Exhibit 99.1
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Shareholder Relations | | NEWS RELEASE |
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| 288 Union Street, Rockland, MA 02370 | | Contact: |
Chris Oddleifson
President and
Chief Executive Officer
(781) 982-6660
Denis K. Sheahan
Chief Financial Officer
(781) 982-6341
INDEPENDENT BANK CORP. REPORTS 2006 EARNINGS
Rockland, Massachusetts (January 18, 2007). Independent Bank Corp., (NASDAQ: INDB), parent of Rockland Trust Company, today announced that 2006 diluted earnings per share increased to $2.17, as compared to $2.14 for 2005, and that 2006 net income of $32.9 million decreased by $354,000 when compared to 2005. Diluted earnings per share decreased $0.01, or (1.8%), to $0.54 for the quarter ended December 31, 2006 as compared to the $0.55 reported in the same period last year. Net income for the quarter was $8.1 million, a decrease of (5.4%) from the $8.6 million reported for the quarter ended December 31, 2005.
Certain non-core items are included in the computation of earnings in accordance with generally accepted accounting principles (“GAAP”) in both 2006 and 2005 as indicated by the following table:
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| | | Three Months Ended | | Twelve Months Ended |
| | | December 31, | | December 31, |
| Dollars in Thousands, Except Per Share Data | | 2006 | | 2005 | | 2006 | | 2005 |
RECONCILIATION TABLE — NON-GAAP FINANCIAL INFORMATION | | | | | | | | | | | | | | | | |
NET INCOME (GAAP) | | $ | 8,101 | | | $ | 8,564 | | | $ | 32,851 | | | $ | 33,205 | |
Net Interest Income Components | | | | | | | | | | | | | | | | |
| Add — Write-Off of Stock Issuance Cost, net of tax | | | 647 | | | | — | | | | 647 | | | | — | |
Non-Interest Income Components | | | | | | | | | | | | | | | | |
| Add — Net Loss on Sale of Securities, net of tax | | | 905 | | | | — | | | | 2,055 | | | | — | |
| Less — Net Gain on Sale of Securities, net of tax | | | — | | | | — | | | | — | | | | (400 | ) |
| Less — BOLI Benefit Proceeds | | | — | | | | — | | | | (1,316 | ) | | | — | |
Non-Interest Expense Components | | | | | | | | | | | | | | | | |
| Add — Severance, net of tax | | | — | | | | 216 | | | | — | | | | 216 | |
| Add — Prepayment Fees on Borrowings, net of tax | | | 53 | | | | — | | | | 53 | | | | — | |
| Less — Recovery on WorldCom Bond Claim, net of tax | | | (1,230 | ) | | | — | | | | (1,230 | ) | | | — | |
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NET OPERATING EARNINGS (NON-GAAP) | | $ | 8,476 | | | $ | 8,780 | | | $ | 33,060 | | | $ | 33,021 | |
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Diluted Operating Earnings Per Share | | $ | 0.57 | | | $ | 0.57 | | | $ | 2.19 | | | $ | 2.13 | |
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Net operating earnings on a per diluted share basis for 2006 were $2.19, an increase of $0.06, or 2.8%, over 2005. Net operating earnings on a per diluted share basis for the quarter ending December 31, 2006 were $0.57, consistent with the comparable quarter in 2005. Net operating earnings for the quarter and year ending December 31, 2006 were $8.5 million and $33.1 million, respectively, a decrease of (3.5%) and an increase of 0.1% from the same periods in 2005.
Comparing the three months ending December 31, 2006 to the same period last year, net interest income decreased $2.2 million or (8.2%), while net interest income for the twelve months ended December 31, 2006 decreased $3.2 million, or (3.0%) from the twelve months ended December 31, 2005. In December 2006 the Company wrote-off approximately $995,000 of unamortized issuance costs related to a refinance of $25.0 million of Trust Preferred securities that were called during December. Excluding the write-off of the trust preferred issuance costs, net interest income decreased $1.2 million in the fourth quarter of 2006 as compared to the same period in 2005, and has decreased $2.2 million in 2006 as compared to 2005, with the decrease primarily being attributable to a smaller balance sheet and an increase in the cost of deposits. The net interest margin for the three and twelve month periods ended December 31, 2006 was 3.74% and 3.85%, respectively. Excluding the trust preferred issuance costs write-off, the net interest margin was 3.89% for both periods as compared to 3.92% and 3.88% for the three and twelve months ended December 31, 2005, respectively. See the tables below for reconciliations of net interest income and the net interest margin as adjusted.
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| | | Three Months Ended | | Twelve Months Ended |
| | | December 31, | | December 31, |
| Dollars in Thousands | | 2006 | | 2005 | | 2006 | | 2005 |
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Net Interest Income GAAP | | $ | 24,710 | | | $ | 26,911 | | | $ | 102,655 | | | $ | 105,843 | |
| Add — Write-Off of Stock Issuance Cost | | | 995 | | | | — | | | | 995 | | | | — | |
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Net Interest Income as Adjusted | | $ | 25,705 | | | $ | 26,911 | | | $ | 103,650 | | | $ | 105,843 | |
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| | | Three Months Ended | | Twelve Months Ended |
| | | December 31, | | December 31, |
| | | 2006 | | 2005 | | 2006 | | 2005 |
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Net Interest Margin GAAP | | | 3.74 | % | | | 3.92 | % | | | 3.85 | % | | | 3.88 | % |
| Add — Write-Off of Stock Issuance Cost | | | 0.15 | % | | | 0.00 | % | | | 0.04 | % | | | 0.00 | % |
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Net Interest Margin as Adjusted | | | 3.89 | % | | | 3.92 | % | | | 3.89 | % | | | 3.88 | % |
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The Company’s allowance for loan losses as a percentage of loans increased to 1.32%, an increase of 0.8% from 1.31% on December 31, 2005. The provision for loan losses for the twelve months ending December 31, 2006 was $2.3 million, a decrease of $1.8 million compared to the same period in 2005, and covered net charge-offs by 1.1 times. The provision for loan losses decreased by $365,000, or (34.1%), for the quarter ended December 31, 2006 as compared to the same period in 2005.
Non-interest income decreased by $825,000, or (12.2%), and by $629,000, or (2.3%), during the three and twelve months ended December 31, 2006, respectively, as compared to the same periods in the prior year. Excluding securities gains and losses and Bank Owned Life Insurance (“BOLI”) benefit proceeds, non-interest income grew by $1.8 million, or 6.9%, in 2006 when compared to 2005. See the table below for a reconciliation of non-interest income as adjusted.
