1-9047 | 04-2870273 | |
(Commission File Number) | (I.R.S. Employer identification No.) |
INDEPENDENT BANK CORP. | ||
Office Address: | 2036 Washington Street, Hanover, Massachusetts | 02339 |
Mailing Address: | 288 Union Street, Rockland, Massachusetts | 02370 |
(Address of Principal Executive Officers) | (Zip Code) |
ITEM 7.01 | REGULATION FD DISCLOSURE |
ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
INDEPENDENT BANK CORP. | |||
Date: | July 19, 2018 | By: | /s/Robert D. Cozzone |
ROBERT D. COZZONE | |||
CHIEF FINANCIAL OFFICER |
Exhibit Index | |
Exhibit # | Exhibit Description |
99.1 |
• | Interchange and ATM fees increased by $596,000, or 14.3%, driven mainly by seasonal debit card activity. |
• | Investment management income rose by $680,000, or 11.1%, reflecting a higher level of assets under administration, along with seasonal tax preparation fees during the second quarter. Total assets under administration increased to $3.6 billion as of June 30, 2018. |
• | Mortgage banking income grew by $168,000, or 19.3%, due primarily to an overall increase in new loan originations. |
• | Loan level derivative income increased by $261,000, or 58.4%, as a result of increased customer demand in the quarter. |
• | Other noninterest income increased by $146,000, or 5.1%, primarily due to a gain on sale of loans partially offset by reduced loan fees. |
• | Salaries and employee benefits expense decreased by $812,000, or 2.6%, due primarily to seasonal decreases in payroll taxes, medical insurance, and retirement plan expenses partially offset by increases in incentive compensation and commissions. |
• | Occupancy and equipment expense was lower by $911,000, or 12.3%, mainly due to decreases in snow removal and utility costs. |
• | Merger and acquisition costs of $434,000 for the second quarter primarily reflect legal and professional fees associated with the pending acquisition of MNB which is anticipated to close in the fourth quarter of 2018. There were no such costs during the first quarter of 2018. |
• | Other noninterest expense increased by $655,000, or 5.1%, driven by increases in equity compensation for directors due to a change in the vesting requirements for the 2018 annual director equity grant, consultant fees and legal fees, offset by decreases in unrealized losses on equity securities and provision for unfunded commitments. |
• | 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; |
• | 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; |
• | our 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; |
• | failure to consummate or a delay in consummating the acquisition of MNB Bancorp, which is subject to certain standard conditions, including regulatory approvals and approval by MNB Bancorp shareholders; |
• | the inability to realize expected synergies from merger transactions in the amounts or in the timeframe anticipated; |
• | inability to retain customers and employees, including those acquired in previous 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. |
INDEPENDENT BANK CORP. FINANCIAL SUMMARY | |||||||||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||||||||
(Unaudited, dollars in thousands) | % Change | % Change | |||||||||||||||
June 30 2018 | March 31 2018 | June 30 2017 | Jun 2018 vs. | Jun 2018 vs. | |||||||||||||
Mar 2018 | Jun 2017 | ||||||||||||||||
Assets | |||||||||||||||||
Cash and due from banks | $ | 113,930 | $ | 102,623 | $ | 110,249 | 11.02 | % | 3.34 | % | |||||||
Interest-earning deposits with banks | 209,176 | 62,925 | 126,073 | 232.42 | % | 65.92 | % | ||||||||||
Securities | |||||||||||||||||
Trading | 1,598 | 1,601 | 1,293 | (0.19 | )% | 23.59 | % | ||||||||||
Equities | 20,133 | 20,075 | — | 0.29 | % | 100.00% | |||||||||||
Available for sale | 442,929 | 445,750 | 415,943 | (0.63 | )% | 6.49 | % | ||||||||||
Held to maturity | 538,261 | 528,861 | 498,392 | 1.78 | % | 8.00 | % | ||||||||||
Total securities | 1,002,921 | 996,287 | 915,628 | 0.67 | % | 9.53 | % | ||||||||||
Loans held for sale (at fair value) | 9,614 | 3,937 | 9,381 | 144.20 | % | 2.48 | % | ||||||||||
Loans | |||||||||||||||||
Commercial and industrial | 976,264 | 903,214 | 910,936 | 8.09 | % | 7.17 | % | ||||||||||
