Independent Bank Corp. Reports Third Quarter Net Income of $71.9 Million

Higher revenues drive earnings growth

Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2022 third quarter net income of $71.9 million, or $1.57 per diluted share, compared to 2022 second quarter net income of $61.8 million, or $1.32 per diluted share, driven primarily by strong net interest margin expansion and profitable deployment of liquid assets.

The Company generated a return on average assets and a return on average common equity of 1.43% and 9.90%, respectively, for the third quarter of 2022, as compared to 1.24% and 8.49%, respectively, for the prior quarter.

“The strength of our third quarter performance is attributable to our long-term, sustained focus on building core relationships and disciplined growth combined with astute balance sheet management,” said Christopher Oddleifson, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “Our results reflect the tireless commitment and dedication of our colleagues, who each day live out our shared mission of forging enduring relationships with each other and with the customers and communities that Rockland Trust serves.”

BALANCE SHEET

Total assets of $19.7 billion at September 30, 2022 decreased by $279.2 million, or 1.4% from the prior quarter due primarily to a decline in cash balances, and increased by $5.2 billion, or 35.6%, as compared to the year ago period, inclusive of the 2021 fourth quarter acquisition of Meridian Bancorp, Inc. ("Meridian") and its subsidiary, East Boston Savings Bank, which closed during the fourth quarter of 2021.

Total loans at September 30, 2022 of $13.7 billion increased by $24.6 million, or 0.7% on an annualized basis compared to the prior quarter level. Excluding $19.4 million of net paydowns associated with the Paycheck Protection Program ("PPP"), the loan portfolio increased by $44.0 million, or 1.3% on an annualized basis, compared to the prior quarter. Strong consumer loan activity continued to be the primary driver of organic loan growth, as the majority of residential real estate loan closings were retained on the balance sheet, resulting in 6.2% growth (24.8% annualized) for the quarter in that portfolio, while increased demand and line utilization fueled 2.0% (8.1% annualized) growth in home equity balances for the quarter. Excluding PPP loans, commercial and industrial balances increased 1.8% (7.0% annualized) during the quarter, driven primarily by increased line utilization and strong closing volumes, but were offset by attrition within the commercial real estate and construction categories resulting in a total commercial portfolio decrease of 1.0%.

Deposit balances of $16.3 billion at September 30, 2022 decreased by $300.6 million, or 1.8%, from the prior quarter primarily attributable to continued runoff in higher-cost time and certain rate sensitive deposits. Despite the reduction in total balances, non-interest bearing deposits rose by $60.1 million, or 1.1%, in the third quarter as new core account opening activity remained strong. Core deposits comprised 87.8% of total deposits at September 30, 2022, an increase from 86.8% at June 30, 2022, while the total cost of deposits for the quarter increased 10 basis points to 0.15%.

Total borrowings decreased by $25.0 million, or 18.1% when compared to the prior quarter reflecting primarily the maturity of a short-term Federal Home Loan Bank borrowing.

The securities portfolio increased by $212.2 million, or 7.2%, 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 $325.3 million, offset by an unrealized loss of $55.5 million related to the available for sale portfolio, as well as paydowns, calls, and maturities. Total securities represented 16.0% of total assets at September 30, 2022, as compared to 14.7% at June 30, 2022.

During the third quarter, the Company repurchased an additional 443,000 shares of its common stock for $34.6 million, marking the completion of its previously announced stock repurchase program. In total, the Company repurchased 1.8 million shares of its common stock under the program over the first three quarters of 2022 at an average price of $78.32 per share. Stockholders' equity at September 30, 2022 decreased 1.9% when compared to the prior quarter, primarily attributable to the aforementioned share repurchases executed during the third quarter, along with increased other comprehensive losses of $69.6 million, which were partially offset by strong earnings retention. As a result of this decrease in stockholders' equity, book value per share decreased by $0.59, or 0.9%, to $61.73 during the third quarter as compared to the prior quarter. The Company's ratio of common equity to assets of 14.3% at September 30, 2022 represented a decrease of 7 basis points from the prior quarter and an increase of 18.4% from the year ago period. The Company's tangible book value per share at September 30, 2022 declined by $0.75, or 1.9%, from the prior quarter to $39.56, but represented an increase of 6.2% 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 9.66% at September 30, 2022 represents a decrease of 13 basis points from the prior quarter and an increase of 9.9% from the year ago period. Please refer to Appendix A for a detailed reconciliation of Non-GAAP metrics.

In consideration of the Company’s strong current capital position, the Company is announcing a new stock repurchase plan, which authorizes repurchases by the Company of up to $120 million in common stock and is scheduled to expire on October 19, 2023.

NET INTEREST INCOME

Net interest income for the third quarter increased 12.2% to $162.6 million compared to $144.9 million for the prior quarter, primarily reflecting the positive impact of asset repricing in the rising interest rate environment in conjunction with relatively modest deposit rate increases, partially offset by a reduction in net PPP fee income of $1.3 million. Average earning asset levels were essentially flat in the third quarter compared to the prior quarter. The reported net interest margin increased by 37 basis points from the prior quarter to 3.64%, and increased 36 basis points to 3.59% 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 $28.2 million for the third quarter of 2022 was $297,000, or 1.1% higher as compared to the prior quarter. Significant changes in noninterest income for the third quarter compared to the prior quarter included the following:

  • Deposit account fees and interchange and ATM fees increased by $433,000, or 7.4%, and $304,000, or 7.5%, respectively, both driven primarily by increased transaction volume during the third quarter.
  • Investment management income decreased by $893,000, or 9.6%, primarily driven by a reduction in seasonal tax preparation fees recognized during the second quarter and a decline in overall asset valuations during the third quarter. The decline in market valuations was mitigated by a healthy volume of new asset inflows, resulting in a modest $65.0 million, or 1.3% decrease in assets under administration to $5.1 billion as of September 30, 2022.
  • Mortgage banking income decreased by $457,000, or 43.9%, primarily due to overall reduced activity, with the vast majority of originations being retained in portfolio.
  • Other noninterest income increased by $509,000, or 9.7%, primarily attributable to a gain on the sale of a vacated office space recently acquired during the Meridian acquisition and increased foreign currency exchange fees.

NONINTEREST EXPENSE

Noninterest expense of $92.7 million for the third quarter of 2022 was $2.2 million, or 2.4%, higher as compared to the prior quarter. Significant changes in noninterest expense for the third quarter compared to the prior quarter included the following:

  • Salaries and employee benefits increased by $3.2 million, or 6.4%, primarily due to increases in salaries and incentives.
  • Occupancy and equipment increased by $679,000, or 5.8%, due mainly to increases in office equipment costs and equipment maintenance and repairs.
  • Other noninterest expense decreased by $1.6 million, or 6.4%, due primarily to decreases in unrealized losses on equity securities, director expenses (which were incurred during the second quarter related primarily to grants of equity compensation), and reduced consultant fees.

