Independent Bank Corp. Reports Fourth Quarter Net Income of $54.8 Million

Completes solid performance in 2023

ROCKLAND, Mass.--()--Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2023 fourth quarter net income of $54.8 million, or $1.26 per diluted share, a decrease of $6.0 million, or 9.9%, compared to the prior quarter. Full year net income was $239.5 million, or $5.42 on a diluted earnings per share basis, a decrease of $24.3 million, or 9.2%, as compared to the prior year. In 2023, full year operating net income was also $239.5 million, or $5.42 on a diluted earnings per share basis, as no adjustments were recognized. In 2022, full year operating net income was $268.9 million, or $5.80 on a diluted earnings per share basis, which excluded non-core adjustments associated with the Company's fourth quarter 2021 acquisition of Meridian Bancorp, Inc. ("Meridian") and its subsidiary, East Boston Savings Bank. Please refer to "Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP)" below for a reconciliation of net income to operating net income.

The Company generated a return on average assets and a return on average common equity of 1.13% and 7.51%, respectively, for the fourth quarter of 2023, as compared to 1.25% and 8.35%, respectively, for the prior quarter. For the full year 2023, the Company generated a return on average assets and return on average common equity of 1.24% and 8.31%, respectively, as compared to 1.33% and 9.05%, respectively, for 2022, or 1.24% and 8.31%, respectively, on an operating basis for 2023, compared to 1.35% and 9.22%, respectively, on an operating basis for 2022.

“The dedication of my colleagues and their unrelenting focus on each relationship, day in and day out, paved the way for the solid financial results we achieved throughout this past year,” said Jeffrey Tengel, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “I am confident that our core fundamentals position us well for continued success heading into 2024 and beyond.”

BALANCE SHEET

Total assets of $19.3 billion at December 31, 2023 remained relatively consistent with the prior quarter and increased by $53.2 million, or 0.3%, as compared to December 31, 2022.

Total loans at December 31, 2023 of $14.3 billion increased by $53.8 million, or 0.4% (1.5% annualized), compared to the prior quarter level. The increase was driven primarily by consumer real estate, which increased $88.7 million, or 2.6% (10.3% annualized) for the quarter, largely attributable to adjustable-rate residential mortgages retained on the balance sheet. Total commercial loans decreased by $37.0 million, or 0.3% (1.4% annualized), compared to the prior quarter, primarily reflecting disciplined new origination activity, offset by commercial and industrial payoffs and decreased line utilization. The small business portfolio continued its steady growth and has risen by 15.0% since December 31, 2022.

Deposit balances of $14.9 billion at December 31, 2023 decreased by $194.0 million, or 1.3%, from September 30, 2023, driven primarily by seasonal business cash flows. Though some level of product remixing persists, total noninterest bearing demand deposits comprised a healthy 30.7% of total deposits at December 31, 2023. Core deposits, inclusive of reciprocal money market deposits, represented 84.6% of total deposits at December 31, 2023 as compared to 86.0% at September 30, 2023. The total cost of deposits for the fourth quarter increased 24 basis points to 1.31% compared to the prior quarter, reflective of ongoing customer preference for higher yielding accounts.

In conjunction with the decline in deposit balances, the Company's Federal Home Loan Bank borrowings increased by $218.0 million, or 21.8%, during the fourth quarter of 2023 to serve as a funding source for stock buyback activity and net loan growth during the quarter.

The securities portfolio decreased by $43.1 million, or 1.4%, compared to September 30, 2023, driven primarily by paydowns, calls, and maturities which were partially offset by unrealized gains of $45.2 million in the available for sale portfolio. Total securities represented 15.1% of total assets at December 31, 2023, as compared to 15.4% at September 30, 2023.

During the fourth quarter of 2023, the Company executed on its previously announced $100 million stock repurchase plan, buying back 1.3 million shares of common stock for $69.0 million at an average price per share of $53.73. Stockholders' equity at December 31, 2023 remained generally consistent when compared to September 30, 2023, as the impact of the share repurchase program was offset by strong earnings retention and unrealized gains on the available for sale investment securities portfolio included in other comprehensive income. The Company's ratio of common equity to assets of 14.96% at December 31, 2023 represented an increase of 6 basis points, or 0.4%, from September 30, 2023 and was consistent with the level at December 31, 2022. The Company's book value per share increased by $2.16, or 3.3%, to $67.53 at December 31, 2023 as compared to the prior quarter. The Company's tangible book value per share at December 31, 2023 rose by $1.53, or 3.6%, from the prior quarter to $44.13, and represented an increase of 7.3% from the year ago period. The Company's ratio of tangible common equity to tangible assets of 10.31% at December 31, 2023 represented an increase of 7 basis points from the prior quarter and an increase of 5 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 fourth quarter of 2023 decreased 3.2% to $145.1 million compared to $149.9 million for the prior quarter, as rising deposit costs continued to counter the benefit of repriced assets resulting in a reduction in net interest margin of 9 basis points to 3.38% for the quarter. The core margin (excluding purchase accounting and other non-core items) was 3.35% for the fourth quarter, representing a reduction of 12 basis points 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 $32.1 million for the fourth quarter of 2023 represented a decrease of $1.5 million, or 4.4%, as compared to the prior quarter. Significant changes in noninterest income for the fourth quarter of 2023 compared to the prior quarter included the following:

  • Investment management income decreased by $428,000, or 4.2%, primarily driven by lower insurance commissions. However, total assets under administration increased by $417.4 million, or 6.8%, to a record level of $6.5 billion at December 31, 2023, driving higher managed fee income quarter over quarter.
  • The Company received proceeds on life insurance policies resulting in gains of $180,000 for the fourth quarter, as compared to gains of $1.9 million in the prior quarter.
  • Other noninterest income increased by $738,000, or 10.4%, primarily due to unrealized gains on equity securities and discounted purchases of tax credits, as well as outsized loan fees recognized during the third quarter of 2023.

