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 |
Exhibit 99.1 | Press Release dated October 20, 2016. |
INDEPENDENT BANK CORP. | |||
Date: | October 20, 2016 | By: | /s/Robert Cozzone |
ROBERT COZZONE | |||
CHIEF FINANCIAL OFFICER AND TREASURER |
Exhibit Index | |
Exhibit # | Exhibit Description |
99.1 | Q3 2016 Earnings Press Release dated October 20, 2016 |
• | Deposit account fees and interchange and ATM fees increased by $205,000, or 2.4%, driven mainly by ongoing increases in total active accounts. |
• | Investment management income decreased by $288,000, or 5.0%, primarily due to seasonal tax preparation fees received during the second quarter, partially offset by a 1.8% increase in assets under administration to $2.9 billion as of September 30, 2016. |
• | Mortgage banking income increased by $600,000, or 44.0%, attributable to higher origination volumes combined with a decrease in the amount of impairment recognized on the Company's mortgage servicing asset. |
• | Loan level derivative income decreased by $1.3 million, or 61.3%, due to lower customer demand in the third quarter. |
• | Other noninterest income increased $92,000, or 4.0%, mainly due to an increase in checkbook fees and partially offset by a decrease in commercial loan fees. |
• | Salaries and employee benefits increased by $418,000, or 1.6%, due primarily to increases in commissions, payroll taxes and medical insurance, partially offset by decreases in other incentive compensation. |
• | Occupancy and equipment expenses decreased by $234,000, or 4.1%, due to snow removal costs that were incurred in the prior quarter and lower repair and maintenance expense. |
• | Data processing expense increased by $139,000, or 14.3%, due to one-time costs associated with implementation of new software. |
• | The FDIC assessment decreased by $195,000, or 21.2%, due to a reduction in assessment rates effective July 1, 2016. |
• | Merger and acquisition costs amounted to $151,000 for the quarter as compared to $206,000 in the prior quarter, related to the pending acquisition of New England Bancorp, Inc., which is expected to close in November 2016. |
• | Other noninterest expense decreased by $395,000, or 3.3%, driven primarily by lower provisions for unfunded commitments, loan workout costs, and card issuance fees, offset by higher advertising, recruitment, and mortgage operation expenses. |
• | 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; |
• | adverse changes in asset quality including an unanticipated credit deterioration in our loan portfolio; |
• | 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; |
• | electronic fraudulent activity within the financial services industry, especially in the commercial banking sector; |
• | adverse changes in consumer spending and savings habits; |
• | the inability to realize expected revenue synergies from merger transactions in the amounts or in the timeframe anticipated; |
• | inability to retain customers and employees, including those of previous mergers; |
• | the effect of 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; |
• | 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 | |||||||||||||||
September 30 2016 | June 30 2016 | September 30 2015 | Sept 2016 vs. | Sept 2016 vs. | |||||||||||||
June 2016 | Sept 2015 | ||||||||||||||||
Assets | |||||||||||||||||
Cash and due from banks | $ | 92,185 | $ | 102,397 | $ | 160,721 | (9.97 | )% | (42.64 | )% | |||||||
Interest-earning deposits with banks | 265,618 | 229,740 | 89,607 | 15.62 | % | 196.43 | % | ||||||||||
Securities | |||||||||||||||||
Securities - trading | 809 | 799 | 454 | 1.25 | % | 78.19 | % | ||||||||||
Securities - available for sale | 387,008 | 389,824 | 365,792 | (0.72 | )% | 5.80 | % | ||||||||||
Securities - held to maturity | 430,763 | 438,656 | 448,139 | (1.80 | )% | (3.88 | )% | ||||||||||
Total securities | 818,580 | 829,279 | 814,385 | (1.29 | )% | 0.52 | % | ||||||||||
Loans held for sale (at fair value) | 13,334 | 12,927 | 11,476 | 3.15 | % | 16.19 | % | ||||||||||
Loans | |||||||||||||||||
Commercial and industrial | 857,713 | 875,164 | 862,512 | (1.99 | )% | (0.56 | )% | ||||||||||
Commercial real estate | 2,787,660 | 2,727,143 | 2,659,342 | 2.22 | % | 4.83 | % | ||||||||||
Commercial construction | 376,245 | 367,559 | 308,214 | 2.36 | % | 22.07 | % | ||||||||||