The Company’s tax rate for the third quarter of 2022 remained relatively flat at 24.37%, compared to 24.84% for the prior quarter.

ASSET QUALITY

Nonperforming loans remained consistent at $56.0 million, or 0.41% of total loans at September 30, 2022, as compared to $55.9 million, or 0.41% of total loans at June 30, 2022, with minimal net charge-offs recorded during the third quarter of 2022. Delinquency as a percentage of total loans decreased 23 basis points from the prior quarter to 0.17% at September 30, 2022, due primarily to the resolution and full payoff of a non-performing commercial loan.

In conjunction with the category shifts on current nonperforming loans and no significant changes to the overall economic outlook, the Company recorded a $3.0 million provision for credit losses during the third quarter of 2022. The allowance for credit losses on total loans was $147.3 million, or 1.08% of total loans, at September 30, 2022, as compared to $144.3 million, or 1.06% of total loans, at June 30, 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 third quarter earnings and other matters at 10:00 a.m. Eastern Time on Friday, October 21, 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: 5395173 and will be available through October 28, 2022. Additionally, a webcast replay will be available on the Company's website until October 21, 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 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, including any future weakening caused by the COVID-19 pandemic and any uncertainty regarding the length and extent of economic contraction as a result of the pandemic;
  • the potential 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;
  • 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 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, including the magnitude and duration of the COVID-19 pandemic, any further resurgences or variants of the COVID-19 virus, the efficacy and availability of vaccines, boosters or other treatments, 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;
  • 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;
  • the Company's potential judgments, claims, damages, penalties, fines and reputational damage resulting from pending or future litigation and regulatory and government actions, including as a result of our participation in and execution of government programs related to the COVID-19 pandemic;
  • 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 including, but not limited to, changes to how the Company accounts for credit losses;
  • 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 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 unique 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. 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

 

September 30

2022

 

June 30

2022

 

September 30

2021

 

Sept 2022 vs.

 

Sept 2022 vs.

 

 

 

 

Jun 2022

 

Sept 2021

Assets

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

172,615

 

 

$

202,802

 

 

$

138,148

 

 

(14.88

) %

 

24.95

%

Interest-earning deposits with banks

 

763,681

 

 

 

1,273,465

 

 

 

1,869,683

 

 

(40.03

) %

 

(59.15

) %

Securities

 

 

 

 

 

 

 

 

 

Trading

 

3,538

 

 

 

3,637

 

 

 

3,504

 

 

(2.72

) %

 

0.97

%

Equities

 

20,439

 

 

 

21,181

 

 

 

22,794

 

 

(3.50

) %

 

(10.33

) %

Available for sale

 

1,425,511

 

 

 

1,501,949

 

 

 

1,427,210

 

 

(5.09

) %

 

(0.12

) %

Held to maturity

 

1,697,635

 

 

 

1,408,189

 

 

 

865,249

 

 

20.55

%

 

96.20

%

Total securities

 

3,147,123

 

 

 

2,934,956

 

 

 

2,318,757

 

 

7.23

%

 

35.72

%

Loans held for sale

 

5,100

 

 

 

2,358

 

 

 

33,553

 

 

116.28

%

 

(84.80

) %

Loans

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

1,548,349

 

 

 

1,541,046

 

 

 

1,640,709

 

 

0.47

%

 

(5.63

) %

Commercial real estate

 

7,677,917

 

 

 

7,791,757

 

 

 

4,221,259

 

 

(1.46

) %

 

81.89

%

Commercial construction

 

1,185,157

 

 

 

1,194,577

 

 

 

515,415

 

 

(0.79

) %

 

129.94

%

Small business

 

209,567

 

 

 

205,953

 

 

 

184,138

 

 

1.75

%

 

13.81

%

Total commercial

 

10,620,990

 

 

 

10,733,333

 

 

 

6,561,521

 

 

(1.05

) %

 

61.87

%

Residential real estate

 

1,959,254

 

 

 

1,844,057

 

 

 

1,222,849

 

 

6.25

%

 

60.22

%

Home equity - first position

 

578,405

 

 

 

587,314

 

 

 

592,564

 

 

(1.52

) %

 

(2.39

) %

Home equity - subordinate positions

 

508,765

 

 

 

478,196

 

 

 

407,904

 

 

6.39

%

 

24.73

%

Total consumer real estate

 

3,046,424

 

 

 

2,909,567

 

 

 

2,223,317

 

 

4.70

%

 

37.02

%

Other consumer

 

32,936

 

 

 

32,864

 

 

 

23,175

 

 

0.22

%

 

42.12

%

Total loans

 

13,700,350

 

 

 

13,675,764

 

 

 

8,808,013

 

 

0.18

%

 

55.54

%

Less: allowance for credit losses

 

(147,313

)

 

 

(144,319

)

 

 

(92,246

)

 

2.07

%

 

59.70

%

Net loans

 

13,553,037

 

 

 

13,531,445

 

 

 

8,715,767

 

 

0.16

%

 

55.50

%

Federal Home Loan Bank stock

 

5,218

 

 

 

6,249

 

 

 

8,666

 

 

(16.50

) %

 

(39.79

) %

Bank premises and equipment, net

 

198,408

 

 

 

202,221

 

 

 

123,528

 

 

(1.89

) %

 

60.62

%

Goodwill

 

985,072

 

 

 

985,072

 

 

 

506,206

 

 

%

 

94.60

%

Other intangible assets

 

26,934

 

 

 

28,845

 

 

 

19,055

 

 

(6.63

) %

 

41.35

%

Cash surrender value of life insurance policies

 

293,126

 

 

 

292,807

 

 

 

244,573

 

 

0.11

%

 

19.85

%

Other assets

 

552,955

 

 

 

522,230

 

 

 

555,375

 

 

5.88

%

 

(0.44

) %

Total assets

$

19,703,269

 

 

$

19,982,450

 

 

$

14,533,311

 

 

(1.40

) %

 

35.57

%

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

$

5,622,260

 

 

$

5,562,174

 

 

$

4,590,492

 

 

1.08

%

 

22.48

%

Savings and interest checking accounts

 

6,094,493

 

 

 

6,347,601

 

 

 

4,484,208

 

 

(3.99

) %

 

35.91

%

Money market

 

3,443,622

 

 

 

3,419,170

 

 

 

2,399,878

 

 

0.72

%

 

43.49

%

Time certificates of deposit

 

1,178,619

 

 

 

