EX-99.1 2 a50541273ex99_1.htm EXHIBIT 99.1

Exhibit 99.1

Independent Bank Corp. Reports Fourth Quarter Net Income of $10.0 Million

Strong Operating EPS Growth Led by Robust Customer Volumes

ROCKLAND, Mass.--(BUSINESS WIRE)--January 24, 2013--Independent Bank Corp., (NASDAQ: INDB), parent of Rockland Trust Company, today announced net income for the fourth quarter of 2012 was $10.0 million, or $0.45 on a diluted earnings per share basis. Net income for the full year was $42.6 million, or $1.95 on a diluted earnings per share basis. The Company completed its acquisition of Central Bancorp, Inc. (“Central”) on November 10, 2012 and, as a consequence, Central is now included in the Company’s financial results.

The fourth quarter and full year results of 2012 contained various items such as merger and acquisition expenses which the Company considers to be non-core in nature. When excluding these non-core items, net operating earnings for the quarter were $13.7 million, or $0.61 on a diluted earnings per share basis compared to $12.0 million, or $0.55 on a diluted earnings per share basis in the linked quarter. For the full year net operating earnings were $47.1 million, or $2.16 on a diluted earnings per share basis compared to $45.5 million, or $2.12 on a diluted earnings per share basis for the prior year.

Christopher Oddleifson, President and Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company, stated: “Rockland Trust’s strong earnings for both the fourth quarter and full year reflect an unwavering focus on meeting our customer’s needs and investing in our brand. All of our major lines of business performed well, with commercial loan and core deposit generation especially strong. We welcome Central Bank customers and employees to Rockland Trust and expect to continue to build on our positive momentum as we integrate Central’s operations.”

CENTRAL BANCORP, INC. ACQUISITION

The Central acquisition added 9 full service branches and one limited service branch, $450.7 million in loans and $357.4 million in deposits at fair value. The total deal consideration was $52.0 million and was split between stock and cash, with sixty percent (60%) of the shares of Central common stock outstanding, in the aggregate, being converted into shares of Independent common stock at a ratio of 1.0533 and the remaining forty percent (40%) of the shares of Central common stock outstanding being converted into the right to receive $32.00 in cash. The Company issued 1,068,514 shares of common stock and paid an aggregate of $21.6 million in cash in connection with the transaction.


   

Net Assets Acquired
(at Fair Value)

(Dollars in Thousands)
Assets:
Cash $ 12,683
Investments

28,268

Loans 450,671
Premises and Equipment 6,277
Goodwill 22,544
Core Deposit Intangible 2,150
Other Assets  

37,309

Total Assets Acquired $ 559,902
Liabilities:
Deposits $ 357,434
Borrowings 144,920
Other Liabilities   5,511
Total Liabilities Assumed $ 507,865
Purchase Price $ 52,037
 

Subsequent to the acquisition the Company sold approximately $42.2 million of performing jumbo residential mortgages acquired in the transaction and paid down $25.0 million of acquired Federal Home Loan Bank Advances in order to mitigate interest rate risk and decrease the leverage of the acquired bank’s balance sheet. For further detail on the loans and deposits acquired, see the organic growth tables provided in the financial section of the release.

BALANCE SHEET

Total assets of $5.8 billion at December 31, 2012 have increased by $564.9 million from the prior quarter and by $786.7 million, or 15.8%, as compared to the year ago period.

Total loans rose to $4.5 billion at December 31, 2012, inclusive of the acquisition, which represents an increase of $462.9 million from the prior quarter, or 45.4% on an annualized basis. Loans have increased by $724.6 million, or 19.1% when compared to December 31, 2011.

Organic loan growth was $54.4 million or 5.3% on an annualized basis for the quarter and $316.2 million, or 8.3% for the full year. Growth was driven by the commercial segment. The commercial loan portfolio continued its strong upward trajectory with an increase in outstanding balances of 12.5%, on an annualized basis, from the prior quarter. The Company closed $896.9 million in commercial loans in 2012 and $296.5 million in the fourth quarter alone, spurred by tax-driven loan activity and a strong loan pipeline. Growth in the home equity loan portfolio tapered off in the fourth quarter as anticipated due to competitive pricing trends but still grew by 14.1% from year ago levels on an organic basis.


Inclusive of the acquisition, deposits increased to $4.5 billion at December 31, 2012, or by 41.4% on an annualized basis for the quarter. For the full year, deposits increased by $669.8 million, or 17.3%. Core deposits increased by $311.1 million, or 35.6%, on an annualized basis for the quarter, to $3.8 billion. Core deposit growth occurred in both consumer and business customer segments and they now represent 83.2% of total deposits. The Company’s cost of total deposits declined even further to 0.25% for the quarter, reflecting management’s continued emphasis on core deposits and profitable relationships.

Organic deposit growth was $71.4 million, or 6.9% on an annualized basis for the quarter and $312.4 million, or 8.1% on a full year basis. Organic growth for core deposits for the fourth quarter was $97.7 million, or 11.2% on an annualized basis and $333.5 million or 10.3% for the year. Of particular note, demand deposits grew organically by 18.2% from a year ago and now represent 27.5% of total deposits.

The securities portfolio of $507.6 million decreased by $2.4 million during the quarter. The securities portfolio represents 8.8% of total assets at December 31, 2012.

Stockholders’ equity at December 31, 2012 was $529.3 million which represents an increase of 7.4% for the quarter. The Tier 1 common ratio at December 31, 2012 declined to an estimated 8.75%, as compared to 9.24% in the prior quarter as a result of the acquisition offset by earnings retention. As anticipated the Company’s tangible common ratio declined to 6.56% from the prior quarter’s tangible common ratio of 7.04% as a result of acquisition related intangibles.