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| | | Three Months Ended | | Twelve Months Ended |
| | | December 31, | | December 31, |
| Dollars in Thousands | | 2006 | | 2005 | | 2006 | | 2005 |
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Non-Interest Income GAAP | | $ | 5,953 | | | $ | 6,778 | | | $ | 26,644 | | | $ | 27,273 | |
| Add — Net Loss on Sale of Securities | | | 1,392 | | | | — | | | | 3,161 | | | | — | |
| Less — Net Gain on Sale of Securities | | | — | | | | — | | | | — | | | | (616 | ) |
| Less — BOLI Benefit Proceeds | | | — | | | | — | | | | (1,316 | ) | | | — | |
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Non-Interest Income as Adjusted | | $ | 7,345 | | | $ | 6,778 | | | $ | 28,489 | | | $ | 26,657 | |
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| | Ø | | Service charges on deposit accounts increased by $89,000, or 2.6%, and by $1.1 million, or 8.6%, for the three and twelve months ended December 31, 2006, as compared to the same periods in 2005, primarily reflecting increased overdraft fees and debit card interchange revenue. |
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| | Ø | | Investment management revenue increased by $343,000, or 26.6%, and $841,000, or 15.9%, for the three and twelve months ended December 31, 2006, as compared to the same periods in 2005 due to growth in managed assets. Assets under administration at December 31, 2006 were $815.8 million, an increase of $135.7 million, or 20.0%, as compared to December 31, 2005. |
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| | Ø | | Mortgage banking income increased by $130,000, or 22.6%, and decreased by $456,000, or (14.5%), for the three and twelve months ended December 31, 2006, as compared to the same periods in 2005. The decrease in the twelve month period ending December 31, 2006 is primarily attributable to a lower volume of mortgage sales in 2006 as compared to 2005. The balance of the |
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| | | | mortgage servicing asset is $2.4 million and loans serviced amounted to $292.9 million as of December 31, 2006. |
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| | Ø | | Net losses on the sale of securities of $3.2 million, were recorded in 2006, with $1.4 million of that amount recorded in the fourth quarter of 2006. A $616,000 gain on the sale of securities, was recorded in 2005. |
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| | Ø | | Other non-interest income decreased by $53,000, or (5.6%), and increased by $205,000, or 6.3%, for the three and twelve months ended December 31, 2006, as compared to the same periods in 2005. The year to date increase is primarily a result of improved checkbook revenue, commercial loan late charge fees, and unrealized gains on trading assets. |
Non-interest expense decreased by $1.9 million, or (9.5%), and decreased by $1.3 million, or (1.6%), for the three and twelve months ended December 31, 2006, as compared to the same periods in 2005. Excluding certain non-core items, as described in the table below, non-interest expense increased $223,000, or 1.1%, and $882,000, or 1.1% for the three and twelve months ending December 31, 2006, as compared to the same periods in 2005. See the table below for a reconciliation of non-interest expense as adjusted.
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| | | Three Months Ended | | Twelve Months Ended |
| | | December 31, | | December 31, |
| Dollars in Thousands | | 2006 | | 2005 | | 2006 | | 2005 |
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Non-Interest Expense GAAP | | $ | 18,263 | | | $ | 20,183 | | | $ | 79,354 | | | $ | 80,615 | |
| Less- Severance | | | — | | | | (333 | ) | | | — | | | | (333 | ) |
| Less — Prepayment Fees on Borrowings | | | (82 | ) | | | — | | | | (82 | ) | | | — | |
| Add — Recovery on WorldCom Bond Claim | | | 1,892 | | | | — | | | | 1,892 | | | | — | |
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Non-Interest Expense as Adjusted | | $ | 20,073 | | | $ | 19,850 | | | $ | 81,164 | | | $ | 80,282 | |
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| | Ø | | Salaries and employee benefits decreased by $288,000, or (2.4%), and by $22,000, or (0.1%), for the three and twelve months ended December 31, 2006, as compared to the same periods in 2005. The decreases are a result of decreases in incentive compensation and sales commissions offset by an increase in the cost of employee retirement plan programs. |
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| | Ø | | Occupancy and equipment related expense decreased by $161,000, or (6.2%), and by $10,000, or (0.1%), for the quarter and year to date ending December 31, 2006, as compared to the same periods in 2005, mainly due to decreased expenses for building repairs and maintenance, rent, snow removal, and sanding, offset by increases in energy costs. |
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| | Ø | | Data processing and facilities management expense has increased $110,000, or 10.3%, and by $349,000, or 8.5%, for the three and twelve months ended December 31, 2006, compared to the same periods in 2005, largely as a result of contractual increases. |
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| | Ø | | As previously announced, during the fourth quarter of 2006, the Company recovered $1.9 million on an impairment charge recognized in 2002 of $4.4 million on its investment in WorldCom bonds through settlement proceeds received from its claims in a class action case brought against WorldCom and from the WorldCom Victim Trust. |
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| | Ø | | Other non-interest expense increased by $311,000, or 7.1%, for the three months ended December 31, 2006, and by $314,000, or 1.7% for the twelve months ended December 31, 2006, as compared to the same periods in the prior year. The increase in the comparative three month periods is attributable to a number of items, including a $82,000 prepayment penalty on $10.0 million of Federal Home Loan Bank borrowings, increases in employee recruitment cost of $66,000, contract labor of $68,000, and advertising of $47,000. |
Total assets decreased by $212.8 million, or (7.0%), from $3.0 billion at December 31, 2005 to $2.8 billion at December 31, 2006. This decrease is due to intentional decreases in the Company’s security portfolio and certain loan categories due to a combination of the flat yield curve environment and the profitability characteristics of these asset classes.
| | Ø | | Fed funds sold and short-term investments increased by $11.9 million, or 18.6%, during the twelve months ending December 31, 2006. |
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| | Ø | | Securities decreased by $199.3 million, or (27.8%), during the twelve months ending December 31, 2006. This decrease resulted mainly from the sale of $31.4 million of lower coupon securities in the first quarter of 2006 and the sale of $73.3 million securities during the fourth quarter of 2006, coupled with the decision not to reinvest normal year to date runoff on the portfolio in the current rate environment. The ratio of securities to total assets as of December 31, 2006 was 18.3%, as compared to 23.6% at December 31, 2005. |
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| | Ø | | Total loans decreased by $15.9 million, or (0.8%), during the twelve months ended December 31, 2006. Total commercial loans increased by $55.6 million, or 5.7%, with commercial real estate comprising most of the increase with an increase of $57.3 million, or 8.4%. Consumer loans decreased $35.9 million, or (6.3%), with the auto loan portfolio decreasing by $56.3 million, or (21.4%), partially offset by a $25.2 million, or 10.0%, increase in home equity lending. Business banking loans totaled $59.9 million, an increase of $8.5 million, or 16.6%, and residential real estate loans decreased $44.2 million, or (10.0%), during the twelve months of 2006. |
Total deposits of $2.1 billion at December 31, 2006 decreased $115.2 million, or (5.2%), compared to December 31, 2005. For the quarter ending December 31, 2006, deposits decreased $90.3 million, or (4.1%).