1,310,603

 

 

 

785,562

 

 

(10.07

) %

 

50.04

%

Total deposits

 

16,338,994

 

 

 

16,639,548

 

 

 

12,260,140

 

 

(1.81

) %

 

33.27

%

Borrowings

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

643

 

 

 

25,652

 

 

 

25,675

 

 

(97.49

) %

 

(97.50

) %

Long-term borrowings, net

 

 

 

 

 

 

 

18,750

 

 

nm

 

(100.00

) %

Junior subordinated debentures, net

 

62,855

 

 

 

62,854

 

 

 

62,853

 

 

%

 

%

Subordinated debentures, net

 

49,862

 

 

 

49,838

 

 

 

49,767

 

 

0.05

%

 

0.19

%

Total borrowings

 

113,360

 

 

 

138,344

 

 

 

157,045

 

 

(18.06

) %

 

(27.82

) %

Total deposits and borrowings

 

16,452,354

 

 

 

16,777,892

 

 

 

12,417,185

 

 

(1.94

) %

 

32.50

%

Other liabilities

 

433,714

 

 

 

333,373

 

 

 

360,172

 

 

30.10

%

 

20.42

%

Total liabilities

 

16,886,068

 

 

 

17,111,265

 

 

 

12,777,357

 

 

(1.32

) %

 

32.16

%

Stockholders' equity

 

 

 

 

 

 

 

 

 

Common stock

 

454

 

 

 

459

 

 

 

329

 

 

(1.09

) %

 

37.99

%

Additional paid in capital

 

2,113,313

 

 

 

2,146,333

 

 

 

949,316

 

 

(1.54

) %

 

122.61

%

Retained earnings

 

882,503

 

 

 

833,857

 

 

 

787,742

 

 

5.83

%

 

12.03

%

Accumulated other comprehensive income (loss), net of tax

 

(179,069

)

 

 

(109,464

)

 

 

18,567

 

 

63.59

%

 

(1,064.45

) %

Total stockholders' equity

 

2,817,201

 

 

 

2,871,185

 

 

 

1,755,954

 

 

(1.88

) %

 

60.44

%

Total liabilities and stockholders' equity

$

19,703,269

 

 

$

19,982,450

 

 

$

14,533,311

 

 

(1.40

) %

 

35.57

%

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

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

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

% Change

 

% Change

 

September 30

2022

 

June 30

2022

 

September 30

2021

 

Sept 2022 vs.

 

Sept 2022 vs.

 

 

 

 

Jun 2022

 

Sept 2021

Interest income

 

 

 

 

 

 

 

 

 

Interest on federal funds sold and short-term investments

$

6,519

 

 

$

2,817

 

 

$

815

 

 

131.42

%

 

699.88

%

Interest and dividends on securities

 

13,244

 

 

 

11,283

 

 

 

7,796

 

 

17.38

%

 

69.88

%

Interest and fees on loans

 

150,157

 

 

 

133,988

 

 

 

84,212

 

 

12.07

%

 

78.31

%

Interest on loans held for sale

 

51

 

 

 

35

 

 

 

193

 

 

45.71

%

 

(73.58

) %

Total interest income

 

169,971

 

 

 

148,123

 

 

 

93,016

 

 

14.75

%

 

82.73

%

Interest expense

 

 

 

 

 

 

 

 

 

Interest on deposits

 

6,109

 

 

 

2,111

 

 

 

1,633

 

 

189.39

%

 

274.10

%

Interest on borrowings

 

1,261

 

 

 

1,151

 

 

 

1,292

 

 

9.56

%

 

(2.40

) %

Total interest expense

 

7,370

 

 

 

3,262

 

 

 

2,925

 

 

125.94

%

 

151.97

%

Net interest income

 

162,601

 

 

 

144,861

 

 

 

90,091

 

 

12.25

%

 

80.49

%

(Release of) provision for credit losses

 

3,000

 

 

 

 

 

 

(10,000

)

 

100.00

%

 

(130.00

) %

Net interest income after provision for credit losses

 

159,601

 

 

 

144,861

 

 

 

100,091

 

 

10.18

%

 

59.46

%

Noninterest income

 

 

 

 

 

 

 

 

 

Deposit account fees

 

6,261

 

 

 

5,828

 

 

 

4,298

 

 

7.43

%

 

45.67

%

Interchange and ATM fees

 

4,331

 

 

 

4,027

 

 

 

3,441

 

 

7.55

%

 

25.86

%

Investment management

 

8,436

 

 

 

9,329

 

 

 

9,174

 

 

(9.57

) %

 

(8.04

) %

Mortgage banking income

 

585

 

 

 

1,042

 

 

 

2,825

 

 

(43.86

) %

 

(79.29

) %

Increase in cash surrender value of life insurance policies

 

1,883

 

 

 

1,871

 

 

 

1,596

 

 

0.64

%

 

17.98

%

Gain on life insurance benefits

 

477

 

 

 

123

 

 

 

 

 

287.80

%

 

100.00

%

Loan level derivative income

 

471

 

 

 

436

 

 

 

586

 

 

8.03

%

 

(19.62

) %

Other noninterest income

 

5,751

 

 

 

5,242

 

 

 

4,537

 

 

9.71

%

 

26.76

%

Total noninterest income

 

28,195

 

 

 

27,898

 

 

 

26,457

 

 

1.06

%

 

6.57

%

Noninterest expenses

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

52,708

 

 

 

49,538

 

 

 

42,235

 

 

6.40

%

 

24.80

%

Occupancy and equipment expenses

 

12,316

 

 

 

11,637

 

 

 

8,564

 

 

5.83

%

 

43.81

%

Data processing and facilities management

 

2,259

 

 

 

2,247

 

 

 

1,673

 

 

0.53

%

 

35.03

%

FDIC assessment

 

1,677

 

 

 

1,743

 

 

 

980

 

 

(3.79

) %

 

71.12

%

Merger and acquisition expense

 

 

 

 

 

 

 

1,943

 

 

nm

 

(100.00

) %

Other noninterest expenses

 

23,768

 

 

 

25,397

 

 

 

17,024

 

 

(6.41

) %

 

39.61

%

Total noninterest expenses

 

92,728

 

 

 

90,562

 

 

 

72,419

 

 

2.39

%

 

28.04

%

Income before income taxes

 

95,068

 

 

 

82,197

 

 

 

54,129

 

 

15.66

%

 

75.63

%

Provision for income taxes

 

23,171

 

 

 

20,421

 

 

 

14,122

 

 

13.47

%

 

64.08

%

Net Income

$

71,897

 

 

$

61,776

 

 

$

40,007

 

 

16.38

%

 

79.71

%

 

 

