Independent Bank Corp. (NASDAQ: INDB), parent of Rockland Trust Company, today announced 2014 fourth quarter net income of $16.0 million, which represents an increase of 1.5% as compared to $15.7 million in the prior quarter. Diluted earnings per share remained consistent with the prior quarter at $0.66 for the fourth quarter of 2014. Net income for the full year was $59.9 million, or $2.49 on a diluted earnings per share basis, as compared to $50.3 million, or $2.18 on a diluted earnings per share basis, for the prior year.

The Company’s results contain items that the Company considers non-core, such as merger and acquisition expenses. When excluding such items, net operating earnings for the fourth quarter were $16.6 million, or $0.69 per diluted share, versus the prior quarter’s net operating earnings of $16.2 million, or $0.67 per diluted share, representing increases of 2.5% and 3.0%, respectively. Net operating earnings for 2014 were $59.9 million, or $2.50 on a diluted earnings per share basis, an increase of 8.6% and 4.6%, respectively, when compared to net operating earnings of $55.2 million, or $2.39 per diluted share in 2013.

“Our discipline and focus continues to deliver outstanding results ~ despite a challenging operating environment, 2014 was a record year for earnings due to the teamwork and devotion of my Rockland Trust colleagues,” said Christopher Oddleifson, President and Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “We are positioned to sustain organic growth, and have the anticipated closing of Peoples Federal Bancshares acquisition on our horizon. We look forward to deepening and expanding customer relationships in 2015 as we expand in and around Boston and in the other markets we serve.”

BALANCE SHEET

Total assets of $6.4 billion at December 31, 2014 decreased by $19.5 million, or 0.3%, from the prior quarter and increased by $265.7 million, or 4.4%, as compared to the year ago period.

Total loans of $5.0 billion at December 31, 2014 increased by $22.9 million during the fourth quarter, or 1.8%, on an annualized basis, and by $252.4 million, or 5.4%, when compared to the year ago period. Ongoing growth in the commercial real estate, commercial and industrial and small business portfolio was partly offset by slightly lower construction balances. There was also continued modest growth in the home equity portfolios due in part to successful marketing campaigns.

Total deposits of $5.2 billion at December 31, 2014 decreased by $92.0 million, or 1.7%, compared to the prior quarter, partially due to an outflow of deposits relating to the Company’s 1031 Exchange business as well as seasonal declines. Despite the fourth quarter decrease, deposit levels increased $224.0 million, or 4.5%, when compared to the year ago period. Core deposits to total deposits remained consistent with the period ended September 30, 2014, representing 87.3% of total deposits as of December 31, 2014. The overall cost of deposits declined to 0.20% and 0.21%, for the quarter and year-end periods, down one and two basis points, respectively, from the prior quarter and year ago periods.

The securities portfolio decreased from the prior quarter by $9.9 million to $724.0 million at December 31, 2014, due to paydowns and the sale of approximately $4.4 million of low-balance mortgage-backed securities. The securities portfolio comprised 11.4% of total assets as of December 31, 2014.

Stockholders’ equity at December 31, 2014 rose to $640.5 million, an increase of 2.1% from the prior quarter. Compared to the year ago period, stockholders’ equity has increased by $49.0 million, or 8.3%. The strong growth in capital led to an increase in the Company’s tangible book value per share, which increased by $0.52, or 2.8% during the fourth quarter to $19.18. The Company’s tangible common ratio of 7.44% also reflected a strong increase from the prior quarter.

NET INTEREST INCOME

Net interest income increased to $49.8 million for the fourth quarter as compared to $49.6 million in the linked quarter, reflective of higher earning asset levels. During the fourth quarter, the Company’s net interest margin remained consistent with the prior quarter at 3.42%, as earning asset yield and total funding cost were essentially stable.

NONINTEREST INCOME

The Company recorded noninterest income of $18.5 million during the fourth quarter, which represents a $1.4 million, or 8.0%, increase from the linked quarter. Significant changes in noninterest income in the fourth quarter compared to the third quarter included the following:

  • Deposit account fees and interchange and ATM fees decreased by $141,000, or 1.8%, mainly due to lower transaction activity.
  • Investment management income decreased by $129,000, or 2.6%. Full year income rose by 16.7% to $19.6 million and assets under administration of $2.5 billion were 9.4% above prior year levels.
  • The cash surrender value of life insurance policies increased $137,000, or 17.7%, due to dividends received on certain policies.
  • Loan level derivative income increased $645,000, due to increased volume.
  • Other noninterest income was up $874,000, or 46.5%, mainly due to capital gain distributions of $403,000 on the Company’s equity security portfolio, an increase of $248,000 in income on Community Reinvestment Act investments and a gain of $121,000 on the sale of nonequity securities during the quarter.

