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Independent Bank Corp. Reports Second Quarter Net Income of $62.6 Million

Solid performance reflects strong business fundamentals

Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2023 second quarter net income of $62.6 million, or $1.42 per diluted share, compared to 2023 first quarter net income of $61.2 million, or $1.36 per diluted share. Second quarter results were driven by healthy loan volumes, strong fee income, and disciplined expense management.

The Company generated a return on average assets and a return on average common equity of 1.29% and 8.78%, respectively, for the second quarter of 2023, as compared to 1.30% and 8.63%, respectively, for the prior quarter.

“Our solid performance reflects both the underlying strength of our core franchise and our resilience to the current difficult operating environment. Our sound business fundamentals, including disciplined underwriting and comprehensive capital and liquidity planning, continue to serve us well and position us to take advantage of the right opportunities.” said Jeffrey Tengel, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “Our focus will continue to center on capitalizing on our diverse business model and maintaining a laser focus on cultivating and expanding our valuable core relationships.”

BALANCE SHEET

Total assets of $19.4 billion at June 30, 2023 were virtually unchanged from the prior quarter and decreased by $581.5 million, or 2.9%, as compared to the prior year level, driven primarily by lower cash balances and associated deposit levels.

Total loans at June 30, 2023 of $14.1 billion increased by $192.0 million, or 1.4% (5.5% annualized), compared to the prior quarter level. Solid closing activity along with reduced attrition drove a modest 0.5% (2.0% annualized) increase in total commercial balances, while small business loans also exhibited solid growth, rising 5.0% over the prior quarter. In addition, the vast majority of residential real estate originations were retained on the balance sheet, resulting in growth in that portfolio of $125.6 million, or 6.0% for the quarter, while home equity balances increased slightly by $4.6 million, or 0.4%, compared to the prior quarter level.

Deposit balances of $15.2 billion at June 30, 2023 decreased slightly by $24.1 million, or 0.2%, from March 31, 2023, reflecting a stabilization of overall deposit balances as compared to the prior quarter. As a result of the continued migration of balances to higher rate time deposits, the total cost of deposits for the quarter increased 26 basis points to 0.85%. Core deposits represented 82.6% of total deposits at June 30, 2023, compared to 85.6% at March 31, 2023.

Borrowings decreased by $91.1 million, or 9.2%, during the second quarter of 2023, primarily driven by a redeployment of the balance sheet cash position. In addition, the Company entered into an additional $100 million of pay-fixed borrowings hedges during the quarter, bringing the total of such hedges to $400 million.

The securities portfolio decreased by $86.9 million, or 2.8%, compared to March 31, 2023 driven primarily by paydowns, calls, and maturities, along with unrealized losses of $15.0 million in the available for sale portfolio during the second quarter. Total securities represented 15.6% of total assets at June 30, 2023, as compared to 16.0% at March 31, 2023.

Stockholders' equity at June 30, 2023 increased 0.8% when compared to March 31, 2023, driven primarily by strong earnings retention and 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 14.72% at June 30, 2023 represented an increase of 16 basis points, or 1.1%, from March 31, 2023 and an increase of 35 basis points, or 2.4%, from June 30, 2022. The Company's book value per share increased by $0.52, or 0.8%, to $64.69 at June 30, 2023 as compared to the prior quarter. The Company's tangible book value per share at June 30, 2023 rose by $0.57, or 1.4%, from the prior quarter to $41.88, and represented an increase of 3.9% from the year ago period, despite 1.6 million shares of common stock repurchased during the first quarter of 2023. The Company's ratio of tangible common equity to tangible assets of 10.05% at June 30, 2023 represented an increase of 16 basis points from the prior quarter and an increase of 26 basis points from the year ago period. Please refer to Appendix A for a detailed reconciliation of Non-GAAP balance sheet metrics.

NET INTEREST INCOME

Net interest income for the second quarter of 2023 decreased 4.1% to $152.5 million compared to $159.0 million for the prior quarter, reflecting a full quarter of increased wholesale borrowings as well as higher deposit costs, resulting in a reduction in net interest margin of 25 basis points to 3.54% for the quarter. The core margin decreased 26 basis points to 3.52% for the second quarter of 2023, when excluding purchase accounting and other non-core items. 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 $30.8 million for the second quarter of 2023 represented an increase of $2.5 million, or 8.9%, as compared to the prior quarter. Significant changes in noninterest income for the second quarter of 2023 compared to the prior quarter included the following:

  • Deposit account fees decreased by $408,000, or 6.9%, due primarily to reduced overdraft fees stemming from the Company's policy changes, which went into effect in March 2023.
  • Interchange and ATM fees increased by $294,000, or 7.0%, driven by increased transaction volume during the second quarter of 2023.
  • Investment management income increased by $569,000, or 5.8%, due primarily to seasonal tax preparation fees, as well as increased market valuations. Total assets under administration rose by $158.6 million, or 2.6%, to a record level of $6.3 billion during the second quarter of 2023.
  • Mortgage banking income grew by $362,000 in comparison to the prior quarter, primarily reflecting increased saleable volume.
  • The Company received proceeds on life insurance policies resulting in a gain of $176,000 for the second quarter, as compared to a gain of $11,000 in the prior quarter.
  • Loan level derivative income increased by $867,000 compared to the prior quarter due primarily to higher customer demand.
  • Other noninterest income increased by $580,000, or 10.0%, due primarily to interest income recognized from income tax return refunds received during the quarter and increased Federal Home Loan Bank dividend income.

NONINTEREST EXPENSE

Noninterest expense of $95.6 million for the second quarter of 2023 represented a decrease of $3.1 million, or 3.1%, as compared to the prior quarter. Significant changes in noninterest expense for the second quarter compared to the prior quarter included the following:

  • Salaries and employee benefits decreased by $3.0 million, or 5.3%, due primarily to non-recurring CEO transition related expenses incurred during the first quarter, as well as decreases in payroll taxes and incentive compensation, partially offset by increases in medical plan insurance.
  • Occupancy and equipment decreased by $437,000, or 3.4%, due mostly to seasonal decreases in snow removal and utilities costs.
  • Other noninterest expense increased by $264,000, or 1.1%, due primarily to director equity compensation granted during the quarter, advertising and sponsorships, partially offset by decreases in legal fees.

The Company’s tax rate for the second quarter of 2023 decreased slightly to 24.30%, compared to 24.69% for the prior quarter.