 

 

 

 

 

 

 

 

Weighted average common shares (basic)

 

45,839,555

 

 

 

46,665,101

 

 

 

33,043,716

 

 

 

 

 

Common share equivalents

 

16,856

 

 

 

14,096

 

 

 

15,554

 

 

 

 

 

Weighted average common shares (diluted)

 

45,856,411

 

 

 

46,679,197

 

 

 

33,059,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

1.57

 

 

$

1.32

 

 

$

1.21

 

 

18.94

%

 

29.75

%

Diluted earnings per share

$

1.57

 

 

$

1.32

 

 

$

1.21

 

 

18.94

%

 

29.75

%

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Net income

$

71,897

 

 

$

61,776

 

 

$

40,007

 

 

 

 

 

Noninterest expense components

 

 

 

 

 

 

 

 

 

Add - merger and acquisition expenses

 

 

 

 

 

 

 

1,943

 

 

 

 

 

Noncore increases to income before taxes

 

 

 

 

 

 

 

1,943

 

 

 

 

 

Net tax benefit associated with noncore items (1)

 

 

 

 

 

 

 

(546

)

 

 

 

 

Noncore increases to net income

 

 

 

 

 

 

 

1,397

 

 

 

 

 

Operating net income (Non-GAAP)

$

71,897

 

 

$

61,776

 

 

$

41,404

 

 

16.38

%

 

73.65

%

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share, on an operating basis

$

1.57

 

 

$

1.32

 

 

$

1.25

 

 

18.94

%

 

25.60

%

 

 

 

 

 

 

 

 

 

 

(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)

 

3.64

%

 

 

3.27

%

 

 

2.78

%

 

 

 

 

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

 

1.43

%

 

 

1.24

%

 

 

1.11

%

 

 

 

 

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

 

1.43

%

 

 

1.24

%

 

 

1.15

%

 

 

 

 

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

 

9.90

%

 

 

8.49

%

 

 

9.04

%

 

 

 

 

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

 

9.90

%

 

 

8.49

%

 

 

9.35

%

 

 

 

 

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

 

14.78

%

 

 

16.15

%

 

 

22.70

%

 

 

 

 

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)

 

14.78

%

 

 

16.15

%

 

 

22.70

%

 

 

 

 

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

 

48.60

%

 

 

52.42

%

 

 

62.14

%

 

 

 

 

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

 

48.60

%

 

 

52.42

%

 

 

60.47

%

 

 

 

 

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

 

15.26

%

 

 

13.01

%

 

 

12.90

%

 

 

 

 

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

 

15.26

%

 

 

13.01

%

 

 

13.35

%

 

 

 

 

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

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

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

 

 

 

 

% Change

 

 

September 30

2022

 

September 30

2021

 

Sept 2022 vs.

 

 

 

 

Sept 2021

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

Interest on federal funds sold and short-term investments

 

$

10,222

 

 

$

1,654

 

 

518.02

%

Interest and dividends on securities

 

 

34,571

 

 

 

21,617

 

 

59.93

%

Interest and fees on loans

 

 

413,770

 

 

 

265,409

 

 

55.90

%

Interest on loans held for sale

 

 

150

 

 

 

675

 

 

(77.78

) %

Total interest income

 

 

458,713

 

 

 

289,355

 

 

58.53

%

Interest expense

 

 

 

 

 

 

Interest on deposits

 

 

10,327

 

 

 

6,361

 

 

62.35

%

Interest on borrowings

 

 

3,492

 

 

 

3,965

 

 

(11.93

) %

Total interest expense

 

 

13,819

 

 

 

10,326

 

 

33.83

%

Net interest income

 

 

444,894

 

 

 

279,029

 

 

59.44

%

(Release of) provision for credit losses

 

 

1,000

 

 

 

(17,500

)

 

(105.71

) %

Net interest income after provision for credit losses

 

 

443,894

 

 

 

296,529

 

 

49.70

%

Noninterest income

 

 

 

 

 

 

Deposit account fees

 

 

17,582

 

 

 

11,704

 

 

50.22

%

Interchange and ATM fees

 

 

11,967

 

 

 

9,229

 

 

29.67

%

Investment management

 

 

26,438

 

 

 

26,350

 

 

0.33

%

Mortgage banking income

 

 

2,989

 

 

 

11,270

 

 

(73.48

) %

Increase in cash surrender value of life insurance policies

 

 

5,549

 

 

 

4,508

 

 

23.09

%

Gain on life insurance benefits

 

 

600

 

 

 

258

 

 

132.56

%

Loan level derivative income

 

 

1,511

 

 

 

875

 

 

72.69

%

Other noninterest income

 

 

15,729

 

 

 

12,476

 

 

26.07

%

Total noninterest income

 

 

82,365

 

 

 

76,670

 

 

7.43

%

Noninterest expenses

 

 

 

 

 

 

Salaries and employee benefits

 

 

150,957

 

 

 

124,759

 

 

21.00

%

Occupancy and equipment expenses

 

 

37,255

 

 

 

26,543

 

 

40.36

%

Data processing and facilities management

 

 

6,878

 

 

 

5,024

 

 

36.90

%

FDIC assessment

 

 

5,225

 

 

 

2,805

 

 

86.27

%

Merger and acquisition expense

 

 

7,100

 

 

 

3,674

 

 

93.25

%

Other noninterest expenses

 

 

71,375

 

 

 

52,598

 

 

35.70

%

Total noninterest expenses

 

 

278,790

 

 

 

215,403

 

 

29.43

%

Income before income taxes

 

 

247,469

 

 

 

157,796

 

 

56.83

%

Provision for income taxes

 

 

60,699

 

 

 

38,506

 

 

57.64

%

Net Income

 

$

186,770

 

 

$

119,290

 

 

56.57

%

 

 

 

 

 

 

 

Weighted average common shares (basic)

 

 

46,618,209

 

 

 

33,024,386

 

 

 

Common share equivalents

 

 

17,221

 

 

 

18,238

 

 

 

Weighted average common shares (diluted)

 

 

46,635,430

 

 

 

33,042,624

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

4.01

 

 

$

3.61

 

 

11.08

%

Diluted earnings per share

 

$

4.00

 

 

$

3.61

 

 

10.80

%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Net Income

 

$

186,770

 

 

$

119,290

 

 

 

Noninterest expense components

 

 

 

 

 

 

Add - merger and acquisition expenses

 

 

7,100

 

 

 

3,674

 

 

 

Noncore increases to income before taxes

 

 

7,100

 

 

 

3,674

 

 

 

Net tax benefit associated with noncore items (1)

 

 

(1,995

)

 

 

(1,033

)

 

 

Noncore increases to net income

 

