Franchise strength drives performance in
challenging environment
Independent Bank Corp. (Nasdaq Global Select Market: INDB),
parent of Rockland Trust Company, today announced 2023 third
quarter net income of $60.8 million, or $1.38 per diluted share,
compared to 2023 second quarter net income of $62.6 million, or
$1.42 per diluted share.
The Company generated a return on average assets and a return on
average common equity of 1.25% and 8.35%, respectively, for the
third quarter of 2023, as compared to 1.29% and 8.78%,
respectively, for the prior quarter.
“I am proud of the Company’s fundamental commitment to its
customers and communities, as another quarter of strong business
activity and solid financial results underscores the inherent value
of our relationship banking model,” said Jeffrey Tengel, the Chief
Executive Officer of Independent Bank Corp. and Rockland Trust
Company. “Our strong balance sheet and capital levels position us
well for continuing to successfully navigate forward in a
challenging environment.”
BALANCE SHEET
Total assets of $19.4 billion at September 30, 2023 remained
relatively consistent with the prior quarter and decreased by
$335.2 million, or 1.7%, as compared to the prior year period,
driven primarily by lower cash and securities balances.
Total loans at September 30, 2023 of $14.2 billion increased by
$84.3 million, or 0.6% (2.4% annualized), compared to the prior
quarter. The increase was fueled primarily by consumer real estate,
which increased $117.0 million, or 3.5% (14.0% annualized), for the
quarter, driven primarily by adjustable-rate residential mortgages.
Total commercial loans decreased slightly by $35.9 million, or 0.3%
(1.3% annualized), compared to the prior quarter, reflecting
construction to permanent commercial real estate transfers and
solid closing activity offset by decreased line of credit
utilization.
Deposit balances of $15.1 billion at September 30, 2023
decreased by $188.5 million, or 1.2%, from June 30, 2023, primarily
attributable to seasonal declines in municipal deposits. Reflecting
continued demand for higher rate products, time deposits continue
to experience steady growth with the total cost of deposits for the
quarter increasing 22 basis points to 1.07%. The volume of new
account openings remains robust. Core deposits represented 80.5% of
total deposits at September 30, 2023, compared to 82.6% at June 30,
2023.
Borrowings increased by $99.1 million, or 11.0%, during the
third quarter of 2023, primarily a result of net changes in loans,
deposits, and securities for the quarter.
The securities portfolio decreased by $49.1 million, or 1.6%,
compared to June 30, 2023 driven primarily by paydowns, calls, and
maturities, along with unrealized losses of $10.4 million in the
available for sale portfolio during the third quarter. Total
securities represented 15.4% of total assets at September 30, 2023,
as compared to 15.6% at June 30, 2023.
Stockholders' equity at September 30, 2023 increased 1.1% when
compared to June 30, 2023, driven primarily by strong earnings
retention, partially offset by unrealized losses on the available
for sale investment securities portfolio included in other
comprehensive income. The Company's ratio of common equity to
assets of 14.90% at September 30, 2023 represented an increase of
18 basis points, or 1.2%, from June 30, 2023 and an increase of 60
basis points, or 4.2%, from September 30, 2022. The Company's book
value per share increased by $0.68, or 1.1%, to $65.37 at September
30, 2023 as compared to the prior quarter. The Company's tangible
book value per share at September 30, 2023 rose by $0.72, or 1.7%,
from the prior quarter to $42.60, and represented an increase of
7.7% from the year ago period. The Company's ratio of tangible
common equity to tangible assets of 10.24% at September 30, 2023
represented an increase of 19 basis points from the prior quarter
and an increase of 58 basis points from the year ago period.
Please refer to Appendix A for a detailed reconciliation of
Non-GAAP balance sheet metrics.
In consideration of the Company's strong current capital
position, the Company is announcing a new stock repurchase plan,
which authorizes repurchases by the Company of up to $100 million
in common stock and is scheduled to expire on October 18, 2024.
NET INTEREST INCOME
Net interest income for the third quarter of 2023 decreased 1.7%
to $149.9 million compared to $152.5 million for the prior quarter,
as rising deposit costs slightly outpaced the benefit of repriced
assets. Both the net interest margin and core margin (excluding
purchase accounting and other non-core items) were 3.47% for the
third quarter, representing reductions of 7 basis points and 5
basis points, respectively, as compared to the prior quarter.
Please refer to Appendix C for additional details regarding the
net interest margin and Non-GAAP reconciliation of core
margin.
NONINTEREST INCOME
Noninterest income of $33.5 million for the third quarter of
2023 represented an increase of $2.8 million, or 9.1%, as compared
to the prior quarter. Significant changes in noninterest income for
the third quarter of 2023 compared to the prior quarter included
the following:
- Deposit account and interchange and ATM fees increased by
$758,000, or 7.6%, due primarily to increased overdraft and
treasury management activity.
- Investment management income decreased by $102,000, or 1.0%,
primarily driven by a reduction in seasonal tax preparation fees,
which are primarily recognized during the second quarter, partially
offset by increased insurance commissions. Total assets under
administration declined by $183.2 million, or 2.9%, to $6.1 billion
during the third quarter of 2023, driven primarily by market
depreciation.
- The Company received proceeds on life insurance policies
resulting in gains of $1.9 million for the third quarter, as
compared to gains of $176,000 in the prior quarter.
- Loan level derivative income decreased by $433,000, or 34.0%,
compared to the prior quarter due primarily to lower customer
demand.
- Other noninterest income increased by $703,000, or 11.0%, due
primarily to outsized loan fees and increased Federal Home Loan
Bank dividend income, partially offset by unrealized gains on
equity securities and interest on income tax refunds received in
the prior quarter.
NONINTEREST EXPENSE
Noninterest expense of $97.8 million for the third quarter of
2023 represented an increase of $2.2 million, or 2.3%, as compared
to the prior quarter. Significant changes in noninterest expense
for the third quarter compared to the prior quarter included the
following:
- Salaries and employee benefits increased by $822,000, or 1.5%,
due primarily to increased commissions, timing on certain
retirement benefits, and severance.
