<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
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 (I.R.S. Employer
incorporation or organization) 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 X No
As of August 1, 2000 there were 14,248,002 shares of the issuer's
common stock outstanding.
<PAGE>
Note: This Form 10-Q/A for the quarterly period ended June 30, 2000 is being
filed solely to amend and restate the note to the unaudited financial statements
regarding "Corporation -Obligated Mandatorily Redeemable Trust Preferred
Securities" in Item 1, Financial Statements (unaudited), from the Form 10-Q for
the quarterly period ended June 30, 2000 filed with the Securities Exchange
Commission on August 14, 2000.
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - June 30, 2000 and
December 31, 1999
Consolidated Statements of Income - Six months and
quarters ended June 30, 2000 and 1999
Consolidated Statements of Cash Flows - Six months ended
June 30, 2000 and 1999
Notes to Consolidated Financial Statements - June 30, 2000
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
PART 1 FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INDEPENDENT BANK CORP.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED - IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
---------------------------------
<S> <C> <C>
ASSETS
Cash and Due From Banks $50,132 $48,949
Federal Funds Sold 3,798 8,719
Trading Assets 469 486
Securities Held To Maturity 211,587 229,043
Securities Available For Sale 273,443 201,614
Federal Home Loan Bank Stock 17,036 17,036
Loans, Net of Unearned Discount 1,036,630 1,028,510
Less: Reserve for Possible Loan Losses (15,416) (14,958)
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Net Loans 1,021,214 1,013,552
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Bank Premises and Equipment 14,610 14,268
Other Assets 60,041 56,389
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TOTAL ASSETS $1,652,330 $1,590,056
===============================================================================================================================
LIABILITIES
Deposits
Demand Deposits $253,662 $226,044
Savings and Interest Checking Accounts 297,676 282,516
Money Market and Super Interest Checking Accounts 109,156 107,624
Time Certificates of Deposit over $100,000 147,816 113,832
Other Time Deposits 331,045 351,790
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Total Deposits 1,139,355 1,081,806
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Federal Funds Purchased and Assets Sold Under Repurchase Agreements 137,125 93,366
Federal Home Loan Bank Borrowings 203,063 256,224
Treasury Tax and Loan Notes 3,037 9,877
Other Liabilities 15,768 21,904
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Total Liabilities 1,498,348 1,463,177
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Commitments and Contingencies
Corporation-obligated mandatorily redeemable trust preferred securities of
subsidiary trust holding solely junior subordinated debentures of the Corporation 51,255 28,750
STOCKHOLDERS' EQUITY
Common Stock, $.01 par value Authorized: 30,000,000 Shares
Outstanding: 14,863,821 Shares at June 30, 2000 and at December 31, 1999 149 149
Treasury Stock: 615,819 Shares at June 30, 2000 and 684,463 Shares at December 31, 1999 (9,601) (10,678)
Surplus 44,151 44,950
Retained Earnings 71,170 67,547
Other Accumulated Comprehensive Income, Net of Tax (3,142) (3,839)
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Total Stockholders' Equity 102,727 98,129
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TOTAL LIABILITIES, MINORITY INTEREST & STOCKHOLDERS' EQUITY $1,652,330 $1,590,056
===============================================================================================================================
</TABLE>
<PAGE>
INDEPENDENT BANK CORP.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED - IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest on Loans $42,856 $39,684 $21,590 $20,128
Interest and Dividends on Securities 16,118 15,173 8,181 7,287
Interest on Federal Funds Sold 319 444 234 279
Interest on Interest Bearing Deposits 7 0 7 0
----------------------------------------------------------------------------------------------------------------------------------
Total Interest Income 59,300 55,301 30,012 27,694
----------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on Deposits 15,680 15,327 8,070 7,855
Interest on Borrowed Funds 10,242 10,001 5,102 4,728
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Total Interest Expense 25,922 25,328 13,172 12,583
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Net Interest Income 33,378 29,973 16,840 15,111
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PROVISION FOR POSSIBLE LOAN LOSSES 1,168 1,963 451 982
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Net Interest Income After Provision
For Possible Loan Losses 32,210 28,010 16,389 14,129
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NON-INTEREST INCOME
Service Charges on Deposit Accounts 2,876 2,584 1,491 1,313
Trust and Investment Services Income 2,370 2,141 1,237 1,224
Mortgage Banking Income 660 987 347 486