NONINTEREST EXPENSE

Noninterest expense of $100.7 million for the fourth quarter of 2023 represented an increase of $3.0 million, or 3.0%, as compared to the prior quarter. Significant changes in noninterest expense for the fourth quarter compared to the prior quarter included the following:

  • Salaries and employee benefits increased by $1.6 million, or 2.9%, due primarily to timing of incentive compensation.
  • Occupancy and equipment expenses increased by $733,000, or 5.9%, due primarily to one-time termination costs associated with two leased locations related to the 2021 Meridian acquisition.
  • FDIC assessment increased $1.2 million, or 44.6%, from the prior quarter, and includes a one-time $1.1 million special assessment implemented by the FDIC to recover losses incurred by the Deposit Insurance Fund in 2023.
  • Other noninterest expense decreased by $593,000, or 2.3%, due primarily to decreases in consultant fees, unrealized losses on equity securities, and card issuance costs, partially offset by increases in check fraud losses, software maintenance and legal costs.

The Company’s tax rate for the fourth quarter of 2023 decreased to 22.72%, compared to 24.12% for the prior quarter. The fourth quarter decline was due to the recognition of discrete items in the quarter associated with low income housing tax investments and the release of certain tax reserves in conjunction with the final 2022 tax return filing.

ASSET QUALITY

The fourth quarter provision for credit losses was consistent with the prior quarter at $5.5 million. Net charge-offs declined to $3.8 million for the fourth quarter of 2023 compared to $5.6 million in the prior quarter and were largely attributable to one partial charge-off of a commercial real estate loan and general overdraft loan charge-offs. Nonperforming loans increased to $54.4 million, or 0.38% of total loans at December 31, 2023, as compared to $39.2 million, or 0.28% of total loans at September 30, 2023, driven primarily by the migration of two commercial loans totaling $25.9 million, offset by paydowns during the quarter. Delinquency as a percentage of total loans increased 22 basis points from the prior quarter to 0.44% at December 31, 2023.

The allowance for credit losses on total loans increased slightly to $142.2 million at December 31, 2023 compared to $140.6 million at September 30, 2023, or 1.00% and 0.99% of total loans, at December 31, 2023 and September 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 fourth quarter earnings at 10:00 a.m. Eastern Time on Friday, January 19, 2024. 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: 9516407 and will be available through January 26, 2024. Additionally, a webcast replay will be available on the Company's website until January 19, 2025.

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" 2023 list, an honor earned for the 15th 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 to the Company or its customers 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, and the potential impact of unfavorable economic conditions on the Company and its customers, including the potential for decreases in deposits and loan demand, unanticipated loan delinquencies, loss of collateral and decreased service revenues;
  • 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;
  • rising interest rates and any resultant adverse changes in asset quality, increased credit risks, decreased loan demand, and/or refinancing challenges, which in turn could further lead to unanticipated credit deterioration in the Company's loan portfolio, including with respect 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, including competition that could impact deposit gathering, retention of deposits and the cost of deposits, increased competition due to the demand for innovative products and service offerings, and competition from non-depository institutions which may be subject to fewer regulatory constraints and lower cost structures;
  • adverse weather, changes in climate, natural disasters, including the risk of floods and fire; 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 or other 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, including the need to invest in technology to meet heightened regulatory expectations or introduction of new requirements or expectations resulting in increased costs of compliance or required adjustments to strategy;
  • 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;
  • operational risks related to cyber threats, attacks, intrusions, and fraud which could lead to interruptions or disruptions of the Company's operating systems, including systems that are customer facing, and adversely impact the Company's business; and
  • other unexpected material adverse changes in the Company's 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

 

December 31
2023

 

September 30
2023

 

December 31
2022

 

Dec 2023 vs.

 

Dec 2023 vs.

 

 

 

 

Sept 2023

 

Dec 2022

Assets

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

178,861

 

 

$

176,930

 

 

$

175,843

 

 

1.09

%

 

1.72

%

Interest-earning deposits with banks

 

45,469

 

 

 

43,198

 

 

 

177,090

 

 

5.26

%

 

(74.32

) %

Securities

 

 

 

 

 

 

 

 

 

Trading

 

4,987

 

 

 

4,476

 

 

 

3,888

 

 

11.42

%

 

28.27

%

Equities

 

22,510

 

 

 

21,475

 

 

 

21,119

 

 

4.82

%

 

6.59

%

Available for sale

 

1,334,256

 

 

 

1,353,744

 

 

 

1,399,154

 

 

(1.44

) %

 

(4.64

) %

Held to maturity

 

1,569,107

 

 

 

1,594,279

 

 

 

1,705,120

 

 

(1.58

) %

 

(7.98

) %

Total securities

 

2,930,860

 

 

 

2,973,974

 

 

 

3,129,281

 

 

(1.45

) %

 

(6.34

) %

Loans held for sale

 

6,368

 

 

 

3,998

 

 

 

2,803

 

 

59.28

%

 

127.19

%

Loans

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

1,579,986

 

 

 

1,653,003

 

 

 

1,635,103

 

 

(4.42

) %

 

(3.37

) %

Commercial real estate

 

8,041,508

 

 

 

7,896,230

 

 

 

7,760,230

 

 

1.84

%

 

3.62

%

Commercial construction

 

849,586

 

 

 

965,442

 

 

 

1,154,413

 

 

(12.00

) %

 

(26.41

) %

Small business

 

251,956

 

 

 

245,335

 

 

 

219,102

 

 

2.70

%

 

14.99

%

Total commercial

 

10,723,036

 

 

 

10,760,010

 

 

 

10,768,848

 

 

(0.34

) %

 

(0.43

) %

Residential real estate

 

2,424,754

 

 

 

2,338,102

 

 

 

2,035,524

 

 

3.71

%

 

19.12

%

Home equity - first position

 

518,706

 

 

 

529,938

 

 

 

566,166

 

 

(2.12

) %

 

(8.38

) %

Home equity - subordinate positions

 

578,920

 

 

 

565,617

 

 

 

522,584

 

 

2.35

%

 

10.78

%

Total consumer real estate

 

3,522,380

 

 

 

3,433,657

 

 

 

3,124,274

 

 

2.58

%

 

12.74

%

Other consumer

 

32,654

 

 

 

30,568

 

 

 

35,553

 

 

6.82

%

 

(8.15

) %

Total loans

 

14,278,070

 

 

 

14,224,235

 

 

 

13,928,675

 

 

0.38

%

 

2.51

%

Less: allowance for credit losses

 

(142,222

)

 

 

(140,569

)

 

 

(152,419

)

 

1.18

%

 

(6.69

) %

Net loans

 

14,135,848

 

 

 

14,083,666

 

 

 

13,776,256

 

 

0.37

%

 

2.61

%

Federal Home Loan Bank stock

 

43,557

 

 

 

