INDEPENDENT BANK CORP - FORM 8-K - EX-99.1 - Q3 2015 EARNINGS PRESS RELEASE

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8-K - EARNINGS RELEASE Q3 2015 - INDEPENDENT BANK CORP	q32015earningsrelease.htm

Exhibit 99.1

Shareholder Relations NEWS RELEASE

288 Union Street,

Rockland, MA 02370

INDEPENDENT BANK CORP. REPORTS THIRD QUARTER OPERATING NET INCOME OF $18.6 MILLION

Rockland, Massachusetts (October 15, 2015). Independent Bank Corp. (NASDAQ: INDB), parent of Rockland Trust Company, today announced 2015 third quarter net income of $18.6 million, or $0.71 per diluted share as compared to $17.5 million, or $0.67 per diluted share in the prior quarter. The second quarter of 2015 contained items which the Company considers non-core, such as merger and acquisition expenses, gains and losses on the sale of fixed income securities, and impairment on acquired facilities. The third quarter contained no such items. When excluding non-core items, net operating earnings for the third quarter of $18.6 million, or $0.71 per diluted share, increased by 4.1% and 4.4%, respectively, as compared to the prior quarter’s net operating earnings of $17.9 million, or $0.68 per diluted share.

“Loan growth improved and asset quality remained strong during the third quarter,” said Christopher Oddleifson, the President and Chief Executive Officer of Independent and Rockland Trust. “Rockland Trust has steadily increased earnings due to the disciplined efforts of my colleagues, who face intense competition every day. We remain focused on responsible, relationship-based growth and expansion.”

BALANCE SHEET

Total assets of $7.1 billion at September 30, 2015 decreased by $60.4 million, or 0.8%, from the prior quarter and increased by $751.1 million, or 11.8%, as compared to the year ago period, inclusive of the acquisition of Peoples Federal Bancshares ("Peoples").

The commercial loan portfolio increased by $49.1 million, or 1.3% (5.0% annualized) over the prior quarter, led by growth in the commercial real estate and construction sectors, as business activity continued to remain strong throughout the Company's footprint. The home equity portfolio also continued to experience growth due to sustained direct mail campaigns with an increase of 1.9% (7.6% annualized) over the prior quarter, while the residential mortgage portfolio remained stable in the third quarter. These factors contributed to growth in total loans at September 30, 2015 of $63.3 million, or 1.2% (4.6% annualized) over the prior quarter. Compared to the prior year period, total loans increased by $550.3 million, or 11.1%, inclusive of the Peoples acquisition.

Total deposits at September 30, 2015 decreased by $55.7 million, or 0.9% from the prior quarter and increased by $612.4 million, or 11.5% over the prior year period, inclusive of the acquisition of Peoples. Core deposits decreased by $41.2 million, or 3.1% on an annualized basis from the prior quarter, and represent 87.8% of total deposits at September 30, 2015, consistent with prior quarter levels. The decline in total and core deposits for the quarter was due in part to an outflow from a large short-term deposit related to the Company’s tax section 1031 exchange business as well as seasonal declines in government banking deposits. Total cost of deposits remained low at 20 basis points during the quarter, reflecting the Company’s continued emphasis on its core deposit customer base.

The securities portfolio increased by $10.6 million from the prior quarter to $814.4 million at September 30, 2015, due primarily to the purchase of $50.6 million of additional securities, offset by principal paydowns during the quarter. The securities portfolio comprised 11.4% of total assets as of September 30, 2015.

Stockholders’ equity at September 30, 2015 rose to $759.2 million, an increase of 2.1% from June 30, 2015. Compared to the year ago period, stockholders’ equity has increased by $132.0 million, or 21.0%, fueled primarily by the Peoples acquisition and strong earnings results. The strong growth in capital led to a further increase in the Company’s tangible book value per share of $0.59, or 2.9%, during the third quarter, to $20.81, which is 11.5% above the prior year level. In addition, the Company’s tangible common ratio of 7.88% represents an increase of 30 basis points from the prior quarter.

NET INTEREST INCOME

Net interest income increased to $55.0 million for the third quarter as compared to $53.7 million in the linked quarter, driven primarily by higher average earning asset levels. During the third quarter, the Company’s net interest margin decreased by four basis points from the prior quarter to 3.39%. The decline is reflective of increased liquid asset levels along with ongoing pressure on loan yields, partially offset by a three basis point positive impact from a security prepayment.

NONINTEREST INCOME

The Company recorded noninterest income of $19.2 million during the third quarter, which represents a $1.0 million, or 5.0%, decrease from the linked quarter. Significant changes in noninterest income in the third quarter compared to the prior quarter included the following:


•	Deposit account fees and interchange and ATM fees increased by $471,000, or 5.7%.


•	Investment management income decreased by $547,000, or 9.9%, primarily driven by seasonal tax preparation fees earned during the second quarter and an overall market driven decline in assets under administration, which decreased by 1.5% to $2.5 billion.


•	Mortgage banking income increased by $254,000, or 20.7%, driven primarily by increased volume.