Commercial real estate | 3,131,337 | 3,102,271 | 3,083,020 | 0.94 | % | 1.57 | % | ||||||||||
Commercial construction | 364,225 | 400,934 | 340,757 | (9.16 | )% | 6.89 | % | ||||||||||
Small business | 147,137 | 133,666 | 131,663 | 10.08 | % | 11.75 | % | ||||||||||
Total commercial | 4,618,963 | 4,540,085 | 4,466,376 | 1.74 | % | 3.42 | % | ||||||||||
Residential real estate | 779,421 | 761,331 | 749,392 | 2.38 | % | 4.01 | % | ||||||||||
Home equity - first position | 646,626 | 617,164 | 612,428 | 4.77 | % | 5.58 | % | ||||||||||
Home equity - subordinate positions | 422,671 | 434,288 | 431,031 | (2.67 | )% | (1.94 | )% | ||||||||||
Total consumer real estate | 1,848,718 | 1,812,783 | 1,792,851 | 1.98 | % | 3.12 | % | ||||||||||
Other consumer | 11,590 | 9,188 | 10,469 | 26.14 | % | 10.71 | % | ||||||||||
Total loans | 6,479,271 | 6,362,056 | 6,269,696 | 1.84 | % | 3.34 | % | ||||||||||
Less: allowance for loan losses | (62,557 | ) | (60,862 | ) | (59,479 | ) | 2.78 | % | 5.17 | % | |||||||
Net loans | 6,416,714 | 6,301,194 | 6,210,217 | 1.83 | % | 3.33 | % | ||||||||||
Federal Home Loan Bank stock | 13,107 | 13,027 | 14,421 | 0.61 | % | (9.11 | )% | ||||||||||
Bank premises and equipment, net | 95,838 | 95,214 | 92,664 | 0.66 | % | 3.43 | % | ||||||||||
Goodwill | 231,806 | 231,806 | 231,806 | — | % | — | % | ||||||||||
Other intangible assets | 7,918 | 8,462 | 11,199 | (6.43 | )% | (29.30 | )% | ||||||||||
Cash surrender value of life insurance policies | 153,574 | 152,568 | 149,319 | 0.66 | % | 2.85 | % | ||||||||||
Other real estate owned and other foreclosed assets | 245 | 358 | 3,029 | (31.56 | )% | (91.91 | )% | ||||||||||
Other assets | 126,159 | 122,009 | 143,307 | 3.40 | % | (11.97 | )% | ||||||||||
Total assets | $ | 8,381,002 | $ | 8,090,410 | $ | 8,017,293 | 3.59 | % | 4.54 | % | |||||||
Liabilities and Stockholders' Equity | |||||||||||||||||
Deposits | |||||||||||||||||
Demand deposits | $ | 2,262,871 | $ | 2,167,361 | $ | 2,118,506 | 4.41 | % | 6.81 | % | |||||||
Savings and interest checking accounts | 2,739,228 | 2,606,257 | 2,676,389 | 5.10 | % | 2.35 | % | ||||||||||
Money market | 1,351,623 | 1,323,138 | 1,292,311 | 2.15 | % | 4.59 | % | ||||||||||
Time certificates of deposit | 659,768 | 654,755 | 608,174 | 0.77 | % | 8.48 | % | ||||||||||
Total deposits | 7,013,490 | 6,751,511 | 6,695,380 | 3.88 | % | 4.75 | % | ||||||||||
Borrowings | |||||||||||||||||
Federal Home Loan Bank borrowings | 50,775 | 53,257 | 53,279 | (4.66 | )% | (4.70 | )% | ||||||||||
Customer repurchase agreements | 142,235 | 137,914 | 159,371 | 3.13 | % | (10.75 | )% | ||||||||||
Junior subordinated debentures, net | 73,077 | 73,075 | 73,069 | — | % | 0.01 | % | ||||||||||
Subordinated debentures, net | 34,705 | 34,693 | 34,659 | 0.03 | % | 0.13 | % | ||||||||||
Total borrowings | 300,792 | 298,939 | 320,378 | 0.62 | % | (6.11 | )% | ||||||||||
Total deposits and borrowings | 7,314,282 | 7,050,450 | 7,015,758 | 3.74 | % | 4.26 | % | ||||||||||
Other liabilities | 89,655 | 83,901 | 86,951 | 6.86 | % | 3.11 | % |
Total liabilities | 7,403,937 | 7,134,351 | 7,102,709 | 3.78 | % | 4.24 | % | ||||||||||
Stockholders' equity | |||||||||||||||||
Common stock | 274 | 273 | 272 | 0.37 | % | 0.74 | % | ||||||||||
Additional paid in capital | 481,979 | 479,715 | 476,684 | 0.47 | % | 1.11 | % | ||||||||||
Retained earnings | 504,926 | 484,266 | 437,587 | 4.27 | % | 15.39 | % | ||||||||||
Accumulated other comprehensive income (loss), net of tax | (10,114 | ) | (8,195 | ) | 41 | 23.42 | % | nm | |||||||||
Total stockholders' equity | 977,065 | 956,059 | 914,584 | 2.20 | % | 6.83 | % | ||||||||||
Total liabilities and stockholders' equity | $ | 8,381,002 | $ | 8,090,410 | $ | 8,017,293 | 3.59 | % | 4.54 | % |
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||
(Unaudited, dollars in thousands, except per share data) | |||||||||||||||||
Three Months Ended | |||||||||||||||||
% Change | % Change | ||||||||||||||||
June 30 2018 | March 31 2018 | June 30 2017 | Jun 2018 vs. | Jun 2018 vs. | |||||||||||||
Mar 2018 | Jun 2017 | ||||||||||||||||
Interest income | |||||||||||||||||
Interest on federal funds sold and short-term investments | $ | 541 | $ | 311 | $ | 190 | 74.0 | % | 184.74 | % | |||||||
