SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
Commission File Number: 1-9047
Independent Bank Corp.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2870273
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
288 Union Street, Rockland, Massachusetts 02370
(Address of principal executive offices, including zip code)
(781) 878-6100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
As of August 1, 2000 there were 14,248,002 shares of the issuer's
common stock outstanding.
INDEX
Page
PART I. FINANCIAL INFORMATION 1
Item 1. Financial Statements (Unaudited) 1
Consolidated Balance Sheets - June 30, 2000 and
December 31, 1999 1
Consolidated Statements of Income - Six months and
quarters ended June 30, 2000 and 1999 2
Consolidated Statements of Cash Flows - Six months ended
June 30, 2000 and 1999 3
Notes to Consolidated Financial Statements - June 30, 2000 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
PART II. OTHER INFORMATION 16
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INDEPENDENT BANK CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands)
JUNE 30, DECEMBER 31,
2000 1999
-----------------------------------------
ASSETS
Cash and Due From Banks $50,132 $48,949
Federal Funds Sold 3,798 8,719
Trading Assets 469 486
Securities Held To Maturity 211,587 229,043
Securities Available For Sale 273,443 201,614
Federal Home Loan Bank Stock 17,036 17,036
Loans, Net of Unearned Discount 1,036,630 1,028,510
Less: Reserve for Possible Loan Losses (15,416) (14,958)
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Net Loans 1,021,214 1,013,552
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Bank Premises and Equipment 14,610 14,268
Other Assets 60,041 56,389
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TOTAL ASSETS $1,652,330 $1,590,056
===================================================================================================================================
LIABILITIES
Deposits
Demand Deposits $253,662 $226,044
Savings and Interest Checking Accounts 297,676 282,516
Money Market and Super Interest Checking Accounts 109,156 107,624
Time Certificates of Deposit over $100,000 147,816 113,832
Other Time Deposits 331,045 351,790
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Total Deposits 1,139,355 1,081,806
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Federal Funds Purchased and Assets Sold Under Repurchase Agreements 137,125 93,366
Federal Home Loan Bank Borrowings 203,063 256,224
Treasury Tax and Loan Notes 3,037 9,877
Other Liabilities 15,768 21,904
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Total Liabilities 1,498,348 1,463,177
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Commitments and Contingencies
Corporation-obligated mandatorily redeemable trust preferred securities of
subsidiary trust holding solely junior subordinated debentures of the Corporation 51,255 28,750
STOCKHOLDERS' EQUITY
Common Stock, $.01 par value Authorized: 30,000,000 Shares
Outstanding: 14,863,821 Shares at June 30, 2000 and at December 31, 1999 149 149
Treasury Stock: 615,819 Shares at June 30, 2000 and 684,463 Shares at December 31, 1999 (9,601) (10,678)
Surplus 44,151 44,950
Retained Earnings 71,170 67,547
Other Accumulated Comprehensive Income, Net of Tax (3,142) (3,839)
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Total Stockholders' Equity 102,727 98,129
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TOTAL LIABILITIES, MINORITY INTEREST & STOCKHOLDERS' EQUITY $1,652,330 $1,590,056
==================================================================================================================================
1
INDEPENDENT BANK CORP.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited - in thousands except per share amounts)
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999
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INTEREST INCOME
Interest on Loans $42,856 $39,684 $21,590 $20,128
Interest and Dividends on Securities 16,118 15,173 8,181 7,287
Interest on Federal Funds Sold 319 444 234 279
Interest on Interest Bearing Deposits 7 0 7 0
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Total Interest Income 59,300 55,301 30,012 27,694
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INTEREST EXPENSE
Interest on Deposits 15,680 15,327 8,070 7,855
Interest on Borrowed Funds 10,242 10,001 5,102 4,728
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Total Interest Expense 25,922 25,328 13,172 12,583
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Net Interest Income 33,378 29,973 16,840 15,111
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PROVISION FOR POSSIBLE LOAN LOSSES 1,168 1,963 451 982
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Net Interest Income After Provision
For Possible Loan Losses 32,210 28,010 16,389 14,129
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NON-INTEREST INCOME
Service Charges on Deposit Accounts 2,876 2,584 1,491 1,313
Trust and Investment Services Income 2,370 2,141 1,237 1,224
Mortgage Banking Income 660 987 347 486
Other Non-Interest Income 1,737 1,594 935 858
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Total Non-Interest Income 7,643 7,306 4,010 3,881
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NON-INTEREST EXPENSES
Salaries and Employee Benefits 12,970 11,722 6,649 6,060
Occupancy Expenses 2,013 1,895 1,010 934
Equipment Expenses 1,784 1,630 877 863
Special Charges 2,998 0 2,998 0
Other Non-Interest Expenses 8,253 7,299 4,255 3,580
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Total Non-Interest Expenses 28,018 22,546 15,789 11,437
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Minority Interest Expense 2,539 1,334 1,391 667
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INCOME BEFORE INCOME TAXES 9,296 11,436 3,219 5,906
PROVISION FOR INCOME TAXES 2,825 3,482 979 1,798
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NET INCOME $6,471 $7,954 $2,240 $4,108
===================================================================================================================================
BASIC EARNINGS PER SHARE $0.45 $0.56 $0.16 $0.29
===================================================================================================================================
DILUTED EARNINGS PER SHARE $0.45 $0.55 $0.16 $0.29
===================================================================================================================================
Weighted average common shares (Basic) 14,226,735 14,249,356 14,239,037 14,164,975
Common stock equivalents 69,048 162,838 62,144 155,506
===================================================================================================================================
Weighted average common shares (Diluted) 14,295,783 14,412,194 14,301,181 14,320,481
===================================================================================================================================
2
