10-Q/A 1 a2026280z10-qa.txt 10-Q/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 Commission File Number: 1-9047 Independent Bank Corp. (Exact name of registrant as specified in its charter) Massachusetts 04-2870273 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 288 Union Street, Rockland, Massachusetts 02370 (Address of principal executive offices, including zip code) (781) 878-6100 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of August 1, 2000 there were 14,248,002 shares of the issuer's common stock outstanding. Note: This Form 10-Q/A for the quarterly period ended June 30, 2000 is being filed solely to amend and restate the note to the unaudited financial statements regarding "Corporation -Obligated Mandatorily Redeemable Trust Preferred Securities" in Item 1, Financial Statements (unaudited), from the Form 10-Q for the quarterly period ended June 30, 2000 filed with the Securities Exchange Commission on August 14, 2000. INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets - June 30, 2000 and December 31, 1999 Consolidated Statements of Income - Six months and quarters ended June 30, 2000 and 1999 Consolidated Statements of Cash Flows - Six months ended June 30, 2000 and 1999 Notes to Consolidated Financial Statements - June 30, 2000 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K PART 1 FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INDEPENDENT BANK CORP. CONSOLIDATED BALANCE SHEETS (UNAUDITED - IN THOUSANDS)
JUNE 30, DECEMBER 31, 2000 1999 --------------------------------- ASSETS Cash and Due From Banks $50,132 $48,949 Federal Funds Sold 3,798 8,719 Trading Assets 469 486 Securities Held To Maturity 211,587 229,043 Securities Available For Sale 273,443 201,614 Federal Home Loan Bank Stock 17,036 17,036 Loans, Net of Unearned Discount 1,036,630 1,028,510 Less: Reserve for Possible Loan Losses (15,416) (14,958) ------------------------------------------------------------------------------------------------------------------------------- Net Loans 1,021,214 1,013,552 ------------------------------------------------------------------------------------------------------------------------------- Bank Premises and Equipment 14,610 14,268 Other Assets 60,041 56,389 ------------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $1,652,330 $1,590,056 =============================================================================================================================== LIABILITIES Deposits Demand Deposits $253,662 $226,044 Savings and Interest Checking Accounts 297,676 282,516 Money Market and Super Interest Checking Accounts 109,156 107,624 Time Certificates of Deposit over $100,000 147,816 113,832 Other Time Deposits 331,045 351,790 ------------------------------------------------------------------------------------------------------------------------------- Total Deposits 1,139,355 1,081,806 ------------------------------------------------------------------------------------------------------------------------------- Federal Funds Purchased and Assets Sold Under Repurchase Agreements 137,125 93,366 Federal Home Loan Bank Borrowings 203,063 256,224 Treasury Tax and Loan Notes 3,037 9,877 Other Liabilities 15,768 21,904 ------------------------------------------------------------------------------------------------------------------------------- Total Liabilities 1,498,348 1,463,177 ------------------------------------------------------------------------------------------------------------------------------- Commitments and Contingencies Corporation-obligated mandatorily redeemable trust preferred securities of subsidiary trust holding solely junior subordinated debentures of the Corporation 51,255 28,750 STOCKHOLDERS' EQUITY Common Stock, $.01 par value Authorized: 30,000,000 Shares Outstanding: 14,863,821 Shares at June 30, 2000 and at December 31, 1999 149 149 Treasury Stock: 615,819 Shares at June 30, 2000 and 684,463 Shares at December 31, 1999 (9,601) (10,678) Surplus 44,151 44,950 Retained Earnings 71,170 67,547 Other Accumulated Comprehensive Income, Net of Tax (3,142) (3,839) ------------------------------------------------------------------------------------------------------------------------------- Total Stockholders' Equity 102,727 98,129 ------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES, MINORITY INTEREST & STOCKHOLDERS' EQUITY $1,652,330 $1,590,056 ===============================================================================================================================
INDEPENDENT BANK CORP. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED - IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
SIX MONTHS ENDED THREE MONTHS ENDED JUNE 30, JUNE 30, JUNE 30, JUNE 30, 2000 1999 2000 1999 ---------------------------------------------------------------------------------------------------------------------------------- INTEREST INCOME Interest on Loans $42,856 $39,684 $21,590 $20,128 Interest and Dividends on Securities 16,118 15,173 8,181 7,287 Interest on Federal Funds Sold 319 444 234 279 Interest on Interest Bearing Deposits 7 0 7 0 ---------------------------------------------------------------------------------------------------------------------------------- Total Interest Income 59,300 55,301 30,012 27,694 ---------------------------------------------------------------------------------------------------------------------------------- INTEREST EXPENSE Interest on Deposits 15,680 15,327 8,070 7,855 Interest on Borrowed Funds 