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United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number: 1-9047
Independent Bank Corp.
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(Exact name of registrant as specified in its charter)
Massachusetts 04-2870273
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
288 Union Street
Rockland, Massachusetts 02370
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 878-6100
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $.0l par value per share
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(Title of Class)
Preferred Stock Purchase Rights
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(Title of Class)
Indicate by check mark whether, the registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
[X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
As of February 28, 1997, the aggregate market value of the 12,700,434 shares of
Common Stock of the Registrant issued and outstanding on such date, excluding
1,917,453 shares held by all directors and executive officers of the Registrant
as group, was $136,529,666. This figure is based on the closing sale price of
$10.75 per share on February 28, 1997, as reported in The Wall Street Journal on
March 1, 1997.
Number of shares of Common Stock outstanding as of February 28, 1997:
14,617,887
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents incorporated by reference and the
Part of Form 10-K into which the document is incorporated:
(1) Portions of the Registrant's Annual Report to Stockholders for the fiscal
year ended December 31, 1996 are incorporated into Part II, Items 5-8 of
this Form 10-K.
(2) Portions of the Registrant's definitive proxy statement for its 1997
Annual Meeting of Stockholders are incorporated into Part III, Items 10-13
of this Form 10-K.
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PART 1.
Item 1. Business
General. 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. Rockland offers a full range of commercial and retail
banking and trust services through its network of 33 banking offices,
seven commercial lending centers, and two trust and financial services
offices located in the Plymouth, Norfolk, and Bristol Counties of
Southeastern Massachusetts. At December 31, 1996, the Company had total
assets of $1,092.8 million, total deposits of $918.6 million, and
stockholders' equity of $81.1 million.
Rockland has a deep rooted history as a community oriented
commercial bank. As a result of its strong commitment to the local
business community, the Bank has become one of the prominent financial
institutions in Plymouth County which represents the majority of its
market area. The Bank had approximately 16.6% of the total deposits
within Plymouth County as of June 30, 1996, the most recent date for
which such data is available, or almost 169% of the market share of its
nearest competitor. In addition, Rockland has been the leading
originator of residential mortgages in Plymouth County for the last five
years. Due to the continuing consolidation within the financial services
industry, Rockland is the only remaining locally based commercial bank
in Plymouth County.
The Company experienced significant growth and profitability
during the early and mid-1980's as the New England economy prospered.
Total assets surpassed the $1 billion level and earnings reached record
levels. However, with the onset of an economic recession in New England
in the late 1980's, and a resulting significant decline in local real
estate values, the Company experienced serious financial problems. The
quality of the loan portfolio declined sharply as nonperforming assets
rose to over 10% of total assets. This deterioration required
significant loan loss provisions which resulted in the Company reporting
substantial losses in 1990 and 1991.
After implementing a number of managerial, operational, and
financial changes during 1991 and 1992, the Company returned to
profitability in 1992. In December of that year, the Company issued 9.2
million shares of common stock, strengthening its capital base. These
measures contributed to improved operating results for the Company which
recorded net income of $4.6 million, $8.1 million and $10.4 million for
the years ended December 31, 1993, 1994 and 1995, respectively. The
improvement in 1995 earnings over 1994 was primarily attributable to
higher net interest income and lower non-interest expenses.
For the year ended December 31, 1996, the Company recorded net
income of $11.6 million, an increase of 11.6% over 1995 earnings. The
improved 1996 results
reflect a 2.2% increase in net interest income, a 10.7% increase in
non-interest income and a decrease of 3.0% in non-interest expenses.
The Company is registered as a bank holding company under the
Bank Holding Company Act of 1956 ("BHCA"), as amended, and as such is
subject to regulation by the Board of Governors of the Federal Reserve
System ("Federal Reserve"). Rockland is subject to regulation and
examination by the Commissioner of Banks of the Commonwealth of
Massachusetts (the "Commissioner") and the Federal Deposit Insurance
Corporation ("FDIC"). The majority of Rockland's deposit accounts are
insured to the maximum extent permitted by law by the Bank Insurance
Fund ("BIF") which is administered by the FDIC. In 1994, the Bank
purchased the deposits of three branches of a failed savings and loan
association from the Resolution Trust Corporation. These deposits are
insured to the maximum extent permitted by law by the Savings
Association Insurance Fund ("SAIF").
Lending Activities
General. The Bank's gross loan portfolio amounted to $708.7
million on December 31, 1996, or 64.9% of total assets on that date. The
Bank classifies loans as commercial, real estate, or consumer.
Commercial loans consist primarily of loans to businesses for working
capital and other business related purposes and floor plan financing.
Real estate loans are comprised of commercial mortgages which are
secured by nonresidential properties, residential mortgages which are
secured primarily by owner-occupied residences, home equity loans, and
mortgages for the construction of commercial and residential properties.
Consumer loans consist of instalment obligations, the majority of which
are automobile loans, and other consumer loans.
The Bank's borrowers consist of small-to-medium sized businesses
and retail customers. The Bank's market area is generally comprised of
Plymouth, Norfolk, and Bristol Counties located in Southeastern
Massachusetts. Substantially all of the Bank's commercial and consumer
loan portfolios consist of loans made to residents of and businesses
located in Southeastern Massachusetts. Virtually all of the real estate
loans in the Bank's loan portfolio are secured by properties located
within this market area. On December 31, 1996, approximately $7.5
million of real estate loans, including approximately $4.5 million of
residential mortgages, were secured by properties located outside of
Southeastern Massachusetts.
In accordance with governing banking statutes, Rockland is
permitted, with certain exceptions, to make loans and commitments to any
one borrower, including related entities, in the aggregate amount of not
more than 20% of stockholders' equity, or $16.2 million at December 31,
1996. Notwithstanding the foregoing, the Bank has established a more
restrictive limit of not more than 15% of stockholders' equity, or $12.2
million at December 31, 1996, which limit may be exceeded with the
approval of the
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Board of Directors. There were no borrowers whose total indebtedness
aggregated or exceeded $12.2 million as of December 31, 1996.
The Bank's principal earning assets are its loans. Although the
Bank judges its borrowers to be creditworthy, the risk of deterioration
in borrowers' abilities to repay their loans in accordance with their
existing loan agreements is inherent in any lending function.
Participating as a lender in the credit markets requires a strict
monitoring process to minimize credit risk. This process requires
substantial analysis of the loan application, an evaluation of the
customer's capacity to repay according to the loan's contractual terms,
and an objective determination of the value of the collateral. The Bank
also utilizes the services of an independent third-party consulting firm
to provide loan review services.
The Bank's Controlled Asset Department is responsible for the
management and resolution of nonperforming assets. In the course of
resolving nonperforming loans, the Bank may choose to restructure
certain contractual provisions. In order to facilitate the disposition
of other real estate owned (OREO), the Bank may finance the purchase of
such properties at market rates if the borrower qualifies under the
Bank's standard underwriting guidelines.
Loan Portfolio Composition and Maturity. The following table sets forth
information concerning the composition of the Bank's loan portfolio by
loan type at the dates indicated.
At December 31,
-----------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------------ ------------------- ------------------- -------------------- ---------------------
(Dollars in
Thousands)
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
------ ------- ----- ------- -------- ------- ------ ------- ------ -------
Commercial $127,008 17.9% $121,679 19.1% $122,944 20.5% $117,332 23.8% $133,192 26.4%
Real estate:
Commercial 205,256 29.0 187,608 29.4 169,693 28.4 142,619 29.0 129,803 25.7
Residential 202,031 28.5 187,652 29.4 184,958 30.9 155,182 31.5 163,426 32.4
Construction 31,633 4.5 27,863 4.4 28,892 4.8 20,147 4.1 26,416 5.2
Consumer:
Instalment 132,589 18.7 102,088 16.0 80,441 13.4 46,909 9.5 45,454 9.1
Other 10,140 1.4 11,076 1.7 11,882 2.0 10,415 2.1 6,015 1.2
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Gross Loans 708,657 100.0% 637,966 100.0% 598,810 100.0% 492,604 100.0% 504,306 100.0%
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Unearned 13,251 9,825 8,121 5,020 5,254
Discount
Reserve for
Possible
Loan Losses 12,221 12,088 13,719 15,485 15,971
------ ------ ------ ------ ------
Net Loans $683,185 $616,053 $576,970 $472,099 $483,081
======== ======== ======== ======== ========
The Company's outstanding loans grew by 10.9% in 1996, following
a 6.8% increase in 1995. This loan growth, which was primarily centered
in commercial mortgages, residential mortgages and instalment loans, is
a result of sales programs
3
implemented by the Bank over the past four years and an opportunity to
expand the Bank's customer base as a result of the consolidation of its
larger competitors.
Commercial loans increased $5.3 million, or 4.4%, in 1996,
following a decrease of $1.3 million, or 1.0%, in 1995. The increase in
commercial loans during 1996 is due to the volume of new loan
originations exceeding the rate of loan payments.
Real estate loans comprised 61.9% of gross loans at December 31,
1996, as compared to 63.2% at December 31, 1995. Commercial real estate
loans have reflected increases over the last two years of $17.7 million,
or 9.4%, in 1996, and $17.9 million, or 10.6%, in 1995. These increases
are indicative of the improving prospects for small and medium sized
businesses in the Bank's recovering market area. Residential real estate
loans increased $14.4 million, or 7.7%, in 1996. In 1995, residential
real estate loans increased $2.7 million, or 1.5%, due to management's
decision to sell a majority of the residential mortgage loans originated
during the year. During 1996, the Bank sold $47.2 million of the current
production of residential mortgages as part of its overall
asset/liability management. Real estate construction loans increased
$3.8 million, or 13.5%, in 1996 following a decrease of $1.0 million, or
3.6%, in 1995.
