-looking statements involve substantial known and unknown risks
and uncertainties described in the Company's Annual Report on Form 10-K
and Quarterly Reports on Form 10-Q ("Risk Factors").
Except as
required by law, the Company disclaims any intent or obligation to
update publicly any such forward-looking statements, whether in response
to new information, future events or otherwise. Any public statements or
disclosures by the Company following this release which modify or impact
any of the forward-looking statements contained in this release will be
deemed to modify or supersede such statements in this release. In
addition to the information set forth in this press release, you should
carefully consider the Risk Factors.

This press release contains financial information determined by
methods other than in accordance with accounting principles generally
accepted in the United States of America ("GAAP"). This information
includes operating net income and operating earnings per share ("EPS"),
operating return on average assets, operating return on average equity,
tangible book value per share and the tangible common equity ratio.

Operating net income, operating EPS, operating return on average
assets and operating return on average common equity exclude items that
management believes are unrelated to its core banking business such as
merger and acquisition expenses, and other items, if applicable.
The
Company's management uses operating earnings and related ratios and
operating EPS to measure the strength of the Company's core banking
business and to identify trends that may to some extent be obscured by
such items.

Management also supplements its evaluation of financial performance
with analysis of tangible book value per share (which is computed by
dividing stockholders' equity less goodwill and identifiable intangible
assets, or "tangible common equity", by common shares outstanding), the
tangible common equity ratio (which is computed by dividing tangible
common equity by "tangible assets", defined as total assets less
goodwill and other intangibles).
The Company has included
information on tangible book value per share and the tangible common
equity ratio because management believes that investors may find it
useful to have access to the same analytical tool used by management.

As a result of merger and acquisition activity, the Company has
recognized goodwill and other intangible assets in conjunction with
business combination accounting principles.
Excluding the impact
of goodwill and other intangibles in measuring asset and capital values
for the ratios provided, along with other bank standard capital ratios,
provides a framework to compare the capital adequacy of the Company to
other companies in the financial services industry.

These non-GAAP measures should not be viewed as a substitute for
operating results and other financial measures determined in accordance
with GAAP.
An item which management deems to be noncore 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, operating return on average assets, operating
return on average equity, tangible book value per share and the tangible
common equity ratio 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
 

March 31
2019

December 31
2018

March 31
2018

Mar 2019 vs.

Mar 2019 vs.

Dec 2018 Mar 2018
Assets
Cash and due from banks

$

106,748

$ 127,503 $ 102,623 (16.28 )% 4.02 %
Interest-earning deposits with banks 185,526 122,952 62,925 50.89 % 194.84 %
Securities
Trading 1,837 1,504 1,601 22.14 % 14.74 %
Equities 20,357 19,477 20,075 4.52 % 1.40 %
Available for sale 437,689 442,752 445,750 (1.14 )% (1.81 )%
Held to maturity   623,243   611,490   528,861   1.92 % 17.85 %
Total securities 1,083,126 1,075,223 996,287 0.74 % 8.72 %
Loans held for sale (at fair value) 5,586 6,431 3,937 (13.14 )% 41.88 %
Loans
Commercial and industrial 1,150,632 1,093,629 903,214 5.21 % 27.39 %
Commercial real estate 3,254,085 3,251,248 3,102,271 0.09 % 4.89 %
Commercial construction 373,517 365,165 400,934 2.29 % (6.84 )%
Small business   166,410   164,676   133,666   1.05 % 24.50 %
Total commercial   4,944,644   4,874,718   4,540,085   1.43 % 8.91 %
Residential real estate 935,238 923,294 761,331 1.29 % 22.84 %
Home equity - first position 642,451 654,083 617,164 (1.78 )% 4.10 %
Home equity - subordinate positions   438,290   438,001   434,288   0.07 % 0.92 %
Total consumer real estate   2,015,979   2,015,378   1,812,783   0.03 % 11.21 %
Other consumer   16,249   16,098   9,188   0.94 % 76.85 %
Total loans   6,976,872   6,906,194   6,362,056   1.02 % 9.66 %
Less: allowance for loan losses   (65,140 ) (64,293 ) (60,862 ) 1.32 % 7.03 %
Net loans   6,911,732   6,841,901   6,301,194   1.02 % 9.69 %
Federal Home Loan Bank stock 7,667 15,683 13,027 (51.11 )% (41.15 )%
Bank premises and equipment, net 98,843 97,581 95,214 1.29 % 3.81 %
Goodwill 256,105 256,105 231,806 % 10.48 %
Other intangible assets 14,339 15,250 8,462 (5.97 )% 69.45 %
Cash surrender value of life insurance policies 161,521 160,456 152,568 0.66 % 5.87 %
Other real estate owned and other foreclosed assets 358 n/a (100.00 )%
Other assets   166,264   132,507   122,009   25.48 % 36.27 %
Total assets

