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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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.51 | 0.98% | 52.70 | 49.80 | 52.65 | 52.845 | 51.6506 | 51.98 | 159,773 | 22:30:00 |
Performance driven by higher revenues
Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2022 second quarter net income of $61.8 million, or $1.32 per diluted share, compared to 2022 first quarter net income of $53.1 million, or $1.12 per diluted share, and 2022 first quarter operating net income of $58.2 million, or $1.23 per diluted share, which excluded pre-tax merger-related costs of $7.1 million associated with the acquisition of Meridian Bancorp, Inc. ("Meridian") and its subsidiary, East Boston Savings Bank ("EBSB"). There were no such costs included in 2022 second quarter results. 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.
“We generated solid results while continuing our focus on disciplined growth. Our core fundamentals were on full display this quarter as evidenced by revenue and loan growth along with a continuing sound balance sheet,” said Christopher Oddleifson, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “Our ongoing success is a testament to the dedication of my talented colleagues and the enduring relationships they forge with each other and with the customers and communities that Rockland Trust serves. In these uncertain economic times, we remain committed to serving the needs of all our constituents and being the bank Where Each Relationship Matters®.”
BALANCE SHEET
Total assets of $20.0 billion at June 30, 2022 decreased by $176.7 million, or 0.9%, from the prior quarter due primarily to the decline in liquid assets, and increased by $5.8 billion, or 40.8%, as compared to the year ago period, inclusive of the 2021 fourth quarter acquisition of Meridian.
Total loans at June 30, 2022 of $13.7 billion increased by $95.7 million, or 2.8% on an annualized basis compared to the prior quarter level. Excluding $69.0 million of net paydowns associated with the Paycheck Protection Program ("PPP"), the loan portfolio increased by $164.7 million, or 4.9% on an annualized basis, compared to the prior quarter. Organic loan growth was driven primarily by strong consumer loan activity, as the majority of residential real estate loan closings were retained on the balance sheet, resulting in 8.1% growth (32.4% annualized) for the quarter in that portfolio, while increased demand and line utilization fueled 3.9% (15.5% annualized) growth in home equity balances. On the commercial side, increased line utilization and higher closing volumes drove solid growth in both the commercial and industrial and construction categories, while elevated attrition outpaced strong closing activity within commercial real estate. Robust small business origination activity led to solid 2.8% growth for the quarter.
Deposit balances of $16.6 billion at June 30, 2022 decreased by $123.8 million, or 0.7%, from the prior quarter primarily attributable to continued runoff in higher-cost time deposits, while growth in municipal deposits was offset by personal and business deposit declines within the core categories. Core deposits comprised 86.8% of total deposits at June 30, 2022, an increase from 85.8% at March 31, 2022. The total cost of deposits for the quarter remained at 0.05%.
The securities portfolio increased by $73.2 million, or 2.6%, when compared to the prior quarter, reflecting the Company's ongoing strategy to deploy a portion of excess cash balances into investment securities. Total purchases for the quarter were $196.7 million, offset by an unrealized loss of $30.7 million related to the available for sale portfolio, as well as paydowns, calls, and maturities. Total securities represented 14.7% of total assets as of June 30, 2022, as compared to 14.2% at March 31, 2022
Stockholders' equity at June 30, 2022 decreased 3.2% when compared to the prior quarter, which decrease is primarily attributable to the Company's repurchase of approximately 1.3 million in shares during the second quarter of 2022 under the Company's buyback program, which totaled $103.4 million, along with elevated levels of unrealized losses on available for sale investment securities included in other comprehensive income, which were partially offset by strong earnings retention. As a result of this decrease in stockholders' equity, book value per share decreased by $0.27, or 0.4%, to $62.32 during the second quarter as compared to the prior quarter. The Company's ratio of common equity to assets of 14.37% at June 30, 2022 represented a decrease of 34 basis points from the prior quarter and an increase of 210 basis points from the year ago period. The Company's tangible book value per share at June 30, 2022 declined by $0.84, or 2.0%, from the prior quarter to $40.31, but represented an increase of 9.6% from the year ago period inclusive of the accretive impact of the Meridian acquisition. The Company's ratio of tangible common equity to tangible assets of 9.79% at June 30, 2022 represents a decrease of 39 basis points from the prior quarter and an increase of 90 basis points from the year ago period. Please refer to Appendix A for a detailed reconciliation of Non-GAAP metrics.
NET INTEREST INCOME
Net interest income for the second quarter increased 5.4% to $144.9 million compared to $137.4 million for the prior quarter, primarily reflecting the positive impact of asset repricing in the rising interest rate environment in conjunction with relatively stable funding costs, offset by reduced net PPP fee income of $1.7 million. The reported net interest margin increased by 18 basis points from the prior quarter to 3.27%, and increased 23 basis points to 3.23% on a core basis when excluding PPP fees, purchase accounting, and other non-recurring items. Please refer to Appendix C for additional details regarding the net interest margin.