- Other noninterest expense increased by $1.5 million, or 6.4%,
due primarily to increased consultant fees, unrealized losses on
equity securities and card issuance costs.
The Company’s tax rate for the third quarter of 2023 decreased
slightly to 24.12%, compared to 24.30% for the prior quarter.
ASSET QUALITY
The third quarter provision for credit losses was $5.5 million,
as compared to $5.0 million in the prior quarter. Net charge-offs
were $5.6 million for the third quarter of 2023, driven
predominantly by a partial charge-off of a single commercial real
estate credit which had previously been placed on nonaccrual and
was largely reserved for during the second quarter. Nonperforming
loans decreased by 14.3% to $39.2 million, or 0.28% of total loans
at September 30, 2023, as compared to $45.7 million, or 0.32% of
total loans at June 30, 2023. Delinquency as a percentage of total
loans decreased eight basis points from the prior quarter to 0.22%
at September 30, 2023.
The allowance for credit losses on total loans remained flat at
$140.6 million, or 0.99% of total loans, at September 30, 2023 and
June 30, 2023, respectively.
CONFERENCE CALL INFORMATION
Jeffrey Tengel, Chief Executive Officer, and Mark Ruggiero,
Chief Financial Officer and Executive Vice President of Consumer
Lending, will host a conference call to discuss third quarter
earnings at 10:00 a.m. Eastern Time on Friday, October 20, 2023.
Internet access to the call is available on the Company’s website
at https://INDB.RocklandTrust.com or via telephonic access by
dial-in at 1-888-336-7153 reference: INDB. A replay of the call
will be available by calling 1-877-344-7529, Replay Conference
Number: 7087586 and will be available through October 27, 2023.
Additionally, a webcast replay will be available on the Company's
website until October 20, 2024.
ABOUT INDEPENDENT BANK CORP.
Independent Bank Corp. (NASDAQ Global Select Market: INDB) is
the holding company for Rockland Trust Company, a full-service
commercial bank headquartered in Massachusetts. With retail
branches in Eastern Massachusetts and Worcester County as well as
commercial banking and investment management offices in
Massachusetts and Rhode Island, Rockland Trust offers a wide range
of banking, investment, and insurance services to individuals,
families, and businesses. The Bank also offers a full suite of
mobile, online, and telephone banking services. Rockland Trust was
named to The Boston Globe's "Top Places to Work" 2022 list, an
honor earned for the 14th consecutive year. Rockland Trust has a
longstanding commitment to equity and inclusion. This commitment is
underscored by initiatives such as Diversity and Inclusion
leadership training, a colleague Allyship mentoring program, and
numerous Employee Resource Groups focused on providing colleague
support and education, reinforcing a culture of mutual respect and
advancing professional development, and Rockland Trust's
sponsorship of diverse community organizations through charitable
giving and employee-based volunteerism. In addition, Rockland Trust
is deeply committed to the communities it serves, as reflected in
the overall "Outstanding" rating in its most recent Community
Reinvestment Act performance evaluation. Rockland Trust is an FDIC
member and an Equal Housing Lender.
This press release contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995 with respect to the financial condition, results of
operations and business of the Company. These statements may be
identified by such forward-looking terminology as “expect,”
“achieve,” “plan,” “believe,” “future,” “positioned,” “continued,”
“will,” “would,” “potential,” or similar statements or variations
of such terms. Actual results may differ from those contemplated by
these forward-looking statements.
Factors that may cause actual results to differ materially from
those contemplated by such forward-looking statements include, but
are not limited to:
- further weakening in the United States economy in general and
the regional and local economies within the New England region and
the Company’s market area;
- the effects of inflationary pressures, labor market shortages
and supply chain issues;
- the instability or volatility in financial markets and
unfavorable general economic or business conditions, globally,
nationally or regionally, whether caused by geopolitical concerns,
including the Russia/Ukraine conflict, the conflict in Israel and
surrounding areas and the possible expansion of such conflicts,
recent disruptions in the banking industry, or other factors;
- unanticipated loan delinquencies, loss of collateral, decreased
service revenues, and other potential negative effects on our
business caused by severe weather, pandemics or other external
events;
- adverse changes or volatility in the local real estate
market;
- adverse changes in asset quality and any unanticipated credit
deterioration in our loan portfolio including those related to one
or more large commercial relationships;
- acquisitions may not produce results at levels or within time
frames originally anticipated and may result in unforeseen
integration issues or impairment of goodwill and/or other
intangibles;
- additional regulatory oversight and related compliance
costs;
- changes in trade, monetary and fiscal policies and laws,
including interest rate policies of the Board of Governors of the
Federal Reserve System;
- higher than expected tax expense, including as a result of
failure to comply with general tax laws and changes in tax
laws;
- changes in market interest rates for interest earning assets
and/or interest bearing liabilities;
- increased competition in the Company’s market areas;
- adverse weather, changes in climate, natural disasters, and
geopolitical concerns;
- the emergence of widespread health emergencies or pandemics,
any further resurgences or variants of the "COVID-19 virus",
actions taken by governmental authorities in response thereto,
other public health crises or man-made events, and their impact on
the Company's local economies or the Company's operations;
- a deterioration in the conditions of the securities
markets;
- a deterioration of the credit rating for U.S. long-term
sovereign debt or uncertainties surrounding the federal
budget;
- inability to adapt to changes in information technology,
including changes to industry accepted delivery models driven by a
migration to the internet as a means of service delivery;
- electronic fraudulent activity within the financial services
industry, especially in the commercial banking sector;
- adverse changes in consumer spending and savings habits;
- the effect of laws and regulations regarding the financial
services industry;
- changes in laws and regulations (including laws and regulations
concerning taxes, banking, securities and insurance) generally
applicable to the Company’s business, including any such changes in
laws and regulations as a result of recent disruptions in the
banking industry, and the associated costs of such changes;
- the Company's potential judgments, claims, damages, penalties,
fines and reputational damage resulting from pending or future
litigation and regulatory and government actions;
- changes in accounting policies, practices and standards, as may
be adopted by the regulatory agencies as well as the Public Company
Accounting Oversight Board, the Financial Accounting Standards
Board, and other accounting standard setters;
- cyber security attacks or intrusions that could adversely
impact our businesses; and
- other unexpected material adverse changes in our operations or
earnings.
