Independent Bank Corp. Shares Rise Nearly 5% as Rockland Trust Parent Beats Third-Quarter Profit Estimates

NEW YORK — Shares of Independent Bank Corp. rose nearly 5% on Friday after the parent company of Massachusetts-based Rockland Trust reported third-quarter earnings that topped Wall Street expectations.

Independent Bank shares were up $3.74, or 4.85%, at $80.82 in late-morning trading on the Nasdaq. The company has a market value of about $3.8 billion.

Earnings beat

The bank reported third-quarter net income of $89.7 million, or $1.90 per diluted share, up from $81.8 million, or $1.70 per share, in the second quarter and $34.3 million, or 69 cents, a year earlier.

Earnings per share beat the average analyst estimate of about $1.84, according to Zacks Investment Research.

Revenue net of interest expense was $261.9 million, roughly in line with expectations and up 7.5% from a year earlier.

CEO Jeffrey Tengel credited the bank's "disciplined approach and core fundamentals" for a 12% increase in diluted earnings per share from the prior quarter, despite an operating environment with many moving pieces.

Improving profitability

Net interest income rose $9.7 million, or 4.6%, from the prior quarter to $220.7 million. The bank's net interest margin, a key measure of lending profitability, improved to 3.89% from 3.85% in the second quarter and 3.62% a year earlier.

Return on average assets rose to 1.42%, and return on average common equity improved to 10.13%.

The bank's commercial and industrial loan portfolio grew 1%, despite runoff from its strategic exit from the dealer finance business. Total assets stood at about $25 billion, with deposits of $20.5 billion.

Rebound from prior quarter

The results marked an improvement from the second quarter, when the bank's earnings fell short of analyst expectations.

Independent Bank shares are up about 16% over the past year. The company pays a quarterly dividend of 64 cents per share.

About the bank

Rockland Trust operates retail branches in eastern Massachusetts and Worcester County, along with commercial banking and investment management offices in Massachusetts and Rhode Island.

Investors will watch for continued loan growth and margin improvement in the fourth quarter, as well as the impact of interest rate changes on regional banks.