PROVIDENCE – Independent Bank Corp. Inc., the parent company for Rockland Trust Co., saw its second-quarter profits increase more than 50% compared to a year ago, the company reported on Friday.
The $37.6 million earnings for the quarter that ended June 30 includes the release of millions of dollars from the company’s credit loss provisions. Like banks across the region and nation, the company stockpiled its loan loss reserves during the pandemic in anticipation of bad loans which, for the most part, never materialized. The company recorded a negative $5 million loan loss provision for this quarter, compared to $20 million added in the second quarter of 2020.
Earnings per diluted share also rose from 76 cents to $1.17.
Interest income fell 3.3% year over year to $96.7 million amid a continued low-interest rate environment, but was largely offset by a 62.2% cut to interest expenses, as well as the release of loan reserves. The resulting net interest income of $98.4 million represents a 38.3% increase year over year.
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 26 basis points to 2.99%.
Noninterest income fell 11.4% year over year to $25.0 million, with mortgage banking income cut nearly in half compared to a year ago due to a larger portion of new originations retained in the company’s portfolio rather than sold into the secondary market as well as gain on sale margin compression, the company stated. This was partially offset by gains in investment management fees driven by increase sin assets under administration along with seasonal tax preparation fees. Assets under administration hit a record $5.4 billion as of June 30.
Noninterest expenses of $73.3 million were up 10.1% over a year ago, including a 14.4% boost to salaries and employee benefits. Also reflected was $1.7 million in costs related to the company’s previously announced merger with another Massachusetts bank and its holding company. The deal to acquire Meridian Bancorp. Inc and East Boston Savings Bank is slated to close in the fourth quarter of the year.
Quarter-end assets stood at $14.2 billion, a 9% increase year over year that included $8.9 billion in loans. A 4.4% year-over-year decline in total loans came in part due to Paycheck Protection Program loan balances being paid off, the company stated. Small business and commercial real estate loans both increased, the former of which reflects a successful PPP experience and overall market disruption, according to the company.
Total deposits reached $12.0 billion, an 11.9% increase year over year driven by government stimulus payments and new account activity in consumer and business product categories.
“Our core fundamentals are strong and we are well-positioned to continue to take advantage of growth opportunities as the local economy continues to re-adjust post-pandemic,” Christopher Oddleifson, CEO, said in a statement.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
