ROCKLAND, Mass.--(BUSINESS WIRE)--
Independent Bank Corp., (NASDAQ: INDB), parent of Rockland Trust
Company, today announced net income of $3.0 million, or $0.18 on a per
diluted share basis, for the three months ending December 31, 2008,
compared to net income and diluted earnings per share for the three
months ended December 31, 2007 of $7.7 million and $0.56, respectively.
Net income was $24.0 million, or $1.52 on a diluted earnings per share
basis, for the year ending December 31, 2008 compared to net income and
diluted earnings per share basis for the year ended December 31, 2007 of
$28.4 million and $2.00, respectively.
The decline in earnings from the prior period is primarily the result of
Other-Than-Temporary Impairment ("OTTI") losses recorded in the fourth
quarter. The quarterly comparisons also reflect higher loan loss
provisioning in the fourth quarter to increase loan loss reserves in
light of economic weakening.
Fourth quarter 2008 loan and deposit growth was strong, despite the
challenging economic environment, as the Company took advantage of
opportunities created by market turmoil. During the three month period
which ended December 31, 2008 total deposits increased by $41.0 million
and loans increased by $75.3 million, quarterly increases which equate
to annualized growth rates of 6.5% and 11.7%, respectively.
In the fourth quarter the Company recorded $4.6 million of OTTI on
various trust preferred securities. The after tax impact of this charge
was $3.0 million, or $0.18 on a diluted earnings per share basis for the
quarter ending December 31, 2008. For the year ending December 31, 2008
the aggregate charges amounted to $4.7 million, net of tax, or $0.30
diluted earnings per share.
"All in all, 2008 was a very successful year," said Christopher
Oddleifson, the Company's President and Chief Executive Officer. "Our
strong loan and deposit growth confirms that the current challenging
economic climate has actually been a time of opportunity for us. The
successful integration of Slade's Ferry Bancorp. early in the year was a
significant accomplishment and our franchise will continue to grow with
the upcoming Benjamin Franklin Bancorp, Inc. acquisition, which we
expect to close in the near future. While our fourth quarter earnings
were restrained by security impairments and higher credit costs, we have
a solid balance sheet and remain in a strong position to continue to
expand our franchise and achieve long term growth in a disciplined
manner."
Total deposits were $2.6 billion at December 31, 2008, a 27.3% increase
when compared to $2.0 billion in total deposits at December 31, 2007. Of
the year-to-date deposit increase, $410.8 million is a result of the
March 2008 acquisition of Slade's Ferry Bancorp ("Slades"). Excluding
the impact of the Slades acquisition, total deposits have grown during
2008 at an annualized rate of 7.0%.
Total loans grew by $617.9 million, or 30.3%, during the twelve months
ended December 31, 2008, with the Slades acquisition contributing $471.2
million to total loan growth. Excluding the Slades acquisition, loan
growth achieved in 2008 amounted to $146.7 million, or 7.2%, on an
annualized basis, and was concentrated in the commercial (12.6%) and
home equity (19.0%) lending categories.
Certain non-core items are included in the computation of earnings in
accordance with the United States of America's generally accepted
accounting principles ("GAAP") in both 2008 and 2007 as indicated by the
table below. In an effort to provide investors with information
regarding the Company's results, the Company has disclosed the following
non-GAAP information, which management believes provides useful
information to the investor. This information should not be viewed as a
substitute for operating results determined in accordance with GAAP, nor
is it necessarily comparable to non-GAAP information which may be
presented by other companies.
Dollars in Thousands, Except Twelve Months Ending
Per Share Data
December 31,
RECONCILIATION TABLE - NON-GAAP 2008 2007 $ Variance % Variance
FINANCIAL INFORMATION
NET INCOME (GAAP) $ 23,964 $ 28,381 $ (4,417 ) -15.6 %
Net Interest Income Components
Add - Write-Off of Debt - 590 (590 ) n/a
Issuance Cost, net of tax
Non-Interest Income Components
Add - Net Loss on Sale of 396 - 396 n/a
Securities, net of tax
Non-Interest Expense Components
Add - Executive Early - 264 (264 ) n/a
Retirement Costs, net of tax
Add - Merger & Acquisition 728 - 728 n/a
Expenses, net of tax
Add - Litigation Reserve (net 488 885 (397 ) -44.9 %
of recovery), net of tax
Less - WorldCom Bond Loss (272 ) - (272 ) n/a
Recovery, net of tax
NET OPERATING EARNINGS $ 25,304 $ 30,120 $ (4,816 ) -16.0 %
(NON-GAAP)
Diluted Operating Earnings Per $ 1.61 $ 2.13 $ (0.52 ) -24.4 %
Share
As shown above, net operating earnings were $25.3 million, or $1.61 on a
per diluted share basis, for the year ending December 31, 2008 compared
to net operating earnings and diluted earnings per share for the year
ended December 31, 2007 of $30.1 million and $2.13, respectively. The
$7.2 million in charges for OTTI of securities recognized during 2008
decreased net operating earnings on a diluted earnings per share basis
by approximately $0.30. There were no non-core items for the fourth
quarter of 2008.
