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Independent Bank Corp. Reports Third Quarter Net Income of $60.8 Million

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

%

 

Contacts

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

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