43,878

 

 

 

5,218

 

 

(0.73

) %

 

734.75

%

Bank premises and equipment, net

 

193,049

 

 

 

191,560

 

 

 

196,504

 

 

0.78

%

 

(1.76

) %

Goodwill

 

985,072

 

 

 

985,072

 

 

 

985,072

 

 

%

 

%

Other intangible assets

 

18,190

 

 

 

19,825

 

 

 

25,068

 

 

(8.25

) %

 

(27.44

) %

Cash surrender value of life insurance policies

 

297,387

 

 

 

295,670

 

 

 

293,323

 

 

0.58

%

 

1.39

%

Other assets

 

512,712

 

 

 

550,338

 

 

 

527,716

 

 

(6.84

) %

 

(2.84

) %

Total assets

$

19,347,373

 

 

$

19,368,109

 

 

$

19,294,174

 

 

(0.11

) %

 

0.28

%

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

$

4,567,083

 

 

$

4,796,148

 

 

$

5,441,584

 

 

(4.78

) %

 

(16.07

) %

Savings and interest checking accounts

 

5,298,913

 

 

 

5,398,322

 

 

 

5,898,009

 

 

(1.84

) %

 

(10.16

) %

Money market

 

2,818,072

 

 

 

2,852,293

 

 

 

3,343,673

 

 

(1.20

) %

 

(15.72

) %

Time certificates of deposit

 

2,181,479

 

 

 

2,012,763

 

 

 

1,195,741

 

 

8.38

%

 

82.44

%

Total deposits

 

14,865,547

 

 

 

15,059,526

 

 

 

15,879,007

 

 

(1.29

) %

 

(6.38

) %

Borrowings

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

1,105,541

 

 

 

887,548

 

 

 

637

 

 

24.56

%

 

nm

Junior subordinated debentures, net

 

62,858

 

 

 

62,857

 

 

 

62,855

 

 

%

 

%

Subordinated debentures, net

 

49,980

 

 

 

49,957

 

 

 

49,885

 

 

0.05

%

 

0.19

%

Total borrowings

 

1,218,379

 

 

 

1,000,362

 

 

 

113,377

 

 

21.79

%

 

974.63

%

Total deposits and borrowings

 

16,083,926

 

 

 

16,059,888

 

 

 

15,992,384

 

 

0.15

%

 

0.57

%

Other liabilities

 

368,196

 

 

 

422,813

 

 

 

415,089

 

 

(12.92

) %

 

(11.30

) %

Total liabilities

 

16,452,122

 

 

 

16,482,701

 

 

 

16,407,473

 

 

(0.19

) %

 

0.27

%

Stockholders' equity

 

 

 

 

 

 

 

 

 

Common stock

 

427

 

 

 

440

 

 

 

455

 

 

(2.95

) %

 

(6.15

) %

Additional paid in capital

 

1,932,163

 

 

 

1,999,448

 

 

 

2,114,888

 

 

(3.37

) %

 

(8.64

) %

Retained earnings

 

1,077,488

 

 

 

1,046,266

 

 

 

934,442

 

 

2.98

%

 

15.31

%

Accumulated other comprehensive loss, net of tax

 

(114,827

)

 

 

(160,746

)

 

 

(163,084

)

 

(28.57

) %

 

(29.59

) %

Total stockholders' equity

 

2,895,251

 

 

 

2,885,408

 

 

 

2,886,701

 

 

0.34

%

 

0.30

%

Total liabilities and stockholders' equity

$

19,347,373

 

 

$

19,368,109

 

 

$

19,294,174

 

 

(0.11

) %

 

0.28

%

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

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

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

% Change

 

% Change

 

December 31
2023

 

September 30
2023

 

December 31
2022

 

Dec 2023 vs.

 

Dec 2023 vs.

 

 

 

 

Sept 2023

 

Dec 2022

Interest income

 

 

 

 

 

 

 

 

 

Interest on federal funds sold and short-term investments

$

304

 

 

$

905

 

 

$

4,163

 

 

(66.41

) %

 

(92.70

) %

Interest and dividends on securities

 

14,631

 

 

 

14,818

 

 

 

15,789

 

 

(1.26

) %

 

(7.33

) %

Interest and fees on loans

 

192,178

 

 

 

187,145

 

 

 

164,153

 

 

2.69

%

 

17.07

%

Interest on loans held for sale

 

57

 

 

 

60

 

 

 

22

 

 

(5.00

) %

 

159.09

%

Total interest income

 

207,170

 

 

 

202,928

 

 

 

184,127

 

 

2.09

%

 

12.51

%

Interest expense

 

 

 

 

 

 

 

 

 

Interest on deposits

 

49,456

 

 

 

40,713

 

 

 

14,325

 

 

21.47

%

 

245.24

%

Interest on borrowings

 

12,618

 

 

 

12,335

 

 

 

1,447

 

 

2.29

%

 

772.01

%

Total interest expense

 

62,074

 

 

 

53,048

 

 

 

15,772

 

 

17.01

%

 

293.57

%

Net interest income

 

145,096

 

 

 

149,880

 

 

 

168,355

 

 

(3.19

) %

 

(13.82

) %

Provision for credit losses

 

5,500

 

 

 

5,500

 

 

 

5,500

 

 

%

 

%

Net interest income after provision for credit losses

 

139,596

 

 

 

144,380

 

 

 

162,855

 

 

(3.31

) %

 

(14.28

) %

Noninterest income

 

 

 

 

 

 

 

 

 

Deposit account fees

 

6,126

 

 

 

5,936

 

 

 

5,788

 

 

3.20

%

 

5.84

%

Interchange and ATM fees

 

4,638

 

 

 

4,808

 

 

 

4,282

 

 

(3.54

) %

 

8.31

%

Investment management

 

9,818

 

 

 

10,246

 

 

 

10,394

 

 

(4.18

) %

 

(5.54

) %

Mortgage banking income

 

609

 

 

 

739

 

 

 

526

 

 

(17.59

) %

 

15.78

%

Increase in cash surrender value of life insurance policies

 

2,091

 

 

 

1,983

 

 

 

2,136

 

 

5.45

%

 

(2.11

) %

Gain on life insurance benefits

 

180

 

 

 

1,924

 

 

 

691

 

 

(90.64

) %

 

(73.95

) %

Loan level derivative income

 

802

 

 

 

842

 

 

 

1,421

 