NONINTEREST EXPENSE

The Company recorded noninterest expense of $44.3 million during the fourth quarter, which represents a $1.8 million, or 4.1%, increase from the prior quarter. Significant changes in noninterest expense in the fourth quarter compared to the third quarter included the following:

  • Salaries and employee benefits increased $820,000, or 3.5%, due primarily to an increase in performance based incentive compensation.
  • Occupancy and equipment expense increased $320,000, or 6.4%, due to costs associated with exiting a lease and increased office equipment expense.
  • The Company incurred an additional $586,000 in merger and acquisition costs related to the previously announced Peoples Federal Bancshares acquisition that is expected to close in the first quarter of 2015.
  • Other noninterest expenses increased by $745,000, or 6.7%, as the Company experienced higher costs related to loan workouts, sales tax audit, printing, debit cards, investment management systems, legal, and consulting. These increases were offset by a decrease in marketing expenses of $614,000 due to the timing of various initiatives.

The Company generated a return on average assets and a return on average common equity of 0.99% and 9.93%, respectively, in the fourth quarter, as compared to 0.99% and 9.97% in the prior quarter. On an operating basis, the return on average assets and the return on average common equity for the three months ended December 31, 2014 were 1.02% and 10.29%, respectively, as compared to 1.01% and 10.23%, respectively, for the prior quarter.

ASSET QUALITY

All asset quality metrics remained strong during the fourth quarter, due to the Company’s ongoing credit discipline and prudent resolution of problem loans. For the fourth quarter, total net charge-offs were $1.7 million, or 0.13% of average loans on an annualized basis, relatively consistent with the prior quarter results. The provision for loan losses was $1.8 million for the fourth quarter, as compared to $1.9 million for the prior quarter. Nonperforming loans increased slightly during the fourth quarter by $1.4 million to $27.5 million, and represent 0.55% of total loans at December 31, 2014, as compared to 0.53% of total loans at September 30, 2014. In addition, nonperforming assets were consistent with prior quarter levels at $38.9 million at the end of the fourth quarter, as compared to $38.6 million in the prior quarter. Delinquency as a percentage of loans was 0.80% at December 31, 2014, up seven basis points from the prior quarter.

The allowance for loan losses was $55.1 million at December 31, 2014, as compared to $55.0 million at September 30, 2014. The Company’s allowance for loan losses as a percentage of loans was 1.11% at December 31, 2014 and September 30, 2014.

CONFERENCE CALL INFORMATION

Christopher Oddleifson, Chief Executive Officer and Robert Cozzone, Chief Financial Officer will host a conference call to discuss fourth quarter earnings at 10:00 a.m. Eastern Time on Friday, January 23, 2015. Internet access to the call is available on the Company’s website at www.rocklandtrust.com or via telephonic access by dial-in at 1-888-336-7153 reference: INDB. A replay of the call will be available by calling 1-877-344-7529. Replay Conference Number: 10057752 and will available through February 6, 2015. Additionally, a webcast replay will be available until January 23, 2016.

ABOUT INDEPENDENT BANK CORP.

Independent Bank Corp. has approximately $6.4 billion in assets and is the holding company for Rockland Trust Company, a full-service commercial bank headquartered in Massachusetts. Rockland Trust offers a wide range of banking, investment, and insurance services to businesses and individuals through retail branches, commercial lending offices, investment management offices, and residential lending centers located in Eastern Massachusetts and Rhode Island, as well as through telephone banking, mobile banking, and the Internet. Rockland Trust, which was named to Sandler 2014 Sm-All Stars list of top performing small-cap banks and thrifts in the country, is an FDIC Member and an Equal Housing Lender. To find out why Rockland Trust is the bank “Where Each Relationship Matters ®”, please visit www.rocklandtrust.com.

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

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

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

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

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Operating earnings and operating EPS, which are non-GAAP financial measures, exclude gain or loss due to items that management believes are unrelated to its core banking business and will not have a material financial impact on operating results in future periods, such as gains or losses on the sales of securities, merger and acquisition expenses, and other items. The Company’s management uses operating earnings and operating EPS to measure the strength of the Company’s core banking business and to identify trends that may to some extent be obscured by such excluded gains or losses. The Company has included information on these non-GAAP measures because management believes that investors may find it useful to have access to the same analytical tool used by management and may also find that it facilitates the comparison of the Company to other companies in the financial services industry. These non-GAAP measures should not be viewed as a substitute for operating results determined in accordance with GAAP. An item which management deems to be non-core and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP performance measures, including operating earnings and operating EPS, are not necessarily comparable to non-GAAP performance measures which may be presented by other companies.