INDEPENDENT BANK CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
SIX MONTHS ENDED JUNE 30,
2000 1999
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $6,471 $7,954
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED FROM OPERATING ACTIVITIES
Depreciation and amortization 2,081 2,603
Provision for possible loan losses 1,168 1,963
Loans originated for resale (11,254) (31,895)
Proceeds from mortgage loan sales 11,181 31,786
Loss on sale of mortgages 73 109
Gain recorded from mortgage servicing rights (120) (195)
Changes in assets and liabilities:
Increase in other assets (3,532) (3,807)
(Decrease)/Increase in other liabilities (6,016) 3,511
- ------------------------------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS (6,419) 4,075
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED FROM OPERATING ACTIVITIES 52 12,029
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of Securities Held to Maturity 19,438 46,924
Proceeds from maturities of Securities Available for Sale 23,132 38,082
Purchase of Securities Held to Maturity (2,142) (7,682)
Purchase of Securities Available for Sale (94,489) (20,416)
Net increase in Loans (8,830) (55,751)
Investment in Bank Premises and Equipment (2,147) (1,761)
- ------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (65,038) (604)
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in Deposits 57,549 35,213
Net increase/(decrease) in Federal Funds Purchased
and Assets Sold Under Repurchase Agreements 43,759 (4,049)
Net decrease in FHLB Borrowings (53,161) (67,500)
Net (decrease)/increase in TT&L Notes (6,840) 7,760
Issuance of corporation-obligated mandatorily redeemable trust preferred
securities of subsidiary trusts holding solely junior subordinated
debentures of the Corporation 22,505
Dividends Paid (2,842) (2,863)
Payments for Treasury Stock Purchase - (4,836)
Proceeds from stock issuance 278 171
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED FROM/(USED IN) FINANCING ACTIVITIES 61,248 (36,104)
- ------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (3,738) (24,679)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 57,668 86,198
- ------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AS OF JUNE 30, $ 53,930 $ 61,519
- ------------------------------------------------------------------------------------------------------------------------
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
Independent Bank Corp. (the "Company") is a state chartered, federally
registered bank holding company headquartered in Rockland, Massachusetts. The
Company is the sole stockholder of Rockland Trust Company ("Rockland" or "the
Bank"), a Massachusetts trust company chartered in 1907. The accompanying
unaudited consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation of the financial statements, primarily consisting of normal
recurring adjustments, have been included. Operating results for the three and
six month periods ended June 30, 2000 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2000 or any other
interim period. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1999.
ACQUISITION
On August 4, 2000, the Company and the Bank, acquired 16 Massachusetts branches
with an estimated $336 million in deposits, $85 million of commercial real
estate loans and $50 million in consumer and SBA loans from Fleet Financial
Group. The acquisitions resulted from the divestiture of Fleet branches after
its merger with BankBoston.
These branches opened as Rockland Trust offices on August 7, 2000 and provide an
expanded presence in Brockton and a powerful entrance into the Cape Cod market.
CORPORATION-OBLIGATED MANDATORILY REDEEMABLE TRUST PREFFERED SECURITIES
In the first quarter of 2000, Independent Capital Trust II (the "Trust
II") was formed for the purpose of issuing trust preferred securities (the
"Trust Preferred Securities") and investing the proceeds of the sale of these
securities in junior subordinated debentures issued by the Company. A total of
$25.0 million of 11.00% Trust Preferred Securities were issued and are scheduled
to mature in 2030, callable at the option of the company after January 31, 2002.
Distributions on these securities are payable quarterly in arrears on the last
day of March, June, September and December, such distributions can be deferred
at the option of the Company for up to five years. The Trust Preferred
Securities can be prepaid in whole or in part on or after January 31, 2002 at a
redemption price equal to $25 per Trust Preferred Security plus accumulated but
unpaid distributions thereon to the date of the redemption.
The Trust Preferred Securities are presented in the consolidated
balance sheets of the Company entitled "Corporation-Obligated Mandatorily
Redeemable Trust Preferred Securities of Subsidiary Trust Holding Solely Junior
Subordinated Debentures of the Corporation". The Company will record
distributions payable on the Trust Preferred Securities as a minority interest
expense in its consolidated statements of income.
4
The Company will unconditionally guarantee all of the Trust's
obligations under the Trust Preferred Securities.
RECENT ACCOUNTING DEVELOPMENTS
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities" as amended by SFAS No. 137 and SFAS No. 138.
This statement establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative instruments embedded
in other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. The statement requires that changes in the
derivative's fair value be recognized currently in income unless specific hedge
accounting criteria are met. Special accounting for qualifying hedges allows a
derivative's gains and losses to offset related results on the hedged item in
the statement of income and requires that a company must formally document,
designate and assess the effectiveness of transactions that receive hedge
accounting. This statement is effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. The Company has not yet quantified the
impact of adopting SFAS No. 133 on its consolidated financial statements and has
not determined the timing nor method of its adoption of the statement. However,
the Company does not expect that the adoption of this statement will have a
material impact on its financial position or results of operations.
SPECIAL CHARGES
The Company recorded special charges of $3.0 million during the second quarter
2000. This amount represents systems conversion charges of $1.3 million and
expense of $0.7 million associated with the purchase of branches from
FleetBoston Financial. Also, as previously announced, an unfavorable judgement
was entered against the Bank in Plymouth Superior Court concerning a proposed
commercial loan transaction that was never consummated. The Company will
vigorously appeal this judgement, however, accounting convention requires that
the Company provide an accrual of $1.0 million in the second quarter of 2000
specifically for that decision.