 

(4.75

) %

 

(43.56

) %

Other noninterest income

 

7,803

 

 

 

7,065

 

 

 

7,064

 

 

10.45

%

 

10.46

%

Total noninterest income

 

32,067

 

 

 

33,543

 

 

 

32,302

 

 

(4.40

) %

 

(0.73

) %

Noninterest expenses

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

56,388

 

 

 

54,797

 

 

 

53,754

 

 

2.90

%

 

4.90

%

Occupancy and equipment expenses

 

13,054

 

 

 

12,321

 

 

 

12,586

 

 

5.95

%

 

3.72

%

Data processing and facilities management

 

2,423

 

 

 

2,404

 

 

 

2,442

 

 

0.79

%

 

(0.78

) %

FDIC assessment

 

3,942

 

 

 

2,727

 

 

 

1,726

 

 

44.55

%

 

128.39

%

Other noninterest expenses

 

24,940

 

 

 

25,533

 

 

 

24,364

 

 

(2.32

) %

 

2.36

%

Total noninterest expenses

 

100,747

 

 

 

97,782

 

 

 

94,872

 

 

3.03

%

 

6.19

%

Income before income taxes

 

70,916

 

 

 

80,141

 

 

 

100,285

 

 

(11.51

) %

 

(29.29

) %

Provision for income taxes

 

16,113

 

 

 

19,333

 

 

 

23,242

 

 

(16.66

) %

 

(30.67

) %

Net Income

$

54,803

 

 

$

60,808

 

 

$

77,043

 

 

(9.88

) %

 

(28.87

) %

 

 

 

 

 

 

 

 

 

 

Weighted average common shares (basic)

 

43,474,734

 

 

 

44,135,487

 

 

 

45,641,605

 

 

 

 

 

Common share equivalents

 

9,474

 

 

 

11,417

 

 

 

20,090

 

 

 

 

 

Weighted average common shares (diluted)

 

43,484,208

 

 

 

44,146,904

 

 

 

45,661,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

1.26

 

 

$

1.38

 

 

$

1.69

 

 

(8.70

) %

 

(25.44

) %

Diluted earnings per share

$

1.26

 

 

$

1.38

 

 

$

1.69

 

 

(8.70

) %

 

(25.44

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance ratios

 

 

 

 

 

 

 

 

 

Net interest margin (FTE)

 

3.38

%

 

 

3.47

%

 

 

3.85

%

 

 

 

 

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

 

1.13

%

 

 

1.25

%

 

 

1.56

%

 

 

 

 

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

 

7.51

%

 

 

8.35

%

 

 

10.70

%

 

 

 

 

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

 

11.50

%

 

 

12.81

%

 

 

16.57

%

 

 

 

 

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

 

18.10

%

 

 

18.29

%

 

 

16.10

%

 

 

 

 

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

 

56.87

%

 

 

53.31

%

 

 

47.28

%

 

 

 

 

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

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

 

 

 

 

 

 

Years Ended

 

 

 

 

 

 

 

 

% Change

 

 

December 31
2023

 

December 31
2022

 

Dec 2023 vs.

 

 

 

 

Dec 2022

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

Interest on federal funds sold and short-term investments

 

$

5,186

 

 

$

14,385

 

 

(63.95

) %

Interest and dividends on securities

 

 

60,342

 

 

 

50,360

 

 

19.82

%

Interest and fees on loans

 

 

730,008

 

 

 

577,923

 

 

26.32

%

Interest on loans held for sale

 

 

190

 

 

 

172

 

 

10.47

%

Total interest income

 

 

795,726

 

 

 

642,840

 

 

23.78

%

Interest expense

 

 

 

 

 

 

Interest on deposits

 

 

144,752

 

 

 

24,652

 

 

487.18

%

Interest on borrowings

 

 

44,453

 

 

 

4,939

 

 

800.04

%

Total interest expense

 

 

189,205

 

 

 

29,591

 

 

539.40

%

Net interest income

 

 

606,521

 

 

 

613,249

 

 

(1.10

) %

Provision for credit losses

 

 

23,250

 

 

 

6,500

 

 

257.69

%

Net interest income after provision for credit losses

 

 

583,271

 

 

 

606,749

 

 

(3.87

) %

Noninterest income

 

 

 

 

 

 

Deposit account fees

 

 

23,486

 

 

 

23,370

 

 

0.50

%

Interchange and ATM fees

 

 

18,108

 

 

 

16,249

 

 

11.44

%

Investment management

 

 

40,191

 

 

 

36,832

 

 

9.12

%

Mortgage banking income

 

 

2,326

 

 

 

3,515

 

 

(33.83

) %

Increase in cash surrender value of life insurance policies

 

 

7,868

 

 

 

7,685

 

 

2.38

%

Gain on life insurance benefits

 

 

2,291

 

 

 

1,291

 

 

77.46

%

Loan level derivative income

 

 

3,327

 

 

 

2,932

 

 

13.47

%

Other noninterest income

 

 

27,012

 

 

 

22,793

 

 

18.51

%

Total noninterest income

 

 

124,609

 

 

 

114,667

 

 

8.67

%

Noninterest expenses

 

 

 

 

 

 

Salaries and employee benefits

 

 

222,135

 

 

 

204,711

 

 

8.51

%

Occupancy and equipment expenses

 

 

50,582

 

 

 

49,841

 

 

1.49

%

Data processing and facilities management

 

 

9,884

 

 

 

9,320

 

 

6.05

%

FDIC assessment

 

 

11,953

 

 

 

6,951

 

 

71.96

%

Merger and acquisition expense

 

 

 

 

 

7,100

 

 

(100.00

) %

Other noninterest expenses

 

 

98,192

 

 

 

95,739

 

 

2.56

%

Total noninterest expenses

 

 

392,746

 

 

 

373,662

 

 

5.11

%

Income before income taxes

 

 

315,134

 

 

 

347,754

 

 

(9.38

) %

Provision for income taxes

 

 

75,632

 

 

 

83,941

 

 

(9.90

) %

Net Income

 

$

239,502

 

 

$

263,813

 

 

(9.22

) %

 

 

 

 

 

 

 

Weighted average common shares (basic)

 

 

44,181,540

 

 

 

46,372,051

 

 

 

Common share equivalents

 

 

12,007

 

 

 

17,938

 

 

 

Weighted average common shares (diluted)

 

 

