{"id":516782,"date":"2021-07-22T16:18:52","date_gmt":"2021-07-22T20:18:52","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/independent-bank-corp-reports-second-quarter-net-income-of-37-6-million\/"},"modified":"2021-07-22T16:18:52","modified_gmt":"2021-07-22T20:18:52","slug":"independent-bank-corp-reports-second-quarter-net-income-of-37-6-million","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/independent-bank-corp-reports-second-quarter-net-income-of-37-6-million\/","title":{"rendered":"Independent Bank Corp. Reports Second Quarter Net Income of $37.6 Million"},"content":{"rendered":"

<\/p>\n

Independent Bank Corp. Reports Second Quarter Net Income of $37.6 Million<\/b><\/p>\n

Business fundamentals remain strong<\/b><\/p>\n

ROCKLAND, Mass.–(BUSINESS WIRE<\/a>)–
\nIndependent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2021 second quarter net income of $37.6 million, or $1.14 per diluted share, compared to net income of $41.7 million, or $1.26 per diluted share, reported for the first quarter of 2021. Second quarter results included merger related costs of $1.7 million associated with the acquisition of Meridian Bancorp Inc. (“Meridian”) and its subsidiary East Boston Savings Bank, which is expected to close in the fourth quarter of 2021. Excluding these merger-related costs, net of tax, operating net income was $38.8 million, or $1.17 per diluted share, for the second quarter of 2021. Please refer to “Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP)” below for a reconciliation of net income to operating net income.<\/b><\/p>\n

\n“Our core fundamentals are strong and we are well-positioned to continue to take advantage of growth opportunities as the local economy continues to re-adjust post-pandemic,\u201d said Christopher Oddleifson, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. \u201cWe have been hard at work on our previously announced merger with Meridian Bancorp.\/East Boston Savings Bank and are excited about the possibilities the transaction represents for our future. I continue to be inspired by the dedication and effort of my colleagues, and their collective commitment to our customers, the communities we serve, and to each other as we live out our mission of being the bank Where Each Relationship Matters\u00ae.\u201d\n<\/p>\n

BALANCE SHEET <\/b><\/p>\n

\nTotal assets of $14.2 billion at June 30, 2021 increased by $420.3 million, or 3.1%, from the prior quarter, and by $1.2 billion, or 9.0%, as compared to the year ago period, driven by continued significant growth in deposits, leading to increased liquid assets in the second quarter of 2021.\n<\/p>\n

\nTotal loans at June 30, 2021 decreased by $307.7 million, or 3.3% (13.3% annualized), when compared to the prior quarter which was primarily attributable to a net reduction in Paycheck Protection Program (“PPP”) loan balances of $363.7 million, or 43.0%, as the program concluded its second round of funding with focus pivoting toward loan forgiveness. Exclusive of PPP loan activity, total loans increased $55.9 million, or 2.7% on an annualized basis, reflecting a modest, yet positive shift in overall economic activity. Fueling the net growth, commercial loans increased $66.2 million, or 1.1% (4.3% annualized) during the second quarter, primarily due to growth in residential-based commercial real estate projects, as well as 5.0% (19.9% annualized) growth in small business loans, capitalizing on positive momentum from the successful PPP experience and overall market disruption. Partially offsetting these growth factors, construction loan balances decreased 3.8% from the prior quarter, reflecting an accelerated pace of project completion, while modest new fundings and restrained line utilization in the commercial and industrial portfolio continued to challenge growth. Strong closing volumes were experienced within both the residential and home equity portfolios, with a larger portion of residential closings being retained in the portfolio rather than sold into the secondary market compared to prior quarters. However the low interest-rate environment and excess consumer liquidity positions continued to drive elevated payoff activity and historically low home equity line utilization rates.\n<\/p>\n

\nDeposit balances of $12.0 billion at June 30, 2021 increased by $393.4 million, or 3.4% (13.6% annualized), from the prior quarter, reflecting additional government stimulus payments along with robust new account activity in both consumer and business product categories. With continued reduction in time deposit balances, core deposits rose to 91.6% of total deposits at June 30, 2021, which, combined with the runoff of higher cost time deposits and further rate reductions across all products, contributed to a total cost of deposits for the second quarter of 0.07%, representing a reduction of three basis points when compared to the prior quarter.\n<\/p>\n

\nThe securities portfolio increased by $251.3 million, or 17.6%, when compared to the prior quarter, reflecting a continued direct strategy to deploy a portion of excess cash balances into securities. Total purchases for the quarter were $340.2 million, offset by paydowns, calls, and maturities.\n<\/p>\n

\nTotal borrowings decreased by $4.7 million, or 2.6% when compared to the prior quarter reflecting repayments of outstanding debt.\n<\/p>\n

\nStockholders’ equity at June 30, 2021 increased by 1.5% (6.1% annualized), as compared to the prior quarter, reflecting continued strong earnings retention. Book value per share increased by $0.78, or 1.5%, to $52.72 during the second quarter as compared to the prior quarter. The Company’s ratio of common equity to assets of 12.27% decreased by 18 basis points from the prior quarter and by 57 basis points from the year ago period. The Company’s tangible book value per share at June 30, 2021 rose by $0.82, or 2.3%, from the prior quarter to $36.78, representing an increase of 6.3% from the year ago period. The Company’s ratio of tangible common equity to tangible assets of 8.89% at June 30, 2021 represents a 7 basis point decrease compared to the prior quarter and a 23 basis point decrease compared to the year ago period.\n<\/p>\n

Please refer to Appendix A for a detailed reconciliation of Non-GAAP metrics. <\/b><\/p>\n

NET INTEREST INCOME<\/b><\/p>\n

\nNet interest income for the second quarter decreased to $93.4 million compared to $95.6 million for the prior quarter, driven primarily by reductions in PPP fee recognition as $7.2 million was recognized in the second quarter compared to $9.5 million for the prior quarter. The 2021 second quarter net interest margin was heavily impacted by the Company’s increased excess liquidity position, decreasing by 26 basis points from the prior quarter to 2.99%. The table below illustrates the changes within the net interest margin for the second quarter:\n<\/p>\n\n\n\n\n\n\n\n\n
\n

\nNet interest margin as of March 31, 2021\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n3.25\n<\/p>\n<\/td>\n

\n

\n%\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nExcess liquidity – cash and securities\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(0.19)\n<\/p>\n<\/td>\n

\n

\n%\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nLoan yields\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(0.03)\n<\/p>\n<\/td>\n

\n

\n%\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nPPP loan impact\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(0.06)\n<\/p>\n<\/td>\n

\n

\n%\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nOther noncore adjustments\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n(0.01)\n<\/p>\n<\/td>\n

\n

\n%\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDecreased cost of funds\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n0.03\n<\/p>\n<\/td>\n

\n

\n%\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nNet interest margin as of June 30, 2021\n<\/p>\n<\/td>\n

\n

\n\u00a0\n<\/p>\n<\/td>\n

\n

\n2.99\n<\/p>\n<\/td>\n

\n

\n%\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

Please refer to Appendix C for additional details regarding the net interest margin.<\/b><\/p>\n

NONINTEREST INCOME<\/b><\/p>\n

\nNoninterest income of $25.0 million for the second quarter of 2021 was $279,000, or 1.1%, lower than the prior quarter. Significant changes in noninterest income for the second quarter compared to the prior quarter included the following:\n<\/p>\n