Interest and dividends on securities | 6,514 | 6,235 | 5,635 | 4.47 | % | 15.60 | % | ||||||||||
Interest and fees on loans | 72,082 | 67,184 | 62,287 | 7.29 | % | 15.73 | % | ||||||||||
Interest on loans held for sale | 30 | 19 | 21 | 57.89 | % | 42.86 | % | ||||||||||
Total interest income | 79,167 | 73,749 | 68,133 | 7.35 | % | 16.19 | % | ||||||||||
Interest expense | |||||||||||||||||
Interest on deposits | 4,587 | 3,935 | 2,912 | 16.57 | % | 57.52 | % | ||||||||||
Interest on borrowings | 1,412 | 1,343 | 1,466 | 5.14 | % | (3.68 | )% | ||||||||||
Total interest expense | 5,999 | 5,278 | 4,378 | 13.66 | % | 37.03 | % | ||||||||||
Net interest income | 73,168 | 68,471 | 63,755 | 6.86 | % | 14.76 | % | ||||||||||
Provision for loan losses | 2,000 | 500 | 1,050 | 300.00 | % | 90.48 | % | ||||||||||
Net interest income after provision for loan losses | 71,168 | 67,971 | 62,705 | 4.70 | % | 13.50 | % | ||||||||||
Noninterest income | |||||||||||||||||
Deposit account fees | 4,551 | 4,431 | 4,392 | 2.71 | % | 3.62 | % | ||||||||||
Interchange and ATM fees | 4,769 | 4,173 | 4,434 | 14.28 | % | 7.56 | % | ||||||||||
Investment management | 6,822 | 6,142 | 5,995 | 11.07 | % | 13.79 | % | ||||||||||
Mortgage banking income | 1,038 | 870 | 1,314 | 19.31 | % | (21.00 | )% | ||||||||||
Increase in cash surrender value of life insurance policies | 998 | 947 | 1,017 | 5.39 | % | (1.87 | )% | ||||||||||
Gain on sale of equity securities | 2 | — | 3 | nm | (33.33 | )% | |||||||||||
Loan level derivative income | 708 | 447 | 1,337 | 58.39 | % | (47.05 | )% | ||||||||||
Other noninterest income | 2,999 | 2,853 | 2,906 | 5.12 | % | 3.20 | % | ||||||||||
Total noninterest income | 21,887 | 19,863 | 21,398 | 10.19 | % | 2.29 | % | ||||||||||
Noninterest expenses | |||||||||||||||||
Salaries and employee benefits | 30,288 | 31,100 | 28,654 | (2.61 | )% | 5.70 | % | ||||||||||
Occupancy and equipment expenses | 6,497 | 7,408 | 6,059 | (12.30 | )% | 7.23 | % | ||||||||||
Data processing and facilities management | 1,264 | 1,286 | 1,188 | (1.71 | )% | 6.40 | % | ||||||||||
FDIC assessment | 691 | 798 | 778 | (13.41 | )% | (11.18 | )% | ||||||||||
Merger and acquisition expense | 434 | — | 2,909 | nm | (85.08 | )% | |||||||||||
Loss on sale of equity securities | — | — | 2 | n/a | nm | ||||||||||||
Other noninterest expenses | 13,514 | 12,859 | 13,219 | 5.09 | % | 2.23 | % | ||||||||||
Total noninterest expenses | 52,688 | 53,451 | 52,809 | (1.43 | )% | (0.23 | )% | ||||||||||
Income before income taxes | 40,367 | 34,383 | 31,294 | 17.40 | % | 28.99 | % | ||||||||||
Provision for income taxes | 9,249 | 6,828 | 10,731 | 35.46 | % | (13.81 | )% | ||||||||||
Net Income | $ | 31,118 | $ | 27,555 | $ | 20,563 | 12.93 | % | 51.33 | % | |||||||
(nm - the percentage is not meaningful) | |||||||||||||||||
Weighted average common shares (basic) | 27,526,653 | 27,486,573 | 27,257,799 | ||||||||||||||
Common share equivalents | 54,525 | 67,381 | 74,497 | ||||||||||||||
Weighted average common shares (diluted) | 27,581,178 | 27,553,954 | 27,332,296 | ||||||||||||||
Basic earnings per share | $ | 1.13 | $ | 1.00 | $ | 0.75 | 13.00 | % | 50.67 | % | |||||||
Diluted earnings per share | $ | 1.13 | $ | 1.00 | $ | 0.75 | 13.00 | % | 50.67 | % | |||||||
Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP): | |||||||||||||||||
Net income | $ | 31,118 | $ | 27,555 | $ | 20,563 | |||||||||||
Noninterest expense components | |||||||||||||||||
Add - merger and acquisition expenses | 434 | — | 2,909 | ||||||||||||||
Noncore items, gross | 434 | — | 2,909 | ||||||||||||||
Less - net tax benefit associated with noncore items (1) | (122 | ) | — | (1,088 | ) | ||||||||||||
Operating net income | $ | 31,430 | $ | 27,555 | $ | 22,384 | 14.06 | % | 40.41 | % | |||||||
Diluted earnings per share, on an operating basis | $ | 1.14 | $ | 1.00 | $ | 0.82 | 14.00 | % | 39.02 | % | |||||||
(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) | 3.89 | % | 3.77 | % | 3.60 | % | |||||||||||
Return on average assets GAAP (calculated by dividing net income by average assets) | 1.52 | % | 1.39 | % | 1.06 | % | |||||||||||
