Stability amidst latest banking
challenges
Independent Bank Corp. (Nasdaq Global Select Market: INDB),
parent of Rockland Trust Company, today announced 2023 first
quarter net income of $61.2 million, or $1.36 per diluted share,
compared to 2022 fourth quarter net income of $77.0 million, or
$1.69 per diluted share. First quarter results were driven
primarily by increases in interest expense, reflecting both an
increase in overall cost of deposits as well as an increase in
levels of borrowings as result of deposit balance reductions.
The Company generated a return on average assets and a return on
average common equity of 1.30% and 8.63%, respectively, for the
first quarter of 2023, as compared to 1.56% and 10.70%,
respectively, for the prior quarter.
“Rockland Trust remains strong. Our disciplined underwriting and
comprehensive capital and liquidity planning positions us well to
navigate the current landscape.” said Jeffrey Tengel, the Chief
Executive Officer of Independent Bank Corp. and Rockland Trust
Company. “We remain confident that our balance sheet management
strategies will continue to serve us in the weeks and months ahead.
Our diverse business model, focus on core relationships, and
service excellence have been the foundational keys to our success
over these many years and these key attributes will continue to
guide us.”
BALANCE SHEET
Total assets of $19.4 billion at March 31, 2023 increased by
$148.2 million, or 0.8% compared to the prior quarter, due
primarily to higher on-balance sheet liquidity in the form of cash
balances. Total assets decreased by $716.8 million, or 3.6%, as
compared to March 31, 2022, fueled primarily by lower deposit
levels and associated cash balances compared to the prior year.
Total loans at March 31, 2023 of $13.9 billion increased by
$19.3 million, or 0.1% (0.6% annualized), compared to the prior
quarter level. The commercial portfolio decreased by $26.7 million,
or 0.2% during the quarter, reflecting approximately $159.9 million
of transfers from construction to commercial real estate, as well
as an overall cautious posture over new commitments. Small business
loans rose modestly in the first quarter. As in prior quarters, the
vast majority of residential real estate originations were retained
on the balance sheet, resulting in growth of $60.1 million, or 3.0%
for the quarter, while home equity balances remained relatively
flat.
Deposit balances of $15.3 billion at March 31, 2023 decreased by
$606.8 million, or 3.8%, from December 31, 2022, primarily
reflective of industry wide dislocations in the first quarter along
with seasonality, a competitive rate environment, and redeployment
of customer excess liquidity due to inflationary and other factors.
Core deposits declined to 85.6% of total deposits at March 31,
2023, compared to 87.9% at December 31, 2022, driven primarily by
core deposit outflows in conjunction with growth in higher yielding
time deposits, which increased $259.6 million, or 21.7%, in
comparison to prior quarter. The total cost of deposits for the
quarter increased 24 basis points to 0.59% in line with the higher
rate environment.
Borrowings increased by $879.0 million during the first quarter
of 2023 in response to deposit balance reductions and share
repurchase activity, as well as preemptive measures to bolster
on-balance sheet liquidity in response to the high deposit risk
environment experienced across the industry during the month of
March. The additional borrowings were comprised primarily of short
term borrowings from the Federal Home Loan Bank. In conjunction
with these borrowings, the Company entered into $300 million of
hedges resulting in a weighted average cost of 3.7% over an average
term of 3.5 years.
The securities portfolio decreased by $19.3 million, or 0.6%,
compared to December 31, 2022 driven primarily by paydowns, calls,
and maturities, partially offset by unrealized gains of $22.2
million in the available for sale portfolio. Total securities
represented 16.0% of total assets at March 31, 2023, as compared to
16.2% at December 31, 2022.