NET INTEREST INCOME

Net interest income was $45.5 million for the fourth quarter of 2012, a $2.6 million increase from the linked quarter as robust loan growth served to counter the industry-wide pressure on interest margins caused by the prolonged low rate environment. The net interest margin was 3.68% in the fourth quarter of 2012, declining by four basis points compared to the prior quarter, due to lower earning asset yields coupled with a limited ability to further reduce the Company’s overall cost of funds. The net interest margin was also impacted by the absorption of Central’s structurally lower margin.

NONINTEREST INCOME

The Company recorded noninterest income of $17.0 million during the fourth quarter of 2012 which represents a $908,000, or 5.6%, increase from the prior quarter. Significant changes in noninterest income included the following:

  • Mortgage banking income increased by $816,000, or 56.5%, reflective of strong mortgage originations and refinancing activity due to the low rate environment.
  • Income from loan level derivatives associated with the Company’s commercial customers decreased by $336,000 due to less activity during the fourth quarter.
  • Other noninterest income increased by $1.3 million, or 87.6% driven by $622,000 associated with Massachusetts historical tax credits, as well as increases in various other categories, including commercial loan late fees, income on called securities, and realized gains on equity securities.
  • The Company received proceeds on life insurance policies in the amount of $2.7 million during the third quarter, resulting in a gain of $1.3 million. The gain represented tax-exempt income to the Company. There were no additional proceeds received in the fourth quarter.

NONINTEREST EXPENSE

Inclusive of merger and integration costs the Company recorded noninterest expense of $45.1 million during the fourth quarter of 2012 which represents a $5.0 million, or 12.5% increase from the prior quarter. Significant changes in noninterest expense included the following:

  • Salaries and employee benefits increased by $1.4 million, or 6.7%, driven largely by an increase in incentive compensation and the inclusion of Central’s employee base in the fourth quarter of 2012.
  • Occupancy and equipment expense increased $337,000, or 8.0%, mainly due to the acquired Central facilities.
  • Merger and acquisition expenses associated with the Central acquisition were $5.5 million for the fourth quarter, an increase of $4.9 million from the prior quarter.
  • Other noninterest expenses increased by $421,000, or 4.1% mainly due to an increase in contract labor of $224,000 and consultant fees of $211,000.
  • During the third quarter of 2012 the Company recorded a $2.2 million goodwill impairment charge, which represented the total amount of goodwill relating to Compass Exchange Advisors, LLC (“Compass”) which was acquired in January 2007. There were no further impairment charges recognized during the fourth quarter.

The Company generated a return on average assets and a return on average common equity in the fourth quarter of 2012 of 0.73% and 7.68% respectively, as compared to 0.91% and 9.39% for the quarter ended September 30, 2012. On an operating basis the return on average assets and the return on average common equity in the fourth quarter was 1.00% and 10.54%, respectively, compared to 0.93% and 9.68%, respectively, for the quarter ended September 30, 2012. For the full year 2012 the return on average assets and the return on average common equity was 0.83% and 8.66% compared to 0.96% and 9.93% for the prior year. On an operating basis the return on average assets and the return on average common equity for 2012 was 0.92% and 9.57%, respectively, compared to 0.96% and 9.94%, respectively, for the prior year.

ASSET QUALITY

The provision for loan losses was $4.4 million for the fourth quarter compared to $3.6 million for the quarter ended September 30, 2012. 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 strong loan growth trends. For the quarter, net charge-offs remained consistent at $2.3 million, or 0.21%, on an annualized basis of average loans as compared to the prior quarter. Delinquency as a percentage of loans increased to 0.82% at December 31, 2012 compared to 0.79% at September 30, 2012. Nonperforming loans decreased by $2.3 million to $28.8 million, or 0.64% of total loans at December 31, 2012, from $31.1 million, or 0.77% of total loans at September 30, 2012. Nonperforming assets increased modestly to $42.4 million at the end of the fourth quarter compared to $41.5 million in the linked quarter.


Consistent with generally accepted accounting principles, acquired loans which are accounted for as purchased credit impaired loans have an accretable yield, which will be recognized in interest income over the life of the loans, based on expected cash flows. As such, these loans are not included in the Company’s nonperforming loan amount unless it is deemed that there is no future accretable yield.

The allowance for loan losses was $51.8 million, at December 31, 2012, an increase of $2.1 million from the prior quarter levels. The Company’s allowance for loan losses was 1.15% and 1.23% as a percentage of total loans at December 31, 2012 and September 30, 2012, respectively. Loans acquired in connection with the acquisition have been recorded at fair value, including a reduction for estimated credit losses, and without carryover of the respective portfolio’s historical allowance for loan losses. Excluding these acquired loans at December 31, 2012, the allowance for loan losses would have been 1.26% as a percentage of total loans.

Christopher Oddleifson and Denis K. Sheahan, Chief Financial Officer, of Independent Bank Corp. and Rockland Trust Company, will host a conference call to discuss fourth quarter earnings at 10:00 a.m. Eastern Time on Friday, January 25, 2013. Internet access to the call is available on the Company’s website at www.RocklandTrust.com or by telephonic access by dial-in at 1-877-317-6016 reference: INDB. A replay of the call will be available by calling 1-877-344-7529. Replay Pass code: 10023472. The webcast replay will be available until January 25, 2014.