                           
INDEPENDENT BANK CORP. FINANCIAL SUMMARY
 
 
                           
% Change % Change
CONSOLIDATED BALANCE SHEETS December 31, September 30, December 31, Dec 2014 vs. Dec 2014 vs.
(Unaudited dollars in thousands)         2014           2014           2013         Sept 2014 Dec 2013
 
Assets
Cash and due from banks $ 143,342 $ 98,810 $ 168,106 45.07 % -14.73 %
Interest-earning deposits with banks 34,912 126,522 48,219 -72.41 % -27.60 %
Securities
Securities available for sale 348,554 361,455 356,862 -3.57 % -2.33 %
Securities held to maturity   375,453     372,418     350,652   0.81 % 7.07 %
Total securities 724,007 733,873 707,514 -1.34 % 2.33 %
 
Loans held for sale 6,888 12,580 8,882 -45.25 % -22.45 %
Loans
Commercial and industrial 860,839 842,833 784,202 2.14 % 9.77 %
Commercial real estate 2,347,323 2,338,641 2,249,260 0.37 % 4.36 %
Commercial construction 265,994 276,593 223,859 -3.83 % 18.82 %
Small business   85,247     81,435     77,240   4.68 % 10.37 %
Total commercial 3,559,403 3,539,502 3,334,561 0.56 % 6.74 %
Residential real estate 530,259 536,822 541,443 -1.22 % -2.07 %
Home equity - 1st position 513,518 509,903 497,075 0.71 % 3.31 %
Home equity - subordinate positions   350,345     344,743     325,066   1.62 % 7.78 %
Total consumer real estate 1,394,122 1,391,468 1,363,584 0.19 % 2.24 %
Other consumer   17,208     16,885     20,162   1.91 % -14.65 %
Total loans   4,970,733     4,947,855     4,718,307   0.46 % 5.35 %
Less - allowance for loan losses   (55,100 )   (55,005 )   (53,239 ) 0.17 % 3.50 %
Net loans 4,915,633 4,892,850 4,665,068 0.47 % 5.37 %
Federal Home Loan Bank stock 33,233 33,233 39,926 0.00 % -16.76 %
Bank premises and equipment 64,074 64,186 64,950 -0.17 % -1.35 %
Goodwill and core deposit intangible 180,306 180,871 182,642 -0.31 % -1.28 %
Other assets   262,517     241,503     213,927   8.70 % 22.71 %
Total assets $ 6,364,912   $ 6,384,428   $ 6,099,234   -0.31 % 4.36 %
 
Liabilities and Stockholders' Equity
Deposits
Demand deposits $ 1,462,200 $ 1,493,116 $ 1,369,432 -2.07 % 6.77 %
Savings and interest checking accounts 2,108,486 2,070,617 1,940,153 1.83 % 8.68 %
Money market 990,160 1,066,237 933,205 -7.14 % 6.10 %
Time certificates of deposit   649,620     672,464     743,628   -3.40 % -12.64 %
Total deposits 5,210,466 5,302,434 4,986,418 -1.73 % 4.49 %
Borrowings
Federal Home Loan Bank borrowings 70,080 60,127 140,294 16.55 % -50.05 %
Customer repurchase agreements and other short-term borrowings 147,890 153,192 154,288 -3.46 % -4.15 %
Wholesale repurchase agreements 50,000 50,000 50,000 0.00 % 0.00 %
Junior subordinated debentures 73,685 73,741 73,906 -0.08 % -0.30 %
Subordinated debentures   65,000     30,000     30,000   116.67 % 116.67 %
Total borrowings 406,655 367,060 448,488 10.79 % -9.33 %
Total deposits and borrowings 5,617,121 5,669,494 5,434,906 -0.92 % 3.35 %
Other liabilities 107,264 87,752 72,788 22.24 % 47.36 %
Stockholders' equity
Common stock 237 237 235 0.00 % 0.85 %
Additional paid in capital 311,978 308,723 305,179 1.05 % 2.23 %
Retained earnings 330,444 320,226 293,560 3.19 % 12.56 %
Accumulated other comprehensive loss, net of tax   (2,132 )   (2,004 )   (7,434 ) 6.39 % -71.32 %
Total stockholders' equity   640,527     627,182     591,540   2.13 % 8.28 %
Total liabilities and stockholders' equity $ 6,364,912   $ 6,384,428   $ 6,099,234   -0.31 % 4.36 %
 