Other Non-Interest Income 1,737 1,594 935 858
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Total Non-Interest Income 7,643 7,306 4,010 3,881
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NON-INTEREST EXPENSES
Salaries and Employee Benefits 12,970 11,722 6,649 6,060
Occupancy Expenses 2,013 1,895 1,010 934
Equipment Expenses 1,784 1,630 877 863
Special Charges 2,998 0 2,998 0
Other Non-Interest Expenses 8,253 7,299 4,255 3,580
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Total Non-Interest Expenses 28,018 22,546 15,789 11,437
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Minority Interest Expense 2,539 1,334 1,391 667
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INCOME BEFORE INCOME TAXES 9,296 11,436 3,219 5,906
PROVISION FOR INCOME TAXES 2,825 3,482 979 1,798
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NET INCOME $6,471 $7,954 $2,240 $4,108
==================================================================================================================================
BASIC EARNINGS PER SHARE $0.45 $0.56 $0.16 $0.29
==================================================================================================================================
DILUTED EARNINGS PER SHARE $0.45 $0.55 $0.16 $0.29
==================================================================================================================================
Weighted average common shares (Basic) 14,226,735 14,249,356 14,239,037 14,164,975
Common stock equivalents 69,048 162,838 62,144 155,506
----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares (Diluted) 14,295,783 14,412,194 14,301,181 14,320,481
==================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEPENDENT BANK CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30,
(Unaudited - in thousands) 2000 1999
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $6,471 $7,954
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED FROM OPERATING ACTIVITIES
Depreciation and amortization 2,081 2,603
Provision for possible loan losses 1,168 1,963
Loans originated for resale (11,254) (31,895)
Proceeds from mortgage loan sales 11,181 31,786
Loss on sale of mortgages 73 109
Gain recorded from mortgage servicing rights (120) (195)
Changes in assets and liabilities::
Increase in other assets (3,532) (3,807)
(Decrease)/ Increase in other liabilities (6,016) 3,511
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TOTAL ADJUSTMENTS (6,419) 4,075
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NET CASH PROVIDED FROM OPERATING ACTIVITIES 52 12,029
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of Securities Held to Maturity 19,438 46,924
Proceeds from maturities of Securities Available for Sale 23,132 38,082
Purchase of Securities Held to Maturity (2,142) (7,682)
Purchase of Securities Available for Sale (94,489) (20,416)
Net increase in Loans (8,830) (55,751)
Investment in Bank Premises and Equipment (2,147) (1,761)
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NET CASH USED IN INVESTING ACTIVITIES (65,038) (604)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in Deposits 57,549 35,213
Net increase/(decrease) in Federal Funds Purchased
and Assets Sold Under Repurchase Agreements 43,759 (4,049)
Net decrease in FHLB Borrowings (53,161) (67,500)
Net (decrease)/ increase in TT&L Notes (6,840) 7,760
Issuance of corporation-obligated mandatorily redeemable trust preferred
securities of subsidiary trusts holding solely junior subordinated
debentures of the Corporation 22,505
Dividends Paid (2,842) (2,863)
Payments for Treasury Stock Purchase - (4,836)
Proceeds from stock issuance 278 171
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NET CASH PROVIDED FROM /(USED IN ) FINANCING ACTIVITIES 61,248 (36,104)
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NET DECREASE IN CASH AND CASH EQUIVALENTS (3,738) (24,679)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 57,668 86,198
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CASH AND CASH EQUIVALENTS AS OF JUNE 30, 53,930 $61,519
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</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
Independent Bank Corp. (the "Company") is a state chartered, federally
registered bank holding company headquartered in Rockland, Massachusetts. The
Company is the sole stockholder of Rockland Trust Company ("Rockland" or "the
Bank"), a Massachusetts trust company chartered in 1907. The accompanying
unaudited consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation of the financial statements, primarily consisting of normal
recurring adjustments, have been included. Operating results for the three and
six month periods ended June 30, 2000 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2000 or any other
interim period. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1999.
ACQUISITION
On August 4, 2000, the Company and the Bank, acquired 16 Massachusetts branches
with an estimated $336 million in deposits, $85 million of commercial real
estate loans and $50 million in consumer and SBA loans from Fleet Financial
Group. The acquisitions resulted from the divestiture of Fleet branches after
its merger with BankBoston.