ASSET QUALITY

Net charge-offs were $23.5 million for the second quarter of 2023, driven primarily by the full charge-off of a large nonperforming commercial and industrial credit which had previously been fully reserved for. The second quarter provision for credit losses declined to $5.0 million from $7.3 million in the prior quarter and was driven primarily by the migration of a single commercial real estate loan to non-accrual, as well as loan growth during the quarter. As a result, nonperforming loans decreased to $45.7 million, or 0.32% of total loans at June 30, 2023, as compared to $56.2 million, or 0.40% of total loans at March 31, 2023. Delinquency as a percentage of total loans increased three basis points from the prior quarter to 0.30% at June 30, 2023.

The allowance for credit losses on total loans decreased to $140.6 million, or 0.99% of total loans, at June 30, 2023, as compared to $159.1 million, or 1.14% of total loans, at March 31, 2023. The decline in the coverage ratio was driven primarily by the aforementioned commercial and industrial loan charged-off during the quarter.

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 second quarter earnings at 10:00 a.m. Eastern Time on Friday, July 21, 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: 3932449 and will be available through July 28, 2023. Additionally, a webcast replay will be available on the Company's website until July 21, 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. 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 offers a wide range of banking, investment, and insurance services. The Bank serves businesses and individuals through over 120 retail branches, commercial and residential lending centers, and investment management offices located throughout Eastern Massachusetts as well as in Worcester County and Rhode Island. Rockland Trust also offers a full suite of mobile, online, and telephone banking services. 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 as a result of the conflict between Russia and Ukraine, 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, resulting from 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 and changes related to the phase-out of the London Interbank Offered Rate ("LIBOR");
  • increased competition in the Company’s market areas;
  • adverse weather, changes in climate, natural disasters, geopolitical concerns, including those arising from the conflict between Russia and Ukraine;
  • 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, provision for credit losses on acquired loan portfolios, 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 low-yielding loans originated through government programs in response to the pandemic, or 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

 

June 30

2023

 

March 31

2023

 

June 30

2022

 

Jun 2023 vs.

 

Jun 2023 vs.

 

 

 

 

Mar 2023

 

Jun 2022

Assets

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

181,810

 

 

$

179,923

 

 

$

202,802

 

 

1.05

%

 

(10.35

)%

Interest-earning deposits with banks

 

126,454

 

 

 

322,621

 

 

 

1,273,465

 

 

(60.80

)%

 

(90.07

)%

Securities

 

 

 

 

 

 

 

 

 

Trading

 

4,477

 

 

 

4,469

 

 

 

3,637

 

 

0.18

%

 

23.10

%

Equities

 

21,800

 

 

 

21,503

 

 

 

21,181

 

 

1.38

%

 

2.92

%

Available for sale

 

1,372,903

 

 

 

1,405,602

 

 

 

1,501,949

 

 

(2.33

)%

 

(8.59

)%

Held to maturity

 

1,623,892

 

 

 

1,678,376

 

 

 

1,408,189

 

 

(3.25

)%

 

15.32

%

Total securities

 

3,023,072

 

 

 

3,109,950

 

 

 

2,934,956

 

 

(2.79

)%

 

3.00

%

Loans held for sale

 

6,577

 

 

 

1,130

 

 

 

2,358

 

 

482.04

%

 

178.92

%

Loans

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

1,723,219

 

 

 

1,649,882

 

 

 

1,541,046

 

 

4.44

%

 

11.82

%

Commercial real estate

 

7,812,796

 

 

 

7,820,094

 

 

 

7,791,757

 

 

(0.09

)%

 

0.27

%

Commercial construction

 

1,022,796

 

 

 

1,046,310

 

 

 

1,194,577

 

 

(2.25

)%

 

(14.38

)%

Small business

 

237,092

 

 

 

225,866

 

 

 

205,953

 

 

4.97

%

 

15.12

%

Total commercial

 

10,795,903

 

 

 

10,742,152

 

 

 

10,733,333

 

 

0.50

%

 

0.58

%

Residential real estate

 

2,221,284

 

 

 

2,095,644

 

 

 

1,844,057

 

 

6.00

%

 

20.46

%

Home equity - first position

 

546,240

 

 

 

556,534

 

 

 

587,314

 

 

(1.85

)%

 

(6.99

)%

Home equity - subordinate positions

 

549,158

 

 

 

534,221

 

 

 

478,196

 

 

2.80

%

 

14.84

%

Total consumer real estate

 

3,316,682

 

 

 

3,186,399

 

 

 

2,909,567

 

 

4.09

%

 

13.99

%

Other consumer

 

27,326

 

 

 

19,401

 

 

 

32,864

 

 

40.85

%

 

(16.85

)%

Total loans

 

14,139,911

 

 

 

13,947,952

 

 

 

13,675,764

 

 

1.38

%

 

3.39

%

Less: allowance for credit losses

 

(140,647

)

 

 

(159,131

)

 

 

(144,319

)

 

(11.62

)%

 

(2.54

)%

Net loans

 

13,999,264

 

 

 

13,788,821

 

 

 

13,531,445

 

 

1.53

%

 

3.46

%

Federal Home Loan Bank stock

 

39,488

 

 

 

40,303

 

 

 

6,249

 

 

(2.02

)%

 

531.91

%

Bank premises and equipment, net

 

193,642

 

 

 

195,921

 

 

 

202,221

 

 

(1.16

)%

 

(4.24

)%

Goodwill

 

985,072

 

 

 

985,072

 

 

 

985,072

 

 

%

 

%

Other intangible assets

 

21,537

 

 

 

23,253

 

 

 

28,845

 

 

(7.38

)%

 

(25.34

)%

Cash surrender value of life insurance policies

 

296,687

 

 

 

295,268

 

 

 

292,807

 

 

0.48

%

 

1.33

%

Other assets

 

527,328

 

 

 

500,140

 

 

 

522,230

 

 

5.44

%

 

0.98

%

Total assets

$

19,400,931

 

 

$

19,442,402

 

 

$

19,982,450

 

 

(0.21

)%

 

(2.91

)%

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

$

4,861,092

 

 

$

5,083,678

 

 

$

5,562,174

 

 

(4.38

)%

 

(12.60

)%

Savings and interest checking accounts

 

5,525,223

 

 

 

5,638,781

 

 

 

6,347,601

 

 

(2.01

)%

 

(12.96

)%

Money market

 

3,065,520

 