Small business | 115,054 | 111,035 | 92,278 | 3.62 | % | 24.68 | % | ||||||||||
Total commercial | 4,136,672 | 4,080,901 | 3,922,346 | 1.37 | % | 5.46 | % | ||||||||||
Residential real estate | 632,685 | 628,348 | 651,937 | 0.69 | % | (2.95 | )% | ||||||||||
Home equity - first position | 559,867 | 554,624 | 531,364 | 0.95 | % | 5.36 | % | ||||||||||
Home equity - subordinate positions | 405,245 | 393,952 | 376,530 | 2.87 | % | 7.63 | % | ||||||||||
Total consumer real estate | 1,597,797 | 1,576,924 | 1,559,831 | 1.32 | % | 2.43 | % | ||||||||||
Other consumer | 11,664 | 16,428 | 15,944 | (29.00 | )% | (26.84 | )% | ||||||||||
Total loans | 5,746,133 | 5,674,253 | 5,498,121 | 1.27 | % | 4.51 | % | ||||||||||
Less: allowance for loan losses | (58,205 | ) | (57,727 | ) | (55,205 | ) | 0.83 | % | 5.43 | % | |||||||
Net loans | 5,687,928 | 5,616,526 | 5,442,916 | 1.27 | % | 4.50 | % | ||||||||||
Federal Home Loan Bank stock | 11,304 | 11,304 | 37,485 | — | % | (69.84 | )% | ||||||||||
Bank premises and equipment, net | 76,429 | 76,173 | 73,738 | 0.34 | % | 3.65 | % | ||||||||||
Goodwill and other intangibles | 210,834 | 211,526 | 213,612 | (0.33 | )% | (1.30 | )% | ||||||||||
Other assets | 325,797 | 328,994 | 290,963 | (0.97 | )% | 11.97 | % | ||||||||||
Total assets | $ | 7,502,009 | $ | 7,418,866 | $ | 7,134,903 | 1.12 | % | 5.15 | % | |||||||
Liabilities and Stockholders' Equity | |||||||||||||||||
Deposits | |||||||||||||||||
Demand deposits | $ | 2,024,235 | $ | 1,908,986 | $ | 1,778,051 | 6.04 | % | 13.85 | % | |||||||
Savings and interest checking accounts | 2,417,195 | 2,469,162 | 2,305,636 | (2.10 | )% | 4.84 | % | ||||||||||
Money market | 1,198,959 | 1,175,669 | 1,119,913 | 1.98 | % | 7.06 | % | ||||||||||
Time certificates of deposit | 629,071 | 644,075 | 711,263 | (2.33 | )% | (11.56 | )% | ||||||||||
Total deposits | 6,269,460 | 6,197,892 | 5,914,863 | 1.15 | % | 6.00 | % | ||||||||||
Borrowings | |||||||||||||||||
Federal Home Loan Bank borrowings | 50,826 | 50,833 | 104,133 | (0.01 | )% | (51.19 | )% | ||||||||||
Customer repurchase agreements and other short-term borrowings | 140,914 | 139,716 | 138,449 | 0.86 | % | 1.78 | % | ||||||||||
Junior subordinated debentures | 73,157 | 73,207 | 73,357 | (0.07 | )% | (0.27 | )% | ||||||||||
Subordinated debentures | 34,624 | 34,612 | 34,577 | 0.03 | % | 0.14 | % | ||||||||||
Total borrowings | 299,521 | 298,368 | 350,516 | 0.39 | % | (14.55 | )% | ||||||||||
Total deposits and borrowings | 6,568,981 | 6,496,260 | 6,265,379 | 1.12 | % | 4.85 | % | ||||||||||
Other liabilities | 114,786 | 118,709 | 110,321 | (3.30 | )% | 4.05 | % | ||||||||||
Stockholders' equity | |||||||||||||||||
Common stock | 261 | 261 | 260 | — | % | 0.38 | % | ||||||||||
Additional paid in capital | 409,731 | 408,155 | 404,089 | 0.39 | % | 1.40 | % |
Retained earnings | 404,750 | 391,898 | 355,537 | 3.28 | % | 13.84 | % | ||||||||||
Accumulated other comprehensive income (loss), net of tax | 3,500 | 3,583 | (683 | ) | (2.32 | )% | (612.45 | )% | |||||||||
Total stockholders' equity | 818,242 | 803,897 | 759,203 | 1.78 | % | 7.78 | % | ||||||||||
Total liabilities and stockholders' equity | $ | 7,502,009 | $ | 7,418,866 | $ | 7,134,903 | 1.12 | % | 5.15 | % |
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||
(Unaudited dollars in thousands, except per share data) | |||||||||||||||||
Three Months Ended | |||||||||||||||||
% Change | % Change | ||||||||||||||||
September 30 2016 | June 30 2016 | September 30 2015 | Sept 2016 vs. | Sept 2016 vs. | |||||||||||||
June 2016 | Sept 2015 | ||||||||||||||||
Interest income | |||||||||||||||||
Interest on federal funds sold and short-term investments | $ | 387 | $ | 169 | $ | 121 | 129.0 | % | 219.83 | % | |||||||
Interest and dividends on securities | 5,062 | 5,298 | 5,486 | (4.45 | )% | (7.73 | )% | ||||||||||
Interest and fees on loans | 56,778 | 55,636 | 54,557 | 2.05 | % | 4.07 | % | ||||||||||
Interest on loans held for sale | 81 | 57 | 64 | 42.11 | % | 26.56 | % | ||||||||||
Total interest income | 62,308 | 61,160 | 60,228 | 1.88 | % | 3.45 | % | ||||||||||
Interest expense | |||||||||||||||||
Interest on deposits | 2,733 | 2,738 | 2,951 | (0.18 | )% | (7.39 | )% | ||||||||||
Interest on borrowings | 1,907 | 1,889 | 2,232 | 0.95 | % | (14.56 | )% | ||||||||||
Total interest expense | 4,640 | 4,627 | 5,183 | 0.28 | % | (10.48 | )% | ||||||||||
