PROVIDENCE – Independent Bank Corp., the parent company for Rockland Trust Co., reported a $40 million third-quarter profit, the company announced on Thursday.
The earnings represent a 14.7% increase over the third quarter of 2020, driven by the dumping of $10 million from the bank’s credit loss provisions. Like institutions around the country, the company stockpiled its loan loss provisions during 2020 in anticipation of pandemic-related loan defaults that, for the most part, never materialized. In the third quarter of 2020, the company added $7.5 million to its reserves.
Earnings per diluted share also rose from $1.06 one year prior to $1.21.
Total revenue dipped 6% year over year to $119.5 million, reflecting drops in both interest and noninterest income. The $93 million in interest income, a 5% decline over a year ago, reflects the continued low-interest rate environment as well as lower income from Paycheck Protection Program loans, the company stated.
Also a sign of low interest rates, the net interest margin, the difference between interest income generated and the amount of interest paid out to lenders – dropped by 35 basis points to 2.78%.
Thanks to a more than 58% cut to interest expenses, which totaled, $2.9 million, net interest income remained flat at $90.1 million.
Noninterest income of $26.5 million represented a 9.9% decline over a year ago, with losses in mortgage banking fees and loan level derivative income that were partially offset by growth in deposit accounts, investment management and interchange and ATM fees.
Noninterest expenses increased 8.6% to $72.4 million, including $1.9 million in costs related to the company’s previously announced acquisition of Peabody, Mass.-based Meridian Bancorp Inc. and its subsidiary, East Boston Savings Bank. The $1.2 billion deal is expected to close in the fourth quarter of 2021.
Quarter-end assets of $14.5 billion grew 10.3% over a year ago, driven by growth in deposits and cash balances, the company stated. The company also shifted its excess cash into investment securities, doubling its total securities to $2.3 billion compared to the third quarter of 2020.
Total loans fell 6.4% to $8.8 billion, in part reflecting the decline of PPP loan activity along with other general commercial and industrial loans. Low interest rates and excess consumer liquidity also led to lower residential real estate and home equity loan balances despite strong volume of new loan originations, the company stated. This was partially offset by growth in small-business and commercial real estate loans.
Total deposits stood at $12.3 billion, a 13% year-over-year increase driven by noninterest-bearing deposit accounts and savings and interest checking accounts.
“We enjoyed another quarter of solid performance owing to our sound fundamentals,” Christopher Oddleifson, CEO of Independent Bank Corp. and Rockland Trust Company, said in a statement. “While remaining focused on organic growth and providing best-in-class customer services to our customers, we have been hard at work collaborating with our counterparts at East Boston Savings Bank to prepare for the anticipated fourth quarter closing of the transaction, and we continue to be excited by the prospects of the combined companies.”
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
