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 8.01 | OTHER EVENTS |
ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
Exhibit 99.1 | Press Release dated April 19, 2018. |
INDEPENDENT BANK CORP. | |||
Date: | April 19, 2018 | By: | /s/Robert D. Cozzone |
ROBERT D. COZZONE | |||
CHIEF FINANCIAL OFFICER |
Exhibit Index | |
Exhibit # | Exhibit Description |
99.1 |
• | Interchange and ATM fees decreased by $237,000, or 5.4%, driven mainly by higher seasonal debit card activity in the prior quarter. |
• | Investment management income remained relatively consistent with the prior quarter despite the volatility experienced in the stock market during the first quarter of 2018. Total assets under administration remained at $3.5 billion as of March 31, 2018. |
• | Mortgage banking income decreased by $481,000, or 35.6%, due primarily to an overall decrease in loan closings reflective of the rising rate environment combined with a greater percentage of loans being retained in the Company's portfolio. |
• | The lower increase in cash surrender value of life insurance policies of $180,000, or 16.0%, was due primarily to the annual dividend income that was received in the fourth quarter of 2017. |
• | Loan level derivative income decreased by $662,000, or 59.7%, as a result of decreased customer demand in the quarter. |
• | Other noninterest income decreased by $353,000, or 11.0%, primarily due to decreases in capital gain distributions received on equity securities and reduced IRS Code Section1031 exchange fees. |
• | Salaries and employee benefits expense increased by $767,000, or 2.5%, due primarily to seasonal increases in payroll taxes and medical insurance, partially offset by decreases in incentive compensation and certain retirement plan expenses. A portion of the latter decrease reflects a 2018 accounting change requiring the classification of certain expenses associated with retirement plans to be recognized in other noninterest expense, when in prior years they were included in salaries and employee benefits. |
• | Occupancy and equipment expense increased by $1.0 million, or 15.9%, mainly due to increases in snow removal costs and accelerated rent expenses associated with a branch closure. |
• | Other noninterest expense increased by $216,000, or 1.7%, driven by a higher provision for unfunded commitments, unrealized losses on equity securities (governed by new accounting guidance which requires income statement recognition of unrealized gains and losses on equity securities), and the aforementioned reclassification of certain retirement plan expenses. These increases were partially offset by a decrease in consultant fees, mortgage origination costs and director fees. |
• | a weakening in the United States economy in general and the regional and local economies within the New England region and the Company’s market area; |
• | adverse changes or volatility in the local real estate market; |
• | adverse changes in asset quality including an unanticipated credit deterioration in our loan portfolio including those related to one or more large commercial relationships; |
• | acquisitions may not produce results at levels or within time frames originally anticipated and may result in unforeseen integration issues or impairment of goodwill and/or other intangibles; |
• | changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; |
• | higher than expected tax expense, resulting from failure to comply with general tax laws, changes in tax laws, or failure to comply with requirements of the federal New Markets Tax Credit program; |
• | unexpected changes in market interest rates for interest earning assets and/or interest bearing liabilities; |