44,193,547

 

 

 

46,389,989

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

5.42

 

 

$

5.69

 

 

(4.75

) %

Diluted earnings per share

 

$

5.42

 

 

$

5.69

 

 

(4.75

) %

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Net Income

 

$

239,502

 

 

$

263,813

 

 

 

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)

 

$

239,502

 

 

$

268,918

 

 

(10.94

) %

 

 

 

 

 

 

 

Diluted earnings per share, on an operating basis

 

$

5.42

 

 

$

5.80

 

 

(6.55

) %

 

 

 

 

 

 

 

(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)

 

 

3.54

%

 

 

3.46

%

 

 

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

 

 

1.24

%

 

 

1.33

%

 

 

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

 

 

1.24

%

 

 

1.35

%

 

 

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

 

 

8.31

%

 

 

9.05

%

 

 

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

 

 

8.31

%

 

 

9.22

%

 

 

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

 

 

12.78

%

 

 

13.87

%

 

 

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

 

 

12.78

%

 

 

14.14

%

 

 

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

 

 

17.04

%

 

 

15.75

%

 

 

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)

 

 

17.04

%

 

 

15.75

%

 

 

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

 

 

53.72

%

 

 

51.33

%

 

 

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

 

 

53.72

%

 

 

50.36

%

 

 

ASSET QUALITY

 

 

(Unaudited, dollars in thousands)

 

Nonperforming Assets At

 

 

December 31
2023

 

September 30
2023

 

December 31
2022

Nonperforming loans

 

 

 

 

 

 

Commercial & industrial loans

 

$

20,188

 

 

$

2,953

 

 

$

26,693

 

Commercial real estate loans

 

 

22,952

 

 

 

23,867

 

 

 

15,730

 

Small business loans

 

 

398

 

 

 

372

 

 

 

104

 

Residential real estate loans

 

 

7,634

 

 

 

8,493

 

 

 

8,479

 

Home equity

 

 

3,171

 

 

 

3,411

 

 

 

3,400

 

Other consumer

 

 

40

 

 

 

75

 

 

 

475

 

Total nonperforming loans

 

 

54,383

 

 

 

39,171

 

 

 

54,881

 

Other real estate owned

 

 

110

 

 

 

110

 

 

 

 

Total nonperforming assets

 

$

54,493

 

 

$

39,281

 

 

$

54,881

 

 

 

 

 

 

 

 

Nonperforming loans/gross loans

 

 

0.38

%

 

 

0.28

%

 

 

0.39

%

Nonperforming assets/total assets

 

 

0.28

%

 

 

0.20

%

 

 

0.28

%

Allowance for credit losses/nonperforming loans

 

 

261.52

%

 

 

358.86

%

 

 

277.73

%

Allowance for credit losses/total loans

 

 

1.00

%

 

 

0.99

%

 

 

1.09

%

Delinquent loans/total loans

 

 

0.44

%

 

 

0.22

%

 

 

0.30

%

 

 

 

 

 

 

 

 

 

Nonperforming Assets Reconciliation for the Three Months Ended

 

 

December 31
2023

 

September 30
2023

 

December 31
2022

 

 

 

 

 

 

 

Nonperforming assets beginning balance

 

$

39,281

 

 

$

45,812

 

 

$

56,017

 

New to nonperforming

 

 

31,823

 

 

 

3,455

 

 

 

5,734

 

Loans charged-off

 

 

(4,182

)

 

 

(6,018

)

 

 

(660

)

Loans paid-off

 

 

(10,905

)

 

 

(2,915

)

 

 

(2,448

)

Loans restored to performing status

 

 

(1,534

)

 

 

(1,428

)

 

 

(3,846

)

Other

 

 

10

 

 

 

375

 

 

 

84

 

Nonperforming assets ending balance

 

$

54,493

 

 

$

39,281

 

 

$

54,881

 

 

 

Net Charge-Offs (Recoveries)

 

 

Three Months Ended

 

Years Ended

 

 

December 31
2023

 

September 30
2023

 

December 31
2022

 

December 31
2023

 

December 31
2022

Net charge-offs (recoveries)

 

 

 

 

 

 

 

 

 

 

Commercial and industrial loans

 

$

80

 

 

$

(111

)

 

$

(5

)

 

$

23,419

 

 

$

(49

)

Commercial real estate loans

 

 

2,783

 

 

 

5,072

 

 

 

 

 

 

7,855

 

 

 

(271

)

Small business loans

 

 

267

 

 

 

77

 

 

 

135

 

 

 

392

 

 

 

47

 

Home equity

 

 

23

 

 

 

(12

)

 

 

(16

)

 

 

(15

)

 

 

1

 

Other consumer

 

 

694

 

 

 

552

 

 

 

280

 

 

 

1,796

 

 

 

1,275

 

Total net charge-offs (recoveries)

 

$

3,847

 

 

$

5,578

 

 

$

394

 

 

$

33,447

 

 

$

1,003

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

0.11

%

 

 

0.16

%

 

 

0.01

%

 

 

0.24

%

 

 

0.01

%

nm = not meaningful

BALANCE SHEET AND CAPITAL RATIOS

 

 

 

 

 

 

 

 

December 31
2023

 

September 30
2023

 

December 31
2022

Gross loans/total deposits

 

 

96.05

%

 

 

94.45

%

 

 

87.72

%

Common equity tier 1 capital ratio (1)

 

 

14.19

%

 

 

14.42

%

 

 

14.33

%

Tier 1 leverage capital ratio (1)

 

 

10.97

%

 

 

11.12

%

 

 

10.99

%

Common equity to assets ratio GAAP

 

 

14.96

%

 

 

14.90

%

 

 

14.96

%

Tangible common equity to tangible assets ratio (2)

 

 

10.31

%

 

 

10.24

%

 

 

10.26

%

Book value per share GAAP

 

$

67.53

 

 

$

65.37

 

 

$

63.25

 

Tangible book value per share (2)

 

$

44.13

 

 

$

42.60

 

 

$

41.12

 

(1) Estimated number for December 31, 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

 

 

December 31, 2023

 

September 30, 2023

 

December 31, 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

 

$

42,391

 

$

304

 

2.85

%

 

$

89,449

 

$

905

 

4.01

%

 

$

466,691

 

$

4,163

 

3.54

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities - trading

 

 

4,509

 

 

 

%

 

 

4,546

 

 

 