Return on average assets on an operating basis (calculated by dividing net operating earnings by average assets) | 1.53 | % | 1.39 | % | 1.15 | % | |||||||||||
Return on average common equity GAAP (calculated by dividing net income by average common equity) | 12.85 | % | 11.73 | % | 9.15 | % | |||||||||||
Return on average common equity on an operating basis (calculated by dividing net operating earnings by average common equity) | 12.98 | % | 11.73 | % | 9.96 | % |
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
(Unaudited, dollars in thousands, except per share data) | |||||||||||
Six Months Ended | |||||||||||
% Change | |||||||||||
June 30 2018 | June 30 2017 | Jun 2018 vs. | |||||||||
Jun 2017 | |||||||||||
Interest income | |||||||||||
Interest on federal funds sold and short-term investments | $ | 852 | $ | 397 | 114.61 | % | |||||
Interest and dividends on securities | 12,749 | 11,028 | 15.61 | % | |||||||
Interest and fees on loans | 139,266 | 121,080 | 15.02 | % | |||||||
Interest on loans held for sale | 49 | 35 | 40.00 | % | |||||||
Total interest income | 152,916 | 132,540 | 15.37 | % | |||||||
Interest expense | |||||||||||
Interest on deposits | 8,522 | 5,679 | 50.06 | % | |||||||
Interest on borrowings | 2,755 | 2,906 | (5.20 | )% | |||||||
Total interest expense | 11,277 | 8,585 | 31.36 | % | |||||||
Net interest income | 141,639 | 123,955 | 14.27 | % | |||||||
Provision for loan losses | 2,500 | 1,650 | 51.52 | % | |||||||
Net interest income after provision for loan losses | 139,139 | 122,305 | 13.76 | % | |||||||
Noninterest income | |||||||||||
Deposit account fees | 8,982 | 8,936 | 0.51 | % | |||||||
Interchange and ATM fees | 8,942 | 8,356 | 7.01 | % | |||||||
Investment management | 12,964 | 11,609 | 11.67 | % |
Mortgage banking income | 1,908 | 2,271 | (15.98 | )% | |||||||
Increase in cash surrender value of life insurance policies | 1,945 | 1,981 | (1.82 | )% | |||||||
Gain on sale of equity securities | 2 | 7 | (71.43 | )% | |||||||
Loan level derivative income | 1,155 | 1,943 | (40.56 | )% | |||||||
Other noninterest income | 5,852 | 5,207 | 12.39 | % | |||||||
Total noninterest income | 41,750 | 40,310 | 3.57 | % | |||||||
Noninterest expenses | |||||||||||
Salaries and employee benefits | 61,388 | 56,978 | 7.74 | % | |||||||
Occupancy and equipment expenses | 13,905 | 12,217 | 13.82 | % | |||||||
Data processing and facilities management | 2,550 | 2,460 | 3.66 | % | |||||||
FDIC assessment | 1,489 | 1,561 | (4.61 | )% | |||||||
Merger and acquisition expense | 434 | 3,393 | (87.21 | )% | |||||||
Loss on sale of equity securities | — | 5 | nm | ||||||||
Other noninterest expenses | 26,373 | 24,968 | 5.63 | % | |||||||
Total noninterest expenses | 106,139 | 101,582 | 4.49 | % | |||||||
Income before income taxes | 74,750 | 61,033 | 22.47 | % | |||||||
Provision for income taxes | 16,077 | 19,745 | (18.58 | )% | |||||||
Net Income | $ | 58,673 | $ | 41,288 | 42.11 | % | |||||
(nm - the percentage is not meaningful) | |||||||||||
Weighted average common shares (basic) | 27,506,724 | 27,144,350 | |||||||||
Common share equivalents | 61,480 | 78,757 | |||||||||
Weighted average common shares (diluted) | 27,568,204 | 27,223,107 | |||||||||
Basic earnings per share | $ | 2.13 | $ | 1.52 | 40.13 | % | |||||
Diluted earnings per share | $ | 2.13 | $ | 1.52 | 40.13 | % | |||||
Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP): | |||||||||||
Net Income | $ | 58,673 | $ | 41,288 | |||||||
Noninterest expense components | |||||||||||
Add - merger and acquisition expenses | 434 | 3,393 | |||||||||
Noncore items, gross | 434 | 3,393 | |||||||||
Less - net tax benefit associated with noncore items (1) | (122 | ) | (1,241 | ) | |||||||
Operating net income | $ | 58,985 | $ | 43,440 | 35.78 | % | |||||
Diluted earnings per share, on an operating basis | $ | 2.14 | $ | 1.60 | 33.75 | % | |||||
(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) | 3.83 | % | 3.56 | % | |||||||
Return on average assets GAAP (calculated by dividing net income by average assets) | 1.46 | % | 1.08 | % | |||||||
Return on average assets on an operating basis (calculated by dividing net operating earnings by average assets) | 1.46 | % | 1.13 | % | |||||||