Independent Bank Corp., which has Rockland Trust Company as a wholly-owned bank subsidiary, has approximately $5.8 billion in assets. Rockland Trust offers a wide range of commercial banking products and services, retail banking products and services, business and consumer loans, insurance products and services, and investment management services. To find out why Rockland Trust is the bank Where Each Relationship Matters®, 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. 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 does not believe are related to its core banking business, 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 gains or losses which management deems not to be core to the Company’s operations. 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

 
 
                     
CONSOLIDATED BALANCE SHEETS     December 31,
2012
    September 30,
2012
    December 31,
2011
    % Change
Dec. 2012 vs.
Sept. 2012
% Change
Dec. 2012 vs.
Dec. 2011
 
Assets
Cash and Due From Banks $ 98,144 $ 66,690 $ 58,301 47.16 % 68.34 %
Interest Earning Deposits with Banks 117,330 111,703 179,203 5.04 % -34.53 %
Securities
Trading Assets - - 8,240 n/a -100.00 %
Securities Available for Sale 329,286 323,156 305,332 1.90 % 7.85 %
Securities Held to Maturity   178,318     186,842     204,956   -4.56 % -13.00 %
Total Securities 507,604 509,998 518,528 -0.47 % -2.11 %
 
Loans Held for Sale 48,187 42,393 20,500 13.67 % 135.06 %
Loans
Commercial and Industrial 687,511 653,861 575,716 5.15 % 19.42 %
Commercial Real Estate 2,122,153 1,939,245 1,847,654 9.43 % 14.86 %
Commercial Construction 188,768 175,731 128,904 7.42 % 46.44 %
Small Business   78,594     78,794     78,509   -0.25 % 0.11 %
Total Commercial 3,077,026 2,847,631 2,630,783 8.06 % 16.96 %
Residential Real Estate 604,668 375,660 416,570 60.96 % 45.15 %
Residential Construction 8,213 9,288 9,631 -11.57 % -14.72 %
Home Equity - 1st Position 487,246 485,605 381,784 0.34 % 27.62 %
Home Equity - 2nd Position   314,903     308,770     314,279   1.99 % 0.20 %
Total Consumer Real Estate 1,415,030 1,179,323 1,122,264 19.99 % 26.09 %
Total Other Consumer   26,955     29,181     41,343   -7.63 % -34.80 %
Total Loans   4,519,011     4,056,135     3,794,390   11.41 % 19.10 %
Less - Allowance for Loan Losses   (51,834 )   (49,746 )   (48,260 ) 4.20 % 7.41 %
Net Loans 4,467,177 4,006,389 3,746,130 11.50 % 19.25 %
Federal Home Loan Bank Stock 41,767 33,564 35,854 24.44 % 16.49 %
Bank Premises and Equipment 55,227 49,100 48,252 12.48 % 14.46 %
Goodwill and Core Deposit Intangible 162,144 137,293 140,722 18.10 % 15.22 %
Other Assets   259,405     234,964     222,750   10.40 % 16.46 %
Total Assets $ 5,756,985   $ 5,192,094   $ 4,970,240   10.88 % 15.83 %
 
Liabilities and Stockholders' Equity
Deposits
Demand Deposits $ 1,248,394 $ 1,110,266 $ 992,418 12.44 % 25.79 %
Savings and Interest Checking Accounts 1,691,187 1,536,439 1,473,812 10.07 % 14.75 %
Money Market 853,971 840,723 780,437 1.58 % 9.42 %
Time Certificates of Deposit   753,125     630,419     630,162   19.46 % 19.51 %
Total Deposits 4,546,677 4,117,847 3,876,829 10.41 % 17.28 %
Borrowings
Federal Home Loan Bank and Other Borrowings 283,569 189,464 229,701 49.67 % 23.45 %
Wholesale Repurchase Agreements 50,000 50,000 50,000 0.00 % 0.00 %
Customer Repurchase Agreements 153,359 158,578 166,128 -3.29 % -7.69 %
Junior Subordinated Debentures 74,127 61,857 61,857 19.84 % 19.84 %
Subordinated Debentures   30,000     30,000     30,000   0.00 % 0.00 %
Total Borrowings 591,055 489,899 537,686 20.65 % 9.93 %
Total Deposits and Borrowings 5,137,732 4,607,746 4,414,515 11.50 % 16.38 %
Other Liabilities 89,933 91,383 86,668 -1.59 % 3.77 %
Stockholders' Equity
Common Stock 225 214 213 5.14 % 5.63 %
Additional Paid in Capital 269,950 237,859 233,878 13.49 % 15.42 %
Retained Earnings 263,671 258,481 239,452 2.01 % 10.11 %
Accumulated Other Comprehensive Loss, Net of Tax   (4,526 )   (3,589 )   (4,486 ) 26.11 % 0.89 %
Total Stockholders' Equity   529,320     492,965     469,057   7.37 % 12.85 %
Total Liabilities and Stockholders' Equity $ 5,756,985   $ 5,192,094   $ 4,970,240   10.88 % 15.83 %

               
 
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended
December 31,
2012
  September 30,
2012
  December 31,
2011
% Change
Dec. 2012 vs.
Sept. 2012
% Change
Dec. 2012 vs.
Dec. 2011
 