%

 

 

3,732

 

 

 

%

Securities - taxable investments

 

 

2,923,983

 

 

14,629

 

1.98

%

 

 

3,000,736

 

 

14,817

 

1.96

%

 

 

3,147,635

 

 

15,787

 

1.99

%

Securities - nontaxable investments (1)

 

 

186

 

 

2

 

4.27

%

 

 

188

 

 

1

 

2.11

%

 

 

189

 

 

2

 

4.20

%

Total securities

 

$

2,928,678

 

$

14,631

 

1.98

%

 

$

3,005,470

 

$

14,818

 

1.96

%

 

$

3,151,556

 

$

15,789

 

1.99

%

Loans held for sale

 

 

3,614

 

 

57

 

6.26

%

 

 

4,072

 

 

60

 

5.85

%

 

 

1,607

 

 

22

 

5.43

%

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (1)

 

 

1,600,886

 

 

28,990

 

7.18

%

 

 

1,682,000

 

 

30,739

 

7.25

%

 

 

1,560,885

 

 

23,258

 

5.91

%

Commercial real estate (1)

 

 

7,956,103

 

 

100,331

 

5.00

%

 

 

7,823,525

 

 

94,861

 

4.81

%

 

 

7,732,925

 

 

88,508

 

4.54

%

Commercial construction

 

 

895,313

 

 

15,932

 

7.06

%

 

 

1,007,814

 

 

16,829

 

6.62

%

 

 

1,223,695

 

 

17,205

 

5.58

%

Small business

 

 

246,411

 

 

3,956

 

6.37

%

 

 

240,782

 

 

3,752

 

6.18

%

 

 

213,384

 

 

2,995

 

5.57

%

Total commercial

 

 

10,698,713

 

 

149,209

 

5.53

%

 

 

10,754,121

 

 

146,181

 

5.39

%

 

 

10,730,889

 

 

131,966

 

4.88

%

Residential real estate

 

 

2,380,706

 

 

24,712

 

4.12

%

 

 

2,276,882

 

 

23,197

 

4.04

%

 

 

2,001,042

 

 

18,334

 

3.64

%

Home equity

 

 

1,097,233

 

 

18,747

 

6.78

%

 

 

1,093,479

 

 

18,313

 

6.64

%

 

 

1,088,846

 

 

14,339

 

5.22

%

Total consumer real estate

 

 

3,477,939

 

 

43,459

 

4.96

%

 

 

3,370,361

 

 

41,510

 

4.89

%

 

 

3,089,888

 

 

32,673

 

4.20

%

Other consumer

 

 

32,141

 

 

667

 

8.23

%

 

 

30,775

 

 

608

 

7.84

%

 

 

34,638

 

 

595

 

6.82

%

Total loans

 

$

4,208,793

 

$

193,335

 

5.40

%

 

$

14,155,257

 

$

188,299

 

5.28

%

 

$

13,855,415

 

$

165,234

 

4.73

%

Total interest-earning assets

 

$

17,183,476

 

$

208,327

 

4.81

%

 

$

17,254,248

 

$

204,082

 

4.69

%

 

$

17,475,269

 

$

185,208

 

4.20

%

Cash and due from banks

 

 

178,100

 

 

 

 

 

 

184,003

 

 

 

 

 

 

184,985

 

 

 

 

Federal Home Loan Bank stock

 

 

37,054

 

 

 

 

 

 

38,252

 

 

 

 

 

 

5,218

 

 

 

 

Other assets

 

 

1,883,317

 

 

 

 

 

 

1,859,099

 

 

 

 

 

 

1,871,241

 

 

 

 

Total assets

 

$

19,281,947

 

 

 

 

 

$

19,335,602

 

 

 

 

 

$

19,536,713

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings and interest checking accounts

 

$

5,323,667

 

$

14,315

 

1.07

%

 

$

5,393,209

 

$

11,860

 

0.87

%

 

$

5,966,326

 

$

4,921

 

0.33

%

Money market

 

 

2,851,343

 

 

15,197

 

2.11

%

 

 

2,945,450

 

 

13,709

 

1.85

%

 

 

3,408,441

 

 

7,492

 

0.87

%

Time deposits

 

 

2,103,666

 

 

19,944

 

3.76

%

 

 

1,860,440

 

 

15,144

 

3.23

%

 

 

1,175,667

 

 

1,912

 

0.65

%

Total interest-bearing deposits

 

$

10,278,676

 

$

49,456

 

1.91

%

 

$

10,199,099

 

$

40,713

 

1.58

%

 

$

10,550,434

 

$

14,325

 

0.54

%

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

 

884,441

 

 

10,836

 

4.86

%

 

 

869,646

 

 

10,568

 

4.82

%

 

 

639

 

 

2

 

1.24

%

Junior subordinated debentures

 

 

62,857

 

 

1,164

 

7.35

%

 

 

62,857

 

 

1,150

 

7.26

%

 

 

62,855

 

 

827

 

5.22

%

Subordinated debentures

 

 

49,968

 

 

618

 

4.91

%

 

 

49,944

 

 

617

 

4.90

%

 

 

49,873

 

 

618

 

4.92

%

Total borrowings

 

$

997,266

 

$

12,618

 

5.02

%

 

$

982,447

 

$

12,335

 

4.98

%

 

$

113,367

 

$

1,447

 

5.06

%

Total interest-bearing liabilities

 

$

11,275,942

 

$

62,074

 

2.18

%

 

$

11,181,546

 

$

53,048

 

1.88

%

 

$

10,663,801

 

$

15,772

 

0.59

%

Noninterest-bearing demand deposits

 

 

4,704,888

 

 

 

 

 

 

4,883,009

 

 

 

 

 

 

5,606,055

 

 

 

 

Other liabilities

 

 

406,029

 

 

 

 

 

 

381,483

 

 

 

 

 

 

410,679

 

 

 

 

Total liabilities

 

$

16,386,859

 

 

 

 

 

$

16,446,038

 

 

 

 

 

$

16,680,535

 

 

 

 

Stockholders' equity

 

 

2,895,088

 

 

 

 

 

 

2,889,564

 

 

 

 

 

 

2,856,178

 

 

 

 

Total liabilities and stockholders' equity

 

$

19,281,947

 

 

 

 

 

$

19,335,602

 

 

 

 

 

$

19,536,713

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

146,253

 

 

 

 

 