During the first quarter of 2023, the Company repurchased 1.6
million shares of common stock for $120 million at an average price
per share of $74.18, marking the full completion of its share
repurchase program announced in October 2022. Stockholders' equity
at March 31, 2023 decreased 1.9% when compared to December 31,
2022, driven primarily by the impact of the share repurchases,
partially offset by strong earnings retention and other
comprehensive income. The Company's ratio of common equity to
assets of 14.56% at March 31, 2023 represented a decrease of 40
basis points, or 2.7% from December 31, 2022 and a decrease of 15
basis points, or 1.0%, from March 31, 2022. Despite the stock
repurchase activity, the Company's book value per share increased
by $0.92, or 1.5%, to $64.17 during the first quarter as compared
to the prior quarter. The Company's tangible book value per share
at March 31, 2023 rose by $0.19, or 0.5%, from the prior quarter to
$41.31, and represented an increase of 0.4% from the year ago
period. The Company's ratio of tangible common equity to tangible
assets of 9.89% at March 31, 2023 represented a decrease of 37
basis points from the prior quarter and a decrease of 29 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 first quarter of 2023 decreased 5.6%
to $159.0 million compared to $168.4 million for the prior quarter,
driven primarily by higher funding costs due to raised deposit
pricing along with increased borrowings, resulting in a reduction
in net interest margin of six basis points to 3.79% for the
quarter. Core margin decreased four basis points to 3.78% for the
first 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 $28.2 million for the first quarter of
2023 represented a decrease $4.1 million, or 12.6%, as compared to
the prior quarter. Significant changes in noninterest income for
the first quarter of 2023 compared to the prior quarter included
the following:
- Investment management income decreased by $615,000, or 5.9%,
despite an overall increase in assets under administration, due
primarily to timing of new asset inflows and reduced fee ratios
experienced during the first quarter. Total assets under
administration rose by $352.3 million, or 6.1%, to $6.1 billion
during the first quarter of 2023.
- Mortgage banking income decreased by $218,000 in comparison to
the prior quarter primarily reflecting reduced fees and lower
mortgage service asset valuation.
- The increase in cash surrender value of life insurance policies
declined by $282,000, or 13.2%, due primarily to annual dividends
received during the fourth quarter of 2022. The Company also
received proceeds on life insurance policies resulting in a gain of
$11,000 for the first quarter, as compared to a gain of $691,000 in
the prior quarter.
- Loan level derivative income decreased by $1.0 million due
primarily to lower customer demand.
- Other noninterest income decreased by $1.3 million, or 18.1%,
due primarily to an $894,000 gain on the sale of a closed branch
facility recognized during the fourth quarter of 2022 with no such
gain during the first quarter of 2023, as well as a $372,000
decrease associated with tax credit purchases.
NONINTEREST EXPENSE
Noninterest expense of $98.7 million for the first quarter of
2023 represented a $3.8 million, or 4.0%, increase as compared to
the prior quarter. Significant changes in noninterest expense for
the first quarter compared to the prior quarter included the
following:
- Salaries and employee benefits increased by $3.2 million, or
6.0%, due primarily to CEO transition related expenses, increased
payroll taxes, and valuation changes in the Company's life
insurance obligations, partially offset by decreased incentive
programs.
- Occupancy and equipment increased by $236,000, or 1.9%, due
mainly to seasonal increases in snow removal costs and utility
costs, partially offset by reduced building repairs and maintenance
and landscaping expenses.
- FDIC assessment increased by $884,000, or 51.2%, due primarily
to increased assessment rates.
- Other noninterest expense decreased by $637,000, or 2.6%, due
primarily to decreases in advertising and consultant fees.
The Company’s tax rate for the first quarter of 2023 increased
to 24.69%, compared to 23.18% for the prior quarter, primarily due
to the recognition of discrete items realized during the fourth
quarter of 2022.
ASSET QUALITY
The first quarter provision for credit losses of $7.3 million
primarily reflects an additional reserve allocation associated with
further credit deterioration of a large commercial and industrial
credit that migrated to nonperforming status during 2022, resulting
in a full specific reserve allocation on the loan. Nonperforming
loans increased slightly during the quarter to $56.2 million, or
0.40% of total loans at March 31, 2023, as compared to $54.9
million, or 0.39% of total loans at December 31, 2022. Net
charge-offs were minimal at $538,000 or 0.02% of average loans
annualized for the first quarter of 2023. Delinquency as a
percentage of total loans decreased three basis points from the
prior quarter to 0.27% at March 31, 2023.