• | unexpected increased competition in the Company’s market area; |
• | unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather or other external events; |
• | a deterioration in the conditions of the securities markets; |
• | a deterioration of the credit rating for U.S. long-term sovereign debt; |
• | our inability to adapt to changes in information technology, including changes to industry accepted delivery models driven by a migration to the internet as a means of service delivery; |
• | electronic fraudulent activity within the financial services industry, especially in the commercial banking sector; |
• | adverse changes in consumer spending and savings habits; |
• | the inability to realize expected synergies from merger transactions in the amounts or in the timeframe anticipated; |
• | inability to retain customers and employees, including those acquired in previous acquisitions; |
• | the effect of laws and regulations regarding the financial services industry including, but not limited to, the Dodd-Frank Wall Street Reform and the Consumer Protection Act and regulatory uncertainty surrounding these laws and regulations; |
• | changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) generally applicable to the Company’s business; |
• | changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters; |
• | cyber security attacks or intrusions that could adversely impact our businesses; and |
• | other unexpected material adverse changes in our operations or earnings. |
INDEPENDENT BANK CORP. FINANCIAL SUMMARY | |||||||||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||||||||
(Unaudited, dollars in thousands) | % Change | % Change | |||||||||||||||
March 31 2018 | December 31 2017 | March 31 2017 | Mar 2018 vs. | Mar 2018 vs. | |||||||||||||
Dec 2017 | Mar 2017 | ||||||||||||||||
Assets | |||||||||||||||||
Cash and due from banks | $ | 102,623 | $ | 103,485 | $ | 94,662 | (0.83 | )% | 8.41 | % | |||||||
Interest-earning deposits with banks | 62,925 | 109,631 | 125,411 | (42.60 | )% | (49.82 | )% | ||||||||||
Securities | |||||||||||||||||
Trading | 1,601 | 1,324 | 1,289 | 20.92 | % | 24.20 | % | ||||||||||
Equities | 20,075 | — | — | 100.00% | n/a | ||||||||||||
Available for sale | 445,750 | 447,498 | 401,837 | (0.39 | )% | 10.93 | % | ||||||||||
Held to maturity | 528,861 | 497,688 | 502,123 | 6.26 | % | 5.32 | % | ||||||||||
Total securities | 996,287 | 946,510 | 905,249 | 5.26 | % | 10.06 | % | ||||||||||
Loans held for sale (at fair value) | 3,937 | 4,768 | 3,398 | (17.43 | )% | 15.86 | % | ||||||||||
Loans | |||||||||||||||||
Commercial and industrial | 903,214 | 888,528 | 881,329 | 1.65 | % | 2.48 | % | ||||||||||
Commercial real estate | 3,102,271 | 3,116,561 | 3,027,305 | (0.46 | )% | 2.48 | % | ||||||||||
Commercial construction | 400,934 | 401,797 | 356,173 | (0.21 | )% | 12.57 | % | ||||||||||
Small business | 133,666 | 132,370 | 126,374 | 0.98 | % | 5.77 | % | ||||||||||
Total commercial | 4,540,085 | 4,539,256 | 4,391,181 | 0.02 | % | 3.39 | % | ||||||||||
Residential real estate | 761,331 | 754,329 | 653,999 | 0.93 | % | 16.41 | % | ||||||||||
Home equity - first position | 617,164 | 612,990 | 595,828 | 0.68 | % | 3.58 | % | ||||||||||
Home equity - subordinate positions | 434,288 | 439,098 | 412,943 | (1.10 | )% | 5.17 | % | ||||||||||
Total consumer real estate | 1,812,783 | 1,806,417 | 1,662,770 | 0.35 | % | 9.02 | % | ||||||||||
Other consumer | 9,188 | 9,880 | 10,415 | (7.00 | )% | (11.78 | )% | ||||||||||
Total loans | 6,362,056 | 6,355,553 | 6,064,366 | 0.10 | % | 4.91 | % | ||||||||||
Less: allowance for loan losses | (60,862 | ) | (60,643 | ) | (62,318 | ) | 0.36 | % | (2.34 | )% | |||||||