Consumer instalment loans increased $30.5 million, or 29.9%, and
$21.6 million, or 26.9%, during 1996 and 1995, respectively. The
increases over the past two years are attributed to a focused effort
directed at expanding banking relationships with new and used automobile
dealers within the market area. As a result, strong growth was reported
in 1996 and 1995. As of December 31, 1996 and 1995, automobile loans
represented 78.2% and 75.6%, respectively, of the Bank's consumer loan
portfolio. Since the sale of the Bank's credit card portfolio during
1991 and 1992, other consumer loans have consisted primarily of cash
reserve loans. Introduced in 1992, cash reserve loans are designed to
afford the Bank's customers overdraft protection. The balances of these
loans declined $.9 million, or 8.4%, in 1996 following a decrease of
$.8 million, or 6.8%, in 1995.
The following table sets forth the scheduled contractual
amortization of the Bank's loan portfolio at December 31, 1996. Loans
having no schedule of repayments or no stated maturity are reported as
due in one year or less. The following table also sets forth the rate
structure of loans scheduled to mature after one year.
4
Real Real Real
Estate - Estate - Estate - Consumer - Consumer - Total
Commercial Commercial Residential Construction Instalment Other
---------- ----------- ---------- ---------- ---------- ---------- ---------
(Thousands)
Amounts due in:
One year or
less $99,478 $76,608 $96,151 $31,633 $44,546 $ --- $348,416
After one year
through
five years 26,305 121,004 51,724 --- 85,055 10,140 294,228
Beyond five years 1,225 7,644 54,156 --- 2,988 --- 66,013
----- ----- ------ --- ----- --- ------
Total $127,008 $205,256 $202,031 $31,633 $132,589 $10,140 $708,657
======== ======== ======== ======== ======== ======= ========
Interest rates on
amounts due
after one year:
Fixed Rate $27,530 $104,250 $55,056 $ $88,043 $10,140 $285,019
---
Adjustable Rate --- 24,398 50,824 --- --- --- 75,222
Generally, the average actual maturity of loans is substantially
less than their average contractual maturity due to prepayments and, in
the case of real estate loans, due-on-sale clauses, which generally
gives the Bank the right to declare a loan immediately due and payable
in the event that, among other things, the borrower sells the property
subject to the mortgage and the loan is not repaid. The average life of
real estate loans tends to increase when current real estate loan rates
are higher than rates on mortgages in the portfolio and, conversely,
tends to decrease when rates on mortgages in the portfolio are higher
than current real estate loan rates. Under the latter scenario, the
weighted average yield on the portfolio tends to decrease as higher
yielding loans are repaid or refinanced at lower rates. Due to the fact
that the Bank may, consistent with industry practice, "roll over" a
significant portion of commercial and commercial real estate loans at or
immediately prior to their maturity by renewing the loans on
substantially similar or revised terms, the principal repayments
actually received by the Bank are anticipated to be significantly less
than the amounts contractually due in any particular period. In
addition, a loan, or a portion of a loan, may not be repaid due to the
borrower's inability to satisfy the contractual obligations of the loan.
As of December 31, 1996, $.6 million of loans scheduled to mature within
one year were nonperforming. See "Lending Activities - Nonperforming
Assets."
Origination of Loans. Commercial loan applications are obtained
through existing customers, solicitation by Bank loan officers,
referrals from current or past customers, or walk-in customers.
Commercial real estate loan applications are obtained primarily from
previous borrowers, direct contacts with the Bank, or referrals.
Applications for residential real estate loans and all types of consumer
loans are taken at all of the Bank's full-service branch offices.
Residential real estate loan applications primarily result from
referrals by real estate brokers, home builders, and existing or walk-in
customers. The Bank also maintains a staff of field originators who
solicit and refer residential real estate loan applications to the Bank.
These employees are compensated on a commission basis and provide
convenient origination services during banking and nonbanking hours.
Consumer loan applications are directly obtained through existing or
5
walk-in customers who have been made aware of the Bank's consumer loan
services through advertising and other media, as well as indirectly
through a network of automobile dealers who are financed by the Bank.
Commercial loans, commercial real estate loans, and construction
loans may be approved by commercial loan officers up to their
individually assigned lending limits which are established and modified
periodically to reflect the officer's expertise and experience.
Commercial loans and commercial real estate loans in excess of a loan
officers assigned lending limit are approved by various levels of
authority within the commercial lending division, depending on the loan
amount, up to and including the Senior Loan Committee and ultimately the
Executive Committee of the Board of Directors.
Residential real estate loans and home equity loans follow a
similar approval process within the retail lending division.
Sale of Loans. The Bank's owner-occupied residential real estate
loans are generally originated in compliance with terms, conditions and
documentation which permit the sale of such loans to the Federal Home
Loan Mortgage Corporation ("FHLMC"), the Federal National Mortgage
Association ("FNMA"), the Government National Mortgage Association
("GNMA"), and other institutional investors in the secondary market. The
majority of fixed rate, long term residential mortgages originated by
the Bank are sold without recourse in the secondary market. Loan sales
in the secondary market provide funds for additional lending and other
banking activities. The Bank generally retains the servicing on the
loans sold. As part of its asset/liability management strategy, the Bank
may retain a portion of adjustable rate residential real estate loans or
fixed-rate residential real estate loans. During 1996, the Bank
originated $99.2 million in residential real estate loans of which $52.0
million was retained in its portfolio.
The principal balance of loans serviced by the Bank amounted to
$252.2 million at December 31, 1996 and $246.6 million at December 31,
1995. Under its mortgage servicing arrangements, the Bank generally
continues to collect payments on loans, to inspect the mortgaged
property, to make insurance and tax advances on behalf of borrowers and
to otherwise service the loans and receives a fee for performing these
services. Net servicing fee income amounted to $741,000 and $704,000 for
the years ended December 31, 1996 and 1995, respectively. Unamortized
loan origination fees which relate to loans sold by the Bank are
recognized as non-interest income at the time of the loan sale. Under
its sales agreements, the Bank pays the purchaser of mortgage loans a
specified yield on the loans sold. The difference, after payment of any
guarantee fee, is retained by the Bank and recognized as fee income over
the life of the loan. In addition, loans may be sold at a premium or a
discount with any resulting gain or loss recognized at the time of sale.
Effective January 1, 1996 the Bank adopted SFAS No. 122 "Accounting for
Mortgage Servicing Rights". For the years ended December 31,
6
1996, and 1995, the Bank recognized net gains on the sales of mortgages
including the impact of the adoption of SFAS No. 122 of $360,000 and
$18,000, respectively.
Commercial Loans. The Bank offers secured and unsecured
commercial loans for business purposes, including issuing letters of
credit. The Bank's commercial loans increased $5.3 million, or 4.4%, in
1996, following a decrease of $1.3 million, or 1.0%, in 1995. At
December 31, 1996, $127.0 million, or 17.9%, of the Bank's gross loan
portfolio consisted of commercial loans, compared to $121.7 million, or
19.1%, at December 31, 1995.
Commercial loans are generally provided to small-to-medium-sized
businesses located within the Company's market area. Commercial loans
may be structured as term loans or as revolving lines of credit.
Commercial term loans generally have a repayment schedule of five years
or less, and although the Bank does originate some commercial term loans
with interest rates which float in relation to the Rockland Base rate,
the majority of commercial term loans have fixed rates of interest.
Generally, Rockland's Base rate is determined by reference to the Wall
Street Journal prime rate. The Bank's Base rate is monitored by the
Executive Vice President Commercial Lending Division, and revised when
appropriate in accordance with guidelines established by the
Asset/Liability Management Committee. The majority of commercial term
loans are collateralized by equipment, machinery or other corporate
assets. In addition, the Bank generally obtains personal guarantees from
the principals of the borrower for virtually all of its commercial
loans.
The Bank's commercial revolving lines of credit generally are for
the purpose of providing working capital to the borrower and may be
secured or unsecured. Collateral for commercial revolving lines of
credit may consist of accounts receivable, inventory or both, as well
as other corporate assets. Generally, the Bank will lend up to 80% of
accounts receivable, provided that such receivables have not aged more
than 60 days and/or up to 20% to 40% of the value of raw materials and
finished goods inventory securing the line. Commercial revolving lines
of credit generally are reviewed on an annual basis and usually require
substantial repayment of principal during the year. At December 31,
1996, the Bank had $34.8 million outstanding under commercial revolving
lines of credit, and $45.0 million of unused commitments under such
lines on that date.
The Bank's standby letters of credit generally are secured, have
terms of not more than one year, and are reviewed for renewal. As
of December 31, 1996, the Bank had $1.9 million in outstanding
commitments pursuant to standby letters of credit. These facilities are
managed by the Commercial Lending Division.
The Bank also provides automobile and, to a lesser extent, boat
and other vehicle floor-plan financing. Floor-plan loans, which are
secured by the automobiles, boats, or
7
other vehicles constituting the dealer's inventory, amounted to $17.0
million as of December 31, 1996. Upon the sale of a floor-plan unit, the
proceeds of the sale are applied to reduce the loan balance. In the
event a unit financed under a floor-plan line of credit remains in the
dealer's inventory for an extended period, the amount of the line is
reduced with respect to such unit. Bank personnel make unannounced
monthly inspections of each dealer to review the value and condition of
the underlying collateral.