Comparing the three months ending December 31, 2008 to the same period
last year, net interest income increased $6.0 million, or 24.5%. For the
year ended December 31, 2008, net interest income increased $21.3
million, or 22.1%, from the year ago period, due to the Slades
acquisition in the first quarter of this year and organic growth. The
net interest margin for the three and twelve month periods ended
December 31, 2008 was 3.81% and 3.95%, respectively. The net interest
margin was 3.94% and 3.90% for the three and twelve months ended
December 31, 2007. See the tables below for reconciliations of net
interest income and the net interest margin as adjusted:
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
(Dollars in Thousands)
Net Interest Income $ 30,495 $ 24,491 $ 117,462 $ 96,183
GAAP
Add - Write-Off of - - - 907 *
Debt Issuance Cost
Net Interest Income $ 30,495 $ 24,491 $ 117,462 $ 97,090
as Adjusted
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
Net Interest Margin 3.81 % 3.94 % 3.95 % 3.90 %
GAAP
Add - Write-Off of - - - 0.04 % *
Debt Issuance Cost
Net Interest Margin 3.81 % 3.94 % 3.95 % 3.94 %
as Adjusted
*April 2007 refinance of Trust
Preferred Securities
On a linked quarter basis the net interest margin decreased from 4.09%
in the third quarter of 2008 to 3.81% in the fourth quarter. The primary
reason for this change is the drop in the Federal Funds rate, which
caused asset yields to drop faster than liability costs. Deposit costs,
in particular, did not decline as rapidly given the opportunity realized
early in the fourth quarter to raise deposits at attractive rates to
retain customers and attract prospects.
Non-interest income decreased by $4.8 million, or (57.0%), and by $4.0
million, or (12.4%), during the three and twelve months ended December
31, 2008, respectively, as compared to the same periods in the prior
year. See the table below for a run rate calculation of non-interest
income:
Three Months Ended
December 31,
2008 2007 $ Variance % Variance
(Dollars in Thousands)
Non-Interest Income GAAP $ 3,652 $ 8,499 ($4,847 ) -57.0 %
Add -
Other-Than-Temporary-Impairment
on Certain
Pooled Trust Preferred 4,646 - 4,646 n/a
Securities
Non-Interest Income as Adjusted $ 8,298 $ 8,499 ($201 ) -2.4 %
Twelve Months Ended
December 31,
2008 2007 $ Variance % Variance
(Dollars in Thousands)
Non-Interest Income GAAP $ 28,084 $ 32,051 ($3,967 ) -12.4 %
Add - Net Loss on Sale of 609 - 609 n/a
Securities
Add -
Other-Than-Temporary-Impairment
on Certain
Pooled Trust Preferred 7,216 - 7,216 n/a
Securities
Non-Interest Income as Adjusted $ 35,909 $ 32,051 $ 3,858 12.0 %
The change in non-interest income is attributable to the following:
-- Service charges on deposit accounts increased by $194,000, or 5.2%, and
by $1.2 million, or 8.2% for the three and twelve months ended December
31, 2008, as compared to the same periods in 2007, primarily due to the
Slades acquisition.
-- Wealth management revenue increased by $340,000, or 15.2%, and $3.0
million, or 37.3%, for the three and twelve months ended December 31,
2008, as compared to the same periods in 2007. Assets under management
at December 31, 2008 and 2007 were $1.1 billion and $1.3 billion,
respectively.
-- Mortgage banking income decreased by $452,000, or (47.6%), and by
$94,000, or (3.0%), for the three and twelve months ended December 31,
2008, as compared to the same periods in 2007. The balance of the
mortgage servicing asset was $1.5 million and loans serviced amounted to
$250.5 million as of December 31, 2008, as compared to a mortgage
servicing asset balance of $2.1 million and loans serviced amounting to
$255.2 million at December 31, 2007.
-- There were no gains or losses on the sale of securities during the
fourth quarter of 2008 or 2007. There was a net loss on the sale of
securities of $609,000 during the first quarter of 2008. Of this loss,
$742,000 is associated with the sale of the majority of the Slades
securities portfolio, which was partially offset by gains on the sale of
agency securities recorded in the first quarter.
-- The Company recorded OTTI on certain investment grade pooled trust
preferred securities, resulting in a negative charge to non-interest
income of approximately $4.6 million and $7.2 million for the three and
twelve month periods ending December 31, 2008.
-- Other non-interest income decreased by $431,000, or (43.1%), and by
$803,000, or (18.4%), for the three and twelve months ended December 31,
2008, as compared to the same period in 2007. The decrease for the
quarter-to-date and year-to-date periods is primarily attributable to
trading asset losses due to the stock market decrease and declines in
1031 exchange income as a result of the slowdown in national commercial
real estate markets.