•	Loan level derivative income decreased $462,000 due to lower volume based on customer demand.


•	During the second quarter, the Company recorded gains of $798,000 on sales of fixed income securities. There were no such gains in the third quarter.


•	Other noninterest income increased $78,000, or 3.8%, mainly due to increases in dividend income from the Company's investment in Federal Home Loan Bank ("FHLB") stock.

NONINTEREST EXPENSE

The Company recorded noninterest expense of $47.0 million during the third quarter, a $1.6 million, or 3.3%, decrease from the prior quarter. Significant changes in noninterest expense in the third quarter compared to the prior quarter included the following:


•	Salaries and employee benefits increased $367,000, or 1.4%, due primarily to increases in salaries and performance-based commissions. These increases were partially offset by decreases in payroll taxes, medical insurance and retirement plans.


•	Occupancy and equipment expense decreased $229,000, or 4.0%, mainly due to reductions in seasonal maintenance costs and an impairment charge relating to an acquired facility incurred in the prior quarter.


•	The Company incurred $271,000 in merger and acquisition costs during the second quarter of 2015, related to the Peoples acquisition. There were no such costs incurred during the third quarter.


•	The Company incurred a loss of $1.1 million on the sale of pooled trust preferred and mortgage backed securities during the second quarter. There was no such loss during the third quarter.


•	Other noninterest expenses decreased by $235,000, or 1.8%, driven primarily by lower advertising costs and reduced levels of other losses and charge-offs, offset by increases in loan workout costs and mortgage related expenses.

The Company generated a return on average assets and a return on average common equity of 1.03% and 9.75%, respectively, in the third quarter, as compared to 1.00% and 9.43%, respectively, for the prior quarter. On an operating basis, the return on average assets and the return on average common equity for the three months ended September 30, 2015 were 1.03% and 9.75%, respectively, as compared to 1.03% and 9.65%, respectively, for the prior quarter.

ASSET QUALITY

Asset quality metrics remained strong during the third quarter with total net charge-offs of $590,000, or 0.04% of average loans on an annualized basis, compared to 0.02% for the quarter ending June 30, 2015. The provision for loan losses was $800,000 for the third quarter as compared to $700,000 in the second quarter. Nonperforming loans increased during the third quarter by $3.4 million to $29.6 million, and represent 0.54% of total loans at September 30, 2015, as compared to 0.48% at June 30, 2015. Inclusive of a reduction in other real estate owned, total nonperforming assets increased to $32.1 million at the end of the third quarter, from $31.3 million at the end of the prior quarter. Delinquency as a percentage of loans was 0.43% at September 30, 2015, a decrease of six basis points from the prior quarter.

The allowance for loan losses was $55.2 million at September 30, 2015, as compared to $55.0 million at June 30, 2015. The Company’s allowance for loan losses as a percentage of loans was 1.00% and 1.01% at September 30, 2015 and June 30, 2015, respectively, inclusive of the Peoples portfolio.

CONFERENCE CALL INFORMATION

Christopher Oddleifson, Chief Executive Officer and Robert Cozzone, Chief Financial Officer will host a conference call to discuss third quarter earnings at 10:00 a.m. Eastern Time on Friday, October 16, 2015. Internet access to the call is available on the Company’s website at www.rocklandtrust.com or via telephonic access by dial-in at 1-888-336-7153 reference: INDB. A replay of the call will be available by calling 1-877-344-7529. Replay Conference Number: 10072927 and will available through October 30, 2015. Additionally, a webcast replay will be available until October 16, 2016.

ABOUT INDEPENDENT BANK CORP.

Independent Bank Corp. has approximately $7.1 billion in assets and is the holding company for Rockland Trust Company, a full-service commercial bank headquartered in Massachusetts. Rockland Trust offers a wide range of banking, investment, and insurance services to businesses and individuals through retail branches, commercial lending offices, investment management offices, and residential lending centers located in Eastern Massachusetts and Rhode Island, as well as through telephone banking, mobile banking, and the Internet. Rockland Trust is an FDIC Member and an Equal Housing Lender. To find out why Rockland Trust is the bank “Where Each Relationship Matters ®”, please visit www.rocklandtrust.com.

This press release contains certain “forward-looking statements” with respect to the financial condition, results of operations and business of the Company. These statements may be identified by such forward-looking terminology as “expect,” “achieve,” “plan,” “believe,” “future,” “positioned,” “continued,” “will,” “would,” “potential,” or similar statements or variations of such terms. Actual results may differ from those contemplated by these forward-looking statements.

Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:


•	a weakening in the United States economy in general and the regional and local economies within the New England region and the Company’s market area;


•	adverse changes in the local real estate market;


•	acquisitions may not produce results at levels or within time frames originally anticipated and may result in unforeseen integration issues or impairment of goodwill and/or other intangibles;


•	changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System;


•	higher than expected tax rates and any changes in and any failure by the Company to comply with tax laws generally and requirements of the federal New Markets Tax Credit program;


•	unexpected changes in market interest rates for interest earning assets and/or interest bearing liabilities;


•	adverse changes in asset quality including an unanticipated credit deterioration in our loan portfolio;


•	unexpected increased competition in the Company’s market area;


•	unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather or other external events;


•	a deterioration in the conditions of the securities markets;


•	our inability to adapt to changes in information technology;


•	electronic fraudulent activity within the financial services industry, especially in the commercial banking sector;


•	adverse changes in consumer spending and savings habits;


•	the inability to realize expected revenue synergies from the Peoples Federal Bancshares merger in the amounts or in the timeframe anticipated;


•	inability to retain customers and employees, including those of Peoples Federal Bancshares;


•	the effect of new laws and regulations regarding the financial services industry including, but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act;


•	changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) generally applicable to the Company’s business;


•	changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters; and


•	other unexpected material adverse changes in our operations or earnings.

The Company wishes to caution readers not to place undue reliance on any forward-looking statements as the Company’s business and its forward-looking statements involve substantial known and unknown risks and uncertainties included in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q (“Risk Factors”). Except as required by law, the Company disclaims any intent or obligation to update publicly any such forward-looking statements, whether in response to new information, future events or otherwise. Any public statements or disclosures by the Company following this release which modify or impact any of the forward-looking statements contained in this release will be deemed to modify or supersede such statements in this release. In addition to the information set forth in this press release, you should carefully consider the Risk Factors.

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This information

includes operating earnings and operating EPS, return on average assets and return on average common equity calculated on an operating basis. The non-GAAP financial measures, including operating earnings and operating EPS, exclude gain or loss due to items that management believes are unrelated to its core banking business and will not have a material financial impact on operating results in future periods, such as gains or losses on the sales of securities, merger and acquisition expenses, and other items. The Company’s management uses operating earnings and operating EPS to measure the strength of the Company’s core banking business and to identify trends that may to some extent be obscured by such excluded gains or losses. The Company has included information on these non-GAAP measures because management believes that investors may find it useful to have access to the same analytical tool used by management and may also find that it facilitates the comparison of the Company to other companies in the financial services industry. These non-GAAP measures should not be viewed as a substitute for operating results determined in accordance with GAAP. An item which management deems to be non-core and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP performance measures, including operating earnings and operating EPS, are not necessarily comparable to non-GAAP performance measures which may be presented by other companies.

Contacts:

Chris Oddleifson

President and Chief Executive Officer

(781) 982-6660

Robert Cozzone

Chief Financial Officer and Treasurer

(781) 982-6723



INDEPENDENT BANK CORP. FINANCIAL SUMMARY
CONSOLIDATED BALANCE SHEETS
(Unaudited dollars in thousands)	September 30,			June 30,			September 30,			% Change		% Change
	2015			2015			2014			Sept 2015 vs. Jun 2015		Sept 2015 vs. Sept 2014
Assets
Cash and due from banks	$	160,721		100,054			98,810			60.63	%	62.66	%
Interest-earning deposits with banks	89,607			295,722			126,522			(69.70	)%	(29.18	)%
Securities
Securities - trading	454			489			—			(7.16	)%	100.00%
Securities - available for sale	365,792			375,001			361,455			(2.46	)%	1.20	%
Securities held to maturity	448,139			428,339			372,418			4.62	%	20.33	%
Total securities	814,385			803,829			733,873			1.31	%	10.97	%

Loans held for sale (at fair value)	11,476			10,728			12,580			6.97	%	(8.78	)%
Loans
Commercial and industrial	862,512			873,105			842,833			(1.21	)%	2.33	%
Commercial real estate	2,659,342			2,630,062			2,338,641			1.11	%	13.71	%
Commercial construction	308,214			278,692			276,593			10.59	%	11.43	%
Small business	92,278			91,367			81,435			1.00	%	13.31	%
Total commercial	3,922,346			3,873,226			3,539,502			1.27	%	10.82	%
Residential real estate	651,937			653,370			536,822			(0.22	)%	21.44	%
Home equity - first position	531,364			526,370			509,903			0.95	%	4.21	%
Home equity - subordinate positions	376,530			364,523			344,743			3.29	%	9.22	%
Total consumer real estate	1,559,831			1,544,263			1,391,468			1.01	%	12.10	%
Other consumer	15,944			17,293			16,885			(7.80	)%	(5.57	)%
Total loans	5,498,121			5,434,782			4,947,855			1.17	%	11.12	%
Less: allowance for loan losses	(55,205		)	(54,995		)	(55,005		)	0.38	%	0.36	%
Net loans	5,442,916			5,379,787			4,892,850			1.17	%	11.24	%
Federal Home Loan Bank stock	37,485			37,485			33,233			—	%	12.79	%
Bank premises and equipment, net	73,738			74,143			64,186			(0.55	)%	14.88	%
Goodwill and core deposit intangible	213,612			214,331			180,871			(0.34	)%	18.10	%
Other assets	291,549			279,842			241,503			4.18	%	20.72	%
Total assets	7,135,489			7,195,921			6,384,428			(0.84	)%	11.76	%