 

 

3,094,362

 

 

 

3,419,170

 

 

(0.93

)%

 

(10.34

)%

Time certificates of deposit

 

1,796,216

 

 

 

1,455,351

 

 

 

1,310,603

 

 

23.42

%

 

37.05

%

Total deposits

 

15,248,051

 

 

 

15,272,172

 

 

 

16,639,548

 

 

(0.16

)%

 

(8.36

)%

Borrowings

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

788,479

 

 

 

879,628

 

 

 

25,652

 

 

(10.36

)%

 

2,973.75

%

Junior subordinated debentures, net

 

62,857

 

 

 

62,856

 

 

 

62,854

 

 

%

 

%

Subordinated debentures, net

 

49,933

 

 

 

49,909

 

 

 

49,838

 

 

0.05

%

 

0.19

%

Total borrowings

 

901,269

 

 

 

992,393

 

 

 

138,344

 

 

(9.18

)%

 

551.47

%

Total deposits and borrowings

 

16,149,320

 

 

 

16,264,565

 

 

 

16,777,892

 

 

(0.71

)%

 

(3.75

)%

Other liabilities

 

396,697

 

 

 

346,928

 

 

 

333,373

 

 

14.35

%

 

18.99

%

Total liabilities

 

16,546,017

 

 

 

16,611,493

 

 

 

17,111,265

 

 

(0.39

)%

 

(3.30

)%

Stockholders' equity

 

 

 

 

 

 

 

 

 

Common stock

 

440

 

 

 

439

 

 

 

459

 

 

0.23

%

 

(4.14

)%

Additional paid in capital

 

1,997,674

 

 

 

1,995,077

 

 

 

2,146,333

 

 

0.13

%

 

(6.93

)%

Retained earnings

 

1,009,735

 

 

 

971,338

 

 

 

833,857

 

 

3.95

%

 

21.09

%

Accumulated other comprehensive loss, net of tax

 

(152,935

)

 

 

(135,945

)

 

 

(109,464

)

 

12.50

%

 

39.71

%

Total stockholders' equity

 

2,854,914

 

 

 

2,830,909

 

 

 

2,871,185

 

 

0.85

%

 

(0.57

)%

Total liabilities and stockholders' equity

$

19,400,931

 

 

$

19,442,402

 

 

$

19,982,450

 

 

(0.21

)%

 

(2.91

)%

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

(Unaudited, dollars in thousands, except per share data)

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

% Change

 

% Change

 

June 30

2023

 

March 31

2023

 

June 30

2022

 

Jun 2023 vs.

 

Jun 2023 vs.

 

 

 

 

Mar 2023

 

Jun 2022

Interest income

 

 

 

 

 

 

 

 

 

Interest on federal funds sold and short-term investments

$

3,312

 

 

$

665

 

 

$

2,817

 

 

398.05

%

 

17.57

%

Interest and dividends on securities

 

15,583

 

 

 

15,310

 

 

 

11,283

 

 

1.78

%

 

38.11

%

Interest and fees on loans

 

179,759

 

 

 

170,926

 

 

 

133,988

 

 

5.17

%

 

34.16

%

Interest on loans held for sale

 

39

 

 

 

34

 

 

 

35

 

 

14.71

%

 

11.43

%

Total interest income

 

198,693

 

 

 

186,935

 

 

 

148,123

 

 

6.29

%

 

34.14

%

Interest expense

 

 

 

 

 

 

 

 

 

Interest on deposits

 

31,909

 

 

 

22,675

 

 

 

2,111

 

 

40.72

%

 

1,411.56

%

Interest on borrowings

 

14,238

 

 

 

5,262

 

 

 

1,151

 

 

170.58

%

 

1,137.01

%

Total interest expense

 

46,147

 

 

 

27,937

 

 

 

3,262

 

 

65.18

%

 

1,314.68

%

Net interest income

 

152,546

 

 

 

158,998

 

 

 

144,861

 

 

(4.06

)%

 

5.31

%

Provision for credit losses

 

5,000

 

 

 

7,250

 

 

 

 

 

(31.03

)%

 

100.00

%

Net interest income after provision for credit losses

 

147,546

 

 

 

151,748

 

 

 

144,861

 

 

(2.77

)%

 

1.85

%

Noninterest income

 

 

 

 

 

 

 

 

 

Deposit account fees

 

5,508

 

 

 

5,916

 

 

 

5,828

 

 

(6.90

)%

 

(5.49

)%

Interchange and ATM fees

 

4,478

 

 

 

4,184

 

 

 

4,027

 

 

7.03

%

 

11.20

%

Investment management

 

10,348

 

 

 

9,779

 

 

 

9,329

 

 

5.82

%

 

10.92

%

Mortgage banking income

 

670

 

 

 

308

 

 

 

1,042

 

 

117.53

%

 

(35.70

)%

Increase in cash surrender value of life insurance policies

 

1,940

 

 

 

1,854

 

 

 

1,871

 

 

4.64

%

 

3.69

%

Gain on life insurance benefits

 

176

 

 

 

11

 

 

 

123

 

 

1,500.00

%

 

43.09

%

Loan level derivative income

 

1,275

 

 

 

408

 

 

 

436

 

 

212.50

%

 

192.43

%

Other noninterest income

 

6,362

 

 

 

5,782

 

 

 

5,242

 

 

10.03

%

 

21.37

%

Total noninterest income

 

30,757

 

 

 

28,242

 

 

 

27,898

 

 

8.91

%

 

10.25

%

Noninterest expenses

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

53,975

 

 

 

56,975

 

 

 

49,538

 

 

(5.27

)%

 

8.96

%

Occupancy and equipment expenses

 

12,385

 

 

 

12,822

 

 

 

11,637

 

 

(3.41

)%

 

6.43

%

Data processing and facilities management

 

2,530

 

 

 

2,527

 

 

 

2,247

 

 

0.12

%

 

12.59

%

FDIC assessment

 

2,674

 

 

 

2,610

 

 

 

1,743

 

 

2.45

%

 

53.41

%

Other noninterest expenses

 

23,991

 

 

 

23,727

 

 

 

25,397

 

 

1.11

%

 

(5.54

)%

Total noninterest expenses

 

95,555

 

 

 

98,661

 

 

 

90,562

 

 

(3.15

)%

 

5.51

%

Income before income taxes

 

82,748

 

 

 

81,329

 

 

 

82,197

 

 