$

151,034

 

 

 

 

 

$

169,436

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

 

 

 

 

2.63

%

 

 

 

 

 

2.81

%

 

 

 

 

 

3.61

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

3.38

%

 

 

 

 

 

3.47

%

 

 

 

 

 

3.85

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits, including demand deposits

 

$

14,983,564

 

$

49,456

 

 

 

$

15,082,108

 

$

40,713

 

 

 

$

16,156,489

 

$

14,325

 

 

Cost of total deposits

 

 

 

 

 

1.31

%

 

 

 

 

 

1.07

%

 

 

 

 

 

0.35

%

Total funding liabilities, including demand deposits

 

$

15,980,830

 

$

62,074

 

 

 

$

16,064,555

 

$

53,048

 

 

 

$

16,269,856

 

$

15,772

 

 

Cost of total funding liabilities

 

 

 

 

 

1.54

%

 

 

 

 

 

1.31

%

 

 

 

 

 

0.38

%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.2 million, $1.2 million, and $1.1 million for the three months ended December 31, 2023, September 30, 2023, and December 31, 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.

 

 

Years Ended

 

 

December 31, 2023

 

December 31, 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

 

$

118,806

 

$

5,186

 

4.37

%

 

$

1,222,434

 

$

14,385

 

1.18

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

Securities - trading

 

 

4,411

 

 

 

%

 

 

3,764

 

 

 

%

Securities - taxable investments

 

 

3,027,769

 

 

60,336

 

1.99

%

 

 

2,948,358

 

 

50,354

 

1.71

%

Securities - nontaxable investments (1)

 

 

190

 

 

7

 

3.68

%

 

 

196

 

 

7

 

3.57

%

Total securities

 

$

3,032,370

 

$

60,343

 

1.99

%

 

$

2,952,318

 

$

50,361

 

1.71

%

Loans held for sale

 

 

3,289

 

 

190

 

5.78

%

 

 

4,774

 

 

172

 

3.60

%

Loans

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (1)

 

 

1,646,939

 

 

115,752

 

7.03

%

 

 

1,538,848

 

 

77,074

 

5.01

%

Commercial real estate (1)

 

 

7,839,476

 

 

376,586

 

4.80

%

 

 

7,807,427

 

 

326,593

 

4.18

%

Commercial construction

 

 

1,019,871

 

 

66,440

 

6.51

%

 

 

1,191,394

 

 

57,804

 

4.85

%

Small business

 

 

235,108

 

 

14,428

 

6.14

%

 

 

204,982

 

 

10,886

 

5.31

%

Total commercial

 

 

10,741,394

 

 

573,206

 

5.34

%

 

 

10,742,651

 

 

472,357

 

4.40

%

Residential real estate

 

 

2,217,971

 

 

88,210

 

3.98

%

 

 

1,831,493

 

 

63,443

 

3.46

%

Home equity

 

 

1,093,546

 

 

70,698

 

6.47

%

 

 

1,061,228

 

 

44,048

 

4.15

%

Total consumer real estate

 

 

3,311,517

 

 

158,908

 

4.80

%

 

 

2,892,721

 

 

107,491

 

3.72

%

Other consumer

 

 

31,202

 

 

2,418

 

7.75

%

 

 

31,986

 

 

2,114

 

6.61

%

Total loans

 

$

14,084,113

 

$

734,532

 

5.22

%

 

$

13,667,358

 

$

581,962

 

4.26

%

Total interest-earning assets

 

$

17,238,578

 

$

800,251

 

4.64

%

 

$

17,846,884

 

$

646,880

 

3.62

%

Cash and due from banks

 

 

180,553

 

 

 

 

 

 

184,812

 

 

 

 

Federal Home Loan Bank stock

 

 

33,734

 

 

 

 

 

 

7,134

 

 

 

 

Other assets

 

 

1,853,585

 

 

 

 

 

 

1,858,210

 

 

 

 

Total assets

 

$

19,306,450

 

 

 

 

 

$

19,897,040

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

Savings and interest checking accounts

 

$

5,489,923

 

$

43,073

 

0.78

%

 

$

6,159,289

 

$

8,339

 

0.14

%

Money market

 

 

3,022,322

 

 

51,630

 

1.71

%

 

 

3,489,981

 

 

11,683

 

0.33

%

Time deposits

 

 

1,724,625

 

 

50,050

 

2.90

%

 

 

1,310,442

 

 

4,630

 

0.35

%

Total interest-bearing deposits

 

$

10,236,870

 

$

144,753

 

1.41

%

 

$

10,959,712

 

$

24,652

 

0.22

%

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

 

782,121

 

 

37,624

 

4.81

%

 

 

16,138

 

 

313

 

1.94

%

Long-term borrowings

 

 

 

 

 

%

 

 

2,235

 

 

31

 

1.39

%

Junior subordinated debentures

 

 

62,857

 

 

4,359

 

6.93

%

 

 

62,854

 

 

2,125

 

3.38

%

Subordinated debentures

 

 

49,933

 

 

2,470

 

4.95

%

 

 

49,837

 

 

2,470

 

4.96

%

Total borrowings

 

$

894,911

 

$

44,453

 

4.97

%

 

$

131,064

 

$

4,939

 

3.77

%

Total interest-bearing liabilities

 

$

11,131,781

 

$

189,206

 

1.70

%

 

$

11,090,776

 

$

29,591

 

0.27

%

Noninterest-bearing demand deposits

 

 

4,918,787

 

 

 

 

 

 

5,559,997

 

 

 

 

Other liabilities

 

 

374,585

 

 

 

 

 

 

330,371

 

 

 

 

Total liabilities

 

$

16,425,153

 

 

 

 

 

$

16,981,144

 

 

 

 

Stockholders' equity

 

 

2,881,297

 

 

 

 

 

 

2,915,896

 

 

 

 

Total liabilities and stockholders' equity

 

$

19,306,450

 

 

 

 

 

$

19,897,040

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

611,045

 

 

 

 

 

$

617,289

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

 

 

 

 

2.94

%

 

 

 

 

 

3.35

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

3.54

%

 

 

 

 

 

3.46

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits, including demand deposits

 

$

15,155,657

 

$

144,753

 

 

 

$

16,519,709

 

$

24,652

 

 

Cost of total deposits

 

 

 

 

 

0.96

%

 

 

 

 

 

0.15

%

Total funding liabilities, including demand deposits

 