The Company wishes to caution readers not to place undue
reliance on any forward-looking statements as the Company’s
business and its forward-looking statements involve substantial
known and unknown risks and uncertainties described in the
Company’s Annual Report on Form 10-K and subsequent Quarterly
Reports on Form 10-Q (“Risk Factors”). Except as required by law,
the Company disclaims any intent or obligation to update publicly
any such forward-looking statements, whether in response to new
information, future events or otherwise. Any public statements or
disclosures by the Company following this release which modify or
impact any of the forward-looking statements contained in this
release will be deemed to modify or supersede such statements in
this release. In addition to the information set forth in this
press release, you should carefully consider the Risk Factors.
This press release and the appendices attached to it contain
financial information determined by methods other than in
accordance with accounting principles generally accepted in the
United States of America (“GAAP”). This information may include
operating net income and operating earnings per share ("EPS"),
operating return on average assets, operating return on average
common equity, operating return on average tangible common equity,
core net interest margin ("core margin"), tangible book value per
share and the tangible common equity ratio.
Operating net income, operating EPS, operating return on average
assets and operating return on average common equity, exclude items
that management believes are unrelated to the Company's core
banking business such as merger and acquisition expenses, and other
items, if applicable. Management uses operating net income and
related ratios and operating EPS to measure the strength of the
Company’s core banking business and to identify trends that may to
some extent be obscured by such items. Management reviews its core
margin to determine any items that may impact the net interest
margin that may be one-time in nature or not reflective of its core
operating environment, such as significant purchase accounting
adjustments or other adjustments such as nonaccrual interest
reversals/recoveries and prepayment penalties. Management believes
that adjusting for these items to arrive at a core margin provides
additional insight into the operating environment and how
management decisions impact the net interest margin.
Management also supplements its evaluation of financial
performance with analysis of tangible book value per share (which
is computed by dividing stockholders' equity less goodwill and
identifiable intangible assets, or "tangible common equity", by
common shares outstanding), the tangible common equity ratio (which
is computed by dividing tangible common equity by "tangible
assets", defined as total assets less goodwill and other
intangibles), and return on average tangible common equity (which
is computed by dividing net income by average tangible common
equity). The Company has included information on tangible book
value per share, the tangible common equity ratio and return on
average tangible common equity because management believes that
investors may find it useful to have access to the same analytical
tools used by management. As a result of merger and acquisition
activity, the Company has recognized goodwill and other intangible
assets in conjunction with business combination accounting
principles. Excluding the impact of goodwill and other intangibles
in measuring asset and capital values for the ratios provided,
along with other bank standard capital ratios, provides a framework
to compare the capital adequacy of the Company to other companies
in the financial services industry.
These non-GAAP measures should not be viewed as a substitute for
operating results and other financial measures determined in
accordance with GAAP. An item which management excludes when
computing these non-GAAP measures can be of substantial importance
to the Company’s results for any particular quarter or year. The
Company’s non-GAAP performance measures, including operating net
income, operating EPS, operating return on average assets,
operating return on average common equity, core margin, tangible
book value per share and the tangible common equity ratio, are not
necessarily comparable to non-GAAP performance measures which may
be presented by other companies.
Category: Earnings Releases
INDEPENDENT BANK CORP. FINANCIAL
SUMMARY
CONSOLIDATED BALANCE SHEETS
(Unaudited, dollars in thousands)
% Change
% Change
September 30
2023
June 30 2023
September 30
2022
Sept 2023 vs.
Sept 2023 vs.
Jun 2023
Sept 2022
Assets
Cash and due from banks
$
176,930
$
181,810
$
172,615
(2.68
)%
2.50
%
Interest-earning deposits with banks
43,198
126,454
763,681
(65.84
)%
(94.34
)%
Securities
Trading
4,476
4,477
3,538
(0.02
)%
26.51
%
Equities
21,475
21,800
20,439
(1.49
)%
5.07
%
Available for sale
1,353,744
1,372,903
1,425,511
(1.40
)%
(5.03
)%
Held to maturity
1,594,279
1,623,892
1,697,635
(1.82
)%
(6.09
)%
Total securities
2,973,974
3,023,072
3,147,123
(1.62
)%
(5.50
)%
Loans held for sale
3,998
6,577
5,100
(39.21
)%
(21.61
)%
Loans
Commercial and industrial
1,653,003
1,723,219
1,548,349
(4.07
)%
6.76
%
Commercial real estate
7,896,230
7,812,796
7,677,917
1.07
%
2.84
%
Commercial construction
965,442
1,022,796
1,185,157
(5.61
)%
(18.54
)%
Small business
245,335
237,092
209,567
3.48
%
17.07
%
Total commercial
10,760,010
10,795,903
10,620,990
(0.33
)%
1.31
%
Residential real estate
2,338,102
2,221,284
1,959,254
5.26
%
19.34
%
Home equity - first position
529,938
546,240
578,405