$

5,105

 

 

$

2,641

 

 

 

Operating net income (Non-GAAP)

 

$

191,875

 

 

$

121,931

 

 

57.36

%

 

 

 

 

 

 

 

Diluted earnings per share, on an operating basis

 

$

4.11

 

 

$

3.69

 

 

11.38

%

 

 

 

 

 

 

 

(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)

 

 

3.33

%

 

 

3.00

%

 

 

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

 

 

1.25

%

 

 

1.15

%

 

 

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

 

 

1.28

%

 

 

1.17

%

 

 

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

 

 

8.51

%

 

 

9.20

%

 

 

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

 

 

8.74

%

 

 

9.40

%

 

 

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

 

 

13.00

%

 

 

13.21

%

 

 

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

 

 

13.35

%

 

 

13.51

%

 

 

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

 

 

15.62

%

 

 

21.55

%

 

 

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)

 

 

15.62

%

 

 

21.55

%

 

 

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

 

 

52.88

%

 

 

60.56

%

 

 

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

 

 

51.53

%

 

 

59.52

%

 

 

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

 

 

13.00

%

 

 

13.21

%

 

 

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

 

 

13.35

%

 

 

13.51

%

 

 

ASSET QUALITY

 

 

(Unaudited, dollars in thousands)

 

Nonperforming Assets At

 

 

September 30

2022

 

June 30

2022

 

September 30

2021

Nonperforming loans

 

 

 

 

 

 

Commercial & industrial loans

 

$

27,393

 

 

$

3,518

 

 

$

19,275

 

Commercial real estate loans

 

 

15,982

 

 

 

40,074

 

 

 

11,788

 

Small business loans

 

 

50

 

 

 

31

 

 

 

46

 

Residential real estate loans

 

 

8,891

 

 

 

8,563

 

 

 

10,872

 

Home equity

 

 

3,485

 

 

 

3,514

 

 

 

3,746

 

Other consumer

 

 

216

 

 

 

215

 

 

 

83

 

Total nonperforming loans

 

 

56,017

 

 

 

55,915

 

 

 

45,810

 

Total nonperforming assets

 

$

56,017

 

 

$

55,915

 

 

$

45,810

 

 

 

 

 

 

 

 

Nonperforming loans/gross loans

 

 

0.41

%

 

 

0.41

%

 

 

0.52

%

Nonperforming assets/total assets

 

 

0.28

%

 

 

0.28

%

 

 

0.32

%

Allowance for credit losses/nonperforming loans

 

 

262.98

%

 

 

258.10

%

 

 

201.37

%

Allowance for credit losses/total loans

 

 

1.08

%

 

 

1.06

%

 

 

1.05

%

Delinquent loans/total loans

 

 

0.17

%

 

 

0.40

%

 

 

0.21

%

 

 

 

 

 

 

 

 

 

Nonperforming Assets Reconciliation for the Three Months Ended

 

 

September 30

2022

 

June 30

2022

 

September 30

2021

 

 

 

 

 

 

 

Nonperforming assets beginning balance

 

$

55,915

 

 

$

56,618

 

 

$

47,818

 

New to nonperforming

 

 

30,650

 

 

 

2,822

 

 

 

4,613

 

Loans charged-off

 

 

(741

)

 

 

(545

)

 

 

(332

)

Loans paid-off /sold

 

 

(29,450

)

 

 

(2,239

)

 

 

(3,488

)

Loans restored to performing status

 

 

(366

)

 

 

(738

)

 

 

(2,813

)

Other

 

 

9

 

 

 

(3

)

 

 

12

 

Nonperforming assets ending balance

 

$

56,017

 

 

$

55,915

 

 

$

45,810

 

 

 

Net Charge-Offs (Recoveries)

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30

2022

 

June 30

2022

 

September 30

2021

 

September 30

2022

 

September 30

2021

Net charge-offs (recoveries)

 

 

 

 

 

 

 

 

 

 

Commercial and industrial loans

 

$

(2

)

 

$

(29

)

 

$

 

 

$

(44

)

 

$

3,374

 

Commercial real estate loans

 

 

(268

)

 

 

 

 

 

 

 

 

(271

)

 

 

(57

)

Small business loans

 

 

(88

)

 

 

(22

)

 

 

33

 

 

 

(88

)

 

 

119

 

Residential real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

Home equity

 

 

(65

)

 

 

84

 

 

 

(49

)

 

 

17

 

 

 

(38

)

Other consumer

 

 

429

 

 

 

166

 

 

 

127

 

 

 

995

 

 

 

249

 

Total net charge-offs

 

$

6

 

 

$

199

 

 

$

111

 

 

$

609

 

 

$

3,646

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs to average loans (annualized)

 

nm

 

 

0.01

%

 

 

0.00

%

 

 

0.01

%

 

 

0.05

%

 

 

Troubled Debt Restructurings At

 

 

September 30

2022

 

June 30

2022

 

September 30

2021

Troubled debt restructurings on accrual status

 

$

11,549

 

 

$

11,734

 

 

$

15,950

 

Troubled debt restructurings on nonaccrual status

 

 

1,538

 

 

 

1,677

 

 

 

21,104

 

Total troubled debt restructurings

 

$

13,087

 

 

$

13,411

 

 

$

37,054

 

 

 

 

 

 

 

 

BALANCE SHEET AND CAPITAL RATIOS

 

 

 

 

 

 

 

 

September 30

2022

 

June 30

2022

 

September 30

2021

Gross loans/total deposits

 

 

83.85

%

 

 

82.19

%

 

 

71.84

%

Common equity tier 1 capital ratio (1)

 

 

13.98

%

 

 

13.90

%

 

 

13.53

%

Tier 1 leverage capital ratio (1)

 

 

10.51

%

 

 

10.42

%

 

 

9.36

%

Common equity to assets ratio GAAP

 

 

14.30

%

 

 

14.37

%

 

 

12.08

%

Tangible common equity to tangible assets ratio (2)

 

 

9.66

%

 

 

9.79

%

 

 

8.79

%

Book value per share GAAP

 

$

61.73

 

 

$

62.32

 

 

$

53.14

 

Tangible book value per share (2)

 

$

39.56

 

 

$

40.31

 

 

$

37.24

 

(1) Estimated number for September 30, 2022.

(2) See Appendix A for detailed reconciliation from GAAP to Non-GAAP ratios.