Borrowings decreased by $94.2 million, or (16.0%), during the twelve months ending December 31, 2006 as excess cash flow from the securities portfolio and certain loan categories were used to decrease wholesale borrowing.
Also during the fourth quarter ending December 31, 2006, as previously announced, Independent Capital Trust V, a Delaware statutory trust sponsored by the
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Company, issued and sold $50.0 million of trust preferred securities. The trust preferred securities pay a variable rate defined as the 3 month London Interbank Offered Rate plus 148 basis points. The Company has entered into interest rate swap agreements to fix the interest rate paid on the debentures issued to Independent Capital Trust V for the next ten years at 6.52%. Of the $50.0 million proceeds, $25.0 million was used to call existing 8.625% Cumulative Trust Preferred Securities of Independent Capital Trust III (NASDAQ: INDBN) on December 31, 2006. The remaining $25.0 million of proceeds will be used to call the still outstanding 8.375% Cumulative Trust Preferred Securities of Independent Capital Trust IV (NASDAQ: INDBM) when they are first callable on April 30, 2007. The trust preferred securities refinancing, when fully completed, will decrease the Company’s annual debt service by approximately $1 million pre-tax.
The Company reported return on average assets and return on average equity in 2006 of 1.12% and 14.60%, respectively, as compared to 1.11% and 15.10% for the same period in 2005, respectively.
Stockholders’ equity at December 31, 2006 totaled $229.8 million, as compared to $228.2 million at December 31, 2005. The Tier 1 leverage capital ratio at December 31, 2006 was 8.06%, maintaining the Company’s well-capitalized position.
As previously announced on December 14, 2006 the Company’s Board of Directors approved a common stock repurchase program. Under the program, the Company is authorized to repurchase up to 1,000,000 shares of the Company’s outstanding common stock. During the quarter ending September 30, 2006, the Company completed a stock repurchase program approved in January 2006. The Company purchased a total of 800,000 shares of common stock under the stock repurchase program approved in January 2006, at a weighted average share price of $31.04.
The allowance for loan losses increased to $26.8 million at December 31, 2006 compared to $26.6 million at December 31, 2005. Nonperforming assets totaled $7.2 million at December 31, 2006 (0.25% of total assets), as compared to $3.3 million (0.11% of total assets) reported at December 31, 2005.
Christopher Oddleifson, President and Chief Executive Officer, 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 10:00 a.m. Eastern Time on Friday, January 19, 2007. 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 1-877-407-8031 reference: INDB. A replay of the call will be available by calling 1-877-660-6853, Account Number: 286, Conference ID: 225254. The webcast replay will be available until April 19, 2007 and the telephone replay will be available until January 24, 2007.
Independent Bank Corp.’s sole bank subsidiary, Rockland Trust Company, currently has $2.8 billion in assets. Rockland Trust Company is a full-service community bank serving southeastern Massachusetts and Cape Cod. To find out more about the products and services available at Rockland Trust Company, please visit our website atwww.RocklandTrust.com.
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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 gains. 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.
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INDEPENDENT BANK CORP. FINANCIAL SUMMARY
(Unaudited — Dollars in Thousands)
CONSOLIDATED BALANCE SHEETS
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| | | | | | | | | | | | | | | | | | | | | | | December 31, 2006 vs. | | | | |
| | | December 31, | | | December 31, | | | $ | | | % | | | September 30, | | | September 30, 2006 | | | % | |
| | | 2006 | | | 2005 | | | Variance | | | Change | | | 2006 | | | Variance | | | Change | |
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Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and Due From Banks | | $ | 62,773 | | | $ | 66,289 | | | | (3,516 | ) | | | -5.30 | % | | $ | 64,403 | | | | (1,630 | ) | | | -2.53 | % |
| Fed Funds Sold and Short Term Investments | | | 75,518 | | | | 63,662 | | | | 11,856 | | | | 18.62 | % | | | 48,500 | | | | 27,018 | | | | 55.71 | % |
| Securities | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Trading Assets | | | 1,758 | | | | 1,557 | | | | 201 | | | | 12.91 | % | | | 1,588 | | | | 170 | | | | 10.71 | % |
| Securities Available for Sale | | | 417,088 | | | | 581,516 | | | | (164,428 | ) | | | -28.28 | % | | | 494,422 | | | | (77,334 | ) | | | -15.64 | % |
| Securities Held to Maturity | | | 76,747 | | | | 104,268 | | | | (27,521 | ) | | | -26.39 | % | | | 98,236 | | | | (21,489 | ) | | | -21.87 | % |
| Federal Home Loan Bank Stock | | | 21,710 | | | | 29,287 | | | | (7,577 | ) | | | -25.87 | % | | | 22,634 | | | | (924 | ) | | | -4.08 | % |
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| Total Securities | | | 517,303 | | | | 716,628 | | | | (199,325 | ) | | | -27.81 | % | | | 616,880 | | | | (99,577 | ) | | | -16.14 | % |