INTEREST INCOME
Interest on Fed Funds Sold and Short Term Investments $ 47 $ 34 $ 81 38.24 % -41.98 %
Interest and Dividends on Securities 3,753 4,015 4,592 -6.53 % -18.27 %
Interest on Loans 47,166 44,251 43,533 6.59 % 8.35 %
Interest on Loans Held for Sale   448     255     176   75.69 % 154.55 %
Total Interest Income 51,414 48,555 48,382 5.89 % 6.27 %
INTEREST EXPENSE
Interest on Deposits 2,658 2,619 2,907 1.49 % -8.57 %
Interest on Borrowed Funds   3,277     3,098     3,621   5.78 % -9.50 %
Total Interest Expense   5,935     5,717     6,528   3.81 % -9.08 %
Net Interest Income 45,479 42,838 41,854 6.17 % 8.66 %
Less - Provision for Loan Losses   4,350     3,606     3,800   20.63 % 14.47 %
Net Interest Income after Provision for Loan Losses 41,129 39,232 38,054 4.84 % 8.08 %
NONINTEREST INCOME
Service Charges on Deposit Accounts 4,159 3,959 4,254 5.05 % -2.23 %
Interchange and ATM Fees 2,594 2,422 2,052 7.10 % 26.41 %
Investment Management 3,666 3,723 3,222 -1.53 % 13.78 %
Mortgage Banking Income 2,261 1,445 1,560 56.47 % 44.94 %
Net Gain on Sale of Securities 5 - - 100.00 % 100.00 %
Increase in Cash Surrender Value of Life Insurance Policies 903 757 847 19.29 % 6.61 %

 

Proceeds from Life Insurance Policies - 1,307 - -100.00 %

n/a

 

Loan Level Derivative Income 711 1,047 852 -32.09 % -16.55 %
Gross Change on Write-Down of Certain Investments to Fair Value 107 403 (48 ) -73.45 % -322.92 %
Less: Portion of Other-Than-Temporary Impairment Losses Recognized in OCI   (107 )   (403 )   9   -73.45 % -1288.89 %
Net Loss on Write-Down of Certain Investments to Fair Value - - (39 )

n/a

 

-100.00 %
Other Noninterest Income   2,717     1,448     1,567   87.64 % 73.39 %

 

Total Noninterest Income 17,016 16,108 14,315 5.64 % 18.87 %
NONINTEREST EXPENSE
Salaries and Employee Benefits 22,099 20,704 20,693 6.74 % 6.79 %
Occupancy and Equipment Expenses 4,555 4,218 3,970 7.99 % 14.74 %
Data Processing and Facilities Management 1,227 1,144 1,063 7.26 % 15.43 %
FDIC Assessment 878 775 736 13.29 % 19.29 %
Prepayment Fee on Borrowings 7 - 757 0.00 % -99.08 %
Merger and Acquisition Expenses 5,474 595 - 820.00 % 100.00 %
Goodwill Impairment - 2,227 - -100.00 %

n/a

 

Other Noninterest Expense   10,810     10,389     9,733   4.05 % 11.07 %
Total Noninterest Expense 45,050 40,052 36,952 12.48 % 21.91 %
INCOME BEFORE INCOME TAXES   13,095     15,288     15,417   -14.34 % -15.06 %
PROVISION FOR INCOME TAXES   3,127     3,687     4,248   -15.19 % -26.39 %
NET INCOME $ 9,968   $ 11,601   $ 11,169   -14.08 % -10.75 %
 
BASIC EARNINGS PER SHARE $ 0.45 $ 0.54 $ 0.52 -16.67 % -13.46 %
DILUTED EARNINGS PER SHARE $ 0.45 $ 0.53 $ 0.52 -15.09 % -13.46 %
BASIC AVERAGE SHARES 22,286,841 21,654,188 21,484,695
DILUTED AVERAGE SHARES 22,318,343 21,706,304 21,504,053
 

PERFORMANCE RATIOS

Net Interest Margin (FTE) 3.68 % 3.72 % 3.78 %
Return on Average Assets 0.73 % 0.91 % 0.91 %
Return on Average Common Equity 7.68 % 9.39 % 9.45 %
 

RECONCILIATION TABLE - NON-GAAP FINANCIAL INFORMATION

NET INCOME $ 9,968 $ 11,601 $ 11,169 -14.08 % -10.75 %
Noninterest Income Components
Less - Gain on Sale of Securities, net of tax (3 ) - -
Less - Proceeds from Life Insurance Policies, tax exempt - (1,307 ) -
Noninterest Expense Components
Add - Prepayment Fees on Borrowings, net of tax 4 - 448
Add - Merger & Acquisition Expenses, net of tax 3,710 352 -
Add - Goodwill Impairment, net of tax   -     1,317     -      
NET OPERATING EARNINGS $ 13,679   $ 11,963   $ 11,617   14.34 % 17.75 %
 
Diluted Earnings Per Share, on an Operating Basis $ 0.61   $ 0.55   $ 0.54   10.91 % 12.96 %

           
 
CONSOLIDATED STATEMENTS OF INCOME
Twelve Months Ended

 

December 31,
2012
December 31,
2011

% Change

Dec. 2012 vs.