Net loans | 6,301,194 | 6,294,910 | 6,002,048 | 0.10 | % | 4.98 | % | ||||||||||
Federal Home Loan Bank stock | 13,027 | 11,597 | 11,497 | 12.33 | % | 13.31 | % | ||||||||||
Bank premises and equipment, net | 95,214 | 94,722 | 82,027 | 0.52 | % | 16.08 | % | ||||||||||
Goodwill | 231,806 | 231,806 | 221,526 | — | % | 4.64 | % | ||||||||||
Other intangible assets | 8,462 | 9,341 | 9,087 | (9.41 | )% | (6.88 | )% | ||||||||||
Cash surrender value of life insurance policies | 152,568 | 151,528 | 145,560 | 0.69 | % | 4.81 | % | ||||||||||
Other real estate owned and other foreclosed assets | 358 | 612 | 3,404 | (41.50 | )% | (89.48 | )% | ||||||||||
Other assets | 122,009 | 123,119 | 134,245 | (0.90 | )% | (9.11 | )% | ||||||||||
Total assets | $ | 8,090,410 | $ | 8,082,029 | $ | 7,738,114 | 0.10 | % | 4.55 | % | |||||||
Liabilities and Stockholders' Equity | |||||||||||||||||
Deposits | |||||||||||||||||
Demand deposits | $ | 2,167,361 | $ | 2,159,396 | $ | 2,043,359 | 0.37 | % | 6.07 | % | |||||||
Savings and interest checking accounts | 2,606,257 | 2,599,922 | 2,542,667 | 0.24 | % | 2.50 | % | ||||||||||
Money market | 1,323,138 | 1,325,634 | 1,268,796 | (0.19 | )% | 4.28 | % | ||||||||||
Time certificates of deposit | 654,755 | 644,301 | 615,852 | 1.62 | % | 6.32 | % | ||||||||||
Total deposits | 6,751,511 | 6,729,253 | 6,470,674 | 0.33 | % | 4.34 | % | ||||||||||
Borrowings | |||||||||||||||||
Federal Home Loan Bank borrowings | 53,257 | 53,264 | 50,811 | (0.01 | )% | 4.81 | % | ||||||||||
Customer repurchase agreements | 137,914 | 162,679 | 145,772 | (15.22 | )% | (5.39 | )% | ||||||||||
Junior subordinated debentures, net | 73,075 | 73,073 | 73,067 | — | % | 0.01 | % | ||||||||||
Subordinated debentures, net | 34,693 | 34,682 | 34,647 | 0.03 | % | 0.13 | % | ||||||||||
Total borrowings | 298,939 | 323,698 | 304,297 | (7.65 | )% | (1.76 | )% | ||||||||||
Total deposits and borrowings | 7,050,450 | 7,052,951 | 6,774,971 | (0.04 | )% | 4.07 | % | ||||||||||
Other liabilities | 83,901 | 85,269 | 85,663 | (1.60 | )% | (2.06 | )% |
Total liabilities | 7,134,351 | 7,138,220 | 6,860,634 | (0.05 | )% | 3.99 | % | ||||||||||
Stockholders' equity | |||||||||||||||||
Common stock | 273 | 273 | 269 | — | % | 1.49 | % | ||||||||||
Additional paid in capital | 479,715 | 479,430 | 452,048 | 0.06 | % | 6.12 | % | ||||||||||
Retained earnings | 484,266 | 465,937 | 425,802 | 3.93 | % | 13.73 | % | ||||||||||
Accumulated other comprehensive loss, net of tax | (8,195 | ) | (1,831 | ) | (639 | ) | 347.57 | % | 1,182.47 | % | |||||||
Total stockholders' equity | 956,059 | 943,809 | 877,480 | 1.30 | % | 8.96 | % | ||||||||||
Total liabilities and stockholders' equity | $ | 8,090,410 | $ | 8,082,029 | $ | 7,738,114 | 0.10 | % | 4.55 | % |
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||
(Unaudited, dollars in thousands, except per share data) | |||||||||||||||||
Three Months Ended | |||||||||||||||||
% Change | % Change | ||||||||||||||||
March 31 2018 | December 31 2017 | March 31 2017 | Mar 2018 vs. | Mar 2018 vs. | |||||||||||||
Dec 2017 | Mar 2017 | ||||||||||||||||
Interest income | |||||||||||||||||
Interest on federal funds sold and short-term investments | $ | 311 | $ | 604 | $ | 207 | (48.5 | )% | 50.24 | % | |||||||
Interest and dividends on securities | 6,235 | 5,864 | 5,393 | 6.33 | % | 15.61 | % | ||||||||||
Interest and fees on loans | 67,184 | 66,384 | 58,793 | 1.21 | % | 14.27 | % | ||||||||||
Interest on loans held for sale | 19 | 24 | 14 | (20.83 | )% | 35.71 | % | ||||||||||
Total interest income | 73,749 | 72,876 | 64,407 | 1.20 | % | 14.50 | % | ||||||||||