1.74

%

 

0.67

%

Provision for income taxes

 

20,104

 

 

 

20,082

 

 

 

20,421

 

 

0.11

%

 

(1.55

)%

Net Income

$

62,644

 

 

$

61,247

 

 

$

61,776

 

 

2.28

%

 

1.41

%

 

 

 

 

 

 

 

 

 

 

Weighted average common shares (basic)

 

44,129,152

 

 

 

45,004,100

 

 

 

46,665,101

 

 

 

 

 

Common share equivalents

 

7,573

 

 

 

19,564

 

 

 

14,096

 

 

 

 

 

Weighted average common shares (diluted)

 

44,136,725

 

 

 

45,023,664

 

 

 

46,679,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

1.42

 

 

$

1.36

 

 

$

1.32

 

 

4.41

%

 

7.58

%

Diluted earnings per share

$

1.42

 

 

$

1.36

 

 

$

1.32

 

 

4.41

%

 

7.58

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance ratios

 

 

 

 

 

 

 

 

 

Net interest margin (FTE)

 

3.54

%

 

 

3.79

%

 

 

3.27

%

 

 

 

 

Return on average assets (calculated by dividing net income by average assets)

 

1.29

%

 

 

1.30

%

 

 

1.24

%

 

 

 

 

Return on average common equity (calculated by dividing net income by average common equity) (GAAP)

 

8.78

%

 

 

8.63

%

 

 

8.49

%

 

 

 

 

Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity)

 

13.54

%

 

 

13.30

%

 

 

13.01

%

 

 

 

 

Noninterest income as a % of total revenue (calculated by dividing total noninterest income by net interest income plus total noninterest income)

 

16.78

%

 

 

15.08

%

 

 

16.15

%

 

 

 

 

Efficiency ratio (calculated by dividing total noninterest expense by total revenue)

 

52.13

%

 

 

52.69

%

 

 

52.42

%

 

 

 

 

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

(Unaudited, dollars in thousands, except per share data)

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

 

 

% Change

 

 

June 30

2023

 

June 30

2022

 

Jun 2023 vs.

 

 

 

 

Jun 2022

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

Interest on federal funds sold and short-term investments

 

$

3,977

 

 

$

3,703

 

 

7.40

%

Interest and dividends on securities

 

 

30,893

 

 

 

21,327

 

 

44.85

%

Interest and fees on loans

 

 

350,685

 

 

 

263,613

 

 

33.03

%

Interest on loans held for sale

 

 

73

 

 

 

99

 

 

(26.26

)%

Total interest income

 

 

385,628

 

 

 

288,742

 

 

33.55

%

Interest expense

 

 

 

 

 

 

Interest on deposits

 

 

54,584

 

 

 

4,218

 

 

1,194.07

%

Interest on borrowings

 

 

19,500

 

 

 

2,231

 

 

774.05

%

Total interest expense

 

 

74,084

 

 

 

6,449

 

 

1,048.77

%

Net interest income

 

 

311,544

 

 

 

282,293

 

 

10.36

%

Provision for (release of) credit losses

 

 

12,250

 

 

 

(2,000

)

 

(712.50

)%

Net interest income after provision for credit losses

 

 

299,294

 

 

 

284,293

 

 

5.28

%

Noninterest income

 

 

 

 

 

 

Deposit account fees

 

 

11,424

 

 

 

11,321

 

 

0.91

%

Interchange and ATM fees

 

 

8,662

 

 

 

7,636

 

 

13.44

%

Investment management

 

 

20,127

 

 

 

18,002

 

 

11.80

%

Mortgage banking income

 

 

978

 

 

 

2,404

 

 

(59.32

)%

Increase in cash surrender value of life insurance policies

 

 

3,794

 

 

 

3,666

 

 

3.49

%

Gain on life insurance benefits

 

 

187

 

 

 

123

 

 

52.03

%

Loan level derivative income

 

 

1,683

 

 

 

1,040

 

 

61.83

%

Other noninterest income

 

 

12,144

 

 

 

9,978

 

 

21.71

%

Total noninterest income

 

 

58,999

 

 

 

54,170

 

 

8.91

%

Noninterest expenses

 

 

 

 

 

 

Salaries and employee benefits

 

 

110,950

 

 

 

98,249

 

 

12.93

%

Occupancy and equipment expenses

 

 

25,207

 

 

 

24,939

 

 

1.07

%

Data processing and facilities management

 

 

5,057

 

 

 

4,619

 

 

9.48

%

FDIC assessment

 

 

5,284

 

 

 

3,548

 

 

48.93

%

Merger and acquisition expense

 

 

 

 

 

7,100

 

 

(100.00

)%

Other noninterest expenses

 

 

47,718

 

 

 

47,607

 

 

0.23

%

Total noninterest expenses

 

 

194,216

 

 

 

186,062

 

 

4.38

%

Income before income taxes

 

 

164,077

 

 

 

152,401

 

 

7.66

%

Provision for income taxes

 

 

40,186

 

 

 

37,528

 

 

7.08

%

Net Income

 

$

123,891

 

 

$

114,873

 

 

7.85

%

 

 

 

 

 

 

 

Weighted average common shares (basic)

 

 

44,564,209

 

 

 

47,013,989

 

 

 

Common share equivalents

 

 

13,568

 

 

 

17,403

 

 

 

Weighted average common shares (diluted)

 

 

44,577,777

 

 

 

47,031,392

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

2.78

 

 

$

2.44

 

 

13.93

%

Diluted earnings per share

 

$

2.78

 

 

$

2.44

 

 

13.93

%

 

 

 

 

 

 

 

Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP):

 

 

 

 

 

 

Net Income

 

$

123,891

 

 

$

114,873

 

 

 

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)

 

$

123,891

 

 

$

119,978

 

 

3.26

%

 

 

 

 

 

 

 

Diluted earnings per share, on an operating basis

 

$

2.78

 

 

$

2.55

 

 

9.02

%

 

 

 

 

 

 

 

(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)

 

 

3.67

%

 

 

3.18

%

 

 

Return on average assets (GAAP) (calculated by dividing net income by average assets)

 

 

1.29

%

 

 

1.15

%

 

 

Return on average assets on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average assets)

 

 

1.29

%

 

 

1.21

%

 

 

Return on average common equity (GAAP) (calculated by dividing net income by average common equity)

 

 

8.70

%

 

 

7.82

%

 

 