The allowance for credit losses on total loans was $159.1
million, or 1.14% of total loans at March 31, 2023, as compared to
$152.4 million, or 1.09% of total loans, at December 31, 2022.
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 first quarter
earnings at 10:00 a.m. Eastern Time on Friday, April 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: 3587499 and will be available through April 28, 2023.
Additionally, a webcast replay will be available on the Company's
website until April 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, caused by geopolitical concerns,
including as a result of the conflict between Russia and Ukraine,
and as a result of recent disruptions in the banking industry;
- 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, actions that the U.S. government may take to avoid
exceeding the debt ceiling, or uncertainties surrounding the debt
ceiling and 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
March 31 2023
December 31
2022
March 31 2022
Mar 2023 vs.
Mar 2023 vs.
Dec 2022
Mar 2022
Assets
Cash and due from banks
$
179,923
$
175,843
$
173,779
2.32
%
3.54
%
Interest-earning deposits with banks
322,621
177,090
1,666,580
82.18
%
(80.64
)%
Securities
Trading
4,469
3,888
3,956
14.94
%
12.97
%
Equities
21,503
21,119
22,611
1.82
%
(4.90
)%
Available for sale
1,405,602
1,399,154
1,552,731
0.46
%
(9.48
)%
Held to maturity
1,678,376
1,705,120
1,282,441
(1.57
)%
30.87
%
Total securities
3,109,950
3,129,281
2,861,739
(0.62
)%
8.67
%
Loans held for sale
1,130
2,803
6,144
(59.69
)%
(81.61
)%
Loans
Commercial and industrial
1,649,882
1,635,103
1,566,192
0.90
%
5.34
%
Commercial real estate
7,820,094
7,760,230
7,897,616
0.77
%
(0.98
)%
Commercial construction
1,046,310
1,154,413
1,153,945
(9.36
)%
(9.33
)%
Small business
225,866
219,102
200,405
3.09
%
12.70
%
Total commercial
10,742,152
10,768,848
10,818,158
(0.25
)%
(0.70
)%
Residential real estate
2,095,644
2,035,524
1,706,045
2.95
%
22.84
%
Home equity - first position
556,534
566,166
577,881
(1.70
)%
(3.69
)%
Home equity - subordinate positions
534,221
522,584
447,934
2.23
%
19.26
%
Total consumer real estate
3,186,399
3,124,274
2,731,860
1.99
%
16.64
%
Other consumer
19,401
35,553
30,009
(45.43
)%
(35.35
)%
Total loans
13,947,952
13,928,675
13,580,027
0.14
%
2.71
%
Less: allowance for credit losses
(159,131
)
(152,419
)
(144,518
)
4.40
%
10.11
%
Net loans
13,788,821
13,776,256
13,435,509
0.09
%
2.63
%
Federal Home Loan Bank stock
40,303
5,218
11,407
672.38
%
253.32
%
Bank premises and equipment, net
195,921
196,504
199,106
(0.30
)%
(1.60
)%
Goodwill
985,072
985,072
985,072
—
%
—
%
Other intangible assets
23,253
25,068
30,759
(7.24
)%
(24.40
)%
Cash surrender value of life insurance
policies
295,268
293,323
291,192
0.66
%
1.40
%
Other assets
500,140
527,716
497,891
(5.23
)%
0.45
%
Total assets
$
19,442,402
$
19,294,174
$
20,159,178
0.77
%
(3.56
)%
Liabilities and Stockholders'
Equity
Deposits
Noninterest-bearing demand deposits