 

nm = not meaningful

INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited, dollars in thousands)

 

Three Months Ended

 

 

September 30, 2022

 

June 30, 2022

 

September 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

 

$

1,156,143

 

$

6,519

 

2.24

%

 

$

1,377,286

 

$

2,817

 

0.82

%

 

$

2,135,031

 

$

815

 

0.15

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities - trading

 

 

3,730

 

 

 

%

 

 

3,863

 

 

 

%

 

 

3,498

 

 

 

%

Securities - taxable investments

 

 

3,024,802

 

 

13,243

 

1.74

%

 

 

2,889,245

 

 

11,281

 

1.57

%

 

 

1,880,863

 

 

7,792

 

1.64

%

Securities - nontaxable investments (1)

 

 

196

 

 

1

 

2.02

%

 

 

197

 

 

3

 

6.11

%

 

 

468

 

 

5

 

4.24

%

Total securities

 

$

3,028,728

 

$

13,244

 

1.73

%

 

$

2,893,305

 

$

11,284

 

1.56

%

 

$

1,884,829

 

$

7,797

 

1.64

%

Loans held for sale

 

 

4,263

 

 

51

 

4.75

%

 

 

3,842

 

 

35

 

3.65

%

 

 

30,143

 

 

193

 

2.54

%

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (1)

 

 

1,520,924

 

 

19,289

 

5.03

%

 

 

1,537,883

 

 

17,496

 

4.56

%

 

 

1,640,422

 

 

15,309

 

3.70

%

Commercial real estate (1)

 

 

7,760,470

 

 

85,284

 

4.36

%

 

 

7,827,442

 

 

76,771

 

3.93

%

 

 

4,232,575

 

 

41,469

 

3.89

%

Commercial construction

 

 

1,157,876

 

 

14,875

 

5.10

%

 

 

1,193,353

 

 

13,456

 

4.52

%

 

 

507,393

 

 

4,916

 

3.84

%

Small business

 

 

207,546

 

 

2,819

 

5.39

%

 

 

203,947

 

 

2,656

 

5.22

%

 

 

181,953

 

 

2,341

 

5.10

%

Total commercial

 

 

10,646,816

 

 

122,267

 

4.56

%

 

 

10,762,625

 

 

110,379

 

4.11

%

 

 

6,562,343

 

 

64,035

 

3.87

%

Residential real estate

 

 

1,909,066

 

 

16,533

 

3.44

%

 

 

1,761,986

 

 

14,879

 

3.39

%

 

 

1,231,606

 

 

10,955

 

3.53

%

Home equity

 

 

1,076,040

 

 

11,869

 

4.38

%

 

 

1,046,933

 

 

9,178

 

3.52

%

 

 

1,007,371

 

 

9,043

 

3.56

%

Total consumer real estate

 

 

2,985,106

 

 

28,402

 

3.77

%

 

 

2,808,919

 

 

24,057

 

3.44

%

 

 

2,238,977

 

 

19,998

 

3.54

%

Other consumer

 

 

31,883

 

 

523

 

6.51

%

 

 

31,554

 

 

507

 

6.44

%

 

 

25,929

 

 

398

 

6.09

%

Total loans

 

$

13,663,805

 

$

151,192

 

4.39

%

 

$

13,603,098

 

$

134,943

 

3.98

%

 

$

8,827,249

 

$

84,431

 

3.79

%

Total interest-earning assets

 

$

17,852,939

 

$

171,006

 

3.80

%

 

$

17,877,531

 

$

149,079

 

3.34

%

 

$

12,877,252

 

$

93,236

 

2.87

%

Cash and due from banks

 

 

192,003

 

 

 

 

 

 

190,501

 

 

 

 

 

 

144,556

 

 

 

 

Federal Home Loan Bank stock

 

 

5,745

 

 

 

 

 

 

6,249

 

 

 

 

 

 

8,904

 

 

 

 

Other assets

 

 

1,854,870

 

 

 

 

 

 

1,855,351

 

 

 

 

 

 

1,268,199

 

 

 

 

Total assets

 

$

19,905,557

 

 

 

 

 

$

19,929,632

 

 

 

 

 

$

14,298,911

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings and interest checking accounts

 

$

6,224,690

 

$

2,110

 

0.13

%

 

$

6,192,761

 

$

710

 

0.05

%

 

$

4,426,106

 

$

338

 

0.03

%

Money market

 

 

3,459,212

 

 

3,025

 

0.35

%

 

 

3,486,017

 

 

607

 

0.07

%

 

 

2,375,492

 

 

443

 

0.07

%

Time deposits

 

 

1,246,841

 

 

974

 

0.31

%

 

 

1,356,507

 

 

794

 

0.23

%

 

 

795,943

 

 

852

 

0.42

%

Total interest-bearing deposits

 

$

10,930,743

 

$

6,109

 

0.22

%

 

$

11,035,285

 

$

2,111

 

0.08

%

 

$

7,597,541

 

$

1,633

 

0.09

%

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

 

12,876

 

 

55

 

1.69

%

 

 

25,654

 

 

123

 

1.92

%

 

 

31,118

 

 

165

 

2.10

%

Long-term borrowings

 

 

 

 

 

%

 

 

 

 

 

%

 

 

18,742

 

 

77

 

1.63

%

Junior subordinated debentures

 

 

62,854

 

 

589

 

3.72

%

 

 

62,854

 

 

410

 

2.62

%

 

 

62,852

 

 

432

 

2.73

%

Subordinated debentures

 

 

49,847

 

 

617

 

4.91

%

 

 

49,825

 

 

618

 

4.97

%

 

 

49,753

 

 

617

 

4.92

%

Total borrowings

 

$

125,577

 

$

1,261

 

3.98

%

 

$

138,333

 

$

1,151

 

3.34

%

 

$

162,465

 

$

1,291

 

3.15

%

Total interest-bearing liabilities

 

$

11,056,320

 

$

7,370

 

0.26

%

 

$

11,173,618

 

$

3,262

 

0.12

%

 

$

7,760,006

 

$

2,924

 

0.15

%

Noninterest-bearing demand deposits

 

 

5,641,742

 

 

 

 

 

 

5,546,041

 

 

 

 

 

 

4,502,045

 

 

 

 

Other liabilities

 

 

325,507

 

 

 

 

 

 

290,467

 

 

 

 

 

 

280,754

 

 

 

 

Total liabilities

 

$

17,023,569

 

 

 

 

 

$

17,010,126

 

 

 

 

 

$

12,542,805

 

 

 

 

Stockholders' equity

 

 

2,881,988

 

 

 

 

 

 

2,919,506

 

 

 

 

 

 

1,756,106

 

 

 

 

Total liabilities and stockholders' equity

 

$

19,905,557

 

 

 

 

 

$

19,929,632

 

 

 

 

 

$

14,298,911

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

163,636

 

 

 

 

 

$

145,817

 

 

 

 

 

$

90,312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

 

 

 

 

3.54

%

 

 

 

 

 

3.22

%

 

 

 

 

 

2.72

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

3.64

%

 

 

 

 

 

3.27

%

 

 

 

 

 

2.78

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits, including demand deposits

 

$

16,572,485

 

$

6,109

 

 

 

$

16,581,326

 

$

2,111

 

 

 

$

12,099,586

 

$

1,633

 

 

Cost of total deposits

 

 

 

 

 

0.15

%

 

 

 

 

 

0.05

%

 

 

 

 

 

0.05

%

Total funding liabilities, including demand deposits

 

$

16,698,062

 

$

7,370

 

 

 

$

16,719,659

 

$

3,262

 

 

 

$

12,262,051

 

$

2,924

 

 

Cost of total funding liabilities

 

 

 

 

 

0.18

%

 

 

 

 

 

0.08

%

 

 

 

 

 

0.09

%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.0 million, $956,000, and $220,000 for the three months ended September 30, 2022, June 30, 2022, and September 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.