$

8,997,457

  $ 8,851,592   $ 8,090,410   1.65 % 11.21 %
Liabilities and Stockholders' Equity
Deposits
Demand deposits

$

2,329,566

$ 2,450,907 $ 2,167,361 (4.95 )% 7.48 %
Savings and interest checking accounts 2,914,367 2,865,349 2,606,257 1.71 % 11.82 %
Money market 1,496,118 1,399,761 1,323,138 6.88 % 13.07 %
Time certificates of deposit   723,551   711,103   654,755   1.75 % 10.51 %
Total deposits   7,463,602   7,427,120   6,751,511   0.49 % 10.55 %
Borrowings
Federal Home Loan Bank borrowings 25,752 147,806 53,257 (82.58 )% (51.65 )%
Customer repurchase agreements 137,914 n/a (100.00 )%
Line of credit, net 49,993 100.00% 100.00%
Long-term borrowings, net 74,914 100.00% 100.00%
Junior subordinated debentures, net 73,082 76,173 73,075 (4.06 )% 0.01 %
Subordinated debentures, net   84,299   34,728   34,693   142.74 % 142.99 %
Total borrowings   308,040   258,707   298,939   19.07 % 3.04 %
Total deposits and borrowings   7,771,642   7,685,827   7,050,450   1.12 % 10.23 %
Other liabilities   121,277   92,275   83,901   31.43 % 44.55 %
Total liabilities   7,892,919   7,778,102   7,134,351   1.48 % 10.63 %
Stockholders' equity
Common stock 280 279 273 0.36 % 2.56 %
Additional paid in capital 527,795 527,648 479,715 0.03 % 10.02 %
Retained earnings 569,582 546,736 484,266 4.18 % 17.62 %
Accumulated other comprehensive income (loss), net of tax   6,881   (1,173 ) (8,195 ) (686.62 )% (183.97 )%
Total stockholders' equity   1,104,538   1,073,490   956,059   2.89 % 15.53 %
Total liabilities and stockholders' equity

$

8,997,457

  $ 8,851,592   $ 8,090,410   1.65 % 11.21 %
 
 
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, dollars in thousands, except per share data)        
Three Months Ended
    % Change % Change
March 31
2019
December 31
2018
March 31
2018
Mar 2019 vs. Mar 2019 vs.
Dec 2018 Mar 2018
Interest income
Interest on federal funds sold and short-term investments $ 426 $ 908 $ 311 (53.08 )% 36.98 %
Interest and dividends on securities 7,478 7,146 6,235 4.65 % 19.94 %
Interest and fees on loans 83,608 79,807 67,184 4.76 % 24.45 %
Interest on loans held for sale 31   49   19   (36.73 )% 63.16 %
Total interest income 91,543 87,910 73,749 4.13 % 24.13 %
Interest expense
Interest on deposits 7,028 6,222 3,935 12.95 % 78.60 %
Interest on borrowings 1,990   1,396   1,343   42.55 % 48.18 %
Total interest expense 9,018   7,618   5,278   18.38 % 70.86 %
Net interest income 82,525 80,292 68,471 2.78 % 20.53 %
Provision for loan losses 1,000   1,200   500   (16.67 )% 100.00 %
Net interest income after provision for loan losses 81,525 79,092 67,971 3.08 % 19.94 %
Noninterest income
Deposit account fees 4,406 4,687 4,431 (6.00 )% (0.56 )%
Interchange and ATM fees 4,516 5,027 4,173 (10.17 )% 8.22 %
Investment management 6,748 6,627 6,142 1.83 % 9.87 %
Mortgage banking income 806 941 870 (14.35 )% (7.36 )%
Increase in cash surrender value of life insurance policies 972 1,131 947 (14.06 )% 2.64 %
Loan level derivative income 641 826 447 (22.40 )% 43.40 %
Other noninterest income 3,444   4,252   2,853   (19.00 )% 20.72 %
Total noninterest income 21,533 23,491 19,863 (8.34 )% 8.41 %
Noninterest expenses
Salaries and employee benefits 33,117 31,845 31,100 3.99 % 6.49 %
Occupancy and equipment expenses 7,130 6,883 7,408 3.59 % (3.75 )%
Data processing and facilities management 1,326 1,288 1,286 2.95 % 3.11 %
FDIC assessment 616 560 798 10.00 % (22.81 )%
Merger and acquisition expense 1,032 8,046 (87.17 )% 100.00%
Other noninterest expenses 13,090   15,769   12,859   (16.99 )% 1.80 %
Total noninterest expenses 56,311 64,391 53,451 (12.55 )% 5.35 %
Income before income taxes 46,747 38,192 34,383 22.40 % 35.96 %
Provision for income taxes 11,522   8,258   6,828   39.53 % 68.75 %
Net Income $ 35,225   $ 29,934   $ 27,555   17.68 % 27.84 %
 