NONINTEREST INCOME
Noninterest income of $27.9 million for the second quarter of 2022 was $1.6 million, or 6.2% higher compared to the prior quarter. Significant changes in noninterest income for the second quarter compared to the prior quarter included the following:
NONINTEREST EXPENSE
Noninterest expense of $90.6 million for the second quarter of 2022 represented a $4.9 million, or 5.2%, decrease compared to the prior quarter. Significant changes in noninterest expense for the second quarter compared to the prior quarter included the following:
The Company generated a return on average assets and a return on average common equity of 1.24% and 8.49%, respectively, for the second quarter of 2022, as compared to 1.06% and 7.16%, respectively, or 1.17% and 7.85%, respectively, on an operating basis, for the prior quarter.
The Company’s tax rate for the second quarter of 2022 was 24.8%, compared to 24.4% for the prior quarter.
ASSET QUALITY
During the second quarter of 2022, the Company recorded total net charge-offs of $199,000, equating to 0.01% of average loans on an annualized basis. Nonperforming loans declined slightly to $55.9 million, or 0.41% of total loans at June 30, 2022, as compared to $56.6 million, or 0.42% of total loans at March 31, 2022. Delinquency as a percentage of total loans increased 11 basis points from the prior quarter to 0.40% at June 30, 2022.
In addition, total loans subject to a COVID-19 related payment deferral decreased significantly to $197.4 million, or 1.4% of total loans, at June 30, 2022, as compared to $304.5 million, or 2.2% of total loans, at March 31, 2022. All loans subject to a payment deferral at June 30, 2022 were performing in accordance with the modified terms.
The Company recorded no provision for credit losses during the second quarter of 2022 as continued strong credit quality metrics countered additional provisioning for net loan growth. The allowance for credit losses on total loans was $144.3 million, or 1.06% of total loans, at June 30, 2022, as compared to $144.5 million, or 1.06% of total loans, at March 31, 2022.
CONFERENCE CALL INFORMATION
Christopher Oddleifson, Chief Executive Officer, Robert Cozzone, Chief Operating Officer, and Mark Ruggiero, Chief Financial Officer, will host a conference call to discuss second quarter earnings at 10:00 a.m. Eastern Time on Friday, July 22, 2022. 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: 9471677 and will be available through July 29, 2022. Additionally, a webcast replay will be available on the Company's website until July 22, 2023.
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" 2021 list, an honor earned for the 13th consecutive year. *In 2022, Rockland Trust was ranked #1 in Customer Satisfaction with Retail Banking in New England. 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 in eastern Massachusetts, including Greater Boston, South Shore, North Shore, Cape Cod and Islands, 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. To find out why Rockland Trust is the bank "Where Each Relationship Matters®," please visit RocklandTrust.com.
*Rockland Trust received the highest score in a tie in the New England Region of the J.D. Power 2022 U.S. Retail Banking Satisfaction Study of customers’ satisfaction with their primary bank. Visit jdpower.com/awards for more details.
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, the foregoing factors may be exacerbated by the ultimate impact of the COVID-19 pandemic, which remains unknown at this time due to factors and future developments that are uncertain, unpredictable and, in many cases, beyond the Company's control, including the scope, duration and extent of the pandemic and any further resurgences, the efficacy, availability and public acceptance of vaccines, boosters or other treatments, actions taken by governmental authorities in response to the pandemic and the direct and indirect impact of these actions and the pandemic generally on the Company’s employees, customers, business and third-parties with which the Company conducts business.
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 contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This information includes 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 out-sized cash balances, unique low-yielding loans originated through government programs in response to the pandemic, or significant purchase accounting adjustments. 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. Similarly, management reviews certain loan metrics such as growth rates and allowance as a percentage of total loans, adjusted to exclude loans that are not considered part of its core portfolio, which includes loans originated in association with government sponsored and guaranteed programs in response to the pandemic, to arrive at adjusted numbers more representative of the core growth of the portfolio and core reserve to loan ratio.
Management also supplements its evaluation of financial performance with analysis of tangible book value per share (which is computed by dividing stockholders' equity less goodwill and identifiable intangible assets, or "tangible common equity", by common shares outstanding), the tangible common equity ratio (which is computed by dividing tangible common equity by "tangible assets", defined as total assets less goodwill and other intangibles), and return on average tangible common equity (which is computed by dividing net income by average tangible common equity). The Company has included information on tangible book value per share, the tangible common equity ratio and return on average tangible common equity because management believes that investors may find it useful to have access to the same analytical tools used by management. As a result of merger and acquisition activity, the Company has recognized goodwill and other intangible assets in conjunction with business combination accounting principles. Excluding the impact of goodwill and other intangibles in measuring asset and capital values for the ratios provided, along with other bank standard capital ratios, provides a framework to compare the capital adequacy of the Company to other companies in the financial services industry.
These non-GAAP measures should not be viewed as a substitute for operating results and other financial measures determined in accordance with GAAP. An item which management excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP performance measures, including operating net income, operating EPS, operating return on average assets, operating return on average common equity, core margin, tangible book value per share and the tangible common equity ratio, are not necessarily comparable to non-GAAP performance measures which may be presented by other companies.
Category: Earnings Releases
INDEPENDENT BANK CORP. FINANCIAL SUMMARY
CONSOLIDATED BALANCE SHEETS
(Unaudited, dollars in thousands)
% Change
% Change
June 30 2022
March 31 2022
June 30 2021
Jun 2022 vs.
Jun 2022 vs.