EARNINGS PER SHARE
(In Thousands, except per share data)
NET INCOME WEIGHTED AVERAGE NET INCOME
SHARES PER SHARE
- ----------------------------------------------------------------------------------------------------------
For the six months ended June 30, 2000 1999 2000 1999 2000 1999
- ----------------------------------------------------------------------------------------------------------
Basic EPS $6,471 $7,954 14,227 14,249 $0.45 $0.56
Effect of dilutive securities 69 163 0.00 0.01
Diluted EPS $6,471 $7,954 14,296 14,412 $0.45 $0.55
- ----------------------------------------------------------------------------------------------------------
(In Thousands, except per share data)
NET INCOME WEIGHTED AVERAGE NET INCOME
SHARES PER SHARE
- ----------------------------------------------------------------------------------------------------------
For the three months ended June 30, 2000 1999 2000 1999 2000 1999
- ----------------------------------------------------------------------------------------------------------
Basic EPS $2,240 $4,108 14,239 14,165 $0.16 $0.29
Effect of dilutive securities 62 155 0.00 0.00
Diluted EPS $2,240 $4,108 14,301 14,320 $0.16 $0.29
- ----------------------------------------------------------------------------------------------------------
5
COMPREHENSIVE INCOME
Comprehensive income is reported net of taxes, as follows:
For the Six For the Three
Months Ended Months Ended
June 30, June 30,
2000 1999 2000 1999
------ ------ ------ ------
Net Income $6,471 $7,954 $2,240 $4,108
Other Comprehensive Income, Net of Tax
Unrealized gains/(losses) on securities available for sale
Unrealized holding gains/(losses) arising during the period 697 (2,688) 625 (2,520)
Less: reclassification adjustment for gains/(losses) included in net earnings - - - -
-------------------------------------
Other Comprehensive Income 697 (2,688) 625 (2,520)
-------------------------------------
Comprehensive Income $7,168 $5,266 $2,865 $1,588
-------------------------------------
SEGMENT INFORMATION
The Company has identified its reportable operating business segment as
Community Banking, based on how the business is strategically managed. The
Company's community banking business segment consists of commercial banking,
retail banking, and trust services. The community banking business segment is
managed as a single strategic unit which derives its revenues from a wide range
of banking services, including lending activities, acceptance of demand, savings
and time deposits, trust and investment management, and mortgage servicing
income from investors. The Company does not have a single external customer from
which it derives ten percent or more of its revenues and operates in the New
England area of the United States.
Non reportable operating segments of the Company's operations which do
not have similar characteristics to the community banking operations and do not
meet the quantitative thresholds requiring disclosure, are included in the Other
category in the disclosure of business segments below. These non-reportable
segments include Parent Company, Independent Capital Trust I and Independent
Capital Trust II financial information.
6
Information about reportable segments and reconciliation of such information to
the consolidated financial statements as of and for the quarters ended June 30,
follows (in thousands):
Community Other Adjustments
Banking Other and Eliminations Consolidated
--------------------------------------------------------------
For the Six months Ended
June 30, 2000
Total Assets $1,650,096 $213,442 ($211,208) $1,652,330
Net Interest Income 32,464 914 - 33,378
Total Non-Interest Income 7,643 8,268 (8,268) 7,643
Net Income $8,191 $6,548 ($8,268) $6,471
For Six months Ended
June 30, 1999
Total Assets $1,542,643 $154,501 ($150,787) $1,546,357
Net Interest Income 29,626 347 - 29,973
Total Non-Interest Income 7,306 8,742 (8,742) 7,306
Net Income $8,701 $7,995 ($8,742) $7,954
Community Other Adjustments
Banking Other and Eliminations Consolidated
--------------------------------------------------------------
For the Three Months Ended
June 30, 2000
Net Interest Income $16,326 $514 $16,840
Total Non-Interest Income 4,010 3,206 (3,206) 4,010
Net Income $3,166 $2,280 ($3,206) $2,240
For Three Months Ended
June 30, 1999
Net Interest Income $14,942 $169 - $15,111
Total Non-Interest Income 3,882 4,331 (4,332) 3,881
Net Income $4,312 $4,128 ($4,332) $4,108
The accounting policies of the segments are the same as those described
in the summary of significant accounting policies. The Company evaluates
performance based on profit or loss from operations before income taxes, not
including nonrecurring gains or losses.
The Company derives a majority of its revenues from interest income and
the chief operating decision maker relies primarily on net interest revenue to
assess the performance of the segments and make decisions about resources to be
allocated to the segment. Therefore, the segments are reported above using net
interest income.
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
SUMMARY
For the six months ended June 30, 2000, Independent Bank Corp. (the
Company) recorded net income of $6.5 million compared with net income of $8.0
million for the same period last year. Diluted earnings per share were $.45 for
the six months ended June 30, 2000 compared to $.55 per share for the prior
year. Basic earnings per share, before the dilutive effect of stock options,
were $.45 in 2000 compared to $.56 for the same period in 1999. Per share
earnings have been calculated in accordance with SFAS No. 128, "Earnings per
Share." On an operating basis the decrease in net income is primarily the result
of $3.0 million in special charges. These charges were recorded in non-interest
expense and are detailed below. Net interest income increased $4.0 million, or
7.23%. The provision for loan losses decreased to $1.2 million for the first six
months of 2000 compared with $2.0 million for the same period last year.
Non-interest income increased $337,000, or 4.6%, while non-interest expense
increased $5.5 million, or 24.3%, over the first six months of 1999, largely due
to the $3.0 million in special charges.
On a operating basis, excluding special charges, net income for the six
month period ended June 30, 2000 was $8.4 million, compared with net income of
$8.0 million for the same period last year. Diluted earnings per share on an
operating basis for the six months ended June 30, 2000 and June 30, 1999 were
$.59 and $.55 respectively.
The Company recorded special charges of $3.0 million during the
second quarter 2000. This amount represents systems conversion charges of $1.3
million and expense of $0.7 million associated with the purchase of branches
from FleetBoston Financial. Also, as previously announced, an unfavorable
judgement was entered against the Bank in Plymouth Superior Court concerning a
proposed commercial loan transaction that was never consummated. The Company
will vigorously appeal this judgement, however, accounting convention requires
that the Company provide an accrual of $1.0 million in the second quarter of
2000 specifically for that decision.
The annualized consolidated returns on average equity and average
assets for the first six months of 2000 were 12.74% and 0.80%, respectively.
This compares to annualized consolidated returns on average equity and average
assets for the first six months of 1999 of 16.66% and 1.02%, respectively. On an
operating basis, the annualized returns on average assets and equity for the six
months ended June 30, 2000 were 1.05% and 16.57%.
As of June 30, 2000, total assets amounted to $1.65 billion, an
increase of $62.3 million over the 1999 year end balance. Investments
increased $49.4 million, or 10.8% from $456.9 million at year-end 1999.
Loans, net of unearned discount, increased $8.1 million, or 0.8%, since
year-end 1999. Deposit balances have increased by $57.5 million, or 5.3%.
Borrowings decreased by $16.2 million, or 4.5%, since year-end 1999.
Nonperforming assets totaled $4.0 million as of June 30, 2000 compared
to $3.7 million at December 31, 1999 Nonperforming assets represented 24 and 23
basis points of total assets as of June 30, 2000 and December 31, 1999,
respectively.