Return on average common equity GAAP (calculated by dividing net income by average common equity) | 12.30 | % | 9.36 | % | |||||||
Return on average common equity on an operating basis (calculated by dividing net operating earnings by average common equity) | 12.36 | % | 9.85 | % |
ASSET QUALITY | ||||||||||||
(Unaudited, dollars in thousands) | Nonperforming Assets At | |||||||||||
June 30 2018 | March 31 2018 | June 30 2017 | ||||||||||
Nonperforming loans | ||||||||||||
Commercial & industrial loans | $ | 30,095 | $ | 30,751 | $ | 33,630 | ||||||
Commercial real estate loans | 3,110 | 2,997 | 4,679 | |||||||||
Small business loans | 384 | 412 | 453 | |||||||||
Residential real estate loans | 7,612 | 7,646 | 7,683 | |||||||||
Home equity | 5,861 | 5,858 | 5,240 | |||||||||
Other consumer | 50 | 49 | 98 | |||||||||
Total nonperforming loans | 47,112 | 47,713 | 51,783 | |||||||||
Other real estate owned | 245 | 358 | 3,029 | |||||||||
Total nonperforming assets | $ | 47,357 | $ | 48,071 | $ | 54,812 | ||||||
Nonperforming loans/gross loans | 0.73 | % | 0.75 | % | 0.83 | % | ||||||
Nonperforming assets/total assets | 0.57 | % | 0.59 | % | 0.68 | % | ||||||
Allowance for loan losses/nonperforming loans | 132.78 | % | 127.56 | % | 114.86 | % | ||||||
Allowance for loan losses/total loans | 0.97 | % | 0.96 | % | 0.95 | % | ||||||
Delinquent loans/total loans | 0.89 | % | 0.79 | % | 0.82 | % | ||||||
Nonperforming Assets Reconciliation for the Three Months Ended | ||||||||||||
June 30 2018 | March 31 2018 | June 30 2017 | ||||||||||
Nonperforming assets beginning balance | $ | 48,071 | $ | 50,250 | $ | 58,456 | ||||||
New to nonperforming | 3,642 | 2,001 | 3,619 | |||||||||
Loans charged-off | (568 | ) | (594 | ) | (4,198 | ) | ||||||
Loans paid-off | (2,209 | ) | (2,692 | ) | (1,124 | ) | ||||||
Loans restored to performing status | (1,490 | ) | (690 | ) | (1,642 | ) | ||||||
Valuation write down | — | — | (95 | ) | ||||||||
Sale of other real estate owned | — | (254 | ) | (279 | ) | |||||||
Other | (89 | ) | 50 | 75 | ||||||||
Nonperforming assets ending balance | $ | 47,357 | $ | 48,071 | $ | 54,812 |
Net Charge-Offs (Recoveries) | ||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 30 2018 | March 31 2018 | June 30 2017 | June 30 2018 | June 30 2017 | ||||||||||||||||
Net charge-offs (recoveries) | ||||||||||||||||||||
Commercial and industrial loans | $ | (55 | ) | $ | 121 | $ | 3,578 | $ | 66 | $ | 3,391 | |||||||||
Commercial real estate loans | (18 | ) | (20 | ) | (26 | ) | (38 | ) | (57 | ) | ||||||||||
Small business loans | 92 | 15 | 11 | 107 | 15 | |||||||||||||||
Residential real estate loans | 108 | 37 | 114 | 145 | 125 | |||||||||||||||
Home equity | 72 | 45 | 96 | 117 | 34 | |||||||||||||||
Other consumer | 106 | 83 | 116 | 189 | 229 | |||||||||||||||
Total net charge-offs | $ | 305 | $ | 281 | $ | 3,889 | $ | 586 | $ | 3,737 | ||||||||||
Net charge-offs to average loans (annualized) | 0.02 | % | 0.02 | % | 0.25 | % | 0.02 | % | 0.12 | % |
Troubled Debt Restructurings At | ||||||||||||
June 30 2018 | March 31 2018 | June 30 2017 | ||||||||||
Troubled debt restructurings on accrual status | $ | 25,528 | $ | 25,617 | $ | 26,908 | ||||||
Troubled debt restructurings on nonaccrual status | 4,095 | 5,637 | 5,728 | |||||||||
Total troubled debt restructurings | $ | 29,623 | $ | 31,254 | $ | 32,636 | ||||||
BALANCE SHEET AND CAPITAL RATIOS | ||||||||||||
June 30 2018 | March 31 2018 | June 30 2017 | ||||||||||
Gross loans/total deposits | 92.38 | % | 94.23 | % | 93.64 | % | ||||||
Common equity tier 1 capital ratio (1) | 11.61 | % | 11.47 | % | 10.95 | % | ||||||
Tier one leverage capital ratio (1) | 10.39 | % | 10.32 | % | 10.07 | % | ||||||
Common equity to assets ratio GAAP | 11.66 | % | 11.82 | % | 11.41 | % | ||||||
Tangible common equity to tangible assets ratio (2) | 9.06 | % | 9.12 | % | 8.64 | % | ||||||
Book value per share GAAP | $ | 35.49 | $ | 34.75 | $ | 33.34 | ||||||
Tangible book value per share (2) | $ | 26.78 | $ | 26.02 | $ | 24.48 |
INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION | |||||||||||||||||||||||||||||||||
(Unaudited, dollars in thousands) | Three Months Ended | ||||||||||||||||||||||||||||||||
June 30, 2018 | March 31, 2018 | June 30, 2017 | |||||||||||||||||||||||||||||||