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| Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and Industrial | | | 174,356 | | | | 155,081 | | | | 19,275 | | | | 12.43 | % | | | 170,389 | | | | 3,967 | | | | 2.33 | % |
| Commercial Real Estate | | | 740,517 | | | | 683,240 | | | | 57,277 | | | | 8.38 | % | | | 730,213 | | | | 10,304 | | | | 1.41 | % |
| Commercial Construction | | | 119,685 | | | | 140,643 | | | | (20,958 | ) | | | -14.90 | % | | | 128,469 | | | | (8,784 | ) | | | -6.84 | % |
| Business Banking | | | 59,910 | | | | 51,373 | | | | 8,537 | | | | 16.62 | % | | | 57,522 | | | | 2,388 | | | | 4.15 | % |
| Residential Real Estate | | | 378,368 | | | | 428,343 | | | | (49,975 | ) | | | -11.67 | % | | | 396,564 | | | | (18,196 | ) | | | -4.59 | % |
| Residential Construction | | | 7,277 | | | | 8,316 | | | | (1,039 | ) | | | -12.49 | % | | | 9,122 | | | | (1,845 | ) | | | -20.23 | % |
| Residential Loans Held for Sale | | | 11,859 | | | | 5,021 | | | | 6,838 | | | | 136.19 | % | | | 10,954 | | | | 905 | | | | 8.26 | % |
| Consumer — Home Equity | | | 277,015 | | | | 251,852 | | | | 25,163 | | | | 9.99 | % | | | 278,879 | | | | (1,864 | ) | | | -0.67 | % |
| Consumer — Auto | | | 206,845 | | | | 263,179 | | | | (56,334 | ) | | | -21.41 | % | | | 217,629 | | | | (10,784 | ) | | | -4.96 | % |
| Consumer — Other | | | 49,077 | | | | 53,760 | | | | (4,683 | ) | | | -8.71 | % | | | 51,554 | | | | (2,477 | ) | | | -4.80 | % |
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| Total Loans | | | 2,024,909 | | | | 2,040,808 | | | | (15,899 | ) | | | -0.78 | % | | | 2,051,295 | | | | (26,386 | ) | | | -1.29 | % |
| Less — Allowance for Loan Losses | | | (26,815 | ) | | | (26,639 | ) | | | (176 | ) | | | 0.66 | % | | | (26,814 | ) | | | (1 | ) | | | 0.00 | % |
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| Net Loans | | | 1,998,094 | | | | 2,014,169 | | | | (16,075 | ) | | | -0.80 | % | | | 2,024,481 | | | | (26,387 | ) | | | -1.30 | % |
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| Bank Premises and Equipment | | | 37,316 | | | | 37,431 | | | | (115 | ) | | | -0.31 | % | | | 37,110 | | | | 206 | | | | 0.56 | % |
| Goodwill and Core Deposit Intangible | | | 56,535 | | | | 56,858 | | | | (323 | ) | | | -0.57 | % | | | 56,616 | | | | (81 | ) | | | -0.14 | % |
| Other Assets | | | 81,380 | | | | 86,648 | | | | (5,268 | ) | | | -6.08 | % | | | 86,338 | | | | (4,958 | ) | | | -5.74 | % |
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| Total Assets | | $ | 2,828,919 | | | $ | 3,041,685 | | | | (212,766 | ) | | | -7.00 | % | | $ | 2,934,328 | | | | (105,409 | ) | | | -3.59 | % |
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Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Deposits | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand Deposits | | $ | 490,036 | | | $ | 511,920 | | | | (21,884 | ) | | | -4.27 | % | | $ | 509,518 | | | | (19,482 | ) | | | -3.82 | % |
| Savings and Interest Checking Accounts | | | 577,443 | | | | 613,840 | | | | (36,397 | ) | | | -5.93 | % | | | 571,227 | | | | 6,216 | | | | 1.09 | % |
| Money Market | | | 455,737 | | | | 550,677 | | | | (94,940 | ) | | | -17.24 | % | | | 508,865 | | | | (53,128 | ) | | | -10.44 | % |
| Time Certificates of Deposit | | | 567,128 | | | | 529,057 | | | | 38,071 | | | | 7.20 | % | | | 591,000 | | | | (23,872 | ) | | | -4.04 | % |
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| Total Deposits | | | 2,090,344 | | | | 2,205,494 | | | | (115,150 | ) | | | -5.22 | % | | | 2,180,610 | | | | (90,266 | ) | | | -4.14 | % |
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| Borrowings | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Federal Home Loan Bank Borrowings | | | 305,128 | | | | 417,477 | | | | (112,349 | ) | | | -26.91 | % | | | 340,389 | | | | (35,261 | ) | | | -10.36 | % |
| Fed Funds Purchased and Assets Sold | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Under Repurchase Agreements | | | 108,248 | | | | 113,335 | | | | (5,087 | ) | | | -4.49 | % | | | 116,242 | | | | (7,994 | ) | | | -6.88 | % |
| Junior Subordinated Debentures | | | 77,320 | | | | 51,546 | | | | 25,774 | | | | 50.00 | % | | | 51,546 | | | | 25,774 | | | | 50.00 | % |
| Treasury Tax and Loan Notes | | | 2,953 | | | | 5,452 | | | | (2,499 | ) | | | -45.84 | % | | | 1,606 | | | | 1,347 | | | | 83.87 | % |
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| Total Borrowings | | | 493,649 | | | | 587,810 | | | | (94,161 | ) | | | -16.02 | % | | | 509,783 | | | | (16,134 | ) | | | -3.16 | % |
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| Total Deposits and Borrowings | | | 2,583,993 | | | | 2,793,304 | | | | (209,311 | ) | | | -7.49 | % | | | 2,690,393 | | | | (106,400 | ) | | | -3.95 | % |
| Other Liabilities | | | 15,143 | | | | 20,229 | | | | (5,086 | ) | | | -25.14 | % | | | 21,591 | | | | (6,448 | ) | | | -29.86 | % |
| Stockholders’ Equity | | | 229,783 | | | | 228,152 | | | | 1,631 | | | | 0.71 | % | | | 222,344 | | | | 7,439 | | | | 3.35 | % |
| | | | | | | | |
| Total Liabilities and Stockholders’ Equity | | $ | 2,828,919 | | | $ | 3,041,685 | | | | (212,766 | ) | | | -7.00 | % | | $ | 2,934,328 | | | | (105,409 | ) | | | -3.59 | % |
| | | | | | | | |
8
INDEPENDENT BANK CORP. FINANCIAL SUMMARY
(Unaudited — Dollars in Thousands, Except Per Share Data)
CONSOLIDATED STATEMENTS OF INCOME