Mar 2022
Jun 2021
Assets
Cash and due from banks
$
202,802
$
173,779
$
141,953
16.70
%
42.87
%
Interest-earning deposits with banks
1,273,465
1,666,580
2,114,477
(23.59
) %
(39.77
) %
Securities
Trading
3,637
3,956
3,439
(8.06
) %
5.76
%
Equities
21,181
22,611
22,975
(6.32
) %
(7.81
) %
Available for sale
1,501,949
1,552,731
794,516
(3.27
) %
89.04
%
Held to maturity
1,408,189
1,282,441
861,821
9.81
%
63.40
%
Total securities
2,934,956
2,861,739
1,682,751
2.56
%
74.41
%
Loans held for sale
2,358
6,144
25,561
(61.62
) %
(90.78
) %
Loans
Commercial and industrial
1,541,046
1,566,192
1,726,498
(1.61
) %
(10.74
) %
Commercial real estate
7,791,757
7,897,616
4,251,543
(1.34
) %
83.27
%
Commercial construction
1,194,577
1,153,945
496,539
3.52
%
140.58
%
Small business
205,953
200,405
182,863
2.77
%
12.63
%
Total commercial
10,733,333
10,818,158
6,657,443
(0.78
) %
61.22
%
Residential real estate
1,844,057
1,706,045
1,240,279
8.09
%
48.68
%
Home equity - first position
587,314
577,881
606,332
1.63
%
(3.14
) %
Home equity - subordinate positions
478,196
447,934
412,076
6.76
%
16.05
%
Total consumer real estate
2,909,567
2,731,860
2,258,687
6.50
%
28.82
%
Other consumer
32,864
30,009
22,858
9.51
%
43.77
%
Total loans
13,675,764
13,580,027
8,938,988
0.70
%
52.99
%
Less: allowance for credit losses
(144,319
)
(144,518
)
(102,357
)
(0.14
) %
41.00
%
Net loans
13,531,445
13,435,509
8,836,631
0.71
%
53.13
%
Federal Home Loan Bank stock
6,249
11,407
9,079
(45.22
) %
(31.17
) %
Bank premises and equipment, net
202,221
199,106
117,435
1.56
%
72.20
%
Goodwill
985,072
985,072
506,206
—
%
94.60
%
Other intangible assets
28,845
30,759
20,370
(6.22
) %
41.61
%
Cash surrender value of life insurance policies
292,807
291,192
242,963
0.55
%
20.52
%
Other assets
522,230
497,891
496,781
4.89
%
5.12
%
Total assets
$
19,982,450
$
20,159,178
$
14,194,207
(0.88
) %
40.78
%
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing demand deposits
$
5,562,174
$
5,537,156
$
4,370,852
0.45
%
27.26
%
Savings and interest checking accounts
6,347,601
6,247,806
4,445,903
1.60
%
42.77
%
Money market
3,419,170
3,579,820
2,352,897
(4.49
) %
45.32
%
Time certificates of deposit
1,310,603
1,398,610
817,319
(6.29
) %
60.35
%
Total deposits
16,639,548
16,763,392
11,986,971
(0.74
) %
38.81
%
Borrowings
Federal Home Loan Bank borrowings
25,652
25,660
35,693
(0.03
) %
(28.13
) %
Long-term borrowings, net
—
—
23,425
n/a
(100.00
) %
Junior subordinated debentures, net
62,854
62,854
62,852
—
%
—
%
Subordinated debentures, net
49,838
49,814
49,743
0.05
%
0.19
%
Total borrowings
138,344
138,328
171,713
0.01
%
(19.43
) %
Total deposits and borrowings
16,777,892
16,901,720
12,158,684
(0.73
) %
37.99
%
Other liabilities
333,373
292,019
293,901
14.16
%
13.43
%
Total liabilities
17,111,265
17,193,739
12,452,585
(0.48
) %
37.41
%
Stockholders' equity
Common stock
459
472
329
(2.75
) %
39.51
%
Additional paid in capital
2,146,333
2,247,518
948,130
(4.50
) %
126.38
%
Retained earnings
833,857
795,651
763,596
4.80
%
9.20
%
Accumulated other comprehensive income (loss), net of tax
(109,464
)
(78,202
)
29,567
39.98
%
(470.22
) %
Total stockholders' equity
2,871,185
2,965,439
1,741,622
(3.18
) %
64.86
%
Total liabilities and stockholders' equity
$
19,982,450
$
20,159,178
$
14,194,207
(0.88
) %
40.78
%
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, dollars in thousands, except per share data)
Three Months Ended
% Change
% Change
June 30 2022
March 31 2022
June 30 2021
Jun 2022 vs.
Jun 2022 vs.