Real Estate Loans. The Bank's real estate loans consist of loans
secured by commercial properties, loans secured by 1-4 unit residential
properties, home equity loans, and construction loans. As of December
31, 1996, the Bank's loan portfolio included $205.3 million in
commercial real estate loans, $158.6 million in residential real estate
loans, $43.4 million in home equity loans, and $31.6 million in
construction loans.
Much of the Bank's commercial real estate portfolio consists of
loans to finance the development of residential projects. As such, many
commercial real estate loans are primarily secured by residential
development tracts but, to a greater extent, they are secured by
owner-occupied commercial and industrial buildings and warehouses.
Commercial real estate loans also include multi-family residential
loans which are primarily secured by condominiums and, to a lesser
extent, apartment buildings. The Bank does not emphasize loans secured
by special purpose properties, such as hotels, motels, or restaurants.
Although terms vary, commercial real estate loans generally have
maturities of five years or less, amortization periods of 15 or 20
years, and interest rates which either float in accordance with a
designated index or have fixed rates of interest. The Bank's
adjustable-rate commercial real estate loans generally are indexed off
of the Rockland Base rate. Loan-to-value ratios on commercial real
estate loans generally do not exceed 80% (70% for special purpose
properties) of the appraised value of the property. In addition, as part
of the criteria for underwriting permanent commercial real estate loans,
the Bank generally imposes a debt service coverage ratio of not less
than 120%. It is also the Bank's policy to obtain personal guarantees
from the principals of the borrower on commercial real estate loans and
to obtain periodic financial statements from all commercial and
multi-family borrowers on an annual basis and, in some cases, more
frequently.
Commercial real estate lending entails additional risks as
compared to residential real estate lending. Commercial real estate
loans typically involve larger loan balances to single borrowers or
groups of related borrowers. Development of commercial real estate
projects also may be subject to numerous land use and environmental
issues. The payment experience on such loans is typically dependent on
the successful operation of the real estate project which can be
significantly impacted by supply and demand conditions in the market for
commercial and retail space.
Rockland originates both fixed-rate and adjustable-rate
residential real estate loans. The Bank will lend up to 95% of the
lesser of the appraised value of the property
8
securing the loan or the purchase price, and generally requires
borrowers to obtain private mortgage insurance when the amount of the
loan exceeds 80% of the value of the property. The rates of these loans
are typically competitive with market rates. As previously noted, the
Bank's residential real estate loans are generally originated only under
terms, conditions and documentation which permit sale in the secondary
market.
The Bank generally requires title insurance protecting the
priority of its mortgage lien, as well as fire and extended coverage
casualty insurance in order to protect the properties securing its
residential and other real estate loans. Properties securing all of the
Bank's first mortgage real estate loans are appraised by independent
appraisers.
Home equity loans may be made as a term loan or under a revolving
line of credit secured by a second mortgage on the borrower's residence.
The Bank will originate home equity loans in an amount up to 80% of the
appraised value or, without appraisal, up to 70% of the tax assessed
value, whichever is lower, reduced for any loans outstanding secured by
such collateral. As of December 31, 1996, there was $32.5 million in
unused commitments under revolving home equity lines of credit.
Construction loans are intended to finance the construction of
residential and commercial properties, including loans for the
acquisition and development of land or rehabilitation of existing homes.
Construction loans generally have terms of six months but not more than
two years. They may not in all cases provide for amortization of the
loan balance during the term. The Bank's non-residential construction
loans have floating rates of interest based upon the Rockland Base rate
or, in some cases, the Wall Street Journal prime rate.
A significant portion of the Bank's construction lending has been
related to one-to-four family residential development within the Bank's
market area. The Bank typically has focused its construction lending on
relatively small projects and the Bank has developed and maintains a
relationship with a significant number of homebuilders in Plymouth,
Norfolk, and Bristol Counties. As of December 31, 1996, $12.7 million,
or 40.2%, of total construction loans at such date were for the
acquisition and development of one-to-four family residential lots or
the construction of one-to-four family residences.
The Bank evaluates the feasibility of construction projects based
upon appraisals of the project performed by independent appraisers. In
addition, the Bank may obtain architects' or engineers' estimations of
the cost of construction. The Bank generally requires the borrower to
fund at least 20% of the project costs and generally does not provide
for an interest reserve in its non-residential construction loans. The
Bank's non-residential construction loans generally do not exceed 80% of
the lesser of the appraised value upon completion or the sales price.
Land acquisition and development loans generally do not exceed the
lesser of 70% of the appraised value (without improvements) or the
purchase price. The Bank's loan policy requires that permanent mortgage
financing be secured prior to extending any non-residential construction
loans. In addition, the Bank generally requires that the units securing
its residential construction loans be pre-
9
sold. Loan proceeds are disbursed in stages after inspections of the
project indicate that the required work has been performed and that such
disbursements are warranted.
Construction loans are generally considered to present a higher
degree of risk than permanent real estate loans. A borrower's ability to
complete construction may be affected by a variety of factors such as
adverse changes in interest rates and the borrower's ability to control
costs and adhere to time schedules. The latter will depend upon the
borrower's management capabilities, and may also be affected by strikes,
adverse weather and other conditions beyond the borrower's control.
Consumer Loans. The Bank makes loans for a wide variety of
personal and consumer needs. Consumer loans primarily consist of
instalment loans and cash reserve loans. As of December 31, 1996, $142.7
million, or 20.1%, of the Bank's gross loan portfolio consisted of
consumer loans.
The Bank's instalment loans consist primarily of automobile
loans, which amounted to $111.6 million at December 31, 1996. A
substantial portion of the Bank's automobile loans are originated
indirectly by a network of 93 new and used automobile dealers located
within the Bank's market area. Indirect automobile loans accounted for
78.3% and 75.6% of the Bank's total instalment loan originations during
1996 and 1995, respectively. The increase in indirect automobile loan
originations in 1996 and 1995 reflects the effect of a focused program
undertaken by the Bank to improve business relationships with automobile
dealers within its market area. Although applications for such loans are
taken by employees of the dealer, the loans are made pursuant to
Rockland's underwriting standards using Rockland's documentation, and
all indirect loans must be approved by a Rockland loan officer. In
addition to indirect automobile lending, the Bank also originates
automobile loans directly.
The maximum term for the Bank's automobile loans is 72 months for
a new car loan and 48 months with respect to a used car loan. The Bank
will lend up to 100% of the purchase price of a new automobile or, with
respect to used cars, up to 100% of the lesser of the purchase price or
the National Automobile Dealer's Association book value. Loans on new
automobiles are generally made without recourse to the dealer. The Bank
requires all borrowers to maintain automobile insurance, including full
collision, fire and theft, with a maximum allowable deductible and with
the Bank listed as loss payee. The majority of the Bank's loans on used
automobiles are made with recourse to the dealer, who is required to pay
off the loan balance upon the Bank's repossession of the financed
vehicle, provided that the Bank delivers the vehicle to the dealer
within 120 days of the loan due date. In addition, in order to
ameliorate the adverse effect on interest income caused by prepayments,
all dealers are required to maintain a reserve, ranging from 0% to 3% of
the outstanding balance of the indirect loans originated by them, which
is rebated to the customer on a pro-rata basis in the event of repayment
prior to maturity.
10
The Bank's instalment loans also include loans secured by deposit
accounts, loans to purchase motorcycles, recreational vehicles, motor
homes, boats, or mobile homes. As of December 31, 1996, instalment loans
other than automobile loans amounted to $20.5 million. The Bank
generally will lend up to 100% of the purchase price of vehicles other
than automobiles with terms of up to three years for motorcycles and up
to fifteen years for recreational vehicles.
Cash reserve loans are made pursuant to previously approved
unsecured cash reserve lines of credit. The rate on these loans is
subject to change due to market conditions. As of December 31, 1996, an
additional $15.5 million had been committed to but was unused under cash
reserve lines of credit.
11
Nonperforming Assets. The following table sets forth information
regarding nonperforming assets held by the Bank at the dates indicated.
December 31,
------------------------------------------------------
1996 1995 1994 1993 1992
------------------------------------------------------
(Dollars in
Thousands)
Loans past due
90 days or more $516 $553 $598 $1,042 $2,877
but still
accruing
Loans accounted
for on a nonaccrual
basis (1) 3,946 4,718 7,266 15,940 25,925
----- ----- ----- ------ ------
Total non
performing loans 4,462 5,271 7,864 16,982 28,802
----- ----- ----- ------ ------
Other real estate owned 271 638 3,866 8,884 11,655
Loans held for sale --- --- --- --- 4,257
------ ------ ------ ------ ------
Total
nonperforming assets $4,733 $5,909 $11,730 $25,866 $44,714
====== ====== ====== ====== ======
Restructured loans $1,658 $2,629 $2,898 $4,202 $6,875
------ ------ ------ ------ ------
Nonperforming
loans as a
percent of gross
loans 0.63% 0.83% 1.31% 3.45% 5.71%
----- ----- ----- ----- -----
Nonperforming
assets as a
percent of total
assets 0.43% 0.60% 1.26% 3.12% 5.54%
==== ==== ==== ==== ====
(1) Includes $.1 million, $.6 million, $1.1 million, $1.4 million, and
$4.6 million of restructured loans at December 31, 1996, 1995, 1994,
1993, and 1992, respectively, which were included in nonaccrual loans
as of such dates.