Return on average common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average common equity)

 

 

8.70

%

 

 

8.16

%

 

 

Return on average tangible common equity (GAAP) (calculated by dividing net income by average tangible common equity)

 

 

13.42

%

 

 

11.89

%

 

 

Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average tangible common equity)

 

 

13.42

%

 

 

12.42

%

 

 

Noninterest income as a % of total revenue (calculated by dividing total noninterest income by net interest income plus total noninterest income)

 

 

15.92

%

 

 

16.10

%

 

 

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)

 

 

15.92

%

 

 

16.10

%

 

 

Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue)

 

 

52.41

%

 

 

55.30

%

 

 

Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue)

 

 

52.41

%

 

 

53.19

%

 

 

ASSET QUALITY

 

 

(Unaudited, dollars in thousands)

 

Nonperforming Assets At

 

 

June 30

2023

 

March 31

2023

 

June 30

2022

Nonperforming loans

 

 

 

 

 

 

Commercial & industrial loans

 

$

3,235

 

 

$

26,343

 

 

$

3,518

 

Commercial real estate loans

 

 

29,910

 

 

 

18,038

 

 

 

40,074

 

Small business loans

 

 

348

 

 

 

242

 

 

 

31

 

Residential real estate loans

 

 

8,179

 

 

 

8,178

 

 

 

8,563

 

Home equity

 

 

3,944

 

 

 

3,305

 

 

 

3,514

 

Other consumer

 

 

86

 

 

 

129

 

 

 

215

 

Total nonperforming loans

 

 

45,702

 

 

 

56,235

 

 

 

55,915

 

Other real estate owned

 

 

110

 

 

 

 

 

 

 

Total nonperforming assets

 

$

45,812

 

 

$

56,235

 

 

$

55,915

 

 

 

 

 

 

 

 

Nonperforming loans/gross loans

 

 

0.32

%

 

 

0.40

%

 

 

0.41

%

Nonperforming assets/total assets

 

 

0.24

%

 

 

0.29

%

 

 

0.28

%

Allowance for credit losses/nonperforming loans

 

 

307.75

%

 

 

282.98

%

 

 

258.10

%

Allowance for credit losses/total loans

 

 

0.99

%

 

 

1.14

%

 

 

1.06

%

Delinquent loans/total loans

 

 

0.30

%

 

 

0.27

%

 

 

0.40

%

 

 

 

 

 

 

 

 

 

Nonperforming Assets Reconciliation for the Three Months Ended

 

 

June 30

2023

 

March 31

2023

 

June 30

2022

 

 

 

 

 

 

 

Nonperforming assets beginning balance

 

$

56,235

 

 

$

54,881

 

 

$

56,618

 

New to nonperforming

 

 

18,018

 

 

 

5,416

 

 

 

2,822

 

Loans charged-off

 

 

(23,767

)

 

 

(815

)

 

 

(545

)

Loans paid-off

 

 

(3,984

)

 

 

(1,915

)

 

 

(2,239

)

Loans restored to performing status

 

 

(680

)

 

 

(1,352

)

 

 

(738

)

Other

 

 

(10

)

 

 

20

 

 

 

(3

)

Nonperforming assets ending balance

 

$

45,812

 

 

$

56,235

 

 

$

55,915

 

 

Net Charge-Offs (Recoveries)

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30

2023

 

March 31

2023

 

June 30

2022

 

June 30

2023

 

June 30

2022

Net charge-offs (recoveries)

 

 

 

 

 

 

 

 

 

 

Commercial and industrial loans

 

$

23,174

 

 

$

276

 

 

$

(29

)

 

$

23,450

 

 

$

(42

)

Commercial real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

Small business loans

 

 

51

 

 

 

(3

)

 

 

(22

)

 

 

48

 

 

 

 

Home equity

 

 

(10

)

 

 

(16

)

 

 

84

 

 

 

(26

)

 

 

82

 

Other consumer

 

 

269

 

 

 

281

 

 

 

166

 

 

 

550

 

 

 

566

 

Total net charge-offs (recoveries)

 

$

23,484

 

 

$

538

 

 

$

199

 

 

$

24,022

 

 

$

603

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs (recoveries) to average loans (annualized)

 

 

0.67

%

 

 

0.02

%

 

 

0.01

%

 

 

0.35

%

 

 

0.01

%

BALANCE SHEET AND CAPITAL RATIOS

 

 

 

 

 

 

 

 

June 30

2023

 

March 31

2023

 

June 30

2022

Gross loans/total deposits

 

 

92.73

%

 

 

91.33

%

 

 

82.19

%

Common equity tier 1 capital ratio (1)

 

 

14.07

%

 

 

13.83

%

 

 

13.90

%

Tier 1 leverage capital ratio (1)

 

 

10.85

%

 

 

10.78

%

 

 

10.42

%

Common equity to assets ratio GAAP

 

 

14.72

%

 

 

14.56

%

 

 

14.37

%

Tangible common equity to tangible assets ratio (2)

 

 

10.05

%

 

 

9.89

%

 

 

9.79

%

Book value per share GAAP

 

$

64.69

 

 

$

64.17

 

 

$

62.32

 

Tangible book value per share (2)

 

$

41.88

 

 

$

41.31

 

 

$

40.31

(1) Estimated number for June 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

 

 

June 30, 2023

 

March 31, 2023

 

June 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

 

$

270,443

 

$

3,312

 

4.91

%

 

$

73,608

 

$

665

 

3.66

%

 

$

1,377,286

 

$

2,817

 

0.82

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities - trading

 

 

4,487

 

 

 

%

 

 

4,095

 

 

 

%

 

 

3,863

 

 

 

%

Securities - taxable investments

 

 

3,071,752

 

 

15,581

 

2.03

%

 

 

3,117,024

 

 

15,309

 

1.99

%

 

 

2,889,245

 

 

11,281

 

1.57

%

Securities - nontaxable investments (1)

 

 

191

 

 

2

 

4.20

%

 

 

193

 

 

2

 

4.20

%

 

 

197

 

 

3

 

6.11

%

Total securities

 

$

3,076,430

 

$

15,583

 

2.03

%

 

$

3,121,312

 

$

15,311

 

1.99

%

 

$

2,893,305

 

$

11,284

 

1.56

%

Loans held for sale

 

 

2,977

 

 

39

 

5.25

%

 

 

2,474

 

 

34

 

5.57

%

 

 

3,842

 

 

