Company Announcements

Independent Bank Corp. Reports Second Quarter Net Income of $37.6 Million

Business fundamentals remain strong

ROCKLAND, Mass.--(BUSINESS WIRE)--Jul. 22, 2021-- Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2021 second quarter net income of $37.6 million, or $1.14 per diluted share, compared to net income of $41.7 million, or $1.26 per diluted share, reported for the first quarter of 2021. Second quarter results included merger related costs of $1.7 million associated with the acquisition of Meridian Bancorp Inc. ("Meridian") and its subsidiary East Boston Savings Bank, which is expected to close in the fourth quarter of 2021. Excluding these merger-related costs, net of tax, operating net income was $38.8 million, or $1.17 per diluted share, for the second quarter of 2021. 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.

"Our core fundamentals are strong and we are well-positioned to continue to take advantage of growth opportunities as the local economy continues to re-adjust post-pandemic,” said Christopher Oddleifson, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “We have been hard at work on our previously announced merger with Meridian Bancorp./East Boston Savings Bank and are excited about the possibilities the transaction represents for our future. I continue to be inspired by the dedication and effort of my colleagues, and their collective commitment to our customers, the communities we serve, and to each other as we live out our mission of being the bank Where Each Relationship Matters®.”

BALANCE SHEET

Total assets of $14.2 billion at June 30, 2021 increased by $420.3 million, or 3.1%, from the prior quarter, and by $1.2 billion, or 9.0%, as compared to the year ago period, driven by continued significant growth in deposits, leading to increased liquid assets in the second quarter of 2021.

Total loans at June 30, 2021 decreased by $307.7 million, or 3.3% (13.3% annualized), when compared to the prior quarter which was primarily attributable to a net reduction in Paycheck Protection Program ("PPP") loan balances of $363.7 million, or 43.0%, as the program concluded its second round of funding with focus pivoting toward loan forgiveness. Exclusive of PPP loan activity, total loans increased $55.9 million, or 2.7% on an annualized basis, reflecting a modest, yet positive shift in overall economic activity. Fueling the net growth, commercial loans increased $66.2 million, or 1.1% (4.3% annualized) during the second quarter, primarily due to growth in residential-based commercial real estate projects, as well as 5.0% (19.9% annualized) growth in small business loans, capitalizing on positive momentum from the successful PPP experience and overall market disruption. Partially offsetting these growth factors, construction loan balances decreased 3.8% from the prior quarter, reflecting an accelerated pace of project completion, while modest new fundings and restrained line utilization in the commercial and industrial portfolio continued to challenge growth. Strong closing volumes were experienced within both the residential and home equity portfolios, with a larger portion of residential closings being retained in the portfolio rather than sold into the secondary market compared to prior quarters. However the low interest-rate environment and excess consumer liquidity positions continued to drive elevated payoff activity and historically low home equity line utilization rates.

Deposit balances of $12.0 billion at June 30, 2021 increased by $393.4 million, or 3.4% (13.6% annualized), from the prior quarter, reflecting additional government stimulus payments along with robust new account activity in both consumer and business product categories. With continued reduction in time deposit balances, core deposits rose to 91.6% of total deposits at June 30, 2021, which, combined with the runoff of higher cost time deposits and further rate reductions across all products, contributed to a total cost of deposits for the second quarter of 0.07%, representing a reduction of three basis points when compared to the prior quarter.

The securities portfolio increased by $251.3 million, or 17.6%, when compared to the prior quarter, reflecting a continued direct strategy to deploy a portion of excess cash balances into securities. Total purchases for the quarter were $340.2 million, offset by paydowns, calls, and maturities.

Total borrowings decreased by $4.7 million, or 2.6% when compared to the prior quarter reflecting repayments of outstanding debt.

Stockholders' equity at June 30, 2021 increased by 1.5% (6.1% annualized), as compared to the prior quarter, reflecting continued strong earnings retention. Book value per share increased by $0.78, or 1.5%, to $52.72 during the second quarter as compared to the prior quarter. The Company's ratio of common equity to assets of 12.27% decreased by 18 basis points from the prior quarter and by 57 basis points from the year ago period. The Company's tangible book value per share at June 30, 2021 rose by $0.82, or 2.3%, from the prior quarter to $36.78, representing an increase of 6.3% from the year ago period. The Company's ratio of tangible common equity to tangible assets of 8.89% at June 30, 2021 represents a 7 basis point decrease compared to the prior quarter and a 23 basis point decrease compared to 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 decreased to $93.4 million compared to $95.6 million for the prior quarter, driven primarily by reductions in PPP fee recognition as $7.2 million was recognized in the second quarter compared to $9.5 million for the prior quarter. The 2021 second quarter net interest margin was heavily impacted by the Company's increased excess liquidity position, decreasing by 26 basis points from the prior quarter to 2.99%. The table below illustrates the changes within the net interest margin for the second quarter:

Net interest margin as of March 31, 2021

 

3.25

%

Excess liquidity - cash and securities

 

(0.19)

%

Loan yields

 

(0.03)

%

PPP loan impact

 

(0.06)

%

Other noncore adjustments

 

(0.01)

%

Decreased cost of funds

 

0.03

%

Net interest margin as of June 30, 2021

 

2.99

%

Please refer to Appendix C for additional details regarding the net interest margin.