Liabilities and Stockholders' Equity
Deposits
Demand deposits	1,778,051			$	1,832,971		$	1,493,116		(3.00	)%	19.08	%
Savings and interest checking accounts	2,305,636			2,285,968			2,070,617			0.86	%	11.35	%
Money market	1,119,913			1,125,888			1,066,237			(0.53	)%	5.03	%
Time certificates of deposit	711,263			725,703			672,464			(1.99	)%	5.77	%
Total deposits	5,914,863			5,970,530			5,302,434			(0.93	)%	11.55	%
Borrowings
Federal home loan bank borrowings	104,133			108,190			60,127			(3.75	)%	73.19	%
Customer repurchase agreements and other short-term borrowings	138,449			119,439			153,192			15.92	%	(9.62	)%
Wholesale repurchase agreements	—			50,000			50,000			(100.00	)%	(100.00	)%
Junior subordinated debentures	73,520			73,576			73,741			(0.08	)%	(0.30	)%
Subordinated debentures	35,000			35,000			30,000			—	%	16.67	%
Total borrowings	351,102			386,205			367,060			(9.09	)%	(4.35	)%
Total deposits and borrowings	6,265,965			6,356,735			5,669,494			(1.43	)%	10.52	%
Other liabilities	110,321			95,869			87,752			15.07	%	25.72	%
Stockholders' equity
Common stock	260			259			237			0.39	%	9.70	%



Additional paid in capital	404,089		401,437		308,723		0.66	%	30.89	%
Retained earnings	355,537		343,757		320,226		3.43	%	11.03	%
Accumulated other comprehensive loss, net of tax	(683	)	(2,136	)	(2,004	)	(68.02	)%	(65.92	)%
Total stockholders' equity	759,203		743,317		627,182		2.14	%	21.05	%
Total liabilities and stockholders' equity	7,135,489		7,195,921		6,384,428		(0.84	)%	11.76	%



CONSOLIDATED STATEMENTS OF INCOME
(Unaudited dollars in thousands)	Three Months Ended						% Change		% Change
	September 30,		June 30,		September 30,		Sept 2015 vs.		Sept 2015 vs.
	2015		2015		2014		June 2015		Sept 2014
Interest income
Interest on federal funds sold and short-term investments	$	121	$	60	$	96	101.67	%	26.04	%
Interest and dividends on securities	5,486		4,882		4,599		12.37	%	19.29	%
Interest and fees on loans	54,557		54,016		49,514		1.00	%	10.18	%
Interest on loans held for sale	64		58		159		10.34	%	(59.75	)%
Total interest income	60,228		59,016		54,368		2.05	%	10.78	%
Interest expense
Interest on deposits	2,951		2,922		2,735		0.99	%	7.90	%
Interest on borrowed funds	2,232		2,347		2,070		(4.90	)%	7.83	%
Total interest expense	5,183		5,269		4,805		(1.63	)%	7.87	%
Net interest income	55,045		53,747		49,563		2.42	%	11.06	%
Provision for loan losses	800		700		1,901		14.29	%	(57.92	)%
Net interest income after provision for loan losses	54,245		53,047		47,662		2.26	%	13.81	%
Noninterest income
Deposit account fees	4,754		4,465		4,656		6.47	%	2.10	%
Interchange and ATM fees	3,949		3,767		3,375		4.83	%	17.01	%
Investment management	4,981		5,528		5,016		(9.90	)%	(0.70	)%
Mortgage banking income	1,480		1,226		1,015		20.72	%	45.81	%
Increase in cash surrender value of life insurance policies	958		949		774		0.95	%	23.77	%
Gain on sale of fixed income securities	—		798		—		(100.00	)%	n/a
Gain on sale of equity securities	—		19		67		(100.00	)%	(100.00	)%
Loan level derivative income	968		1,430		381		(32.31	)%	154.07	%
Other noninterest income	2,157		2,079		1,814		3.75	%	18.91	%
Total noninterest income	19,247		20,261		17,098		(5.00	)%	12.57	%
Noninterest expenses
Salaries and employee benefits	26,685		26,318		23,651		1.39	%	12.83	%
Occupancy and equipment expenses	5,443		5,672		5,027		(4.04	)%	8.28	%
Data processing & facilities management	1,112		1,228		1,178		(9.45	)%	(5.60	)%
FDIC assessment	1,020		1,017		957		0.29	%	6.58	%
Merger and acquisition expense	—		271		677		(100.00	)%	(100.00	)%
Loss on sale of fixed income securities	—		1,124		—		(100.00	)%	n/a
Loss on sale of equity securities	—		8		—		(100.00	)%	n/a
Other noninterest expenses	12,771		13,006		11,117		(1.81	)%	14.88	%
Total noninterest expenses	47,031		48,644		42,607		(3.32	)%	10.38	%
Income before income taxes	26,461		24,664		22,153		7.29	%	19.45	%
Provision for income taxes	7,867		7,213		6,415		9.07	%	22.63	%
Net Income	$	18,594	$	17,451	$	15,738	6.55	%	18.15	%