$
5,083,678
$
5,441,584
$
5,537,156
(6.58
)%
(8.19
)%
Savings and interest checking accounts
5,638,781
5,898,009
6,247,806
(4.40
)%
(9.75
)%
Money market
3,094,362
3,343,673
3,579,820
(7.46
)%
(13.56
)%
Time certificates of deposit
1,455,351
1,195,741
1,398,610
21.71
%
4.06
%
Total deposits
15,272,172
15,879,007
16,763,392
(3.82
)%
(8.90
)%
Borrowings
Federal Home Loan Bank borrowings
879,628
637
25,660
nm
3,328.01
%
Junior subordinated debentures, net
62,856
62,855
62,854
—
%
—
%
Subordinated debentures, net
49,909
49,885
49,814
0.05
%
0.19
%
Total borrowings
992,393
113,377
138,328
775.30
%
617.42
%
Total deposits and borrowings
16,264,565
15,992,384
16,901,720
1.70
%
(3.77
)%
Other liabilities
346,928
415,089
292,019
(16.42
)%
18.80
%
Total liabilities
16,611,493
16,407,473
17,193,739
1.24
%
(3.39
)%
Stockholders' equity
Common stock
439
455
472
(3.52
)%
(6.99
)%
Additional paid in capital
1,995,077
2,114,888
2,247,518
(5.67
)%
(11.23
)%
Retained earnings
971,338
934,442
795,651
3.95
%
22.08
%
Accumulated other comprehensive loss, net
of tax
(135,945
)
(163,084
)
(78,202
)
(16.64
)%
73.84
%
Total stockholders' equity
2,830,909
2,886,701
2,965,439
(1.93
)%
(4.54
)%
Total liabilities and stockholders'
equity
$
19,442,402
$
19,294,174
$
20,159,178
0.77
%
(3.56
)%
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited, dollars in thousands, except
per share data)
Three Months Ended
% Change
% Change
March 31 2023
December 31
2022
March 31 2022
Mar 2023 vs.
Mar 2023 vs.
Dec 2022
Mar 2022
Interest income
Interest on federal funds sold and
short-term investments
$
665
$
4,163
$
886
(84.03
)%
(24.94
)%
Interest and dividends on securities
15,310
15,789
10,044
(3.03
)%
52.43
%
Interest and fees on loans
170,926
164,153
129,625
4.13
%
31.86
%
Interest on loans held for sale
34
22
64
54.55
%
(46.88
)%
Total interest income
186,935
184,127
140,619
1.53
%
32.94
%
Interest expense
Interest on deposits
22,675
14,325
2,107
58.29
%
976.17
%
Interest on borrowings
5,262
1,447
1,080
263.65
%
387.22
%
Total interest expense
27,937
15,772
3,187
77.13
%
776.59
%
Net interest income
158,998
168,355
137,432
(5.56
)%
15.69
%
Provision for (release of) credit
losses
7,250
5,500
(2,000
)
31.82
%
(462.50
)%
Net interest income after provision for
(release of) credit losses
151,748
162,855
139,432
(6.82
)%
8.83
%
Noninterest income
Deposit account fees
5,916
5,788
5,493
2.21
%
7.70
%
Interchange and ATM fees
4,184
4,282
3,609
(2.29
)%
15.93
%
Investment management
9,779
10,394
8,673
(5.92
)%
12.75
%
Mortgage banking income
308
526
1,362
(41.44
)%
(77.39
)%
Increase in cash surrender value of life
insurance policies
1,854
2,136
1,795
(13.20
)%
3.29
%
Gain on life insurance benefits
11
691
—
(98.41
)%
100.00
%
Loan level derivative income
408
1,421
604
(71.29
)%
(32.45
)%
Other noninterest income
5,782
7,064
4,736
(18.15
)%
22.09
%
Total noninterest income
28,242
32,302
26,272
(12.57
)%
7.50
%
Noninterest expenses