8
NET INTEREST INCOME
The discussion of net interest income which follows, is presented on a
fully tax-equivalent basis. Net interest income for the six months ended June
30, 2000, amounted to $33.9 million, an increase of $3.4 million, or 11.2%, from
the comparable 1999 time frame. This is primarily due to higher yields on
earning assets, 8.00% in 2000 compared to 7.62% in 1999. The Company's net
interest margin for the first six months of 2000 was 4.51%, compared to 4.17%
for the comparable 1999 time frame. The Company's interest rate spread (the
difference between the weighted average yield on interest-earning assets and the
weighted average cost of interest-bearing liabilities) increased by 20 basis
points to 3.67%.
The average balance of interest-earning assets for the first six months
of 2000 amounted to $1.5 billion, an increase of $41.5 million, or 2.8%, from
the comparable 1999 time frame. Income from interest-earning assets amounted to
$59.9 million for the six months ended June 30, 2000, an increase of $4.0
million, or 7.2%, from the first six months of 1999. The increase in interest
income was the result of a $57.9 million, or 5.97% increase in the average
balance of the loan portfolio, net of unearned discount, resulting from
increases in the commercial real estate portfolio and indirect automobile
lending.
Interest income is impacted by changes in market rates of interest due
to variable and floating rate loans in the Company's portfolio. At June 30,
2000, loans having interest rates which adjust in accordance with changes in the
Company's base lending rate or other market indices amounted to approximately
$209.7 million, or 20.2% of loans, net of unearned discount.
Interest income is also impacted by the amount of non-performing loans.
The amount of interest due, but not recognized, on non-performing loans amounted
to approximately $154,000 for the six months ended June 30, 2000 compared to
$94,000 for the six months ended June 30, 1999.
The average balance of interest-bearing liabilities for the first six
months of 2000 was $1.2 billion, or 0.1%, lower than the comparable 1999 time
frame. Average interest bearing deposits increased by $23.1 million, or 2.77%,
for the first six months of 2000 over the same period last year, primarily in
the Savings and Now account category. For the six months ended June 30, 2000,
average borrowings were $357.6 million, or 6.36% lower than the first six months
of 1999, primarily in FHLB borrowings which decreased by $46.9 million. Interest
expense on deposits increased by $353,000, or 2.3%, to $15.7 million in the
first six months of 2000 and interest expense on borrowings increased by $0.2
million, or 2.4%, to $10.2 million as compared to the same period last year.
PROVISION FOR POSSIBLE LOAN LOSSES
The reserve for possible loan losses is maintained at a level that
management considers adequate to provide for potential loan losses based upon an
evaluation of known and inherent risks in the loan portfolio. The reserve is
increased by provisions for possible loan losses and by recoveries of loans
previously charged-off and reduced by loan charge-offs. Determining an
appropriate level of reserve for possible loan losses necessarily involves a
high degree of judgment.
An analysis of individual loans and the overall risk characteristics
and size of the different loan portfolios is conducted on an ongoing basis. In
addition, the Company considers industry trends, regional and national economic
conditions, past estimates of possible losses as compared to actual losses, and
historical loss patterns. Management assesses the adequacy of the reserve for
possible loan losses and reviews that assessment quarterly with the Board of
Directors.
For the six months ended June 30, 2000, management decreased the
provision for possible loan losses to $1.2 million as compared to $2.0 million
for the same period last year. This decrease is the result of continued
stability in the risk profile of the Company's loan portfolio, strong coverage
9
ratios and slowing loan growth. For the first six months of 2000, loans
charged-off, net of recoveries of loans previously charged-off, amounted to $0.7
million as compared to $1.3 million for the comparable 1999 time frame.
As of June 30, 2000, the ratio of the reserve for possible loan losses
to loans, net of unearned discount, was 1.49%, as compared to the 1999 year-end
level of 1.45%. The ratio of the reserve for possible loan losses to
non-performing loans was 384.20% at June 30, 2000, as compared to the 409.36%
coverage recorded at year-end 1999.
NON-INTEREST INCOME
Non-interest income for the six months ended June 30, 2000 was
$7.6 million, compared to $7.3 million for the same period in 1999, due to
increased revenue from the Asset Management and Trust Services Division, as well
as an increase in deposit service charge revenues. Mortgage Banking income
decreased from $987,000 to $660,000 for the six months ended June 30, 2000 and
1999, respectively due to an increasing rate environment and a near term lack of
sellers and housing inventory.
NON-INTEREST EXPENSES
Non-interest expenses totaled $28.0 million for the six months ended
June 30, 2000, a $5.47 million, or 24.3%, increase from the comparable 1999
period. Salaries and employee benefits increased by $1.25 million or 10.6%
resulting from additions to staff needed to support planned internal growth.
Occupancy and equipment expenses increased $272,000, or 7.7%, to $3.80 million
for the first six months of 2000 from $3.53 million in the same period last
year. Special Charges of $3.0 million pretax were recorded as discussed above.
Other non-interest expenses for the first six months of 2000 increased by
$954,000 or 13.1% to $8.3 million from $7.3 million in the first six months of
1999 primarily attributable to necessary redundancy prior to the systems'
conversion and increased advertising in anticipation of the acquisition.
MINORITY INTEREST
In the second quarter of 1997, Independent Capital Trust I (the
"Trust") was formed for the purpose of issuing trust preferred securities (the
"Trust Preferred Securities") and investing the proceeds of the sale of these
securities in junior subordinated debentures issued by the Company. A total of
$28.75 million of 9.28% Trust Preferred Securities were issued and are scheduled
to mature in 2027, callable at the option of the Company after May 19, 2002.
Distributions on these securities are payable quarterly in arrears on the last
day of March, June, September and December, and such distributions can be
deferred at the option of the Company for up to five years. The Trust Preferred
Securities can be prepaid in whole or in part on or after May 19, 2002 at a
redemption price equal to $25 per Trust Preferred Security plus accumulated but
unpaid distributions thereon to the date of the redemption.