Basic earnings per share	$	0.71	$	0.67	$	0.66	5.97	%	7.58	%
Diluted earnings per share	$	0.71	$	0.67	$	0.66	5.97	%	7.58	%
Weighted average common shares (basic)	26,200,261		26,149,593		23,911,678



Weighted average common shares (diluted)	26,264,114			26,221,412			24,002,363

Performance ratios
Net interest margin (FTE)	3.39		%	3.43		%	3.42		%
Return on average assets	1.03		%	1.00		%	0.99		%
Return on average common equity	9.75		%	9.43		%	9.97		%

Reconciliation table - non-GAAP financial information
Net income	$	18,594		$	17,451		$	15,738		6.55	%	18.15	%
Noninterest income components
Less - gain on sale of fixed income securities, net of tax	—			(473		)	—
Noninterest expense components
Add - loss on sale of fixed income securities, net of tax	—			667			—
Add - merger & acquisition expenses, net of tax	—			155			400
Add - impairment on acquired facilities, net of tax	—			65			12
Net operating earnings	$	18,594		$	17,865		$	16,150		4.08	%	15.13	%
Diluted earnings per share, on an operating basis	$	0.71		$	0.68		$	0.67		4.41	%	5.97	%



CONSOLIDATED STATEMENTS OF INCOME
(Unaudited dollars in thousands)	Nine Months Ended				% Change
	September 30,		September 30,		Sept 2015 vs.
	2015		2014		Sept 2014

Interest income
Interest on federal funds sold and short-term investments	$	212	$	203	4.43	%
Interest and dividends on securities	15,029		14,013		7.25	%
Interest and fees on loans	160,261		147,111		8.94	%
Interest on loans held for sale	173		306		(43.46	)%
Total interest income	175,675		161,633		8.69	%
Interest expense
Interest on deposits	8,636		8,314		3.87	%
Interest on borrowed funds	6,997		7,095		(1.38	)%
Total interest expense	15,633		15,409		1.45	%
Net interest income	160,042		146,224		9.45	%
Provision for loan losses	1,000		8,653		(88.44	)%
Net interest income after provision for loan losses	159,042		137,571		15.61	%
Noninterest income
Deposit account fees	13,385		13,478		(0.69	)%
Interchange and ATM fees	10,817		9,672		11.84	%
Investment management	15,616		14,755		5.84	%
Mortgage banking income	3,832		2,379		61.08	%
Increase in cash surrender value of life insurance policies	2,685		2,217		21.11	%
Gain on life insurance benefits	—		1,964		(100.00	)%
Gain on sale of fixed income securities	798		—		100.00%
Gain on sale of equity securities	19		138		(86.23	)%
Loan level derivative income	2,816		1,452		93.94	%
Other noninterest income	6,096		5,414		12.60	%
Total noninterest income	56,064		51,469		8.93	%
Noninterest expenses
Salaries and employee benefits	78,291		69,574		12.53	%
Occupancy and equipment expenses	17,509		16,474		6.28	%
Data processing & facilities management	3,462		3,609		(4.07	)%



FDIC assessment	2,993			2,828			5.83	%
Merger and acquisition expense	10,501			754			1,292.71	%
Loss on sale of fixed income securities	1,124			—			100.00%
Loss on sale of equity securities	8			—			100.00%
Loss on termination of derivatives	—			1,122			(100.00	)%
Other noninterest expenses	36,764			33,113			11.03	%
Total noninterest expenses	150,652			127,474			18.18	%
Income before income taxes	64,454			61,566			4.69	%
Provision for income taxes	18,949			17,699			7.06	%
Net Income	$	45,505		$	43,867		3.73	%

Basic earnings per share	$	1.77		$	1.84		(3.80	)%
Diluted earnings per share	$	1.76		$	1.83		(3.83	)%
Basic average shares	25,774,571			23,876,391
Diluted average shares	25,847,492			23,971,711

Performance ratios
Net interest margin (FTE)	3.44		%	3.46		%
Return on average assets	0.88		%	0.94		%
Return on average common equity	8.35		%	9.56		%

Reconciliation table - non-GAAP financial information
Net income	$	45,505		$	43,867		3.73	%
Noninterest income components
Less - gain on sale of fixed income securities, net of tax	(473		)	—
Less - gain on life insurance benefits, tax exempt	—			(1,964		)
Noninterest expense components
Add - loss on extinguishment of debt, net of tax	72			—
Add - loss on termination of derivatives, net of tax	—			663
Add - loss on sale of fixed income securities, net of tax	667			—
Add - merger & acquisition expenses, net of tax	6,442			466
Add - impairment on acquired facilities, net of tax	65			310
Net operating earnings	$	52,278		$	43,342		20.62	%

Diluted earnings per share, on an operating basis	$	2.02		$	1.81		11.60	%



Reconciliation table - non-GAAP financial information
(Unaudited dollars in thousands)	Three Months Ended										Nine Months Ended
							% Change								% Change
	September 30,		June 30,		September 30,		Sept 2015 vs.		Sept 2015 vs.		September 30,		September 30,		Sept 2015 vs.
	2015		2015		2014		June 2015		Sept 2014		2015		2014		Sept 2014