Gross interest income that would have been recognized for the
years ended December 31, 1996 and 1995 if nonperforming loans at the
respective dates had been performing in accordance with their original
terms approximated $518,000 and $597,000, respectively. The actual
amount of interest that was collected on these loans during those
periods and included in interest income approximated $44,000 and
$63,000, respectively.
Through the Controlled Asset Department, the Bank strives to
ensure that loans do not become nonperforming. In the case that they do,
this department will restore nonperforming assets to performing status
or, alternatively, dispose of such assets. On occasion, this effort may
require the restructure of loan terms for certain nonperforming loans.
The Bank works closely with independent real estate brokers throughout
its market area, and all of the Bank's other real estate owned is listed
with brokers who are members of a multiple listing service.
Reserve for Possible Loan Losses. The reserve for possible loan
losses is maintained at a level that management considers adequate to
provide for potential loan losses based upon an evaluation of known and
inherent risks in the loan portfolio. The reserve is increased by
provisions for possible loan losses and by recoveries of loans
previously charged-off and reduced by loan charge-offs. Determining an
appropriate level of reserve for possible loan losses necessarily
involves a high degree of judgment.
12
For additional information, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in Item 7 hereof.
The following table summarizes changes in the reserve for
possible loan losses and other selected statistics for the periods
presented.
Year Ending December 31,
----------------------------------------------------
1996 1995 1994 1993 1992
(Dollars In Thousands)
Average loans, net of unearned $657,749 $612,481 $534,052 $494,288 $551,694
discount ======== ======== ======== ======== ========
Reserve for Possible loan losses, $12,088 $13,719 $15,485 $15,971 $16,165
beginning of year
Charged-off loans
Commercial 1,252 2,097 2,396 3,568 6,150
Real estate - commercial 228 690 682 1,285 1,786
Real estate - residential 296 558 618 1,107 941
Real estate - construction -- -- 63 111 1,180
Consumer - instalment 430 273 188 587 807
Consumer - other 619 464 346 861 1,962
--- --- --- --- -----
Total charged-off loans 2,825 4,082 4,293 7,519 12,826
----- ----- ----- ----- ------
Recoveries on loans previously
charged off
Commercial 573 436 890 1,232 579
Real estate - commercial 241 665 425 191 9
Real estate - residential 31 3 2 41 128
Real estate - construction -- -- -- 20 162
Consumer - instalment 171 169 133 182 183
Consumer - other 192 178 276 292 557
--- --- --- --- ---
Total recoveries 1,208 1,451 1,726 1,958 1,618
----- ----- ----- ----- -----
Net loans charged-off 1,617 2,631 2,567 5,561 11,208
Provision for loan losses 1,750 1,000 801 5,075 11,014
----- ----- --- ----- ------
Reserve for possible loan losses,
end of period $12,221 $12,088 $13,719 $15,485 $15,971
======= ======= ======= ======= =======
Net loans charged-off as a percent
of average loans, net of unearned
discount 0.25% 0.43% 0.48% 1.13% 2.03%
Reserve for possible loan losses
as a percent of loans, net of
unearned discount 1.76 1.92 2.32 3.18 3.20
Reserve for possible loan losses
as a percent of nonperforming
loans 273.89 229.33 174.45 91.18 55.45
Net loans charged-off as a percent
of reserve for possible loan
losses 13.23 21.77 18.71 35.91 70.18
Recoveries as a percent of
charge-offs 42.76 35.55 40.20 26.04 12.62
The reserve for possible loan losses is allocated to various loan
categories as part of the Bank's process for evaluating the adequacy of
the reserve for possible loan losses. The following table sets forth
certain information concerning the allocation of the Bank's reserve for
possible loan losses by loan categories at December 31, 1996. For
information about the percent of loans in each category to total loans,
see "Lending Activities - Loan Portfolio Composition and Maturity."
Percent of Total
Amount Loans by Category
------------ ----------------------
(Dollars In Thousands)
Commercial Loans $3,656 2.88%
Real Estate Loans 6,788 1.55%
Consumer Loans 1,777 1.25%
----- ----
Total Loans $12,221 1.76%
====== ====
13
The Bank determines the level of the reserve for possible loan
losses based on a number of factors. An individual analysis of all
commercial, commercial real estate and construction loans above $25,000,
as well as all internally classified loans is conducted and reserves are
assigned for those loans which are determined to have certain weaknesses
which make ultimate collection of both principal and interest uncertain.
A portion of the reserve is allocated as a general reserve for those
loans which are not individually reviewed. In conjunction with its
review, management considers both internal and external factors which
may affect the adequacy of the reserve for possible loan losses. Such
factors may include, but are not limited to, industry trends, regional
and national economic conditions, past estimates of possible loan losses
as compared to actual losses, and historical loan losses. Management
assesses the adequacy of the reserve for possible loan losses, and
reviews that assessment quarterly with the Board of Directors.
Management's assessment of the adequacy of the reserve for possible loan
losses is reviewed periodically by the Company's independent public
accountants.
As of December 31, 1996, the reserve for possible loan losses
totaled $12.2 million. Based on the processes described above,
management believes that the level of the reserve for possible loan
losses at December 31, 1996 is adequate. A review of the Bank's loan
portfolio and its reserve for possible loan losses as of June 30, 1996
was also conducted by the Commonwealth of Massachusetts, Division of
Banks. Notwithstanding the foregoing, since the level of the reserve is
based on an estimate of future events, ultimate loan losses may vary
from current estimates.
Investment Activities
The Bank's securities portfolio primarily consists of U.S.
Treasury and U.S. Government Agency securities, mortgage-backed
securities, and, to a lesser extent, securities issued by states,
counties and municipalities. Most of these securities are A-rated (or
equivalent) debt obligations with average lives of less than five years.
Government and government agency securities entail a lesser degree of
risk than loans made by the Bank by virtue of the guarantees that back
them, require less capital under risk-based capital rules than
non-insured or non-guaranteed mortgage loans, are more liquid than
individual mortgage loans, and may be used to collateralize borrowings
or other obligations of the Bank. However, these securities are subject
to prepayment risk which could result in significantly less future
income than would have been the case based on the contractual coupon
rate and term. In addition the Bank had $4,800,000 in private issue
mortgage backed securities at December 31, 1996. The Bank had no
investments in marketable equity securities at December 31, 1996 or
1995, and presently has no intention to make investments in such
securities.
The Bank views its securities portfolio as a source of income
and, with regard to maturing securities, liquidity. Interest payments
generated from securities also provides a source of liquidity to fund
loans and meet short-term cash needs. The Bank's securities
14
portfolio is managed in accordance with the Rockland Trust Company
Investment Policy adopted by the Board of Directors. Investments may be
made by the Chief Executive Officer or the Chief Financial Officer with
the approval of one additional member of the Asset/Liability Management
Committee, subject to limits on the type, size and quality of all
investments, which are specified in the Investment Policy. The Bank's
Asset/Liability Management Committee, or its designee, is required to
evaluate any proposed purchase from the standpoint of overall
diversification of the portfolio.
The investment portfolio includes securities which management
intends to hold until maturity and securities available for sale. This
classification of the securities portfolio is required by Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting For Certain
Investments in Debt and Equity Securities," which the Bank adopted
effective January 1, 1994.
Securities held to maturity as of December 31, 1996 are carried
at their amortized cost of $290.9 million and exclude gross unrealized
gains of $1.2 million and gross unrealized losses of $3.2 million. A
year earlier, securities held to maturity totaled $226.9 million,
excluding gross unrealized gains of $2.1 million and gross unrealized
losses of $1.6 million.
Securities available for sale are carried at fair market value
and unrealized gains and losses, net of the related tax effect, are
recognized as a separate component of stockholders' equity. The fair
market value of securities available for sale at December 31, 1996
totaled $26.4 million, and net unrealized losses totaled $135,000. A
year earlier, securities available for sale were $32.6 million, with net
unrealized losses of $60,000. In the fourth quarter of 1995, the Bank
transferred $28.6 million of securities from held to maturity status to
available for sale in accordance with the "FASB Special Report, A Guide
to the Implementation of SFAS No. 115."
The following table sets forth the amortized cost and percentage
distribution of securities held to maturity at the dates indicated. For
additional information, see Note 3 to the Consolidated Financial
Statements included in Item 8 hereof.
At December 31,
--------------------------------------------------------
1996 1995 1994
---------------- --------------------- -----------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
(Dollars in Thousands)
U.S. treasury and
government
agency securities $71,104 24.4% $73,484 32.4% $70,904 27.6%
Mortgage-backed
securities 193,854 66.7 128,361 56.6 157,197 61.2
Collateralized
mortgage
obligations 19,526 6.7 17,473 7.7 24,259 9.5
State. county, and
municipal
securities 5,410 1.9 6,578 2.9 3,425 1.3
Other investment
securities 1,000 0.3 1,000 0.4 1,000 0.4
------- ----- ------- ----- ------- -----
$290,894 100.0% $226,896 100.0% $256,785 100.0%
======= ===== ======= ===== ======= =====
15
The following table sets forth the fair market value and
percentage distribution of securities available for sale at the dates
indicated. For additional information, see Note 3 to the Consolidated
Financial Statements included in Item 8 hereof.