On January 31, 2000, Independent Capital Trust II (the "Trust II") was formed
for the purpose of issuing trust preferred securities (the "Trust Preferred
Securities") and investing the proceeds of the sale of these securities in
junior subordinated debentures issued by the Company. A total of $25 million of
11% Trust Preferred Securities were issued and are scheduled to mature in 2030,
callable at the option of the Company after January 31, 2002. Distributions on
these securities are payable quarterly in arrears on the last day of March,
June, September and December, and such distributions can be deferred at the
option of the Company for up to five years. The Trust Preferred Securities can
be prepaid in whole or in part on or after January 31,
10
2002 at a redemption price equal to $25 per Trust Preferred Security plus
accumulated but unpaid distributions thereon to the date of the redemption.
The Trust Preferred Securities are presented in the consolidated
balance sheets of the Company entitled "Corporation-Obligated Mandatorily
Redeemable Trust Preferred Securities of Subsidiary Trusts Holding Solely Junior
Subordinated Debentures of the Corporation". The Company records distributions
payable on the Trust Preferred Securities as minority interest expense in its
consolidated statements of income. The minority interest expense was $2.5
million and $1.3 million for the six months ended June 30, 2000 and June 30,
1999.
INCOME TAXES
The Company records income tax expense pursuant to Statement of
Financial Accounting Standards No. 109, "Accounting For Income Taxes". The
Company evaluates the deferred tax asset and the valuation reserve on a
quarterly basis. The Company's effective tax rates for the six months ended June
30, 2000 and 1999 was 30.4%.
ASSET/LIABILITY MANAGEMENT
The principal objective of the Company's asset/liability management
strategy is to reduce the vulnerability of the Company to changes in interest
rates. This is accomplished by managing the volume of assets and liabilities
maturing, or subject to repricing, and by adjusting rates in relation to market
conditions to influence volumes and spreads.
The effect of interest rate volatility on net interest income is
minimized when the interest sensitivity gap (the difference between assets and
liabilities that reprice within a given time period) is the smallest. Given the
inherent uncertainty of future interest rates, Rockland Trust Company's (the
Bank or Rockland) Asset/Liability Management Committee evaluates the interest
sensitivity gap and executes strategies, which may include off-balance sheet
activities, in an effort to minimize the Company's exposure to interest rate
movements while providing adequate earnings in the most plausible future
interest rate environments.
INTEREST RATE RISK
Interest rate risk is the sensitivity of income to variations in
interest rates over both short-term and long-term horizons. The primary goal of
interest-rate risk management is to control this risk within limits approved by
the Board. These limits reflect the Company's tolerance for interest-rate risk
by identifying exposures, quantifying and hedging them as needed. The Company
quantifies its interest-rate exposures using net interest income simulation
models, as well as simpler gap analyses. The Company manages its interest-rate
exposure using a combination of on and off balance sheet instruments, primarily
fixed rate portfolio securities, interest rate swaps, and options.
The Company uses simulation analysis to measure the exposure of net
interest income to changes in interest rates over a relatively short (i.e., less
than 2 years) time horizon. Simulation analysis involves projecting future
interest income and expense from the Company's asset, liabilities and off
balance sheet positions under various scenarios.
The Company's limits on interest rate risk specify that if interest
rates were to shift up or down 200 basis points estimated net income for the
next 12 months should decline by less than 6%. The following table reflects the
Company's estimated exposure, as a percentage of estimated net interest income
for the next 12 months.
11
Rate Change Estimated Exposure as %
(Basis Points) of Net Interest Income
----------------------------------------------------------------------------
+200 (2.05%)
-200 1.96%
LIQUIDITY AND CAPITAL
Liquidity, as it pertains to the Company, is the ability to generate
cash in the most economical way, in order to meet ongoing obligations to pay
deposit withdrawals and to fund loan commitments. The Company's primary sources
of funds are deposits, borrowings, and the amortization, prepayment, and
maturities of loans and investments.
A strong source of liquidity is the Company's core deposits, those
deposits which management considers, based on experience, not likely to be
withdrawn in the near term. The Company utilizes its extensive branch-banking
network to attract retail customers who provide a stable source of core
deposits. The Company has established five repurchase agreements with major
brokerage firms as potential sources of liquidity. On June 30, 2000 the Company
had $91.8 million outstanding under such lines classified on the Balance Sheet
as "Federal Funds Purchased and Assets Sold Under Repurchase Agreements". As an
additional source of funds, the Bank has entered into repurchase agreements with
customers totaling $45.3 million at June 30, 2000. As a member of the Federal
Home Loan Bank, Rockland has access to approximately $305.0 million of borrowing
capacity. At June 30, 2000, the Company had $203.1 million outstanding under
such lines. The Company actively manages its liquidity position under the
direction of the Bank's Asset/Liability Management Committee. Periodic review
under formal policies and procedures is intended to ensure that the Company will
maintain access to adequate levels of available funds. At June 30, 2000, the
Company's liquidity position was well above policy guidelines.
CAPITAL RESOURCES AND DIVIDENDS
The Company and Rockland are subject to capital requirements
established by the Federal Reserve Board and the FDIC, respectively. One key
measure of capital adequacy is the risk-based ratio for which the regulatory
agencies have established minimum requirements of 4.00% and 8.00% for Tier 1
risk-based capital and total risk-based capital, respectively. As of June 30,
2000, the Company had a Tier 1 risked-based capital ratio of 11.92% and a total
risked-based capital ratio of 14.76%. Rockland had a Tier 1 risked-based capital
ratio of 9.57% and a total risked-based capital ratio of 10.82% as of the same
date.
An additional capital requirement of a minimum 4.00% Tier 1 leverage
capital is mandated by the regulatory agencies for most banking organizations
and a 5.00% Tier 1 leverage capital ratio is required for a "well capitalized"
institution. As of June 30, 2000, the Company and the Bank had Tier 1 leverage
capital ratios of 8.57% and 6.91%, respectively.
The Company's capital ratios increased significantly in the first
quarter of 2000 due to the issuance of $25.0 million of Trust Preferred
Securities.
In June, the Company's Board of Directors declared a cash dividend of
$.10 per share to shareholders of record as of June 30, 2000. This dividend was
paid on July 14, 2000. On an annualized basis, the dividend payout ratio
amounted to 32.72% of the trailing four quarters' earnings.