NONINTEREST INCOME

Noninterest income of $25.0 million for the second quarter of 2021 was $279,000, or 1.1%, lower than the prior quarter. Significant changes in noninterest income for the second quarter compared to the prior quarter included the following:

  • Deposit account fees increased by $238,000, or 6.6%, primarily driven by overdraft fees.
  • Interchange and ATM fees increased by $348,000, or 12.8%, due primarily to increased volume during the second quarter, reflecting a rise in customer spending.
  • Investment management income increased by $568,000, or 6.8%, due primarily to an increase in assets under administration along with seasonal tax preparation fees during the second quarter. Assets under administration increased by 4.3% from the prior quarter to a record high of $5.4 billion as of June 30, 2021.
  • Mortgage banking income decreased by $3.0 million, or 52.9%, reflecting a larger portion of new originations retained in the Company's portfolio versus sold into the secondary market, coupled with gain on sale margin compression during the quarter.
  • Income from bank owned life insurance policies increased $266,000, or 20.1%, reflecting the full quarter impact of $40.0 million in new policies purchased during the first quarter of 2021.
  • Other noninterest income increased by $1.7 million, or 52.5%, primarily attributable to $1.1 million in income recognized from other investments, unrealized gains on equity securities, and an increase in income from like-kind exchanges.

NONINTEREST EXPENSE

Noninterest expense of $73.3 million for the second quarter of 2021 was $3.6 million, or 5.2% higher than the prior quarter. Significant changes in noninterest expense for the second quarter compared to the prior quarter included the following:

  • Salaries and employee benefits increased by $2.7 million, or 6.9%, mainly due to increases in incentive compensation, general salaries, and other commissions. These increases were offset partially by decreases in medical plan insurance expenses and payroll taxes.
  • Occupancy and equipment decreased by $567,000, or 6.1%, mainly due to decreases in snow removal costs and cleaning expenses.
  • FDIC assessment decreased by $275,000, or 26.2%, reflecting a lower fee for the quarter along with a refund of prior period assessment fees of approximately $109,000.
  • During the second quarter of 2021 there were $1.7 million of merger and acquisition expenses relating to the Meridian acquisition. No such costs were incurred during the first quarter of 2021.
  • Other noninterest expense remained flat, primarily due to decreases in consultant fees and card issuance costs, partially offset by increases in legal fees, director expenses related to equity compensation during the quarter and additional reserve for unfunded commitments.

The Company generated a return on average assets and a return on average common equity of 1.08% and 8.70%, respectively, for the second quarter of 2021, as compared to 1.26% and 9.87%, respectively, for the prior quarter. On an operating basis, return on average assets and return on average common equity were 1.12% and 8.98%, respectively, for the second quarter of 2021.

The tax rate of 24.9% for the second quarter was higher than the prior quarter rate of 22.3%, which included $1.4 million of discrete tax benefits related primarily to low income housing tax credits and equity compensation.

ASSET QUALITY

During the second quarter, the Company recorded total net charge-offs of $192,000, or 0.01% of average loans on an annualized basis. Nonperforming loans decreased by 19.2% to $47.8 million, or 0.53% of total loans at June 30, 2021, as compared to $59.2 million, or 0.64% of total loans at March 31, 2021. The decrease was primarily attributable to the full pay-off of one large commercial loan during the second quarter.

In addition, total loans subject to a payment deferral remained relatively consistent with the prior quarter, amounting to $233.8 million, or 2.6% of total loans at June 30, 2021, with the highest concentration remaining in the accommodation portfolio. The majority of the loans subject to a payment deferral at June 30, 2021 were characterized as current loans. As such, delinquency as a percentage of total loans remained low at 0.11% as of June 30, 2021, representing a decrease of one basis point from the prior quarter. Please refer to Appendix E for additional details regarding loans whose terms have been modified as a result of the COVID-19 pandemic.

The Company recorded credit reserve releases of $5.0 million during the second quarter of 2021, reflecting continued improvement in asset quality metrics and overall macro-economic assumptions. The allowance for credit losses on total loans was $102.4 million at June 30, 2021, or 1.15% of total loans, as compared to $107.5 million at March 31, 2021, or 1.16% of total loans. The allowance for credit losses as a percentage of total loans, excluding PPP loans, was 1.21% and 1.28% at June 30, 2021 and March 31, 2021, respectively. Please refer to Appendix D for information regarding loan exposures within industries deemed highly impacted by the COVID-19 pandemic.