Non-interest expense increased by $4.6 million, or 20.8%, and by $16.2
million, or 18.4%, for the three and twelve months ended December 31,
2008, as compared to the same periods in 2007. When adjusting the twelve
month period for the items listed below, non-interest expense increased
$16.5 million, or 19.2%, as compared to the same periods in 2007. There
were no adjustments for the three months ended December 31, 2008 and
2007. See the table below for a reconciliation of non-interest
expense as adjusted:
Twelve Months Ended
December 31,
2008 2007 $ Variance % Variance
(Dollars in Thousands)
Non-Interest Expense GAAP $ 104,143 $ 87,932 $ 16,211 18.4 %
Less - Executive Early - (406 ) 406 n/a
Retirement Costs
Less - Merger & (1,120 ) - (1,120 ) n/a
Acquisition Expenses
Less - Litigation Reserve (750 ) (1,361 ) 611 -44.9 %
(net of Recovery)
Add - WorldCom Bond Loss 418 - 418 n/a
Recovery
Non-Interest Expense as $ 102,691 $ 86,165 $ 16,526 19.2 %
Adjusted
-- Salaries and employee benefits increased by $1.2 million, or 9.2%, and
$5.8 million, or 11.0%, for the three and twelve months ended December
31, 2008, as compared to the same periods in 2007. The increase in
salaries and benefits is primarily attributable to the Slades
acquisition in the first quarter of 2008 and annual merit and medical
insurance increases.
-- Occupancy and equipment expense increased by $1.0 million, or 44.0%, and
$2.8 million, or 28.4%, for the three and twelve month periods ending
December 31, 2008, as compared to the same periods in 2007. The increase
is mainly due to an increase in rent expense due to two new branch
locations, increased utility costs, depreciation expense and the effects
of the Slades acquisition.
-- Data processing and facilities management expense increased by $187,000,
or 15.4%, and $990,000, or 21.6%, for the three and twelve month periods
ending December 31, 2008, as compared to the same periods in 2007. The
increase is partially a result of new functionality as well as an
increase in volume primarily attributable to the Slades acquisition
during the first quarter of 2008.
-- Merger and acquisition related expenditures totaled $1.1 million, for
the twelve month period ending December 31, 2008, associated with the
Slades acquisition in March 2008. There were no merger and acquisition
expenses for the comparable 2007 periods.
-- Other non-interest expense increased by $2.1 million, or 41.4%, and $5.9
million, or 28.4%, for the three and twelve month periods ending
December 31, 2008, as compared to the same periods in 2007. The increase
in the twelve-month period is primarily attributable to the amortization
of intangible assets of $1.5 million, FDIC deposit insurance assessment
of $1.1 million, consulting fees of $779,000, litigation settlement of
$750,000, legal loan collection fees of $489,000 due to collection
activity, and advertising expense of $299,000.
Total assets increased by $860.1 million, or 31.1%, to $3.6 billion at
December 31, 2008 as compared to December 31, 2007. This increase is
primarily a result of the Slades acquisition, which closed during the
first quarter of 2008.
Securities increased by $152.9 million, or 30.1%, during the twelve
months ended December 31, 2008. Securities represented approximately 18%
of total assets at both December 31, 2008 and 2007. On a linked quarter
basis, securities increased $99.5 million in anticipation of proceeds
from the United States Treasury Capital Purchase Program ("CPP"). As
previously mentioned, during 2008, the Company recorded OTTI on certain
investment grade pooled trust preferred securities amounting to $4.6
million and $7.2 million for the three and twelve months ended December
31, 2008, respectively. See table below for details regarding the
Company's trust preferred securities and related other-than-temporary
impairment charges as of December 31, 2008.
Trust Preferred Detail as of December 31, 2008
Amortized
Cost
Amortized After
Cost OTTI Impairment
(Dollars in Thousands)
Pooled Trust Preferred $ 18,677 $ 7,216 $ 11,461
Single Issuer Trust Preferred 14,803 - 14,803
Total Trust Preferred $ 33,480 $ 7,216 $ 26,264
Certain BBB rated and two of the three A rated pooled trust preferred
securities held by the Company were written down to prices of
approximately 13% and 24% per dollar, respectively.
The following table summarizes loan growth during the year ending
December 31, 2008:
December 31, December 31, Slades Organic
2008 2007 Acquisition Growth/(Loss)
(Dollars in Thousands)
Loans
Commercial and
Commercial Real $ 1,569,082 $ 1,121,310 $ 306,824 $ 140,948
Estate Loans
Small Business 86,670 69,977 9,257 7,436
Residential Real 432,325 341,090 114,432 (23,197)
Estate
Consumer - Home 406,240 308,744 38,723 58,773
Equity
Consumer - Other 166,570 201,831 2,009 (37,270)
Total Loans $ 2,660,887 $ 2,042,952 $ 471,245 $ 146,690
Excluding the Slades acquisition, organic loan growth achieved in the
twelve months of 2008 amounted to $146.7 million, or 7.2%, on an
annualized basis, and was concentrated in the commercial (12.6%) and
home equity (19.0%) lending categories, while the residential real
estate and consumer (primarily indirect automobile lending) categories
were reduced. Total commercial loans (including small business loans)
following the Slades acquisition now represent 62.2% of the total loan
portfolio.
The following table summarizes deposit growth during the year ending
December 31, 2008:
December 31, December 31, Slades Organic
2008 2007 Acquisition Growth/(Loss)
(Dollars in Thousands)
Deposits
Demand $ 519,326 $ 471,164 $ 74,584 $ (26,422)
Deposits
Savings and
Interest 725,313 587,474 119,908 17,931
Checking
Accounts
Money Market 488,345 435,792 38,668 13,885
Time
Certificates 846,096 532,180 177,609 136,307
of Deposit
Total $ 2,579,080 $ 2,026,610 $ 410,769 $ 141,701
Deposits
Borrowings increased by $191.0 million, or 37.9%, during the twelve
months ending December 31, 2008, as compared to December 31, 2007,
attributable to the Slades acquisition and organic loan growth.