Salaries and employee benefits
56,975
53,754
48,711
5.99
%
16.97
%
Occupancy and equipment expenses
12,822
12,586
13,302
1.88
%
(3.61
)%
Data processing and facilities
management
2,527
2,442
2,372
3.48
%
6.53
%
FDIC assessment
2,610
1,726
1,805
51.22
%
44.60
%
Merger and acquisition expense
—
—
7,100
nm
(100.00
)%
Other noninterest expenses
23,727
24,364
22,210
(2.61
)%
6.83
%
Total noninterest expenses
98,661
94,872
95,500
3.99
%
3.31
%
Income before income taxes
81,329
100,285
70,204
(18.90
)%
15.85
%
Provision for income taxes
20,082
23,242
17,107
(13.60
)%
17.39
%
Net Income
$
61,247
$
77,043
$
53,097
(20.50
)%
15.35
%
Weighted average common shares (basic)
45,004,100
45,641,605
47,366,753
Common share equivalents
19,564
20,090
20,711
Weighted average common shares
(diluted)
45,023,664
45,661,695
47,387,464
Basic earnings per share
$
1.36
$
1.69
$
1.12
(19.53
)%
21.43
%
Diluted earnings per share
$
1.36
$
1.69
$
1.12
(19.53
)%
21.43
%
Reconciliation of
Net Income (GAAP) to Operating Net Income
(Non-GAAP):
Net income
$
61,247
$
77,043
$
53,097
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)
$
61,247
$
77,043
$
58,202
(20.50
)%
5.23
%
Diluted earnings per share, on an
operating basis (Non-GAAP)
$
1.36
$
1.69
$
1.23
(19.53
)%
10.57
%
(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)
3.79
%
3.85
%
3.09
%
Return on average assets (GAAP)
(calculated by dividing net income by average assets)
1.30
%
1.56
%
1.06
%
Return on average assets on an operating
basis (Non-GAAP) (calculated by dividing net operating net income
by average assets)
1.30
%
1.56
%
1.17
%
Return on average common equity (GAAP)
(calculated by dividing net income by average common equity)
8.63
%
10.70
%
7.16
%
Return on average common equity on an
operating basis (Non-GAAP) (calculated by dividing net operating
net income by average common equity)
8.63
%
10.70
%
7.85
%
Return on average tangible common equity
(Non-GAAP) (calculated by dividing net income by average tangible
common equity)
13.30
%
16.57
%
10.82
%
Return on average tangible common equity
on an operating basis (Non-GAAP) (calculated by dividing net
operating net income by average tangible common equity)
13.30
%
16.57
%
11.86
%
Noninterest income as a % of total revenue
(calculated by dividing total noninterest income by net interest
income plus total noninterest income)
15.08
%
16.10
%
16.05
%
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)
15.08
%
16.10
%
16.05
%
Efficiency ratio (GAAP) (calculated by
dividing total noninterest expense by total revenue)
52.69
%
47.28
%
58.34
%
Efficiency ratio on an operating basis
(Non-GAAP) (calculated by dividing total noninterest expense on an
operating basis by total revenue)
52.69
%
47.28
%
54.00
%
nm = not meaningful
ASSET QUALITY
(Unaudited, dollars in thousands)
Nonperforming Assets
At
March 31 2023
December 31
2022
March 31 2022
Nonperforming loans
Commercial & industrial loans
$
26,343
$
26,693
$
3,517
