Independent Bank Corp., parent of Rockland Trust company, announced 2015 first quarter net income of $9.5 million, or $0.38 per diluted share.
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This compares to $16 million, or $0.66 per diluted share in the prior quarter.
The decrease in the company’s earnings was largely attributable to merger and acquisition costs of $6.3 million, net of tax, recognized during the first quarter, relating to the February 20, 2015 acquisition of Peoples Federal Bancshares, Inc.
When excluding these expenses and other items that the company considers to be non-core, net operating earnings for the first quarter were $15.8 million, or $0.63 per diluted share, versus the prior quarter’s net operating earnings of $16.6 million, or $0.69 per diluted share, representing decreases of 4.5% and 8.7%, respectively.
The Peoples acquisition added eight full-service branches, $463.9 million in loans and $432.3 million in deposits, at fair value. Total consideration of $141.8 million was paid with stock and cash, with the company issuing 2,052,137 shares of common stock and paying $55.4 million in cash, in the aggregate, to Peoples shareholders.
Total assets of $6.9 billion at March 31, 2015 increased by $546.2 million, or 8.6%, from the prior quarter and by $685.2 million, or 11.0%, as compared to the year ago period, inclusive of the acquisition of Peoples.
Inclusive of the Peoples acquisition, total loans at March 31, 2015 grew by $422.4 million, or 8.5% over the prior quarter and by $585.8 million, or 12.2% over the prior year period. On an organic basis, total loans declined slightly by $41.5 million, or 3.4% on an annualized basis in the first quarter.
Growth in the commercial real estate, construction, and home equity portfolios was countered by declines in the commercial and industrial and residential loans portfolios as heightened competition and severe weather served to restrain loan closings and line utilization. Compared to a year ago, total loans grew organically by $121.9 million, or 2.5%.
Inclusive of the Peoples acquisition, total deposits at March 31, 2015 grew by $460.2 million, or 8.8% over the prior quarter and by $556.5 million, or 10.9% over the prior year period.
On an organic basis, core deposits continued their steady growth with a rise of $47.0 million, or 4.2% on an annualized basis over the prior quarter and now represent 86.7% of total deposits.
Total cost of deposits increased by one basis point as a result of the acquired deposit base, yet remained low at 0.21% for the quarter, reflecting the company’s continued emphasis on lower cost funding. Compared to a year ago, total deposits grew organically by $124.2 million, or 2.4%.
Net interest income increased to $51.2 million for the first quarter as compared to $49.8 million in the linked quarter, reflective of higher earning asset levels and a higher loan yield. During the first quarter, the company’s net interest margin increased by eight basis points from the prior quarter to 3.50%, driven mainly by a four basis point accretion adjustment related to early payoffs on loans acquired along with lower liquid balances.
The company recorded noninterest income of $16.6 million during the first quarter, which represents a $1.9 million, or 10.4%, decrease from the linked quarter.
Inclusive of merger and acquisition costs, the company recorded noninterest expense of $55 million during the first quarter, a $10.6 million, or 23.9%, increase from the prior quarter. ■