Interest expense | |||||||||||||||||
Interest on deposits | 3,935 | 3,692 | 2,767 | 6.58 | % | 42.21 | % | ||||||||||
Interest on borrowings | 1,343 | 1,352 | 1,440 | (0.67 | )% | (6.74 | )% | ||||||||||
Total interest expense | 5,278 | 5,044 | 4,207 | 4.64 | % | 25.46 | % | ||||||||||
Net interest income | 68,471 | 67,832 | 60,200 | 0.94 | % | 13.74 | % | ||||||||||
Provision for loan losses | 500 | 1,300 | 600 | (61.54 | )% | (16.67 | )% | ||||||||||
Net interest income after provision for loan losses | 67,971 | 66,532 | 59,600 | 2.16 | % | 14.05 | % | ||||||||||
Noninterest income | |||||||||||||||||
Deposit account fees | 4,431 | 4,485 | 4,544 | (1.20 | )% | (2.49 | )% | ||||||||||
Interchange and ATM fees | 4,173 | 4,410 | 3,922 | (5.37 | )% | 6.40 | % | ||||||||||
Investment management | 6,142 | 6,226 | 5,614 | (1.35 | )% | 9.41 | % | ||||||||||
Mortgage banking income | 870 | 1,351 | 957 | (35.60 | )% | (9.09 | )% | ||||||||||
Increase in cash surrender value of life insurance policies | 947 | 1,127 | 964 | (15.97 | )% | (1.76 | )% | ||||||||||
Gain on sale of equity securities | — | — | 4 | n/a | nm | ||||||||||||
Loan level derivative income | 447 | 1,109 | 606 | (59.69 | )% | (26.24 | )% | ||||||||||
Other noninterest income | 2,853 | 3,206 | 2,301 | (11.01 | )% | 23.99 | % | ||||||||||
Total noninterest income | 19,863 | 21,914 | 18,912 | (9.36 | )% | 5.03 | % | ||||||||||
Noninterest expenses | |||||||||||||||||
Salaries and employee benefits | 31,100 | 30,333 | 28,324 | 2.53 | % | 9.80 | % | ||||||||||
Occupancy and equipment expenses | 7,408 | 6,391 | 6,158 | 15.91 | % | 20.30 | % | ||||||||||
Data processing and facilities management | 1,286 | 1,256 | 1,272 | 2.39 | % | 1.10 | % | ||||||||||
FDIC assessment | 798 | 834 | 783 | (4.32 | )% | 1.92 | % | ||||||||||
Merger and acquisition expense | — | — | 484 | n/a | nm | ||||||||||||
Loss on sale of equity securities | — | 10 | 3 | nm | nm | ||||||||||||
Other noninterest expenses | 12,859 | 12,643 | 11,749 | 1.71 | % | 9.45 | % | ||||||||||
Total noninterest expenses | 53,451 | 51,467 | 48,773 | 3.85 | % | 9.59 | % | ||||||||||
Income before income taxes | 34,383 | 36,979 | 29,739 | (7.02 | )% | 15.62 | % | ||||||||||
Provision for income taxes | 6,828 | 14,915 | 9,014 | (54.22 | )% | (24.25 | )% | ||||||||||
Net Income | $ | 27,555 | $ | 22,064 | $ | 20,725 | 24.89 | % | 32.96 | % | |||||||
(nm - the percentage is not meaningful) | |||||||||||||||||
Weighted average common shares (basic) | 27,486,573 | 27,445,739 | 27,029,640 |
Common share equivalents | 67,381 | 77,615 | 81,283 | ||||||||||||||
Weighted average common shares (diluted) | 27,553,954 | 27,523,354 | 27,110,923 | ||||||||||||||
Basic earnings per share | $ | 1.00 | $ | 0.80 | $ | 0.77 | 25.00 | % | 29.87 | % | |||||||
Diluted earnings per share | $ | 1.00 | $ | 0.80 | $ | 0.76 | 25.00 | % | 31.58 | % | |||||||
Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP): | |||||||||||||||||
Net income | $ | 27,555 | $ | 22,064 | $ | 20,725 | |||||||||||
Noninterest expense components | |||||||||||||||||
Add - merger and acquisition expenses | — | — | 484 | ||||||||||||||
Noncore items, gross | — | — | 484 | ||||||||||||||
Less - net tax benefit associated with noncore items (1) | — | — | (153 | ) | |||||||||||||
2017 Tax Act: revaluation of net deferred tax assets | — | 1,895 | — | ||||||||||||||
2017 Tax Act: revaluation of LIHTC investments | — | 466 | — | ||||||||||||||
Total tax impact | — | 2,361 | (153 | ) | |||||||||||||
Noncore items, net of tax | — | 2,361 | 331 | ||||||||||||||
Operating net income | $ | 27,555 | $ | 24,425 | $ | 21,056 | 12.81 | % | 30.87 | % | |||||||