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 | $ | 122,116 | $ | 541 | 1.78 | % | $ | 81,934 | $ | 311 | 1.54 | % | $ | 72,676 | $ | 190 | 1.05 | % | |||||||||||||||
Securities | |||||||||||||||||||||||||||||||||
Securities - trading | 1,599 | — | — | % | 1,433 | — | — | % | 1,292 | — | — | % | |||||||||||||||||||||
Securities - taxable investments | 993,222 | 6,498 | 2.62 | % | 967,221 | 6,219 | 2.61 | % | 900,086 | 5,609 | 2.50 | % | |||||||||||||||||||||
Securities - nontaxable investments (1) | 2,204 | 20 | 3.64 | % | 2,262 | 20 | 3.59 | % | 3,787 | 40 | 4.24 | % | |||||||||||||||||||||
Total securities | $ | 997,025 | $ | 6,518 | 2.62 | % | $ | 970,916 | $ | 6,239 | 2.61 | % | $ | 905,165 | $ | 5,649 | 2.50 | % | |||||||||||||||
Loans held for sale | 4,719 | 30 | 2.55 | % | 2,753 | 19 | 2.80 | % | 3,733 | 21 | 2.26 | % | |||||||||||||||||||||
Loans | |||||||||||||||||||||||||||||||||
Commercial and industrial | 943,110 | 11,116 | 4.73 | % | 879,336 | 9,615 | 4.43 | % | 895,173 | 9,098 | 4.08 | % | |||||||||||||||||||||
Commercial real estate (1) | 3,092,771 | 35,175 | 4.56 | % | 3,107,437 | 33,289 | 4.34 | % | 3,028,745 | 30,968 | 4.10 | % | |||||||||||||||||||||
Commercial construction | 416,830 | 5,256 | 5.06 | % | 397,720 | 4,671 | 4.76 | % | 362,603 | 4,105 | 4.54 | % | |||||||||||||||||||||
Small business | 138,758 | 2,008 | 5.80 | % | 132,125 | 1,862 | 5.72 | % | 129,100 | 1,776 | 5.52 | % | |||||||||||||||||||||
Total commercial | 4,591,469 | 53,555 | 4.68 | % | 4,516,618 | 49,437 | 4.44 | % | 4,415,621 | 45,947 | 4.17 | % | |||||||||||||||||||||
Residential real estate | 769,441 | 7,661 | 3.99 | % | 755,996 | 7,501 | 4.02 | % | 704,726 | 7,024 | 4.00 | % | |||||||||||||||||||||
Home equity | 1,061,082 | 10,830 | 4.09 | % | 1,051,022 | 10,205 | 3.94 | % | 1,028,109 | 9,444 | 3.68 | % | |||||||||||||||||||||
Total consumer real estate | 1,830,523 | 18,491 | 4.05 | % | 1,807,018 | 17,706 | 3.97 | % | 1,732,835 | 16,468 | 3.81 | % | |||||||||||||||||||||
Other consumer | 10,295 | 211 | 8.22 | % | 10,659 | 214 | 8.14 | % | 10,541 | 240 | 9.13 | % | |||||||||||||||||||||
Total loans | $ | 6,432,287 | $ | 72,257 | 4.51 | % | $ | 6,334,295 | $ | 67,357 | 4.31 | % | $ | 6,158,997 | $ | 62,655 | 4.08 | % | |||||||||||||||
Total interest-earning assets | 7,556,147 | $ | 79,346 | 4.21 | % | $ | 7,389,898 | $ | 73,926 | 4.06 | % | $ | 7,140,571 | $ | 68,515 | 3.85 | % | ||||||||||||||||
Cash and due from banks | 100,952 | 97,605 | 97,129 | ||||||||||||||||||||||||||||||
Federal Home Loan Bank stock | 13,399 | 13,016 | 13,700 | ||||||||||||||||||||||||||||||
Other assets | 545,994 | 545,516 | 551,388 | ||||||||||||||||||||||||||||||
Total assets | $ | 8,216,492 | $ | 8,046,035 | $ | 7,802,788 | |||||||||||||||||||||||||||
Interest-bearing liabilities | |||||||||||||||||||||||||||||||||
Deposits | |||||||||||||||||||||||||||||||||
Savings and interest checking accounts | $ | 2,664,148 | $ | 1,293 | 0.19 | % | $ | 2,563,186 | $ | 1,093 | 0.17 | % | $ | 2,568,020 | $ | 849 | 0.13 | % | |||||||||||||||
Money market | 1,360,216 | 1,667 | 0.49 | % | 1,338,265 | 1,364 | 0.41 | % | 1,287,991 | 935 | 0.29 | % | |||||||||||||||||||||
Time deposits | 653,373 | 1,627 | 1.00 | % | 646,529 | 1,478 | 0.93 | % | 609,787 | 1,128 | 0.74 | % | |||||||||||||||||||||
Total interest-bearing deposits | $ | 4,677,737 | $ | 4,587 | 0.39 | % | $ | 4,547,980 | $ | 3,935 | 0.35 | % | $ | 4,465,798 | $ | 2,912 | 0.26 | % | |||||||||||||||
Borrowings | |||||||||||||||||||||||||||||||||
Federal Home Loan Bank borrowings | 62,600 | 295 | 1.89 | % | 73,040 | 260 | 1.44 | % | 63,275 | 418 | 2.65 | % | |||||||||||||||||||||
Customer repurchase agreements | 143,259 | 64 | 0.18 | % | 155,768 | 66 | 0.17 | % | 155,692 | 55 | 0.14 | % | |||||||||||||||||||||
Junior subordinated debentures | 73,076 | 625 | 3.43 | % | 73,074 | 590 | 3.27 | % | 73,068 | 565 | 3.10 | % | |||||||||||||||||||||
Subordinated debentures | 34,699 | 428 | 4.95 | % | 34,687 | 427 | 4.99 | % | 34,652 | 428 | 4.95 | % | |||||||||||||||||||||
Total borrowings | $ | 313,634 | $ | 1,412 | 1.81 | % | $ | 336,569 | $ | 1,343 | 1.62 | % | $ | 326,687 | $ | 1,466 | 1.80 | % | |||||||||||||||