Mar 2022
Jun 2021
Interest income
Interest on federal funds sold and short-term investments
$
2,817
$
886
$
513
217.95
%
449.12
%
Interest and dividends on securities
11,283
10,044
7,189
12.34
%
56.95
%
Interest and fees on loans
133,988
129,625
88,814
3.37
%
50.86
%
Interest on loans held for sale
35
64
186
(45.31
) %
(81.18
) %
Total interest income
148,123
140,619
96,702
5.34
%
53.17
%
Interest expense
Interest on deposits
2,111
2,107
2,017
0.19
%
4.66
%
Interest on borrowings
1,151
1,080
1,331
6.57
%
(13.52
) %
Total interest expense
3,262
3,187
3,348
2.35
%
(2.57
) %
Net interest income
144,861
137,432
93,354
5.41
%
55.17
%
Provision for credit losses
—
(2,000
)
(5,000
)
(100.00
) %
(100.00
) %
Net interest income after provision for credit losses
144,861
139,432
98,354
3.89
%
47.29
%
Noninterest income
Deposit account fees
5,828
5,493
3,822
6.10
%
52.49
%
Interchange and ATM fees
4,027
3,609
3,068
11.58
%
31.26
%
Investment management
9,329
8,673
8,872
7.56
%
5.15
%
Mortgage banking income
1,042
1,362
2,705
(23.49
) %
(61.48
) %
Increase in cash surrender value of life insurance policies
1,871
1,795
1,589
4.23
%
17.75
%
Gain on life insurance benefits
123
—
—
100.00
%
100.00
%
Loan level derivative income
436
604
116
(27.81
) %
275.86
%
Other noninterest income
5,242
4,736
4,795
10.68
%
9.32
%
Total noninterest income
27,898
26,272
24,967
6.19
%
11.74
%
Noninterest expenses
Salaries and employee benefits
49,538
48,711
42,635
1.70
%
16.19
%
Occupancy and equipment expenses
11,637
13,302
8,706
(12.52
) %
33.67
%
Data processing and facilities management
2,247
2,372
1,686
(5.27
) %
33.27
%
FDIC assessment
1,743
1,805
775
(3.43
) %
124.90
%
Merger and acquisition expense
—
7,100
1,731
(100.00
) %
(100.00
) %
Other noninterest expenses
25,397
22,210
17,769
14.35
%
42.93
%
Total noninterest expenses
90,562
95,500
73,302
(5.17
) %
23.55
%
Income before income taxes
82,197
70,204
50,019
17.08
%
64.33
%
Provision for income taxes
20,421
17,107
12,447
19.37
%
64.06
%
Net Income
$
61,776
$
53,097
$
37,572
16.35
%
64.42
%
Weighted average common shares (basic)
46,665,101
47,366,753
33,033,578
Common share equivalents
14,096
20,711
21,270
Weighted average common shares (diluted)
46,679,197
47,387,464
33,054,848
Basic earnings per share
$
1.32
$
1.12
$
1.14
17.86
%
15.79
%
Diluted earnings per share
$
1.32
$
1.12
$
1.14
17.86
%
15.79
%
Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP):
Net income
$
61,776
$
53,097
$
37,572
Noninterest expense components
Add - merger and acquisition expenses
—
7,100
1,731
Noncore increases to income before taxes
—
7,100
1,731
Net tax benefit associated with noncore items (1)
—
(1,995
)
(487
)
Noncore increases to net income
—
5,105
1,244
Operating net income (Non-GAAP)
$
61,776
$
58,202
$
38,816
6.14
%
59.15
%
Diluted earnings per share, on an operating basis
$
1.32
$
1.23
$
1.17
7.32
%
12.82
%
(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)
3.27
%
3.09
%
2.99
%
Return on average assets (GAAP) (calculated by dividing net income by average assets)
1.24
%
1.06
%
1.08
%
Return on average assets on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average assets)
1.24
%
1.17
%
1.12
%
Return on average common equity (GAAP) (calculated by dividing net income by average common equity)
8.49
%
7.16
%
8.70
%
Return on average common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average common equity)
8.49
%
7.85
%
8.98
%
Noninterest income as a % of total revenue (calculated by dividing total noninterest income by net interest income plus total noninterest income)
16.15
%
16.05
%
21.10
%
Noninterest income as a % of total revenue on an operating basis (Non-GAAP) (calculated by dividing total noninterest income on an operating basis by net interest income plus total noninterest income)
16.15
%
16.05
%
21.10
%
Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue)
52.42
%
58.34
%
61.95
%
Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue)
52.42
%
54.00
%
60.49
%
Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity)
13.01
%
10.82
%
12.50
%
Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average tangible common equity)
13.01
%
11.86
%
12.91
%
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, dollars in thousands, except per share data)
Six Months Ended
% Change
June 30 2022
June 30 2021
Jun 2022 vs.