(2.98
)%
(8.38
)%
Home equity - subordinate positions
565,617
549,158
508,765
3.00
%
11.17
%
Total consumer real estate
3,433,657
3,316,682
3,046,424
3.53
%
12.71
%
Other consumer
30,568
27,326
32,936
11.86
%
(7.19
)%
Total loans
14,224,235
14,139,911
13,700,350
0.60
%
3.82
%
Less: allowance for credit losses
(140,569
)
(140,647
)
(147,313
)
(0.06
)%
(4.58
)%
Net loans
14,083,666
13,999,264
13,553,037
0.60
%
3.92
%
Federal Home Loan Bank stock
43,878
39,488
5,218
11.12
%
740.90
%
Bank premises and equipment, net
191,560
193,642
198,408
(1.08
)%
(3.45
)%
Goodwill
985,072
985,072
985,072
—
%
—
%
Other intangible assets
19,825
21,537
26,934
(7.95
)%
(26.39
)%
Cash surrender value of life insurance
policies
295,670
296,687
293,126
(0.34
)%
0.87
%
Other assets
550,338
527,328
552,955
4.36
%
(0.47
)%
Total assets
$
19,368,109
$
19,400,931
$
19,703,269
(0.17
)%
(1.70
)%
Liabilities and Stockholders'
Equity
Deposits
Noninterest-bearing demand deposits
$
4,796,148
$
4,861,092
$
5,622,260
(1.34
)%
(14.69
)%
Savings and interest checking accounts
5,398,322
5,525,223
6,094,493
(2.30
)%
(11.42
)%
Money market
2,852,293
3,065,520
3,443,622
(6.96
)%
(17.17
)%
Time certificates of deposit
2,012,763
1,796,216
1,178,619
12.06
%
70.77
%
Total deposits
15,059,526
15,248,051
16,338,994
(1.24
)%
(7.83
)%
Borrowings
Federal Home Loan Bank borrowings
887,548
788,479
643
12.56
%
nm
Junior subordinated debentures, net
62,857
62,857
62,855
—
%
—
%
Subordinated debentures, net
49,957
49,933
49,862
0.05
%
0.19
%
Total borrowings
1,000,362
901,269
113,360
10.99
%
782.46
%
Total deposits and borrowings
16,059,888
16,149,320
16,452,354
(0.55
)%
(2.39
)%
Other liabilities
422,813
396,697
433,714
6.58
%
(2.51
)%
Total liabilities
16,482,701
16,546,017
16,886,068
(0.38
)%
(2.39
)%
Stockholders' equity
Common stock
440
440
454
—
%
(3.08
)%
Additional paid in capital
1,999,448
1,997,674
2,113,313
0.09
%
(5.39
)%
Retained earnings
1,046,266
1,009,735
882,503
3.62
%
18.56
%
Accumulated other comprehensive loss, net
of tax
(160,746
)
(152,935
)
(179,069
)
5.11
%
(10.23
)%
Total stockholders' equity
2,885,408
2,854,914
2,817,201
1.07
%
2.42
%
Total liabilities and stockholders'
equity
$
19,368,109
$
19,400,931
$
19,703,269
(0.17
)%
(1.70
)%
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited, dollars in thousands, except
per share data)
Three Months Ended
% Change
% Change
September 30
2023
June 30 2023
September 30
2022
Sept 2023 vs.
Sept 2023 vs.
Jun 2023
Sept 2022
Interest income
Interest on federal funds sold and
short-term investments
$
905
$
3,312
$
6,519
(72.68
)%
(86.12
)%
Interest and dividends on securities
14,818
15,583
13,244
(4.91
)%
11.88
%
Interest and fees on loans
187,145
179,759
150,157
4.11
%
24.63
%
Interest on loans held for sale
60
39
51
53.85
%
17.65
%
Total interest income
202,928
198,693
169,971
2.13
%
19.39
%
Interest expense
Interest on deposits
40,713
31,909
6,109
27.59
%
566.44
%
Interest on borrowings
12,335
14,238
1,261
(13.37
)%
878.19
%
Total interest expense
53,048
46,147
7,370
14.95
%
619.78
%
Net interest income
149,880
152,546
162,601
(1.75
)%
(7.82
)%
Provision for credit losses
5,500
5,000
3,000
10.00
%
83.33
%
Net interest income after provision for
credit losses
144,380
147,546
159,601
(2.15
)%
(9.54
)%
Noninterest income
Deposit account fees
5,936
5,508
6,261
7.77
%
(5.19
)%
Interchange and ATM fees
4,808
4,478
4,331
7.37
%
11.01
%
Investment management
10,246
10,348
8,436
(0.99
)%
21.46
%
Mortgage banking income
739
670
585
10.30
%
26.32
%
Increase in cash surrender value of life
insurance policies
1,983
1,940
1,883
2.22
%
5.31
%
Gain on life insurance benefits
1,924
176
477
993.18
%
303.35
%
Loan level derivative income
842
1,275
471
(33.96
)%
78.77
%
Other noninterest income
7,065
6,362
5,751
11.05
%
22.85
%
Total noninterest income
33,543
30,757
28,195
9.06
%
18.97
%
Noninterest expenses
Salaries and employee benefits
54,797
53,975
52,708
1.52
%
3.96
%
Occupancy and equipment expenses
12,321
12,385
12,316
(0.52
)%
0.04
%
Data processing and facilities
management
2,404
2,530
2,259
(4.98
)%
6.42
%
FDIC assessment
2,727
2,674
1,677
1.98
%
62.61
%
Other noninterest expenses
25,533
23,991
23,768
6.43
%
7.43
%
Total noninterest expenses
97,782
95,555
92,728
2.33
%
5.45
%
Income before income taxes
80,141
82,748
95,068
(3.15
)%
(15.70
)%
Provision for income taxes
19,333
20,104
23,171
(3.84
)%
(16.56
)%
Net Income
$
60,808
$
62,644
$
71,897
(2.93
)%
(15.42
)%
Weighted average common shares (basic)
44,135,487
44,129,152
45,839,555
Common share equivalents
11,417
7,573
16,856
Weighted average common shares
(diluted)
44,146,904
44,136,725
45,856,411
Basic earnings per share
$
1.38
$
1.42
$
1.57
(2.82
)%
(12.10
)%
Diluted earnings per share
$
1.38
$
1.42
$
1.57
(2.82
)%
(12.10
)%
Performance ratios
Net interest margin (FTE)
3.47
%
3.54
%
3.64
%
Return on average assets (calculated by
dividing net income by average assets)
1.25
%
1.29
%
1.43
%
Return on average common equity
(calculated by dividing net income by average common equity)
(GAAP)
8.35
%
8.78
%
9.90
%
Return on average tangible common equity
(Non-GAAP) (calculated by dividing net income by average tangible
common equity)
12.81
%
13.54
%
15.26
%
Noninterest income as a % of total revenue
(calculated by dividing total noninterest income by net interest
income plus total noninterest income)
18.29
%
16.78
%
14.78
%
Efficiency ratio (calculated by dividing
total noninterest expense by total revenue)
53.31
%
52.13
%
48.60
%
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited, dollars in thousands, except
per share data)
Nine Months Ended
% Change
September 30
2023
September 30
2022
Sept 2023 vs.