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | | | | | Twelve Months Ended | | | | |
| | | December 31, | | | | | | | Percent | | | December 31, | | | | | | | Percent | |
| | | 2006 | | | 2005 | | | Variance | | | Change | | | 2006 | | | 2005 | | | Variance | | | Change | |
| |
INTEREST INCOME | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest on Fed Funds Sold and Short Term Investments | | $ | 785 | | | $ | 378 | | | | 407 | | | | 107.67 | % | | $ | 1,514 | | | $ | 515 | | | | 999 | | | | 193.98 | % |
| Interest and Dividends on Securities | | | 7,320 | | | | 8,106 | | | | (786 | ) | | | -9.70 | % | | | 29,792 | | | | 33,905 | | | | (4,113 | ) | | | -12.13 | % |
| Interest on Loans | | | 34,870 | | | | 32,350 | | | | 2,520 | | | | 7.79 | % | | | 136,387 | | | | 121,241 | | | | 15,146 | | | | 12.49 | % |
| | | | | |
| Total Interest Income | | | 42,975 | | | | 40,834 | | | | 2,141 | | | | 5.24 | % | | | 167,693 | | | | 155,661 | | | | 12,032 | | | | 7.73 | % |
| | | | | |
INTEREST EXPENSE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest on Deposits | | | 11,700 | | | | 7,809 | | | | 3,891 | | | | 49.83 | % | | | 40,793 | | | | 25,758 | | | | 15,035 | | | | 58.37 | % |
| Interest on Borrowed Funds | | | 6,565 | | | | 6,114 | | | | 451 | | | | 7.38 | % | | | 24,245 | | | | 24,060 | | | | 185 | | | | 0.77 | % |
| | | | | |
| Total Interest Expense | | | 18,265 | | | | 13,923 | | | | 4,342 | | | | 31.19 | % | | | 65,038 | | | | 49,818 | | | | 15,220 | | | | 30.55 | % |
| | | | | |
| Net Interest Income | | | 24,710 | | | | 26,911 | | | | (2,201 | ) | | | -8.18 | % | | | 102,655 | | | | 105,843 | | | | (3,188 | ) | | | -3.01 | % |
| Less — Provision for Loan Losses | | | 705 | | | | 1,070 | | | | (365 | ) | | | -34.11 | % | | | 2,335 | | | | 4,175 | | | | (1,840 | ) | | | -44.07 | % |
| | | | | |
| Net Interest Income after Provision for Loan Losses | | | 24,005 | | | | 25,841 | | | | (1,836 | ) | | | -7.10 | % | | | 100,320 | | | | 101,668 | | | | (1,348 | ) | | | -1.33 | % |
| | | | | |
NON-INTEREST INCOME | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Service Charges on Deposit Accounts | | | 3,581 | | | | 3,492 | | | | 89 | | | | 2.55 | % | | | 14,233 | | | | 13,103 | | | | 1,130 | | | | 8.62 | % |
| Investment Management Services Income | | | 1,631 | | | | 1,288 | | | | 343 | | | | 26.63 | % | | | 6,128 | | | | 5,287 | | | | 841 | | | | 15.91 | % |
| Mortgage Banking Income | | | 705 | | | | 575 | | | | 130 | | | | 22.61 | % | | | 2,699 | | | | 3,155 | | | | (456 | ) | | | -14.45 | % |
| BOLI Income | | | 530 | | | | 472 | | | | 58 | | | | 12.29 | % | | | 3,259 | | | | 1,831 | | | | 1,428 | | | | 77.99 | % |
| Net Loss/Gain on Sale of Securities | | | (1,392 | ) | | | — | | | | (1,392 | ) | | | -100.00 | % | | | (3,161 | ) | | | 616 | | | | (3,777 | ) | | | -613.15 | % |
| Other Non-Interest Income | | | 898 | | | | 951 | | | | (53 | ) | | | -5.57 | % | | | 3,486 | | | | 3,281 | | | | 205 | | | | 6.25 | % |
| | | | | |
| Total Non-Interest Income | | | 5,953 | | | | 6,778 | | | | (825 | ) | | | -12.17 | % | | | 26,644 | | | | 27,273 | | | | (629 | ) | | | -2.31 | % |
| | | | | |
NON-INTEREST EXPENSE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Salaries and Employee Benefits | | | 11,866 | | | | 12,154 | | | | (288 | ) | | | -2.37 | % | | | 47,890 | | | | 47,912 | | | | (22 | ) | | | -0.05 | % |
| Occupancy and Equipment Expenses | | | 2,443 | | | | 2,604 | | | | (161 | ) | | | -6.18 | % | | | 10,060 | | | | 10,070 | | | | (10 | ) | | | -0.10 | % |
| Data Processing and Facilities Management | | | 1,178 | | | | 1,068 | | | | 110 | | | | 10.30 | % | | | 4,440 | | | | 4,091 | | | | 349 | | | | 8.53 | % |
| Recovery on WorldCom Bond Claim | | | (1,892 | ) | | | — | | | | (1,892 | ) | | | 100.00 | % | | | (1,892 | ) | | | — | | | | (1,892 | ) | | | 100.00 | % |
| Other Non-Interest Expense | | | 4,668 | | | | 4,357 | | | | 311 | | | | 7.14 | % | | | 18,856 | | | | 18,542 | | | | 314 | | | | 1.69 | % |
| | | | | |
| Total Non-Interest Expense | | | 18,263 | | | | 20,183 | | | | (1,920 | ) | | | -9.51 | % | | | 79,354 | | | | 80,615 | | | | (1,261 | ) | | | -1.56 | % |
| | | | | |
| INCOME BEFORE INCOME TAXES | | | 11,695 | | | | 12,436 | | | | (741 | ) | | | -5.96 | % | | | 47,610 | | | | 48,326 | | | | (716 | ) | | | -1.48 | % |
| | | | | |
| PROVISION FOR INCOME TAXES | | | 3,594 | | | | 3,872 | | | | (278 | ) | | | -7.18 | % | | | 14,759 | | | | 15,121 | | | | (362 | ) | | | -2.39 | % |
| | | | | |
| NET INCOME | | $ | 8,101 | | | $ | 8,564 | | | | (463 | ) | | | -5.41 | % | | $ | 32,851 | | | $ | 33,205 | | | | (354 | ) | | | -1.07 | % |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BASIC EARNINGS PER SHARE | | $ | 0.55 | | | $ | 0.56 | | | | | | | | -1.79 | % | | $ | 2.20 | | | $ | 2.16 | | | | | | | | 1.85 | % |
| DILUTED EARNINGS PER SHARE | | $ | 0.54 | | | $ | 0.55 | | | | | | | | -1.82 | % | | $ | 2.17 | | | $ | 2.14 | | | | | | | | 1.40 | % |
| BASIC AVERAGE SHARES | | | 14,681,644 | | | | 15,402,690 | | | | | | | | -4.68 | % | | | 14,938,095 | | | | 15,378,187 | | | | | | | | -2.86 | % |
| DILUTED AVERAGE SHARES | | | 14,880,143 | | | | 15,534,090 | | | | | | | | -4.21 | % | | | 15,109,873 | | | | 15,521,915 | | | | | | | | -2.65 | % |
| |