35

 

3.65

%

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (1)

 

 

1,686,348

 

 

29,451

 

7.00

%

 

 

1,618,330

 

 

26,572

 

6.66

%

 

 

1,537,883

 

 

17,496

 

4.56

%

Commercial real estate (1)

 

 

7,803,702

 

 

91,813

 

4.72

%

 

 

7,773,007

 

 

89,581

 

4.67

%

 

 

7,827,442

 

 

76,771

 

3.93

%

Commercial construction

 

 

1,044,650

 

 

17,212

 

6.61

%

 

 

1,134,469

 

 

16,467

 

5.89

%

 

 

1,193,353

 

 

13,456

 

4.52

%

Small business

 

 

230,371

 

 

3,501

 

6.10

%

 

 

222,543

 

 

3,219

 

5.87

%

 

 

203,947

 

 

2,656

 

5.22

%

Total commercial

 

 

10,765,071

 

 

141,977

 

5.29

%

 

 

10,748,349

 

 

135,839

 

5.13

%

 

 

10,762,625

 

 

110,379

 

4.11

%

Residential real estate

 

 

2,153,563

 

 

20,943

 

3.90

%

 

 

2,056,524

 

 

19,358

 

3.82

%

 

 

1,761,986

 

 

14,879

 

3.39

%

Home equity

 

 

1,094,329

 

 

17,394

 

6.38

%

 

 

1,089,056

 

 

16,244

 

6.05

%

 

 

1,046,933

 

 

9,178

 

3.52

%

Total consumer real estate

 

 

3,247,892

 

 

38,337

 

4.73

%

 

 

3,145,580

 

 

35,602

 

4.59

%

 

 

2,808,919

 

 

24,057

 

3.44

%

Other consumer

 

 

28,863

 

 

566

 

7.87

%

 

 

32,767

 

 

577

 

7.14

%

 

 

31,554

 

 

507

 

6.44

%

Total loans

 

$

14,041,826

 

$

180,880

 

5.17

%

 

$

13,926,696

 

$

172,018

 

5.01

%

 

$

13,603,098

 

$

134,943

 

3.98

%

Total interest-earning assets

 

$

17,391,676

 

$

199,814

 

4.61

%

 

$

17,124,090

 

$

188,028

 

4.45

%

 

$

17,877,531

 

$

149,079

 

3.34

%

Cash and due from banks

 

 

178,707

 

 

 

 

 

 

181,402

 

 

 

 

 

 

190,501

 

 

 

 

Federal Home Loan Bank stock

 

 

44,619

 

 

 

 

 

 

14,714

 

 

 

 

 

 

6,249

 

 

 

 

Other assets

 

 

1,826,879

 

 

 

 

 

 

1,844,556

 

 

 

 

 

 

1,855,351

 

 

 

 

Total assets

 

$

19,441,881

 

 

 

 

 

$

19,164,762

 

 

 

 

 

$

19,929,632

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings and interest checking accounts

 

$

5,512,995

 

$

9,425

 

0.69

%

 

$

5,745,357

 

$

7,473

 

0.53

%

 

$

6,192,761

 

$

710

 

0.05

%

Money market

 

 

3,044,486

 

 

12,331

 

1.62

%

 

 

3,243,322

 

 

10,393

 

1.30

%

 

 

3,486,017

 

 

607

 

0.07

%

Time deposits

 

 

1,630,015

 

 

10,153

 

2.50

%

 

 

1,293,987

 

 

4,809

 

1.51

%

 

 

1,356,507

 

 

794

 

0.23

%

Total interest-bearing deposits

 

$

10,187,496

 

$

31,909

 

1.26

%

 

$

10,282,666

 

$

22,675

 

0.89

%

 

$

11,035,285

 

$

2,111

 

0.08

%

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

 

1,068,585

 

 

12,576

 

4.72

%

 

 

298,413

 

 

3,644

 

4.95

%

 

 

25,654

 

 

123

 

1.92

%

Junior subordinated debentures

 

 

62,856

 

 

1,044

 

6.66

%

 

 

62,856

 

 

1,001

 

6.46

%

 

 

62,854

 

 

410

 

2.62

%

Subordinated debentures

 

 

49,921

 

 

618

 

4.97

%

 

 

49,897

 

 

617

 

5.01

%

 

 

49,825

 

 

618

 

4.97

%

Total borrowings

 

$

1,181,362

 

$

14,238

 

4.83

%

 

$

411,166

 

$

5,262

 

5.19

%

 

$

138,333

 

$

1,151

 

3.34

%

Total interest-bearing liabilities

 

$

11,368,858

 

$

46,147

 

1.63

%

 

$

10,693,832

 

$

27,937

 

1.06

%

 

$

11,173,618

 

$

3,262

 

0.12

%

Noninterest-bearing demand deposits

 

 

4,873,767

 

 

 

 

 

 

5,219,531

 

 

 

 

 

 

5,546,041

 

 

 

 

Other liabilities

 

 

336,210

 

 

 

 

 

 

374,195

 

 

 

 

 

 

290,467

 

 

 

 

Total liabilities

 

$

16,578,835

 

 

 

 

 

$

16,287,558

 

 

 

 

 

$

17,010,126

 

 

 

 

Stockholders' equity

 

 

2,863,046

 

 

 

 

 

 

2,877,204

 

 

 

 

 

 

2,919,506

 

 

 

 

Total liabilities and stockholders' equity

 

$

19,441,881

 

 

 

 

 

$

19,164,762

 

 

 

 

 

$

19,929,632

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

153,667

 

 

 

 

 

$

160,091

 

 

 

 

 

$

145,817

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

 

 

 

 

2.98

%

 

 

 

 

 

3.39

%

 

 

 

 

 

3.22

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

3.54

%

 

 

 

 

 

3.79

%

 

 

 

 

 

3.27

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits, including demand deposits

 

$

15,061,263

 

$

31,909

 

 

 

$

15,502,197

 

$

22,675

 

 

 

$

16,581,326

 

$

2,111

 

 

Cost of total deposits

 

 

 

 

 

0.85

%

 

 

 

 

 

0.59

%

 

 

 

 

 

0.05

%

Total funding liabilities, including demand deposits

 

$

16,242,625

 

$

46,147

 

 

 

$

15,913,363

 

$

27,937

 

 

 

$

16,719,659

 

$

3,262

 

 

Cost of total funding liabilities

 

 

 

 

 

1.14

%

 

 

 

 

 

0.71

%

 

 

 

 

 

0.08

%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.1 million, $1.1 million, and $956,000 for the three months ended June 30, 2023, March 31, 2023, and June 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.