10,242 10,001 5,102 4,728 ---------------------------------------------------------------------------------------------------------------------------------- Total Interest Expense 25,922 25,328 13,172 12,583 ---------------------------------------------------------------------------------------------------------------------------------- Net Interest Income 33,378 29,973 16,840 15,111 ---------------------------------------------------------------------------------------------------------------------------------- PROVISION FOR POSSIBLE LOAN LOSSES 1,168 1,963 451 982 ---------------------------------------------------------------------------------------------------------------------------------- Net Interest Income After Provision For Possible Loan Losses 32,210 28,010 16,389 14,129 ---------------------------------------------------------------------------------------------------------------------------------- NON-INTEREST INCOME Service Charges on Deposit Accounts 2,876 2,584 1,491 1,313 Trust and Investment Services Income 2,370 2,141 1,237 1,224 Mortgage Banking Income 660 987 347 486 Other Non-Interest Income 1,737 1,594 935 858 ---------------------------------------------------------------------------------------------------------------------------------- Total Non-Interest Income 7,643 7,306 4,010 3,881 ---------------------------------------------------------------------------------------------------------------------------------- NON-INTEREST EXPENSES Salaries and Employee Benefits 12,970 11,722 6,649 6,060 Occupancy Expenses 2,013 1,895 1,010 934 Equipment Expenses 1,784 1,630 877 863 Special Charges 2,998 0 2,998 0 Other Non-Interest Expenses 8,253 7,299 4,255 3,580 ---------------------------------------------------------------------------------------------------------------------------------- Total Non-Interest Expenses 28,018 22,546 15,789 11,437 ---------------------------------------------------------------------------------------------------------------------------------- Minority Interest Expense 2,539 1,334 1,391 667 ---------------------------------------------------------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 9,296 11,436 3,219 5,906 PROVISION FOR INCOME TAXES 2,825 3,482 979 1,798 ---------------------------------------------------------------------------------------------------------------------------------- NET INCOME $6,471 $7,954 $2,240 $4,108 ================================================================================================================================== BASIC EARNINGS PER SHARE $0.45 $0.56 $0.16 $0.29 ================================================================================================================================== DILUTED EARNINGS PER SHARE $0.45 $0.55 $0.16 $0.29 ================================================================================================================================== Weighted average common shares (Basic) 14,226,735 14,249,356 14,239,037 14,164,975 Common stock equivalents 69,048 162,838 62,144 155,506 ---------------------------------------------------------------------------------------------------------------------------------- Weighted average common shares (Diluted) 14,295,783 14,412,194 14,301,181 14,320,481 ==================================================================================================================================
INDEPENDENT BANK CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, (Unaudited - in thousands) 2000 1999 ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $6,471 $7,954 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED FROM OPERATING ACTIVITIES Depreciation and amortization 2,081 2,603 Provision for possible loan losses 1,168 1,963 Loans originated for resale (11,254) (31,895) Proceeds from mortgage loan sales 11,181 31,786 Loss on sale of mortgages 73 109 Gain recorded from mortgage servicing rights (120) (195) Changes in assets and liabilities:: Increase in other assets (3,532) (3,807) (Decrease)/ Increase in other liabilities (6,016) 3,511 ------------------------------------------------------------------------------------------------------------------------ TOTAL ADJUSTMENTS (6,419) 4,075 ------------------------------------------------------------------------------------------------------------------------ NET CASH PROVIDED FROM OPERATING ACTIVITIES 52 12,029 ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities of Securities Held to Maturity 19,438 46,924 Proceeds from maturities of Securities Available for Sale 23,132 38,082 Purchase of Securities Held to Maturity (2,142) (7,682) Purchase of Securities Available for Sale (94,489) (20,416) Net increase in Loans (8,830) (55,751) Investment in Bank Premises and Equipment (2,147) (1,761) ------------------------------------------------------------------------------------------------------------------------ NET CASH USED IN INVESTING ACTIVITIES (65,038) (604) ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in Deposits 57,549 35,213 Net increase/(decrease) in Federal Funds Purchased and Assets Sold Under Repurchase Agreements 43,759 (4,049) Net decrease in FHLB Borrowings (53,161) (67,500) Net (decrease)/ increase in TT&L Notes (6,840) 7,760 Issuance of corporation-obligated mandatorily redeemable trust preferred securities of subsidiary trusts holding solely junior subordinated debentures of the Corporation 22,505 Dividends Paid (2,842) (2,863) Payments for Treasury Stock Purchase - (4,836) Proceeds