PERFORMANCE RATIOS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Interest Margin (FTE) | | | 3.74 | % | | | 3.92 | % | | | | | | | -4.59 | % | | | 3.85 | % | | | 3.88 | % | | | | | | | -0.77 | % |
| Return on Average Assets | | | 1.12 | % | | | 1.14 | % | | | | | | | -1.75 | % | | | 1.12 | % | | | 1.11 | % | | | | | | | 0.90 | % |
| Return on Average Equity | | | 14.25 | % | | | 15.17 | % | | | | | | | -6.06 | % | | | 14.60 | % | | | 15.10 | % | | | | | | | -3.31 | % |
| |
RECONCILIATION TABLE - - NON-GAAP FINANCIAL INFORMATION | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NET INCOME (GAAP) | | $ | 8,101 | | | $ | 8,564 | | | | (463 | ) | | | -5.41 | % | | $ | 32,851 | | | $ | 33,205 | | | | (354 | ) | | | -1.07 | % |
Net Interest Income Components | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Add - Write-Off of Stock Issuance Cost, net of tax | | | 647 | | | | — | | | | | | | | | | | | 647 | | | | — | | | | | | | | | |
Non-Interest Income Components | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Add — Net Loss on Sale of Securities, net of tax | | | 905 | | | | — | | | | | | | | | | | | 2,055 | | | | — | | | | | | | | | |
| Less — Net Gain on Sale of Securities, net of tax | | | — | | | | — | | | | | | | | | | | | — | | | | (400 | ) | | | | | | | | |
| Less — BOLI Benefit Proceeds, net of tax | | | — | | | | — | | | | | | | | | | | | (1,316 | ) | | | — | | | | | | | | | |
Non-Interest Expense Components | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Add - Severance, net of tax | | | — | | | | 216 | | | | | | | | | | | | — | | | | 216 | | | | | | | | | |
| Add - Prepayment Fees on Borrowings, net of tax | | | 53 | | | | — | | | | | | | | | | | | 53 | | | | — | | | | | | | | | |
| Less - Recovery on WorldCom Bond Claim, net of tax | | | (1,230 | ) | | | — | | | | | | | | | | | | (1,230 | ) | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
NET OPERATING EARNINGS | | $ | 8,476 | | | $ | 8,780 | | | | (304 | ) | | | -3.46 | % | | $ | 33,060 | | | $ | 33,021 | | | | 39 | | | | 0.12 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Diluted Earnings Per Share, on an Operating Basis | | $ | 0.57 | | | $ | 0.57 | | | | | | | | 0.00 | % | | $ | 2.19 | | | $ | 2.13 | | | | | | | | 2.82 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
9
INDEPENDENT BANK CORP.
SUPPLEMENTAL FINANCIAL INFORMATION
CONSOLIDATED AVERAGE BALANCE SHEETS AND AVERAGE RATE DATA
(Unaudited — Dollars in Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Three Months Ended December 31, |
| | | | | | | 2006 | | | 2005 | |
| | | | | | | |
| | | | | | | | | | | Interest | | | | | | | | | | | Interest | | | | |
| | | Ending | | | Average | | | Earned/ | | | Yield/ | | | Average | | | Earned/ | | | Yield/ | |
| | | Balance | | | Balance | | | Paid | | | Rate | | | Balance | | | Paid | | | Rate | |
| |
Interest-Earning Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Federal Funds Sold and Short Term Investments | | $ | 75,518 | | | $ | 59,122 | | | $ | 785 | | | | 5.31 | % | | $ | 37,445 | | | $ | 378 | | | | 4.04 | % |
| Securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Trading Assets | | | 1,758 | | | | 1,593 | | | | 11 | | | | 2.76 | % | | | 1,556 | | | | 8 | | | | 2.06 | % |
| Taxable Investment Securities | | | 461,683 | | | | 539,417 | | | | 6,724 | | | | 4.99 | % | | | 663,568 | | | | 7,423 | | | | 4.47 | % |
| Non-taxable Investment Securities (1) | | | 53,862 | | | | 55,148 | | | | 900 | | | | 6.53 | % | | | 64,053 | | | | 1,038 | | | | 6.48 | % |
| | | | | | | | | | | | | | |
| Total Securities: | | | 517,303 | | | | 596,158 | | | | 7,635 | | | | 5.12 | % | | | 729,177 | | | | 8,469 | | | | 4.65 | % |
| | | | | | | | | | | | | | |
| Loans (1) | | | 2,024,909 | | | | 2,032,331 | | | | 34,983 | | | | 6.89 | % | | | 2,028,820 | | | | 32,450 | | | | 6.40 | % |
Total Interest-Earning Assets | | $ | 2,617,730 | | | $ | 2,687,611 | | | $ | 43,403 | | | | 6.46 | % | | $ | 2,795,442 | | | $ | 41,297 | | | | 5.91 | % |
| | | | | | | | | | | |
| Cash and Due from Banks | | | 62,773 | | | | 59,809 | | | | | | | | | | | | 67,357 | | | | | | | | | |
| Other Assets | | | 148,416 | | | | 149,754 | | | | | | | | | | | | 149,964 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Assets | | $ | 2,828,919 | | | $ | 2,897,174 | | | | | | | | | | | $ | 3,012,763 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Savings and Interest Checking Accounts | | $ | 577,443 | | | $ | 564,638 | | | $ | 1,576 | | | | 1.12 | % | | $ | 609,707 | | | $ | 1,005 | | | | 0.66 | % |
| Money Market | | | 455,737 | | | | 510,534 | | | | 3,965 | | | | 3.11 | % | | | 530,849 | | | | 2,953 | | | | 2.23 | % |
| Time Deposits | | | 567,128 | | | | 583,087 | | | | 6,159 | | | | 4.23 | % | | | 529,907 | | | | 3,851 | | | | 2.91 | % |
| | | | | | | | | | | |
| Total interest-bearing deposits: | | | 1,600,308 | | | | 1,658,259 | | | | 11,700 | | | | 2.82 | % | | | 1,670,463 | | | | 7,809 | | | | 1.87 | % |
| Borrowings: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Federal Home Loan Bank Borrowings | | $ | 305,128 | | | $ | 323,980 | | | $ | 3,493 | | | | 4.31 | % | | $ | 419,572 | | | $ | 4,458 | | | | 4.25 | % |
| Federal Funds Purchased and Assets Sold Under Repurchase Agreement | | | 108,248 | | | | 115,593 | | | | 910 | | | | 3.15 | % | | | 98,388 | | | | 527 | | | | 2.14 | % |
| Junior Subordinated Debentures | | | 77,320 | | | | 52,947 | | | | 2,152 | | | | 16.26 | % | | | 51,546 | | | | 1,117 | | | | 8.67 | % |