 

 

 

Six Months Ended

 

 

June 30, 2023

 

June 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

 

$

172,569

 

$

3,977

 

4.65

%

 

$

1,640,264

 

$

3,703

 

0.46

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

Securities - trading

 

 

4,292

 

 

 

%

 

 

3,798

 

 

 

%

Securities - taxable investments

 

 

3,094,263

 

 

30,890

 

2.01

%

 

 

2,808,213

 

 

21,324

 

1.53

%

Securities - nontaxable investments (1)

 

 

192

 

 

4

 

4.20

%

 

 

199

 

 

4

 

4.05

%

Total securities

 

$

3,098,747

 

$

30,894

 

2.01

%

 

$

2,812,210

 

$

21,328

 

1.53

%

Loans held for sale

 

 

2,727

 

 

73

 

5.40

%

 

 

6,643

 

 

99

 

3.01

%

Loans

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (1)

 

 

1,652,527

 

 

56,023

 

6.84

%

 

 

1,536,757

 

 

34,527

 

4.53

%

Commercial real estate (1)

 

 

7,788,304

 

 

181,394

 

4.70

%

 

 

7,869,164

 

 

152,800

 

3.92

%

Commercial construction

 

 

1,089,311

 

 

33,679

 

6.23

%

 

 

1,192,013

 

 

25,724

 

4.35

%

Small business

 

 

226,479

 

 

6,720

 

5.98

%

 

 

199,408

 

 

5,072

 

5.13

%

Total commercial

 

 

10,756,621

 

 

277,816

 

5.21

%

 

 

10,797,342

 

 

218,123

 

4.07

%

Residential real estate

 

 

2,105,311

 

 

40,301

 

3.86

%

 

 

1,705,883

 

 

28,576

 

3.38

%

Home equity

 

 

1,091,707

 

 

33,638

 

6.21

%

 

 

1,039,661

 

 

17,840

 

3.46

%

Total consumer real estate

 

 

3,197,018

 

 

73,939

 

4.66

%

 

 

2,745,544

 

 

46,416

 

3.41

%

Other consumer

 

 

30,940

 

 

1,143

 

7.45

%

 

 

30,690

 

 

996

 

6.54

%

Total loans

 

$

13,984,579

 

$

352,898

 

5.09

%

 

$

13,573,576

 

$

265,535

 

3.94

%

Total interest-earning assets

 

$

17,258,622

 

$

387,842

 

4.53

%

 

$

18,032,693

 

$

290,665

 

3.25

%

Cash and due from banks

 

 

180,047

 

 

 

 

 

 

181,069

 

 

 

 

Federal Home Loan Bank stock

 

 

29,749

 

 

 

 

 

 

8,814

 

 

 

 

Other assets

 

 

1,835,669

 

 

 

 

 

 

1,853,285

 

 

 

 

Total assets

 

$

19,304,087

 

 

 

 

 

$

20,075,861

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

Savings and interest checking accounts

 

$

5,628,535

 

$

16,898

 

0.61

%

 

$

6,224,128

 

$

1,308

 

0.04

%

Money market

 

 

3,143,355

 

 

22,724

 

1.46

%

 

 

3,547,066

 

 

1,166

 

0.07

%

Time deposits

 

 

1,462,929

 

 

14,962

 

2.06

%

 

 

1,411,275

 

 

1,744

 

0.25

%

Total interest-bearing deposits

 

$

10,234,819

 

$

54,584

 

1.08

%

 

$

11,182,469

 

$

4,218

 

0.08

%

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

 

685,626

 

 

16,220

 

4.77

%

 

 

25,675

 

 

256

 

2.01

%

Long-term borrowings

 

 

 

 

 

%

 

 

4,506

 

 

31

 

1.39

%

Junior subordinated debentures

 

 

62,856

 

 

2,045

 

6.56

%

 

 

62,854

 

 

709

 

2.27

%

Subordinated debentures

 

 

49,909

 

 

1,235

 

4.99

%

 

 

49,813

 

 

1,235

 

5.00

%

Total borrowings

 

$

798,391

 

$

19,500

 

4.93

%

 

$

142,848

 

$

2,231

 

3.15

%

Total interest-bearing liabilities

 

$

11,033,210

 

$

74,084

 

1.35

%

 

$

11,325,317

 

$

6,449

 

0.11

%

Noninterest-bearing demand deposits

 

 

5,045,694

 

 

 

 

 

 

5,495,036

 

 

 

 

Other liabilities

 

 

355,097

 

 

 

 

 

 

292,023

 

 

 

 

Total liabilities

 

$

16,434,001

 

 

 

 

 

$

17,112,376

 

 

 

 

Stockholders' equity

 

 

2,870,086

 

 

 

 

 

 

2,963,485

 

 

 

 

Total liabilities and stockholders' equity

 

$

19,304,087

 

 

 

 

 

$

20,075,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

313,758

 

 

 

 

 

$

284,216

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

 

 

 

 

3.18

%

 

 

 

 

 

3.14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

3.67

%

 

 

 

 

 

3.18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits, including demand deposits

 

$

15,280,513

 

$

54,584

 

 

 

$

16,677,505

 

$

4,218

 

 

Cost of total deposits

 

 

 

 

 

0.72

%

 

 

 

 

 

0.05

%

Total funding liabilities, including demand deposits

 

$

16,078,904

 

$

74,084

 

 

 

$

16,820,353

 

$

6,449

 

 

Cost of total funding liabilities

 

 

 

 

 

0.93

%

 

 

 

 

 

0.08

%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $2.2 million and $1.9 million for the six months ended June 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:

 

 

June 30

2023

 

March 31

2023

 

June 30

2022

 

Tangible common equity

 

(Dollars in thousands, except per share data)

 

Stockholders' equity (GAAP)

 

$

2,854,914

 

 

$

2,830,909

 

 

$

2,871,185

 

(a)

Less: Goodwill and other intangibles

 

 

1,006,609

 

 

 

1,008,325

 

 

 

1,013,917

 

 

Tangible common equity (Non-GAAP)

 

$

1,848,305

 

 

$

1,822,584

 

 

$

1,857,268

 

(b)

Tangible assets

 

 

 

 

 

 

 