Jun 2021
Interest income
Interest on federal funds sold and short-term investments
$
3,703
$
839
341.36
%
Interest and dividends on securities
21,327
13,821
54.31
%
Interest and fees on loans
263,613
181,197
45.48
%
Interest on loans held for sale
99
482
(79.46
) %
Total interest income
288,742
196,339
47.06
%
Interest expense
Interest on deposits
4,218
4,728
(10.79
) %
Interest on borrowings
2,231
2,673
(16.54
) %
Total interest expense
6,449
7,401
(12.86
) %
Net interest income
282,293
188,938
49.41
%
Provision for credit losses
(2,000
)
(7,500
)
(73.33
) %
Net interest income after provision for credit losses
284,293
196,438
44.72
%
Noninterest income
Deposit account fees
11,321
7,406
52.86
%
Interchange and ATM fees
7,636
5,788
31.93
%
Investment management
18,002
17,176
4.81
%
Mortgage banking income
2,404
8,445
(71.53
) %
Increase in cash surrender value of life insurance policies
3,666
2,912
25.89
%
Gain on life insurance benefits
123
258
(52.33
) %
Loan level derivative income
1,040
289
259.86
%
Other noninterest income
9,978
7,939
25.68
%
Total noninterest income
54,170
50,213
7.88
%
Noninterest expenses
Salaries and employee benefits
98,249
82,524
19.06
%
Occupancy and equipment expenses
24,939
17,979
38.71
%
Data processing and facilities management
4,619
3,351
37.84
%
FDIC assessment
3,548
1,825
94.41
%
Merger and acquisition expense
7,100
1,731
310.17
%
Other noninterest expenses
47,607
35,574
33.83
%
Total noninterest expenses
186,062
142,984
30.13
%
Income before income taxes
152,401
103,667
47.01
%
Provision for income taxes
37,528
24,384
53.90
%
Net Income
$
114,873
$
79,283
44.89
%
Weighted average common shares (basic)
47,013,989
33,014,561
Common share equivalents
17,403
25,085
Weighted average common shares (diluted)
47,031,392
33,039,646
Basic earnings per share
$
2.44
$
2.40
1.67
%
Diluted earnings per share
$
2.44
$
2.40
1.67
%
Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP):
Net Income
$
114,873
$
79,283
Noninterest expense components
Add - merger and acquisition expenses
7,100
1,731
Noncore increases to income before taxes
7,100
1,731
Net tax benefit associated with noncore items (1)
(1,995
)
(487
)
Noncore increases to net income
$
5,105
$
1,244
Operating net income (Non-GAAP)
$
119,978
$
80,527
48.99
%
Diluted earnings per share, on an operating basis
$
2.55
$
2.44
4.51
%
(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)
3.18
%
3.12
%
Return on average assets (GAAP) (calculated by dividing net income by average assets)
1.15
%
1.17
%
Return on average assets on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average assets)
1.21
%
1.19
%
Return on average common equity (GAAP) (calculated by dividing net income by average common equity)
7.82
%
9.28
%
Return on average common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average common equity)
8.16
%
9.42
%
Return on average tangible common equity (GAAP) (calculated by dividing net income by average tangible common equity)
11.89
%
13.38
%
Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing Net operating net income by average tangible common equity)
12.42
%
13.59
%
Noninterest income as a % of total revenue (calculated by dividing total noninterest income by net interest income plus total noninterest income)
16.10
%
21.00
%
Noninterest income as a % of total revenue on an operating basis (Non-GAAP) (calculated by dividing total noninterest income on an operating basis by net interest income plus total noninterest income)
16.10
%
21.00
%
Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue)
55.30
%
59.79
%
Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue)
53.19
%
59.06
%
Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity)
11.89
%
13.38
%
Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average tangible common equity)
12.42
%
13.59
%
ASSET QUALITY
(Unaudited, dollars in thousands)
Nonperforming Assets At
June 30 2022
March 31 2022
June 30 2021
Nonperforming loans
Commercial & industrial loans
$
3,518
$
3,517
$
20,831
Commercial real estate loans
40,074
40,470
9,031
Small business loans
31
20
558
Residential real estate loans
8,563
8,457
12,786
Home equity
3,514
3,761
4,517
Other consumer
215
393
95
Total nonperforming loans
55,915
56,618
47,818
Total nonperforming assets
$
55,915
$
56,618
$
47,818
Nonperforming loans/gross loans
0.41
%
0.42
%
0.53
%
Nonperforming assets/total assets
0.28
%
0.28
%
0.34
%
Allowance for credit losses/nonperforming loans
258.10
%
255.25
%
214.06
%
Allowance for credit losses/total loans
1.06
%
1.06
%
1.15
%
Delinquent loans/total loans
0.40
%
0.29
%
0.11
%
Nonperforming Assets Reconciliation for the Three Months Ended
June 30 2022
March 31 2022
June 30 2021
Nonperforming assets beginning balance
$
56,618
$
27,820
$
59,201
New to nonperforming
2,822
33,754
2,233
Loans charged-off
(545
)
(706
)
(481
)
Loans paid-off /sold
(2,239
)
(1,485
)
(10,364
)
Loans restored to performing status
(738
)
(2,702
)
(2,771
)
Other
(3
)
(63
)
—
Nonperforming assets ending balance
$
55,915
$
56,618
$
47,818
Net Charge-Offs (Recoveries)
Three Months Ended
Six Months Ended
June 30 2022
March 31 2022
June 30 2021
June 30 2022
June 30 2021
Net charge-offs (recoveries)
Commercial and industrial loans
$
(29
)
$
(13
)
$
107
$
(42
)
$
3,374
Commercial real estate loans
—
(3
)
—
(3
)
(57
)
Small business loans
(22
)
22
31
—
86
Residential real estate loans
—
—
—
—
(1
)
Home equity
84
(2
)
24
82
11
Other consumer
166
400
30
566
122
Total net charge-offs
$
199
$
404
$
192
$
603
$
3,535
Net charge-offs to average loans (annualized)
0.01
%
0.01
%
0.01
%
0.01
%
0.08
%
Troubled Debt Restructurings At
June 30 2022
March 31 2022
June 30 2021
Troubled debt restructurings on accrual status
$
11,734
$
13,288
$
19,495
Troubled debt restructurings on nonaccrual status
1,677
1,972
20,212
Total troubled debt restructurings
$
13,411
$
15,260
$
39,707
BALANCE SHEET AND CAPITAL RATIOS
June 30 2022
March 31 2022
June 30 2021
Gross loans/total deposits
82.19
%
81.01
%
74.57
%
Common equity tier 1 capital ratio (1)
13.90
%
14.45
%
13.31
%
Tier 1 leverage capital ratio (1)
10.42
%
10.62
%
9.41
%
Common equity to assets ratio GAAP
14.37
%
14.71
%
12.27
%
Tangible common equity to tangible assets ratio (2)
9.79
%
10.18
%
8.89
%
Book value per share GAAP
$
62.32
$
62.59
$
52.72
Tangible book value per share (2)
$
40.31
$
41.15
$
36.78
(1) Estimated number for June 30, 2022.
