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10 Bank Stocks Ready for a 2012 Dividend Boost

9. Independent Bank Corp.

Shares of Independent Bank Corp. (INDB) of Rockland, Mass., closed at $24.86 Friday, for a year-to-date decline of 6%. Based on a quarterly payout of 19 cents, the shares have a dividend yield of 3.06%.

The company had $4.9 billion in total assets as of Sept 30, operating 67 Rockland Trust Co. offices in Eastern Massachusetts, as well as a network of loan production offices and investment management offices in Massachusetts and Rhode Island.

Third-quarter net income was $12.0 million, or 56 cents a share, increasing from $11.1 million, or 52 cents a share, in the second quarter, and $11.1 million, or 53 cents a share, in the third quarter of 2010. The earnings improvement reflected a decline in credit costs, with a third-quarter provision for loan losses of $2.0 million, down from $3.5 million both in the second quarter and in the third quarter of 2010.

The annualized third-quarter operating return on average assets, or ROA, was 1.00%, according to SNL Financial.

Total loans increased 9% year-over-year to $3.7 billion as of Sept 30, while net interest income increased 1% to $41.7 million in the third quarter. The net interest margin -- the difference between a bank's yield on loans and securities investments and its average cost for deposits and wholesale borrowings -- was a tax-adjusted 3.84% in the third quarter, declining from 3.97% the previous quarter and 3.89% a year earlier.

David Darst of Guggenheim securities reiterated his neutral rating on Independent Bank Corp. on Oct. 21, following the company's earnings announcement, saying he expected the net interest margin to "stabilize at ~3.8% as the earning asset yield declines and INDB manages funding costs modestly lower." The analyst's price target for the shares is $26 is 12 times his 2012 earnings estimate of $2.17 a share, "in line with peers" in the New England and Mid-Atlantic regions.

The shares trade for 11.3 times the consensus 2012 EPS estimate of $2.17, among analysts polled by FactSet, and 1.7 times tangible book value, according to SNL.

All five analysts covering Independent Bank Corp. have neutral ratings on the shares.
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