12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE QUARTER ENDED JUNE 30, 2000
SUMMARY
For the three months ended June 30, 2000, the Company recorded net
income of $2.24 million compared with net income of $4.11 million for the same
period last year. Diluted earnings per share were $.16 for the three months
ended June 30, 2000 versus $.29 per share for the same period in the prior year.
Basic earnings per share, before the dilutive effect of stock options, were $.16
in 2000 compared with $.29 for the same period in 1999. Per share earnings have
been calculated in accordance with SFAS No. 128, "Earnings per Share." The
decrease in net income is primarily the result of $3.0 million of special
charges. These charges were recorded in non-interest expense and are detailed
below. Net interest income increased $1.7 million or 11.4%. The provision for
loan losses decreased to $451,000 for the second quarter of 2000 compared with
$982,000 for the same period last year. Non-interest income increased $129,000,
or 3.3%, while non-interest expenses increased $4.35 million, or 38.1% over the
second quarter of 1999, largely due to the $3.0 million in special charges.
On an operating basis, excluding special charges, net income for the
three month period ended June 30, 2000 was $4.2 million, compared with net
income of $4.1 million for the same period last year. Diluted earnings per share
on an operating basis for the three months ended June 30, 2000 and June 30, 1999
were $.29 for both periods.
The Company recorded special charges of $3.0 million during the second
quarter 2000. This amount represents systems conversion charges of $1.3 million
and expense of $0.7 million associated with the pending purchase of branches
from FleetBoston Financial. Also, as previously announced, an unfavorable
judgement was entered against the Bank in Plymouth Superior Court concerning a
proposed commercial loan transaction that was never consummated. The Company
will vigorously appeal this judgement, however, accounting convention requires
that the Company provide an accrual of $1.0 million in the second quarter of
2000 specifically for that decision.
The annualized consolidated returns on average equity and average
assets for the second quarter of 2000 were 8.71% and 0.55%, respectively. This
compares to annualized consolidated returns on average equity and average assets
for the second quarter of 1999 of 17.19% and 1.05%, respectively. On an
operating basis, the annualized returns on average assets and equity for the
three months ended June 30, 2000 were 1.03% and 16.28%.
NET INTEREST INCOME
The discussion of net interest income, which follows, is presented on a
fully tax-equivalent basis. Net interest income for the three months ended June
30, 2000, amounted to $17.1 million, an increase of $1.7 million, or 11.3%, from
the comparable 1999 time frame. The Company's interest rate spread (the
difference between the weighted average yield on interest-earning assets and the
weighted average cost of interest-bearing liabilities) increased by 19 basis
points, to 3.66%. The Company's net interest margin for the second quarter of
2000 was 4.52%, compared to 4.19% for the comparable 1999 time frame, primarily
due to a higher yield on earning assets, 8.00% in 2000 compared to 7.62% in
1999.
The average balance of interest-earning assets for the second quarter
of 2000 amounted to $1.5 billion, an increase of $47.0 million, or 3.2%, over
the comparable 1999 time frame. Income
13
from interest-earning assets amounted to $30.3 million for the second quarter of
2000, an increase of $2.3 million, or 8.3%, from the second quarter of 1999. The
increase in interest income was attributable to a $44.5 million, or 4.5%
increase in the average balance of the loan portfolio, net of unearned discount,
resulting from increases in the commercial real estate portfolio and indirect
automobile lending. In addition, the securities portfolio increased by $10.9
million, or 2.4%, which reflects the Company's strategy of leveraging its
capital in a beneficial interest rate environment.
The average balance of interest-bearing liabilities for the second
quarter of 2000 was $766,000, or 0.06%, higher than the comparable 1999 time
frame. Average interest bearing deposits increased by $10.6 million, or 1.2%,
for the second quarter of 2000 over the same period last year, primarily in the
savings and interest checking account category. For the three months ended June
30, 2000, average borrowings were $349.8 million, or 2.7% lower than the second
quarter of 1999. Interest expense on deposits increased by $215,000, or 2.7%,
and interest expense on borrowings increased by $374,000, or 7.9%.
NON-INTEREST INCOME
Non-interest income for the three months ended June 30, 2000 was $4.0
million, compared to $3.9 million for the same period in 1999. Income from
Service Charges on Deposit Accounts increased by $178,000, or 13.6%. Mortgage
banking income decreased by $139,000, or 28.6%, over the 1999 time frame due to
an increasing rate environment and a lack of sellers and housing inventory.
Other non-interest income increased $77,000 or 8.97%, to $935,000 million
compared to $858,000 for the three months of 1999.
NON-INTEREST EXPENSES
Non-interest expenses totaled $15.8 million for the three months ended
June 30, 2000, a $4.35 million increase from the comparable 1999 period.
Salaries and employee benefits increased $589,000, or 9.7%. Occupancy and
equipment expenses for the same three months of 2000 increased $90,000, or 5.0%,
from the comparable 1999 period. The Company recorded special charges of $3.0
million pretax during the second quarter 2000 as discussed above. Other
non-interest expenses for the three months ended June 30, 2000 increased by $0.7
million or 18.9%. This increase is primarily attributable to necessary
redundancy prior to the systems' conversion and increased advertising in
anticipation of the branch acquisition.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
The preceding Management's Discussion and Analysis and Notes to
Consolidated Financial Statements of this Form 10Q contain certain
forward-looking statements, including without limitation, statements regarding
(i) the level of reserve for possible loan losses, (ii) the rate of
delinquencies and amounts of charge-offs, (iii) the rates of loan growth.
Moreover, the Company may from time to time, in both written reports and oral
statements by Company management, express its expectations regarding future
performance of the Company. These forward-looking statements are inherently
uncertain and actual results may differ from Company expectations. The following
factors, which, among others, could impact current and future performance
include but are not limited to: (i) adverse changes in asset quality and
resulting credit risk-related losses and expenses; (ii) adverse changes in the
economy of the New England region, the Company's primary market, (iii) adverse
changes in the local real estate market, as most of the Company's loans are
concentrated in Southeastern Massachusetts and a substantial portion of these
loans have real estate as collateral; (iv) fluctuations in market rates and
prices which can negatively affect net interest margin asset valuations and
expense expectations; and (v) changes in regulatory requirements of federal and
state agencies applicable to banks and bank holding companies, such as the
Company and Rockland, which could have materially adverse effects on the
Company's future operating results.