from stock issuance 278 171 ------------------------------------------------------------------------------------------------------------------------ NET CASH PROVIDED FROM /(USED IN ) FINANCING ACTIVITIES 61,248 (36,104) ------------------------------------------------------------------------------------------------------------------------ NET DECREASE IN CASH AND CASH EQUIVALENTS (3,738) (24,679) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 57,668 86,198 ------------------------------------------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS AS OF JUNE 30, 53,930 $61,519 ------------------------------------------------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS BASIS OF PRESENTATION Independent Bank Corp. (the "Company") is a state chartered, federally registered bank holding company headquartered in Rockland, Massachusetts. The Company is the sole stockholder of Rockland Trust Company ("Rockland" or "the Bank"), a Massachusetts trust company chartered in 1907. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, primarily consisting of normal recurring adjustments, have been included. Operating results for the three and six month periods ended June 30, 2000 are not necessarily indicative of the results that may be expected for the year ended December 31, 2000 or any other interim period. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1999. ACQUISITION On August 4, 2000, the Company and the Bank, acquired 16 Massachusetts branches with an estimated $336 million in deposits, $85 million of commercial real estate loans and $50 million in consumer and SBA loans from Fleet Financial Group. The acquisitions resulted from the divestiture of Fleet branches after its merger with BankBoston. These branches opened as Rockland Trust offices on August 7, 2000 and provide an expanded presence in Brockton and a powerful entrance into the Cape Cod market. CORPORATION-OBLIGATED MANDATORILY REDEEMABLE TRUST PREFFERED SECURITIES In the second quarter of 1997, Independent Capital Trust I (the "Trust I") was formed for the purpose of issuing trust preferred securities (the "Trust Preferred Securities") and investing the proceeds of the sale of these securities in junior subordinated debentures issued by the Company. A total of $28.75 million of 9.28% Trust Preferred Securities were issued and are scheduled to mature in 2027, callable at the option of the Company after May 19, 2002. Distributions on these securities are payable quarterly in arrears on the last day of March, June, September and December, such distributions can be deferred at the option of the Company for up to five years. The Trust Preferred Securities can be prepaid in whole or in part on or after May 19, 2002 at a redemption price equal to $25 per Trust Preferred Security plus accumulated but unpaid distributions thereon to the date of the redemption. In the first quarter of 2000, Independent Capital Trust II (the "Trust II") was formed for the purpose of issuing trust preferred securities (the "Trust Preferred Securities") and investing the proceeds of the sale of these securities in junior subordinated debentures issued by the Company. A total of $25.0 million of 11.00% Trust Preferred Securities were issued and are scheduled to mature in 2030, callable at the option of the company after January 31, 2002. Distributions on these securities are payable quarterly in arrears on the last day of March, June, September and December, such distributions can be deferred at the option of the Company for up to five years. The Trust Preferred Securities can be prepaid in whole or in part on or after January 31, 2002 at a redemption price equal to $25 per Trust Preferred Security plus accumulated but unpaid distributions thereon to the date of the redemption. The Trust Preferred Securities are presented in the consolidated balance sheets of the Company entitled "Corporation-Obligated Mandatorily Redeemable Trust Preferred Securities of Subsidiary Trust Holding Solely Junior Subordinated Debentures of the Corporation". The Company records distributions payable on the Trust Preferred Securities as minority interest expense in its consolidated statements of income. The Company will unconditionally guarantee all of the Trusts' obligations under the Trust Preferred Securities RECENT ACCOUNTING DEVELOPMENTS The Financial Accounting Standards Board (FASB) has issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities" as amended by SFAS No. 137 and SFAS No. 138. This statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires that changes in the derivative's fair value be recognized currently in income unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the statement of income and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. This statement is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. The Company has not yet quantified the impact of adopting SFAS No. 133 on its consolidated financial statements and has not determined the timing nor method of its adoption of the statement. However, the Company does not expect that the adoption of this statement will have a material impact on its financial position or results of operations. SPECIAL CHARGES The Company recorded special charges of $3.0 million during the second quarter 2000. This amount represents systems conversion charges of $1.3 million and expense of $0.7 million associated with the purchase of branches from FleetBoston Financial. Also, as previously announced, an unfavorable judgement was entered against the Bank in Plymouth Superior Court concerning a proposed commercial loan transaction that was never consummated. The Company will vigorously appeal this judgement, however, accounting convention requires that the Company provide an accrual of $1.0 million in the second quarter of 2000 specifically for that decision. EARNINGS PER SHARE