CONFERENCE CALL INFORMATION

Christopher Oddleifson, Chief Executive Officer, Robert Cozzone, Chief Operating Officer, Mark Ruggiero, Chief Financial Officer, and Gerard Nadeau, President and Chief Commercial Banking Officer will host a conference call to discuss second quarter earnings at 10:00 a.m. Eastern Time on Friday, July 23, 2021. Internet access to the call is available on the Company’s website at www.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: 10157162 and will be available through August 6, 2021. Additionally, a webcast replay will be available until July 23, 2022.

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" 2020 list, an honor earned for the 12th consecutive year. In 2021, Rockland Trust was ranked the #1 Bank in Massachusetts according to Forbes World's Best Banks list for the second year in a row. 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 approximately 100 retail branches, commercial and residential lending centers, and investment management offices in eastern Massachusetts, including Greater Boston, the South 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.

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 future weakening caused by the COVID-19 pandemic;
  • the length and extent of economic contraction as a result of the COVID-19 pandemic;
  • 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, including the additional costs associated with the Company's increase in assets to over $10 billion;
  • 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, the emergence of widespread health emergencies or pandemics, including the magnitude and duration of the COVID-19 pandemic, other public health crises or man-made events could negatively affect our local economies or disrupt our operations, which would have an adverse effect on our business or results of 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.

Further, the foregoing factors may be exacerbated by the ultimate impact of the COVID-19 pandemic, which is unknown at this time. Statements about the COVID-19 pandemic and its potential impact on our business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that actual results may differ, possibly materially, from what is reflected in such statements due to factors and future developments that are uncertain, unpredictable and, in many cases, beyond our control, including the scope, duration and extent of the pandemic and any resurgences, actions taken by governmental authorities in response to the pandemic and the direct and indirect impact 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, core net margin, tangible book value per share and the tangible common equity ratio.

Operating net income, operating EPS, operating return on average assets and operating return on average common equity exclude items that management believes are unrelated to the Company's core banking business such as merger and acquisition expenses, and other items, if applicable. Management uses operating net income and related ratios and operating EPS to measure the strength of the Company’s core banking business and to identify trends that may to some extent be obscured by such items. Management reviews its core net interest 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). The Company has included information on tangible book value per share and the tangible common equity ratio 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 deems to be noncore and 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 net 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
2021

 

March 31
2021

 

June 30
2020

 

Jun 2021 vs.

 

Jun 2021 vs.

 

 

 

 

Mar 2021

 

Jun 2020

Assets

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

141,953

 

 

$

126,651

 

 

$

131,615

 

 

12.08

%

 

7.85

%

Interest-earning deposits with banks

2,114,477

 

 

1,642,688

 

 

974,105

 

 

28.72

%

 

117.07

%

Securities

 

 

 

 

 

 

 

 

 

Trading

3,439

 

 

3,269

 

 

2,541

 

 

5.20

%

 

35.34

%

Equities

22,975

 

 

22,419

 

 

20,810

 

 

2.48

%

 

10.40

%

Available for sale

794,516

 

 

600,213

 

 

420,517

 

 

32.37

%

 

88.94

%

Held to maturity

861,821

 

 

805,529

 

 

731,026

 

 

6.99

%

 

17.89

%

Total securities

1,682,751

 

 

1,431,430

 

 

1,174,894

 

 

17.56

%

 

43.23

%

Loans held for sale

25,561

 

 

41,632

 

 

45,395

 

 

(38.60)

%

 

(43.69)

%

Loans

 

 

 

 

 

 

 

 

 

Commercial and industrial

1,726,498

 

 

2,086,671

 

 

2,004,645

 

 

(17.26)

%

 

(13.88)

%

Commercial real estate

4,251,543

 

 

4,177,617

 

 

4,071,047

 

 

1.77

%

 

4.43

%

Commercial construction

496,539

 

 

516,362

 

 

537,788

 

 

(3.84)

%

 

(7.67)

%

Small business

182,863

 

 

174,211

 

 

170,288

 

 

4.97

%

 

7.38

%

Total commercial

6,657,443

 

 

6,954,861

 

 

6,783,768

 

 

(4.28)

%

 

(1.86)

%

Residential real estate

1,240,279

 

 

1,241,789

 

 

1,431,129

 

 

(0.12)

%

 

(13.34)

%

Home equity - first position

606,332

 

 

610,907

 

 

650,922

 

 

(0.75)

%

 

(6.85)

%

Home equity - subordinate positions

412,076

 

 

417,588

 

 

469,601

 

 

(1.32)

%

 

(12.25)

%

Total consumer real estate

2,258,687

 

 

2,270,284

 

 

2,551,652

 

 

(0.51)

%

 

(11.48)

%

Other consumer

22,858

 

 

21,546

 

 

24,228

 

 

6.09

%

 

(5.65)