Diluted earnings per share, on an operating basis | $ | 1.00 | $ | 0.89 | $ | 0.78 | 12.36 | % | 28.21 | % | |||||||
(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) | 3.77 | % | 3.64 | % | 3.51 | % | |||||||||||
Return on average assets GAAP (calculated by dividing net income by average assets) | 1.39 | % | 1.08 | % | 1.10 | % | |||||||||||
Return on average assets on an operating basis (calculated by dividing net operating earnings by average assets) | 1.39 | % | 1.20 | % | 1.12 | % | |||||||||||
Return on average common equity GAAP (calculated by dividing net income by average common equity) | 11.73 | % | 9.28 | % | 9.59 | % | |||||||||||
Return on average common equity on an operating basis (calculated by dividing net operating earnings by average common equity) | 11.73 | % | 10.28 | % | 9.74 | % |
ASSET QUALITY | ||||||||||||
(Unaudited, dollars in thousands) | Nonperforming Assets At | |||||||||||
March 31 2018 | December 31 2017 | March 31 2017 | ||||||||||
Nonperforming loans | ||||||||||||
Commercial & industrial loans | $ | 30,751 | $ | 32,055 | $ | 36,877 | ||||||
Commercial real estate loans | 2,997 | 3,123 | 4,792 | |||||||||
Small business loans | 412 | 230 | 207 | |||||||||
Residential real estate loans | 7,646 | 8,129 | 7,139 | |||||||||
Home equity | 5,858 | 6,022 | 5,987 | |||||||||
Other consumer | 49 | 79 | 50 | |||||||||
Total nonperforming loans | 47,713 | 49,638 | 55,052 | |||||||||
Other real estate owned | 358 | 612 | 3,404 | |||||||||
Total nonperforming assets | $ | 48,071 | $ | 50,250 | $ | 58,456 | ||||||
Nonperforming loans/gross loans | 0.75 | % | 0.78 | % | 0.91 | % | ||||||
Nonperforming assets/total assets | 0.59 | % | 0.62 | % | 0.76 | % | ||||||
Allowance for loan losses/nonperforming loans | 127.56 | % | 122.17 | % | 113.20 | % | ||||||
Allowance for loan losses/total loans | 0.96 | % | 0.95 | % | 1.03 | % | ||||||
Delinquent loans/total loans | 0.79 | % | 0.77 | % | 0.58 | % | ||||||
Nonperforming Assets Reconciliation for the Three Months Ended | ||||||||||||
March 31 2018 | December 31 2017 | March 31 2017 | ||||||||||
Nonperforming assets beginning balance | $ | 50,250 | $ | 53,175 | $ | 61,580 | ||||||
New to nonperforming | 2,001 | 2,363 | 3,948 | |||||||||
Loans charged-off | (594 | ) | (686 | ) | (508 | ) | ||||||
Loans paid-off | (2,692 | ) | (1,892 | ) | (4,745 | ) | ||||||
Loans transferred to other real estate owned/other assets | — | — | (457 | ) | ||||||||
Loans restored to performing status | (690 | ) | (369 | ) | (629 | ) | ||||||
New to other real estate owned | — | — | 457 | |||||||||
Valuation write down | — | (39 | ) | — | ||||||||
Sale of other real estate owned | (254 | ) | (2,195 | ) | (1,226 | ) | ||||||
Other | 50 | (107 | ) | 36 | ||||||||
Nonperforming assets ending balance | $ | 48,071 | $ | 50,250 | $ | 58,456 |
Net Charge-Offs (Recoveries) | ||||||||||||
Three Months Ended | ||||||||||||
March 31 2018 | December 31 2017 | March 31 2017 | ||||||||||
Net charge-offs (recoveries) | ||||||||||||
Commercial and industrial loans | $ | 121 | $ | 165 | $ | (187 | ) | |||||
Commercial real estate loans | (20 | ) | (3 | ) | (31 | ) | ||||||
Small business loans | 15 | 26 | 4 | |||||||||
Residential real estate loans | 37 | 23 | 11 | |||||||||
Home equity | 45 | 28 | (62 | ) | ||||||||
Other consumer | 83 | 128 | 113 | |||||||||
Total net charge-offs (recoveries) | $ | 281 | $ | 367 | $ | (152 | ) | |||||
Net charge-offs (recoveries) to average loans (annualized) | 0.02 | % | 0.02 | % | (0.01 | )% |
Troubled Debt Restructurings At | ||||||||||||
March 31 2018 | December 31 2017 | March 31 2017 | ||||||||||
Troubled debt restructurings on accrual status | $ | 25,617 | $ | 25,852 | $ | 25,575 | ||||||