At December 31,
---------------------------------------------------
1996 1995 1994
---------------- ---------------- -----------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
(Dollars in Thousands)
Mortgage-backed $24,796 93.8% $29,676 91.0% $4,250 100.0%
securities
Collateralized
mortgage
obligations $1,653 6.2% $2,952 9.0% --- ---
------- ------ ------- ------ ------ ------
$26,449 100.0% $32,628 100.0% $4,250 100.0%
======= ====== ======= ====== ====== ======
At December 31, 1996 and 1995, the Bank had no investment in
obligations of individual states, counties or municipalities which
exceeded 10% of stockholders' equity. In addition, there were no sales
of securities in 1996, 1995, or 1994.
Sources of Funds
Deposits. Deposits obtained through Rockland's branch banking
network have traditionally been the principal source of the Bank's funds
for use in lending and for other general business purposes. The Bank has
built a stable base of in-market core deposits from the residents of and
businesses located in Southeastern Massachusetts. The Bank does not
solicit nor accept brokered deposits. Rockland offers a range of demand
deposits, NOW accounts, money market accounts, savings accounts and time
certificates of deposit. Interest rates on deposits are based on factors
which include loan demand, deposit maturities, and interest rates
offered by competing financial institutions in the Bank's market area.
The Bank believes it has been able to attract and maintain satisfactory
levels of deposits based on the level of service it provides to its
customers, the convenience of its banking locations, and its interest
rates which are generally competitive with those of competing financial
institutions.
Rockland's branch locations are supplemented by the Bank's
Trust/24 card which may be used to conduct various banking transactions
at automated teller machines ("ATMs") maintained at each of the Bank's
full-service offices and three additional locations. The Trust/24 card
also allows customers access to the "NYCE" regional ATM network, as well
as the "Cirrus" nationwide ATM network. These networks provide the
Bank's customers access to their accounts through ATMs located
throughout Massachusetts, the United States, and the world.
16
The following table sets forth the average balances of the Bank's
deposits for the periods indicated.
Year Ended December 31,
---------------------------------------------------------
1996 1995 1994
------------------ ------------------- ------------------
(Dollars in Thousands)
Amount Percent Amount Percent Amount Percent
Demand deposits $161,475 18.9% $153,142 18.7% $141,533 18.5%
Savings and NOW
accounts 257,294 30.2% 261,302 32.0% 290,719 37.9%
Money Market and
Super NOW accounts 105,706 12.4% 110,431 13.5% 119,347 15.6%
Time deposits 328,232 38.5% 292,206 35.8% 214,780 28.0%
--------- ------ -------- ----- -------- -----
Total $852,707 100.0% $817,081 100.0% $766,379 100.0%
========= ====== ======== ===== ======== =====
The Bank's interest-bearing time certificates of deposit of
$100,000 or more totaled $45.9 million at December 31, 1996. The
maturity of these certificates is as follows: $20.3 million within three
months; $14.8 million over three through 12 months; and $10.8 million
thereafter.
Borrowings. Borrowings consist of short-term and
intermediate-term obligations. Short-term borrowings consist primarily
of federal funds purchased, assets sold under repurchase agreements, and
treasury tax and loan notes. The Bank has established two unsecured
federal funds lines totaling $20 million with Boston-based banks. The
Bank also obtains funds under repurchase agreements. In a repurchase
agreement transaction, the Bank will generally sell a security agreeing
to repurchase either the same or a substantially identical security on a
specified later date at a price slightly greater than the original sales
price. The difference in the sale price and purchase price is the cost
of the proceeds. The securities underlying the agreements are delivered
to the dealer who arranges the transactions as security for the
repurchase obligation. Payments on such borrowings are interest only
until the scheduled repurchase date, which generally occurs within a
period of 30 days or less. Repurchase agreements represent a non-deposit
funding source for the Bank. However, the Bank is subject to the risk
that the lender may default at maturity and not return the collateral.
In order to minimize this potential risk, the Bank only deals with
established investment brokerage firms when entering into these
transactions. The Bank has repurchase agreements with five major
brokerage firms. At December 31, 1996, the Bank had no outstanding
balances under repurchase agreements.
In July 1994, Rockland became a member of the Federal Home Loan
Bank ("FHLB") of Boston. Among the many advantages of this membership,
this affiliation provides the Bank with access to approximately $386
million of short-to-medium term borrowing capacity as of December 31,
1996, based on the Bank's assets at that time. At December 31, 1996, the
Bank had $78 million outstanding in FHLB borrowings with initial
maturities ranging from 2 to 9 months.
17
While the Bank has not traditionally placed significant reliance
on borrowings as a source of liquidity, it established the borrowing
arrangements described above in order to provide management with greater
flexibility in overall funds management.
Management believes that the Bank has adequate liquidity
available to respond to current and anticipated liquidity demands. See
Notes 3 and 6 of the Notes to Consolidated Financial Statements,
included in Item 8 hereof.
The following table sets forth the Bank's borrowings at the dates
indicated.
At December 31,
1996 1995 1994
-------------------------------------------
(in Thousands)
Federal funds purchased $840 $4,060 $1,165
Assets sold under
repurchase agreements --- --- 25,420
Treasury tax and loan
notes 2,296 4,031 3,802
Federal Home Loan
Bank borrowings 78,000 20,000 25,000
Subordinated capital
notes --- 4,843 4,965
------ ------ ------
$81,136 $32,934 $60,352
====== ====== ======
The following table presents certain information regarding the
Bank's short-term borrowings at the dates and for the periods indicated.
At or For the Year Ended December 31,
---------------------------------
1996 1995 1994
---------------------------------
(Dollars in Thousands)
Balance outstanding at end of year $3,136 $8,091 $30,387
Average daily balance outstanding 26,534 18,995 18,034
Maximum balance outstanding at
any month-end 44,545 63,988 30,387
Weighted average interest rate
for the year 5.36% 5.74% 4.03%
Weighted average interest rate
at end of year 5.35% 4.36% 5.74%
Trust and Financial Services
Rockland's Trust and Financial Services Division offers a variety
of trust and financial services. Financial services, including
assistance with investments, estate planning, custody services, employee
benefit plans, and tax planning, are provided primarily to individuals
and small businesses located in Southeastern Massachusetts. In addition,
the Bank acts as executor or administrator of estates and as trustee for
various types of trusts. As of December 31, 1996, the Trust and
Financial Services Division maintained approximately 1,550
trust/fiduciary accounts, with an aggregate market value of over $438
million on that date. Income from the Trust and Financial Services
Division amounted to $2.8 million and $2.4 million, for 1996 and 1995,
respectively.
Accounts maintained by the Trust and Financial Services Division
consist of "managed" and "non-managed" accounts. "Managed accounts" are
those accounts under
18
custody for which Rockland has responsibility for administration and
investment management and/or investment advice. "Non-managed" accounts
are those accounts for which Rockland acts as a custodian. The Bank
receives fees dependent upon the level and type of service(s) provided.
The administration of trust and fiduciary accounts is monitored
by the Trust Committee of the Bank's Board of Directors. The Trust
Committee has delegated administrative responsibilities to two
committees - one for investments and one for administration - comprised
of Trust and Financial Services Division officers who meet no less than
monthly.
Regulation
The Company - General. The Company, as a federally registered
bank holding company, is subject to regulation and supervision by the
Federal Reserve Board (the "Federal Reserve"). The Company is required
to file an annual report of its operations with, and is subject to
examination by, the Federal Reserve.
BHCA - Activities and Other Limitations. The BHCA prohibits a
bank holding company from acquiring direct or indirect ownership or
control of more than 5% of the voting shares of any bank, or increasing
such ownership or control of any bank, without prior approval of the
Federal Reserve. No approval under the BHCA is required, however, for a
bank holding company already owning or controlling 50% of the voting
shares of a bank to acquire additional shares of such bank.
The BHCA also prohibits a bank holding company from, with certain
exceptions, acquiring more than 5% of the voting shares of any company
that is not a bank and from engaging in any business other than banking
or managing or controlling banks. Under the BHCA, the Federal Reserve is
authorized to approve the ownership of shares by a bank holding company
in any company, the activities of which the Federal Reserve has
determined to be so closely related to banking or to managing or
controlling banks as to be a proper incident thereto. In making such
determination, the Federal Reserve is required to weigh the expected
benefit to the public, such as greater convenience, increased
competition or gains in efficiency, against the possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or unsound banking practices.
The Federal Reserve has, by regulation, determined that certain
activities are closely related to banking within the meaning of the
BHCA. These activities include, but are not limited to, operating a
mortgage company, finance company, credit card company, factoring
company, trust company or savings association; performing certain data
processing operations; providing certain securities brokerage services;
acting as an investment or financial adviser; acting as an insurance
agent for certain types of credit-
19
related insurance; engaging in insurance underwriting under certain
limited circumstances; leasing personal property on a full-payout,
nonoperating basis; providing tax planning and preparation services;
operating a collection agency and a credit bureau; providing consumer
financial counseling; and providing certain courier services. The
Federal Reserve also has determined that certain other activities,
including real estate brokerage and syndication, land development,
property management and, except under limited circumstances,
underwriting of life insurance not related to credit transactions are
not closely related to banking and are not a proper incident thereto.