%

Total loans

8,938,988

 

 

9,246,691

 

 

9,359,648

 

 

(3.33)

%

 

(4.49)

%

Less: allowance for credit losses

(102,357)

 

 

(107,549)

 

 

(112,176)

 

 

(4.83)

%

 

(8.75)

%

Net loans

8,836,631

 

 

9,139,142

 

 

9,247,472

 

 

(3.31)

%

 

(4.44)

%

Federal Home Loan Bank stock

9,079

 

 

10,250

 

 

15,090

 

 

(11.42)

%

 

(39.83)

%

Bank premises and equipment, net

117,435

 

 

115,945

 

 

122,172

 

 

1.29

%

 

(3.88)

%

Goodwill

506,206

 

 

506,206

 

 

506,206

 

 

%

 

%

Other intangible assets

20,370

 

 

21,689

 

 

25,996

 

 

(6.08)

%

 

(21.64)

%

Cash surrender value of life insurance policies

242,963

 

 

241,365

 

 

198,124

 

 

0.66

%

 

22.63

%

Other assets

496,781

 

 

496,916

 

 

581,431

 

 

(0.03)

%

 

(14.56)

%

Total assets

$

14,194,207

 

 

$

13,773,914

 

 

$

13,022,500

 

 

3.05

%

 

9.00

%

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

$

4,370,852

 

 

$

4,136,259

 

 

$

3,694,559

 

 

5.67

%

 

18.31

%

Savings and interest checking accounts

4,445,903

 

 

4,242,235

 

 

3,896,024

 

 

4.80

%

 

14.11

%

Money market

2,352,897

 

 

2,346,985

 

 

2,034,021

 

 

0.25

%

 

15.68

%

Time certificates of deposit

817,319

 

 

868,045

 

 

1,092,217

 

 

(5.84)

%

 

(25.17)

%

Total deposits

11,986,971

 

 

11,593,524

 

 

10,716,821

 

 

3.39

%

 

11.85

%

Borrowings

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

35,693

 

 

35,717

 

 

145,770

 

 

(0.07)

%

 

(75.51)

%

Long-term borrowings, net

23,425

 

 

28,099

 

 

37,433

 

 

(16.63)

%

 

(37.42)

%

Junior subordinated debentures, net

62,852

 

 

62,851

 

 

62,850

 

 

%

 

%

Subordinated debentures, net

49,743

 

 

49,720

 

 

49,648

 

 

0.05

%

 

0.19

%

Total borrowings

171,713

 

 

176,387

 

 

295,701

 

 

(2.65)

%

 

(41.93)

%

Total deposits and borrowings

12,158,684

 

 

11,769,911

 

 

11,012,522

 

 

3.30

%

 

10.41

%

Other liabilities

293,901

 

 

288,632

 

 

338,286

 

 

1.83

%

 

(13.12)

%

Total liabilities

12,452,585

 

 

12,058,543

 

 

11,350,808

 

 

3.27

%

 

9.71

%

Stockholders' equity

 

 

 

 

 

 

 

 

 

Common stock

329

 

 

329

 

 

328

 

 

%

 

0.30

%

Additional paid in capital

948,130

 

 

946,002

 

 

942,685

 

 

0.22

%

 

0.58

%

Retained earnings

763,596

 

 

741,883

 

 

676,834

 

 

2.93

%

 

12.82

%

Accumulated other comprehensive income, net of tax

29,567

 

 

27,157

 

 

51,845

 

 

8.87

%

 

(42.97)

%

Total stockholders' equity

1,741,622

 

 

1,715,371

 

 

1,671,692

 

 

1.53

%

 

4.18

%

Total liabilities and stockholders' equity

$

14,194,207

 

 

$

13,773,914

 

 

$

13,022,500

 

 

3.05

%

 

9.00

%

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

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

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

% Change

 

% Change

 

June 30
2021

 

March 31
2021

 

June 30
2020

 

Jun 2021 vs.

 

Jun 2021 vs.

 

 

 

 

Mar 2021

 

Jun 2020

Interest income

 

 

 

 

 

 

 

 

 

Interest on federal funds sold and short-term investments

$

513

 

 

$

326

 

 

$

132

 

 

57.36

%

 

288.64

%

Interest and dividends on securities

7,189

 

 

6,632

 

 

7,840

 

 

8.40

%

 

(8.30)

%

Interest and fees on loans

88,814

 

 

92,383

 

 

91,634

 

 

(3.86)

%

 

(3.08)

%

Interest on loans held for sale

186

 

 

296

 

 

359

 

 

(37.16)

%

 

(48.19)

%

Total interest income

96,702

 

 

99,637

 

 

99,965

 

 

(2.95)

%

 

(3.26)

%

Interest expense

 

 

 

 

 

 

 

 

 

Interest on deposits

2,017

 

 

2,711

 

 

7,027

 

 

(25.60)