Dec. 2011

 
INTEREST INCOME
Interest on Fed Funds Sold and Short Term Investments $ 132 $ 162 -18.52 %
Interest and Dividends on Securities 16,763 20,657 -18.85 %
Interest on Loans 178,309 174,450 2.21 %
Interest on Loans Held for Sale   988     482   104.98 %
Total Interest Income 196,192 195,751 0.23 %
INTEREST EXPENSE
Interest on Deposits 10,703 13,355 -19.86 %
Interest on Borrowed Funds   12,690     15,317   -17.15 %
Total Interest Expense   23,393     28,672   -18.41 %
Net Interest Income 172,799 167,079 3.42 %
Less - Provision for Loan Losses   18,056     11,482   57.25 %
Net Interest Income after Provision for Loan Losses 154,743 155,597 -0.55 %
NONINTEREST INCOME
Service Charges on Deposit Accounts 15,930 16,628 -4.20 %
Interchange and ATM Fees 9,783 7,733 26.51 %
Investment Management 14,779 13,532 9.22 %
Mortgage Banking Income 6,500 4,197 54.87 %
Net Gain on Sale of Securities 5 723 -99.31 %
Increase in Cash Surrender Value of Life Insurance Policies 3,114 3,170 -1.77 %
Proceeds from Life Insurance Policies 1,307 - 100.00 %
Loan Level Derivative Income 3,457 2,093 65.17 %
Gross Change on Write-Down of Certain Investments to Fair Value 678 53 1179.25 %
Less: Portion of Other-Than-Temporary Impairment Losses Recognize in OCI   (754 )   (296 ) 154.73 %
Net Loss on Write-Down of Certain Investments to Fair Value (76 ) (243 ) -68.72 %
Other Noninterest Income   7,217     4,867   48.28 %
Total Noninterest Income 62,016 52,700 17.68 %
NONINTEREST EXPENSE
Salaries and Employee Benefits 84,014 81,275 3.37 %
Occupancy and Equipment Expenses 17,307 16,916 2.31 %
Data Processing and Facilities Management 4,644 4,891 -5.05 %
FDIC Assessment 3,232 3,496 -7.55 %
Prepayment Fee on Borrowings 7 757 -99.08 %
Merger and Acquisition Expenses 6,741 - 100.00 %
Goodwill Impairment 2,227 - 100.00 %
Other Noninterest Expense   41,287     38,378   7.58 %
Total Noninterest Expense 159,459 145,713 9.43 %
INCOME BEFORE INCOME TAXES   57,300     62,584   -8.44 %
PROVISION FOR INCOME TAXES   14,673     17,148   -14.43 %
NET INCOME $ 42,627   $ 45,436   -6.18 %
 
BASIC EARNINGS PER SHARE $ 1.96 $ 2.12 -7.55 %
DILUTED EARNINGS PER SHARE $ 1.95 $ 2.12 -8.02 %
BASIC AVERAGE SHARES 21,782,499 21,422,757
DILUTED AVERAGE SHARES 21,812,316 21,451,587
 

PERFORMANCE RATIOS

Net Interest Margin (FTE) 3.75 % 3.90 %
Return on Average Assets 0.83 % 0.96 %
Return on Average Common Equity 8.66 % 9.93 %
 

RECONCILIATION TABLE - NON-GAAP FINANCIAL INFORMATION

NET INCOME $ 42,627 $ 45,436 -6.18 %
Noninterest Income Components
Less - Net Gain on Sale of Securities, net of tax (3 ) (428 )
Less - Proceeds from Life Insurance Policies, tax exempt (1,307 ) -
Noninterest Expense Components
Add - Prepayment Fees on Borrowings, net of tax 4 448
Add - Merger & Acquisition Expenses, net of tax 4,459 -
Add - Goodwill Impairment, net of tax   1,317     -    
NET OPERATING EARNINGS $ 47,097   $ 45,456   3.61 %
 
Diluted Earnings Per Share, on an Operating Basis $ 2.16   $ 2.12   1.89 %

                                   
 
RECONCILIATION TABLE - NON-GAAP FINANCIAL INFORMATION
Three Months Ended Twelve Months Ended    
December 31,
2012
September 30,
2012
December 31,
2011
% Change
Dec. 2012 vs.
Sept. 2012

% Change
Dec. 2012 vs.
Dec. 2011

December 31,
2012
December 31,
2011
% Change
Dec. 2012 vs.
Dec. 2011
 
Noninterest Income GAAP $ 17,016 $ 16,108 $ 14,315 5.64 % 18.87 % $ 62,016 $ 52,700 17.68 %
Less - Net Gain on Sale of Securities (5 ) - - -100.00 % -100.00 % (5 ) (723 ) -99.31 %
Add - Other-Than-Temporary-Impairment on Securities - - 39 n/a -100.00 % 76 243 -68.72 %
Less - Proceeds from Life Insurance Policies, tax exempt   -     (1,307 )   -     100.00 %  

n/a

 

  (1,307 )   -   -100.00 %
Noninterest Income as Adjusted $ 17,011   $ 14,801   $ 14,354     14.93 %   18.51 % $ 60,780   $ 52,220   16.39 %
 
Noninterest Expense GAAP $ 45,050 $ 40,052 $ 36,952 12.48 % 21.91 % $ 159,459 $ 145,713 9.43 %
Less - Prepayment Fee on Borrowings (7 ) - (757 ) -100.00 % -99.08 % (7 ) (757 ) -99.08 %
Less - Merger and Acquisition Expenses (5,474 ) (595 ) - 820.00 % -100.00 % (6,741 ) - -100.00 %
Less - Goodwill Impairment   -     (2,227 )   -     100.00 %   n/a     (2,227 )   -   -100.00 %
Noninterest Expense as Adjusted $ 39,569   $ 37,230   $ 36,195     6.28 %   9.32 % $ 150,484   $ 144,956   3.81 %
 
 
 
 

ASSET QUALITY

Nonperforming Assets
At
Net Charge-Offs
For the Three Months Ending
Net Charge-Offs
For the Twelve Months Ending
December 31,
2012
September 30,
2012
December 31,
2011
December 31,
2012
September 30,
2012
December 31,
2011
December 31,
2012
December 31,
2011
 
Nonperforming Loans
Commercial & Industrial Loans $ 2,666 $ 2,981 $ 1,883 ($326 ) $ 1,145 $ 361 $ 5,228 $ 2,468
Commercial Real Estate Loans 6,574 9,249 13,109 990 433 1,246 4,160 2,803
Small Business Loans 570 604 542 197 77 132 482 1,030
Residential Real Estate Loans 11,472 10,383 9,867 581 148 69 943 559
Home Equity 7,311 7,643 3,130 646 329 692 3,085 1,574
Installment Loans - Other   173     221     422     174     131     318     584       1,043  
Total Nonperforming Loans / Total Net Charge-offs $ 28,766   $ 31,081   $ 28,953   $ 2,262   $ 2,263   $ 2,818   $ 14,482     $ 9,477  
Nonaccrual Securities 1,511 1,521 1,272
Other Assets in Possession 176 176 266
Other Real Estate Owned   11,974     8,751     6,658  
Nonperforming Assets $ 42,427   $ 41,529   $ 37,149  
 