$

16,050,568

 

$

189,206

 

 

 

$

16,650,773

 

$

29,591

 

 

Cost of total funding liabilities

 

 

 

 

 

1.18

%

 

 

 

 

 

0.18

%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $4.5 million and $4.0 million for the years ended months ended December 31, 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:

 

 

December 31
2023

 

September 30
2023

 

December 31
2022

 

Tangible common equity

 

(Dollars in thousands, except per share data)

 

Stockholders' equity (GAAP)

 

$

2,895,251

 

 

$

2,885,408

 

 

$

2,886,701

 

(a)

Less: Goodwill and other intangibles

 

 

1,003,262

 

 

 

1,004,897

 

 

 

1,010,140

 

 

Tangible common equity (Non-GAAP)

 

$

1,891,989

 

 

$

1,880,511

 

 

$

1,876,561

 

(b)

Tangible assets

 

 

 

 

 

 

 

Assets (GAAP)

 

$

19,347,373

 

 

$

19,368,109

 

 

$

19,294,174

 

(c)

Less: Goodwill and other intangibles

 

 

1,003,262

 

 

 

1,004,897

 

 

 

1,010,140

 

 

Tangible assets (Non-GAAP)

 

$

18,344,111

 

 

$

18,363,212

 

 

$

18,284,034

 

(d)

 

 

 

 

 

 

 

 

Common Shares

 

 

42,873,187

 

 

 

44,141,973

 

 

 

45,641,238

 

(e)

 

 

 

 

 

 

 

 

Common equity to assets ratio (GAAP)

 

 

14.96

%

 

 

14.90

%

 

 

14.96

%

(a/c)

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

 

 

10.31

%

 

 

10.24

%

 

 

10.26

%

(b/d)

Book value per share (GAAP)

 

$

67.53

 

 

$

65.37

 

 

$

63.25

 

(a/e)

Tangible book value per share (Non-GAAP)

 

$

44.13

 

 

$

42.60

 

 

$

41.12

 

(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

 

Years Ended

 

December 31
2023

 

September 30
2023

 

December 31
2022

 

December 31
2023

 

December 31
2022

Net interest income (GAAP)

$

145,096

 

 

$

149,880

 

 

$

168,355

 

 

$

606,521

 

 

$

613,249

 

 

 

 

 

 

 

 

 

 

 

Noninterest income (GAAP)

$

32,067

 

 

$

33,543

 

 

$

32,302

 

 

$

124,609

 

 

$

114,667

 

Noninterest income on an operating basis (Non-GAAP)

$

32,067

 

 

$

33,543

 

 

$

32,302

 

 

$

124,609

 

 

$

114,667

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (GAAP)

 

100,747

 

 

$

97,782

 

 

$

94,872

 

 

$

392,746

 

 

$

373,662

 

Less:

 

 

 

 

 

 

 

 

 

Merger and acquisition expense

 

 

 

 

 

 

 

 

 

 

 

 

 

7,100

 

Noninterest expense on an operating basis (Non-GAAP)

$

100,747

 

 

$

97,782

 

 

$

94,872

 

 

$

392,746

 

 

$

366,562

 

 

 

 

 

 

 

 

 

 

 

Total revenue (GAAP)

$

177,163

 

 

$

183,423

 

 

$

200,657

 

 

$

731,130

 

 

$

727,916

 

Total operating revenue (Non-GAAP)

$

177,163

 

 

$

183,423

 

 

$

200,657

 

 

$

731,130

 

 

$

727,916

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

$

54,803

 

 

$

60,808

 

 

$

77,043

 

 

$

239,502

 

 

$

263,813

 

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

$

54,803

 

 

$

60,808

 

 

$

77,043

 

 

$

239,502

 

 

$

268,918

 

 

 

 

 

 

 

 

 

 

 

Average common equity (GAAP)

$

2,895,088

 

 

$

2,889,564

 

 

$

2,856,178

 

 

$

2,881,297

 

 

$

2,915,896

 

Less: Average goodwill and other intangibles

 

1,004,081

 

 

 

1,005,778

 

 

 

1,011,091

 

 

 

1,006,658

 

 

 

1,014,045

 

Tangible average tangible common equity (Non-GAAP)

$

1,891,007

 

 

$

1,883,786

 

 

$

1,845,087

 

 

$

1,874,639

 

 

$

1,901,851

 

 

 

 

 

 

 

 

 

 

 

Ratios

 

 

 

 

 

 

 

 

 

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

 

18.10

%

 

 

18.29

%

 

 

16.10

%

 

 

17.04

%

 

 

15.75

%

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)

 

18.10

%

 

 

18.29

%

 

 

16.10

%

 

 

17.04

%

 

 

15.75

%

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

 

56.87

%

 

 

53.31

%

 

 

47.28

%

 

 

53.72

%

 

 

51.33

%

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

 

56.87

%

 

 

53.31

%

 

 

47.28

%

 

 

53.72

%

 

 

50.36

%

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

 

11.50

%

 

 

12.81

%

 

 

16.57

%

 

 

12.78

%

 

 

13.87

%

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)

 

11.50

%

 

 

12.81

%

 

 

16.57

%

 

 

12.78

%

 

 

14.14

%

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

 

Three Months Ended

 

December 31, 2023

 

September 30, 2023

 

Volume

Interest

Margin
Impact

 

Volume

Interest

Margin
Impact

 

(Dollars in thousands)

Reported total interest earning assets

$

17,183,476

 

$

146,253

 

3.38

%

 

$

17,254,248

 

$

151,034

 

3.47

%

Acquisition fair value marks:

 

 

 

 

 

 

 

Loan accretion

 

 

(1,156

)

 

 

 

 

(330

)

 

CD amortization

 

 

11

 

 

 

 

 

11

 

 

 

 

 

(1,145

)

(0.03

) %

 

 

 

(319

)

%

 

 

 

 

 

 

 

 

Nonaccrual interest, net

 

 

549

 

0.01

%

 

 

 

67

 

%

 

 

 

 

 

 

 

 

Other noncore adjustments

 

(4,913

)

 

(574

)

(0.01

) %

 

 

(5,448

)

 

(77

)

%

 

 

 

 

 

 

 

 

Core margin (Non-GAAP)

$

17,178,563

 

$

145,083

 

3.35

%

 

$

17,248,800

 

$

150,705

 

3.47

%

 

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

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