%

 

(71.30)

%

Interest on borrowings

1,331

 

 

1,342

 

 

1,840

 

 

(0.82)

%

 

(27.66)

%

Total interest expense

3,348

 

 

4,053

 

 

8,867

 

 

(17.39)

%

 

(62.24)

%

Net interest income

93,354

 

 

95,584

 

 

91,098

 

 

(2.33)

%

 

2.48

%

Provision for credit losses

(5,000)

 

 

(2,500)

 

 

20,000

 

 

100.00

%

 

(125.00)

%

Net interest income after provision for credit losses

98,354

 

 

98,084

 

 

71,098

 

 

0.28

%

 

38.34

%

Noninterest income

 

 

 

 

 

 

 

 

 

Deposit account fees

3,822

 

 

3,584

 

 

2,829

 

 

6.64

%

 

35.10

%

Interchange and ATM fees

3,068

 

 

2,720

 

 

5,214

 

 

12.79

%

 

(41.16)

%

Investment management

8,872

 

 

8,304

 

 

7,296

 

 

6.84

%

 

21.60

%

Mortgage banking income

2,705

 

 

5,740

 

 

5,005

 

 

(52.87)

%

 

(45.95)

%

Increase in cash surrender value of life insurance policies

1,589

 

 

1,323

 

 

1,312

 

 

20.11

%

 

21.11

%

Gain on life insurance benefits

 

 

258

 

 

335

 

 

(100.00)

%

 

(100.00)

%

Loan level derivative income

116

 

 

173

 

 

2,864

 

 

(32.95)

%

 

(95.95)

%

Other noninterest income

4,795

 

 

3,144

 

 

3,335

 

 

52.51

%

 

43.78

%

Total noninterest income

24,967

 

 

25,246

 

 

28,190

 

 

(1.11)

%

 

(11.43)

%

Noninterest expenses

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

42,635

 

 

39,889

 

 

37,269

 

 

6.88

%

 

14.40

%

Occupancy and equipment expenses

8,706

 

 

9,273

 

 

9,273

 

 

(6.11)

%

 

(6.11)

%

Data processing and facilities management

1,686

 

 

1,665

 

 

1,459

 

 

1.26

%

 

15.56

%

FDIC assessment

775

 

 

1,050

 

 

503

 

 

(26.19)

%

 

54.08

%

Merger and acquisition expense

1,731

 

 

 

 

 

 

100.00%

 

100.00%

Other noninterest expenses

17,769

 

 

17,805

 

 

18,103

 

 

(0.20)

%

 

(1.84)

%

Total noninterest expenses

73,302

 

 

69,682

 

 

66,607

 

 

5.20

%

 

10.05

%

Income before income taxes

50,019

 

 

53,648

 

 

32,681

 

 

(6.76)

%

 

53.05

%

Provision for income taxes

12,447

 

 

11,937

 

 

7,779

 

 

4.27

%

 

60.01

%

Net Income

$

37,572

 

 

$

41,711

 

 

$

24,902

 

 

(9.92)

%

 

50.88

%

 

 

 

 

 

 

 

 

 

 

Weighted average common shares (basic)

33,033,578

 

 

32,995,332

 

 

32,944,761

 

 

 

 

 

Common share equivalents

21,270

 

 

30,098

 

 

28,098

 

 

 

 

 

Weighted average common shares (diluted)

33,054,848

 

 

33,025,430

 

 

32,972,859

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

1.14

 

 

$

1.26

 

 

$

0.76

 

 

(9.52)

%

 

50.00

%

Diluted earnings per share

$

1.14

 

 

$

1.26

 

 

$

0.76

 

 

(9.52)

%

 

50.00

%

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Net income

$

37,572

 

 

$

41,711

 

 

$

24,902

 

 

 

 

 

Noninterest expense components

 

 

 

 

 

 

 

 

 

Add - merger and acquisition expenses

1,731

 

 

 

 

 

 

 

 

 

Noncore increases to income before taxes

1,731

 

 

 

 

 

 

 

 

 

Net tax benefit associated with noncore items (1)

(487)

 

 

 

 

 

 

 

 

 

Noncore increases to net income

1,244

 

 

 

 

 

 

 

 

 

Operating net income (Non-GAAP)

$

38,816

 

 

$

41,711

 

 

$

24,902

 

 

(6.94)

%

 

55.88

%

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share, on an operating basis

$

1.17

 

 

$

1.26

 

 

$

0.76

 

 

(7.14)

%

 

53.95

%

 

 

 

 

 

 

 

 

 

 

(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)

2.99

%

 

3.25

%

 

3.25

%

 

 

 

 

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

1.08

%

 

1.26

%

 

0.79

%

 

 

 

 

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

1.12

%

 

1.26

%

 

0.79

%

 

 

 

 

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

8.70

%

 

9.87

%

 

5.97

%

 

 

 

 

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

8.98

%

 

9.87

%

 

5.97

%

 

 

 

 

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

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

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

 

 

% Change

 

 

June 30
2021

 

June 30
2020

 

Jun 2021 vs.