Net interest income | 57,668 | 56,533 | 55,045 | 2.01 | % | 4.77 | % | ||||||||||
Provision for loan losses | 950 | 600 | 800 | 58.33 | % | 18.75 | % | ||||||||||
Net interest income after provision for loan losses | 56,718 | 55,933 | 54,245 | 1.40 | % | 4.56 | % | ||||||||||
Noninterest income | |||||||||||||||||
Deposit account fees | 4,622 | 4,471 | 4,754 | 3.38 | % | (2.78 | )% | ||||||||||
Interchange and ATM fees | 4,190 | 4,136 | 3,949 | 1.31 | % | 6.10 | % | ||||||||||
Investment management | 5,446 | 5,734 | 4,981 | (5.02 | )% | 9.34 | % | ||||||||||
Mortgage banking income | 1,963 | 1,363 | 1,480 | 44.02 | % | 32.64 | % | ||||||||||
Increase in cash surrender value of life insurance policies | 984 | 982 | 958 | 0.20 | % | 2.71 | % | ||||||||||
Gain on sale of equity securities | — | 5 | — | (100.00 | )% | n/a | |||||||||||
Loan level derivative income | 810 | 2,095 | 968 | (61.34 | )% | (16.32 | )% | ||||||||||
Other noninterest income | 2,401 | 2,309 | 2,157 | 3.98 | % | 11.31 | % | ||||||||||
Total noninterest income | 20,416 | 21,095 | 19,247 | (3.22 | )% | 6.07 | % | ||||||||||
Noninterest expenses | |||||||||||||||||
Salaries and employee benefits | 27,395 | 26,977 | 26,685 | 1.55 | % | 2.66 | % | ||||||||||
Occupancy and equipment expenses | 5,433 | 5,667 | 5,443 | (4.13 | )% | (0.18 | )% | ||||||||||
Data processing and facilities management | 1,400 | 1,225 | 1,112 | 14.29 | % | 25.90 | % | ||||||||||
FDIC assessment | 725 | 920 | 1,020 | (21.20 | )% | (28.92 | )% | ||||||||||
Merger and acquisition expense | 151 | 206 | — | (26.70 | )% | 100.00% | |||||||||||
Loss on sale of equity securities | — | 3 | — | (100.00 | )% | n/a | |||||||||||
Other noninterest expenses | 11,753 | 12,148 | 12,771 | (3.25 | )% | (7.97 | )% | ||||||||||
Total noninterest expenses | 46,857 | 47,146 | 47,031 | (0.61 | )% | (0.37 | )% | ||||||||||
Income before income taxes | 30,277 | 29,882 | 26,461 | 1.32 | % | 14.42 | % | ||||||||||
Provision for income taxes | 9,793 | 9,508 | 7,867 | 3.00 | % | 24.48 | % | ||||||||||
Net Income | $ | 20,484 | $ | 20,374 | $ | 18,594 | 0.54 | % | 10.16 | % | |||||||
Weighted average common shares (basic) | 26,324,316 | 26,304,129 | 26,200,621 | ||||||||||||||
Common share equivalents | 53,072 | 47,885 | 63,493 | ||||||||||||||
Weighted average common shares (diluted) | 26,377,388 | 26,352,014 | 26,264,114 |
Basic earnings per share | $ | 0.78 | $ | 0.77 | $ | 0.71 | 1.30 | % | 9.86 | % | |||||||
Diluted earnings per share | $ | 0.78 | $ | 0.77 | $ | 0.71 | 1.30 | % | 9.86 | % | |||||||
Reconciliation of Net Income (GAAP) to Operating Earnings (Non-GAAP): | |||||||||||||||||
Net income | 20,484 | 20,374 | 18,594 | ||||||||||||||
Noninterest expense components | |||||||||||||||||
Add - merger and acquisition expenses | 151 | 206 | — | ||||||||||||||
Noncore items, gross | $ | 151 | $ | 206 | $ | — | |||||||||||
Less - net tax benefit associated with noncore items (1) | $ | (61 | ) | $ | (84 | ) | $ | — | |||||||||
Noncore items, net of tax | $ | 90 | $ | 122 | $ | — | |||||||||||
Net operating earnings | $ | 20,574 | $ | 20,496 | $ | 18,594 | 0.38 | % | 10.65 | % | |||||||
Diluted earnings per share, on an operating basis | $ | 0.78 | $ | 0.78 | $ | 0.71 | — | % | 9.86 | % | |||||||
(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) | 3.40 | % | 3.47 | % | 3.39 | % | |||||||||||
Return on average assets GAAP (calculated by dividing net income by average assets) | 1.09 | % | 1.13 | % | 1.03 | % | |||||||||||
Return on average assets on an operating basis (calculated by dividing net operating earnings by average assets) | 1.10 | % | 1.14 | % | 1.03 | % | |||||||||||
Return on average common equity GAAP (calculated by dividing net income by average common equity) | 9.98 | % | 10.24 | % | 9.75 | % | |||||||||||
Return on average common equity on an operating basis (calculated by dividing net operating earnings by average common equity) | 10.03 | % | 10.31 | % | 9.75 | % |
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
(Unaudited dollars in thousands, except per share data) | |||||||||||
Nine Months Ended | |||||||||||
% Change | |||||||||||
September 30 2016 | September 30 2015 | Sept 2016 vs. | |||||||||
Sept 2015 | |||||||||||
Interest income | |||||||||||
Interest on federal funds sold and short-term investments | $ | 767 | $ | 212 | 261.79 | % | |||||