               
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended
(Unaudited dollars in thousands)           % Change % Change
December 31, September 30, December 31, Dec 2014 vs. Dec 2014 vs.
  2014     2014     2013   Sept 2014 Dec 2013
 
Interest income
Interest on fed funds sold and short term investments $ 76 $ 96 $ 65 -20.83 % 16.92 %
Interest and dividends on securities 4,741 4,599 4,362 3.09 % 8.69 %
Interest on loans 49,911 49,514 48,032 0.80 % 3.91 %
Interest on loans held for sale   99     159     112   -37.74 % -11.61 %
Total interest income 54,827 54,368 52,571 0.84 % 4.29 %
Interest expense
Interest on deposits 2,725 2,735 2,766 -0.37 % -1.48 %
Interest on borrowed funds   2,282     2,070     2,900   10.24 % -21.31 %
Total interest expense   5,007     4,805     5,666   4.20 % -11.63 %
Net interest income 49,820 49,563 46,905 0.52 % 6.21 %
Less - provision for loan losses   1,750     1,901     3,150   -7.94 % -44.44 %
Net interest income after provision for loan losses 48,070 47,662 43,755 0.86 % 9.86 %
Noninterest income
Deposit account fees 4,587 4,656 4,776 -1.48 % -3.96 %
Interchange and ATM fees 3,303 3,375 2,949 -2.13 % 12.00 %
Investment management 4,887 5,016 4,416 -2.57 % 10.67 %
Mortgage banking income 1,004 1,015 941 -1.08 % 6.70 %
Increase in cash surrender value of life insurance policies 911 774 904 17.70 % 0.77 %
Gain on life insurance benefits - - 227 n/a -100.00 %
Loan level derivative income 1,026 381 760 169.29 % 35.00 %
Other noninterest income   2,755     1,881     2,491   46.46 % 10.60 %
Total noninterest income 18,473 17,098 17,464 8.04 % 5.78 %
Noninterest expense
Salaries and employee benefits 24,471 23,651 22,931 3.47 % 6.72 %
Occupancy and equipment 5,347 5,027 4,908 6.37 % 8.94 %
Data processing and facilities management 1,156 1,178 1,183 -1.87 % -2.28 %
FDIC assessment 942 957 926 -1.57 % 1.73 %
Merger and acquisition 586 677 6,219 -13.44 % -90.58 %
Other noninterest expense   11,862     11,117     11,678   6.70 % 1.58 %
Total noninterest expense 44,364 42,607 47,845 4.12 % -7.28 %
Income before income taxes   22,179     22,153     13,374   0.12 % 65.84 %
Provision for income taxes   6,201     6,415     2,786   -3.34 % 122.58 %
Net income $ 15,978   $ 15,738   $ 10,588   1.52 % 50.91 %
 
Basic earnings per share $ 0.67 $ 0.66 $ 0.45 1.52 % 48.89 %
Diluted earnings per share $ 0.66 $ 0.66 $ 0.45 0.00 % 46.67 %
Basic average shares 23,968,320 23,911,678 23,383,608
Diluted average shares 24,055,132 24,002,363 23,481,053
 

Performance ratios

Net interest margin (FTE) 3.42 % 3.42 % 3.45 %
Return on average assets 0.99 % 0.99 % 0.70 %
Return on average common equity 9.93 % 9.97 % 7.29 %
 

Reconciliation table - non-GAAP financial information

Net income $ 15,978 $ 15,738 $ 10,588 1.52 % 50.91 %
Noninterest income components
Less - gain on sale of nonequity securities, net of tax (72 ) - (153 )
Less - gain on life insurance benefits (tax exempt) - - (227 )
Noninterest expense components
Add - loss on sale of nonequity securities 13 - -
Add - merger & acquisition expenses, net of tax 404 400 4,033
Add - impairment on acquired facilities, net of tax - 12 -
Other components:
Add - Adjustment for tax effect of previously incurred merger and acquisition expenses   235     -     -      
Net operating earnings $ 16,558   $ 16,150   $ 14,241   2.52 % 16.27 %
 
Diluted earnings per share, on an operating basis $ 0.69   $ 0.67   $ 0.61   2.99 % 13.11 %
 

                 
CONSOLIDATED STATEMENTS OF INCOME
Twelve Months Ended % Change
December 31, December 31, Dec 2014 vs.
  2014     2013   Dec 2013
 
