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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Independent Bank Corporation | NASDAQ:INDB | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.03 | -0.06% | 52.92 | 51.73 | 54.46 | 53.40 | 52.74 | 53.04 | 165,506 | 22:30:00 |
Completes solid performance in 2023
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:
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:
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:
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
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20240117623955/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
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