Total interest-bearing liabilities | $ | 4,991,371 | $ | 5,999 | 0.48 | % | $ | 4,884,549 | $ | 5,278 | 0.44 | % | $ | 4,792,485 | $ | 4,378 | 0.37 | % | |||||||||||||||
Demand deposits | 2,174,571 | 2,129,517 | 2,026,770 | ||||||||||||||||||||||||||||||
Other liabilities | 79,266 | 79,125 | 81,725 | ||||||||||||||||||||||||||||||
Total liabilities | $ | 7,245,208 | $ | 7,093,191 | $ | 6,900,980 | |||||||||||||||||||||||||||
Stockholders' equity | 971,284 | 952,844 | 901,808 |
Total liabilities and stockholders' equity | $ | 8,216,492 | $ | 8,046,035 | $ | 7,802,788 | |||||||||||||||||||||||||||
Net interest income | $ | 73,347 | $ | 68,648 | $ | 64,137 | |||||||||||||||||||||||||||
Interest rate spread (2) | 3.73 | % | 3.62 | % | 3.48 | % | |||||||||||||||||||||||||||
Net interest margin (3) | 3.89 | % | 3.77 | % | 3.60 | % | |||||||||||||||||||||||||||
Supplemental Information | |||||||||||||||||||||||||||||||||
Total deposits, including demand deposits | $ | 6,852,308 | $ | 4,587 | $ | 6,677,497 | $ | 3,935 | $ | 6,492,568 | $ | 2,912 | |||||||||||||||||||||
Cost of total deposits | 0.27 | % | 0.24 | % | 0.18 | % | |||||||||||||||||||||||||||
Total funding liabilities, including demand deposits | $ | 7,165,942 | $ | 5,999 | $ | 7,014,066 | $ | 5,278 | $ | 6,819,255 | $ | 4,378 | |||||||||||||||||||||
Cost of total funding liabilities | 0.34 | % | 0.31 | % | 0.26 | % |
Six Months Ended | ||||||||||||||||||||||
June 30, 2018 | June 30, 2017 | |||||||||||||||||||||
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 | $ | 102,136 | $ | 852 | 1.68 | % | $ | 88,752 | $ | 397 | 0.90 | % | ||||||||||
Securities | ||||||||||||||||||||||
Securities - trading | 1,517 | — | — | % | 1,146 | — | — | % | ||||||||||||||
Securities - taxable investments | 980,293 | 12,717 | 2.62 | % | 887,820 | 10,976 | 2.49 | % | ||||||||||||||
Securities - nontaxable investments (1) | 2,233 | 40 | 3.61 | % | 3,790 | 80 | 4.26 | % | ||||||||||||||
Total securities | $ | 984,043 | $ | 12,757 | 2.61 | % | $ | 892,756 | $ | 11,056 | 2.50 | % | ||||||||||
Loans held for sale | 3,741 | 49 | 2.64 | % | 3,232 | 35 | 2.18 | % | ||||||||||||||
Loans | ||||||||||||||||||||||
Commercial and industrial | 911,399 | 20,731 | 4.59 | % | 888,009 | 17,740 | 4.03 | % | ||||||||||||||
Commercial real estate (1) | 3,100,063 | 68,464 | 4.45 | % | 3,029,043 | 61,182 | 4.07 | % | ||||||||||||||
Commercial construction | 407,328 | 9,927 | 4.91 | % | 347,031 | 7,682 | 4.46 | % | ||||||||||||||
Small business | 135,460 | 3,870 | 5.76 | % | 126,750 | 3,456 | 5.50 | % | ||||||||||||||
Total commercial | 4,554,250 | 102,992 | 4.56 | % | 4,390,833 | 90,060 | 4.14 | % | ||||||||||||||
Residential real estate | 762,755 | 15,162 | 4.01 | % | 674,368 | 13,123 | 3.92 | % | ||||||||||||||
Home equity | 1,056,080 | 21,035 | 4.02 | % | 1,012,610 | 18,152 | 3.61 | % | ||||||||||||||
Total consumer real estate | 1,818,835 | 36,197 | 4.01 | % | 1,686,978 | 31,275 | 3.74 | % | ||||||||||||||
Other consumer | 10,476 | 425 | 8.18 | % | 10,934 | 481 | 8.87 | % | ||||||||||||||
Total loans | $ | 6,383,561 | $ | 139,614 | 4.41 | % | $ | 6,088,745 | $ | 121,816 | 4.03 | % | ||||||||||
Total interest-earning assets | $ | 7,473,481 | $ | 153,272 | 4.14 | % | $ | 7,073,485 | $ | 133,304 | 3.80 | % | ||||||||||
Cash and due from banks | 99,288 | 96,048 | ||||||||||||||||||||
Federal Home Loan Bank stock | 13,209 | 13,406 | ||||||||||||||||||||
Other assets | 545,756 | 545,929 | ||||||||||||||||||||
Total assets | $ | 8,131,734 | $ | 7,728,868 | ||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||
Deposits | ||||||||||||||||||||||
Savings and interest checking accounts | $ | 2,613,945 | $ | 2,386 | 0.18 | % | $ | 2,523,941 | $ | 1,612 | 0.13 | % | ||||||||||
Money market | 1,349,301 | 3,031 | 0.45 | % | 1,273,310 | 1,792 | 0.28 | % | ||||||||||||||
Time deposits | 649,970 | 3,105 | 0.96 | % | 622,298 | 2,275 | 0.74 | % | ||||||||||||||
Total interest-bearing deposits | $ | 4,613,216 | $ | 8,522 | 0.37 | % | $ | 4,419,549 | $ | 5,679 | 0.26 | % | ||||||||||
Borrowings | ||||||||||||||||||||||
Federal Home Loan Bank borrowings | 67,792 | 555 | 1.65 | % | 64,905 | 821 | 2.55 | % | ||||||||||||||