14
When relying on forward-looking statements to make decisions with respect to the
Company, investors and others are cautioned to consider these and other risks
and uncertainties.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information required by this Item 3 is included in Item 2 of Part I of
this Form 10-Q, entitled "Management's Discussion and Analysis."
15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
A judgement was rendered against the Bank in the second quarter of 2000
in the Plymouth Superior Court, Massachusetts, relating to a lawsuit filed in
1994 by Charles J. Tufankjian, Jr. concerning a proposed loan transaction that
was never consummated. The plaintiff asserted compensatory damages of
$232,116.00 in the lawsuit.
Superior Court Justice Elizabeth Donovan awarded the damages asserted
by the plaintiff and trebled them to $696,348.00. The Bank was also ordered to
pay plaintiff's legal fees of $102,392.50. Interest is also due on this claim at
the statutory rate of 12% from 1994, which has been estimated to be
approximately $200,000.
The impact of this decision was charged against earnings for the second quarter
of 2000. The Bank will appeal the verdict in this case.
Item 2. Changes in Securities and Use of Proceeds - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information
The financial information detailed below is included
hereafter in this report:
Consolidated Statements of Changes in Stockholders' Equity -
Six months ended June 30, 2000 and the year ended
December 31, 1999
Consolidated Average Balance Sheet and Average Rate Data -
Six months and three months ended June 30, 2000
and 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
NO. PAGE
27 Financial Data Schedule E-1
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K
during the quarter ended June 30, 2000.
16
INDEPENDENT BANK CORP.
CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY
(Unaudited - in thousands except per share amounts)
OTHER
COMPREHENSIVE
COMMON TREASURY SURPLUS RETAINED INCOME
STOCK STOCK EARNINGS AVAILABLE TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, January 1, 1999 $149 ($6,431) $45,303 $56,063 $764 $95,848
Net Income 17,031 17,031
Dividends Declared ($.10 per share) (5,547) (5,547)
Proceeds from Exercise of Stock Options 589 (353) 236
Repurchase Common Stock (4,836) (4,836)
Change in Unrealized Gain (Loss) on
Investments Available for Sale, Net of Tax (4,603) (4,603)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 $149 ($10,678) $44,950 $67,547 ($3,839) $98,129
===================================================================================================================================
Balance, January 1, 2000 $149 ($10,678) $44,950 $67,547 ($3,839) 98,129
Net Income 6,471 6,471
Dividends Declared ($.10 per share) (2,848) (2,848)
Proceeds from Exercise of Stock Options 1,077 (831) 246
Tax Benefit on Stock Option Exercise 32 32
Repurchase Common Stock
Change in Unrealized Gain on Investments
Available for Sale, Net of Tax 697 697
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2000 $149 ($9,601) $44,151 $71,170 ($3,142) $102,727
===================================================================================================================================
17
INDEPENDENT BANK CORP.
SUPPLEMENTAL FINANCIAL INFORMATION
CONSOLIDATED AVERAGE BALANCE SHEET AND AVERAGE RATE DATA
(Unaudited - in thousands)
AVERAGE INTEREST
OUTSTANDING EARNED/ AVERAGE
BALANCE PAID YIELD
FOR THE SIX MONTHS ENDED JUNE 30, 2000 2000 2000
---------------- -------------- ------------
Interest-Earning Assets
Taxable Investment Securities $423,818 $15,031 7.09%
Non-taxable Investment Securities 43,087 1,623 7.53%
Loans, net of Unearned Discount 1,027,471 42,880 8.35%
Federal Funds Sold and Assets Purchased Under Resale Agreements 10,633 319 6.00%
Trading Assets 477 7 2.94%
--------------- -------------- -------------
Total Interest-Earning Assets $1,505,486 $59,860 7.95%
--------------- ============== =============
Cash and Due From Banks 46,793
Other Assets 56,950
---------------
Total Assets $1,609,229
===============
Interest-Bearing Liabilities
Savings and Interest Checking Accounts $288,294 $2,354 1.63%
Money Market & Super Interest Checking Accounts 112,886 1,413 2.50%
Other Time Deposits 454,103 11,913 5.25%
Federal Funds Purchased and Assets Sold Under Repurchase Agreements 101,587 2,617 5.15%
Federal Home Loan Bank Borrowings 251,583 7,508 5.97%
Treasury Tax and Loan Notes 4,467 117 5.24%
--------------- -------------- -------------
Total Interest-Bearing Liabilities $1,212,920 $25,922 4.27%
=============== ============== =============
Demand Deposits 233,138
Corporation-Obligated Mandatorily Redeemable Trust Preferred Securities of
Subsidiary Trust Holding Solely Junior Subordinated debentures of the 51,255
Corporation
Other Liabilities 10,311
---------------
Total Liabilities 1,507,624
---------------
Stockholders' Equity 101,605
---------------
Total Liabilities and Stockholders' Equity $1,609,229
===============
Net Interest Income $33,938
==============
Interest Rate Spread 3.67%
==============
Net Interest Margin 4.51%
==============
Interest income and yield are stated on a fully tax-equivalent basis. The
total amount of adjustment is $560 in 2000.
18
INDEPENDENT BANK CORP.