Interest and dividends on securities | 15,589 | 15,029 | 3.73 | % | |||||||
Interest and fees on loans | 166,683 | 160,261 | 4.01 | % | |||||||
Interest on loans held for sale | 170 | 173 | (1.73 | )% | |||||||
Total interest income | 183,209 | 175,675 | 4.29 | % | |||||||
Interest expense | |||||||||||
Interest on deposits | 8,339 | 8,636 | (3.44 | )% | |||||||
Interest on borrowings | 5,778 | 6,997 | (17.42 | )% | |||||||
Total interest expense | 14,117 | 15,633 | (9.70 | )% | |||||||
Net interest income | 169,092 | 160,042 | 5.65 | % | |||||||
Provision for loan losses | 2,075 | 1,000 | 107.50 | % | |||||||
Net interest income after provision for loan losses | 167,017 | 159,042 | 5.01 | % | |||||||
Noninterest income | |||||||||||
Deposit account fees | 13,563 | 13,385 | 1.33 | % | |||||||
Interchange and ATM fees | 12,050 | 10,817 | 11.40 | % | |||||||
Investment management | 16,183 | 15,616 | 3.63 | % | |||||||
Mortgage banking income | 4,458 | 3,832 | 16.34 | % | |||||||
Increase in cash surrender value of life insurance policies | 2,980 | 2,685 | 10.99 | % |
Gain on sale of fixed income securities | — | 798 | (100.00 | )% | |||||||
Gain on sale of equity securities | 5 | 19 | (73.68 | )% | |||||||
Loan level derivative income | 4,627 | 2,816 | 64.31 | % | |||||||
Other noninterest income | 6,800 | 6,096 | 11.55 | % | |||||||
Total noninterest income | 60,666 | 56,064 | 8.21 | % | |||||||
Noninterest expenses | |||||||||||
Salaries and employee benefits | 81,561 | 78,291 | 4.18 | % | |||||||
Occupancy and equipment expenses | 16,927 | 17,509 | (3.32 | )% | |||||||
Data processing and facilities management | 3,831 | 3,462 | 10.66 | % | |||||||
FDIC assessment | 2,655 | 2,993 | (11.29 | )% | |||||||
Merger and acquisition expense | 691 | 10,501 | (93.42 | )% | |||||||
Loss on extinguishment of debt | 437 | 122 | 258.20 | % | |||||||
Loss on sale of fixed income securities | — | 1,124 | (100.00 | )% | |||||||
Loss on sale of equity securities | 32 | 8 | 300.00 | % | |||||||
Other noninterest expenses | 34,351 | 36,642 | (6.25 | )% | |||||||
Total noninterest expenses | 140,485 | 150,652 | (6.75 | )% | |||||||
Income before income taxes | 87,198 | 64,454 | 35.29 | % | |||||||
Provision for income taxes | 27,729 | 18,949 | 46.33 | % | |||||||
Net Income | $ | 59,469 | $ | 45,505 | 30.69 | % | |||||
Weighted average common shares (basic) | 26,301,340 | 25,774,571 | |||||||||
Common share equivalents | 48,354 | 72,921 | |||||||||
Weighted average common shares (diluted) | 26,349,694 | 25,847,492 | |||||||||
Basic earnings per share | $ | 2.26 | $ | 1.77 | 27.68 | % | |||||
Diluted earnings per share | $ | 2.26 | $ | 1.76 | 28.41 | % | |||||
Reconciliation of Net Income (GAAP) to Operating Earnings (Non-GAAP) | |||||||||||
Net Income | 59,469 | 45,505 | |||||||||
Noninterest income components | |||||||||||
Less - gain on sale of fixed income securities | — | (798 | ) | ||||||||
Noninterest expense components | |||||||||||
Add - impairment on acquired facilities | — | 109 | |||||||||
Add - loss on extinguishment of debt | 437 | 122 | |||||||||
Add - loss on sale of fixed income securities | — | 1,124 | |||||||||
Add - merger and acquisition expenses | 691 | 10,501 | |||||||||
Noncore items, gross | $ | 1,128 | $ | 11,058 | |||||||
Less - net tax benefit associated with noncore items (1) | $ | (461 | ) | $ | (4,285 | ) | |||||
Noncore items, net of tax | $ | 667 | $ | 6,773 | |||||||
Net operating earnings | $ | 60,136 | $ | 52,278 | 15.03 | % | |||||
Diluted earnings per share, on an operating basis | $ | 2.28 | $ | 2.02 | 12.87 | % | |||||
(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) | 3.42 | % | 3.44 | % | (0.58 | )% | |||||
Return on average assets GAAP (calculated by dividing net income by average assets) | 1.09 | % | 0.88 | % | 23.86 | % | |||||
Return on average assets on an operating basis (calculated by dividing net operating earnings by average assets) | 1.10 | % | 1.01 | % | 8.91 | % | |||||
Return on average common equity GAAP (calculated by dividing net income by average common equity) | 9.92 | % | 8.35 | % | 18.80 | % | |||||
Return on average common equity on an operating basis (calculated by dividing net operating earnings by average common equity) | 10.03 | % | 9.59 | % | 4.59 | % |
ASSET QUALITY | ||||||||||||