Nonperforming Loans/Gross Loans 0.64 % 0.77 % 0.76 %
Allowance for Loan Losses/Nonperforming Loans 180.19 % 160.05 % 166.68 %
Gross Loans/Total Deposits 99.39 % 98.50 % 97.87 %
Allowance for Loan Losses/Total Loans 1.15 % 1.23 % 1.27 %
 
Net charge-offs to average loans (quarter annualized) 0.21 % 0.22 % 0.30 %
Net charge-offs to average loans (year-to-date) 0.36 % 0.26 %
Troubled Debt Restructurings
At
December 31,
2012
September 30,
2012
December 31,
2011
Troubled Debt Restructurings on Accrual Status $ 46,764 $ 46,823 $ 37,151
Troubled Debt Restructurings on Nonaccrual Status   6,554         5,962         9,230  
Total Troubled Debt Restructurings $ 53,318       $ 52,785       $ 46,381  
 

Nonperforming Assets Reconciliation

Three Months Ending
December 31,
2012
Three Months Ending
September 30,
2012
Three Months Ending
December 31,
2011
Nonperforming Assets Beginning Balance $ 41,529 $ 43,857 $ 36,647
New to Nonperforming 6,927 7,981 9,279
Loans Charged-Off (3,053 ) (2,826 ) (3,155 )
Loans Paid-Off (2,438 ) (3,837 ) (821 )
Loans Transferred to Other Real Estate Owned/Other Assets (1,632 ) (347 ) (650 )
Loans Restored to Accrual Status (2,194 ) (1,081 ) (2,296 )
New to Other Real Estate Owned 1,632 347 650
Acquired Other Real Estate Owned 2,633

-

-

Sale of Other Real Estate Owned (1,281 ) (2,708 ) (2,508 )
Other   304     143     3  

Nonperforming Assets Ending Balance

$ 42,427   $ 41,529   $ 37,149  
 
 
 

Financial Ratios

December 31,
2012
September 30,
2012
December 31,
2011
Book Value per Common Share $ 23.24 $ 22.75 $ 21.82
Tangible Common Book Value per Share (proforma to include
the tax deductibility of goodwill) - Non-GAAP $ 17.00 $ 17.28 $ 16.21
Tangible Common Capital/Tangible Assets 6.56 % 7.04 % 6.80 %
Tangible Common Capital/Tangible Asset (proforma to include
the tax deductibility of goodwill) - Non-GAAP 6.90 % 7.38 % 7.18 %
 

Capital Adequacy

Tier one leverage capital ratio (1) 8.65 % 8.73 % 8.61 %
Tier one common ratio (1) 8.75 % 9.24 % 9.16 %
(1) Estimated number for December 31, 2012

                           
 

INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION

       
(Unaudited - Dollars in Thousands) Three Months Ended
December 31, 2012 September 30, 2012

 

December 31, 2011

Average
Balance
    Interest
Earned/
Paid
    Yield/
Rate
    Average
Balance
    Interest
Earned/
Paid
    Yield/
Rate
    Average
Balance
    Interest
Earned/
Paid
    Yield/
Rate
 