Weighted average common shares (basic) 28,106,184 27,815,437 27,486,573
Common share equivalents 54,466   58,576   67,381  
Weighted average common shares (diluted) 28,160,650   27,874,013   27,553,954  
 
Basic earnings per share $ 1.25 $ 1.08 $ 1.00 15.74 % 25.00 %
Diluted earnings per share $ 1.25 $ 1.07 $ 1.00 16.82 % 25.00 %
 

Reconciliation of Net Income (GAAP) to
Operating Net Income (Non-GAAP):

Net income $ 35,225 $ 29,934 $ 27,555
Noninterest expense components
Add - merger and acquisition expenses 1,032   8,046    
Noncore items, gross 1,032 8,046
Less - net tax benefit associated with noncore items (1) (198 ) (2,089 )
Add - adjustment for tax effect of previously incurred merger and
acquisition expenses
650      

Total tax impact

452   (2,089 )  
Noncore items, net of tax 1,484   5,957    
Operating net income $ 36,709   $ 35,891   $ 27,555   2.28 % 33.22 %
 
Diluted earnings per share, on an operating basis $ 1.30 $ 1.29 $ 1.00 0.78 % 30.00 %

(1) The net tax benefit associated with noncore items is determined by
assessing whether each noncore item is included or excluded from net
taxable income and applying the Company's combined marginal tax rate to
only those items included in net taxable income.

 

Performance ratios

Net interest margin (FTE)     4.14 %   4.05 %   3.77 %
Return on average assets GAAP (calculated by dividing net income by
average assets)
1.62 % 1.38 % 1.39 %
Return on average assets on an operating basis (calculated by
dividing net operating earnings by average assets)
1.69 % 1.66 % 1.39 %
Return on average common equity GAAP (calculated by dividing net
income by average common equity)
13.10 % 11.49 % 11.73 %
Return on average common equity on an operating basis (calculated by
dividing net operating earnings by average common equity)
13.65 % 13.78 % 11.73 %
 
 

ASSET QUALITY

(Unaudited, dollars in thousands)     Nonperforming Assets At
March 31
2019
  December 31
2018
  March 31
2018
Nonperforming loans
Commercial & industrial loans $ 25,879 $ 26,310 $ 30,751
Commercial real estate loans 1,539 3,326 2,997
Small business loans 180 235 412
Residential real estate loans 8,517 8,251 7,646
Home equity 7,202 7,278 5,858
Other consumer 14   18   49  
Total nonperforming loans 43,331   45,418   47,713  
Other real estate owned     358  
Total nonperforming assets $ 43,331   $ 45,418   $ 48,071  
 
Nonperforming loans/gross loans 0.62 % 0.66 % 0.75 %
Nonperforming assets/total assets 0.48 % 0.51 % 0.59 %
Allowance for loan losses/nonperforming loans 150.33 % 141.56 % 127.56 %
Allowance for loan losses/total loans 0.93 % 0.93 % 0.96 %
Delinquent loans/total loans 0.25 % 0.67 % 0.79 %
 
Nonperforming Assets Reconciliation for the Three Months Ended
March 31
2019
December 31
2018
March 31
2018
 
