ROCKLAND, Mass. – After completing the $1.2 billion acquisition of another Massachusetts bank, Independent Bank Corp. ended 2021 with profits nearly identical to the prior year.
The parent company for Rockland Trust Co. on Thursday reported a $121.0 million net income for 2021, 0.1% less than annual earnings in 2020. The yearly earnings report includes the acquisition of Peabody-based holding company Meridian Bancorp Inc. and its bank East Boston Savings Bank.
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While based in Rockland, Mass., Rockland Trust operates a commercial lending and investment office in Providence, and has bank branches in Seekonk and Attleboro.
Costs associated with the $1.2 billion Meridian Bancorp deal added $40.9 million to the company’s annual noninterest expenses, a majority of which was spent in the fourth quarter when the deal closed.
This was offset in part by a less-aggressive approach to building the company’s credit loss provisions. Like other institutions, it socked away millions in reserves in 2020 anticipating bad loans from the COVID-19 pandemic. Those defaults largely never happened, and signals of economic recovery in 2021 prompted the company to back off building its reserves, adding $18.2 million in 2021 to its loan loss provisions versus the $52.5 million added in 2020.
Annual earnings per diluted share declined from $3.64 to $3.47.
Despite the challenges of low interest rates, Independent Bank Corp. grew its interest income by 3.3% to $415.3 million.
Interest expenses, meanwhile, were cut more than half to $13.7 million.
Net interest margin – the difference between interest income generated and the amount of interest paid out to lenders – dropped 27 basis points to 3.02%.
Non-interest income was down 5.0% to $105.9 million, driven by declining mortgage banking income, interchange and ATM fees and loan level derivative income, which were partially offset by higher deposit account fees and investment management income.
The $332.5 million in noninterest expenses marked a 21.4% increase over a year ago. In addition to the costs associated with the merger, the company also reported a 13.2% rise in salaries and employee benefits.
Year-end assets stood at $14.9 billion, a 17.8% increase over the prior year largely driven by the $6.4 billion in assets added from the Meridian acquisition.
The $9.7 billion in total loans was up 4.5% year over year, reflecting higher commercial real estate and commercial constructions loans that were partially offset by declines in consumer real estate and other consumer loans.
The $12.5 billion total deposits increased 21.6%, with $4.4 billion in deposits added from the Meridian deal.
The company also reported fourth-quarter earnings of $1.7 million, down 95.1% over fourth-quarter 2020 profits. The cut to profits largely stems from the $37.2 million in quarterly acquisition costs.
The company added $35.7 million to its quarterly credit loss provisions, versus the $10 million it withdrew from the provisions in the fourth quarter of 2020, to cover the acquisition.
These costs were partially offset by a 30.1% gain in quarterly interest income, which reached $125.9 million as of Dec. 31, reflecting an increase in average interest-earning assets and increased fee recognition from Paycheck Protection Program loans, the company stated.
Noninterest income of $29.2 million was up 6.2% with loan level derivative income more than doubling, along with gains in deposit account, interchange and ATM fees and investment management income.
Quarterly noninterest expenses rose 58.9%, driven by merger costs as well as a 21.3% bump in employee salaries and benefits due to more workers from the merger and higher compensation and commissions, the company stated.
“2021 was a pivotal year for Rockland Trust as we closed on our acquisition of East Boston Savings Bank, ending the year with over $20.4 billion in assets,” Christopher Oddleifson, CEO, said in a statement. “We are proud of all we accomplished last year, both financially and strategically, despite the many challenges posed by the ongoing pandemic.”
Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.
