SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 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 May 1, 2000 there were 14,230,071 shares of the issuer's common stock outstanding. Note: This Form 10-Q/A for the quarterly period ended March 31, 2000 is being filed solely to amend and restate the note to the unaudited financial statements regarding "Corporation -Obligated Mandatorily Redeemable Trust Preferred Securities" in Item 1, Financial Statements (unaudited), from the Form 10-Q for the quarterly period ended March 31, 2000 filed with the Securities Exchange Commission on May 12, 2000. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets - March 31, 2000 and December 31, 1999 Consolidated Statements of Income - Three months ended March 31, 2000 and 1999 Consolidated Statements of Cash Flows - Three months ended March 31, 2000 and 1999 Notes to Consolidated Financial Statements - March 31, 2000 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosure About Market Risk PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K PART 1 FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INDEPENDENT BANK CORP. CONSOLIDATED BALANCE SHEETS (UNAUDITED - IN THOUSANDS) MARCH 31, DECEMBER 31, 2000 1999 --------------------------------- ASSETS Cash and Due From Banks $49,168 $48,949 Federal Funds Sold 15,002 8,719 Trading Assets 469 486 Securities Held To Maturity 222,885 229,043 Securities Available For Sale 229,233 201,614 Federal Home Loan Bank Stock 17,036 17,036 Loans, Net of Unearned Discount 1,024,229 1,028,510 Less: Reserve for Possible Loan Losses (15,263) (14,958) - ----------------------------------------------------------------------------------------------------------------- Net Loans 1,008,966 1,013,552 - ----------------------------------------------------------------------------------------------------------------- Bank Premises and Equipment 14,155 14,268 Other Assets 62,561 56,389 - ----------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $1,619,475 $1,590,056 ================================================================================================================= LIABILITIES Deposits Demand Deposits $233,937 $226,044 Savings and Interest Checking Accounts 297,245 262,516 Money Market and Super Interest Checking Accounts 110,800 107,624 Time Certificates of Deposit over $100,000 102,556 113,632 Other Time Deposits 325,877 351,790 - ----------------------------------------------------------------------------------------------------------------- Total Deposits 1,070,415 1,081,806 - ----------------------------------------------------------------------------------------------------------------- Federal Funds Purchased and Assets Sold Under Repurchase Agreements 114,132 93,366 Federal Home Loan Bank Borrowings 266,836 256,224 Treasury Tax and Loan Notes 667 9,877 Other Liabilities 14,863 21,904 - ----------------------------------------------------------------------------------------------------------------- Total Liabilities 1,466,913 1,463,177 - ----------------------------------------------------------------------------------------------------------------- Corporation-obligated mandatorily redeemable trust preferred securities of subsidiary trusts holding solely junior subordinated debentures of the 51,325 28,750 Corporation STOCKHOLDERS' EQUITY Common Stock, $.01 par value Authorized: 30,000,000 Shares Outstanding: 14,863,821 Shares at March 31, 2000 and 14,863,821 at December 31, 1999 149 149 Treasury Stock: 633,750 Shares at March 31, 2000 and 684,463 Shares at December 31, 1999 (9,886) (10,678) Surplus 44,387 44,950 Retained Earnings 70,354 67,547 Accumulated other Comprehensive Income (3,767) (3,839) - ----------------------------------------------------------------------------------------------------------------- Total Stockholders' Equity 101,237 98,129 - ----------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES, MINORITY INTEREST & STOCKHOLDERS' EQUITY $1,619,475 $1,590,056 ================================================================================================================= INDEPENDENT BANK CORP. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED - IN THOUSANDS) THREE MONTHS ENDED MARCH 31, MARCH 31, 2000 1999 - ---------------------------------------------------------------------------------------------------- INTEREST INCOME Interest on Loans $21,266 $19,556 Interest and Dividends on Securities 7,936 7,886 Interest on Federal Funds Sold And Repurchase Agreements 85 165 Interest on Interest Bearing Deposits 1 - - ---------------------------------------------------------------------------------------------------- Total Interest Income 29,288 27,607 - ---------------------------------------------------------------------------------------------------- INTEREST EXPENSE Interest on Deposits 7,610 7,472 Interest on Borrowed Funds 5,140 5,273 - ---------------------------------------------------------------------------------------------------- Total Interest Expense 12,750 12,745 - ---------------------------------------------------------------------------------------------------- Net Interest Income 16,538 14,862 - ---------------------------------------------------------------------------------------------------- PROVISION FOR POSSIBLE LOAN LOSSES 717 981 - ---------------------------------------------------------------------------------------------------- Net Interest Income After Provision For Possible Loan Losses 15,821 13,881 - ---------------------------------------------------------------------------------------------------- NON-INTEREST INCOME Service Charges on Deposit Accounts 1,385 1,271 Trust and Investment Services Income 1,133 917 Mortgage Banking Income 313 501 Other Non-Interest Income 802 736 - ---------------------------------------------------------------------------------------------------- Total Non-Interest Income 3,633 3,425 - ---------------------------------------------------------------------------------------------------- NON-INTEREST EXPENSES Salaries and Employee Benefits 6,321 5,662 Occupancy Expenses 1,003 961 Equipment Expenses 907 767 Other Non-Interest Expenses 3,996 3,719 - ---------------------------------------------------------------------------------------------------- Total Non-Interest Expenses 12,227 11,109 - ---------------------------------------------------------------------------------------------------- Minority Interest 1,149 667 INCOME BEFORE INCOME TAXES 6,078 5,530 PROVISION FOR INCOME TAXES 1,847 1,684 - ---------------------------------------------------------------------------------------------------- NET INCOME $4,231 $3,846 ==================================================================================================== BASIC EARNINGS PER SHARE $0.30 $0.27 ==================================================================================================== DILUTED EARNINGS PER SHARE $0.30 $0.27 ==================================================================================================== Weighted average common shares (Basic) 14,215,268 14,312,093 Common stock equivalents 76,053 169,506 - ---------------------------------------------------------------------------------------------------- Weighted average common shares (Diluted) 14,291,321 14,481,599 ==================================================================================================== INDEPENDENT BANK CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED - IN THOUSANDS) THREE MONTHS ENDED MARCH 31, 2000 1999 ------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $4,231 $3,846 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED FROM OPERATING ACTIVITIES: Depreciation and amortization 1,078 1,270 Provision for loan losses 717 981 Loans originated for resale (5,767) (16,793) Proceeds from mortgage loan sales 5,722 16,730 Loss on sale of mortgages 45 63 Gain on mortgage servicing rights (62) (97) Changes in assets and liabilities: Decrease / (Increase) in other assets (7,393) (1,100) (Decrease) / Increase in other liabilities (6,497) 4,063 - ------------------------------------------------------------------------------------------------------------------------------- TOTAL ADJUSTMENTS (12,157) 5,117 - ------------------------------------------------------------------------------------------------------------------------------- NET CASH (USED IN)PROVIDED FROM OPERATING ACTIVITIES (7,926) 8,963 - ------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities of Investment Securities 18,396 36,108 Purchase of Investment Securities (40,497) (22,874) Net (Increase) / Decrease in Loans 3,869 (33,005) Investment in Bank Premises and Equipment (791) (1,055) - ------------------------------------------------------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (19,023) (20,826) - ------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net decrease in Deposits (11,391) (9,884) Net increase / (decrease) in Federal Funds Purchased and Assets Sold Under Repurchase Agreements 20,766 (1,564) Net increase / (decrease) in FHLB Borrowings 10,612 (2,500) Net increase / (decrease) in TT&L Notes (9,210) 1,084 Issuance of corporation-obligated mandatorily redeemable trust preferred securities of subsidiary trusts holding solely junior subordinated debentures of the Corporation 23,858 - Dividends Paid (1,413) (1,315) Purchase of Treasury Shares - (4,787) Proceeds from stock issuance 229 98 - ------------------------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED FROM (USED IN) FINANCING ACTIVITIES 33,451 (18,868) - ------------------------------------------------------------------------------------------------------------------------------- NET DECREASE IN CASH AND CASH EQUIVALENTS 6,502 (30,731) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 57,668 86,198 =============================================================================================================================== CASH AND CASH EQUIVALENTS AS OF MARCH 31, $64,170 $55,467 =============================================================================================================================== 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 month period ended March 31, 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 September 27, 1999, the Company and the Bank, entered into a purchase and assumption agreement with Fleet Financial Group to acquire 12 Massachusetts branches totaling $269 million in deposits and $37 million in consumer and SBA loans. In addition, the Company will purchase approximately $100 million of commercial real estate loans at par from BankBoston's Small Business Banking Developmental Real Estate portfolio. The acquisitions result from the divestiture of Fleet branches after its merger with BankBoston. This transaction has received regulatory approval. These branches will continue to operate as Fleet offices until they are converted to Rockland Trust in late summer of 2000. All current Fleet employees will be retained by Rockland Trust, and a special notification will be sent to customers prior to the conversion. CORPORATION-OBLIGATED MANDATORILY REDEEMABLE TRUST PREFFERED SECURITIES In the second quarter of 1997, Independent Capital Trust I (the "Trust I") 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, 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. 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 records distributions payable on the Trust Preferred Securities as minority interest expense in its consolidated statements of income. The Company will unconditionally guarantee all of the Trusts' obligations under the Trust Preferred Securities RECENT ACCOUNTING DEVELOPMENTS In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." 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. SFAS No. 133 as amended by SFAS No. 137 "Accounting for Derivative Instruments and Hedging Activities Deferral of the Effective Date of FASB Statement No. 133" shall be 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. EARNINGS PER SHARE NET INCOME WEIGHTED AVERAGE NET INCOME PER SHARE SHARES March 31, March 31, March 31, March 31, March 31, March 31, 2000 1999 2000 1999 2000 1999 --------------------------------------------------------------------------------------------- Basic EPS $4,231 $3,846 14,215 14,312 $0.30 $0.27 Effect of dilutive securities - - 76 170 - - --------------------------------------------------------------------------------------------- Diluted EPS $4,231 $3,846 14,291 14,482 $0.30 $0.27 --------------------------------------------------------------------------------------------- COMPREHENSIVE INCOME . Comprehensive income is reported net of taxes, as follows: March 31, 2000 1999 Net Income $4,231 $3,846 Change in unrealized gain/(loss) on securities available for sale 72 (168) Less: reclassification adjustment for losses included in net income - - --------------------- Comprehensive Income $4,303 $3,678 --------------------- 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. Information about reportable segments and reconciliation of such information to the consolidated financial statements as of and for the quarters ended March 31, follows (in thousands): RECONCILIATION TO CONSOLIDATED FINANCIAL INFORMATION Community Other Adjustments Banking Other and Eliminations Consolidated March 31, 2000 Total Assets 1,617,535 211,075 (209,135) 1,619,475 Net Interest Income 16,139 399 - 16,538 Total Non-Interest Income 3,633 5,062 (5,062) 3,633 Net Income $5,026 $4,267 ($5,062) $4,231 March 31, 1999 Total Assets 1,560,106 154,262 (150,512) 1,563,856 Net Interest Income 14,684 178 - 14,862 Total Non-Interest Income 3,424 4,411 (4,410) 3,425 Net Income $4,389 $3,867 ($4,410) $3,846 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. 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: September 22, 2000 /s/ Douglas H. Philipsen ------------------------- Douglas H. Philipsen Chairman of the Board, President and Chief Executive Officer Date: September 22, 2000 /s/ Denis K. Sheahan --------------------- Denis K. Sheahan Chief Financial Officer and Treasurer (Principal Financial and Principal Accounting Officer)