Commercial real estate loans
18,038
15,730
40,470
Small business loans
242
104
20
Residential real estate loans
8,178
8,479
8,457
Home equity
3,305
3,400
3,761
Other consumer
129
475
393
Total nonperforming loans
56,235
54,881
56,618
Total nonperforming assets
$
56,235
$
54,881
$
56,618
Nonperforming loans/gross loans
0.40
%
0.39
%
0.42
%
Nonperforming assets/total assets
0.29
%
0.28
%
0.28
%
Allowance for credit losses/nonperforming
loans
282.98
%
277.73
%
255.25
%
Allowance for credit losses/total
loans
1.14
%
1.09
%
1.06
%
Delinquent loans/total loans
0.27
%
0.30
%
0.29
%
Nonperforming Assets
Reconciliation for the Three Months Ended
March 31 2023
December 31
2022
March 31 2022
Nonperforming assets beginning balance
$
54,881
$
56,017
$
27,820
New to nonperforming
5,416
5,734
33,754
Loans charged-off
(815
)
(660
)
(706
)
Loans paid-off
(1,915
)
(2,448
)
(1,485
)
Loans restored to performing status
(1,352
)
(3,846
)
(2,702
)
Other
20
84
(63
)
Nonperforming assets ending balance
$
56,235
$
54,881
$
56,618
Net Charge-Offs
(Recoveries)
Three Months Ended
March 31 2023
December 31
2022
March 31 2022
Net charge-offs (recoveries)
Commercial and industrial loans
$
276
$
(5
)
$
(13
)
Commercial real estate loans
—
—
(3
)
Small business loans
(3
)
135
22
Home equity
(16
)
(16
)
(2
)
Other consumer
281
280
400
Total net charge-offs (recoveries)
$
538
$
394
$
404
Net charge-offs (recoveries) to average
loans (annualized)
0.02
%
0.01
%
0.01
%
BALANCE SHEET AND CAPITAL
RATIOS
March 31 2023
December 31
2022
March 31 2022
Gross loans/total deposits
91.33
%
87.72
%
81.01
%
Common equity tier 1 capital ratio (1)
13.83
%
14.33
%
14.45
%
Tier 1 leverage capital ratio (1)
10.78
%
10.99
%
10.62
%
Common equity to assets ratio GAAP
14.56
%
14.96
%
14.71
%
Tangible common equity to tangible assets
ratio (2)
9.89
%
10.26
%
10.18
%
Book value per share GAAP
$
64.17
$
63.25
$
62.59
Tangible book value per share (2)
$
41.31
$
41.12
$
41.15
(1) Estimated number for March 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
March 31, 2023
December 31, 2022
March 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
$
73,608
$
665
3.66
%
$
466,691
$
4,163
3.54
%
$
1,906,164
$
886
0.19
%
Securities
Securities - trading
4,095
—
—
%
3,732
—
—
%
3,732
—
—
%
Securities - taxable investments
3,117,024
15,309
1.99
%
3,147,635
15,787
1.99
%
2,726,281
10,043
1.49
%
Securities - nontaxable investments
(1)
193
2
4.20
%
189
2
4.20
%
201
1
2.02
%
Total securities
$
3,121,312
$
15,311
1.99
%
$
3,151,556
$
15,789
1.99
%
$
2,730,214
$
10,044
1.49
%
Loans held for sale
2,474
34
5.57
%
1,607
22
5.43
%
9,475
64
2.74
%
Loans
Commercial and industrial (1)
1,618,330
26,572
6.66
%
1,560,885
23,258
5.91
%
1,535,619
17,031
4.50
%
Commercial real estate (1)
7,773,007
89,581
4.67
%
7,732,925
88,508
4.54
%
7,911,349
76,030
3.90
%
Commercial construction
1,134,469
16,467
5.89
%
1,223,695
17,205
5.58
%
1,190,659
12,268
4.18
%
Small business
222,543
3,219
5.87