Nonperforming assets beginning balance $ 45,418 $ 45,584 $ 50,250
New to nonperforming 1,857 5,759 2,001
Loans charged-off (559 ) (588 ) (594 )
Loans paid-off (3,171 ) (4,453 ) (2,692 )
Loans restored to performing status (232 ) (630 ) (690 )
Valuation write down (120 )
Sale of other real estate owned (70 ) (254 )
Other 18   (64 ) 50  
Nonperforming assets ending balance $ 43,331   $ 45,418   $ 48,071  
 
   
Net Charge-Offs (Recoveries)
Three Months Ended
March 31
2019
  December 31
2018
  March 31
2018
Net charge-offs (recoveries)
Commercial and industrial loans $ (124 ) $ (3 ) $ 121
Commercial real estate loans (33 ) (121 ) (20 )
Small business loans 118 118 15
Residential real estate loans (1 ) 37
Home equity 47 4 45
Other consumer 146   144   83  
Total net charge-offs $ 153   $ 142   $ 281  
 
Net charge-offs to average loans (annualized) 0.01 % 0.01 % 0.02 %
 
   
Troubled Debt Restructurings At
March 31
2019
  December 31
2018
  March 31
2018
Troubled debt restructurings on accrual status $ 23,053 $ 23,849 $ 25,617
Troubled debt restructurings on nonaccrual status 28,908   29,348   5,637  
Total troubled debt restructurings $ 51,961   $ 53,197   $ 31,254  
 
BALANCE SHEET AND CAPITAL RATIOS
March 31
2019
December 31
2018
March 31
2018
Gross loans/total deposits 93.48 % 92.99 % 94.23 %
Common equity tier 1 capital ratio (1) 12.12 % 11.92 % 11.47 %
Tier one leverage capital ratio (1) 10.64 % 10.69 % 10.32 %
Common equity to assets ratio GAAP 12.28 % 12.13 % 11.82 %
Tangible common equity to tangible assets ratio (2) 9.56 % 9.35 % 9.12 %
Book value per share GAAP $ 39.26 $ 38.23 $ 34.75
Tangible book value per share (2) $ 29.64 $ 28.57 $ 26.02
 

(1) Estimated number for March 31, 2019.
(2) See
Appendix A for detailed reconciliation from GAAP to Non-GAAP ratios.

 

INDEPENDENT BANK CORP. SUPPLEMENTAL
FINANCIAL INFORMATION

               
(Unaudited, dollars in thousands) Three Months Ended
March 31, 2019 December 31, 2018 March 31, 2018
Interest Interest Interest
Average Earned/ Yield/ Average Earned/ Yield/ Average Earned/ Yield/
Balance   Paid (1)   Rate Balance   Paid (1)   Rate Balance   Paid (1)   Rate
Interest-earning assets
Interest-earning deposits with banks, federal funds sold, and short
term investments
$ 68,994 $ 426 2.50 % $ 158,376 $ 908 2.27 % $ 81,934 $ 311 1.54 %
Securities
Securities - trading 1,616 % 1,554 % 1,433 %
Securities - taxable investments 1,084,747 7,465 2.79 % 1,031,969 7,132 2.74 % 967,221 6,219 2.61 %
Securities - nontaxable investments (1) 1,738   17   3.97 % 1,939   18   3.68 % 2,262   20   3.59 %

