Independent Bank Corp., the parent company of Rockland Trust Company, reported third quarter net income of $23.9 million, or $0.87 per diluted share, an increase of more than $3 million from the third quarter of last year.
The $8 billion asset company had a strong quarter as it continues to prepare for Dodd-Frank stress testing once it eventually crosses the $10 billion threshold, and more competition for deposits in the near future.
Net interest income for the quarter was more than $67 million, up about $9.5 million from the third quarter of last year. The net interest margin reach 3.65 percent, up 25 basis points from the prior year.
Noninterest income was $20.8 million for the quarter, up about $350,000 from the same quarter last year.
“Rockland Trust’s strong performance continued in the third quarter of 2017, a period in which we achieved a new quarterly earnings per share record,” Christopher Oddleifson, CEO and president of Independent Bank Corp. and CEO of Rockland Trust Company, said in a statement. “We are well positioned to take advantage of a rising interest rate environment, and the increases in both our net interest margin and earnings during this quarter demonstrate that we are harvesting the benefits of our loan and deposit pricing strategies.”
Despite the strong increase in NIM, investors were still curious about future deposit pressure.
Robert Cozzone, the company’s CFO, said the NIM was likely to decline in the fourth quarter due to an increase in deposit costs.
It started a few quarters back with the government banking business; then there was pressure from some commercial clients and the demand for better returns has started to “trickle down” to consumer deposits, he said.
The level of competition going forward, he said, will likely depend on whether the Federal Reserve hikes short-term rates in December.
Overall though, Rockland executives expressed positivity on the Massachusetts economy and on the company’s outlook.
Investment management income was consistent, reflecting a higher level of assets under administration, which grew 2.5 percent to $3.3 billion as of Sept. 30, due to strong new business results and market appreciation.
Total loans climbed nearly $550 million year-over-year, despit what executives said was a drop in the utilizations of lines of credit, and a slowdown in commercial and industrial loans.
Cozzone said expense rates for Dodd-Frank stress test preparation would not continue to increase because the company has already been gradually incurring expenses, but that there would be added expenses for validation and building a governance framework.