(In Thousands, except per share data) NET INCOME WEIGHTED AVERAGE NET INCOME SHARES PER SHARE ---------------------------------------------------------------------------------------------------------- For the six months ended June 30, 2000 1999 2000 1999 2000 1999 ---------------------------------------------------------------------------------------------------------- Basic EPS $6,471 $7,954 14,227 14,249 $0.45 $0.56 Effect of dilutive securities 69 163 0.00 0.01 Diluted EPS $6,471 $7,954 14,296 14,412 $0.45 $0.55 ----------------------------------------------------------------------------------------------------------
(In Thousands, except per share data) NET INCOME WEIGHTED AVERAGE NET INCOME SHARES PER SHARE ---------------------------------------------------------------------------------------------------------- For the three months ended June 30, 2000 1999 2000 1999 2000 1999 ---------------------------------------------------------------------------------------------------------- Basic EPS $2,240 $4,108 14,239 14,165 $0.16 $0.29 Effect of dilutive securities 62 155 0.00 0.00 Diluted EPS $2,240 $4,108 14,301 14,320 $0.16 $0.29 ----------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME Comprehensive income is reported net of taxes, as follows:
For the Six For the Three Months Ended Months Ended June 30, June 30, 2000 1999 2000 1999 Net Income $6,471 $7,954 $2,240 $4,108 Other Comprehensive Income, Net of Tax Unrealized gains/(losses) on securities available for sale Unrealized holding gains/(losses) arising during the period 697 (2,688) 625 (2,520) Less: reclassification adjustment for gains/(losses) included in net earnings - - - - ---------------------------------------- Other Comprehensive Income 697 (2,688) 625 (2,520) ---------------------------------------- Comprehensive Income $7,168 $5,266 $2,865 $1,588 ----------------------------------------
SEGMENT INFORMATION The Company has identified its reportable operating business segment as Community Banking, based on how the business is strategically managed. The Company's community banking business segment consists of commercial banking, retail banking, and trust services. The community banking business segment is managed as a single strategic unit which derives its revenues from a wide range of banking services, including lending activities, acceptance of demand, savings and time deposits, trust and investment management, and mortgage servicing income from investors. The Company does not have a single external customer from which it derives ten percent or more of its revenues and operates in the New England area of the United States. Non reportable operating segments of the Company's operations which do not have similar characteristics to the community banking operations and do not meet the quantitative thresholds requiring disclosure, are included in the Other category in the disclosure of business segments below. These non-reportable segments include Parent Company, Independent Capital Trust I and Independent Capital Trust II financial information. Information about reportable segments and reconciliation of such information to the consolidated financial statements as of and for the quarters ended June 30, follows (in thousands): RECONCILIATION TO CONSOLIDATED FINANCIAL INFORMATION
Community Other Adjustments For the Six months Ended Banking Other and Eliminations Consolidated June 30, 2000 Total Assets $1,650,096 $213,442 ($211,208) $1,652,330 Net Interest Income 32,464 914 - 33,378 Total Non-Interest Income 7,643 8,268 (8,268) 7,643 Net Income $8,191 $6,548 ($8,268) $6,471 For Six months Ended June 30, 1999 Total Assets $1,542,643 $154,501 ($150,787) $1,546,357 Net Interest Income 29,626 347 - 29,973 Total Non-Interest Income 7,306 8,742 (8,742) 7,306 Net Income $8,701 $7,995 ($8,742) $7,954
For the three Months Ended Community Other Adjustments June 30, 2000 Banking Other And Eliminations Consolidated Net Interest Income $16,326 $514 $16,840 Total Non-Interest Income 4,010 3,206 (3,206) 4,010 Net Income $3,166 $2,280 ($3,206) $2,240 For Three Months Ended June 30, 1999 Net Interest Income $14,942 $169 - $15,111 Total Non-Interest Income 3,882 4,331 (4,332) 3,881 Net Income $4,312 $4,128 ($4,332) $4,108
The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on profit or loss from operations before income taxes, not including nonrecurring gains or losses. The Company derives a majority of its revenues from interest income and the chief operating decision maker relies primarily on net interest revenue to assess the performance of the segments and make decisions about resources to be allocated to the segment. Therefore, the segments are reported above using net interest income. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INDEPENDENT BANK CORP. (registrant) Date: September 22, 2000 /s/ Douglas H. Philipsen Douglas H. Philipsen President, Chairman of the Board and Chief Executive Officer Date: September 22, 2000 /s/ Denis K. Sheahan -------------------- Denis K. Sheahan Chief Financial Officer and Treasurer (Principal Financial and Principal Accounting Officer)