 

 

 

 

Jun 2020

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

Interest on federal funds sold and short-term investments

 

$

839

 

 

$

292

 

 

187.33

%

Interest and dividends on securities

 

13,821

 

 

15,806

 

 

(12.56)

%

Interest and fees on loans

 

181,197

 

 

190,656

 

 

(4.96)

%

Interest on loans held for sale

 

482

 

 

591

 

 

(18.44)

%

Total interest income

 

196,339

 

 

207,345

 

 

(5.31)

%

Interest expense

 

 

 

 

 

 

Interest on deposits

 

4,728

 

 

17,919

 

 

(73.61)

%

Interest on borrowings

 

2,673

 

 

4,024

 

 

(33.57)

%

Total interest expense

 

7,401

 

 

21,943

 

 

(66.27)

%

Net interest income

 

188,938

 

 

185,402

 

 

1.91

%

Provision for credit losses

 

(7,500)

 

 

45,000

 

 

(116.67)

%

Net interest income after provision for credit losses

 

196,438

 

 

140,402

 

 

39.91

%

Noninterest income

 

 

 

 

 

 

Deposit account fees

 

7,406

 

 

7,799

 

 

(5.04)

%

Interchange and ATM fees

 

5,788

 

 

10,110

 

 

(42.75)

%

Investment management

 

17,176

 

 

14,125

 

 

21.60

%

Mortgage banking income

 

8,445

 

 

5,866

 

 

43.97

%

Increase in cash surrender value of life insurance policies

 

2,912

 

 

2,588

 

 

12.52

%

Gain on life insurance benefits

 

258

 

 

692

 

 

(62.72)

%

Loan level derivative income

 

289

 

 

6,461

 

 

(95.53)

%

Other noninterest income

 

7,939

 

 

6,984

 

 

13.67

%

Total noninterest income

 

50,213

 

 

54,625

 

 

(8.08)

%

Noninterest expenses

 

 

 

 

 

 

Salaries and employee benefits

 

82,524

 

 

74,618

 

 

10.60

%

Occupancy and equipment expenses

 

17,979

 

 

18,590

 

 

(3.29)

%

Data processing and facilities management

 

3,351

 

 

3,117

 

 

7.51

%

FDIC assessment

 

1,825

 

 

503

 

 

262.82

%

Merger and acquisition expense

 

1,731

 

 

 

 

100.00%

Other noninterest expenses

 

35,574

 

 

36,619

 

 

(2.85)

%

Total noninterest expenses

 

142,984

 

 

133,447

 

 

7.15

%

Income before income taxes

 

103,667

 

 

61,580

 

 

68.35

%

Provision for income taxes

 

24,384

 

 

9,927

 

 

145.63

%

Net Income

 

$

79,283

 

 

$

51,653

 

 

53.49

%

 

 

 

 

 

 

 

Weighted average common shares (basic)

 

33,014,561

 

 

33,564,596

 

 

 

Common share equivalents

 

25,085

 

 

31,991

 

 

 

Weighted average common shares (diluted)

 

33,039,646

 

 

33,596,587

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

2.40

 

 

$

1.54

 

 

55.84

%

Diluted earnings per share

 

$

2.40

 

 

$

1.54

 

 

55.84

%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Net Income

 

$

79,283

 

 

$

51,653

 

 

 

Noninterest expense components

 

 

 

 

 

 

Add - merger and acquisition expenses

 

1,731

 

 

 

 

 

Noncore increases to income before taxes

 

1,731

 

 

 

 

 

Net tax benefit associated with noncore items (1)

 

(487)

 

 

 

 

 

Noncore increases to net income

 

$

1,244

 

 

$

 

 

 

Operating net income (Non-GAAP)

 

$

80,527

 

 

$

51,653

 

 

55.90

%

 

 

 

 

 

 

 

Diluted earnings per share, on an operating basis

 

$

2.44

 

 

$

1.54

 

 

58.44

%

 

 

 

 

 

 

 

(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)

 

3.12

%

 

3.48

%

 

 

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

 

1.17

%

 

0.86

%

 

 

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

 

1.19

%

 

0.86

%

 

 

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

 

9.28

%

 

6.10

%

 

 

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

 

9.42

%

 

6.10

%

 

 

ASSET QUALITY

 

 

(Unaudited, dollars in thousands)

 

Nonperforming Assets At

 

 

June 30
2021

 

March 31
2021

 

June 30
2020

Nonperforming loans

 

 

 

 

 

 

Commercial & industrial loans

 

$

20,831

 

 

$

29,785

 

 

$

20,736

 

Commercial real estate loans

 

9,031

 

 

9,635

 

 

6,313

 