| Treasury Tax and Loan Notes | | | 2,953 | | | | 966 | | | | 10 | | | | 4.14 | % | | | 1,471 | | | | 12 | | | | 3.26 | % |
| | | | | | | | | | | |
| Total Borrowings: | | | 493,649 | | | | 493,486 | | | | 6,565 | | | | 5.32 | % | | | 570,977 | | | | 6,114 | | | | 4.28 | % |
| | | | | | | | | | | |
Total Interest-Bearing Liabilities | | $ | 2,093,957 | | | $ | 2,151,745 | | | $ | 18,265 | | | | 3.40 | % | | $ | 2,241,440 | | | $ | 13,923 | | | | 2.48 | % |
| | | | | | | | | | | |
| Demand Deposits | | | 490,036 | | | | 499,508 | | | | | | | | | | | | 525,807 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Liabilities | | | 15,143 | | | | 18,592 | | | | | | | | | | | | 19,766 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Liabilities | | $ | 2,599,136 | | | $ | 2,669,845 | | | | | | | | | | | $ | 2,787,013 | | | | | | | | | |
| Stockholders’ Equity | | | 229,783 | | | | 227,329 | | | | | | | | | | | | 225,750 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 2,828,919 | | | $ | 2,897,174 | | | | | | | | | | | $ | 3,012,763 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Interest Income | | | | | | | | | | $ | 25,138 | | | | | | | | | | | $ | 27,374 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest Rate Spread (2) | | | | | | | | | | | | | | | 3.06 | % | | | | | | | | | | | 3.43 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Interest Margin (2) | | | | | | | | | | | | | | | 3.74 | % | | | | | | | | | | | 3.92 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Supplemental Information: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Deposits, including Demand Deposits | | $ | 2,090,344 | | | $ | 2,157,767 | | | $ | 11,700 | | | | | | | $ | 2,196,270 | | | $ | 7,809 | | | | | |
| Cost of Total Deposits | | | | | | | | | | | | | | | 2.17 | % | | | | | | | | | | | 1.42 | % |
| Total Funding Liabilities, including Demand Deposits | | $ | 2,583,993 | | | $ | 2,651,253 | | | $ | 18,265 | | | | | | | $ | 2,767,247 | | | $ | 13,923 | | | | | |
| Cost of Total Funding Liabilities | | | | | | | | | | | | | | | 2.76 | % | | | | | | | | | | | 2.01 | % |
| | |
| (1) | | The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $428 for the three months ended December 31, 2006 and $463 for the three months ended December 31, 2005. |
| |
| (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. Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. |
10
INDEPENDENT BANK CORP.
SUPPLEMENTAL FINANCIAL INFORMATION
CONSOLIDATED AVERAGE BALANCE SHEETS AND AVERAGE RATE DATA
(Unaudited — Dollars in Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Twelve Months Ended December 31, |
| | | | | | | 2006 | | | 2005 | |
| | | | | | | |
| | | | | | | | | | | Interest | | | | | | | | | | | Interest | | | | |
| | | Ending | | | Average | | | Earned/ | | | Yield/ | | | Average | | | Earned/ | | | Yield/ | |
| | | Balance | | | Balance | | | Paid | | | Rate | | | Balance | | | Paid | | | Rate | |
| |
Interest-Earning Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Federal Funds Sold and Short Term Investments | | $ | 75,518 | | | $ | 29,464 | | | $ | 1,514 | | | | 5.14 | % | | $ | 14,023 | | | $ | 515 | | | | 3.67 | % |
| Securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Trading Assets | | | 1,758 | | | | 1,570 | | | | 42 | | | | 2.68 | % | | | 1,548 | | | | 36 | | | | 2.33 | % |
| Taxable Investment Securities | | | 461,683 | | | | 581,372 | | | | 27,229 | | | | 4.68 | % | | | 708,043 | | | | 31,188 | | | | 4.40 | % |
| Non-taxable Investment Securities (1) | | | 53,862 | | | | 57,725 | | | | 3,879 | | | | 6.72 | % | | | 62,771 | | | | 4,126 | | | | 6.57 | % |
| | | | | | | | | | | |
| Total Securities: | | | 517,303 | | | | 640,667 | | | | 31,150 | | | | 4.86 | % | | | 772,362 | | | | 35,350 | | | | 4.58 | % |
| Loans (1) | | | 2,024,909 | | | | 2,041,098 | | | | 136,802 | | | | 6.70 | % | | | 1,987,591 | | | | 121,605 | | | | 6.12 | % |
| | | | | | | | | | | |
Total Interest-Earning Assets | | $ | 2,617,730 | | | $ | 2,711,229 | | | $ | 169,466 | | | | 6.25 | % | | $ | 2,773,976 | | | $ | 157,470 | | | | 5.68 | % |
| | | | | | | | | | | |
| Cash and Due from Banks | | | 62,773 | | | | 59,834 | | | | | | | | | | | | 65,703 | | | | | | | | | |
| Other Assets | | | 148,416 | | | | 151,295 | | | | | | | | | | | | 144,747 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Assets | | $ | 2,828,919 | | | $ | 2,922,358 | | | | | | | | | | | $ | 2,984,426 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Savings and Interest Checking Accounts | | $ | 577,443 | | | $ | 563,615 | | | $ | 4,810 | | | | 0.85 | % | | $ | 599,797 | | | $ | 3,037 | | | | 0.51 | % |
| Money Market | | | 455,737 | | | | 524,265 | | | | 14,872 | | | | 2.84 | % | | | 519,461 | | | | 9,549 | | | | 1.84 | % |
| Time Deposits | | | 567,128 | | | | 563,212 | | | | 21,111 | | | | 3.75 | % | | | 510,611 | | | | 13,172 | | | | 2.58 | % |
| | | | | | | | | | | |
| Total interest-bearing deposits: | | | 1,600,308 | | | | 1,651,092 | | | | 40,793 | | | | 2.47 | % | | | 1,629,869 | | | | 25,758 | | | | 1.58 | % |
| Borrowings: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Federal Home Loan Bank Borrowings | | $ | 305,128 | | | $ | 365,597 | | | $ | 15,524 | | | | 4.25 | % | | $ | 468,821 | | | $ | 18,162 | | | | 3.87 | % |