Noninterest income GAAP	$	19,247	$	20,261	$	17,098	(5.00	)%	12.57	%	$	56,064	$	51,469	8.93	%
Less - gain on sale of fixed income securities	—		798		—		(100.00	)%	n/a		798		—		100.00%
Less - gain on life insurance benefits	—		—		—		n/a		n/a		—		1,964		(100.00	)%
Total noninterest income as adjusted	$	19,247	$	19,463	$	17,098	(1.11	)%	12.57	%	$	55,266	$	49,505	11.64	%

Noninterest expense GAAP	$	47,031	$	48,644	$	42,607	(3.32	)%	10.38	%	$	150,652	$	127,474	18.18	%
Less - loss on extinguishment of debt	—		—		—		n/a		n/a		122		—		100.00%
Less - loss on termination of derivatives	—		—		—		n/a		n/a		—		1,122		(100.00	)%
Less - loss on sale of fixed income securities	—		1,124		—		(100.00	)%	n/a		1,124		—		100.00%
Less - merger and acquisition expenses	—		271		677		(100.00	)%	(100.00	)%	10,501		754		1,292.71	%
Less - impairment on acquired facilities	—		109		21		(100.00	)%	(100.00	)%	109		524		(79.20	)%
Total noninterest expense as adjusted	$	47,031	$	47,140	$	41,909	(0.23	)%	12.22	%	$	138,796	$	125,074	10.97	%



Asset quality
	Nonperforming Assets At
	September 30,			June 30,			September 30,
	2015			2015			2014

Nonperforming loans
Commercial & industrial loans	$	4,114		$	3,767		$	2,321
Commercial real estate loans	9,006			6,824			6,512
Small business loans	159			198			278
Residential real estate loans	9,106			8,086			9,305
Home equity	7,142			7,238			7,672
Other consumer	40			37			31
Total nonperforming loans	$	29,567		$	26,150		$	26,119
Nonaccrual securities	—			—			2,806
Other assets in possession	—			—			30
Other real estate owned	2,532			5,124			9,602
Total nonperforming assets	$	32,099		$	31,274		$	38,557

Nonperforming loans/gross loans	0.54		%	0.48		%	0.53		%
Nonperforming assets/total assets	0.45		%	0.43		%	0.60		%
Allowance for loan losses/nonperforming loans	186.71		%	210.31		%	210.59		%
Gross loans/total deposits	92.95		%	91.03		%	93.31		%
Allowance for loan losses/total loans	1.00		%	1.01		%	1.11		%

	Nonperforming Assets Reconciliation for the Three Months Ended
	September 30,			June 30,			September 30,
	2015			2015			2014
Nonperforming assets beginning balance	$	31,274		$	40,348		$	39,661
New to Nonperforming	8,348			4,326			4,972
Loans charged-off	(1,165		)	(1,099		)	(1,906		)
Loans paid-off	(1,799		)	(4,264		)	(1,833		)
Loans transferred to other real estate owned/other assets	(539		)	(629		)	(783		)
Loans restored to performing status	(1,409		)	(2,566		)	(1,705		)
New to other real estate owned	1,151			941			783
Sale of other real estate owned	(3,460		)	(2,153		)	(1,480		)
Capital improvements to other real estate owned	196			100			896
Net change in nonaccrual securities	—			(3,723		)	—
Other	(498		)	(7		)	(48		)
Nonperforming assets ending balance	$	32,099		$	31,274		$	38,557



	Net Charge-Offs
	For the Three Months Ended									For the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2015			2015			2014			2015			2014

Net charge-offs
Commercial & industrial loans	$	475		$	(29	)	$	498		$	628		$	1,544
Commercial real estate loans	(124		)	(102		)	634			(770		)	3,951
Small business loans	(55		)	(19		)	44			9			301
Residential real estate loans	34			16			21			190			285
Home equity	119			217			93			425			347
Other consumer	141			137			144			413			459
Total net charge-offs	$	590		$	220		$	1,434		$	895		$	6,887

Net charge-offs to average loans (annualized)	0.04		%	0.02		%	0.12		%	0.02		%	0.19		%




	Troubled Debt Restructurings At
	September 30,			June 30,			September 30,
	2015			2015			2014
Troubled debt restructurings on accrual status	$	37,477		$	36,750		$	40,140
Troubled debt restructurings on nonaccrual status	5,201			5,623			5,709
Total troubled debt restructurings	$	42,678		$	42,373		$	45,849

	September 30,			June 30,			September 30,
Financial ratios	2015			2015			2014
Book value per common share	$	28.96		$	28.42		$	26.23
Tangible book value per share	$	20.81		$	20.22		$	18.66
Tangible common capital/tangible assets	7.88		%	7.58		%	7.19		%

Capital adequacy
Common equity tier 1 capital ratio (1)	10.33		%	10.20		%	n/a
Tier one leverage capital ratio (1)	9.21		%	9.21		%	8.75		%
(1) Estimated number for September 30, 2015.



INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited - dollars in thousands)	Three Months Ended
	September 30, 2015						June 30, 2015						September 30, 2014
			Interest						Interest						Interest
	Average		Earned/		Yield/		Average		Earned/		Yield/		Average		Earned/		Yield/
	Balance		Paid		Rate		Balance		Paid		Rate		Balance		Paid		Rate
Interest-earning assets
Interest-earning deposits with banks, federal funds sold, and short term investments	$	192,205	$	121	0.25	%	$	97,274	$	60	0.25	%	$	153,314	$	96	0.25	%
Securities
Securities - trading	479		—		—	%	500		—		—	%	—		—		—
Securities - taxable investments	802,146		5,455		2.70	%	787,023		4,852		2.47	%	704,021		4,563		2.57	%
Securities - nontaxable investments (1)	4,895		48		3.89	%	5,044		47		3.74	%	5,861		55		3.72	%
Total securities	807,520		5,503		2.70	%	792,567		4,899		2.48	%	709,882		4,618		2.58	%
Loans held for sale	10,196		64		2.49	%	9,726		58		2.39	%	16,812		159		3.75	%
Loans
Commercial and industrial	871,976		8,608		3.92	%	860,242		8,499		3.96	%	842,672		8,150		3.84	%
Commercial real estate (1)	2,649,676		27,449		4.11	%	2,613,347		26,762		4.11	%	2,302,181		24,252		4.18	%
Commercial construction	290,052		3,057		4.18	%	291,658		3,204		4.41	%	266,534		2,824		4.20	%
Small business	91,331		1,237		5.37	%	88,884		1,219		5.50	%	80,114		1,133		5.61	%
Total commercial	3,903,035		40,351		4.10	%	3,854,131		39,684		4.13	%	3,491,501		36,359		4.13	%
Residential real estate	650,039		6,490		3.96	%	666,325		6,750		4.06	%	537,669		5,511		4.07	%
Home equity	896,257		7,690		3.40	%	885,618		7,541		3.42	%	847,365		7,459		3.49	%
Total consumer real estate	1,546,296		14,180		3.64	%	1,551,943		14,291		3.69	%	1,385,034		12,970		3.72	%
Other consumer	17,033		383		8.92	%	18,016		399		8.88	%	17,139		412		9.54	%
Total loans	5,466,364		54,914		3.99	%	5,424,090		54,374		4.02	%	4,893,674		49,741		4.03	%
Total interest-earning assets	$	6,476,285	$	60,602	3.71	%	$	6,323,657	$	59,391	3.77	%	$	5,773,682	$	54,614	3.75	%
Cash and due from banks	116,975						91,479						78,375
Federal Home Loan Bank stock	37,485						37,485						34,576
Other assets	512,921						525,239						426,661
Total assets	$	7,143,666					$	6,977,860					$	6,313,294
Interest-bearing liabilities
Deposits
Savings and interest checking accounts	$	2,274,861	$	897	0.16	%	$	2,232,790	$	883	0.16	%	$	2,067,132	$	895	0.17	%
Money market	1,120,290		742		0.26	%	1,113,748		742		0.27	%	1,027,830		608		0.23	%
Time deposits	717,225		1,312		0.73	%	730,825		1,297		0.71	%	686,195		1,232		0.71	%
Total interest-bearing deposits	4,112,376		2,951		0.28	%	4,077,363		2,922		0.29	%	3,781,157		2,735		0.29	%
Borrowings
Federal Home Loan Bank borrowings	107,489		571		2.11	%	117,557		565		1.93	%	60,151		462		3.05	%
Customer repurchase agreements and other short-term borrowings	142,704		48		0.13	%	125,495		50		0.16	%	146,804		49		0.13	%
Wholesale repurchase agreements	29,348		162		2.19	%	50,000		298		2.39	%	50,000		292		2.32	%
Junior subordinated debentures	73,549		1,014		5.47	%	73,604		1,003		5.47	%	73,771		1,010		5.43	%
Subordinated debentures	35,000		437		4.95	%	35,000		431		4.94	%	30,000		257		3.40	%
Total borrowings	388,090		2,232		2.28	%	401,656		2,347		2.34	%	360,726		2,070		2.28	%
Total interest-bearing liabilities	$	4,500,466	$	5,183	0.46	%	$	4,479,019	$	5,269	0.47	%	$	4,141,883	$	4,805	0.46	%
Demand deposits	1,789,288						1,653,485						1,459,105
Other liabilities	97,475						102,901						86,052
Total liabilities	$	6,387,229					$	6,235,405					$	5,687,040
Stockholders' equity	756,437						742,455						626,254
Total liabilities and stockholders' equity	$	7,143,666					$	6,977,860					$	6,313,294




Net interest income			$	55,419					$	54,122					$	49,809

Interest rate spread (2)					3.25	%					3.30	%					3.29	%

Net interest margin (3)					3.39	%					3.43	%					3.42	%

Supplemental Information
Total deposits, including demand deposits	$	5,901,664	$	2,951			$	5,730,848	$	2,922			$	5,240,262	$	2,735
Cost of total deposits					0.20	%					0.20	%					0.21	%
Total funding liabilities, including demand deposits	$	6,289,754	$	5,183			$	6,132,504	$	5,269			$	5,600,988	$	4,805
Cost of total funding liabilities					0.33	%					0.34	%					0.34	%


(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $374,000, $375,000, and $246,000 for the three months ended September 30, 2015, June 30, 2015, and September 30, 2014, respectively.
(2) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.



