ENP Newswire - 28 January 2014 Release date- 27012014 - 2013 GAP EPS $2 .18: Operating EPS Rises by 11% to a record $2.39 . Independent Bank Corp., (NASDAQ: INDB), parent of Rockland Trust Company , today announced 2013 fourth quarter net income of $10.6 million , or $0.45 per diluted share, as compared to $14.7 million , or $0.64 per diluted share, in the prior quarter. The Company acquired Mayflower Bancorp, Inc. ('Mayflower') on November 15, 2013 and recorded $6.2 million of merger and acquisition costs during the fourth quarter. Net income for the full year was $50.3 million , or $2.18 on a diluted earnings per share basis, as compared to $42.6 million , or $1.95 for the prior year. Net income for the fourth quarter and full year 2013 contained items, such as merger and acquisition expenses and gains on life insurance benefits, security sales, and debt extinguishment, which the Company considers non-core. When excluding such items, net operating earnings for the fourth quarter were $14.2 million , or $0.61 per diluted share, versus the prior quarter's net operating earnings of $14.4 million , or $0.63 per diluted share. Net operating earnings for 2013 were $55.2 million , or $2.39 on a diluted earnings per share basis, an increase of 17.2% and 10.7%, respectively, when compared to net operating earnings of $47.1 million , or $2.16 per diluted share in 2012. ' Rockland Trust had many outstanding accomplishments in 2013,' said Christopher Oddleifson , President and Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company . 'The teamwork of my colleagues once again produced strong financial results and growth in the face of continued strong competition for loans and deposits. During the third quarter of 2013 our ongoing talent development, succession planning, and leadership development efforts enabled us to make several important promotions from within to expand our already strong managerial capacity. We believe we are positioned for future growth and ready to take full advantage of the opportunities that lie ahead. ' MAYFLOWER ACQUISITION The Mayflower acquisition added four full service branches and, at fair value, $126.6 million in loans and $218.9 million in deposits. Total consideration of $40.3 million was paid with stock and cash, with the Company issuing 818,650 shares of common stock and paying $10.9 million in cash, in the aggregate, to Mayflower shareholders. The following table provides the purchase price allocation of the net assets acquired for this transaction: Net Assets Acquired (at Fair Value ) (Dollars in Thousands) Assets: Cash $ 21,390 Investments 77,953 Loans 126,570 Premises and Equipment 7,128 Goodwill 20,030 Core Deposit Intangible 2,610 Other Assets 7,104 Total Assets Acquired $ 262,785 Liabilities: Deposits $ 218,877 Borrowings 1,121 Other Liabilities 2,527 Total Liabilities Assumed $ 222,525 Purchase Price $ 40,260 For further detail on the loans and deposits acquired, see the organic growth table provided in the financial schedules accompanying the release. BALANCE SHEET Total assets of $6.1 billion at December 31, 2013 have increased by $203.8 million from the prior quarter, or 3.5%, and by $342.2 million , or 5.9%, as compared to the year ago period, inclusive of the Mayflower acquisition. Organic loan growth was $35.7 million , or 3.1% on an annualized basis, for the quarter ended December 31, 2013 , and increased by $72.7 million , or 1.6%, when compared to the year ago period. The commercial loan portfolio continued its healthy growth during the fourth quarter, increasing by $55.0 million organically, or 6.8% on an annualized basis, from the third quarter of 2013. The commercial and industrial and commercial real estate portfolios experienced strong net growth in the fourth quarter, as evidenced by annualized organic growth of 12.8% and 8.1%, respectively. This growth was somewhat offset by a decrease in the commercial construction portfolio during the same period. In addition, prepayment activity on the residential loan portfolio, despite leveling off during the quarter, continued to outpace new originations resulting in a decrease of $18.3 million , or 14.6%, on an annualized basis from the third quarter of 2013. Exclusive of the acquisition, deposit growth increased by $10.2 million , or 0.9% on an annualized basis during the fourth quarter, as compared to the linked quarter, resulting in total deposits of $5.0 billion at December 31, 2013 . Growth was led by core deposits, which increased organically by $28.5 million to 84.9% of total deposits. The total cost of deposits remained at 0.23% for the quarter, reflecting the Company's continued emphasis on lower cost funding sources. The securities portfolio increased by $105.7 million to $707.5 million at December 31, 2013 compared to the quarter ended September 30, 2013 , and represented 11.6% of total assets at year end. The increase was primarily due to the acquired Mayflower portfolio, in addition to incremental purchases during the quarter. Stockholders' equity at December 31, 2013 rose to $591.5 million , an increase of 6.4% from the prior quarter, primarily as a result of the acquisition. As compared to the year ago period, stockholders' equity has increased by $62.2 million , or 11.8%. Despite an increase in acquisition related intangibles, the Company's Tier 1 common and tangible common ratios increased by 2 basis points during the quarter, to an estimated 9.28% and 6.91%, respectively. NET INTEREST INCOME Net interest income was $46.9 million for the fourth quarter of 2013, compared to $45.2 million in the linked quarter. During the fourth quarter, the Company's net interest margin increased by 2 basis points to 3.45%, benefiting from a lower average cash position and lower borrowing costs. NONINTEREST INCOME The Company