Independent Bank Corp. Announces Net Income Growth of 21% for the Second Quarter of 2005

Business Wire, July 21, 2005

ROCKLAND, Mass. -- Independent Bank Corp., (NASDAQ: INDB), parent of Rockland Trust Company, today announced that net income for the quarter ended June 30, 2005 was $8.0 million, an increase of 21.5% from the same period last year and that diluted earnings per share for the quarter were $0.52, an increase of $0.07 diluted earnings per share compared to $0.45 for the quarter ended June 30, 2004. For the six months ended June 30, 2005, net income was $16.0 million and diluted earnings per share were $1.03, an increase of $2.6 million or $0.13 diluted earnings per share, respectively, when compared to net income of $13.3 million and diluted earnings per share of $0.90 for the six months ended June 30, 2004.

Comparing the three months ending June 30, 2005 to the same period last year, net interest income increased $3.4 million, or 14.7%, while net interest income for the six month ended June 30, 2005 increased $5.8 million, or 12.5% from the six months ended June 30, 2004. The net interest margin was 3.84% for both the three and six months ended June 30, 2005, as compared to 3.84% and 3.99%(1) for the three and six months ended June 30, 2004, respectively.

Non-interest income increased by $252,000, or 3.9%, and decreased by $417,000, or (3.0%) during the three and six months ended June 30, 2005, respectively, as compared to the same periods in the prior year.

--Service charges on deposit accounts increased by $126,000, or 4.1%, and by $187,000, or 3.1% for the three and six months ended June 30, 2005, respectively, as compared to the same periods in 2004, reflecting growth in core deposits.

--Investment management services income increased by $165,000, or 13.2%, and $323,000, or 13.9%, for the three and six months ended June 30, 2005, compared to the same periods last year due to growth in managed assets. Assets under administration increased by 19.5% from the same period last year to $603.0 million.

--Mortgage banking income decreased by $273,000, or (31.9%), and by $80,000, or (5.0%) for the three and six months ended June 30, 2005 as compared to the same periods in 2004. Loan originations decreased in 2005 as compared to the prior year due, at least in part, to inclement weather that lasted well into spring.

--The balance of the mortgage servicing asset is $3.0 million and loans serviced amounted to $363.1 million as of June 30, 2005.

--Gains on sale of securities totaled $273,000 in the second quarter of 2005. There were no gains realized on sale of securities in the second quarter of 2004. For the six months ended June 30, 2005 the gain on sale of securities totaled $616,000 a decrease of $381,000, or (38.2%) from the $997,000 recorded in the six months ended June 30, 2004.

--Other non-interest income increased by $75,000, or 10.5%, and decreased by $393,000, or (21.1%) for the three and six months ended June 30, 2005, as compared to the same period in 2004. The decrease in the six month comparison is primarily due to a decrease in commercial loan prepayment fees.

Non-interest expense increased by $1.4 million, or 7.7%, and by $2.3 million, or 6.0% for the three and six months ended June 30, 2005, as compared to the same periods in the prior year.

--Salaries and employee benefits increased by $2.2 million, or 21.9%, and by $3.0 million, or 14.4% for the three and six months ended June 30, 2005, as compared to the same periods in the prior year. Salaries increased by $896,000, or 11.5%, and by $1.3 million, or 8.4%, respectively, for the three and six months ended June 30, 2005, compared to the same periods in 2004 as a result of annual merit increases for employees and select additions to staff to support strategic initiatives. Accruals for incentive compensation increased by $1.0 million and $1.2 million for the three months the six months ended June 30, 2005, respectively, as compared to the same periods last year due to improved operating performance.

--Occupancy and equipment related expense increased by $388,000 or 17.6%, and by $695,000, or 15.5% for the three and six months ended June 30, 2005 as compared to the same periods in the prior year. The increase in this expense is primarily driven by facility's rent associated with the Falmouth Bancorp, Inc. acquisition which closed in mid 2004, lease buyout expense, two de novo branches, and increased depreciation expense related to a new phone system installed in 2004. Snow removal expense due to inclement weather also contributed to the increase in occupancy and equipment related expense for the six months ended June 30, 2005 as compared to the same period in 2004.

--Data processing and facilities management expense has decreased $162,000, or (14.1%) and $257,000, or (11.6%), for the three and six months ended June 30, 2005 compared to the same period in 2004, respectively, as a result of a new data processing contract finalized in the latter part of 2004.

--Other non-interest expenses decreased by $746,000, or (14.0%), and by $959,000, or (9.6%), for the three and six months ended June 30, 2005, as compared to the same periods in the prior year. The decrease in other non-interest expenses for the year is primarily attributable to decreases in telephone expense of $321,000 due to the implementation of the aforementioned new phone system, lower consultant fees of $534,000 associated with commercial lending process improvement and data warehousing studies in 2004, and the timing of advertising campaigns of $377,000.