%
213,384
2,995
5.57
%
194,819
2,416
5.03
%
Total commercial
10,748,349
135,839
5.13
%
10,730,889
131,966
4.88
%
10,832,446
107,745
4.03
%
Residential real estate
2,056,524
19,358
3.82
%
2,001,042
18,334
3.64
%
1,649,157
13,697
3.37
%
Home equity
1,089,056
16,244
6.05
%
1,088,846
14,339
5.22
%
1,032,308
8,662
3.40
%
Total consumer real estate
3,145,580
35,602
4.59
%
3,089,888
32,673
4.20
%
2,681,465
22,359
3.38
%
Other consumer
32,767
577
7.14
%
34,638
595
6.82
%
29,814
489
6.65
%
Total loans
$
13,926,696
$
172,018
5.01
%
$
13,855,415
$
165,234
4.73
%
$
13,543,725
$
130,593
3.91
%
Total interest-earning assets
$
17,124,090
$
188,028
4.45
%
$
17,475,269
$
185,208
4.20
%
$
18,189,578
$
141,587
3.16
%
Cash and due from banks
181,402
184,985
171,533
Federal Home Loan Bank stock
14,714
5,218
11,407
Other assets
1,844,556
1,871,241
1,851,196
Total assets
$
19,164,762
$
19,536,713
$
20,223,714
Interest-bearing liabilities
Deposits
Savings and interest checking accounts
$
5,745,357
$
7,473
0.53
%
$
5,966,326
$
4,921
0.33
%
$
6,255,843
$
598
0.04
%
Money market
3,243,322
10,393
1.30
%
3,408,441
7,492
0.87
%
3,608,793
559
0.06
%
Time deposits
1,293,987
4,809
1.51
%
1,175,667
1,912
0.65
%
1,466,651
950
0.26
%
Total interest-bearing deposits
$
10,282,666
$
22,675
0.89
%
$
10,550,434
$
14,325
0.54
%
$
11,331,287
$
2,107
0.08
%
Borrowings
Federal Home Loan Bank borrowings
298,413
3,644
4.95
%
639
2
1.24
%
25,696
133
2.10
%
Long-term borrowings
—
—
—
%
—
—
—
%
9,063
31
1.39
%
Junior subordinated debentures
62,856
1,001
6.46
%
62,855
827
5.22
%
62,853
299
1.93
%
Subordinated debentures
49,897
617
5.01
%
49,873
618
4.92
%
49,800
617
5.02
%
Total borrowings
$
411,166
$
5,262
5.19
%
$
113,367
$
1,447
5.06
%
$
147,412
$
1,080
2.97
%
Total interest-bearing liabilities
$
10,693,832
$
27,937
1.06
%
$
10,663,801
$
15,772
0.59
%
$
11,478,699
$
3,187
0.11
%
Noninterest-bearing demand deposits
5,219,531
5,606,055
5,443,465
Other liabilities
374,195
410,679
293,597
Total liabilities
$
16,287,558
$
16,680,535
$
17,215,761
Stockholders' equity
2,877,204
2,856,178
3,007,953
Total liabilities and stockholders'
equity
$
19,164,762
$
19,536,713
$
20,223,714
Net interest income
$
160,091
$
169,436
$
138,400
Interest rate spread (2)
3.39
%
3.61
%
3.05
%
Net interest margin (3)
3.79
%
3.85
%
3.09
%
Supplemental Information
Total deposits, including demand
deposits
$
15,502,197
$
22,675
$
16,156,489
$
14,325
$
16,774,752
$
2,107
Cost of total deposits
0.59
%
0.35
%
0.05
%
Total funding liabilities, including
demand deposits
$
15,913,363
$
27,937
$
16,269,856
$
15,772
$
16,922,164
$
3,187
Cost of total funding liabilities
0.71
%
0.38
%
0.08
%
(1) The total amount of adjustment to
present interest income and yield on a fully tax-equivalent basis
is $1.1 million for both the three months ended March 31, 2023 and
December 31, 2022, and $968,000 for the three months ended March
31, 2022, 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.