Sept 2022
Interest income
Interest on federal funds sold and
short-term investments
$
4,882
$
10,222
(52.24
)%
Interest and dividends on securities
45,711
34,571
32.22
%
Interest and fees on loans
537,830
413,770
29.98
%
Interest on loans held for sale
133
150
(11.33
)%
Total interest income
588,556
458,713
28.31
%
Interest expense
Interest on deposits
95,297
10,327
822.79
%
Interest on borrowings
31,835
3,492
811.66
%
Total interest expense
127,132
13,819
819.98
%
Net interest income
461,424
444,894
3.72
%
Provision for credit losses
17,750
1,000
1,675.00
%
Net interest income after provision for
credit losses
443,674
443,894
(0.05
)%
Noninterest income
Deposit account fees
17,360
17,582
(1.26
)%
Interchange and ATM fees
13,470
11,967
12.56
%
Investment management
30,373
26,438
14.88
%
Mortgage banking income
1,717
2,989
(42.56
)%
Increase in cash surrender value of life
insurance policies
5,777
5,549
4.11
%
Gain on life insurance benefits
2,111
600
251.83
%
Loan level derivative income
2,525
1,511
67.11
%
Other noninterest income
19,209
15,729
22.12
%
Total noninterest income
92,542
82,365
12.36
%
Noninterest expenses
Salaries and employee benefits
165,747
150,957
9.80
%
Occupancy and equipment expenses
37,528
37,255
0.73
%
Data processing and facilities
management
7,461
6,878
8.48
%
FDIC assessment
8,011
5,225
53.32
%
Merger and acquisition expense
—
7,100
(100.00
)%
Other noninterest expenses
73,251
71,375
2.63
%
Total noninterest expenses
291,998
278,790
4.74
%
Income before income taxes
244,218
247,469
(1.31
)%
Provision for income taxes
59,519
60,699
(1.94
)%
Net Income
$
184,699
$
186,770
(1.11
)%
Weighted average common shares (basic)
44,419,731
46,618,209
Common share equivalents
12,851
17,221
Weighted average common shares
(diluted)
44,432,582
46,635,430
Basic earnings per share
$
4.16
$
4.01
3.74
%
Diluted earnings per share
$
4.16
$
4.00
4.00
%
Reconciliation of Net Income (GAAP) to
Operating Net Income (Non-GAAP):
Net Income
$
184,699
$
186,770
Noninterest expense components
Add - merger and acquisition expenses
—
7,100
Noncore increases to income before
taxes
—
7,100
Net tax benefit associated with noncore
items (1)
—
(1,995
)
Noncore increases to net income
$
—
$
5,105
Operating net income (Non-GAAP)
$
184,699
$
191,875
(3.74
)%
Diluted earnings per share, on an
operating basis
$
4.16
$
4.11
1.22
%
(1) The net tax benefit associated with
noncore items is determined by assessing whether each noncore item
is included or excluded from net taxable income and applying the
Company's combined marginal tax rate to only those items included
in net taxable income.
Performance ratios
Net interest margin (FTE)
3.60
%
3.33
%
Return on average assets (GAAP)
(calculated by dividing net income by average assets)
1.28
%
1.25
%
Return on average assets on an operating
basis (Non-GAAP) (calculated by dividing net operating net income
by average assets)
1.28
%
1.28
%
Return on average common equity (GAAP)
(calculated by dividing net income by average common equity)
8.58
%
8.51
%
Return on average common equity on an
operating basis (Non-GAAP) (calculated by dividing net operating
net income by average common equity)
8.58
%
8.74
%
Return on average tangible common equity
(GAAP) (calculated by dividing net income by average tangible
common equity)
13.21
%
13.00
%
Return on average tangible common equity
on an operating basis (Non-GAAP) (calculated by dividing net
operating net income by average tangible common equity)
13.21
%
13.35
%
Noninterest income as a % of total revenue
(calculated by dividing total noninterest income by net interest
income plus total noninterest income)
16.71
%
15.62
%
Noninterest income as a % of total revenue
on an operating basis (Non-GAAP) (calculated by dividing total
noninterest income on an operating basis by net interest income
plus total noninterest income)
16.71
%
15.62
%
Efficiency ratio (GAAP) (calculated by
dividing total noninterest expense by total revenue)
52.71
%
52.88
%
Efficiency ratio on an operating basis
(Non-GAAP) (calculated by dividing total noninterest expense on an
operating basis by total revenue)
52.71
%
51.53
%
ASSET QUALITY
(Unaudited, dollars in thousands)
Nonperforming Assets
At
September 30
2023
June 30 2023
September 30
2022
Nonperforming loans
Commercial & industrial loans
$
2,953
$
3,235
$
27,393
Commercial real estate loans
23,867
29,910
15,982
Small business loans
372
348
50
Residential real estate loans
8,493
8,179
8,891
Home equity
3,411
3,944
3,485
Other consumer
75
86
216
Total nonperforming loans
39,171
45,702
56,017
Other real estate owned
110
110
—
Total nonperforming assets
$
39,281
$
45,812
$
56,017
Nonperforming loans/gross loans
0.28
%
0.32
%
0.41
%
Nonperforming assets/total assets
0.20
%
0.24
%
0.28
%
Allowance for credit losses/nonperforming
loans
358.86
%
307.75
%
262.98
%
Allowance for credit losses/total
loans
0.99
%
0.99
%
1.08
%
Delinquent loans/total loans
0.22
%
0.30
%
0.17
%
Nonperforming Assets
Reconciliation for the Three Months Ended
September 30
2023
June 30 2023
September 30
2022
Nonperforming assets beginning balance
$
45,812
$
56,235
$
55,915
New to nonperforming
3,455
18,018
30,650
Loans charged-off
(6,018
)
(23,767
)
(741
)
Loans paid-off
(2,915
)
(3,984
)
(29,450
)
Loans restored to performing status
(1,428
)
(680
)
(366
)
Other
375
(10
)
9
Nonperforming assets ending balance
$
39,281
$
45,812
$
56,017
Net Charge-Offs
(Recoveries)
Three Months Ended
Nine Months Ended
September 30
2023
June 30 2023
September 30
2022
September 30
2023
September 30
2022
Net charge-offs (recoveries)
Commercial and industrial loans
$
(111
)
$
23,174
$
(2
)
$
23,339
$
(44
)
Commercial real estate loans
5,072
—
(268
)
5,072
(271
)
Small business loans
77
51
(88
)
125
(88
)
Home equity
(12
)
(10
)
(65
)
(38
)
17
Other consumer
552
269
429
1,102
995
Total net charge-offs (recoveries)
$
5,578
$
23,484
$
6
$
29,600
$
609
Net charge-offs (recoveries) to average
loans (annualized)
0.16
%
0.67
%
nm
0.28
%
0.01
%
nm = not meaningful
BALANCE SHEET AND CAPITAL
RATIOS
September 30
2023
June 30 2023
September 30
2022
Gross loans/total deposits
94.45
%
92.73
%
83.85
%
Common equity tier 1 capital ratio (1)
14.42
%
14.06
%
13.98
%
Tier 1 leverage capital ratio (1)
11.12
%
10.85
%
10.51
%
Common equity to assets ratio GAAP
14.90
%
14.72
%
14.30
%
Tangible common equity to tangible assets
ratio (2)
10.24
%
10.05
%
9.66
%
Book value per share GAAP
$
65.37
$
64.69
$
61.73
Tangible book value per share (2)
$
42.60
$
41.88
$
39.56
(1) Estimated number for September 30,
2023.
