INDEPENDENT BANK CORP - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2003

Commission File Number: 1-9047

Independent Bank Corp.

(Exact name of registrant as specified in its charter)

Massachusetts		04-2870273
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

288 Union Street, Rockland, Massachusetts 02370
(Address of principal executive offices, including zip code)

(781) 878-6100
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes ý No o

As of August 1, 2003, there were 14,585,248 shares of the issuer’s common stock outstanding, par value $.01 per share.

INDEX

PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements		3
		Consolidated Balance Sheets (unaudited) - June 30, 2003 and December 31, 2002	3
		Consolidated Statements of Income (unaudited) - Six months and quarter ended June 30, 2003 and 2002	4
		Consolidated Statements of Stockholders Equity (unaudited) - Six months ended June 30, 2003 and for the year ended December 31, 2002	5
		Consolidated Statements of Cash flows (unaudited) - Six months ended June 30, 2003 and 2002	6
		Condensed Notes to Consolidated Financial Statements – June 30, 2003	7
		Note 1 - Basis of Presentation	7
		Note 2 - Stock Based Compensation	7
		Note 3 - Recent Accounting Developments	9
		Note 4 - Goodwill and Intangibles	11
		Note 5 - Settlement of Real Estate Investment Trust (“REIT”) Retroactive Taxation Dispute	11
		Note 6 - Earnings Per Share	12
		Note 7 - Redemption/Issuance of Trust Preferred Securities	13
		Note 8 - Comprehensive Income	14
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
		Table 1 - Summary of Delinquency Information	18
		Table 2 - Nonperforming Assets / Loans	19
		Table 3 - Summary of Changes in the Allowance for Loan Losses	22
		Table 4 - Summary of Allocation of the Allowance for Loan Losses	23
		Table 5 - Average Balance, Interest Earned/Paid & Average Yields - Quarter to Date	27
		Table 6 - Average Balance, Interest Earned/Paid & Average Yields - Year to Date	28
		Table 7 - Volume Rate Analysis	30
		Table 8 - Interest Rate Sensitivity	35
		Table 9 - Contractual Obligations and Commitments by Maturity	37
	Item 3. Quantitative and Qualitative Disclosures About Market Risk		38
	Item 4. Controls and Procedures		38

PART II. OTHER INFORMATION			38
	Item 1. Legal Proceedings		38
	Item 2. Changes in Securities and Use of Proceeds		39
	Item 3. Defaults Upon Senior Securities		39
	Item 4. Submission of Matters to a Vote of Security Holders		40
	Item 5. Other Information		40
	Item 6. Exhibits and Reports on Form 8-K		40

Signatures			41
Exhibit 31.1 – Certification 302
Exhibit 31.2 – Certification 302
Exhibit 32.1 – Certification 906

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

INDEPENDENT BANK CORP.

CONSOLIDATED BALANCE SHEETS

(Unaudited, Dollars In Thousands, Except Share Amounts)

	June 30, 2003			December 31, 2002

ASSETS
CASH AND DUE FROM BANKS	$	84,610		$	71,317
FEDERAL FUNDS SOLD & SHORT TERM INVESTMENTS	—			3,169
INVESTMENTS
Trading Assets	1,157			1,075
Securities Available for Sale	557,399			501,828
Securities Held to Maturity (fair value $142,322 and $152,566)	134,702			149,071
Federal Home Loan Bank Stock	21,907			17,036
TOTAL INVESTMENTS	715,165			669,010
LOANS
Commercial & Industrial	171,296			151,591
Commercial Real Estate	545,202			511,102
Residential Real Estate	315,108			281,452
Real Estate Construction	64,742			59,371
Consumer - Installment	306,631			323,501
Consumer - Other	119,897			104,585
TOTAL LOANS	1,522,876			1,431,602
LESS: ALLOWANCE FOR LOAN LOSSES	(22,472		)	(21,387		)
NET LOANS	1,500,404			1,410,215
BANK PREMISES AND EQUIPMENT, Net	31,796			30,872
GOODWILL	36,236			36,236
MORTGAGE SERVICING RIGHTS	2,260			2,039
BANK OWNED LIFE INSURANCE	38,063			37,133
OTHER REAL ESTATE OWNED	227			—
OTHER ASSETS	19,308			25,381
TOTAL ASSETS	$	2,428,069		$	2,285,372

LIABILITIES
DEPOSITS
Demand Deposits	$	449,430		$	429,042
Savings and Interest Checking Accounts	496,921			464,318
Money Market and Super Interest Checking Accounts	356,802			320,819
Time Certificates of Deposit over $100,000	107,067			101,835
Other Time Certificates of Deposits	353,447			372,718
TOTAL DEPOSITS	1,763,667			1,688,732
FEDERAL FUNDS PURCHASED AND ASSETS SOLD UNDER REPURCHASE AGREEMENTS	50,874			58,092
TREASURY TAX AND LOAN NOTES	2,353			6,471
FEDERAL HOME LOAN BANK BORROWINGS	376,932			297,592
OTHER LIABILITIES	21,728			25,469
TOTAL LIABILITIES	$	2,215,554		$	2,076,356
COMMITMENTS AND CONTINGENCIES
CORPORATION-OBLIGATED MANDATORILY REDEEMABLE TRUST PREFERRED SECURITIES OF SUBSIDIARY TRUST HOLDING SOLELY JUNIOR SUBORDINATED DEBENTURES OF THE CORPORATION
Outstanding: 2,000,000 shares at June 30, 2003 and at December 31, 2002	$	47,817		$	47,774
STOCKHOLDERS’ EQUITY
PREFERRED STOCK, $.01 par value. Authorized: 1,000,000 Shares Outstanding: None	—			—
COMMON STOCK, $.01 par value. Authorized: 30,000,000 Issued: 14,863,821 Shares at June 30, 2003 and December 31, 2002.	149			149
TREASURY STOCK: 335,320 Shares at June 30, 2003 and 402,340 Shares at December 31, 2002.	(5,244		)	(6,292		)
TOTAL OUTSTANDING STOCK:14,528,501 at June 30, 2003 and 14,461,481 at December 31, 2002
TREASURY STOCK SHARES HELD IN RABBI TRUST AT COST	(1,202		)	(1,189		)</