These branches opened as Rockland Trust offices on August 7, 2000 and provide an
expanded presence in Brockton and a powerful entrance into the Cape Cod market.
CORPORATION-OBLIGATED MANDATORILY REDEEMABLE TRUST PREFFERED SECURITIES
In the second quarter of 1997, Independent Capital Trust I (the "Trust
I") was formed for the purpose of issuing trust preferred securities (the "Trust
Preferred Securities") and investing the proceeds of the sale of these
securities in junior subordinated debentures issued by the Company. A total of
$28.75 million of 9.28% Trust Preferred Securities were issued and are scheduled
to mature in 2027, callable at the option of the Company after May 19, 2002.
Distributions on these securities are payable quarterly in arrears on the last
day of March, June, September and December, such distributions can be deferred
at the option of the Company for up to five years. The Trust Preferred
Securities can be prepaid in whole or in part on or after May 19, 2002 at a
redemption price equal to $25 per Trust Preferred Security plus accumulated but
unpaid distributions thereon to the date of the redemption.
In the first quarter of 2000, Independent Capital Trust II (the "Trust
II") was formed for the purpose of issuing trust preferred securities (the
"Trust Preferred Securities") and investing the proceeds of the sale of these
securities in junior subordinated debentures issued by the Company. A total of
$25.0 million of 11.00% Trust Preferred Securities were issued and are scheduled
to mature in 2030, callable at the option of the company after January 31, 2002.
Distributions on these securities are payable quarterly in arrears on the last
day of March, June, September and December, such distributions can be deferred
at the option of the
<PAGE>
Company for up to five years. The Trust Preferred Securities can be prepaid in
whole or in part on or after January 31, 2002 at a redemption price equal to $25
per Trust Preferred Security plus accumulated but unpaid distributions thereon
to the date of the redemption.
The Trust Preferred Securities are presented in the consolidated
balance sheets of the Company entitled "Corporation-Obligated Mandatorily
Redeemable Trust Preferred Securities of Subsidiary Trust Holding Solely Junior
Subordinated Debentures of the Corporation". The Company records distributions
payable on the Trust Preferred Securities as minority interest expense in its
consolidated statements of income.
The Company will unconditionally guarantee all of the Trusts'
obligations under the Trust Preferred Securities
RECENT ACCOUNTING DEVELOPMENTS
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities" as amended by SFAS No. 137 and SFAS No. 138.
This statement establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative instruments embedded
in other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. The statement requires that changes in the
derivative's fair value be recognized currently in income unless specific hedge
accounting criteria are met. Special accounting for qualifying hedges allows a
derivative's gains and losses to offset related results on the hedged item in
the statement of income and requires that a company must formally document,
designate and assess the effectiveness of transactions that receive hedge
accounting. This statement is effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. The Company has not yet quantified the
impact of adopting SFAS No. 133 on its consolidated financial statements and has
not determined the timing nor method of its adoption of the statement. However,
the Company does not expect that the adoption of this statement will have a
material impact on its financial position or results of operations.
SPECIAL CHARGES
The Company recorded special charges of $3.0 million during the second quarter
2000. This amount represents systems conversion charges of $1.3 million and
expense of $0.7 million associated with the purchase of branches from
FleetBoston Financial. Also, as previously announced, an unfavorable judgement
was entered against the Bank in Plymouth Superior Court concerning a proposed
commercial loan transaction that was never consummated. The Company will
vigorously appeal this judgement, however, accounting convention requires that
the Company provide an accrual of $1.0 million in the second quarter of 2000
specifically for that decision.