	Nine Months Ended
	September 30, 2015						September 30, 2014
			Interest						Interest
	Average		Earned/		Yield/		Average		Earned/		Yield/
	Balance		Paid		Rate		Balance		Paid		Rate
Interest-earning assets
Interest earning deposits with banks, federal funds sold, and short term investments	$	113,251	$	212	0.25	%	$	108,771	$	203	0.25	%
Securities
Securities - trading	387		—		—	%	—		—		-
Securities - taxable investments	778,346		14,934		2.57	%	709,774		13,903		2.62	%
Securities - nontaxable investments (1)	5,172		146		3.77	%	6,036		181		4.01	%
Total securities	783,905		15,080		2.57	%	715,810		14,084		2.63	%
Loans held for sale	9,185		173		2.52	%	10,840		306		3.77	%
Loans
Commercial and industrial	862,620		25,315		3.92	%	835,092		24,234		3.88	%
Commercial real estate (1)	2,573,265		79,933		4.15	%	2,289,601		73,178		4.27	%
Commercial construction	287,290		9,162		4.26	%	246,077		7,787		4.23	%
Small business	88,922		3,628		5.45	%	78,832		3,289		5.58	%
Total commercial	3,812,097		118,038		4.14	%	3,449,602		108,488		4.20	%
Residential real estate	639,792		19,452		4.06	%	539,400		15,997		3.97	%
Home equity	883,952		22,650		3.43	%	835,549		22,061		3.53	%
Total consumer real estate	1,523,744		42,102		3.69	%	1,374,949		38,058		3.70	%
Other consumer	17,645		1,194		9.05	%	18,054		1,345		9.96	%
Total loans	5,353,486		161,334		4.03	%	4,842,605		147,891		4.08	%
Total interest-earning assets	$	6,259,827	$	176,799	3.78	%	$	5,678,026	$	162,484	3.83	%
Cash and due from banks	107,816						111,091
Federal Home Loan Bank stock	36,691						37,557
Other assets	510,802						418,333
Total assets	$	6,915,136					$	6,245,007
Interest-bearing liabilities
Deposits
Savings and interest checking accounts	$	2,214,414	$	2,640	0.16	%	$	2,024,157	$	2,703	0.18	%
Money market	1,094,764		2,161		0.26	%	1,009,821		1,834		0.24	%
Time deposits	712,628		3,835		0.72	%	711,393		3,777		0.71	%
Total interest-bearing deposits	4,021,806		8,636		0.29	%	3,745,371		8,314		0.30	%
Borrowings
Federal Home Loan Bank borrowings	107,584		1,638		2.04	%	113,995		2,327		2.73	%
Customer repurchase agreements and other short-term borrowings	135,692		161		0.16	%	140,421		148		0.14	%
Wholesale repurchase agreements	43,040		746		2.32	%	50,000		866		2.32	%
Junior subordinated debentures	73,604		3,010		5.47	%	73,826		2,996		5.43	%
Subordinated debentures	40,495		1,442		4.76	%	30,000		758		3.38	%
Total borrowings	400,415		6,997		2.34	%	408,242		7,095		2.32	%
Total interest-bearing liabilities	$	4,422,221	$	15,633	0.47	%	$	4,153,613	$	15,409	0.50	%
Demand deposits	1,660,821						1,398,599
Other liabilities	103,035						79,139



Total liabilities	$	6,186,077					$	5,631,351
Stockholders' equity	729,059						613,656
Total liabilities and stockholders' equity	$	6,915,136					$	6,245,007

Net interest income			$	161,166					$	147,075

Interest rate spread (2)					3.31	%					3.33	%

Net interest margin (3)					3.44	%					3.46	%

Supplemental Information
Total deposits, including demand deposits	$	5,682,627	$	8,636			$	5,143,970	$	8,314
Cost of total deposits					0.20	%					0.22	%
Total funding liabilities, including demand deposits	$	6,083,042	$	15,633			$	5,552,212	$	15,409
Cost of total funding liabilities					0.34	%					0.37	%


(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.1 million and $851,000 for the nine months ended September 30, 2015 and 2014, respectively.
(2) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

Certain amounts in prior year financial statement have been reclassified to conform to the current year's presentation.

INDEPENDENT BANK CORP - FORM 8-K - EX-99.1 - Q3 2015 EARNINGS PRESS RELEASE - October 15, 2015

Attached files

INDEPENDENT BANK CORP Reports