 
Interest-Earning Assets
Interest Earning Deposits with Banks, Federal Funds Sold, and Short Term Investments $ 79,894 $ 47 0.23 % $ 53,650 $ 34 0.25 % $ 129,956 $ 81 0.25 %
Securities
Trading Assets - - - - - - 8,152 80 3.89 %
Taxable Investment Securities 509,289 3,742 2.92 % 513,712 3,995 3.09 % 511,302 4,467 3.47 %
Nontaxable Investment Securities (1)   915   19 8.26 %   1,649   34 8.20 %   4,066   76 7.42 %
Total Securities: 510,204 3,761 2.93 % 515,361 4,029 3.11 % 523,520 4,623 3.50 %
Loans Held for Sale 48,091 448 3.71 % 34,106 255 2.97 % 23,237 176 3.00 %
Loans
Commercial and Industrial 666,606 6,666 3.98 % 636,533 6,447 4.03 % 562,638 5,917 4.17 %
Commercial Real Estate (1) 2,027,330 24,702 4.85 % 1,920,905 23,173 4.80 % 1,830,429 23,294 5.05 %
Commercial Construction 182,293 1,882 4.11 % 162,150 1,695 4.16 % 122,518 1,417 4.59 %
Small Business   78,719   1,120 5.66 %   78,629   1,121 5.67 %   77,477   1,136 5.82 %
Total Commercial 2,954,948 34,370 4.63 % 2,798,217 32,436 4.61 % 2,593,062 31,764 4.86 %
Residential Real Estate 514,605 5,055 3.91 % 381,247 4,060 4.24 % 426,442 4,721 4.39 %
Residential Construction 8,419 87 4.11 % 11,567 104 3.58 % 7,703 88 4.53 %
Home Equity   797,792   7,289 3.63 %   787,052   7,236 3.66 %   673,509   6,370 3.75 %
Total Consumer Real Estate 1,320,816 12,431 3.74 % 1,179,866 11,400 3.84 % 1,107,654 11,179 4.00 %
Total Other Consumer   27,490   615 8.90 %   30,155   669 8.83 %   44,242   865 7.76 %
Total Loans   4,303,254       47,416     4.38 %   4,008,238       44,505     4.42 %   3,744,958       43,808     4.64 %
Total Interest-Earning Assets $ 4,941,443     $ 51,672     4.16 % $ 4,611,355     $ 48,823     4.21 % $ 4,421,671     $ 48,688     4.37 %
Cash and Due from Banks 70,404 75,876 58,257
Federal Home Loan Bank Stock 38,201 33,564 35,854
Other Assets   405,179   374,208   357,871
Total Assets $ 5,455,227 $ 5,095,003 $ 4,873,653
Interest-Bearing Liabilities
Deposits
Savings and Interest Checking Accounts $ 1,548,798 $ 729 0.19 % $ 1,482,213 $ 707 0.19 % $ 1,401,182 $ 768 0.22 %
Money Market 842,574 586 0.28 % 801,921 615 0.31 % 742,344 687 0.37 %
Time Deposits   697,599   1,343 0.77 %   635,729   1,297 0.81 %   624,458     1,453 0.92 %
Total Interest-Bearing Deposits $ 3,088,971 $ 2,658 0.34 % $ 2,919,863 $ 2,619 0.36 % $ 2,767,984 $ 2,908 0.42 %
Borrowings
Federal Home Loan Bank and Other Borrowings $ 253,758 $ 1,398 2.19 % $ 198,212 $ 1,255 2.52 % $ 256,907 $ 1,731 2.67 %
Wholesale Repurchase Agreements 50,000 292 2.32 % 50,000 292 2.32 % 50,000 292 2.32 %
Customer Repurchase Agreements 176,624 57 0.13 % 161,097 76 0.19 % 163,738 125 0.30 %
Junior Subordinated Debentures 68,587 983 5.70 % 61,857 928 5.97 % 61,857 925 5.93 %
Subordinated Debentures   30,000   547 7.25 %   30,000   547 7.25 %   30,000     547 7.23 %
Total Borrowings $ 578,969     $ 3,277     2.25 % $ 501,166     $ 3,098     2.46 % $ 562,502     $ 3,620     2.55 %
Total Interest-Bearing Liabilities $ 3,667,940     $ 5,935     0.64 % $ 3,421,029     $ 5,717     0.66 % $ 3,330,486     $ 6,528     0.78 %
Demand Deposits 1,178,975 1,093,387 994,500
Other Liabilities   92,158   89,157   79,842
Total Liabilities $ 4,939,073 $ 4,603,573 $ 4,404,828
Stockholders' Equity   516,154   491,430   468,825
Total Liabilities and Stockholders' Equity $ 5,455,227 $ 5,095,003 $ 4,873,653
 
Net Interest Income $ 45,737 $ 43,106 $ 42,160
 
Interest Rate Spread (2) 3.53 % 3.55 % 3.59 %
 
Net Interest Margin (3) 3.68 % 3.72 % 3.78 %
 
Supplemental Information:
Total Deposits, including Demand Deposits $ 4,267,946 $ 2,658 $ 4,013,250 $ 2,619 $ 3,762,484 $ 2,908
Cost of Total Deposits 0.25 % 0.26 % 0.31 %
Total Funding Liabilities, including Demand Deposits $ 4,846,915 $ 5,935 $ 4,514,416 $ 5,717 $ 4,324,986 $ 6,528
Cost of Total Funding Liabilities 0.49 % 0.50 % 0.60 %
 
 
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $258,000, $268,000, and $306,000 for the three months ended December 31, 2012, September 30, 2012, and December 31, 2011, 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, 2012 December 31, 2011
Average
Balance
    Interest
Earned/
Paid
    Yield/
Rate
Average
Balance
    Interest
Earned/
Paid
    Yield/
Rate
 
 
Interest-Earning Assets

Interest Earning Deposits with Banks, Federal Funds Sold, and Short Term Investments

$ 54,483 $ 132 0.24 % $ 65,053 $ 162 0.25 %
Securities
Trading Assets 1,365 37 2.71 % 8,329 285 3.42 %
Taxable Investment Securities 524,466 16,643 3.17 % 540,564 20,041 3.71 %
Nontaxable Investment Securities (1)   1,746   140 8.02 %   7,471   560 7.50 %
Total Securities: 527,577 16,820 3.19 % 556,364 20,886 3.75 %
Loans Held for Sale 29,928 988 3.30 % 14,646 482 3.29 %
Loans
Commercial and Industrial 625,789 25,309 4.04 % 538,805 22,867 4.24 %
Commercial Real Estate (1) 1,923,602 93,582 4.86 % 1,792,247 93,604 5.22 %
Commercial Construction 159,271 6,698 4.21 % 126,083 5,805 4.60 %
Small Business   79,092   4,509 5.70 %   78,851   4,606   5.84 %
Total Commercial 2,787,754 130,098 4.67 % 2,535,986 126,882 5.00 %
Residential Real Estate 425,084 17,848 4.20 % 450,501 20,203 4.48 %
Residential Construction 11,653 482 4.14 % 5,685 260 4.57 %
Home Equity   765,228   28,124 3.68 %   635,695   24,015   3.78 %
Total Consumer Real Estate 1,201,965 46,454 3.86 % 1,091,881 44,478 4.07 %
Total Other Consumer   32,630   2,785 8.54 %   53,551   4,171 7.79 %
Total Loans   4,022,349       179,337     4.46 %   3,681,418       175,531     4.77 %
Total Interest-Earning Assets $ 4,634,337     $ 197,277     4.26 % $ 4,317,481     $ 197,061     4.56 %
Cash and Due from Banks 67,085 55,897
Federal Home Loan Bank Stock 35,155 35,854
Other Assets   377,450   336,617
Total Assets $ 5,114,027 $ 4,745,849
Interest-Bearing Liabilities
Deposits
Savings and Interest Checking Accounts $ 1,484,758 $ 2,820 0.19 % $ 1,355,478 $ 3,216 0.24 %
Money Market 803,656 2,461 0.31 % 728,380 3,050 0.42 %
Time Deposits   646,873     5,422   0.84 %   656,486     7,089   1.08 %
Total Interest-Bearing Deposits $ 2,935,287 $ 10,703 0.36 % $ 2,740,344 $ 13,355 0.49 %
Borrowings
Federal Home Loan Bank and Other Borrowings $ 224,553 $ 5,277 2.35 % $ 284,400 $ 7,199 2.53 %
Wholesale Repurchase Agreements 50,000 1,162 2.32 % 50,000 1,747 3.49 %
Customer Repurchase Agreements 160,589 325 0.20 % 143,904 536 0.37 %
Junior Subordinated Debentures 63,549 3,749 5.90 % 61,857 3,663 5.92 %
Subordinated Debentures   30,000       2,177     7.26 %   30,000       2,171     7.24 %
Total Borrowings $ 528,691     $ 12,690     2.40 % $ 570,161     $ 15,316     2.69 %
Total Interest-Bearing Liabilities $ 3,463,978     $ 23,393     0.68 % $ 3,310,505     $ 28,672     0.87 %
Demand Deposits 1,070,577 910,701
Other Liabilities   87,104   67,221
Total Liabilities $ 4,621,659 $ 4,288,427
Stockholders' Equity   492,368   457,422
Total Liabilities and Stockholders' Equity $ 5,114,027 $ 4,745,849
 