Interest income
Interest on fed funds sold and short term investments $ 279 $ 200 39.50 %
Interest and dividends on securities 18,754 15,192 23.45 %
Interest on loans 197,021 189,748 3.83 %
Interest on loans held for sale   405     774   -47.67 %
Total interest income 216,459 205,914 5.12 %
Interest expense
Interest on deposits 11,039 10,624 3.91 %
Interest on borrowed funds   9,378     12,712   -26.23 %
Total interest expense   20,417     23,336   -12.51 %
Net interest income 196,042 182,578 7.37 %
Less - provision for loan losses   10,403     10,200   1.99 %
Net interest income after provision for loan losses 185,639 172,378 7.69 %
Noninterest income
Deposit account fees 18,065 17,940 0.70 %
Interchange and ATM fees 12,975 10,883 19.22 %
Investment management 19,642 16,832 16.69 %
Mortgage banking income 3,384 6,734 -49.75 %
Increase in cash surrender value of life insurance policies 3,128 3,229 -3.13 %
Gain on life insurance benefits 1,964 227 765.34 %
Loan level derivative income 2,477 3,439 -27.97 %
Gain on extinguishment of debt - 763 -100.00 %
Other noninterest income   8,308     7,962   4.35 %
Total noninterest income 69,943 68,009 2.84 %
Noninterest expense
Salaries and employee benefits 94,044 89,894 4.62 %
Occupancy and equipment expenses 21,820 19,650 11.04 %
Data processing and facilities management 4,765 4,748 0.36 %
FDIC assessment 3,770 3,579 5.34 %
Merger and acquisition expenses 1,339 8,685 -84.58 %
Loss on termination of derivatives 1,122 - 100.00 %
Other noninterest expense   44,978     47,093   -4.49 %
Total noninterest expense 171,838 173,649 -1.04 %
Income before income taxes   83,744     66,738   25.48 %
Provision for income taxes   23,899     16,484   44.98 %
Net income $ 59,845   $ 50,254   19.09 %
 
Basic earnings per share $ 2.50 $ 2.18 14.68 %
Diluted earnings per share $ 2.49 $ 2.18 14.22 %
Basic average shares 23,899,562 23,011,814
Diluted average shares 23,993,377 23,088,578
 

Performance ratios

Net interest margin (FTE) 3.45 % 3.51 %
Return on average assets 0.95 % 0.87 %
Return on average common equity 9.66 % 9.09 %
 

Reconciliation table - non-GAAP financial information

Net income $ 59,845 $ 50,254 19.09 %
Noninterest income components
Less - gain on sale of nonequity securities, net of tax (72 ) (153 )
Less - gain on life insurance benefits, tax exempt (1,964 ) (227 )
Less - gain on extinguishment of debt, net of tax - (451 )
Noninterest expense components
Add - loss on termination of derivatives, net of tax 663 -
Add - severance, net of tax - 192
Add - loss on sale of securities 13 -
Add - merger & acquisition expenses, net of tax 1,105 5,564
Add - impairment on acquired facilities, net of tax   310     -    
Net operating earnings $ 59,900   $ 55,179   8.56 %
 
Diluted earnings per share, on an operating basis $ 2.50   $ 2.39   4.60 %
 

                                           
 
 

Reconciliation table - non-GAAP financial information

(Unaudited dollars in thousands) Three Months Ended Twelve Months Ended
% Change % Change
December 31, September 30, December 31, Dec 2014 vs. Dec 2014 vs.

December 31,

December 31, Dec 2014 vs.
  2014     2014     2013   Sept 2014   Dec 2013     2014     2013   Dec 2013
 
Noninterest income GAAP $ 18,473 $ 17,098 $ 17,464 8.04 % 5.78 % $ 69,943 $ 68,009 2.84 %
Less - net gain on sale of nonequity securities (121 ) - (258 ) 100.00 % -53.10 % (121 ) (258 )

-53.10

%

Less - gain on life insurance benefits - - (227 ) n/a -100.00 % (1,964 ) (227 ) 765.34 %
Less - gain on extinguishment of debt   -     -     -     n/a     n/a     -     (763 )   -100.00 %
Total noninterest income as adjusted $ 18,352   $ 17,098   $ 16,979     7.33 %   8.09 % $ 67,858   $ 66,761     1.64 %
 