Small business loans

 

558

 

 

660

 

 

619

 

Residential real estate loans

 

12,786

 

 

13,392

 

 

14,561

 

Home equity

 

4,517

 

 

5,592

 

 

6,437

 

Other consumer

 

95

 

 

137

 

 

148

 

Total nonperforming loans

 

47,818

 

 

59,201

 

 

48,814

 

Total nonperforming assets

 

$

47,818

 

 

$

59,201

 

 

$

48,814

 

 

 

 

 

 

 

 

Nonperforming loans/gross loans

 

0.53

%

 

0.64

%

 

0.52

%

Nonperforming assets/total assets

 

0.34

%

 

0.43

%

 

0.37

%

Allowance for credit losses/nonperforming loans

 

214.06

%

 

181.67

%

 

229.80

%

Allowance for credit losses/total loans

 

1.15

%

 

1.16

%

 

1.20

%

Delinquent loans/total loans

 

0.11

%

 

0.12

%

 

0.24

%

 

 

 

 

 

 

 

 

 

Nonperforming Assets Reconciliation for the Three Months Ended

 

 

June 30
2021

 

March 31
2021

 

June 30
2020

 

 

 

 

 

 

 

Nonperforming assets beginning balance

 

$

59,201

 

 

$

66,861

 

 

$

48,040

 

New to nonperforming

 

2,233

 

 

2,359

 

 

8,215

 

Loans charged-off

 

(481)

 

 

(3,686)

 

 

(710)

 

Loans paid-off

 

(10,364)

 

 

(4,025)

 

 

(2,210)

 

Loans restored to performing status

 

(2,771)

 

 

(2,559)

 

 

(4,529)

 

Other

 

 

 

251

 

 

8

 

Nonperforming assets ending balance

 

$

47,818

 

 

$

59,201

 

 

$

48,814

 

 

 

Net Charge-Offs (Recoveries)

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30
2021

 

March 31
2021

 

June 30
2020

 

June 30
2021

 

June 30
2020

Net charge-offs (recoveries)

 

 

 

 

 

 

 

 

 

 

Commercial and industrial loans

 

$

107

 

 

$

3,267

 

 

$

(4)

 

 

$

3,374

 

 

$

(46)

 

Commercial real estate loans

 

 

 

(57)

 

 

 

 

(57)

 

 

 

Small business loans

 

31

 

 

55

 

 

33

 

 

86

 

 

139

 

Residential real estate loans

 

 

 

(1)

 

 

 

 

(1)

 

 

(1)

 

Home equity

 

24

 

 

(13)

 

 

(91)

 

 

11

 

 

(11)

 

Other consumer

 

30

 

 

92

 

 

262

 

 

122

 

 

503

 

Total net charge-offs

 

$

192

 

 

$

3,343

 

 

$

200

 

 

$

3,535

 

 

$

584

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs to average loans (annualized)

 

0.01

%

 

0.15

%

 

0.01

%

 

0.08

%

 

0.01

%

 

 

Troubled Debt Restructurings At

 

 

June 30
2021

 

March 31
2021

 

June 30
2020

Troubled debt restructurings on accrual status

 

$

19,495

 

 

$

20,262

 

 

$

17,741

 

Troubled debt restructurings on nonaccrual status

 

20,212

 

 

21,167

 

 

24,098

 

Total troubled debt restructurings

 

$

39,707

 

 

$

41,429

 

 

$

41,839

 

 

 

 

 

 

 

 

BALANCE SHEET AND CAPITAL RATIOS

 

 

 

 

 

 

 

 

June 30
2021

 

March 31
2021

 

June 30
2020

Gross loans/total deposits

 

74.57

%

 

79.76

%

 

87.34

%

Common equity tier 1 capital ratio (1)

 

13.24

%

 

13.16

%

 

12.26

%

Tier 1 leverage capital ratio (1)

 

9.41

%

 

9.63

%

 

9.57

%

Common equity to assets ratio GAAP

 

12.27

%

 

12.45

%

 

12.84

%

Tangible common equity to tangible assets ratio (2)

 

8.89

%

 

8.96

%

 

9.12

%

Book value per share GAAP

 

$

52.72

 

 

$

51.94

 

 

$

50.75

 

Tangible book value per share (2)

 

$

36.78

 

 

$

35.96

 

 

$

34.59

 

(1) Estimated number for June 30, 2021.