Nonperforming Assets At | ||||||||||||
September 30 2016 | June 30 2016 | September 30 2015 | ||||||||||
Nonperforming loans | ||||||||||||
Commercial & industrial loans | $ | 3,065 | $ | 3,177 | $ | 4,114 | ||||||
Commercial real estate loans | 7,399 | 8,220 | 9,006 | |||||||||
Small business loans | 288 | 349 | 159 | |||||||||
Residential real estate loans | 7,684 | 7,116 | 9,106 | |||||||||
Home equity | 6,311 | 6,684 | 7,142 | |||||||||
Other consumer | 46 | 82 | 40 | |||||||||
Total nonperforming loans | $ | 24,793 | $ | 25,628 | $ | 29,567 | ||||||
Other real estate owned | 1,798 | 1,845 | 2,532 | |||||||||
Total nonperforming assets | $ | 26,591 | $ | 27,473 | $ | 32,099 | ||||||
Nonperforming loans/gross loans | 0.43 | % | 0.45 | % | 0.54 | % | ||||||
Nonperforming assets/total assets | 0.35 | % | 0.37 | % | 0.45 | % | ||||||
Allowance for loan losses/nonperforming loans | 234.76 | % | 225.25 | % | 187.71 | % | ||||||
Gross loans/total deposits | 91.65 | % | 91.55 | % | 92.95 | % | ||||||
Allowance for loan losses/total loans | 1.01 | % | 1.02 | % | 1.00 | % | ||||||
Delinquent loans/total loans | 0.44 | % | 0.47 | % | 0.43 | % | ||||||
Nonperforming Assets Reconciliation for the Three Months Ended | ||||||||||||
September 30 2016 | June 30 2016 | September 30 2015 | ||||||||||
Nonperforming assets beginning balance | $ | 27,473 | $ | 27,219 | $ | 31,274 | ||||||
New to nonperforming | 2,630 | 3,943 | 8,348 | |||||||||
Loans charged-off | (1,143 | ) | (576 | ) | (1,165 | ) | ||||||
Loans paid-off | (2,049 | ) | (1,955 | ) | (1,799 | ) | ||||||
Loans transferred to other real estate owned/other assets | — | (291 | ) | (539 | ) | |||||||
Loans restored to performing status | (288 | ) | (1,058 | ) | (1,409 | ) | ||||||
New to other real estate owned | — | 291 | 1,151 | |||||||||
Valuation write down | (5 | ) | — | (480 | ) | |||||||
Sale of other real estate owned | (42 | ) | (45 | ) | (3,460 | ) | ||||||
Net capital improvements to other real estate owned | — | 31 | 196 | |||||||||
Other | 15 | (86 | ) | (18 | ) | |||||||
Nonperforming assets ending balance | $ | 26,591 | $ | 27,473 | $ | 32,099 |
Net Charge-Offs (Recoveries) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30 2016 | June 30 2016 | September 30 2015 | September 30 2016 | September 30 2015 | ||||||||||||||||
Net charge-offs (recoveries) | ||||||||||||||||||||
Commercial and industrial loans | $ | (36 | ) | $ | (647 | ) | $ | 475 | $ | (819 | ) | $ | 628 | |||||||
Commercial real estate loans | 217 | (198 | ) | (124 | ) | (170 | ) | (770 | ) | |||||||||||
Small business loans | 70 | (43 | ) | (55 | ) | 69 | 9 | |||||||||||||
Residential real estate loans | (130 | ) | (43 | ) | 34 | (155 | ) | 190 | ||||||||||||
Home equity | 130 | 164 | 119 | 414 | 425 | |||||||||||||||
Other consumer | 221 | 72 | 141 | 356 | 413 | |||||||||||||||
Total net charge-offs (recoveries) | $ | 472 | $ | (695 | ) | $ | 590 | $ | (305 | ) | $ | 895 | ||||||||
Net charge-offs (recoveries) to average loans (annualized) | 0.03 | % | (0.05 | )% | 0.04 | % | (0.01 | )% | 0.02 | % |
Troubled Debt Restructurings At | ||||||||||||
September 30 2016 | June 30 2016 | September 30 2015 | ||||||||||
Troubled debt restructurings on accrual status | $ | 27,644 | $ | 28,319 | $ | 37,477 | ||||||
Troubled debt restructurings on nonaccrual status | 5,910 | 5,121 | 5,201 | |||||||||
Total troubled debt restructurings | $ | 33,554 | $ | 33,440 | $ | 42,678 | ||||||
CAPITAL ADEQUACY | ||||||||||||
September 30 2016 | June 30 2016 | September 30 2015 | ||||||||||
Common equity tier 1 capital ratio (1) | 10.78 | % | 10.64 | % | 10.31 | % | ||||||
Tier one leverage capital ratio (1) | 9.59 | % | 9.66 | % | 9.21 | % | ||||||
Common equity to assets ratio GAAP | 10.91 | % | 10.84 | % | 10.64 | % | ||||||
Tangible common equity to tangible assets ratio (2) | 8.33 | % | 8.22 | % | 7.88 | % | ||||||
Book value per share GAAP | $ | 31.09 | $ | 30.55 | $ | 28.96 | ||||||
Tangible book value per share (2) | $ | 23.08 | $ | 22.52 | $ | 20.81 | ||||||
(1) Estimated number for September 30, 2016. | ||||||||||||
(2) See appendix A for detailed reconciliation from GAAP to Non-GAAP ratios |
INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION | |||||||||||||||||||||||||||||||||
(Unaudited - dollars in thousands) | Three Months Ended | ||||||||||||||||||||||||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||||||||||||||||||||||||