Noninterest expense GAAP $ 44,364 $ 42,607 $ 47,845 4.12 % -7.28 % $ 171,838 $ 173,649 -1.04 %
Less - loss on termination of derivatives - - - n/a n/a (1,122 ) - 100.00 %
Less - loss on sale of nonequity securities (21 ) - - 100.00 % 100.00 % (21 ) - 100.00 %
Less - severance - - - n/a n/a - (325 ) -100.00 %
Less - merger and acquisition expenses (586 ) (677 ) (6,219 ) -13.44 % -90.58 % (1,339 ) (8,685 ) -84.58 %
Less - impairment on acquired facilities   -     (21 )   -     -100.00 %   n/a     (524 )   -     100.00 %
Total noninterest expense as adjusted $ 43,757   $ 41,909   $ 41,626     4.41 %   5.12 % $ 168,832   $ 164,639     2.55 %
 
 
 
 

Asset quality

Nonperforming Assets Net Charge-Offs Net Charge-Offs
At For the Three Months Ended   For the Twelve Months Ended
December 31, September 30, December 31, December 31, September 30, December 31, December 31, December 31,
  2014     2014     2013     2014       2014     2013     2014     2013  
 
Nonperforming loans
Commercial & industrial loans $ 2,822 $ 2,321 $ 4,178 $ 91 $ 498 $ 83 $ 1,635 $ 2,411
Commercial real estate loans 7,590 6,512 11,834 1,099 634 2,567 5,050 3,589
Small business loans 246 278 633 29 44 112 330 494
Residential real estate loans 8,803 9,305 10,791 117 21 113 402 479
Home equity 8,038 7,672 7,068 154 93 354 501 1,235
Other consumer   13     31     155     165     144     244     624       587  
Total nonperforming loans / total net charge-offs $ 27,512   $ 26,119   $ 34,659   $ 1,655   $ 1,434   $ 3,473   $ 8,542     $ 8,795  
Nonaccrual securities 3,640 2,806 1,541
Other assets in possession - 30 167
Other real estate owned   7,742     9,602     7,466  
Total nonperforming assets $ 38,894   $ 38,557   $ 43,833  
 
Nonperforming loans/gross loans 0.55 % 0.53 % 0.73 %
Nonperforming assets/total assets 0.61 % 0.60 % 0.72 %
Allowance for loan losses/nonperforming loans 200.28 % 210.59 % 153.61 %
Gross loans/total deposits 95.40 % 93.31 % 94.62 %
Allowance for loan losses/total loans 1.11 % 1.11 % 1.13 %
 
Net charge-offs to average loans (quarter annualized) 0.13 % 0.12 % 0.30 %
Net charge-offs to average loans (year-to-date) 0.18 % 0.19 %
 
Three Months Ended
December 31, September 30, December 31,

Nonperforming assets reconciliation

   2014     2014     2013  
Nonperforming assets beginning balance $ 38,557 $ 39,661 $ 48,879
New to Nonperforming 9,287 4,972 12,275
Loans charged-off (2,325 ) (1,906 ) (4,097 )
Loans paid-off (4,119 ) (1,833 ) (7,073 )
Loans transferred to other real estate owned/other assets (209 ) (783 ) (523 )
Loans restored to performing status (1,230 ) (1,705 ) (3,251 )
New to other real estate owned 209 783 523
Sale of other real estate owned (3,206 ) (1,480 ) 419
Capital improvements to other real estate owned 1,483 896 (2,386 )
Other   447     (48 )   (933 )
Nonperforming assets ending balance $ 38,894   $ 38,557   $ 43,833  
 
 
Troubled Debt Restructurings
At
December 31, September 30, December 31,
  2014     2014     2013  
Troubled debt restructurings on accrual status $ 38,382 $ 40,140 $ 38,410
Troubled debt restructurings on nonaccrual status   5,248     5,709     7,454  
Total troubled debt restructurings $ 43,630     $ 45,849     $ 45,864  
 
 
December 31, September 30, December 31,

Financial ratios

   2014     2014     2013  
Book value per common share $ 26.69 $ 26.23 $ 24.85
Tangible book value per share $ 19.18 $ 18.66 $ 17.18
Tangible common capital/tangible assets 7.44 % 7.19 % 6.91 %
 

Capital adequacy

Tier one leverage capital ratio (1) 8.84 % 8.75 % 8.64 %
(1) Estimated number for December 31, 2014.
 