Interstate Banking Legislation. On September 24, 1994, President
Clinton signed, and as of September 29, 1995, the Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994 (the "Interstate Act")
became effective. The Interstate Act facilitates interstate branching by
permitting (i) bank holding companies that are adequately capitalized
and adequately managed to acquire banks outside their home states
regardless of whether such acquisitions are permissible under the laws
of the target bank's home state; (ii) commencing June 1, 1997,
interstate bank mergers regardless of state law, unless a state
specifically "opts out" or "opts in" after September 29, 1994 and prior
to June 1, 1997; (iii) banks to establish new branches on an interstate
basis provided the state of the new branch specifically permits such
activity; (iv) foreign banks to establish, with regulatory approval,
foreign branches outside their home state to the same extent as if they
were national or state banks; and (v) affiliates of banks in different
states to receive deposits, renew time deposits, close loans, service
loans, and receive loan payments on loans and other obligations as
agents for each other. Massachusetts has "opted in" to the interstate
branching provisions of the Interstate Act. See discussion under
"Massachusetts Law" elsewhere in this section. In October, 1996, the
banking regulators of the six New England states signed a New England
Cooperative Agreement facilitating and addressing the regulation of
state banks with multistate operations in New England.
Capital Requirements. The Federal Reserve has adopted capital
adequacy guidelines pursuant to which it assesses the adequacy of
capital in examining and supervising a bank holding company and in
analyzing applications to it under the BHCA. The Federal Reserve's
capital adequacy guidelines which generally require bank holding
companies to maintain total capital equal to 8% of total risk-adjusted
assets, with at least one-half of that amount consisting of Tier 1, or
core, capital and up to one-half of that amount consisting of Tier 2, or
supplementary, capital. Tier 1 capital for bank holding companies
generally consists of the sum of common stockholders' equity and
perpetual preferred stock (subject in the case of the latter to
limitations on the kind and amount of such stocks which may be included
as Tier 1 capital), less goodwill and other intangible assets required
to be deducted from capital. Tier 2 capital generally consists of hybrid
capital instruments: perpetual preferred stock which is not eligible to
be included as Tier 1 capital; term subordinated debt and
intermediate-term preferred stock; and, subject to limitations, the
reserve for loan losses. Assets are adjusted under the risk-based
guidelines to take into account different risk characteristics, with the
categories ranging
20
from 0% (requiring no additional capital) for assets such as cash to
100% for the majority of assets which are typically held by a bank
holding company, including commercial real estate loans, commercial
loans and consumer loans. Single family residential first mortgage loans
which are not 90 days or more past due or nonperforming and which have
been made in accordance with prudent underwriting standards are assigned
a 50% level in the risk-weighting system, as are certain
privately-issued mortgage-backed securities representing indirect
ownership of such loans and certain multi-family housing loans.
Off-balance sheet items also are adjusted to take into account certain
risk characteristics.
In addition to the risk-based capital requirements, the Federal
Reserve requires bank holding companies to maintain a minimum leverage
capital ratio of Tier 1 capital to total assets of 3.0%. Total assets
for this purpose does not include goodwill and any other intangible
assets or investments that the Federal Reserve determines should be
deducted from Tier 1 capital. The Federal Reserve has announced that the
3.0% Tier 1 leverage capital ratio requirement is the minimum for the
top-rated bank holding companies without any supervisory, financial or
operational weaknesses or deficiencies or those which are not
experiencing or anticipating significant growth. Other bank holding
companies (including the Company) will be expected to maintain Tier 1
leverage capital ratios of at least 4.0% to 5.0% or more, depending on
their overall condition.
The Company currently is in compliance with the above-described
regulatory capital requirements. At December 31, 1996, the Company had
Tier 1 capital and total capital equal to 10.89% and 12.15% of total
risk-adjusted assets, respectively, and Tier 1 leverage capital equal to
7.35 % of total assets. As of such date, Rockland complied with the
applicable federal regulatory capital requirements, with Tier 1 capital
and total capital equal to 10.73% and 11.99% of total risk-adjusted
assets, respectively, and Tier 1 leverage capital equal to 7.23% of
total assets.
Commitments to Affiliated Institutions. Under Federal Reserve
policy, the Company is expected to act as a source of financial strength
to Rockland and to commit resources to support Rockland in circumstances
when it might not do so absent such policy.
Limitations on Acquisitions of Common Stock. The federal Change
in Bank Control Act ("CBCA") prohibits a person or group of persons from
acquiring "control" of a bank holding company or bank unless the
appropriate federal bank regulator has been given 60 days prior written
notice of such proposed acquisition and within that time period such
regulator has not issued a notice disapproving the proposed acquisition
or extending for up to another 30 days the period during which such a
disapproval may be issued. An acquisition may be made prior to
expiration of the disapproval period if such regulator issues written
notice of its intent not to disapprove the action. Under a rebuttable
presumption established under the CBCA regulations, the acquisition of
10% or more of a class of voting stock of a bank holding company or a
FDIC-insured bank, with a class of securities registered under or
subject to the requirements of Section 12 of
21
the Securities Exchange Act of 1934 would, under the circumstances
set forth in the presumption, constitute the acquisition of control.
In addition, any "company" would be required to obtain the
approval of the Federal Reserve under the BHCA before acquiring 25% (5%
in the case of an acquirer that is a bank holding company) or more of
the outstanding common stock of, or such lesser number of shares as
constitute control over, the Company. Such approval would be contingent
upon, among other things, the acquirer registering as a bank holding
company, divesting all impermissible holdings and ceasing any activities
not permissible for a bank holding company.
Massachusetts Law. Massachusetts law requires all Massachusetts
bank holding companies (those companies which control, own, or have the
power to vote 25% or more of the stock of each of two or more
Massachusetts based banks) to receive prior written approval of the
Massachusetts Board of Bank Incorporation to, among other things,
acquire all or substantially all of the assets of a banking institution
located within the Commonwealth of Massachusetts or to merge or
consolidate with a Massachusetts bank holding company. The Company owns
no voting stock in any banking institution other than Rockland. In
addition, prior approval of the Board of Bank Incorporation is required
before any Massachusetts bank holding company owning 25% or more of the
stock of two banking institutions may acquire additional voting stock in
those banking institutions equal to 5% or more. Generally, no approval
to acquire a banking institution, acquire additional shares in an
institution, acquire substantially all the assets of a banking
institution or merge or consolidate with another bank holding company
may be given if, as a result, the bank holding company would control in
excess of 30% of the total deposits of all state and federally chartered
banks in Massachusetts. Similarly, no bank which is not a member of the
Federal Reserve can merge or consolidate with any other insured
depository institution or, either directly or indirectly, acquire the
assets of or assume the liability to pay any deposits made in any other
depository institution except with the prior written approval of the
FDIC.
As noted above, Massachusetts "opted in" to the Interstate Act in
1996. As such, any out-of-state bank may engage, with the written
approval of the Commissioner, in a merger transaction with a
Massachusetts bank to the fullest extent permitted by the Interstate
Act, provided that the laws of the home state of such out-of-state bank
permit, under conditions no more restrictive than those imposed by
Massachusetts, interstate merger transactions with Massachusetts banks,
and provided further that the Massachusetts bank has been in existence
for at least three years and the resulting bank would not control 30% or
more of the total deposits of all state and federally chartered
depository institutions in Massachusetts. The Commissioner may waive the
latter two conditions, in his discretion. Such a merger transaction may
also involve the acquisition of one or more branches of a Massachusetts
bank and not the entire institution. With the prior written approval of
the Commissioner, Massachusetts also permits the establishment of de
novo branches in Massachusetts to the fullest extent permitted by the
Interstate Act,
22
provided the laws of the home state of such out-of-state bank expressly
authorize, under conditions no more restrictive than those of
Massachusetts, Massachusetts banks to establish and operate do novo
branches in such state.
With the prior written approval of the Massachusetts Board of
Bank Incorporation, a bank holding company (as defined under the BHCA)
whose principal operations are located in a state other than
Massachusetts may acquire more than 5% of the voting stock of a
Massachusetts bank or may merge with a Massachusetts bank holding
company or a Massachusetts bank, provided that the Massachusetts Board
of Bank Incorporation is satisfied that the transaction will not result
in the out-of-state bank holding company holding or controlling more
than 30% of the deposits of all state and federally chartered depository
institutions in Massachusetts or such condition is affirmatively waived
by the Board.
Subsidiary Bank - General. Rockland is subject to extensive
regulation and examination by the Commissioner and by the FDIC, which
insures its deposits to the maximum extent permitted by law, and to
certain requirements established by the Federal Reserve. The federal and
state laws and regulations which are applicable to banks regulate, among
other things, the scope of their business, their investments, their
reserves against deposits, the timing of the availability of deposited
funds and the nature and amount of and collateral for certain loans. The
laws and regulations governing Rockland generally have been promulgated
to protect depositors and not for the purpose of protecting
stockholders.
Deposit Insurance Premiums. Rockland currently pays deposit
insurance premiums to the FDIC based on a single, uniform assessment
rate established by the FDIC for all BIF-member institutions. The
assessment rates range from 0% to .27%. Under the FDIC's risk-based
assessment system, institutions are assigned to one of three capital
groups which assignment is based solely on the level of an institution's
capital - "well capitalized, " "adequately capitalized," and
"undercapitalized" - which are defined in the same manner as the
regulations establishing the prompt corrective action system under
Section 38 of the Federal Deposit Insurance Act ("FDIA"), as discussed
below. These three groups are then divided into three subgroups which
reflect varying levels of supervisory concern, from those which are
considered to be healthy to those which are considered to be of
substantial supervisory concern. The matrix so created results in nine
assessment risk classifications, with rates ranging from 0% for well
capitalized, healthy institutions to .27% for undercapitalized
institutions with substantial supervisory concerns. Rockland is
presently "well capitalized" and as a result has no FDIC premium
obligation as of January 1, 1997.