Customer repurchase agreements | 149,479 | 130 | 0.18 | % | 156,494 | 111 | 0.14 | % | ||||||||||||||
Junior subordinated debentures | 73,075 | 1,215 | 3.35 | % | 73,077 | 1,119 | 3.09 | % | ||||||||||||||
Subordinated debentures | 34,693 | 855 | 4.97 | % | 34,647 | 855 | 4.98 | % | ||||||||||||||
Total borrowings | $ | 325,039 | $ | 2,755 | 1.71 | % | $ | 329,123 | $ | 2,906 | 1.78 | % | ||||||||||
Total interest-bearing liabilities | $ | 4,938,255 | $ | 11,277 | 0.46 | % | $ | 4,748,672 | $ | 8,585 | 0.36 | % | ||||||||||
Demand deposits | 2,152,168 | 2,007,282 | ||||||||||||||||||||
Other liabilities | 79,196 | 83,697 | ||||||||||||||||||||
Total liabilities | $ | 7,169,619 | $ | 6,839,651 | ||||||||||||||||||
Stockholders' equity | 962,115 | 889,217 |
Total liabilities and stockholders' equity | $ | 8,131,734 | $ | 7,728,868 | ||||||||||||||||||
Net interest income | $ | 141,995 | $ | 124,719 | ||||||||||||||||||
Interest rate spread (2) | 3.68 | % | 3.44 | % | ||||||||||||||||||
Net interest margin (3) | 3.83 | % | 3.56 | % | ||||||||||||||||||
Supplemental Information | ||||||||||||||||||||||
Total deposits, including demand deposits | $ | 6,765,384 | $ | 8,522 | $ | 6,426,831 | $ | 5,679 | ||||||||||||||
Cost of total deposits | 0.25 | % | 0.18 | % | ||||||||||||||||||
Total funding liabilities, including demand deposits | $ | 7,090,423 | $ | 11,277 | $ | 6,755,954 | $ | 8,585 | ||||||||||||||
Cost of total funding liabilities | 0.32 | % | 0.26 | % |
June 30 2018 | March 31 2018 | June 30 2017 | |||||||||||
Tangible common equity | |||||||||||||
Stockholders' equity (GAAP) | $ | 977,065 | $ | 956,059 | $ | 914,584 | (a) | ||||||
Less: Goodwill and other intangibles | 239,724 | 240,268 | 243,005 | ||||||||||
Tangible common equity | $ | 737,341 | $ | 715,791 | $ | 671,579 | (b) | ||||||
Tangible assets | |||||||||||||
Assets (GAAP) | $ | 8,381,002 | $ | 8,090,410 | $ | 8,017,293 | (c) | ||||||
Less: Goodwill and other intangibles | 239,724 | 240,268 | 243,005 | ||||||||||
Tangible assets | $ | 8,141,278 | $ | 7,850,142 | $ | 7,774,288 | (d) | ||||||
Common Shares | 27,532,524 | 27,512,328 | 27,431,171 | (e) | |||||||||
Common equity to assets ratio (GAAP) | 11.66 | % | 11.82 | % | 11.41 | % | (a/c) | ||||||
Tangible common equity to tangible assets ratio (Non-GAAP) | 9.06 | % | 9.12 | % | 8.64 | % | (b/d) | ||||||
Book value per share (GAAP) | $ | 35.49 | $ | 34.75 | $ | 33.34 | (a/e) | ||||||
Tangible book value per share (Non-GAAP) | $ | 26.78 | $ | 26.02 | $ | 24.48 | (b/e) |
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 30 2018 | March 31 2018 | June 30 2017 | June 30, 2018 | June 30, 2017 | ||||||||||||||||
Net interest income (GAAP) | $ | 73,168 | $ | 68,471 | $ | 63,755 | $ | 141,639 | $ | 123,955 | (a) | |||||||||
Noninterest income (GAAP) | $ | 21,887 | $ | 19,863 | $ | 21,398 | $ | 41,750 | $ | 40,310 | (b) | |||||||||
Noninterest income on an operating basis (Non-GAAP) | $ | 21,887 | $ | 19,863 | $ | 21,398 | $ | 41,750 | $ | 40,310 | (c) | |||||||||
Noninterest expense (GAAP) | $ | 52,688 | $ | 53,451 | $ | 52,809 | $ | 106,139 | $ | 101,582 | (d) | |||||||||
Less: | ||||||||||||||||||||
Merger and acquisition expense | 434 | — | 2,909 | 434 | 3,393 | |||||||||||||||
Noninterest expense on an operating basis (Non-GAAP) | $ | 52,254 | $ | 53,451 | $ | 49,900 | $ | 105,705 | $ | 98,189 | (e) | |||||||||
Total revenue (GAAP) | $ | 95,055 | $ | 88,334 | $ | 85,153 | $ | 183,389 | $ | 164,265 | (a+b) | |||||||||
Total operating revenue (Non-GAAP) | $ | 95,055 | $ | 88,334 | $ | 85,153 | $ | 183,389 | $ | 164,265 | (a+c) | |||||||||
Ratios | ||||||||||||||||||||
Noninterest income as a % of total revenue (GAAP based) | 23.03 | % | 22.49 | % | 25.13 | % | 22.77 | % | 24.54 | % | (b/(a+b)) | |||||||||
Noninterest income as a % of total revenue on an operating basis (Non-GAAP) | 23.03 | % | 22.49 | % | 25.13 | % | 22.77 | % | 24.54 | % | (c/(a+c)) | |||||||||
Efficiency ratio (GAAP based) | 55.43 | % | 60.51 | % | 62.02 | % | 57.88 | % | 61.84 | % | (d/(a+b)) | |||||||||
Efficiency ratio on an operating basis (Non-GAAP) | 54.97 | % | 60.51 | % | 58.60 | % | 57.64 | % | 59.77 | % | (e/(a+c)) |
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