                                             

INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION

       
(Unaudited - dollars in thousands) Three Months Ended
December 31, 2014       September 30, 2014     December 31, 2013
Interest Interest Interest
  Average Earned/ Yield/ Average Earned/ Yield/ Average Earned/ Yield/
Balance       Paid       Rate       Balance       Paid       Rate       Balance       Paid       Rate
 
 
Interest-earning assets
Interest-earning deposits with banks, federal funds sold, and short term investments $ 120,647 $ 76 0.25 % $ 153,314 $ 96 0.25 % $ 104,749 $ 65 0.25 %
Securities
Taxable investment securities 726,417 4,708 2.57 % 704,021 4,563 2.57 % 646,708 4,339 2.66 %
Nontaxable investment securities (1)   5,670   51 3.57 %   5,861   55 3.72 %   3,394   35 4.09 %
Total securities 732,088 4,759 2.58 % 709,882 4,618 2.58 % 650,102 4,374 2.67 %
Loans held for sale 11,972 99 3.28 % 16,812 159 3.75 % 12,553 112 3.54 %
Loans
Commercial and industrial 845,113 8,207 3.85 % 842,672 8,150 3.84 % 770,729 7,707 3.97 %
Commercial real estate (1) 2,358,236 24,689 4.15 % 2,302,181 24,252 4.18 % 2,231,793 24,386 4.34 %
Commercial construction 259,218 2,895 4.43 % 266,534 2,824 4.20 % 221,010 2,335 4.19 %
Small business   82,417   1,143   5.50 %   80,114   1,133   5.61 %   75,607   1,072 5.63 %
Total commercial 3,544,984 36,934 4.13 % 3,491,501 36,359 4.13 % 3,299,139 35,500 4.27 %
Residential real estate 534,527 5,465 4.06 % 537,669 5,511 4.07 % 518,742 4,973 3.80 %
Home equity   859,994   7,507   3.46 %   847,365   7,459   3.49 %   813,466   7,321 3.57 %
Total consumer real estate 1,394,521 12,972 3.69 % 1,385,034 12,970 3.72 % 1,332,208 12,294 3.66 %
Other consumer   16,534   387 9.29 %   17,139   412 9.54 %   20,177   479 9.42 %
Total loans   4,956,039     50,293   4.03 %   4,893,674     49,741   4.03 %   4,651,524     48,273   4.12 %
Total interest-earning assets $ 5,820,745   $ 55,227   3.76 % $ 5,773,682   $ 54,614   3.75 % $ 5,418,928   $ 52,824   3.87 %
Cash and due from banks 120,228 78,375 165,667
Federal Home Loan Bank stock 33,233 34,576 39,300
Other assets   435,254   426,661   393,365
Total assets $ 6,409,460 $ 6,313,294 $ 6,017,260
Interest-bearing liabilities
Deposits
Savings and interest checking accounts $ 2,129,340 $ 871 0.16 % $ 2,067,132 $ 895 0.17 % $ 1,883,026 $ 915 0.19 %
Money market 1,010,401 653 0.26 % 1,027,830 608 0.23 % 917,744 582 0.25 %
Time deposits   658,533     1,201   0.72 %   686,195     1,232   0.71 %   718,432     1,269   0.70 %
Total interest-bearing deposits $ 3,798,274 $ 2,725 0.28 % $ 3,781,157 $ 2,735 0.29 % $ 3,519,202 $ 2,766 0.31 %
Borrowings
Federal Home Loan Bank borrowings $ 60,974 $ 456 2.97 % $ 60,151 $ 462 3.05 % $ 179,743 $ 1,258 2.78 %
Customer repurchase agreements and other short-term borrowings 156,041 52 0.13 % 146,804 49 0.13 % 160,415 72 0.18 %
Wholesale repurchase agreements 50,000 292 2.32 % 50,000 292 2.32 % 50,000 292 2.32 %
Junior subordinated debentures 73,712 1,012 5.45 % 73,771 1,010 5.43 % 73,933 1,019 5.47 %
Subordinated debentures   47,120     470   3.96 %   30,000     257   3.40 %   30,000     259   3.43 %
Total borrowings $ 387,847   $ 2,282   2.33 % $ 360,726   $ 2,070   2.28 % $ 494,091   $ 2,900   2.33 %
Total interest-bearing liabilities $ 4,186,121   $ 5,007   0.47 % $ 4,141,883   $ 4,805   0.46 % $ 4,013,293   $ 5,666   0.56 %
Demand deposits 1,493,464 1,459,105 1,353,155
Other liabilities   91,726   86,052   74,660
Total liabilities $ 5,771,311 $ 5,687,040 $ 5,441,108
Stockholders' equity   638,149   626,254   576,152
Total liabilities and stockholders' equity $ 6,409,460 $ 6,313,294 $ 6,017,260
 