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:
March 31 2023
December 31
2022
March 31 2022
Tangible common equity
(Dollars in thousands, except per
share data)
Stockholders' equity (GAAP)
$
2,830,909
$
2,886,701
$
2,965,439
(a)
Less: Goodwill and other intangibles
1,008,325
1,010,140
1,015,831
Tangible common equity
$
1,822,584
$
1,876,561
$
1,949,608
(b)
Tangible assets
Assets (GAAP)
$
19,442,402
$
19,294,174
$
20,159,178
(c)
Less: Goodwill and other intangibles
1,008,325
1,010,140
1,015,831
Tangible assets
$
18,434,077
$
18,284,034
$
19,143,347
(d)
Common Shares
44,114,827
45,641,238
47,377,125
(e)
Common equity to assets ratio (GAAP)
14.56
%
14.96
%
14.71
%
(a/c)
Tangible common equity to tangible assets
ratio (Non-GAAP)
9.89
%
10.26
%
10.18
%
(b/d)
Book value per share (GAAP)
$
64.17
$
63.25
$
62.59
(a/e)
Tangible book value per share
(Non-GAAP)
$
41.31
$
41.12
$
41.15
(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
March 31 2023
December 31
2022
March 31 2022
Net interest income (GAAP)
$
158,998
$
168,355
$
137,432
Noninterest income (GAAP)
$
28,242
$
32,302
$
26,272
Noninterest income on an operating basis
(Non-GAAP)
$
28,242
$
32,302
$
26,272
Noninterest expense (GAAP)
$
98,661
$
94,872
$
95,500
Less:
Merger and acquisition expense
—
—
7,100
Noninterest expense on an operating basis
(Non-GAAP)
$
98,661
$
94,872
$
88,400
Total revenue (GAAP)
$
187,240
$
200,657
$
163,704
Total operating revenue (Non-GAAP)
$
187,240
$
200,657
$
163,704
Net income (GAAP)
$
61,247
$
77,043
$
53,097
Operating net income (Non-GAAP) (See
income statement for reconciliation of GAAP to Non-GAAP)
$
61,247
$
77,043
$
58,202
Average common equity (GAAP)
$
2,877,204
$
2,856,178
$
3,007,953
Less: Average goodwill and other
intangibles
1,009,340
1,011,091
1,017,040
Tangible average tangible common equity
(Non-GAAP)
$
1,867,864
$
1,845,087
$
1,990,913
Ratios
Noninterest income as a % of total revenue
(GAAP) (calculated by dividing total noninterest income by total
revenue)
15.08
%
16.10
%
16.05
%
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)
15.08
%
16.10
%
16.05
%
Efficiency ratio (GAAP) (calculated by
dividing total noninterest expense by total revenue)
52.69
%
47.28
%
58.34
%
Efficiency ratio on an operating basis
(Non-GAAP) (calculated by dividing total noninterest expense on an
operating basis by total revenue)
52.69
%
47.28
%
54.00
%
Return on average tangible common equity
(Non-GAAP) (calculated by dividing annualized net income by average
tangible common equity)
13.30
%
16.57
%
10.82
%
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)
13.30
%
16.57
%
11.86
%
APPENDIX C: Net Interest Margin
Analysis & Non-GAAP Reconciliation of Core
Margin
Three Months Ended
March 31, 2023
December 31, 2022
Volume
Interest
Margin Impact
Volume
Interest
Margin Impact
(Dollars in thousands)
Reported total interest earning assets
$
17,124,090
$
160,091
3.79
%
$
17,475,269
$
169,436
3.85
%
Acquisition fair value marks:
Loan amortization (accretion)
(287
)
259
CD amortization
11
11
(276
)
—
%
270
0.01
%
Nonaccrual interest, net
(12
)
—
%
(95
)
—
%
Other noncore adjustments*
(7,396
)
(361
)
(0.01
)%
(9,935
)
(1,366
)
(0.04
)%
Core margin (Non-GAAP)
$
17,116,694
$
159,442
3.78
%
$
17,465,334
$
168,245
3.82
%
* Other noncore adjustments include impact
from loans made under the payroll protection program
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230419006029/en/
Jeffrey Tengel President and Chief Executive Officer (781)
982-6144 Mark J. Ruggiero Chief Financial Officer and Executive
Vice President of Consumer Lending (781) 982-6281
Grafico Azioni Independent Bank (NASDAQ:INDB)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Independent Bank (NASDAQ:INDB)
Storico
Da Giu 2023 a Giu 2024