Troubled debt restructurings on nonaccrual status | 5,637 | 6,067 | 5,439 | |||||||||
Total troubled debt restructurings | $ | 31,254 | $ | 31,919 | $ | 31,014 | ||||||
BALANCE SHEET AND CAPITAL RATIOS | ||||||||||||
March 31 2018 | December 31 2017 | March 31 2017 | ||||||||||
Gross loans/total deposits | 94.23 | % | 94.45 | % | 93.72 | % | ||||||
Common equity tier 1 capital ratio (1) | 11.43 | % | 11.20 | % | 10.89 | % | ||||||
Tier one leverage capital ratio (1) | 10.32 | % | 10.04 | % | 9.92 | % | ||||||
Common equity to assets ratio GAAP | 11.82 | % | 11.68 | % | 11.34 | % | ||||||
Tangible common equity to tangible assets ratio (2) | 9.12 | % | 8.96 | % | 8.62 | % | ||||||
Book value per share GAAP | $ | 34.75 | $ | 34.38 | $ | 32.44 | ||||||
Tangible book value per share (2) | $ | 26.02 | $ | 25.60 | $ | 23.92 |
INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION | |||||||||||||||||||||||||||||||||
(Unaudited, dollars in thousands) | Three Months Ended | ||||||||||||||||||||||||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||||||||||||||||||||||||||
Interest | Interest | Interest | |||||||||||||||||||||||||||||||
Average | Earned/ | Yield/ | Average | Earned/ | Yield/ | Average | Earned/ | Yield/ | |||||||||||||||||||||||||
Balance | Paid (1) | Rate | Balance | Paid (1) | Rate | Balance | Paid (1) | Rate | |||||||||||||||||||||||||
Interest-earning assets | |||||||||||||||||||||||||||||||||
Interest-earning deposits with banks, federal funds sold, and short term investments | $ | 81,934 | $ | 311 | 1.54 | % | $ | 185,073 | $ | 604 | 1.29 | % | $ | 105,007 | $ | 207 | 0.80 | % | |||||||||||||||
Securities | |||||||||||||||||||||||||||||||||
Securities - trading | 1,433 | — | — | % | 1,297 | — | — | % | 999 | — | — | % | |||||||||||||||||||||
Securities - taxable investments | 967,221 | 6,219 | 2.61 | % | 922,904 | 5,847 | 2.51 | % | 875,417 | 5,367 | 2.49 | % | |||||||||||||||||||||
Securities - nontaxable investments (1) | 2,262 | 20 | 3.59 | % | 2,365 | 25 | 4.19 | % | 3,793 | 40 | 4.28 | % | |||||||||||||||||||||
Total securities | 970,916 | 6,239 | 2.61 | % | 926,566 | 5,872 | 2.51 | % | 880,209 | 5,407 | 2.49 | % | |||||||||||||||||||||
Loans held for sale | 2,753 | 19 | 2.80 | % | 6,763 | 24 | 1.41 | % | 2,725 | 14 | 2.08 | % | |||||||||||||||||||||
Loans | |||||||||||||||||||||||||||||||||
Commercial and industrial | 879,336 | 9,615 | 4.43 | % | 856,272 | 9,135 | 4.23 | % | 880,765 | 8,642 | 3.98 | % | |||||||||||||||||||||
Commercial real estate (1) | 3,107,437 | 33,289 | 4.34 | % | 3,104,885 | 33,455 | 4.27 | % | 3,029,344 | 30,215 | 4.05 | % | |||||||||||||||||||||
Commercial construction | 397,720 | 4,671 | 4.76 | % | 401,309 | 4,528 | 4.48 | % | 331,285 | 3,577 | 4.38 | % | |||||||||||||||||||||
Small business | 132,125 | 1,862 | 5.72 | % | 130,403 | 1,861 | 5.66 | % | 124,374 | 1,680 | 5.48 | % | |||||||||||||||||||||
Total commercial | 4,516,618 | 49,437 | 4.44 | % | 4,492,869 | 48,979 | 4.33 | % | 4,365,768 | 44,114 | 4.10 | % | |||||||||||||||||||||
Residential real estate | 755,996 | 7,501 | 4.02 | % | 754,605 | 7,400 | 3.89 | % | 643,672 | 6,099 | 3.84 | % | |||||||||||||||||||||
Home equity | 1,051,022 | 10,205 | 3.94 | % | 1,050,815 | 10,155 | 3.83 | % | 996,940 | 8,708 | 3.54 | % | |||||||||||||||||||||
Total consumer real estate | 1,807,018 | 17,706 | 3.97 | % | 1,805,420 | 17,555 | 3.86 | % | 1,640,612 | 14,807 | 3.66 | % | |||||||||||||||||||||
Other consumer | 10,659 | 214 | 8.14 | % | 10,085 | 222 | 8.73 | % | 11,333 | 241 | 8.62 | % | |||||||||||||||||||||
Total loans | 6,334,295 | 67,357 | 4.31 | % | 6,308,374 | 66,756 | 4.20 | % | 6,017,713 | 59,162 | 3.99 | % | |||||||||||||||||||||