Additionally, the Company issued $30.0 million of subordinated debt
during the quarter ended September 30, 2008, which will be used to
support additional loan growth, particularly in commercial lending. The
subordinated debt, which qualifies as Tier 2 regulatory capital, has a
10 year maturity and may be called at the option of the Company after
five years, and is priced at a fixed rate of 7.02% for the first five
year period.
As previously announced, on January 9, 2009 the Company raised
$78,158,000 through the issuance of preferred stock and warrants
associated with its participation in the CPP. The CPP funding
strengthened the Company's already strong capital position. On a pro
forma basis as of December 31, 2008, the CPP funding increased the
Company's Tier 1 leverage ratio from 7.58% to 9.63% and its total
risk-based capital ratio from 11.79% to 14.58%.
Management anticipates using CPP funds to expand lending to creditworthy
consumers and businesses and, when appropriate, to modify residential
mortgages. The Company's fourth quarter 2008 loan growth was expanded in
anticipation of successfully raising capital through CPP participation.
The Company fully intends to deploy its CPP capital in a deliberate and
responsible manner.
The Company reported a return on average assets and a return on average
equity in the fourth quarter of 2008 of 0.34% and 3.92%, respectively,
as compared to 1.13% and 14.08% for the same periods in 2007.
Stockholders' equity at December 31, 2008 totaled $305.3 million, as
compared to $220.5 million at December 31, 2007. The Tier 1 leverage
capital ratio at December 31, 2008 was 7.58%, maintaining the Company's
well-capitalized position.
At December 31, 2008, the balance of goodwill was $116.4 million and
other intangible assets, primarily core deposit intangibles, were $9.3
million. The amount of goodwill and core deposit intangible assets
derived from the Slades acquisition was $58.1 million and $9.0 million,
respectively.
The allowance for loan losses was $37.0 million at December 31, 2008 and
$26.8 million at December 31, 2007. A portion of the increase in
allowance for loan losses is due to the Slades acquisition with the
remainder reflective of overall credit softening. Nonperforming assets
totaled $29.9 million at December 31, 2008, or 0.82% of total assets,
and $8.3 million at December 31, 2007, or 0.30% of total assets. The
primary increase on a linked quarter basis was in the commercial and
commercial real estate categories of $7.4 million, residential real
estate of $2.7 million, and non-accrual securities of $910,000. The
Company's allowance for loan losses as a percentage of loans was 1.39%
at December 31, 2008 and 1.29% at September 30, 2008. The provision for
loan losses was $5.6 million and $10.9 million for the quarter and year
ended December 31, 2008, respectively, as compared to $1.4 million and
$3.1 million for the year ago comparative periods. Net charge-offs were
$1.8 million and $6.2 million for the three and twelve month periods of
2008 as compared to $717,000 and $3.1 million for the three and twelve
month periods of 2007. The provision was increased in the fourth quarter
to account for the significant loan growth experienced in the quarter in
addition to the increase in non-performing loans, particularly in
commercial real estate.
Christopher Oddleifson and Denis K. Sheahan, Chief Financial Officer, of
Independent Bank Corp. and Rockland Trust Company, will host a
conference call to discuss fourth quarter earnings at 4:30 p.m. Eastern
Time on Monday, January 26, 2009. Internet access to the call is
available on the Company's website at http://www.RocklandTrust.com
or by telephonic access by dial-in at 1-800-860-2442 reference: INDB. A
replay of the call will be available by calling 1-877-344-7529, Replay
Passcode: 426542. The web cast replay will be available until January
26, 2010 and the telephone replay will be available until February 10,
2009.
Independent Bank Corp.'s sole bank subsidiary, Rockland Trust Company,
currently has $3.6 billion in assets. Rockland Trust Company is a
full-service community bank serving southeastern Massachusetts, Cape
Cod, and Rhode Island. To find out more about the products and services
available at Rockland Trust Company, please visit our website at 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. Actual results may differ from those contemplated
by these statements. The Company wishes to caution readers not to
place undue reliance on any forward-looking statements. 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.
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"). The Company's
management uses these non-GAAP measures in its analysis of the Company's
performance. These non-GAAP measures may exclude significant gains or
losses that are unusual in nature, such as securities losses. Because
these gains and losses and their impact on the Company's performance are
difficult to predict, management believes that presentations of adjusted
financial measures excluding the impact of these gains and losses
provide useful information that is essential to a proper
understanding of the operating results of the Company. These disclosures
should not be viewed as a substitute for operating results determined in
accordance with GAAP, nor are they necessarily comparable to non-GAAP
performance measures which may be presented by other companies.
INDEPENDENT BANK CORP.
FINANCIAL SUMMARY
(Unaudited -
Dollars in
Thousands)
September
30, 2008
vs.