(2) See Appendix A for detailed
reconciliation from GAAP to Non-GAAP ratios.
INDEPENDENT BANK CORP. SUPPLEMENTAL
FINANCIAL INFORMATION
(Unaudited, dollars in thousands)
Three Months Ended
September 30, 2023
June 30, 2023
September 30, 2022
Interest
Interest
Interest
Average
Earned/
Yield/
Average
Earned/
Yield/
Average
Earned/
Yield/
Balance
Paid (1)
Rate
Balance
Paid (1)
Rate
Balance
Paid (1)
Rate
Interest-earning assets
Interest-earning deposits with banks,
federal funds sold, and short term investments
$
89,449
$
905
4.01
%
$
270,443
$
3,312
4.91
%
$
1,156,143
$
6,519
2.24
%
Securities
Securities - trading
4,546
—
—
%
4,487
—
—
%
3,730
—
—
%
Securities - taxable investments
3,000,736
14,817
1.96
%
3,071,752
15,581
2.03
%
3,024,802
13,243
1.74
%
Securities - nontaxable investments
(1)
188
1
2.11
%
191
2
4.20
%
196
1
2.02
%
Total securities
$
3,005,470
$
14,818
1.96
%
$
3,076,430
$
15,583
2.03
%
$
3,028,728
$
13,244
1.73
%
Loans held for sale
4,072
60
5.85
%
2,977
39
5.25
%
4,263
51
4.75
%
Loans
Commercial and industrial (1)
1,682,000
30,739
7.25
%
1,686,348
29,451
7.00
%
1,520,924
19,289
5.03
%
Commercial real estate (1)
7,823,525
94,861
4.81
%
7,803,702
91,813
4.72
%
7,760,470
85,284
4.36
%
Commercial construction
1,007,814
16,829
6.62
%
1,044,650
17,212
6.61
%
1,157,876
14,875
5.10
%
Small business
240,782
3,752
6.18
%
230,371
3,501
6.10
%
207,546
2,819
5.39
%
Total commercial
10,754,121
146,181
5.39
%
10,765,071
141,977
5.29
%
10,646,816
122,267
4.56
%
Residential real estate
2,276,882
23,197
4.04
%
2,153,563
20,943
3.90
%
1,909,066
16,533
3.44
%
Home equity
1,093,479
18,313
6.64
%
1,094,329
17,394
6.38
%
1,076,040
11,869
4.38
%
Total consumer real estate
3,370,361
41,510
4.89
%
3,247,892
38,337
4.73
%
2,985,106
28,402
3.77
%
Other consumer
30,775
608
7.84
%
28,863
566
7.87
%
31,883
523
6.51
%
Total loans
$
14,155,257
$
188,299
5.28
%
$
14,041,826
$
180,880
5.17
%
$
13,663,805
$
151,192
4.39
%
Total interest-earning assets
$
17,254,248
$
204,082
4.69
%
$
17,391,676
$
199,814
4.61
%
$
17,852,939
$
171,006
3.80
%
Cash and due from banks
184,003
178,707
192,003
Federal Home Loan Bank stock
38,252
44,619
5,745
Other assets
1,859,099
1,826,879
1,854,870
Total assets
$
19,335,602
$
19,441,881
$
19,905,557
Interest-bearing liabilities
Deposits
Savings and interest checking accounts
$
5,393,209
$
11,860
0.87
%
$
5,512,995
$
9,425
0.69
%
$
6,224,690
$
2,110
0.13
%
Money market
2,945,450
13,709
1.85
%
3,044,486
12,331
1.62
%
3,459,212
3,025
0.35
%
Time deposits
1,860,440
15,144
3.23
%
1,630,015
10,153
2.50
%
1,246,841
974
0.31
%
Total interest-bearing deposits
$
10,199,099
$
40,713
1.58
%
$
10,187,496
$
31,909
1.26
%
$
10,930,743
$
6,109
0.22
%
Borrowings
Federal Home Loan Bank borrowings
869,646
10,568
4.82
%
1,068,585
12,576
4.72
%
12,876
55
1.69
%
Junior subordinated debentures
62,857
1,150
7.26
%
62,856
1,044
6.66
%
62,854
589
3.72
%
Subordinated debentures
49,944
617
4.90
%
49,921
618
4.97
%
49,847
617
4.91
%
Total borrowings
$
982,447
$
12,335
4.98
%
$
1,181,362
$
14,238
4.83
%
$
125,577
$
1,261
3.98
%
Total interest-bearing liabilities
$
11,181,546
$
53,048
1.88
%
$
11,368,858
$
46,147
1.63
%
$
11,056,320
$
7,370
0.26
%
Noninterest-bearing demand deposits
4,883,009
4,873,767
5,641,742
Other liabilities
381,483
336,210
325,507
Total liabilities
$
16,446,038
$
16,578,835
$
17,023,569
Stockholders' equity
2,889,564
2,863,046
2,881,988
Total liabilities and stockholders'
equity
$
19,335,602
$
19,441,881
$
19,905,557
Net interest income
$
151,034
$
153,667
$
163,636
Interest rate spread (2)
2.81
%
2.98
%
3.54
%
Net interest margin (3)
3.47
%
3.54
%
3.64
%
Supplemental Information
Total deposits, including demand
deposits
$
15,082,108
$
40,713
$
15,061,263
$
31,909
$
16,572,485
$
6,109
Cost of total deposits
1.07
%
0.85
%
0.15
%
Total funding liabilities, including
demand deposits
$
16,064,555
$
53,048
$
16,242,625
$
46,147
$
16,698,062
$
7,370
Cost of total funding liabilities
1.31
%
1.14
%
0.18
%
(1) The total amount of adjustment to
present interest income and yield on a fully tax-equivalent basis
is $1.2 million, $1.1 million, and $1.0 million for the three
months ended September 30, 2023, June 30, 2023, and September 30,
2022, respectively, determined by applying the Company's marginal
tax rates in effect during each respective quarter.