recorded noninterest income of $17.5 million during the fourth quarter of 2013 which represents a $666,000 , or 3.7%, decrease from the prior quarter. Significant changes in noninterest income included the following: Deposit account fees and Interchange and ATM fees increased by $172,000 and $104,000 , respectively. Investment management income increased by $241,000 , or 5.8%, primarily due to continued growth in assets under administration, which were $2.3 billion at December 31, 2013 , a 4.4% increase from the linked quarter, as well as an increase in fees received on mutual funds. Mortgage banking income decreased $902,000 , or 48.9%, consistent with the significant decline in volume industrywide during the quarter. The Company recorded gains on life insurance benefits in the amount of $227,000 . The Company recognized a gain of $258,000 on the sale of two private label collateralized mortgage obligations during the fourth quarter. Income from loan level derivatives decreased by $571,000 , or 42.9%. During the third quarter the Company recognized a gain of $763,000 on the extinguishment of debt related to the prepayment of $60.0 million of Federal Home Loan Bank Advances. No additional prepayments occurred during the fourth quarter. Other noninterest income increased by $457,000 , or 25.7%, due to capital gain distributions of $260,000 on the Company's equity security portfolio related to Rabbi trust investments used to fund the Company's retirement plans, as well as an increase in 1031 exchange fees of $103,000 and other small increases across various categories. NONINTEREST EXPENSE Inclusive of merger and acquisition costs the Company recorded noninterest expense of $47.8 million during the fourth quarter of 2013 which represents a $7.1 million , or 17.5%, increase from the prior quarter. Significant changes in noninterest expense included the following: Merger and acquisition expenses associated with the Mayflower acquisition were $6.2 million for the fourth quarter, which represented an increase of $5.9 million from the linked quarter. Occupancy and equipment expense increased $335,000 , or 7.3%, from the third quarter, due to impairment recognized on closed branches, as well as general expense increases due to the addition of the four former Mayflower facilities. Other noninterest expenses increased by $626,000 , or 5.7%, mainly due to increases in loan work-out costs of $431,000 , an increase in consultant fees of $116,000 , and an increase in advertising of $111,000 . On an operating basis, the Company generated a return on average assets and a return on average common equity of 0.94% and 9.81%, respectively, in the fourth quarter, as compared to 0.98% and 10.36% in the third quarter. Additionally, the return on average assets and the return on average common equity for the year ended December 31, 2013 was 0.95% and 9.99%, respectively, compared to 0.92% and 9.57%, respectively, on an operating basis for the prior year. ASSET QUALITY The provision for loan losses was $3.2 million for the fourth quarter compared to $2.7 million for the quarter ended September 30, 2013 . For the quarter, net charge-offs were $3.5 million , an increase of $1.4 million compared to the prior quarter, or 0.30%, on an annualized basis of average loans. For the year, net charge-offs were 0.19% of average loans. Nonperforming loans decreased by $3.2 million to $34.7 million , or 0.73% of total loans at December 31, 2013 , from $37.9 million , or 0.83% of total loans at September 30, 2013 , due to management's proactive approach to loan workouts. Nonperforming assets decreased to $43.8 million at the end of the fourth quarter, compared to $48.9 million in the linked quarter. Delinquency as a percentage of loans decreased to 0.86% at December 31, 2013 , compared to 0.90% at September 30, 2013 . The allowance for loan losses was $53.2 million at December, 2013, remaining consistent with the prior quarter levels. The Company's allowance for loan losses was 1.13% and 1.18% of total loans at December 31, 2013 and September 30, 2013 , respectively. Loans acquired in connection with the Mayflower acquisition have been recorded at fair value, including a reduction for estimated credit losses, and without carryover of the respective portfolio's historical allowance for loan losses. Excluding these recently acquired loans at December 31, 2013 , the allowance for loan losses would have been approximately 1.16% of total loans. CONFERENCE CALL INFORMATION Christopher Oddleifson - Chief Executive Officer and Robert Cozzone - Chief Financial Officer will host a conference call to discuss fourth quarter earnings at 10:00 a.m. Eastern Time on Friday, January 24, 2014 . Internet access to the call is available on the Company's website at www.RocklandTrust.com or via telephonic access by dial-in at 1-888-317-6016 reference: INDB. A replay of the call will be available by calling 1-877-344-7529. Replay Pass code: 10038888. The webcast replay will be available until January 24, 2015 . ABOUT INDEPENDENT BANK CORP. Independent Bank Corp. has approximately $6.1 billion in assets and is the holding company for Rockland Trust Company , a full-service commercial bank headquartered in Massachusetts . Rockland Trust offers a wide range of banking, investment, and insurance services to businesses and individuals through retail branches, commercial lending offices, investment management offices, and residential lending centers located in Eastern Massachusetts and Rhode Island and through telephone banking, mobile banking, and the Internet. To find out why Rockland Trust is the bank 'Where Each Relationship Matters ', please visit www.rocklandtrust.com . Rockland Trust is an FDIC Member and an Equal Housing Lender.
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