Rockland,Mass.-based Independent Bank Corp.expects to consolidate branches as a result of its pending of Hyannis, Mass.-basedNew England Bancorp Inc.
Independentanticipates about 65% cost savings from the deal given the level of branch overlapbetween the banks. The company plans to consolidate three of the fourBank of Cape Codbranches, including the main office. As a result of branch closures,Independent expects to write off all fixed assets.
Inaddition, the company anticipates a net loan mark of 1%, which is about equalto Bank of Cape Cod's current allowance. Independent's CFO Robert Cozzone saidduring an earnings conference call that Bank of Cape Cod has experiencedminimal loan losses. He said the core deposit intangible of approximately $2million will be amortized over 10 years. The bank expects to realizeapproximately $3 million of onetime after tax expenses, mostly during thefourth quarter.
"Inaddition, due to the relatively high cost of Bank of Cape Cod deposits, we haveplanned for a meaningful deposit runoff," Cozzone said.
Thecompany, with assets of $7.19 billion as of March 31, also addressed thelooming $10 billion assetthreshold. CEO Christopher Oddleifson said the company has addedpeople in compliance and internal audit and hired a capital planning manager tohelp it prepare for Dodd-Frank Act stress tests. "We have had someadditional outside auditor types come in to help us figure out how do we makethis place even more resilient," Oddleifson added.
During the call,Cozzone reaffirmed previous 2016 operating diluted EPS guidance of between$2.90 and $3.00. "Excluding the impact of the New England Bancorpacquisition, the rest of the full-year guidance which I provided previouslyremains unchanged," Cozzone said.
The netinterest margin could be the exception. Cozzone said original guidance of a NIMin the lower 3.40% range "may turn out to be a bit of a stretch"based on the current yield curve.
IndependentBank Corp. on April 21 reportednet income of $18.6 million, or 71 cents per share, for the first quarter,compared to $9.5 million, or 38 cents per share, for the first quarter of 2015.