Total interest-earning assets | 7,389,898 | $ | 73,926 | 4.06 | % | 7,426,776 | $ | 73,256 | 3.91 | % | 7,005,654 | $ | 64,790 | 3.75 | % | ||||||||||||||||||
Cash and due from banks | 97,605 | 98,397 | 94,955 | ||||||||||||||||||||||||||||||
Federal Home Loan Bank stock | 13,016 | 11,597 | 13,108 | ||||||||||||||||||||||||||||||
Other assets | 545,516 | 557,044 | 540,411 | ||||||||||||||||||||||||||||||
Total assets | $ | 8,046,035 | $ | 8,093,814 | $ | 7,654,128 | |||||||||||||||||||||||||||
Interest-bearing liabilities | |||||||||||||||||||||||||||||||||
Deposits | |||||||||||||||||||||||||||||||||
Savings and interest checking accounts | $ | 2,563,186 | $ | 1,093 | 0.17 | % | $ | 2,556,355 | $ | 1,052 | 0.16 | % | $ | 2,479,373 | $ | 763 | 0.12 | % | |||||||||||||||
Money market | 1,338,265 | 1,364 | 0.41 | % | 1,337,491 | 1,261 | 0.37 | % | 1,258,466 | 857 | 0.28 | % | |||||||||||||||||||||
Time deposits | 646,529 | 1,478 | 0.93 | % | 635,941 | 1,379 | 0.86 | % | 634,947 | 1,147 | 0.73 | % | |||||||||||||||||||||
Total interest-bearing deposits | 4,547,980 | 3,935 | 0.35 | % | 4,529,787 | 3,692 | 0.32 | % | 4,372,786 | 2,767 | 0.26 | % | |||||||||||||||||||||
Borrowings | |||||||||||||||||||||||||||||||||
Federal Home Loan Bank borrowings | 73,040 | 260 | 1.44 | % | 53,267 | 262 | 1.95 | % | 66,556 | 403 | 2.46 | % | |||||||||||||||||||||
Customer repurchase agreements | 155,768 | 66 | 0.17 | % | 178,917 | 79 | 0.18 | % | 157,305 | 56 | 0.14 | % | |||||||||||||||||||||
Junior subordinated debentures | 73,074 | 590 | 3.27 | % | 73,072 | 584 | 3.17 | % | 73,085 | 554 | 3.07 | % | |||||||||||||||||||||
Subordinated debentures | 34,687 | 427 | 4.99 | % | 34,675 | 427 | 4.89 | % | 34,641 | 427 | 5.00 | % | |||||||||||||||||||||
Total borrowings | 336,569 | 1,343 | 1.62 | % | 339,931 | 1,352 | 1.58 | % | 331,587 | 1,440 | 1.76 | % | |||||||||||||||||||||
Total interest-bearing liabilities | 4,884,549 | $ | 5,278 | 0.44 | % | 4,869,718 | $ | 5,044 | 0.41 | % | 4,704,373 | $ | 4,207 | 0.36 | % | ||||||||||||||||||
Demand deposits | 2,129,517 | 2,201,866 | 1,987,579 | ||||||||||||||||||||||||||||||
Other liabilities | 79,125 | 79,208 | 85,691 | ||||||||||||||||||||||||||||||
Total liabilities | $ | 7,093,191 | $ | 7,150,792 | $ | 6,777,643 | |||||||||||||||||||||||||||
Stockholders' equity | 952,844 | 943,022 | 876,485 |
Total liabilities and stockholders' equity | $ | 8,046,035 | $ | 8,093,814 | $ | 7,654,128 | |||||||||||||||||||||||||||
Net interest income | $ | 68,648 | $ | 68,212 | $ | 60,583 | |||||||||||||||||||||||||||
Interest rate spread (2) | 3.62 | % | 3.50 | % | 3.39 | % | |||||||||||||||||||||||||||
Net interest margin (3) | 3.77 | % | 3.64 | % | 3.51 | % | |||||||||||||||||||||||||||
Supplemental Information | |||||||||||||||||||||||||||||||||
Total deposits, including demand deposits | $ | 6,677,497 | $ | 3,935 | $ | 6,731,653 | $ | 3,692 | $ | 6,360,365 | $ | 2,767 | |||||||||||||||||||||
Cost of total deposits | 0.24 | % | 0.22 | % | 0.18 | % | |||||||||||||||||||||||||||
Total funding liabilities, including demand deposits | $ | 7,014,066 | $ | 5,278 | $ | 7,071,584 | $ | 5,044 | $ | 6,691,952 | $ | 4,207 | |||||||||||||||||||||
Cost of total funding liabilities | 0.31 | % | 0.28 | % | 0.25 | % |
Organic Loan and Deposit Growth | |||||||||||||||||||
(Unaudited, dollars in thousands) | |||||||||||||||||||
Year-over-Year | |||||||||||||||||||
March 31 2018 | March 31 2017 | Island Bancorp Balances Acquired | Organic Growth/(Decline) | Organic Growth/(Decline) % | |||||||||||||||
Loans | |||||||||||||||||||
Commercial and industrial | $ | 903,214 | $ | 881,329 | $ | 4,271 | $ | 17,614 | 2.00 | % | |||||||||