Assets (GAAP)

 

$

19,400,931

 

 

$

19,442,402

 

 

$

19,982,450

 

(c)

Less: Goodwill and other intangibles

 

 

1,006,609

 

 

 

1,008,325

 

 

 

1,013,917

 

 

Tangible assets (Non-GAAP)

 

$

18,394,322

 

 

$

18,434,077

 

 

$

18,968,533

 

(d)

 

��

 

 

 

 

 

 

Common Shares

 

 

44,130,901

 

 

 

44,114,827

 

 

 

46,069,761

 

(e)

 

 

 

 

 

 

 

 

Common equity to assets ratio (GAAP)

 

 

14.72

%

 

 

14.56

%

 

 

14.37

%

(a/c)

Tangible common equity to tangible assets ratio (Non-GAAP)

 

 

10.05

%

 

 

9.89

%

 

 

9.79

%

(b/d)

Book value per share (GAAP)

 

$

64.69

 

 

$

64.17

 

 

$

62.32

 

(a/e)

Tangible book value per share (Non-GAAP)

 

$

41.88

 

 

$

41.31

 

 

$

40.31

 

(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

 

Six Months Ended

 

 

June 30

2023

 

March 31

2023

 

June 30

2022

 

June 30

2023

 

June 30

2022

 

Net interest income (GAAP)

$

         152,546

 

 

$

         158,998

 

 

$

         144,861

 

 

$

         311,544

 

 

$

         282,293

 

(a)

 

 

 

 

 

 

 

 

 

 

 

Noninterest income (GAAP)

$

           30,757

 

 

$

           28,242

 

 

$

           27,898

 

 

$

           58,999

 

 

$

           54,170

 

(b)

Noninterest income on an operating basis (Non-GAAP)

$

           30,757

 

 

$

           28,242

 

 

$

           27,898

 

 

$

           58,999

 

 

$

           54,170

 

(c)

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (GAAP)

$

           95,555

 

 

$

           98,661

 

 

$

           90,562

 

 

$

         194,216

 

 

$

         186,062

 

(d)

Less:

 

 

 

 

 

 

 

 

 

 

Merger and acquisition expense

 

                   —

 

 

 

                   —

 

 

 

                   —

 

 

 

                   —

 

 

 

              7,100

 

 

Noninterest expense on an operating basis (Non-GAAP)

$

           95,555

 

 

$

           98,661

 

 

$

           90,562

 

 

$

         194,216

 

 

$

         178,962

 

(e)

 

 

 

 

 

 

 

 

 

 

 

Total revenue (GAAP)

$

         183,303

 

 

$

         187,240

 

 

$

         172,759

 

 

$

         370,543

 

 

$

         336,463

 

(a+b)

Total operating revenue (Non-GAAP)

$

         183,303

 

 

$

         187,240

 

 

$

         172,759

 

 

$

         370,543

 

 

$

         336,463

 

(a+c)

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

$

           62,644

 

 

$

           61,247

 

 

$

           61,776

 

 

$

         123,891

 

 

$

         114,873

 

 

Operating net income (Non-GAAP) (See income statement for reconciliation of GAAP to Non-GAAP)

$

           62,644

 

 

$

           61,247

 

 

$

           61,776

 

 

$

         123,891

 

 

$

         119,978

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common equity (GAAP)

$

      2,863,046

 

 

$

      2,877,204

 

 

$

      2,919,506

 

 

$

      2,870,086

 

 

$

      2,963,485

 

 

Less: Average goodwill and other intangibles

 

        1,007,500

 

 

 

        1,009,340

 

 

 

        1,014,953

 

 

 

        1,008,415

 

 

 

        1,015,991

 

 

Tangible average tangible common equity (Non-GAAP)

$

      1,855,546

 

 

$

      1,867,864

 

 

$

      1,904,553

 

 

$

      1,861,671

 

 

$

      1,947,494

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios

 

 

 

 

 

 

 

 

 

 

Noninterest income as a % of total revenue (GAAP) (calculated by dividing total noninterest income by total revenue)

 

16.78

%

 

 

15.08

%

 

 

16.15

%

 

 

15.92

%

 

 

16.10

%

(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)

 

16.78

%

 

 

15.08

%

 

 

16.15

%

 

 

15.92

%

 

 

16.10

%

(c/(a+c))

Efficiency ratio (GAAP)  (calculated by dividing total noninterest expense by total revenue)

 

52.13

%

 

 

52.69

%

 

 

52.42

%

 

 

52.41

%

 

 

55.30

%

(d/(a+b))

Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue)

 

52.13

%

 

 

52.69

%

 

 

52.42

%

 

 

52.41

%

 

 

53.19

%

(e/(a+c))

Return on average tangible common equity (Non-GAAP) (calculated by dividing annualized net income by average tangible common equity)

 

13.54

%

 

 

13.30

%

 

 

13.01

%

 

 

13.42

%

 

 

11.89

%

 

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)

 

13.54

%

 

 

13.30

%

 

 

13.01

%

 

 

13.42

%

 

 

12.42

%

 

 

 APPENDIX C: Net Interest Margin Analysis & Non-GAAP Reconciliation of Core Margin

 

Three Months Ended

 

June 30, 2023

 

March 31, 2023

 

Volume

Interest

Margin Impact

 

 Volume

 Interest

Margin Impact

 

(Dollars in thousands)

Reported total interest earning assets

$

    17,391,676

 

$

        153,667

 

3.54

%

 

$

    17,124,090

 

$

        160,091

 

3.79

%

Acquisition fair value marks:

 

 

 

 

 

 

 

Loan accretion

 

 

               (862

)

 

 

 

 

               (287

)

 

CD amortization

 

 

                  11

 

 

 

 

 

                  11

 

 

 

 

 

               (851

)

(0.02

)%

 

 

 

               (276

)

%

 

 

 

 

 

 

 

 

Nonaccrual interest, net

 

 

                231

 

0.01

%

 

 

 

                (12

)

%

 

 

 

 

 

 

 

 

Other noncore adjustments

 

            (6,362

)

 

               (287

)

(0.01

)%

 

 

            (7,396

)

 

               (361

)

(0.01

)%

 

 

 

 

 

 

 

 

Core margin (Non-GAAP)

$

    17,385,314

 

$

        152,760

 

3.52

%

 

$

    17,116,694

 

$

        159,442

 

3.78

%

 

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 Jeffrey Tengel

 

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