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 | $ | 305,728 | $ | 387 | 0.50 | % | $ | 135,766 | $ | 169 | 0.50 | % | $ | 192,205 | $ | 121 | 0.25 | % | |||||||||||||||
Securities | |||||||||||||||||||||||||||||||||
Securities - trading | 805 | — | — | % | 775 | — | — | % | 479 | — | — | % | |||||||||||||||||||||
Securities - taxable investments | 815,889 | 5,034 | 2.45 | % | 826,382 | 5,269 | 2.56 | % | 802,146 | 5,455 | 2.70 | % | |||||||||||||||||||||
Securities - nontaxable investments (1) | 4,382 | 43 | 3.90 | % | 4,397 | 44 | 4.02 | % | 4,895 | 48 | 3.89 | % | |||||||||||||||||||||
Total securities | 821,076 | 5,077 | 2.46 | % | 831,554 | 5,313 | 2.57 | % | 807,520 | 5,503 | 2.70 | % | |||||||||||||||||||||
Loans held for sale | 11,652 | 81 | 2.77 | % | 8,077 | 57 | 2.84 | % | 10,196 | 64 | 2.49 | % | |||||||||||||||||||||
Loans | |||||||||||||||||||||||||||||||||
Commercial and industrial | 851,497 | 8,420 | 3.93 | % | 853,783 | 8,367 | 3.94 | % | 871,976 | 8,608 | 3.92 | % | |||||||||||||||||||||
Commercial real estate (1) | 2,723,832 | 28,466 | 4.16 | % | 2,726,249 | 27,847 | 4.11 | % | 2,649,676 | 27,449 | 4.11 | % | |||||||||||||||||||||
Commercial construction | 370,085 | 3,881 | 4.17 | % | 358,256 | 3,676 | 4.13 | % | 290,052 | 3,057 | 4.18 | % | |||||||||||||||||||||
Small business | 111,932 | 1,502 | 5.34 | % | 106,272 | 1,432 | 5.42 | % | 91,331 | 1,237 | 5.37 | % | |||||||||||||||||||||
Total commercial | 4,057,346 | 42,269 | 4.14 | % | 4,044,560 | 41,322 | 4.11 | % | 3,903,035 | 40,351 | 4.10 | % | |||||||||||||||||||||
Residential real estate | 631,582 | 6,334 | 3.99 | % | 628,855 | 6,224 | 3.98 | % | 650,039 | 6,490 | 3.96 | % | |||||||||||||||||||||
Home equity | 958,317 | 8,243 | 3.42 | % | 942,515 | 8,178 | 3.49 | % | 896,257 | 7,690 | 3.40 | % | |||||||||||||||||||||
Total consumer real estate | 1,589,899 | 14,577 | 3.65 | % | 1,571,370 | 14,402 | 3.69 | % | 1,546,296 | 14,180 | 3.64 | % | |||||||||||||||||||||
Other consumer | 13,026 | 291 | 8.89 | % | 13,815 | 297 | 8.65 | % | 17,033 | 383 | 8.92 | % | |||||||||||||||||||||
Total loans | 5,660,271 | 57,137 | 4.02 | % | 5,629,745 | 56,021 | 4.00 | % | 5,466,364 | 54,914 | 3.99 | % | |||||||||||||||||||||
Total interest-earning assets | $ | 6,798,727 | $ | 62,682 | 3.67 | % | $ | 6,605,142 | $ | 61,560 | 3.75 | % | $ | 6,476,285 | $ | 60,602 | 3.71 | % | |||||||||||||||
Cash and due from banks | 94,547 | 91,198 | 116,975 | ||||||||||||||||||||||||||||||
Federal Home Loan Bank stock | 11,304 | 13,935 | 37,485 | ||||||||||||||||||||||||||||||
Other assets | 552,247 | 539,511 | 512,326 | ||||||||||||||||||||||||||||||
Total assets | $ | 7,456,825 | $ | 7,249,786 | $ | 7,143,071 | |||||||||||||||||||||||||||
Interest-bearing liabilities | |||||||||||||||||||||||||||||||||
Deposits | |||||||||||||||||||||||||||||||||
Savings and interest checking accounts | $ | 2,408,498 | $ | 756 | 0.12 | % | $ | 2,395,837 | $ | 777 | 0.13 | % | $ | 2,274,861 | $ | 897 | 0.16 | % | |||||||||||||||
Money market | 1,197,382 | 758 | 0.25 | % | 1,146,928 | 712 | 0.25 | % | 1,120,290 | 742 | 0.26 | % | |||||||||||||||||||||
Time deposits | 635,635 | 1,219 | 0.76 | % | 647,274 | 1,249 | 0.78 | % | 717,225 | 1,312 | 0.73 | % | |||||||||||||||||||||
Total interest-bearing deposits | 4,241,515 | 2,733 | 0.26 | % | 4,190,039 | 2,738 | 0.26 | % | 4,112,376 | 2,951 | 0.28 | % | |||||||||||||||||||||
Borrowings | |||||||||||||||||||||||||||||||||
Federal Home Loan Bank borrowings | 51,100 | 391 | 3.04 | % | 59,657 | 394 | 2.66 | % | 107,489 | 571 | 2.11 | % | |||||||||||||||||||||
Customer repurchase agreements and other short-term borrowings | 151,982 | 52 | 0.14 | % | 140,252 | 48 | 0.14 | % | 142,704 | 48 | 0.13 | % | |||||||||||||||||||||
Wholesale repurchase agreements | — | — | — | % | — | — | % | 29,348 | 162 | 2.19 | % | ||||||||||||||||||||||
Junior subordinated debentures | 73,184 | 1,037 | 5.64 | % | 73,231 | 1,019 | 5.60 | % | 73,383 | 1,014 | 5.48 | % | |||||||||||||||||||||
Subordinated debentures | 34,617 | 427 | 4.91 | % | 34,607 | 428 | 4.97 | % | 34,571 | 437 | 5.02 | % | |||||||||||||||||||||
Total borrowings | 310,883 | 1,907 | 2.44 | % | 307,747 | 1,889 | 2.47 | % | 387,495 | 2,232 | 2.29 | % | |||||||||||||||||||||
