Independent Bank Corp. is a bank holding company for Rockland Trust Company. They are a community-oriented commercial bank. The community banking business consists of commercial banking retail banking and trust services and is managed as a single strategic unit. The community banking business 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. Independent Bank Corp. has a market cap of $459.1 million; its shares were traded at around $21.95 with a P/E ratio of 16.4 and P/S ratio of 2.2. The dividend yield of Independent Bank Corp. stocks is 3.2%. Independent Bank Corp. had an annual average earning growth of 6.2% over the past 10 years.
Highlight of Business Operations:The Company reported net income of $660,000 and $7.0 million for the three and six month periods ending June 30, 2009 compared to $5.8 million and $12.1 million for the same periods in 2008 respectively. The decrease in net income from the prior quarter is primarily due to merger and acquisition expenses associated with the Benjamin Franklin Bancorp. Inc. (Ben Franklin) acquisition, increased FDIC deposit premium fees, and other-than-temporary impairment charges on investment securities partially offset by a gain resulting from an early termination of an interest rate swap agreement.
On a diluted earnings per share basis the Company reported a loss of $0.19 and earnings of $0.07 for the three and six month periods ending June 30, 2009 compared to earnings of $0.36 and $0.79 for the comparative 2008 periods. The Companys repayment of the United States Treasury Departments (Treasury) Capital Purchase Program (CPP) preferred stock, resulted in a one time $4.4 million deemed dividend charge, which decreased net income available to common shareholders by $0.22 per diluted share, negatively impacting the second quarters performance.
As indicated above second quarter 2009 results included certain items which management considers non-core. These items, net of tax, are merger and acquisition expenses of $8.7 million, a gain of $2.5 million on the termination of an interest rate swap agreement and the aforementioned deemed preferred stock dividend of $4.4 million. Excluding certain non-core items, net operating earnings were $6.8 million, or $0.33 per diluted common share and $12.1 million, or $0.66 per diluted common share for the three and six month ended June 30, 2009, respectively, down 23.3% and 27.5%, respectively, from the same period in the prior year.
Not reflected in the table above are two additional large variance items impacting the second quarter of 2009, a special FDIC assessment of $2.1 million pre-tax or $0.07 per share and securities impairment charges of $1.7 million or $0.05 per share.
Excluding the loans acquired from Ben Franklin at fair value, the reserve to loan ratio at June 30, 2009 was 1.49%, a 9 basis point increase from the quarter ended March 31, 2009. The provision for loan losses was $4.5 million and $4.0 million, for the quarter ended June 30, 2009 and March 31, 2009, respectively. Net charge-offs were $5.4 million and $3.6 million for the periods ended June 30, 2009 and March 31, 2009, respectively.
Loan Portfolio Total loans increased by $717.1 million, or 27.0%, for the period ended June 30, 2009 as compared to December 31, 2008. Loan growth achieved was concentrated in the commercial real estate and residential real estate categories while the consumer (primarily automobile lending) categories were reduced. Total commercial loans (including small business loans) now represent 63.3% of the total loan portfolio. The acquisition of Ben Franklin added $687.4 million in growth, as shown in the table below.
Read the The complete ReportINDB is in the portfolios of Bruce Sherman of Private Capital Management.