Net Interest Income $ 173,884 $ 168,389
 
Interest Rate Spread (2) 3.58 % 3.69 %
 
Net Interest Margin (3) 3.75 % 3.90 %
 
Supplemental Information:
Total Deposits, including Demand Deposits $ 4,005,864 $ 10,703 $ 3,651,045 $ 13,355
Cost of Total Deposits 0.27 % 0.37 %
Total Funding Liabilities, including Demand Deposits $ 4,534,555 $ 23,393 $ 4,221,206 $ 28,672
Cost of Total Funding Liabilities 0.52 % 0.68 %
 
 
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.1 million and $1.3 million for the twelve months ended December 31, 2012 and 2011, 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.

 


                 
 

Organic Loan and Deposit Growth

Quarter-to-Date
December 31,
2012
September 30,
2012
Balance
Acquired
Organic
Growth/(Loss)
Organic
Growth/(Loss)
%
Loans
Commercial and Industrial $ 687,511 $ 653,861 $ 536 $ 33,114 5.1 %
Commercial Real Estate 2,122,153 1,939,245 139,148 43,760 2.3 %
Commercial Construction 188,768 175,731 - 13,037 7.4 %
Small Business   78,594   78,794   -   (200 ) -0.3 %
Total Commercial 3,077,026 2,847,631 139,684 89,711 3.2 %
Residential Real Estate 604,668 375,660 259,637 (1 ) (30,629 ) -8.2 %
Residential Construction 8,213 9,288 - (1,075 ) -11.6 %
Home Equity   802,149   794,375   8,281   (507 ) -0.1 %
Total Consumer Real Estate 1,415,030 1,179,323 267,918 (32,211 ) -2.7 %
Total Other Consumer   26,955   29,181   826   (3,052 ) -10.5 %
Total Loans $ 4,519,011 $ 4,056,135 $ 408,428 $ 54,448   1.3 %
 
Deposits
Demand Deposits $ 1,248,394 $ 1,110,266 $ 75,438 $ 62,690 5.6 %
Savings and Interest Checking Accounts 1,691,187 1,536,439 65,110 89,638 5.8 %
Money Market 853,971 840,723 72,849 (59,601 ) -7.1 %
Time Certificates of Deposit   753,125   630,419   144,037   (21,331 ) -3.4 %
Total Deposits $ 4,546,677 $ 4,117,847 $ 357,434 $ 71,396   1.7 %
 
 
Year-to-Date
December 31,
2012
December 30,
2011
Balance
Acquired
Organic
Growth/(Loss)
Organic
Growth/(Loss)
%
Loans
Commercial and Industrial $ 687,511 $ 575,716 $ 536 $ 111,259 19.3 %
Commercial Real Estate 2,122,153 1,847,654 139,148 135,351 7.3 %
Commercial Construction 188,768 128,904 - 59,864 46.4 %
Small Business   78,594   78,509   -   85   0.1 %
Total Commercial 3,077,026 2,630,783 139,684 306,559 11.7 %
Residential Real Estate 604,668 416,570 259,637 (1 ) (71,539 ) -17.2 %
Residential Construction 8,213 9,631 - (1,418 ) -14.7 %
Home Equity   802,149   696,063   8,281   97,805   14.1 %
Total Consumer Real Estate 1,415,030 1,122,264 267,918 24,848 2.2 %
Total Other Consumer   26,955   41,343   826   (15,214 ) -36.8 %
Total Loans $ 4,519,011 $ 3,794,390 $ 408,428 $ 316,193   8.3 %
 
Deposits
Demand Deposits $ 1,248,394 $ 992,418 $ 75,438 $ 180,538 18.2 %
Savings and Interest Checking Accounts 1,691,187 1,473,812 65,110 152,265 10.3 %
Money Market 853,971 780,437 72,849 685 0.1 %
Time Certificates of Deposit   753,125   630,162   144,037   (21,074 ) -3.3 %
Total Deposits $ 4,546,677 $ 3,876,829 $ 357,434 $ 312,414   8.1 %
 
(1) Excludes $42.2 million of acquired loans which were sold subsequent to the closing of the acquisition.

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