Total interest-bearing liabilities | $ | 4,552,398 | $ | 4,640 | 0.41 | % | $ | 4,497,786 | $ | 4,627 | 0.41 | % | $ | 4,499,871 | $ | 5,183 | 0.46 | % | |||||||||||||||
Demand deposits | 1,976,177 | 1,846,550 | 1,789,288 | ||||||||||||||||||||||||||||||
Other liabilities | 112,018 | 105,607 | 97,475 | ||||||||||||||||||||||||||||||
Total liabilities | $ | 6,640,593 | $ | 6,449,943 | $ | 6,386,634 | |||||||||||||||||||||||||||
Stockholders' equity | 816,232 | 799,843 | 756,437 |
Total liabilities and stockholders' equity | $ | 7,456,825 | $ | 7,249,786 | $ | 7,143,071 | |||||||||||||||||||||||||||
Net interest income | $ | 58,042 | $ | 56,933 | $ | 55,419 | |||||||||||||||||||||||||||
Interest rate spread (2) | 3.26 | % | 3.34 | % | 3.25 | % | |||||||||||||||||||||||||||
Net interest margin (3) | 3.40 | % | 3.47 | % | 3.39 | % | |||||||||||||||||||||||||||
Supplemental Information | |||||||||||||||||||||||||||||||||
Total deposits, including demand deposits | $ | 6,217,692 | $ | 2,733 | $ | 6,036,589 | $ | 2,738 | $ | 5,901,664 | $ | 2,951 | |||||||||||||||||||||
Cost of total deposits | 0.17 | % | 0.18 | % | 0.20 | % | |||||||||||||||||||||||||||
Total funding liabilities, including demand deposits | $ | 6,528,575 | 4,640 | $ | 6,344,336 | $ | 4,627 | $ | 6,289,159 | $ | 5,183 | ||||||||||||||||||||||
Cost of total funding liabilities | 0.28 | % | 0.29 | % | 0.33 | % |
Nine Months Ended | ||||||||||||||||||||||
September 30, 2016 | September 30, 2015 | |||||||||||||||||||||
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 | $ | 202,397 | $ | 767 | 0.51 | % | $ | 113,251 | $ | 212 | 0.25 | % | ||||||||||
Securities | ||||||||||||||||||||||
Securities - trading | 667 | — | — | % | 387 | — | — | % | ||||||||||||||
Securities - taxable investments | 824,449 | 15,500 | 2.51 | % | 778,346 | 14,934 | 2.57 | % | ||||||||||||||
Securities - nontaxable investments (1) | 4,557 | 137 | 4.02 | % | 5,172 | 146 | 3.77 | % | ||||||||||||||
Total securities | 829,673 | 15,637 | 2.52 | % | 783,905 | 15,080 | 2.57 | % | ||||||||||||||
Loans held for sale | 8,005 | 170 | 2.84 | % | 9,185 | 173 | 2.52 | % | ||||||||||||||
Loans | ||||||||||||||||||||||
Commercial and industrial | 845,565 | 24,759 | 3.91 | % | 862,620 | 25,315 | 3.92 | % | ||||||||||||||
Commercial real estate (1) | 2,703,300 | 83,082 | 4.11 | % | 2,573,265 | 79,933 | 4.15 | % | ||||||||||||||
Commercial construction | 369,403 | 11,376 | 4.11 | % | 287,290 | 9,162 | 4.26 | % | ||||||||||||||
Small business | 105,761 | 4,266 | 5.39 | % | 88,922 | 3,628 | 5.45 | % | ||||||||||||||
Total commercial | 4,024,029 | 123,483 | 4.10 | % | 3,812,097 | 118,038 | 4.14 | % | ||||||||||||||
Residential real estate | 631,343 | 18,939 | 4.01 | % | 639,792 | 19,452 | 4.06 | % | ||||||||||||||
Home equity | 943,857 | 24,452 | 3.46 | % | 883,952 | 22,650 | 3.43 | % | ||||||||||||||
Total consumer real estate | 1,575,200 | 43,391 | 3.68 | % | 1,523,744 | 42,102 | 3.69 | % | ||||||||||||||
Other consumer | 13,743 | 924 | 8.98 | % | 17,645 | 1,194 | 9.05 | % | ||||||||||||||
Total loans | 5,612,972 | 167,798 | 3.99 | % | 5,353,486 | 161,334 | 4.03 | % | ||||||||||||||
Total interest-earning assets | $ | 6,653,047 | $ | 184,372 | 3.70 | % | $ | 6,259,827 | $ | 176,799 | 3.78 | % | ||||||||||
Cash and due from banks | 90,527 | 107,816 | ||||||||||||||||||||
Federal Home Loan Bank stock | 12,940 | 36,691 | ||||||||||||||||||||
Other assets | 542,271 | 510,212 | ||||||||||||||||||||
Total assets | $ | 7,298,785 | $ | 6,914,546 | ||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||
Deposits | ||||||||||||||||||||||
Savings and interest checking accounts | $ | 2,386,520 | $ | 2,416 | 0.14 | % | $ | 2,214,414 | $ | 2,640 | 0.16 | % | ||||||||||
Money market | 1,157,731 | 2,171 | 0.25 | % | 1,094,764 | 2,161 | 0.26 | % | ||||||||||||||
Time deposits | 651,044 | 3,752 | 0.77 | % | 712,628 | 3,835 | 0.72 | % | ||||||||||||||
Total interest-bearing deposits | 4,195,295 | 8,339 | 0.27 | % | 4,021,806 | 8,636 | 0.29 | % | ||||||||||||||
Borrowings | ||||||||||||||||||||||
Federal Home Loan Bank borrowings | 63,869 | 1,275 | 2.67 | % | 107,584 | 1,638 | 2.04 | % | ||||||||||||||
Customer repurchase agreements and other short-term borrowings | 144,393 | 149 | 0.14 | % | 135,692 | 161 | 0.16 | % | ||||||||||||||
Wholesale repurchase agreements | — | — | — | % | 43,040 | 746 | 2.32 | % | ||||||||||||||