(2) See Appendix A for detailed reconciliation from GAAP to Non-GAAP ratios.
INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited, dollars in thousands)
Three Months Ended
June 30, 2022
March 31, 2022
June 30, 2021
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
$
1,377,286
$
2,817
0.82
%
$
1,906,164
$
886
0.19
%
$
1,882,285
$
513
0.11
%
Securities
Securities - trading
3,863
—
—
%
3,732
—
—
%
3,359
—
—
%
Securities - taxable investments
2,889,245
11,281
1.57
%
2,726,281
10,043
1.49
%
1,514,336
7,184
1.90
%
Securities - nontaxable investments (1)
197
3
6.11
%
201
1
2.02
%
555
6
4.34
%
Total securities
$
2,893,305
$
11,284
1.56
%
$
2,730,214
$
10,044
1.49
%
$
1,518,250
$
7,190
1.90
%
Loans held for sale
3,842
35
3.65
%
9,475
64
2.74
%
28,279
186
2.64
%
Loans
Commercial and industrial (1)
1,537,883
17,496
4.56
%
1,535,619
17,031
4.50
%
1,944,026
20,351
4.20
%
Commercial real estate (1)
7,827,442
76,771
3.93
%
7,911,349
76,030
3.90
%
4,196,171
41,532
3.97
%
Commercial construction
1,193,353
13,456
4.52
%
1,190,659
12,268
4.18
%
514,935
4,777
3.72
%
Small business
203,947
2,656
5.22
%
194,819
2,416
5.03
%
178,525
2,302
5.17
%
Total commercial
10,762,625
110,379
4.11
%
10,832,446
107,745
4.03
%
6,833,657
68,962
4.05
%
Residential real estate
1,761,986
14,879
3.39
%
1,649,157
13,697
3.37
%
1,226,520
11,058
3.62
%
Home equity
1,046,933
9,178
3.52
%
1,032,308
8,662
3.40
%
1,024,798
8,591
3.36
%
Total consumer real estate
2,808,919
24,057
3.44
%
2,681,465
22,359
3.38
%
2,251,318
19,649
3.50
%
Other consumer
31,554
507
6.44
%
29,814
489
6.65
%
22,471
411
7.34
%
Total loans
$
13,603,098
$
134,943
3.98
%
$
13,543,725
$
130,593
3.91
%
$
9,107,446
$
89,022
3.92
%
Total interest-earning assets
$
17,877,531
$
149,079
3.34
%
$
18,189,578
$
141,587
3.16
%
$
12,536,260
$
96,911
3.10
%
Cash and due from banks
190,501
171,533
142,198
Federal Home Loan Bank stock
6,249
11,407
9,410
Other assets
1,855,351
1,851,196
1,258,056
Total assets
$
19,929,632
$
20,223,714
$
13,945,924
Interest-bearing liabilities
Deposits
Savings and interest checking accounts
$
6,192,761
$
710
0.05
%
$
6,255,843
$
598
0.04
%
$
4,339,645
$
384
0.04
%
Money market
3,486,017
607
0.07
%
3,608,793
559
0.06
%
2,347,852
429
0.07
%
Time deposits
1,356,507
794
0.23
%
1,466,651
950
0.26
%
843,090
1,204
0.57
%
Total interest-bearing deposits
$
11,035,285
$
2,111
0.08
%
$
11,331,287
$
2,107
0.08
%
$
7,530,587
$
2,017
0.11
%
Borrowings
Federal Home Loan Bank borrowings
25,654
123
1.92
%
25,696
133
2.10
%
35,704
191
2.15
%
Long-term borrowings
—
—
—
%
9,063
31
1.39
%
23,417
94
1.61
%
Junior subordinated debentures
62,854
410
2.62
%
62,853
299
1.93
%
62,852
429
2.74
%
Subordinated debentures
49,825
618
4.97
%
49,800
617
5.02
%
49,730
618
4.98
%
Total borrowings
$
138,333
$
1,151
3.34
%
$
147,412
$
1,080
2.97
%
$
171,703
$
1,332
3.11
%
Total interest-bearing liabilities
$
11,173,618
$
3,262
0.12
%
$
11,478,699
$
3,187
0.11
%
$
7,702,290
$
3,349
0.17
%
Noninterest-bearing demand deposits
5,546,041
5,443,465
4,237,135
Other liabilities
290,467
293,597
273,449
Total liabilities
$
17,010,126
$
17,215,761
$
12,212,874
Stockholders' equity
2,919,506
3,007,953
1,733,050
Total liabilities and stockholders' equity
$
19,929,632
$
20,223,714
$
13,945,924
Net interest income
$
145,817
$
138,400
$
93,562
Interest rate spread (2)
3.22
%
3.05
%
2.93
%
Net interest margin (3)
3.27
%
3.09
%
2.99
%
Supplemental Information
Total deposits, including demand deposits
$
16,581,326
$
2,111
$
16,774,752
$
2,107
$
11,767,722
$
2,017
Cost of total deposits
0.05
%
0.05
%
0.07
%
Total funding liabilities, including demand deposits
$
16,719,659
$
3,262
$
16,922,164
$
3,187
$
11,939,425
$
3,349
Cost of total funding liabilities
0.08
%
0.08
%
0.11
%
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $956,000, $968,000, and $209,000 for the three months ended June 30, 2022, March 31, 2022, and June 30, 2021, respectively, determined by applying the Company's marginal tax rates in effect during each respective quarter.