CONSOLIDATED December December September December
BALANCE 31, 31, $ % 30, 31, 2008 %
SHEETS
2008 2007 Variance Change 2008 Variance Change
Assets
Cash and Due $ 50,007 $ 67,416 (17,409 ) -25.82 % $ 92,752 $ (42,745 ) -46.09 %
From Banks
Fed Funds
Sold and 100 - 100 n/a 100 - n/a
Short Term
Investments
Securities
Trading 2,701 1,687 1,014 60.11 % 3,048 (347 ) -11.38 %
Assets
Securities
Available for 600,291 444,258 156,033 35.12 % 499,879 100,412 20.09 %
Sale
Securities
Held to 32,789 45,265 (12,476 ) -27.56 % 33,354 (565 ) -1.69 %
Maturity
Federal Home
Loan Bank 24,603 16,260 8,343 51.31 % 24,603 - n/a
Stock
Total 660,384 507,470 152,914 30.13 % 560,884 99,500 17.74 %
Securities
Loans
Commercial
and 270,832 190,522 80,310 42.15 % 250,469 20,363 8.13 %
Industrial
Commercial 1,126,295 797,416 328,879 41.24 % 1,092,811 33,484 3.06 %
Real Estate
Commercial 171,955 133,372 38,583 28.93 % 150,615 21,340 14.17 %
Construction
Small 86,670 69,977 16,693 23.85 % 85,120 1,550 1.82 %
Business
Residential 413,024 323,847 89,177 27.54 % 420,809 (7,785 ) -1.85 %
Real Estate
Residential 10,950 6,115 4,835 79.07 % 12,868 (1,918 ) -14.91 %
Construction
Residential
Loans Held 8,351 11,128 (2,777 ) -24.96 % 5,511 2,840 51.53 %
for Sale
Consumer - 406,240 308,744 97,496 31.58 % 391,416 14,824 3.79 %
Home Equity
Consumer - 127,956 156,006 (28,050 ) -17.98 % 134,866 (6,910 ) -5.12 %
Auto
Consumer - 38,614 45,825 (7,211 ) -15.74 % 41,073 (2,459 ) -5.99 %
Other
Total Loans 2,660,887 2,042,952 617,935 30.25 % 2,585,558 75,329 2.91 %
Less -
Allowance for (37,049 ) (26,831 ) (10,218 ) 38.08 % (33,287 ) (3,762 ) 11.30 %
Loan Losses
Net Loans 2,623,838 2,016,121 607,717 30.14 % 2,552,271 71,567 2.80 %
Bank Premises 36,429 39,085 (2,656 ) -6.80 % 35,246 1,183 3.36 %
and Equipment
Goodwill and
Core Deposit 125,710 60,411 65,299 108.09 % 126,412 (702 ) -0.56 %
Intangible
Other Assets 132,001 77,910 54,091 69.43 % 109,570 22,431 20.47 %
Total Assets $ 3,628,469 $ 2,768,413 860,056 31.07 % $ 3,477,235 $ 151,234 4.35 %
Liabilities
and
Stockholders'
Equity
Deposits
Demand $ 519,326 $ 471,164 48,162 10.22 % $ 573,904 $ (54,578 ) -9.51 %
Deposits
Savings and
Interest 725,313 587,474 137,839 23.46 % 711,862 13,451 1.89 %
Checking
Accounts
Money Market 488,345 435,792 52,553 12.06 % 464,983 23,362 5.02 %
Time
Certificates 846,096 532,180 313,916 58.99 % 787,282 58,814 7.47 %
of Deposit
Total 2,579,080 2,026,610 552,470 27.26 % 2,538,031 41,049 1.62 %
Deposits
Borrowings
Federal Home
Loan Bank 429,634 311,125 118,509 38.09 % 336,792 92,842 27.57 %
Borrowings
Fed Funds
Purchased and
Assets Sold 170,880 138,603 32,277 23.29 % 166,417 4,463 2.68 %
Under
Repurchase
Agreements
Junior
Subordinated 61,857 51,547 10,310 20.00 % 61,857 - n/a
Debentures
Subordinated 30,000 - 30,000 n/a 30,000 - n/a
Debentures
Other 2,946 3,069 (123 ) -4.01 % 2,103 843 40.09 %
Borrowings
Total 695,317 504,344 190,973 37.87 % 597,169 98,148 16.44 %
Borrowings
Total
Deposits and 3,274,397 2,530,954 743,443 29.37 % 3,135,200 139,197 4.44 %
Borrowings
Other 48,798 16,994 31,804 187.15 % 37,295 11,503 30.84 %
Liabilities
Stockholders' 305,274 220,465 84,809 38.47 % 304,740 534 0.18 %
Equity
Total
Liabilities
and $ 3,628,469 $ 2,768,413 860,056 31.07 % $ 3,477,235 $ 151,234 4.35 %
Stockholders'
Equity
INDEPENDENT BANK CORP.