(2) Interest rate spread represents the
difference between weighted average yield on interest-earning
assets and the weighted average cost of interest-bearing
liabilities.
(3) Net interest margin represents
annualized net interest income as a percentage of average
interest-earning assets.
Nine Months Ended
September 30, 2023
September 30, 2022
Interest
Interest
Average
Earned/
Yield/
Average
Earned/
Yield/
Balance
Paid
Rate
Balance
Paid
Rate
Interest-earning assets
Interest earning deposits with banks,
federal funds sold, and short term investments
$
144,558
$
4,882
4.52
%
$
1,477,117
$
10,222
0.93
%
Securities
Securities - trading
4,377
—
—
%
3,775
—
—
%
Securities - taxable investments
3,062,745
45,707
2.00
%
2,881,203
34,567
1.60
%
Securities - nontaxable investments
(1)
191
5
3.50
%
198
5
3.38
%
Total securities
$
3,067,313
$
45,712
1.99
%
$
2,885,176
$
34,572
1.60
%
Loans held for sale
3,180
133
5.59
%
5,841
150
3.43
%
Loans
Commercial and industrial (1)
1,662,459
86,762
6.98
%
1,531,421
53,816
4.70
%
Commercial real estate (1)
7,800,173
276,255
4.74
%
7,832,534
238,085
4.06
%
Commercial construction
1,061,847
50,508
6.36
%
1,180,509
40,599
4.60
%
Small business
231,299
10,472
6.05
%
202,151
7,891
5.22
%
Total commercial
10,755,778
423,997
5.27
%
10,746,615
340,391
4.23
%
Residential real estate
2,163,130
63,498
3.92
%
1,774,355
45,109
3.40
%
Home equity
1,092,304
51,951
6.36
%
1,051,921
29,709
3.78
%
Total consumer real estate
3,255,434
115,449
4.74
%
2,826,276
74,818
3.54
%
Other consumer
30,885
1,751
7.58
%
31,092
1,519
6.53
%
Total loans
$
14,042,097
$
541,197
5.15
%
$
13,603,983
$
416,728
4.10
%
Total interest-earning assets
$
17,257,148
$
591,924
4.59
%
$
17,972,117
$
461,672
3.43
%
Cash and due from banks
181,380
184,754
Federal Home Loan Bank stock
32,615
7,780
Other assets
1,843,564
1,853,818
Total assets
$
19,314,707
$
20,018,469
Interest-bearing liabilities
Deposits
Savings and interest checking accounts
$
5,545,951
$
28,758
0.69
%
$
6,224,317
$
3,418
0.07
%
Money market
3,079,942
36,433
1.58
%
3,517,459
4,191
0.16
%
Time deposits
1,596,889
30,106
2.52
%
1,355,861
2,718
0.27
%
Total interest-bearing deposits
$
10,222,782
$
95,297
1.25
%
$
11,097,637
$
10,327
0.12
%
Borrowings
Federal Home Loan Bank borrowings
747,640
26,788
4.79
%
21,361
311
1.95
%
Long-term borrowings
—
—
—
%
2,988
31
1.39
%
Junior subordinated debentures
62,856
3,195
6.80
%
62,854
1,298
2.76
%
Subordinated debentures
49,921
1,852
4.96
%
49,824
1,852
4.97
%
Total borrowings
$
860,417
$
31,835
4.95
%
$
137,027
$
3,492
3.41
%
Total interest-bearing liabilities
$
11,083,199
$
127,132
1.53
%
$
11,234,664
$
13,819
0.16
%
Noninterest-bearing demand deposits
4,990,869
5,544,476
Other liabilities
363,989
303,308
Total liabilities
$
16,438,057
$
17,082,448
Stockholders' equity
2,876,650
2,936,021
Total liabilities and stockholders'
equity
$
19,314,707
$
20,018,469
Net interest income
$
464,792
$
447,853
Interest rate spread (2)
3.06
%
3.27
%
Net interest margin (3)
3.60
%
3.33
%
Supplemental Information
Total deposits, including demand
deposits
$
15,213,651
$
95,297
$
16,642,113
$
10,327
Cost of total deposits
0.84
%
0.08
%
Total funding liabilities, including
demand deposits
$
16,074,068
$
127,132
$
16,779,140
$
13,819
Cost of total funding liabilities
1.06
%
0.11
%
(1) The total amount of adjustment to
present interest income and yield on a fully tax-equivalent basis
is $3.4 million and $3.0 million for the nine months ended
September 30, 2023 and 2022, respectively.
(2) Interest rate spread represents the
difference between weighted average yield on interest-earning
assets and the weighted average cost of interest-bearing
liabilities.
(3) Net interest margin represents
annualized net interest income as a percentage of average
interest-earning assets.
Certain amounts in prior year financial
statements have been reclassified to conform to the current year's
presentation.