Total securities

$ 1,088,101 $ 7,482 2.79 % $ 1,035,462 $ 7,150 2.74 % $ 970,916 $ 6,239 2.61 %
Loans held for sale 3,445 31 3.65 % 5,708 49 3.41 % 2,753 19 2.80 %
Loans
Commercial and industrial (1) 1,113,819 14,440 5.26 % 1,033,345 13,087 5.02 % 879,336 9,615 4.43 %
Commercial real estate (1) 3,240,346 39,230 4.91 % 3,168,962 38,533 4.82 % 3,107,437 33,289 4.34 %
Commercial construction 386,736 5,617 5.89 % 373,042 5,116 5.44 % 397,720 4,671 4.76 %
Small business 165,374   2,484   6.09 % 152,722   2,309   6.00 % 132,125   1,862   5.72 %
Total commercial 4,906,275 61,771 5.11 % 4,728,071 59,045 4.95 % 4,516,618 49,437 4.44 %
Residential real estate 926,945 9,547 4.18 % 860,234 8,647 3.99 % 755,996 7,501 4.02 %
Home equity 1,086,620   12,175   4.54 % 1,085,421   12,013   4.39 % 1,051,022   10,205   3.94 %
Total consumer real estate 2,013,565 21,722 4.38 % 1,945,655 20,660 4.21 % 1,807,018 17,706 3.97 %
Other consumer 16,087   313   7.89 % 14,415   283   7.79 % 10,659   214   8.14 %
Total loans $ 6,935,927   $ 83,806   4.90 % $ 6,688,141   $ 79,988   4.74 % $ 6,334,295   $ 67,357   4.31 %
Total interest-earning assets $ 8,096,467   $ 91,745   4.60 % $ 7,887,687   $ 88,095   4.43 % $ 7,389,898   $ 73,926   4.06 %
Cash and due from banks 105,194 110,643 97,605
Federal Home Loan Bank stock 11,697 13,274 13,016
Other assets 617,259   573,854   545,516  
Total assets $ 8,830,617   $ 8,585,458   $ 8,046,035  
Interest-bearing liabilities
Deposits
Savings and interest checking accounts $ 2,891,613 $ 1,954 0.27 % $ 2,737,399 $ 1,763 0.26 % $ 2,563,186 $ 1,093 0.17 %
Money market 1,464,151 2,719 0.75 % 1,398,175 2,378 0.67 % 1,338,265 1,364 0.41 %
Time deposits 717,081   2,355   1.33 % 685,440   2,081   1.20 % 646,529   1,478   0.93 %
Total interest-bearing deposits $ 5,072,845 $ 7,028 0.56 % $ 4,821,014 $ 6,222 0.51 % $ 4,547,980 $ 3,935 0.35 %
Borrowings
Federal Home Loan Bank borrowings 112,898 710 2.55 % 53,631 280 2.07 % 73,040 260 1.44 %
Customer repurchase agreements % 72,668 43 0.23 % 155,768 66 0.17 %
Line of Credit 2,221 21 3.83 % % %
Long-term borrowings 3,331 32 3.90 % % %
Junior subordinated debentures 73,287 684 3.79 % 74,592 646 3.44 % 73,074 590 3.27 %
Subordinated debentures 44,678   543   4.93 % 34,723   427   4.88 % 34,687   427   4.99 %
Total borrowings $ 236,415   $ 1,990   3.41 % $ 235,614   $ 1,396   2.35 % $ 336,569   $ 1,343   1.62 %
Total interest-bearing liabilities $ 5,309,260   $ 9,018   0.69 % $ 5,056,628   $ 7,618   0.60 % $ 4,884,549   $ 5,278   0.44 %
Demand deposits 2,317,209 2,399,488 2,129,517
Other liabilities 113,688   95,670   79,125  
Total liabilities $ 7,740,157   $ 7,551,786   $ 7,093,191  
Stockholders' equity 1,090,460   1,033,673   952,844  
Total liabilities and stockholders' equity $ 8,830,617   $ 8,585,459   $ 8,046,035  
 
Net interest income $ 82,727   $ 80,477   $ 68,648  
 
Interest rate spread (2) 3.91 % 3.83 % 3.62 %
 
Net interest margin (3) 4.14 % 4.05 % 3.77 %
 

Supplemental Information

Total deposits, including demand deposits $ 7,390,054 $ 7,028 $ 7,220,502 $ 6,222 $ 6,677,497 $ 3,935
Cost of total deposits 0.39 % 0.34 % 0.24 %
Total funding liabilities, including demand deposits $ 7,626,469 $ 9,018 $ 7,456,116 $ 7,618 $ 7,014,066 $ 5,278
Cost of total funding liabilities 0.48 % 0.41 % 0.31 %
 

(1) The total amount of adjustment to present interest income and yield
on a fully tax-equivalent basis is $202,000, $185,000, and $177,000 for
the three months ended March 31, 2019, December 31, 2018, and March 31,
2018, respectively, determined by applying the Company's marginal tax
rates in effect during each respective quarter.
(2) Interest rate
spread represents the difference between weighted average yield on
interest-earning assets and the weighted average cost of
interest-bearing liabilities.
(3) Net interest margin represents
annualized net interest income as a percentage of average
interest-earning assets.