FINANCIAL SUMMARY
(Unaudited - Dollars in
Thousands, Except Per Share
Data)
CONSOLIDATED STATEMENTS OF Three Months Ended Twelve Months Ended
INCOME
December 31, $ % December 31, $ %
2008 2007 Variance Change 2008 2007 Variance Change
INTEREST INCOME
Interest on Fed Funds Sold and $ 51 $ 56 $ (5 ) -8.93 % $ 148 $ 1,468 $ (1,320 ) -89.92 %
Short Term Investments
Interest and Dividends on 7,351 6,071 1,280 21.08 % 25,135 22,879 2,256 9.86 %
Securities
Interest on Loans 38,080 34,033 4,047 11.89 % 151,105 135,391 15,714 11.61 %
Total Interest Income 45,482 40,160 5,322 13.25 % 176,388 159,738 16,650 10.42 %
INTEREST EXPENSE
Interest on Deposits 9,964 10,611 (647 ) -6.10 % 38,896 43,639 (4,743 ) -10.87 %
Interest on Borrowed Funds 5,023 5,058 (35 ) -0.69 % 20,030 19,916 114 0.57 %
Total Interest Expense 14,987 15,669 (682 ) -4.35 % 58,926 63,555 (4,629 ) -7.28 %
Net Interest Income 30,495 24,491 6,004 24.52 % 117,462 96,183 21,279 22.12 %
Less - Provision for Loan 5,575 1,355 4,220 311.44 % 10,888 3,130 7,758 247.86 %
Losses
Net Interest Income after 24,920 23,136 1,784 7.71 % 106,574 93,053 13,521 14.53 %
Provision for Loan Losses
NON-INTEREST INCOME
Service Charges on Deposit 3,914 3,720 194 5.22 % 15,595 14,414 1,181 8.19 %
Accounts
Wealth Management 2,580 2,240 340 15.18 % 11,133 8,110 3,023 37.27 %
Mortgage Banking Income 497 949 (452 ) -47.63 % 3,072 3,166 (94 ) -2.97 %
BOLI Income 739 591 148 25.04 % 2,555 2,004 551 27.50 %
Net Loss on Sale of Securities - - - n/a (609 ) - (609 ) n/a
Other-Than-Temporary-Impairment
on Certain Pooled Trust (4,646 ) - (4,646 ) n/a (7,216 ) - (7,216 ) n/a
Preferred Securities
Other Non-Interest 568 999 (431 ) -43.14 % 3,554 4,357 (803 ) -18.43 %
(Loss)/Income
Total Non-Interest Income 3,652 8,499 (4,847 ) -57.03 % 28,084 32,051 (3,967 ) -12.38 %
NON-INTEREST EXPENSE
Salaries and Employee Benefits 14,468 13,252 1,216 9.18 % 58,275 52,520 5,755 10.96 %
Occupancy and Equipment 3,419 2,375 1,044 43.96 % 12,757 9,932 2,825 28.44 %
Expenses
Data Processing and Facilities 1,403 1,216 187 15.38 % 5,574 4,584 990 21.60 %
Management
Merger & Acquisition Expense - - - n/a 1,120 - 1,120 n/a
WorldCom Bond Loss Recovery - - - n/a (418 ) - (418 ) n/a
Other Non-Interest Expense 7,300 5,164 2,136 41.36 % 26,835 20,896 5,939 28.42 %
Total Non-Interest Expense 26,590 22,007 4,583 20.83 % 104,143 87,932 16,211 18.44 %
INCOME BEFORE INCOME TAXES 1,982 9,628 (7,646 ) -79.41 % 30,515 37,172 (6,657 ) -17.91 %
PROVISION FOR INCOME TAXES (1,039 ) 1,898 (2,937 ) -154.74 % 6,551 8,791 (2,240 ) -25.48 %
NET INCOME $ 3,021 $ 7,730 $ (4,709 ) -60.92 % $ 23,964 $ 28,381 $ (4,417 ) -15.56 %
BASIC EARNINGS PER SHARE $ 0.19 $ 0.56 -67.86 % $ 1.53 $ 2.02 -24.26 %
DILUTED EARNINGS PER SHARE $ 0.18 $ 0.56 -67.86 % $ 1.52 $ 2.00 -24.00 %
BASIC AVERAGE SHARES 16,280,552 13,734,231 18.54 % 15,694,555 14,033,257 11.84 %
DILUTED AVERAGE SHARES 16,331,118 13,840,654 17.99 % 15,759,482 14,160,598 11.29 %
PERFORMANCE RATIOS:
Net Interest Margin (FTE) 3.81 % 3.94 % -3.30 % 3.95 % 3.90 % 1.28 %
Return on Average Assets 0.34 % 1.13 % -69.91 % 0.73 % 1.05 % -30.48 %
Return on Average Equity 3.92 % 14.08 % -72.09 % 8.20 % 12.93 % -36.66 %
RECONCILIATION TABLE - NON-GAAP
FINANCIAL INFORMATION
NET INCOME (GAAP) $ 3,021 $ 7,730 $ (4,709 ) -60.92 % $ 23,964 $ 28,381 $ (4,417 ) -15.56 %
Net Interest Income Components
Add - Write-Off of Debt - - - - 590 (590 )
Issuance Cost, net of tax
Non-Interest Income Components
Add - Net Loss on Sale of - - - 396 - 396
Securities, net of tax
Non-Interest Expense Components
Add - Executive Early - - - - 264 (264 )
Retirement Costs, net of tax
Add - Merger and Acquisition - - - 728 - 728
Expenses, net of tax
(Less)/Add - Litigation - - - 488 885 (397 )
Reserve/(Recovery), net of tax
Less - WorldCom Bond Loss - - - (272 ) - (272 )
Recovery, net of tax
NET OPERATING EARNINGS $ 3,021 $ 7,730 $ (4,709 ) -60.92 % $ 25,304 $ 30,120 $ (4,816 ) -15.99 %
Diluted Earnings Per Share, on $ 0.18 $ 0.56 $ (0.38 ) -67.86 % $ 1.61 $ 2.13 $ (0.52 ) -24.41 %
an Operating Basis
INDEPENDENT BANK
CORP.
