Independent Bank Corp (Mass) (NASDAQ:INDB) Q2 2019 Earnings Conference Call Transcript

Jul 19, 2019 • 10:00 am ET

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Independent Bank Corp (Mass) (NASDAQ:INDB) Q2 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

We will now begin the question-and-answer session. [Operator instructions] Today's first question comes from David Bishop of D.A. Davidson. Please proceed.

Analyst
David Bishop

Hi, good morning, gentlemen. How are you?

Executive
Christopher Oddleifson

Good morning. [Speech Overlap].

Analyst
David Bishop

Good. A question for you in terms of -- you saw the uptick in deposit costs. I think that was sort of telegraph of some of the pressure, some of the wholesale side of Blue Hills. But, what are you seeing in terms of the marketplace and what are your estimates in terms of the -- maybe that's the pace of growth in funding costs on the deposit side in the second half? Or you think maybe those can plateau just given some of the remix and strong demand you've had on the noninterest-bearing side? Just curious how you're thinking about the deposit costs as we head into the back half of the year?

Executive
Christopher Oddleifson

Sure, David and think you, you hit upon certainly a concept that we're looking at closely, and that's essentially the mix of deposit. As you can look at the second quarter results, we had very strong growth in demand deposit at 4.6%, although we'd love to see that growth continue into the third quarter, that may be a bit outsized. So certainly the mix of deposits could put a little bit of strain on the cost of deposits. On the positive side, we are seeing pricing pressures subside. The competition certainly on the CD pricing is starting to come in and I think the industry expectations over our potential rate cuts is certainly starting to resonate amongst our competitors. So, with all that being said, I think we're -- we feel pretty comfortable that we should be able to remain deposit costs in check, but I would expect maybe a basis point or two increase into the third quarter, probably solely, primarily due to the mix of deposits.

Analyst
David Bishop

Got it. Have you all started lowering -- I guess some of your legacy rates on terms of savings and you see these across the board?

Executive
Robert D. Cozzone

We have not, David. We have lagged, as you'll probably recognize on the way up. We're certainly positioning ourselves to reduce rates, should we actually get a cut from the Fed and use that as the impetus to do so. But as of now, we have not reduced any of our rates on deposits.

Analyst
David Bishop

Got it. And then, sounds like a clearly strong quarter on the origination front. I'm just curious that it sounds like clearly there was some run off in some of the legacy, Blue Hill sectors, maybe talk about sort of the pace, the volume of commercial and residential originations, and I'd be curious just to hear what was the sort of planned attrition on the legacy Blue Hill side versus maybe what was the sort of -- sort of legacy or organic runoff that may have caught you by surprise? That math sound like pretty strong organic loan growth?

Executive
Christopher Oddleifson

Yes, we had very, very strong commercial closings