(2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
Six Months Ended
June 30, 2022
June 30, 2021
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
$
1,640,264
$
3,703
0.46
%
$
1,603,407
$
839
0.11
%
Securities
Securities - trading
3,798
—
—
%
3,150
—
—
%
Securities - taxable investments
2,808,213
21,324
1.53
%
1,383,122
13,811
2.01
%
Securities - nontaxable investments (1)
199
4
4.05
%
599
12
4.04
%
Total securities
$
2,812,210
$
21,328
1.53
%
$
1,386,871
$
13,823
2.01
%
Loans held for sale
6,643
99
3.01
%
38,907
482
2.50
%
Loans
Commercial and industrial (1)
1,536,757
34,527
4.53
%
2,029,075
43,397
4.31
%
Commercial real estate (1)
7,869,164
152,800
3.92
%
4,176,202
81,908
3.96
%
Commercial construction
1,192,013
25,724
4.35
%
534,933
10,060
3.79
%
Small business
199,408
5,072
5.13
%
176,434
4,583
5.24
%
Total commercial
10,797,342
218,123
4.07
%
6,916,644
139,948
4.08
%
Residential real estate
1,705,883
28,576
3.38
%
1,248,778
23,494
3.79
%
Home equity
1,039,661
17,840
3.46
%
1,037,446
17,348
3.37
%
Total consumer real estate
2,745,544
46,416
3.41
%
2,286,224
40,842
3.60
%
Other consumer
30,690
996
6.54
%
22,087
843
7.70
%
Total loans
$
13,573,576
$
265,535
3.94
%
$
9,224,955
$
181,633
3.97
%
Total interest-earning assets
$
18,032,693
$
290,665
3.25
%
$
12,254,140
$
196,777
3.24
%
Cash and due from banks
181,069
148,499
Federal Home Loan Bank stock
8,814
9,828
Other assets
1,853,285
1,249,898
Total assets
$
20,075,861
$
13,662,365
Interest-bearing liabilities
Deposits
Savings and interest checking accounts
$
6,224,128
$
1,308
0.04
%
$
4,225,331
$
807
0.04
%
Money market
3,547,066
1,166
0.07
%
2,318,106
950
0.08
%
Time deposits
1,411,275
1,744
0.25
%
874,676
2,971
0.68
%
Total interest-bearing deposits
$
11,182,469
$
4,218
0.08
%
$
7,418,113
$
4,728
0.13
%
Borrowings
Federal Home Loan Bank borrowings
25,675
256
2.01
%
35,746
379
2.14
%
Long-term borrowings
4,506
31
1.39
%
25,818
205
1.60
%
Junior subordinated debentures
62,854
709
2.27
%
62,851
855
2.74
%
Subordinated debentures
49,813
1,235
5.00
%
49,717
1,235
5.01
%
Total borrowings
$
142,848
$
2,231
3.15
%
$
174,132
$
2,674
3.10
%
Total interest-bearing liabilities
$
11,325,317
$
6,449
0.11
%
$
7,592,245
$
7,402
0.20
%
Noninterest-bearing demand deposits
5,495,036
4,067,235
Other liabilities
292,023
279,620
Total liabilities
$
17,112,376
$
11,939,100
Stockholders' equity
2,963,485
1,723,265
Total liabilities and stockholders' equity
$
20,075,861
$
13,662,365
Net interest income
$
284,216
$
189,375
Interest rate spread (2)
3.14
%
3.04
%
Net interest margin (3)
3.18
%
3.12
%
Supplemental Information
Total deposits, including demand deposits
$
16,677,505
$
4,218
$
11,485,348
$
4,728
Cost of total deposits
0.05
%
0.08
%
Total funding liabilities, including demand deposits
$
16,820,353
$
6,449
$
11,659,480
$
7,402
Cost of total funding liabilities
0.08
%
0.13
%
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.9 million and $438,000 for the six months ended June 30, 2022 and 2021, respectively.
(2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
Certain amounts in prior year financial statements have been reclassified to conform to the current year's presentation.