SUPPLEMENTAL
FINANCIAL Three Months Ended December 31,
INFORMATION
CONSOLIDATED
AVERAGE BALANCE
SHEETS AND 2008 2007
AVERAGE RATE
DATA
(Unaudited -
Dollars in Interest Interest
Thousands)
Ending Average Earned/ Yield/ Average Earned/ Yield/
Balance Balance Paid Rate Balance Paid Rate
Interest-Earning
Assets:
Federal Funds
Sold and Short $ 100 $ 19,979 $ 51 1.02% $ 1,073 $ 56 20.88%
Term Investments
Securities:
Trading Assets 2,701 3,036 45 5.93% 1,724 15 3.48%
Taxable
Investment 619,213 558,345 6,937 4.97% 458,080 5,552 4.85%
Securities
Non-taxable
Investment 38,470 38,461 568 5.91% 49,449 776 6.28%
Securities (1)
Total 660,384 599,842 7,550 5.03% 509,253 6,343 4.98%
Securities:
Loans (1) 2,660,887 2,617,938 38,200 5.84% 2,015,811 34,154 6.78%
Total
Interest-Earning $ 3,321,371 $ 3,237,759 $ 45,801 5.66% $ 2,526,137 $ 40,553 6.42%
Assets
Cash and Due 50,007 65,772 57,305
from Banks
Other Assets 257,091 244,772 147,935
Total Assets $ 3,628,469 $ 3,548,303 $ 2,731,377
Interest-bearing
Liabilities:
Deposits:
Savings and
Interest $ 725,313 $ 720,695 $ 1,490 0.83% $ 574,727 $ 1,865 1.30%
Checking
Accounts
Money Market 488,345 498,845 2,356 1.89% 447,431 3,155 2.82%
Time Deposits 846,096 859,894 6,118 2.85% 521,902 5,591 4.29%
Total
interest-bearing 2,059,754 2,079,434 9,964 1.92% 1,544,060 10,611 2.75%
deposits:
Borrowings:
Federal Home
Loan Bank $ 429,634 $ 309,653 $ 2,335 3.02% $ 277,127 $ 3,050 4.40%
Borrowings
Federal Funds
Purchased and
Assets Sold
Under Repurchase 170,880 168,343 1,144 2.72% 136,040 1,107 3.25%
Agreement
Junior
Subordinated 61,857 61,857 995 6.43% 51,547 861 6.68%
Debentures
Subordinated 30,000 30,000 546 7.28% - - -
Debentures
Other Borrowings 2,946 2,736 3 0.44% 3,025 40 5.29%
Total 695,317 572,589 5,023 3.51% 467,739 5,058 4.33%
Borrowings:
Total
Interest-Bearing $ 2,755,071 $ 2,652,023 $ 14,987 2.26% $ 2,011,799 $ 15,669 3.12%
Liabilities
Demand Deposits 519,326 550,073 485,923
Other 48,798 38,261 14,017
Liabilities
Total $ 3,323,195 $ 3,240,357 $ 2,511,739
Liabilities
Stockholders' 305,274 307,946 219,638
Equity
Total
Liabilities and $ 3,628,469 $ 3,548,303 $ 2,731,377
Stockholders'
Equity
Net Interest $30,814 $24,884
Income
Interest Rate 3.40% 3.30%
Spread (2)
Net Interest 3.81% 3.94%
Margin (3)
Supplemental
Information:
Total Deposits,
including Demand $ 2,579,080 $ 2,629,507 $ 9,964 $ 2,029,983 $ 10,611
Deposits
Cost of Total 1.52% 2.09%
Deposits
Total Funding
Liabilities, $ 3,274,397 $ 3,202,096 $ 14,987 $ 2,497,722 $ 15,669
including Demand
Deposits
Cost of Total
Funding 1.87% 2.51%
Liabilities
(1) The total amount of adjustment to present interest income and yield on a
fully tax-equivalent
basis is $319 and $393 for the three months ended December 31, 2008 and 2007,
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.
INDEPENDENT BANK
CORP.