APPENDIX A: NON-GAAP Reconciliation of
Balance Sheet Metrics
(Unaudited, dollars in thousands, except per share data)
The following table summarizes the calculation of the Company's
tangible common equity to tangible assets ratio and tangible book
value per share, at the dates indicated:
September 30
2023
June 30 2023
September 30
2022
Tangible common equity
(Dollars in thousands, except per
share data)
Stockholders' equity (GAAP)
$
2,885,408
$
2,854,914
$
2,817,201
(a)
Less: Goodwill and other intangibles
1,004,897
1,006,609
1,012,006
Tangible common equity (Non-GAAP)
$
1,880,511
$
1,848,305
$
1,805,195
(b)
Tangible assets
Assets (GAAP)
$
19,368,109
$
19,400,931
$
19,703,269
(c)
Less: Goodwill and other intangibles
1,004,897
1,006,609
1,012,006
Tangible assets (Non-GAAP)
$
18,363,212
$
18,394,322
$
18,691,263
(d)
Common Shares
44,141,973
44,130,901
45,634,626
(e)
Common equity to assets ratio (GAAP)
14.90
%
14.72
%
14.30
%
(a/c)
Tangible common equity to tangible assets
ratio (Non-GAAP)
10.24
%
10.05
%
9.66
%
(b/d)
Book value per share (GAAP)
$
65.37
$
64.69
$
61.73
(a/e)
Tangible book value per share
(Non-GAAP)
$
42.60
$
41.88
$
39.56
(b/e)
APPENDIX B: Non-GAAP Reconciliation of
Earnings Metrics
(Unaudited, dollars in thousands)
The following table summarizes the impact of noncore items on
the Company's calculation of noninterest income and noninterest
expense, the impact of noncore items on noninterest income as a
percentage of total revenue and the efficiency ratio, as well as
the average tangible common equity used to calculate return on
average tangible common equity and operating return on tangible
common equity for the periods indicated:
Three Months Ended
Nine Months Ended
September 30
2023
June 30 2023
September 30
2022
September 30
2023
September 30
2022
Net interest income (GAAP)
$
149,880
$
152,546
$
162,601
$
461,424
$
444,894
(a)
Noninterest income (GAAP)
$
33,543
$
30,757
$
28,195
$
92,542
$
82,365
(b)
Noninterest income on an operating basis
(Non-GAAP)
$
33,543
$
30,757
$
28,195
$
92,542
$
82,365
(c)
Noninterest expense (GAAP)
$
97,782
$
95,555
$
92,728
$
291,998
$
278,790
(d)
Less:
Merger and acquisition expense
—
—
—
—
7,100
Noninterest expense on an operating basis
(Non-GAAP)
$
97,782
$
95,555
$
92,728
$
291,998
$
271,690
(e)
Total revenue (GAAP)
$
183,423
$
183,303
$
190,796
$
553,966
$
527,259
(a+b)
Total operating revenue (Non-GAAP)
$
183,423
$
183,303
$
190,796
$
553,966
$
527,259
(a+c)
Net income (GAAP)
$
60,808
$
62,644
$
71,897
$
184,699
$
186,770
Operating net income (Non-GAAP) (See
income statement for reconciliation of GAAP to Non-GAAP)
$
60,808
$
62,644
$
71,897
$
184,699
$
191,875
Average common equity (GAAP)
$
2,889,564
$
2,863,046
$
2,881,988
$
2,876,650
$
2,936,021
Less: Average goodwill and other
intangibles
1,005,778
1,007,500
1,013,169
1,007,526
1,015,040
Tangible average tangible common equity
(Non-GAAP)
$
1,883,786
$
1,855,546
$
1,868,819
$
1,869,124
$
1,920,981
Ratios
Noninterest income as a % of total revenue
(GAAP) (calculated by dividing total noninterest income by total
revenue)
18.29
%
16.78
%
14.78
%
16.71
%
15.62
%
(b/(a+b))
Noninterest income as a % of total revenue
on an operating basis (Non-GAAP) (calculated by dividing total
noninterest income on an operating basis by total revenue)
18.29
%
16.78
%
14.78
%
16.71
%
15.62
%
(c/(a+c))
Efficiency ratio (GAAP) (calculated by
dividing total noninterest expense by total revenue)
53.31
%
52.13
%
48.60
%
52.71
%
52.88
%
(d/(a+b))
Efficiency ratio on an operating basis
(Non-GAAP) (calculated by dividing total noninterest expense on an
operating basis by total revenue)
53.31
%
52.13
%
48.60
%
52.71
%
51.53
%
(e/(a+c))
Return on average tangible common equity
(Non-GAAP) (calculated by dividing annualized net income by average
tangible common equity)
12.81
%
13.54
%
15.26
%
13.21
%
13.00
%
Return on average tangible common equity
on an operating basis (Non-GAAP) (calculated by dividing annualized
net operating net income by average tangible common equity)
12.81
%
13.54
%
15.26
%
13.21
%
13.35
%
APPENDIX C: Net Interest Margin
Analysis & Non-GAAP Reconciliation of Core
Margin
Three Months Ended
September 30, 2023
June 30, 2023
Volume
Interest
Margin Impact
Volume
Interest
Margin Impact
(Dollars in thousands)
Reported total interest earning assets
$
17,254,248
$
151,034
3.47
%
$
17,391,676
$
153,667
3.54
%
Acquisition fair value marks:
Loan accretion
(330
)
(862
)
CD amortization
11
11
(319
)
—
%
(851
)
(0.02
)%
Nonaccrual interest, net
67
—
%
231
0.01
%
Other noncore adjustments
(5,448
)
(77
)
—
%
(6,362
)
(287
)
(0.01
)%
Core margin (Non-GAAP)
$
17,248,800
$
150,705
3.47
%
$
17,385,314
$
152,760
3.52
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231018303080/en/
Jeffrey Tengel President and Chief Executive Officer (781)
982-6144
Mark J. Ruggiero Chief Financial Officer and Executive Vice
President of Consumer Lending (781) 982-6281
Independent Bank (NASDAQ:INDB)
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