| Federal Funds Purchased and Assets Sold Under Repurchase Agreement | | | 108,248 | | | | 113,448 | | | | 3,171 | | | | 2.80 | % | | | 80,074 | | | | 1,389 | | | | 1.73 | % |
| Junior Subordinated Debentures | | | 77,320 | | | | 51,899 | | | | 5,504 | | | | 10.61 | % | | | 51,546 | | | | 4,469 | | | | 8.67 | % |
| Treasury Tax and Loan Notes | | | 2,953 | | | | 1,081 | | | | 46 | | | | 4.26 | % | | | 1,653 | | | | 40 | | | | 2.42 | % |
| | | | | | | | | | | |
| Total Borrowings: | | | 493,649 | | | | 532,025 | | | | 24,245 | | | | 4.56 | % | | | 602,094 | | | | 24,060 | | | | 4.00 | % |
| | | | | | | | | | | |
Total Interest-Bearing Liabilities | | $ | 2,093,957 | | | $ | 2,183,117 | | | $ | 65,038 | | | | 2.98 | % | | $ | 2,231,963 | | | $ | 49,818 | | | | 2.23 | % |
| | | | | | | | | | | |
| Demand Deposits | | | 490,036 | | | | 495,958 | | | | | | | | | | | | 514,611 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Liabilities | | | 15,143 | | | | 18,286 | | | | | | | | | | | | 17,897 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Liabilities | | $ | 2,599,136 | | | $ | 2,697,361 | | | | | | | | | | | $ | 2,764,471 | | | | | | | | | |
| Stockholders’ Equity | | | 229,783 | | | | 224,997 | | | | | | | | | | | | 219,955 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 2,828,919 | | | $ | 2,922,358 | | | | | | | | | | | $ | 2,984,426 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Interest Income | | | | | | | | | | $ | 104,428 | | | | | | | | | | | $ | 107,652 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest Rate Spread (2) | | | | | | | | | | | | | | | 3.27 | % | | | | | | | | | | | 3.45 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Interest Margin (2) | | | | | | | | | | | | | | | 3.85 | % | | | | | | | | | | | 3.88 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Supplemental Information: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Deposits, including Demand Deposits | | $ | 2,090,344 | | | $ | 2,147,050 | | | $ | 40,793 | | | | | | | $ | 2,144,480 | | | $ | 25,758 | | | | | |
| Cost of Total Deposits | | | | | | | | | | | | | | | 1.90 | % | | | | | | | | | | | 1.20 | % |
| Total Funding Liabilities, including Demand Deposits | | $ | 2,583,993 | | | $ | 2,679,075 | | | $ | 65,038 | | | | | | | $ | 2,746,574 | | | $ | 49,818 | | | | | |
| Cost of Total Funding Liabilities | | | | | | | | | | | | | | | 2.43 | % | | | | | | | | | | | 1.81 | % |
| | |
| (1) | | The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1,773 for the twelve months ended December 31, 2006 and $1,809 for the twelve months ended December 31, 2005. |
| |
| (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. Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. |
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| | | | | | | | | | | | | |
| | | As Of | | | | |
| | | December 31, | | | December 31, | | | September 30, | |
| | | 2006 | | | 2005 | | | 2006 | |
| | | | |
| | | (Dollars in Thousands, Except Per Share Data) | |
Asset Quality | | | | | | | | | | | | |
| Nonperforming Loans | | | | | | | | | | | | |
| Commercial & Industrial Loans | | $ | 872 | | | $ | 245 | | | $ | 642 | |
| Business Banking Loans | | $ | 74 | | | $ | 47 | | | $ | 117 | |
| Commercial Real Estate Loans | | $ | 2,346 | | | $ | 313 | | | $ | 3,004 | |
| Residential Real Estate Loans | | $ | 2,318 | | | $ | 1,876 | | | $ | 1,838 | |
| Installment Loans — Home Equity | | $ | 358 | | | | — | | | $ | 406 | |
| Installment Loans — Auto | | $ | 703 | | | $ | 674 | | | $ | 791 | |
| Installment Loans — Other | | $ | 308 | | | $ | 184 | | | $ | 60 | |
| | | | | | | | | | |
| Total Nonperforming Loans | | $ | 6,979 | | | $ | 3,339 | | | $ | 6,858 | |
| | | | | | | | | | |
| Other Real Estate Owned | | $ | 190 | | | | — | | | $ | 190 | |
| Nonperforming Assets | | $ | 7,169 | | | $ | 3,339 | | | $ | 7,048 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Net charge-offs (year to date) | | $ | 2,159 | | | $ | 2,733 | | | $ | 1,454 | |
| Net charge-offs to average loans (annualized) | | | 0.11 | % | | | 0.14 | % | | | 0.09 | % |
| | | | | | | | | | | | | |
| Nonperforming Loans/Gross Loans | | | 0.34 | % | | | 0.16 | % | | | 0.33 | % |
| Allowance for Loan Losses/Nonperforming Loans | | | 384.22 | % | | | 797.81 | % | | | 390.99 | % |
| Loans/Total Deposits | | | 96.87 | % | | | 92.53 | % | | | 94.07 | % |
| Allowance for Loan Losses/Total Loans | | | 1.32 | % | | | 1.31 | % | | | 1.31 | % |
| | | | | | | | | | | | | |
Financial Ratios | | | | | | | | | | | | |
| Book Value per Share | | $ | 15.65 | | | $ | 14.81 | | | $ | 15.15 | |
| Tangible Capital/Tangible Asset | | | 6.25 | % | | | 5.74 | % | | | 5.76 | % |
| Tangible Capital/Tangible Asset (proforma to include the deductibility of goodwill) | | | 6.77 | % | | | 6.23 | % | | | 6.26 | % |
| Tangible Book Value per Share | | $ | 11.80 | | | $ | 11.12 | | | $ | 11.29 | |
| Tangible Book Value per Share (proforma to include the deductibility of goodwill) | | $ | 12.78 | | | $ | 12.06 | | | $ | 12.28 | |
| | | | | | | | | | | | | |
Capital Adequacy | | | | | | | | | | | | |
| Tier one leverage capital ratio (1) | | | 8.06 | % | | | 7.71 | % | | | 7.78 | % |
| | |
| (1) | | Estimated number for December 31, 2006 |
Certain amounts in prior year financial statement have been reclassified to conform to the current year’s presentation.
12