APPENDIX A: NON-GAAP Reconciliation of Balance Sheet Metrics
(Unaudited, dollars in thousands, except per share data)
The following table summarizes the calculation of the Company's tangible common equity to tangible assets ratio and tangible book value per share, at the dates indicated:
June 30 2022
March 31 2022
June 30 2021
Tangible common equity
(Dollars in thousands, except per share data)
Stockholders' equity (GAAP)
$
2,871,185
$
2,965,439
$
1,741,622
(a)
Less: Goodwill and other intangibles
1,013,917
1,015,831
526,576
Tangible common equity
$
1,857,268
$
1,949,608
$
1,215,046
(b)
Tangible assets
Assets (GAAP)
$
19,982,450
$
20,159,178
$
14,194,207
(c)
Less: Goodwill and other intangibles
1,013,917
1,015,831
526,576
Tangible assets
$
18,968,533
$
19,143,347
$
13,667,631
(d)
Common Shares
46,069,761
47,377,125
33,037,859
(e)
Common equity to assets ratio (GAAP)
14.37
%
14.71
%
12.27
%
(a/c)
Tangible common equity to tangible assets ratio (Non-GAAP)
9.79
%
10.18
%
8.89
%
(b/d)
Book value per share (GAAP)
$
62.32
$
62.59
$
52.72
(a/e)
Tangible book value per share (Non-GAAP)
$
40.31
$
41.15
$
36.78
(b/e)
APPENDIX B: Non-GAAP Reconciliation of Earnings Metrics
(Unaudited, dollars in thousands)
The following table summarizes the impact of noncore items on the Company's calculation of noninterest income and noninterest expense, the impact of noncore items on noninterest income as a percentage of total revenue and the efficiency ratio, as well as the average tangible common equity used to calculate return on average tangible common equity and operating return on tangible common equity for the periods indicated:
Three Months Ended
Six Months Ended
June 30 2022
March 31 2022
June 30 2021
June 30 2022
June 30 2021
Net interest income (GAAP)
$
144,861
$
137,432
$
93,354
$
282,293
$
188,938
(a)
Noninterest income (GAAP)
$
27,898
$
26,272
$
24,967
$
54,170
$
50,213
(b)
Noninterest income on an operating basis (Non-GAAP)
$
27,898
$
26,272
$
24,967
$
54,170
$
50,213
(c)
Noninterest expense (GAAP)
$
90,562
$
95,500
$
73,302
$
186,062
$
142,984
(d)
Less:
Merger and acquisition expense
—
7,100
1,731
7,100
1,731
Noninterest expense on an operating basis (Non-GAAP)
$
90,562
$
88,400
$
71,571
$
178,962
$
141,253
(e)
Total revenue (GAAP)
$
172,759
$
163,704
$
118,321
$
336,463
$
239,151
(a+b)
Total operating revenue (Non-GAAP)
$
172,759
$
163,704
$
118,321
$
336,463
$
239,151
(a+c)
Net income (GAAP)
$
61,776
$
53,097
$
37,572
$
114,873
$
79,283
Operating net income (Non-GAAP) (See income statement for reconciliation of GAAP to Non-GAAP)
$
61,776
$
58,202
$
38,816
$
119,978
$
80,527
Average common equity (GAAP)
$
2,919,506
$
3,007,953
$
1,733,050
$
2,963,485
$
1,723,265
Less: Average goodwill and other intangibles
1,014,953
1,017,040
527,337
1,015,991
528,050
Tangible average tangible common equity (Non-GAAP)
$
1,904,553
$
1,990,913
$
1,205,713
$
1,947,494
$
1,195,215
Ratios
Noninterest income as a % of total revenue (GAAP)
16.15
%
16.05
%
21.10
%
16.10
%
21.00
%
(b/(a+b))
Noninterest income as a % of total revenue on an operating basis (Non-GAAP)
16.15
%
16.05
%
21.10
%
16.10
%
21.00
%
(c/(a+c))
Efficiency ratio (GAAP)
52.42
%
58.34
%
61.95
%
55.30
%
59.79
%
(d/(a+b))
Efficiency ratio on an operating basis (Non-GAAP)
52.42
%
54.00
%
60.49
%
53.19
%
59.06
%
(e/(a+c))
Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity)
13.01
%
10.82
%
12.50
%
11.89
%
13.38
%
Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average tangible common equity)
13.01
%
11.86
%
12.91
%
12.42
%
13.59
%
APPENDIX C: Net Interest Margin Analysis & Non-GAAP Reconciliation of Core Margin
Three Months Ended
June 30, 2022
March 31, 2022
Volume
Interest
Margin Impact
Volume
Interest
Margin Impact
(Dollars in thousands)
Reported total interest earning assets
$
17,877,531
$
145,817
3.27
%
$
18,189,578
$
138,403
3.09
%
Core adjustments:
PPP volume @ 1%
(60,969
)
(149
)
(148,384
)
(362
)
PPP fee amortization
(1,762
)
(3,486
)
Total PPP impact
(60,969
)
(1,911
)
(0.03
) %
(148,384
)
(3,848
)
(0.07
) %
Acquisition related:
Loan fair value amortization (accretion)
823
(83
)
CD fair market accretion
(437
)
(684
)
386
0.01
%
(767
)
(0.02
) %
Nonaccrual interest
205
—
%
310
0.01
%
Other noncore adjustments
(1,106
)
(0.02
) %
(773
)
(0.01
) %
Core margin (Non-GAAP)
$
17,816,562
$
143,391
3.23
%
$
18,041,194
$
133,325
3.00
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20220720006050/en/
Chris Oddleifson President and Chief Executive Officer (781) 982-6660
Mark J. Ruggiero Chief Financial Officer and Chief Accounting Officer (781) 982-6281
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