           

Organic Loan and Deposit Growth

(Unaudited, dollars in thousands)  
Year-over-Year

March 31
2019

March 31
2018

MNB
Balances
Acquired

Organic
Growth/(Decline)

Organic
Growth/(Decline)
%

Loans
Commercial and industrial $ 1,150,632 $ 903,214 $ 44,929 $ 202,489 22.42 %
Commercial real estate 3,254,085 3,102,271 112,922 38,892 1.25 %
Commercial construction 373,517 400,934 16,497 (43,914 )

(10.95)

%

Small business 166,410   133,666   12,589   20,155   15.08 %
Total commercial 4,944,644 4,540,085 186,937 217,622 4.79 %
Residential real estate 935,238 761,331 95,705 78,202 10.27 %
Home equity 1,080,741   1,051,452   7,692   21,597   2.05 %
Total consumer real estate 2,015,979 1,812,783 103,397 99,799 5.51 %
Total other consumer 16,249   9,188   3,164   3,897   42.41 %
Total loans $ 6,976,872   $ 6,362,056   $ 293,498   $ 321,318   5.05 %
 
Deposits
Demand deposits $ 2,329,566 $ 2,167,361 $ 77,786 $ 84,419 3.90 %
Savings and interest checking accounts 2,914,367 2,606,257 58,441 249,669 9.58 %
Money market 1,496,118 1,323,138 73,645 99,335 7.51 %
Time certificates of deposit 723,551   654,755   68,332   464   0.07 %
Total deposits $ 7,463,602   $ 6,751,511   $ 278,204   $ 433,887   6.43 %
 

Certain amounts in prior year financial statements have been
reclassified to conform to the current year's presentation.

APPENDIX A

(Unaudited, dollars in thousands, except per share data)

The following table summarizes the calculation of the Company's tangible
common equity ratio and tangible book value per share at the dates
indicated:

         
March 31
2019
December 31
2018
March 31
2018
Tangible common equity
Stockholders' equity (GAAP) $ 1,104,538 $ 1,073,490 $ 956,059 (a)
Less: Goodwill and other intangibles 270,444   271,355   240,268  
Tangible common equity $ 834,094   $ 802,135   $ 715,791   (b)
Tangible assets
Assets (GAAP) $ 8,997,457 $ 8,851,592 $ 8,090,410 (c)
Less: Goodwill and other intangibles 270,444   271,355   240,268  
Tangible assets $ 8,727,013   $ 8,580,237   $ 7,850,142   (d)
     
Common Shares 28,137,504   28,080,408   27,512,328   (e)
 
Common equity to assets ratio (GAAP) 12.28 % 12.13 % 11.82 % (a/c)
Tangible common equity to tangible assets ratio (Non-GAAP) 9.56 % 9.35 % 9.12 % (b/d)
Book value per share (GAAP) $ 39.26 $ 38.23 $ 34.75 (a/e)
Tangible book value per share (Non-GAAP) $ 29.64 $ 28.57 $ 26.02 (b/e)
 

APPENDIX B

(Unaudited, dollars in thousands)

The following table summarizes the impact of noncore items on of the
Company's calculation of noninterest income and noninterest expense, as
well as the impact of noncore items on noninterest income as a
percentage of total revenue and the efficiency ratio for the periods
indicated:

     
Three Months Ended
March 31
2019
  December 31
2018
  March 31
2018
Net interest income (GAAP) $ 82,525 $ 80,292 $ 68,471 (a)
 
Noninterest income (GAAP) $ 21,533   $ 23,491   $ 19,863   (b)
Noninterest income on an operating basis (Non-GAAP) $ 21,533 $ 23,491 $ 19,863 (c)
 
Noninterest expense (GAAP) $ 56,311 $ 64,391 $ 53,451 (d)
Less:
Merger and acquisition expense 1,032   8,046    
Noninterest expense on an operating basis (Non-GAAP) $ 55,279 $ 56,345 $ 53,451 (e)
 
Total revenue (GAAP) $ 104,058 $ 103,783 $ 88,334 (a+b)
Total operating revenue (Non-GAAP) $ 104,058 $ 103,783 $ 88,334 (a+c)
 
Ratios
Noninterest income as a % of total revenue (GAAP based) 20.69 % 22.63 % 22.49 % (b/(a+b))
Noninterest income as a % of total revenue on an operating basis
(Non-GAAP)
20.69 % 22.63 % 22.49 % (c/(a+c))
Efficiency ratio (GAAP based) 54.12 % 62.04 % 60.51 % (d/(a+b))
Efficiency ratio on an operating basis (Non-GAAP) 53.12 % 54.29 % 60.51 % (e/(a+c))
 

View Comments and Join the Discussion!
 
Lightning Fast
Market News Service
$199 Free 14 Day Trial