<PAGE>
EARNINGS PER SHARE
<TABLE>
<CAPTION>
(In Thousands, except per share data)
NET INCOME WEIGHTED AVERAGE NET INCOME
SHARES PER SHARE
----------------------------------------------------------------------------------------------------------
For the six months ended June 30, 2000 1999 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $6,471 $7,954 14,227 14,249 $0.45 $0.56
Effect of dilutive securities 69 163 0.00 0.01
Diluted EPS $6,471 $7,954 14,296 14,412 $0.45 $0.55
----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
(In Thousands, except per share data)
NET INCOME WEIGHTED AVERAGE NET INCOME
SHARES PER SHARE
----------------------------------------------------------------------------------------------------------
For the three months ended June 30, 2000 1999 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $2,240 $4,108 14,239 14,165 $0.16 $0.29
Effect of dilutive securities 62 155 0.00 0.00
Diluted EPS $2,240 $4,108 14,301 14,320 $0.16 $0.29
----------------------------------------------------------------------------------------------------------
</TABLE>
COMPREHENSIVE INCOME
Comprehensive income is reported net of taxes, as follows:
<TABLE>
<CAPTION>
For the Six For the Three
Months Ended Months Ended
June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net Income $6,471 $7,954 $2,240 $4,108
Other Comprehensive Income, Net of Tax
Unrealized gains/(losses) on securities available for sale
Unrealized holding gains/(losses) arising during the period 697 (2,688) 625 (2,520)
Less: reclassification adjustment for gains/(losses) included in net earnings - - - -
----------------------------------------
Other Comprehensive Income 697 (2,688) 625 (2,520)
----------------------------------------
Comprehensive Income $7,168 $5,266 $2,865 $1,588
----------------------------------------
</TABLE>
SEGMENT INFORMATION
The Company has identified its reportable operating business segment as
Community Banking, based on how the business is strategically managed. The
Company's community banking business segment consists of commercial banking,
retail banking, and trust services. The community banking business segment is
managed as a single strategic unit which derives its revenues from a wide range
of banking services, including lending activities, acceptance of demand, savings
and time deposits, trust and investment management, and mortgage servicing
income from investors. The Company does not have a single external customer from
which it derives ten percent or more of its revenues and operates in the New
England area of the United States.
Non reportable operating segments of the Company's operations which do
not have similar characteristics to the community banking operations and do not
meet the quantitative thresholds requiring disclosure, are included in the Other
category in the disclosure of
<PAGE>
business segments below. These non-reportable segments include Parent Company,
Independent Capital Trust I and Independent Capital Trust II financial
information. Information about reportable segments and reconciliation of such
information to the consolidated financial statements as of and for the quarters
ended June 30, follows (in thousands):
RECONCILIATION TO CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Community Other Adjustments
For the Six months Ended Banking Other and Eliminations Consolidated
June 30, 2000
<S> <C> <C> <C> <C>
Total Assets $1,650,096 $213,442 ($211,208) $1,652,330
Net Interest Income 32,464 914 - 33,378
Total Non-Interest Income 7,643 8,268 (8,268) 7,643
Net Income $8,191 $6,548 ($8,268) $6,471
For Six months Ended
June 30, 1999
Total Assets $1,542,643 $154,501 ($150,787) $1,546,357
Net Interest Income 29,626 347 - 29,973
Total Non-Interest Income 7,306 8,742 (8,742) 7,306
Net Income $8,701 $7,995 ($8,742) $7,954
</TABLE>
<TABLE>
<CAPTION>
For the three Months Ended Community Other Adjustments
June 30, 2000 Banking Other And Eliminations Consolidated
<S> <C> <C> <C>
Net Interest Income $16,326 $514 $16,840
Total Non-Interest Income 4,010 3,206 (3,206) 4,010
Net Income $3,166 $2,280 ($3,206) $2,240
For Three Months Ended
June 30, 1999
Net Interest Income $14,942 $169 - $15,111
Total Non-Interest Income 3,882 4,331 (4,332) 3,881
Net Income $4,312 $4,128 ($4,332) $4,108
</TABLE>
The accounting policies of the segments are the same as those described
in the summary of significant accounting policies. The Company evaluates
performance based on profit or loss from operations before income taxes, not
including nonrecurring gains or losses.
The Company derives a majority of its revenues from interest income and
the chief operating decision maker relies primarily on net interest revenue to
assess the performance of the segments and make decisions about resources to be
allocated to the segment. Therefore, the segments are reported above using net
interest income.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INDEPENDENT BANK CORP.
(registrant)
Date: September 22, 2000 /s/ Douglas H. Philipsen
Douglas H. Philipsen
President, Chairman of the Board and
Chief Executive Officer
Date: September 22, 2000 /s/ Denis K. Sheahan
--------------------
Denis K. Sheahan
Chief Financial Officer
and Treasurer
(Principal Financial and
Principal Accounting Officer)