The FDIC Board of Directors voted in 1996 to collect an
assessment against BIF assessable deposits to be paid to the Financing
Corporation (FICO). The Board stipulated that the FICO assessment rate
that is applied to BIF assessable deposits must equal one-fifth of the
rate that is applied to SAIF assessable deposits. The actual assessment
rates
23
are approximately 1.29 basis points, on an annual basis, for BIF
assessable deposits and approximately 6.44 basis points for SAIF
assessable deposits.
Capital Requirements. The FDIC has promulgated regulations and
adopted a statement of policy regarding the capital adequacy of
state-chartered banks which, like Rockland, are not members of the
Federal Reserve System. These requirements are substantially similar to
those adopted by the Federal Reserve regarding bank holding companies,
as described above.
The FDIC's capital regulations establish a minimum 3.0% Tier 1
leverage capital requirement for the most highly-rated state-chartered,
nonmember banks, with an additional cushion of at least 100 to 200 basis
points for all other state-chartered, nonmember banks, which effectively
will increase the minimum Tier 1 leverage capital ratio for such banks
to 4.0% or 5.0% or more. Under the FDIC's regulations, the highest-rated
banks are those that the FDIC determines are not anticipating or
experiencing significant growth and have well diversified risk,
including no undue interest rate risk exposure, excellent asset quality,
high liquidity, good earnings and in general which are considered strong
banking organizations, rated composite 1 under the Uniform Financial
Institutions Rating System. A bank having less than the minimum leverage
capital requirement shall, within 45 days of the date as of which it
receives notice or is deemed to have notice that it is undercapitalized,
submit to its FDIC regional director for review and approval a written
capital restoration plan describing the means and timing by which the
bank shall achieve its minimum leverage capital requirement. A bank
which fails to file such plan with the FDIC is deemed to be operating in
an unsafe and unsound manner, and could subject the bank to a cease and
desist order from the FDIC. The FDIC's regulations also provide that any
insured depository institution with a ratio of Tier 1 capital to total
assets that is less than 2.0% is deemed to be operating in an unsafe or
unsound condition pursuant to Section 8(a) of the FDIA and is subject to
potential termination of deposit insurance. However, such an institution
will not be subject to an enforcement proceeding thereunder solely on
account of its capital ratios if it has entered into and is in
compliance with a written agreement with the FDIC to increase its Tier 1
leverage capital ratio to such level as the FDIC deems appropriate and
to take such other action as may be necessary for the institution to be
operated in a safe and sound manner. The FDIC capital regulation also
provides for, among other things, the issuance by the FDIC or its
designee(s) of a capital directive, which is a final order issued to a
bank that fails to maintain minimum capital to restore its capital to
the minimum leverage capital requirement within a specified time period.
Such directive is enforceable in the same manner as a final cease and
desist order.
Pursuant to the requirements of the FDIA, each federal banking
agency has adopted or proposed regulations relating to its review of and
revisions to its risk-based capital standards for insured institutions
to ensure that those standards take adequate account of interest-rate
risk, concentration of credit risk and the risks of non-traditional
24
activities, as well as to reflect the actual performance and expected
risk of loss on multi-family residential loans.
Prompt Corrective Action. Under Section 38 of the FDIA, as
amended by the Federal Deposit Insurance Corporation Improvement Act
("FDICIA"), each federal banking agency has broad powers to implement a
system of prompt corrective action to resolve problems of institutions
which it regulates which are not adequately capitalized. Under FDICIA, a
bank shall be deemed to be (i) "well capitalized" if it has total
risk-based capital of 10.0% or more, has a Tier 1 risk-based capital
ratio of 6.0% or more, has a Tier 1 leverage capital ratio of 5.0% or
more and is not subject to any written capital order or directive; (ii)
"adequately capitalized" if it has a total risk-based capital ratio of
8.0% or more, a Tier 1 risk-based capital ratio of 4.0% or more, a Tier
1 leverage capital ratio of 4.0% or more (3.0% under certain
circumstances) and does not meet the definition of "well capitalized";
(iii) "undercapitalized" if it has a total risk-based capital ratio that
is less than 8.0%, or a Tier 1 risk-based capital ratio that is less
than 4.0% or a Tier 1 leverage capital ratio of less than 4.0% (3.0%
under certain circumstances); (iv) "significantly undercapitalized" if
it has a total risk-based capital ratio that is less than 6.0%, or a
Tier 1 risk-based capital ratio that is less than 3.0%, or a Tier 1
leverage capital ratio that is less than 3.0%; and (v) "critically
undercapitalized" if it has a ratio of tangible equity to total assets
that is equal to or less than 2.0%. FDICIA also specifies circumstances
under which a federal banking agency may reclassify a well capitalized
institution as adequately capitalized and may require an adequately
capitalized institution or an undercapitalized institution to comply
with supervisory actions as if it were in the next lower category
(except that the FDIC may not reclassify a significantly
undercapitalized institution as critically undercapitalized). As of
December 31, 1996, Rockland was deemed a "well-capitalized institution"
for this purpose.
Brokered Deposits. FDICIA restricts the use of brokered deposits
by certain depository institutions. Well capitalized insured depository
institutions may solicit and accept, renew or roll over any brokered
deposit without restriction. Adequately capitalized insured depository
institutions may not accept, renew or roll over any brokered deposit
unless they have applied for and been granted a waiver of this
prohibition by the FDIC. Undercapitalized insured depository
institutions may not (i) accept, renew or roll over any brokered deposit
or (ii) solicit deposits by offering an effective yield that exceeds by
more than 75 basis points the prevailing effective yields on insured
deposits of comparable maturity in such institution's normal market area
or in the market area in which such deposits are being solicited. While
Rockland can solicit and accept brokered deposits, the Bank historically
has not relied upon brokered deposits as a source of funding and, at
December 31, 1996, the Bank did not have any brokered deposits. See
"Sources of Funds - Deposits. "
Safety and Soundness. In August, 1995, the FDIC adopted
regulations pursuant to FDICIA relating to operational and managerial
safety and soundness standards for financial institutions relating to
internal controls, information systems and internal audit
25
systems, loan documentation, credit underwriting, interest rate
exposure, asset growth and compensation, fees, and benefits. The
standards are to serve as guidelines for institutions to help identify
potential safety and soundness concerns. If an institution fails to meet
any safety and soundness standard, the FDIC may require it to submit a
written safety and soundness compliance plan within thirty (30) days
following a request therefor, and if it fails to do so or fails to
correct safety and soundness deficiencies, the FDIC may take
administrative enforcement action against the institution, including
assessing civil money penalties, issuing supervisory orders and other
available remedies.
Miscellaneous. Rockland is subject to certain restrictions on
loans to the Company, on investments in the stock or securities thereof,
on the taking of such stock or securities as collateral for loans to any
borrower, and on the issuance of a guarantee or letter of credit on
behalf of the Company. Rockland also is subject to certain restrictions
on most types of transactions with the Company, requiring that the terms
of such transactions be substantially equivalent to terms of similar
transactions with non-affiliated firms. In addition under state law,
there are certain conditions for and restrictions on the distribution of
dividends to the Company by Rockland.
In addition to the laws and regulations discussed above,
regulations have been promulgated under FDICIA which increase the
requirements for independent audits, set standards for real estate
lending and increase lending restrictions with respect to bank officers
and directors. FDICIA also contains provisions which amend various
consumer banking laws, limit the ability of "undercapitalized banks" to
borrow from the Federal Reserve Board's discount window, and require
regulators to perform annual on-site bank examinations.
Regulatory Enforcement Authority. The Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") included
substantial enhancement to the enforcement powers available to federal
banking regulators, This enforcement authority includes, among other
things, the ability to assess civil money penalties, to issue cease and
desist or removal orders and to initiate injunctive actions against
banking organizations and institution-affiliated parties, as defined. In
general, these enforcement actions may be initiated for violations of
laws and regulations and unsafe or unsound practices. Other actions or
inaction's may provide the basis for enforcement action, including
misleading or untimely reports filed with regulatory authorities. FIRREA
significantly increased the amount of and grounds for civil money
penalties and requires, except under certain circumstances, public
disclosure of final enforcement actions by the federal banking agencies.
The foregoing references to laws and regulations which are
applicable to the Company and Rockland are brief summaries thereof which
do not purport to be complete and which are qualified in their entirety
by reference to such laws and regulations.
26
Federal Taxation. The Company and its subsidiaries are subject to
those rules of federal income taxation generally applicable to
corporations under the Internal Revenue Code (the "Code"). The Company
and its subsidiaries, as members of an affiliated group of corporations
within the meaning of Section 1504 of the Code, file a consolidated
federal income tax return, which has the effect of eliminating or
deferring the tax consequences of inter-company distributions, including
dividends, in the computation of consolidated taxable income.