SUPPLEMENTAL FINANCIAL INFORMATION
CONSOLIDATED AVERAGE BALANCE SHEET AND AVERAGE RATE DATA
(Unaudited - in thousands)
AVERAGE INTEREST
OUTSTANDING EARNED/ AVERAGE
BALANCE PAID YIELD
1999 1999 1999
------------------ --------------- ------------
FOR THE SIX MONTHS ENDED JUNE 30,
Interest-Earning Assets
Taxable Investment Securities $433,178 $14,107 6.51%
Non-taxable Investment Securities 41,975 1,583 7.54%
Loans, net of Unearned Discount 969,528 39,715 8.19%
Federal Funds Sold and Assets Purchased Under Resale Agreements 19,290 444 4.60%
-------------- ------------- -----------
Total Interest-Earning Assets $1,463,971 $55,849 7.63%
-------------- ============= ===========
Cash and Due From Banks 45,706
Other Assets 52,052
--------------
Total Assets $1,561,729
==============
Interest-Bearing Liabilities
Savings and Interest Checking Accounts $275,415 $2,416 1.75%
Money Market & Super Interest Checking Accounts 109,269 1,341 2.45%
Other Time Deposits 447,512 11,570 5.17%
Federal Funds Purchased and Assets Sold Under Repurchase Agreements 81,087 1,925 4.75%
Federal Home Loan Bank Borrowings 298,464 7,994 5.36%
Treasury Tax and Loan Notes 2,392 82 6.86%
-------------- ------------- -----------
Total Interest-Bearing Liabilities $1,214,139 $25,328 4.17%
============== ============= ===========
Demand Deposits 212,026
Corporation-Obligated Mandatorily Redeemable Trust Preferred Securities of
Subsidiary Trust Holding Solely Junior Subordinated debentures of the
Corporation 28,750
Other Liabilities 11,322
--------------
Total Liabilities 1,466,237
--------------
Stockholders' Equity 95,492
--------------
Total Liabilities and Stockholders' Equity $1,561,729
==============
Net Interest Income $30,521
=============
Interest Rate Spread 3.47%
===========
Net Interest Margin 4.17%
===========
Interest income and yield are stated on a fully tax-equivalent basis. The
total amount of adjustment is $549 in 1999.
19
INDEPENDENT BANK CORP.
SUPPLEMENTAL FINANCIAL INFORMATION
CONSOLIDATED AVERAGE BALANCE SHEET AND AVERAGE RATE DATA
(Unaudited - in thousands)
AVERAGE INTEREST
OUTSTANDING EARNED/ AVERAGE
BALANCE PAID YIELD
2000 2000 2000
----------------- --------------- -------------
FOR THE THREE MONTHS ENDED JUNE 30,
Interest-Earning Assets
Taxable Investment Securities $427,259 $7,640 7.15%
Non-taxable Investment Securities 43,094 813 7.54%
Loans, net of Unearned Discount 1,028,817 21,599 8.40%
Federal Funds Sold and Assets Purchased Under Resale Agreements 15,242 234 6.14%
Trading Assets 469 7 5.97%
----------------- --------------- ---------------
Total Interest-Earning Assets $1,514,881 $30,293 8.00%
----------------- =============== ==============
Cash and Due From Banks 50,831
Other Assets 57,261
-----------------
Total Assets $1,622,973
=================
Interest-Bearing Liabilities
Savings and Interest Checking Accounts $291,594 $1,187 1.63%
Money Market & Super Interest Checking Accounts 117,392 762 2.60%
Other Time Deposits 454,828 6,121 5.38%
Federal Funds Purchased and Assets Sold Under Repurchase Agreements 109,542 1,457 5.32%
Federal Home Loan Bank Borrowings 235,713 3,586 6.09%
Treasury Tax and Loan Notes 4,545 59 5.19%
----------------- --------------- ---------------
Total Interest-Bearing Liabilities $1,213,614 $13,172 4.34%
================= =============== =============
Demand Deposits 242,199
Corporation-Obligated Mandatorily Redeemable Trust Preferred Securities
of Subsidiary Trust Holding Solely Junior Subordinated debentures
of the Corporation 51,247
Other Liabilities 12,999
-----------------
Total Liabilities 1,520,059
-----------------
Stockholders' Equity 102,914
-----------------
Total Liabilities and Stockholders' Equity $1,622,973
=================
---------------
Net Interest Income $17,121
===============
Interest Rate Spread 3.66%
=============
Net Interest Margin 4.52%
=============
Interest income and yield are stated on a fully tax-equivalent basis. The
total amount of adjustment is $281 in 2000.
20
INDEPENDENT BANK CORP.
SUPPLEMENTAL FINANCIAL INFORMATION
CONSOLIDATED AVERAGE BALANCE SHEET AND AVERAGE RATE DATA
(Unaudited - in thousands)
AVERAGE INTEREST
OUTSTANDING EARNED/ AVERAGE
BALANCE PAID YIELD
1999 1999 1999
----------------- --------------- -------------
FOR THE THREE MONTHS ENDED JUNE 30,
Interest-Earning Assets
Taxable Investment Securities $417,276 $6,752 6.47%
Non-taxable Investment Securities 42,182 794 7.53%
Loans, net of Unearned Discount 984,292 20,143 8.19%
Federal Funds Sold and Assets Purchased Under Resale Agreements 24,094 279 4.63%
----------------- --------------- -------------
Total Interest-Earning Assets $1,467,844 $27,968 7.62%
----------------- =============== =============
Cash and Due From Banks 46,948
Other Assets 54,159
=================
Total Assets $1,568,951
=================
Interest-Bearing Liabilities
Savings and Interest Checking Accounts $277,436 $1,206 1.74%
Money Market & Super Interest Checking Accounts 111,843 697 2.49%
Other Time Deposits 463,932 5,952 5.13%
Federal Funds Purchased and Assets Sold Under Repurchase Agreements 81,290 968 4.76%
Federal Home Loan Bank Borrowings 275,602 3,717 5.39%
Treasury Tax and Loan Notes 2,745 43 6.27%
----------------- --------------- -------------
Total Interest-Bearing Liabilities $1,212,848 $12,583 4.15%
================= =============== =============
Demand Deposits 219,119
Corporation-Obligated Mandatorily Redeemable Trust Preferred Securities
of Subsidiary Trust Holding Solely Junior Subordinated debentures
of the Corporation 28,750
Other Liabilities 12,629
-----------------
Total Liabilities 1,473,346
-----------------
Stockholders' Equity 95,605
-----------------
Total Liabilities and Stockholders' Equity $1,568,951
=================
Net Interest Income $15,385
===============
Interest Rate Spread 3.47%
=============
Net Interest Margin 4.19%
=============
Interest income and yield are stated on a fully tax-equivalent basis. The
total amount of adjustment is $275 in 1999.
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INDEPENDENT BANK CORP.
(registrant)
Date: August 14, 2000 /s/ Douglas H. Philipsen
------------------------
Douglas H. Philipsen
President, Chairman of the Board and
Chief Executive Officer
Date: August 14, 2000 /s/ Denis K. Sheahan
--------------------
Denis K. Sheahan
Chief Financial Officer
and Treasurer
(Principal Financial and
Principal Accounting Officer)
22