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 $431.7 million; its shares were traded at around $20.63 with a P/E ratio of 17.9 and P/S ratio of 2.1. The dividend yield of Independent Bank Corp. stocks is 3.5%. 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 $6.8 million and $13.9 million for the three and nine month periods ending September 30, 2009 compared to $8.8 million and $20.9 million for the same periods in 2008, respectively. The decrease in net income from the prior year is primarily due to merger and acquisition expenses associated with the Benjamin Franklin Bancorp. Inc. (Ben Franklin) acquisition, a special FDIC deposit insurance premium fee incurred during the second quarter of 2009, OTTI charges, and a higher level of provision for loan losses consistent with current economic conditions and a higher level of loan losses. The provision for loan loss has increased by $2.4 million and $7.6 million for the three and nine months ended September 30, 2009 as compared to the same periods in 2008, respectively. Also, in early 2009 the Company issued preferred stock related to the Companys participation in the United States Treasury Departments Capital Purchase program (CPP), which decreased net income available to common shareholders by the preferred dividends declared,
causing a decline of $0.30 per diluted share, year-to-date. On a diluted earnings per share basis the Company reported earnings of $0.33 and earnings of $0.43 for the three and nine month periods ending September 30, 2009, respectively, compared to earnings of $0.54 and $1.34 for the comparative 2008 periods.
As indicated above, the Companys results included certain items which management considers non-core. Excluding certain non-core items, net operating earnings were $6.8 million, or $0.33 per diluted common share and $18.9 million, or $0.98 per diluted common share for the three and nine months ended September 30, 2009, respectively, down 17.5% and 15.0%, respectively, from the comparable 2008 periods.
Not reflected in the table above are additional large items impacting the Companys results. For the three months ended September 30, 2009 and 2008 securities impairment charges, net of tax, were $3.3 million, or $0.16 per share and $468,000, or $0.03 per share, respectively. For the nine months ended September 30, 2009 and 2008 securities impairment charges, net of tax, were $4.4 million, or $0.23 per share and $1.7 million, or $0.11 per share, respectively. In addition, the Company incurred a special FDIC deposit insurance premium fee, net of tax, of $1.4 million, or $0.07 per share, during the second quarter of 2009.
Nonperforming loans as a percentage of loans increased to 109 basis points in the third quarter from 94 basis points at the end of the second quarter of 2009. Net charge-offs were $3.2 million in the third quarter of 2009, or 37 basis points on an annualized basis, compared to $1.9 million, or 23 basis points on an annualized basis, in the second quarter. The provision for loan losses was $4.4 million and $4.5 million for the quarters ended September 30, 2009 and June 30, 2009, respectively.
On loans secured by one-to-four family, owner-occupied properties, the Bank attempts to work out an alternative payment schedule with the borrower in order to avoid foreclosure action. Any loans that are modified are reviewed by the Bank to identify if a troubled debt restructuring has occurred. A troubled debt restructuring is when, for economic or legal reasons related to a borrowers financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider based upon current market rates. The restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two. As of September 30, 2009 and December 31, 2008, troubled debt restructured loans amounted to $6.4 million and $1.1 million, which was comprised of 82 and 16 loans, respectively. If such efforts by the Bank do not result in a satisfactory arrangement, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated. At any time prior to a sale of the property at foreclosure, the Bank may and will terminate foreclosure proceedings if the borrower is able to work out a satisfactory payment plan. On loans secured by commercial real estate or other business assets, the Bank similarly seeks to reach a satisfactory payment plan so as to avoid foreclosure or liquidation.
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