State Taxation. The Commonwealth of Massachusetts imposes a tax
on the Massachusetts net income of banks at a rate of 11.72% as of
December 31, 1996. As a result of legislation in 1995, the state tax
rate for financial institutions and their related corporations will be
gradually reduced to 10.5% by January 1, 1999. In addition, the Company
is subject to an excise tax at the rate of .26% of its net worth. The
Bank's security corporation subsidiary is, for state tax purposes, taxed
at a rate of 1.32% of its gross income. Massachusetts net income for
banks is generally similar to federal taxable income except deductions
with respect to the following items are generally not allowed: (i)
dividends received, (ii) losses sustained in other taxable years, and
(iii) income or franchise taxes imposed by other states. The Company is
permitted to carry a percentage of its losses forward for not more than
five years, while Rockland is not permitted to carry its losses forward
or back for Massachusetts tax purposes.
For additional information, see Note 8 of the Notes to
Consolidated Financial Statements included in Item 8 hereof.
Item 2. Properties
At February 28, 1997, the Bank conducted its business from its
headquarters and main office at 288 Union Street, Rockland,
Massachusetts, and 32 other branch offices located in Southeastern
Massachusetts in Plymouth County, Bristol County and Norfolk County. In
addition to its main office, the Bank owns four of its branch offices
and leases the remaining 28 offices. Of the branch offices which are
leased by the Bank, 16 have remaining lease terms, including options
renewable at the Bank's option, of five years or less, eleven have
remaining lease terms of greater than five years and less than 10 years,
and one has a remaining lease term of 10 years or more. The Bank's
aggregate rental expense under such leases was $1.6 million in 1996.
Certain of the Bank's branch offices are leased from companies with whom
directors of the Company are affiliated. The Bank leases space for its
Trust and Financial Services Division in a building in Hanover,
Massachusetts developed by a joint venture consisting of the Bank and A.
W. Perry, Inc., and in Attleboro. It also leases office space in two
buildings in Rockland, Massachusetts for administrative purposes as well
as space in four additional facilities used as lending centers. At
December 31, 1996, the net book value of the property and leasehold
improvements of the offices of the Bank amounted to $5.7 million. The
Bank's properties which are not leased are owned free and clear of any
mortgages. The Bank believes that
27
all of its properties are well maintained and are suitable for their
respective present needs and operations. For additional information
regarding the Bank's lease obligations, see Note 12 to the Consolidated
Financial Statements, included in Item 8 hereof.
Item 3. Legal Proceedings
The Company is involved in routine legal proceedings which arise
in the ordinary course of business. Management has reviewed these
actions with legal counsel and has taken into consideration the view of
counsel as to the outcome of the litigation. In the opinion of
management, final disposition of these lawsuits is not expected to have
a material adverse effect on the Company's financial position or results
of operation.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
28
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The information required herein is incorporated by reference from
page 40 of the Company's 1996 Annual Report to Stockholders ("Annual
Report"), which is included herein as Exhibit 13. The Registrant did not
sell any unregistered equity securities during the year-ended December
31, 1996.
Item 6. Selected Financial Data
The information required herein is incorporated by reference
from page 5 of the Annual Report.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information required herein is incorporated by reference from
pages 6 through 19 of the Annual Report.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data required herein
are incorporated by reference from pages 20 through 37 of the Annual
Report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None
29
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required herein is incorporated by reference from
the Company's definitive proxy statement (the "Proxy Statement")
relating to its 1997 Annual Meeting of Stockholders filed with the
Commission on March 20, 1997.
Item 11. Executive Compensation
The information required herein is incorporated by reference from
the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required herein is incorporated by reference from
the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information required herein is incorporated by reference from
the Proxy Statement.
30
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a)(1) The following financial statements are incorporated herein
by reference from pages 20 through 37 of the Annual Report.
Report of Independent Public Accountants
Consolidated balance sheets as of December 31, 1996 and 1995
Consolidated statements of income for each of the years in the
three year period ended December 31, 1996
Consolidated statements of cash flows for each of the years in
the three year period ended December 31, 1996
Notes to Consolidated Financial Statements
(a)(2) There are no financial statement schedules filed
herewith.
All information required by financial statement schedules is
disclosed in Notes to Consolidated Financial Statements or is not
applicable to the Company.
(a)(3) The following exhibits are filed as part of this report.
EXHIBIT INDEX
No. Exhibit Page
---- ------- ----
3.(i) Restated Articles of Organization, as (5)
amended to date
3.(ii) Bylaws of the Company, as amended (1)
to date
4.1 Specimen Common Stock Certificate (4)
4.2 Specimen Preferred Stock Purchase (2)
Rights Certificate
4.3 Amended and Restated Independent (6)
Bank Corp. 1987 Incentive Stock
Option Plan ("Stock Option Plan").
(Management contract under Item
601(10)(iii)(A).
31
No. Exhibit Page
------- ------------------------------------ ----
4.4 Independent Bank Corp. 1996 (8)
Non-Employee Directors' Stock
Option Plan (Management contract
under Item 901(10)(iii)(A)).
4.5 Independent Bank Corp. 1997 (9)
Employee Stock Option Plan
(Management contract under
Item 601 (10)(iii)(A)).
10.1 Second amended and Restated (7)
Employment Agreement between the
Company, Rockland and Douglas H.
Philipsen, dated February 21, 1996
("Philipsen Employment Agreement").
(Management contract under Item
601(10)(iii)(A)).
10.2 Second amended and Restated (7)
Employment Agreement between
Rockland Trust Company and Richard
F. Driscoll, dated January 19, 1996
(the "Driscoll Agreement").
Employment Agreements between
Rockland and Richard J. Seaman,
Ferdinand T. Kelley, S. Lee Miller, and
Raymond G. Fuerschbach are
substantially similar to the Driscoll
agreement. (Management contract
under Item 601(10)(iii)(A)).
10.3 Rockland Trust Company Deferred (3)
Compensation Plan for Directors, as
Amended and Restated dated September
1992. (Management contract under Item
601(10)(iii)(A)).
10.4 Stockholders Rights Agreement, dated (2)
January 24, 1991, between the Company
and Rockland, as Rights Agent
32
10.5 Master Securities Repurchase (3)
Agreement
13 Annual Report to Stockholders E - 37
21 Subsidiaries of the Registrant (3)
23 Consent of Independent Public E - 82
Accountants
27 Financial Data Schedule E - 84
(Footnotes on next page)
33
Footnotes:
(1) Incorporated by reference from the Company's report on Form 10-K
for the year ended December 31, 1990.
(2) Exhibit is incorporated by reference to the Form 8-A Registration
Statement (No. 0-19264) filed by the Company.
(3) Exhibit is incorporated by reference to the Form S-1 Registration
Statement (No. 33-52216) filed by the Company.
(4) Incorporated by reference from the Company's report on Form 10-K
for the year ended December 31, 1992.
(5) Incorporated by reference from the Company's report on Form 10-K
for the year ended December 31, 1993.
(6) Incorporated by reference from the Company's report on Form 10-K
for the year ended December 31, 1994.
(7) Incorporated by reference from the Company's report on Form 10-K
for the year ended December 31, 1995.
(8) Incorporated by reference from the Company's definitive Proxy
Statement for the 1996 Annual Meeting of Stockholders filed with
the Commission on March 19, 1996.
(9) Incorporated by reference from the Company's definitive Proxy
Statement for the 1997 Annual Meeting of Stockholders filed with
the Commission on March 20, 1997.
(b) There were no reports on Form 8-K filed by the Company during
the three months ended December 31, 1996.
(c) See (a)(3) above for all exhibits filed herewith and the
Exhibit Index.
(d) All schedules are omitted as the required information is not
applicable or the information is presented in the
Consolidated Financial Statements or related notes.
34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 13, 1997 /s/ John F. Spence, Jr.
---------------------------
John F. Spence, Jr.
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the followings persons on behalf of
the Registrant and in the capacities and on the dates indicated. Each
person whose signature appears below hereby makes, constitutes and
appoints Douglas H. Philipsen, John F. Spence, Jr., Richard Seaman and
each of them acting individually, his true and lawful attorneys, with
full power to sign for such person and in such person's name and
capacity indicated below any and all amendments to this Form 10-K,
hereby ratifying and confirming such person's signature as it may be
signed by said attorneys to any and all amendments.
/s/ Richard S. Anderson Date: March 13, 1997
-----------------------
Richard S. Anderson
Director
/s/ Donald K. Atkins Date: March 13, 1997
--------------------
Donald K. Atkins
Director
/s/ W. Paul Clark Date: March 13, 1997
-----------------
W. Paul Clark
Director
/s/ Robert L. Cushing Date: March 13, 1997
----------------------
Robert L. Cushing
Director
35
/s/ Benjamin A. Gilmore, II Date: March 13, 1997
---------------------------
Benjamin A. Gilmore, II
Director
/s/ Lawrence M. Levinson Date: March 13, 1997
------------------------
Lawrence M. Levinson
Director
/s/ Douglas H. Philipsen Date: March 13, 1997
------------------------
Douglas H. Philipsen
Director and President
/s/ Richard H. Sgarzi Date: March 13, 1997
---------------------
Richard H. Sgarzi
Director
/s/ Robert J. Spence Date: March 13, 1997
---------------------
Robert J. Spence
Director
/s/ William J. Spence Date: March 13, 1997
---------------------
William J. Spence
Director
/s/ Brian S. Tedeschi Date: March 13, 1997
---------------------
Brian S. Tedeschi
Director
/s/ Thomas J. Teuten Date: March 13, 1997
--------------------
Thomas J. Teuten
Director
/s/ Richard J. Seaman Date: March 13, 1997
---------------------
Richard J. Seaman
Chief Financial Officer and Treasurer
(principal financial and accounting officer)
36