Net interest income $ 50,220 $ 49,809 $ 47,158
 
Interest rate spread (2) 3.29 % 3.29 % 3.31 %
 
Net interest margin (3) 3.42 % 3.42 % 3.45 %
 
Supplemental Information
Total deposits, including demand deposits $ 5,291,738 $ 2,725 $ 5,240,262 $ 2,735 $ 4,872,357 $ 2,766
Cost of total deposits 0.20 % 0.21 % 0.23 %
Total funding liabilities, including demand deposits $ 5,679,585 $ 5,007 $ 5,600,988 $ 4,805 $ 5,366,448 $ 5,666
Cost of total funding liabilities 0.35 % 0.34 % 0.42 %
 
 
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $400,000, $246,000, and $253,000 for the three months ended December 31, 2014, September 30, 2014, and December 31, 2013, 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, 2014       December 31, 2013
      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 $ 111,764 $ 279 0.25 % $ 80,349 $ 200 0.25 %
Securities
Taxable investment securities 713,969 18,610 2.61 % 566,764 15,137 2.67 %
Nontaxable investment securities (1)   5,944   233 3.92 %   1,523   88 5.78 %
Total securities 719,913 18,843 2.62 % 568,287 15,225 2.68 %
Loans held for sale 11,125 405 3.64 % 27,693 774 2.79 %
Loans
Commercial and industrial 837,618 32,442 3.87 % 736,814 29,241 3.97 %
Commercial real estate (1) 2,306,901 97,971 4.25 % 2,166,073 96,165 4.44 %
Commercial construction 249,389 10,682 4.28 % 218,894 9,066 4.14 %
Small business   79,736   4,431 5.56 %   76,700   4,272 5.57 %
Total commercial 3,473,644 145,526 4.19 % 3,198,481 138,744 4.34 %
Residential real estate 538,171 21,462 3.99 % 534,696 21,179 3.96 %
Home equity   841,710   29,568 3.51 %   800,646   28,712 3.59 %
Total consumer real estate 1,379,881 51,030 3.70 % 1,335,342 49,891 3.74 %
Other consumer   17,672   1,732 9.80 %   22,528   2,047 9.09 %
Total loans   4,871,197   198,288 4.07 %   4,556,351   190,682 4.18 %
Total interest-earning assets $ 5,713,999 $ 217,815 3.81 % $ 5,232,680 $ 206,881 3.95 %
Cash and due from banks 113,394 127,171
Federal Home Loan Bank stock 36,467 39,416
Other assets   422,598   400,805
Total assets $ 6,286,458 $ 5,800,072
Interest-bearing liabilities
Deposits
Savings and interest checking accounts $ 2,087,973 $ 3,573 0.17 % $ 1,735,211 $ 3,107 0.18 %
Money market 972,664 2,487 0.26 % 887,936 2,271 0.26 %
Time deposits   698,070   4,979 0.71 %   724,644   5,246 0.72 %
Total interest-bearing deposits $ 3,758,707 $ 11,039 0.29 % $ 3,347,791 $ 10,624 0.32 %
Borrowings
Federal Home Loan Bank borrowings $ 100,631 $ 2,784 2.77 % $ 245,392 $ 5,446 2.22 %
Customer repurchase agreements and other short-term borrowings 144,358 200 0.14 % 150,286 276 0.18 %
Wholesale repurchase agreements 50,000 1,158 2.32 % 50,000 1,158 2.32 %
Junior subordinated debentures 73,797 4,008 5.43 % 74,017 4,049 5.47 %
Subordinated debentures   34,315   1,228 3.58 %   30,000   1,783 5.94 %
Total borrowings $ 403,101 $ 9,378 2.33 % $ 549,695 $ 12,712 2.31 %
Total interest-bearing liabilities $ 4,161,808 $ 20,417 0.49 % $ 3,897,486 $ 23,336 0.60 %
Demand deposits 1,422,510 1,271,616
Other liabilities   82,310   78,392
Total liabilities $ 5,666,628 $ 5,247,494
Stockholders' equity   619,830   552,578
Total liabilities and stockholders' equity $ 6,286,458 $ 5,800,072
 
Net interest income $ 197,398 $ 183,545
 
Interest rate spread (2) 3.32 % 3.35 %
 
Net interest margin (3) 3.45 % 3.51 %
 
Supplemental Information
Total deposits, including demand deposits $ 5,181,217 $ 11,039 $ 4,619,407 $ 10,624
Cost of total deposits 0.21 % 0.23 %
Total funding liabilities, including demand deposits $ 5,584,318 $ 20,417 $ 5,169,102 $ 23,336
Cost of total funding liabilities 0.37 % 0.45 %
 
 
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.4 million and $967,000 for the twelve months ended December 31, 2014 and 2013, respectively.
(2) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
 
Certain amounts in prior year financial statement have been reclassified to conform to the current year's presentation.