Commercial real estate | 3,102,271 | 3,027,305 | 44,510 | 30,456 | 1.01 | % | |||||||||||||
Commercial construction | 400,934 | 356,173 | 106 | 44,655 | 12.54 | % | |||||||||||||
Small business | 133,666 | 126,374 | 57 | 7,235 | 5.73 | % | |||||||||||||
Total commercial | 4,540,085 | 4,391,181 | 48,944 | 99,960 | 2.28 | % | |||||||||||||
Residential real estate | 761,331 | 653,999 | 87,450 | 19,882 | 3.04 | % | |||||||||||||
Home equity | 1,051,452 | 1,008,771 | 18,921 | 23,760 | 2.36 | % | |||||||||||||
Total consumer real estate | 1,812,783 | 1,662,770 | 106,371 | 43,642 | 2.62 | % | |||||||||||||
Total other consumer | 9,188 | 10,415 | 236 | (1,463 | ) | (14.05 | )% | ||||||||||||
Total loans | $ | 6,362,056 | $ | 6,064,366 | $ | 155,551 | $ | 142,139 | 2.34 | % | |||||||||
Deposits | |||||||||||||||||||
Demand deposits | $ | 2,167,361 | $ | 2,043,359 | $ | 33,599 | $ | 90,403 | 4.42 | % | |||||||||
Savings and interest checking accounts | 2,606,257 | 2,542,667 | 47,095 | 16,495 | 0.65 | % | |||||||||||||
Money market | 1,323,138 | 1,268,796 | 63,915 | (9,573 | ) | (0.75 | )% | ||||||||||||
Time certificates of deposit | 654,755 | 615,852 | 14,971 | 23,932 | 3.89 | % | |||||||||||||
Total deposits | $ | 6,751,511 | $ | 6,470,674 | $ | 159,580 | $ | 121,257 | 1.87 | % |
March 31 2018 | December 31 2017 | March 31 2017 | |||||||||||
Tangible common equity | |||||||||||||
Stockholders' equity (GAAP) | $ | 956,059 | $ | 943,809 | $ | 877,480 | (a) | ||||||
Less: Goodwill and other intangibles | 240,268 | 241,147 | 230,613 | ||||||||||
Tangible common equity | $ | 715,791 | $ | 702,662 | $ | 646,867 | (b) | ||||||
Tangible assets | |||||||||||||
Assets (GAAP) | $ | 8,090,410 | $ | 8,082,029 | $ | 7,738,114 | (c) | ||||||
Less: Goodwill and other intangibles | 240,268 | 241,147 | 230,613 | ||||||||||
Tangible assets | $ | 7,850,142 | $ | 7,840,882 | $ | 7,507,501 | (d) | ||||||
Common Shares | 27,512,328 | 27,450,190 | 27,046,768 | (e) | |||||||||
Common equity to assets ratio (GAAP) | 11.82 | % | 11.68 | % | 11.34 | % | (a/c) | ||||||
Tangible common equity to tangible assets ratio (Non-GAAP) | 9.12 | % | 8.96 | % | 8.62 | % | (b/d) | ||||||
Book value per share (GAAP) | $ | 34.75 | $ | 34.38 | $ | 32.44 | (a/e) | ||||||
Tangible book value per share (Non-GAAP) | $ | 26.02 | $ | 25.60 | $ | 23.92 | (b/e) |
Three Months Ended | ||||||||||||
March 31 2018 | December 31 2017 | March 31 2017 | ||||||||||
Net interest income (GAAP) | $ | 68,471 | $ | 67,832 | $ | 60,200 | (a) | |||||
Noninterest income (GAAP) | $ | 19,863 | $ | 21,914 | $ | 18,912 | (b) | |||||
Noninterest income on an operating basis (Non-GAAP) | $ | 19,863 | $ | 21,914 | $ | 18,912 | (c) | |||||
Noninterest expense (GAAP) | $ | 53,451 | $ | 51,467 | $ | 48,773 | (d) | |||||
Less: | ||||||||||||
Merger and acquisition expense | — | — | 484 | |||||||||
Noninterest expense on an operating basis (Non-GAAP) | $ | 53,451 | $ | 51,467 | $ | 48,289 | (e) | |||||
Total revenue (GAAP) | $ | 88,334 | $ | 89,746 | $ | 79,112 | (a+b) | |||||
Total operating revenue (Non-GAAP) | $ | 88,334 | $ | 89,746 | $ | 79,112 | (a+c) | |||||
Ratios | ||||||||||||
Noninterest income as a % of total revenue (GAAP based) | 22.49 | % | 24.42 | % | 23.91 | % | (b/(a+b)) | |||||
Noninterest income as a % of total revenue on an operating basis (Non-GAAP) | 22.49 | % | 24.42 | % | 23.91 | % | (c/(a+c)) | |||||
Efficiency ratio (GAAP based) | 60.51 | % | 57.35 | % | 61.65 | % | (d/(a+b)) | |||||
Efficiency ratio on an operating basis (Non-GAAP) | 60.51 | % | 57.35 | % | 61.04 | % | (e/(a+c)) |
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