 

 

Nine Months Ended

 

 

September 30, 2022

 

September 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

 

$

1,477,117

 

$

10,222

 

0.93

%

 

$

1,782,463

 

$

1,654

 

0.12

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

Securities - trading

 

 

3,775

 

 

 

%

 

 

3,267

 

 

 

%

Securities - taxable investments

 

 

2,881,203

 

 

34,567

 

1.60

%

 

 

1,550,859

 

 

21,603

 

1.86

%

Securities - nontaxable investments (1)

 

 

198

 

 

5

 

3.38

%

 

 

555

 

 

17

 

4.10

%

Total securities

 

$

2,885,176

 

$

34,572

 

1.60

%

 

$

1,554,681

 

$

21,620

 

1.86

%

Loans held for sale

 

 

5,841

 

 

150

 

3.43

%

 

 

35,953

 

 

675

 

2.51

%

Loans

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (1)

 

 

1,531,421

 

 

53,816

 

4.70

%

 

 

1,898,100

 

 

58,706

 

4.14

%

Commercial real estate (1)

 

 

7,832,534

 

 

238,085

 

4.06

%

 

 

4,195,200

 

 

123,377

 

3.93

%

Commercial construction

 

 

1,180,509

 

 

40,599

 

4.60

%

 

 

525,652

 

 

14,976

 

3.81

%

Small business

 

 

202,151

 

 

7,891

 

5.22

%

 

 

178,294

 

 

6,924

 

5.19

%

Total commercial

 

 

10,746,615

 

 

340,391

 

4.23

%

 

 

6,797,246

 

 

203,983

 

4.01

%

Residential real estate

 

 

1,774,355

 

 

45,109

 

3.40

%

 

 

1,242,991

 

 

34,449

 

3.71

%

Home equity

 

 

1,051,921

 

 

29,709

 

3.78

%

 

 

1,027,311

 

 

26,391

 

3.43

%

Total consumer real estate

 

 

2,826,276

 

 

74,818

 

3.54

%

 

 

2,270,302

 

 

60,840

 

3.58

%

Other consumer

 

 

31,092

 

 

1,519

 

6.53

%

 

 

23,382

 

 

1,241

 

7.10

%

Total loans

 

$

13,603,983

 

$

416,728

 

4.10

%

 

$

9,090,930

 

$

266,064

 

3.91

%

Total interest-earning assets

 

$

17,972,117

 

$

461,672

 

3.43

%

 

$

12,464,027

 

$

290,013

 

3.11

%

Cash and due from banks

 

 

184,754

 

 

 

 

 

 

147,269

 

 

 

 

Federal Home Loan Bank stock

 

 

7,780

 

 

 

 

 

 

9,516

 

 

 

 

Other assets

 

 

1,853,818

 

 

 

 

 

 

1,256,066

 

 

 

 

Total assets

 

$

20,018,469

 

 

 

 

 

$

13,876,878

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

Savings and interest checking accounts

 

$

6,224,317

 

$

3,418

 

0.07

%

 

$

4,292,992

 

$

1,145

 

0.04

%

Money market

 

 

3,517,459

 

 

4,191

 

0.16

%

 

 

2,337,445

 

 

1,393

 

0.08

%

Time deposits

 

 

1,355,861

 

 

2,718

 

0.27

%

 

 

848,143

 

 

3,823

 

0.60

%

Total interest-bearing deposits

 

$

11,097,637

 

$

10,327

 

0.12

%

 

$

7,478,580

 

$

6,361

 

0.11

%

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

 

21,361

 

 

311

 

1.95

%

 

 

34,185

 

 

544

 

2.13

%

Long-term borrowings

 

 

2,988

 

 

31

 

1.39

%

 

 

23,434

 

 

282

 

1.61

%

Junior subordinated debentures

 

 

62,854

 

 

1,298

 

2.76

%

 

 

62,852

 

 

1,287

 

2.74

%

Subordinated debentures

 

 

49,824

 

 

1,852

 

4.97

%

 

 

49,729

 

 

1,852

 

4.98

%

Total borrowings

 

$

137,027

 

$

3,492

 

3.41

%

 

$

170,200

 

$

3,965

 

3.11

%

Total interest-bearing liabilities

 

$

11,234,664

 

$

13,819

 

0.16

%

 

$

7,648,780

 

$

10,326

 

0.18

%

Noninterest-bearing demand deposits

 

 

5,544,476

 

 

 

 

 

 

4,213,764

 

 

 

 

Other liabilities

 

 

303,308

 

 

 

 

 

 

280,002

 

 

 

 

Total liabilities

 

$

17,082,448

 

 

 

 

 

$

12,142,546

 

 

 

 

Stockholders' equity

 

 

2,936,021

 

 

 

 

 

 

1,734,332

 

 

 

 

Total liabilities and stockholders' equity

 

$

20,018,469

 

 

 

 

 

$

13,876,878

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

447,853

 

 

 

 

 

$

279,687

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

 

 

 

 

3.27

%

 

 

 

 

 

2.93

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

3.33

%

 

 

 

 

 

3.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits, including demand deposits

 

$

16,642,113

 

$

10,327

 

 

 

$

11,692,344

 

$

6,361

 

 

Cost of total deposits

 

 

 

 

 

0.08

%

 

 

 

 

 

0.07

%

Total funding liabilities, including demand deposits

 

$

16,779,140

 

$

13,819

 

 

 

$

11,862,544

 

$

10,326

 

 

Cost of total funding liabilities

 

 

 

 

 

0.11

%

 

 

 

 

 

0.12

%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $3.0 million and $658,000 for the nine months ended September 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:

 

 

September 30

2022

 

June 30

2022

 

September 30

2021

 

Tangible common equity

 