SUPPLEMENTAL
FINANCIAL Twelve Months Ended December 31,
INFORMATION
CONSOLIDATED
AVERAGE BALANCE
SHEETS AND 2008 2007
AVERAGE RATE
DATA
(Unaudited -
Dollars in Interest Interest
Thousands)
Ending Average Earned/ Yield/ Average Earned/ Yield/
Balance Balance Paid Rate Balance Paid Rate
Interest-Earning
Assets:
Federal Funds
Sold and Short $ 100 $ 5,908 $ 148 2.51% $ 26,630 $ 1,468 5.51%
Term Investments
Securities:
Trading Assets 2,701 3,060 140 4.58% 1,692 48 2.84%
Taxable
Investment 619,213 470,668 23,307 4.95% 433,186 20,694 4.78%
Securities
Non-taxable
Investment 38,470 41,203 2,597 6.30% 51,181 3,288 6.42%
Securities (1)
Total 660,384 514,931 26,044 5.06% 486,059 24,030 4.94%
Securities:
Loans (1) 2,660,887 2,489,028 151,572 6.09% 1,994,273 135,874 6.81%
Total
Interest-Earning $ 3,321,371 $ 3,009,867 $ 177,764 5.91% $ 2,506,962 $ 161,372 6.44%
Assets
Cash and Due 50,007 65,992 59,009
from Banks
Other Assets 257,091 219,517 148,494
Total Assets $ 3,628,469 $ 3,295,376 $ 2,714,465
Interest-bearing
Liabilities:
Deposits:
Savings and
Interest $ 725,313 $ 688,336 $ 6,229 0.90% $ 575,269 $ 7,731 1.34%
Checking
Accounts
Money Market 488,345 472,065 9,182 1.95% 462,434 13,789 2.98%
Time Deposits 846,096 740,779 23,485 3.17% 531,016 22,119 4.17%
Total
interest-bearing 2,059,754 1,901,180 38,896 2.05% 1,568,719 43,639 2.78%
deposits:
Borrowings:
Federal Home
Loan Bank $ 429,634 $ 312,451 $ 10,714 3.43% $ 254,516 $ 11,316 4.45%
Borrowings
Federal Funds
Purchased and
Assets Sold
Under Repurchase 170,880 154,440 4,663 3.02% 109,344 3,395 3.10%
Agreement
Junior
Subordinated 61,857 60,166 3,842 6.39% 59,950 5,048 8.42%
Debentures
Subordinated 30,000 10,410 750 7.20% - - -
Debentures
Other Borrowings 2,946 2,381 61 2.56% 2,627 157 5.98%
Total 695,317 539,848 20,030 3.71% 426,437 19,916 4.67%
Borrowings:
Total
Interest-Bearing $ 2,755,071 $ 2,441,028 $ 58,926 2.41% $ 1,995,156 $ 63,555 3.19%
Liabilities
Demand Deposits 519,326 533,543 485,922
Other 48,798 28,692 13,914
Liabilities
Total $ 3,323,195 $ 3,003,263 $ 2,494,992
Liabilities
Stockholders' 305,274 292,113 219,473
Equity
Total
Liabilities and $ 3,628,469 $ 3,295,376 $ 2,714,465
Stockholders'
Equity
Net Interest $118,838 $97,817
Income
Interest Rate 3.50% 3.25%
Spread (2)
Net Interest 3.95% 3.90%
Margin (3)
Supplemental
Information:
Total Deposits,
including Demand $ 2,579,080 $ 2,434,723 $ 38,896 $ 2,054,641 $ 43,639
Deposits
Cost of Total 1.60% 2.12%
Deposits
Total Funding
Liabilities, $ 3,274,397 $ 2,974,571 $ 58,926 $ 2,481,078 $ 63,555
including Demand
Deposits
Cost of Total
Funding 1.98% 2.56%
Liabilities
(1) The total amount of adjustment to present interest income and yield on a
fully tax-equivalent
basis is $1,376 for the twelve months ended December 31, 2008 and $1,634 for the
twelve months ended December 31, 2007.
(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.
As Of
December 31, December 31, September 30,
2008 2007 2008
Asset Quality (Dollars in Thousands, Except Per Share Data)
Nonperforming Loans
Commercial & Industrial Loans $ 1,942 $ 306 $ 1,481
Small Business Loans 1,111 439 773
Commercial Real Estate Loans 12,370 2,568 5,478
Residential Real Estate Loans 9,394 2,380 6,725
Installment Loans - Home Equity 1,090 872 1,106
Installment Loans - Auto 813 833 770
Installment Loans - Other 213 246 311
Total Nonperforming Loans 26,933 7,644 16,644
Non-Accrual Securities 910 - -
Other Assets in Possession 231 - -
Other Real Estate Owned 1,809 681 1,239
Nonperforming Assets 29,883 8,325 17,883
Net charge-offs (year to date) $ 6,194 $ 3,114 $ 4,381
Net charge-offs to average loans 0.24 % 0.16 % 0.23 %
(annualized)
Nonperforming Loans/Gross Loans 1.01 % 0.37 % 0.64 %
Allowance for Loan 137.56 % 351.01 % 199.99 %
Losses/Nonperforming Loans
Gross Loans/Total Deposits 103.17 % 100.81 % 101.87 %
Allowance for Loan Losses/Total 1.39 % 1.31 % 1.29 %
Loans
Financial Ratios
Book Value per Share $ 18.75 $ 16.04 $ 18.72
Tangible Capital/Tangible Asset 5.13 % 5.91 % 5.32 %
Tangible Capital/Tangible Asset
(proforma to include
the deductibility of goodwill) 5.67 % 6.45 % 5.76 %
Tangible Book Value per Share $ 11.03 $ 11.64 $ 10.95
Tangible Book Value per Share
(proforma to include
the deductibility of goodwill) $ 12.19 $ 12.70 $ 11.85
Capital Adequacy
Tier one leverage capital ratio 7.58 % 8.02 % 7.69 %
(1)
(1) Estimated number for December
31, 2008
Certain amounts in prior year financial statement have been reclassified to
conform to the current year's presentation.
Source: Independent Bank Corp.
Contact: Independent Bank Corp.
Chris Oddleifson, 781-982-6660
President and Chief Executive Officer
or
Denis K. Sheahan, 781-982-6341
Chief Financial Officer