Junior subordinated debentures | 73,233 | 3,072 | 5.60 | % | 73,433 | 3,010 | 5.48 | % | ||||||||||||||
Subordinated debentures | 34,606 | 1,282 | 4.95 | % | 40,076 | 1,442 | 4.81 | % | ||||||||||||||
Total borrowings | 316,101 | 5,778 | 2.44 | % | 399,825 | 6,997 | 2.34 | % | ||||||||||||||
Total interest-bearing liabilities | $ | 4,511,396 | $ | 14,117 | 0.42 | % | $ | 4,421,631 | $ | 15,633 | 0.47 | % | ||||||||||
Demand deposits | 1,878,558 | 1,660,821 | ||||||||||||||||||||
Other liabilities | 107,983 | 103,035 | ||||||||||||||||||||
Total liabilities | $ | 6,497,937 | $ | 6,185,487 |
Stockholders' equity | 800,848 | 729,059 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 7,298,785 | $ | 6,914,546 | ||||||||||||||||||
Net interest income | $ | 170,255 | $ | 161,166 | ||||||||||||||||||
Interest rate spread (2) | 3.28 | % | 3.31 | % | ||||||||||||||||||
Net interest margin (3) | 3.42 | % | 3.44 | % | ||||||||||||||||||
Supplemental Information | ||||||||||||||||||||||
Total deposits, including demand deposits | $ | 6,073,853 | $ | 8,339 | $ | 5,682,627 | $ | 8,636 | ||||||||||||||
Cost of total deposits | 0.18 | % | 0.20 | % | ||||||||||||||||||
Total funding liabilities, including demand deposits | $ | 6,389,954 | $ | 14,117 | $ | 6,082,452 | $ | 15,633 | ||||||||||||||
Cost of total funding liabilities | 0.30 | % | 0.34 | % |
September 30 2016 | June 30 2016 | September 30 2015 | |||||||||||
Tangible common equity | |||||||||||||
Stockholders' equity (GAAP) | $ | 818,242 | $ | 803,897 | $ | 759,203 | (a) | ||||||
Less: Goodwill and other intangibles | 210,834 | 211,526 | 213,612 | ||||||||||
Tangible common equity | 607,408 | 592,371 | 545,591 | (b) | |||||||||
Tangible assets | |||||||||||||
Assets (GAAP) | 7,502,009 | 7,418,866 | 7,134,903 | (c) | |||||||||
Less: Goodwill and other intangibles | 210,834 | 211,526 | 213,612 | ||||||||||
Tangible assets | $ | 7,291,175 | $ | 7,207,340 | $ | 6,921,291 | (d) | ||||||
Common Shares | 26,320,467 | 26,309,887 | 26,212,238 | (e) | |||||||||
Common equity to assets ratio (GAAP) | 10.91 | % | 10.84 | % | 10.64 | % | (a/c) | ||||||
Tangible common equity to tangible assets ratio (Non-GAAP) | 8.33 | % | 8.22 | % | 7.88 | % | (b/d) | ||||||
Book value per share (GAAP) | $ | 31.09 | $ | 30.55 | $ | 28.96 | (a/e) | ||||||
Tangible book value per share (Non-GAAP) | $ | 23.08 | $ | 22.52 | $ | 20.81 | (b/e) |
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net interest income (GAAP) | $ | 57,668 | $ | 56,533 | $ | 55,045 | $ | 169,092 | $ | 160,042 | (a) | |||||||||
Noninterest income (GAAP) | $ | 20,416 | $ | 21,095 | $ | 19,247 | $ | 60,666 | $ | 56,064 | (b) | |||||||||
Less: | ||||||||||||||||||||
Gain on sale of fixed income securities | — | — | — | — | 798 | |||||||||||||||
Noninterest income on an operating basis (Non-GAAP) | $ | 20,416 | $ | 21,095 | $ | 19,247 | $ | 60,666 | $ | 55,266 | (c) | |||||||||
Noninterest expense (GAAP) | $ | 46,857 | $ | 47,146 | $ | 47,031 | $ | 140,485 | $ | 150,652 | (d) | |||||||||
Less: | ||||||||||||||||||||
Impairment on acquired facilities | — | — | — | — | 109 | |||||||||||||||
Loss on extinguishment of debt | — | — | — | 437 | 122 | |||||||||||||||
Loss on sale of fixed income securities | — | — | — | — | 1,124 | |||||||||||||||
Merger and acquisition expense | 151 | 206 | — | 691 | 10,501 | |||||||||||||||
Noninterest expense on an operating basis (Non-GAAP) | $ | 46,706 | $ | 46,940 | $ | 47,031 | $ | 139,357 | $ | 138,796 | (e) | |||||||||
Total revenue (GAAP) | $ | 78,084 | $ | 77,628 | $ | 74,292 | $ | 229,758 | $ | 216,106 | (a+b) | |||||||||
Total operating revenue (Non-GAAP) | $ | 78,084 | $ | 77,628 | $ | 74,292 | $ | 229,758 | $ | 215,308 | (a+c) | |||||||||
Ratios | ||||||||||||||||||||
Noninterest income as a % of total revenue (GAAP based) | 26.15 | % | 27.17 | % | 25.91 | % | 26.40 | % | 25.94 | % | (b/(a+b)) | |||||||||
Noninterest income as a % of total revenue on an operating basis (Non-GAAP) | 26.15 | % | 27.17 | % | 25.91 | % | 26.40 | % | 25.67 | % | (c/(a+c)) | |||||||||
Efficiency ratio (GAAP based) | 60.01 | % | 60.73 | % | 63.31 | % | 61.14 | % | 69.71 | % | (d/(a+b)) | |||||||||
Efficiency ratio on an operating basis (Non-GAAP) | 59.82 | % | 60.47 | % | 63.31 | % | 60.65 | % | 64.46 | % | (e/(a+c)) |
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