(Dollars in thousands, except per share data)

 

Stockholders' equity (GAAP)

 

$

2,817,201

 

 

$

2,871,185

 

 

$

1,755,954

 

(a)

Less: Goodwill and other intangibles

 

 

1,012,006

 

 

 

1,013,917

 

 

 

525,261

 

 

Tangible common equity

 

$

1,805,195

 

 

$

1,857,268

 

 

$

1,230,693

 

(b)

Tangible assets

 

 

 

 

 

 

 

Assets (GAAP)

 

$

19,703,269

 

 

$

19,982,450

 

 

$

14,533,311

 

(c)

Less: Goodwill and other intangibles

 

 

1,012,006

 

 

 

1,013,917

 

 

 

525,261

 

 

Tangible assets

 

$

18,691,263

 

 

$

18,968,533

 

 

$

14,008,050

 

(d)

 

 

 

 

 

 

 

 

Common Shares

 

 

45,634,626

 

 

 

46,069,761

 

 

 

33,043,812

 

(e)

 

 

 

 

 

 

 

 

Common equity to assets ratio (GAAP)

 

 

14.30

%

 

 

14.37

%

 

 

12.08

%

(a/c)

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

 

 

9.66

%

 

 

9.79

%

 

 

8.79

%

(b/d)

Book value per share (GAAP)

 

$

61.73

 

 

$

62.32

 

 

$

53.14

 

(a/e)

Tangible book value per share (Non-GAAP)

 

$

39.56

 

 

$

40.31

 

 

$

37.24

 

(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

 

Nine Months Ended

 

 

September 30

2022

 

June 30

2022

 

September 30

2021

 

September 30

2022

 

September 30

2021

 

Net interest income (GAAP)

$

162,601

 

 

$

144,861

 

 

$

90,091

 

 

$

444,894

 

 

$

279,029

 

(a)

 

 

 

 

 

 

 

 

 

 

 

Noninterest income (GAAP)

$

28,195

 

 

$

27,898

 

 

$

26,457

 

 

$

82,365

 

 

$

76,670

 

(b)

Noninterest income on an operating basis (Non-GAAP)

$

28,195

 

 

$

27,898

 

 

$

26,457

 

 

$

82,365

 

 

$

76,670

 

(c)

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (GAAP)

$

92,728

 

 

$

90,562

 

 

$

72,419

 

 

$

278,790

 

 

$

215,403

 

(d)

Less:

 

 

 

 

 

 

 

 

 

 

Merger and acquisition expense

 

 

 

 

 

 

 

1,943

 

 

 

7,100

 

 

 

3,674

 

 

Noninterest expense on an operating basis (Non-GAAP)

$

92,728

 

 

$

90,562

 

 

$

70,476

 

 

$

271,690

 

 

$

211,729

 

(e)

 

 

 

 

 

 

 

 

 

 

 

Total revenue (GAAP)

$

190,796

 

 

$

172,759

 

 

$

116,548

 

 

$

527,259

 

 

$

355,699

 

(a+b)

Total operating revenue (Non-GAAP)

$

190,796

 

 

$

172,759

 

 

$

116,548

 

 

$

527,259

 

 

$

355,699

 

(a+c)

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

$

71,897

 

 

$

61,776

 

 

$

40,007

 

 

$

186,770

 

 

$

119,290

 

 

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

$

71,897

 

 

$

61,776

 

 

$

41,404

 

 

$

191,875

 

 

$

121,931

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common equity (GAAP)

$

2,881,988

 

 

$

2,919,506

 

 

$

1,756,106

 

 

$

2,936,021

 

 

$

1,734,332

 

 

Less: Average goodwill and other intangibles

 

1,013,169

 

 

 

1,014,953

 

 

 

526,032

 

 

 

1,015,040

 

 

 

527,370

 

 

Tangible average tangible common equity (Non-GAAP)

$

1,868,819

 

 

$

1,904,553

 

 

$

1,230,074

 

 

$

1,920,981

 

 

$

1,206,962

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios

 

 

 

 

 

 

 

 

 

 

Noninterest income as a % of total revenue (GAAP)

 

14.78

%

 

 

16.15

%

 

 

22.70

%

 

 

15.62

%

 

 

21.55

%

(b/(a+b))

Noninterest income as a % of total revenue on an operating basis (Non-GAAP)

 

14.78

%

 

 

16.15

%

 

 

22.70

%

 

 

15.62

%

 

 

21.55

%

(c/(a+c))

Efficiency ratio (GAAP)

 

48.60

%

 

 

52.42

%

 

 

62.14

%

 

 

52.88

%

 

 

60.56

%

(d/(a+b))

Efficiency ratio on an operating basis (Non-GAAP)

 

48.60

%

 

 

52.42

%

 

 

60.47

%

 

 

51.53

%

 

 

59.52

%

(e/(a+c))

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

 

15.26

%

 

 

13.01

%

 

 

12.90

%

 

 

13.00

%

 

 

13.21

%

 

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

 

15.26

%

 

 

13.01

%

 

 

13.35

%

 

 

13.35

%

 

 

13.51

%

 

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

 

Three Months Ended

 

September 30, 2022

 

June 30, 2022

 

Volume

Interest

Margin

Impact

 

Volume

Interest

Margin

Impact

 

(Dollars in thousands)

Reported total interest earning assets

$

17,852,939

 

$

163,636

 

3.64

%

 

$

17,877,531

 

$

145,817

 

3.27

%

Core adjustments:

 

 

 

 

 

 

 

PPP volume @ 1%

 

(20,071

)

 

(46

)

 

 

 

(60,969

)

 

(149

)

 

PPP fee amortization

 

 

(443

)

 

 

 

 

(1,762

)

 

Total PPP impact

 

(20,071

)

 

(489

)

(0.01

) %

 

 

(60,969

)

 

(1,911

)

(0.03

) %

Acquisition fair value marks:

 

 

 

 

 

 

 

Loan amortization (accretion)

 

 

(624

)

 

 

 

 

823

 

 

CD accretion

 

 

(97

)

 

 

 

 

(437

)

 

 

 

 

(721

)

(0.02

) %

 

 

 

386

 

0.01

%

 

 

 

 

 

 

 

 

Nonaccrual interest, net

 

 

(556

)

(0.01

) %

 

 

 

205

 

%

 

 

 

 

 

 

 

 

Other noncore adjustments

 

 

(637

)

(0.01

) %

 

 

 

(1,106

)

(0.02

) %

 

 

 

 

 

 

 

 

Core margin (Non-GAAP)

$

17,832,868

 

$

161,233

 

3.59

%

 

$

17,816,562

 

$

143,391

 

3.23

%

 

Contacts

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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