(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, 2021

 

March 31, 2021

 

June 30, 2020

 

 

 

 

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

 

$

1,882,285

 

 

$

513

 

 

0.11

%

 

$

1,321,430

 

 

$

326

 

 

0.10

%

 

$

724,634

 

 

$

132

 

 

0.07

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities - trading

 

3,359

 

 

 

 

%

 

2,939

 

 

 

 

%

 

2,393

 

 

 

 

%

Securities - taxable investments

 

1,514,336

 

 

7,184

 

 

1.90

%

 

1,250,451

 

 

6,627

 

 

2.15

%

 

1,206,631

 

 

7,831

 

 

2.61

%

Securities - nontaxable investments (1)

 

555

 

 

6

 

 

4.34

%

 

642

 

 

6

 

 

3.79

%

 

1,145

 

 

11

 

 

3.86

%

Total securities

 

$

1,518,250

 

 

$

7,190

 

 

1.90

%

 

$

1,254,032

 

 

$

6,633

 

 

2.15

%

 

$

1,210,169

 

 

$

7,842

 

 

2.61

%

Loans held for sale

 

28,279

 

 

186

 

 

2.64

%

 

49,652

 

 

296

 

 

2.42

%

 

50,613

 

 

359

 

 

2.85

%

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (1)

 

1,944,026

 

 

20,351

 

 

4.20

%

 

2,115,069

 

 

23,046

 

 

4.42

%

 

1,914,830

 

 

17,363

 

 

3.65

%

Commercial real estate (1)

 

4,196,171

 

 

41,532

 

 

3.97

%

 

4,156,012

 

 

40,376

 

 

3.94

%

 

4,051,342

 

 

42,371

 

 

4.21

%

Commercial construction

 

514,935

 

 

4,777

 

 

3.72

%

 

555,153

 

 

5,283

 

 

3.86

%

 

538,767

 

 

5,314

 

 

3.97

%

Small business

 

178,525

 

 

2,302

 

 

5.17

%

 

174,320

 

 

2,281

 

 

5.31

%

 

174,438

 

 

2,388

 

 

5.51

%

Total commercial

 

6,833,657

 

 

68,962

 

 

4.05

%

 

7,000,554

 

 

70,986

 

 

4.11

%

 

6,679,377

 

 

67,436

 

 

4.06

%

Residential real estate

 

1,226,520

 

 

11,058

 

 

3.62

%

 

1,271,283

 

 

12,436

 

 

3.97

%

 

1,474,495

 

 

13,801

 

 

3.76

%

Home equity

 

1,024,798

 

 

8,591

 

 

3.36

%

 

1,050,234

 

 

8,757

 

 

3.38

%

 

1,133,034

 

 

10,132

 

 

3.60

%

Total consumer real estate

 

2,251,318

 

 

19,649

 

 

3.50

%

 

2,321,517

 

 

21,193

 

 

3.70

%

 

2,607,529

 

 

23,933

 

 

3.69

%

Other consumer

 

22,471

 

 

411

 

 

7.34

%

 

21,698

 

 

432

 

 

8.07

%

 

24,971

 

 

500

 

 

8.05

%

Total loans

 

$

9,107,446

 

 

$

89,022

 

 

3.92

%

 

$

9,343,769

 

 

$

92,611

 

 

4.02

%

 

$

9,311,877

 

 

$

91,869

 

 

3.97

%

Total interest-earning assets

 

$

12,536,260

 

 

$

96,911

 

 

3.10

%

 

$

11,968,883

 

 

$

99,866

 

 

3.38

%

 

$

11,297,293

 

 

$

100,202

 

 

3.57

%

Cash and due from banks

 

142,198

 

 

 

 

 

 

154,870

 

 

 

 

 

 

119,692

 

 

 

 

 

Federal Home Loan Bank stock

 

9,410

 

 

 

 

 

 

10,250

 

 

 

 

 

 

23,175

 

 

 

 

 

Other assets

 

1,258,056

 

 

 

 

 

 

1,241,651

 

 

 

 

 

 

1,287,620

 

 

 

 

 

Total assets

 

$

13,945,924

 

 

 

 

 

 

$

13,375,654

 

 

 

 

 

 

$

12,727,780

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings and interest checking accounts

 

$

4,339,645

 

 

$

384

 

 

0.04

%

 

$

4,109,747

 

 

$

423

 

 

0.04

%

 

$

3,679,729

 

 

$

1,101

 

 

0.12

%

Money market

 

2,347,852

 

 

429

 

 

0.07

%

 

2,288,030

 

 

521

 

 

0.09

%

 

1,972,986

 

 

1,377

 

 

0.28

%

Time deposits

 

843,090

 

 

1,204

 

 

0.57

%

 

906,613

 

 

1,767

 

 

0.79

%

 

1,186,189

 

 

4,549

 

 

1.54

%

Total interest-bearing deposits

 

$

7,530,587

 

 

$

2,017

 

 

0.11

%

 

$

7,304,390

 

 

$

2,711

 

 

0.15

%

 

$

6,838,904

 

 

$

7,027

 

 

0.41

%

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

35,704

 

 

191

 

 

2.15

%

 

35,785

 

 

188

 

 

2.13

%

 

339,393

 

 

433

 

 

0.51

%

Long-term borrowings

 

23,417

 

 

94

 

 

1.61

%

 

28,247

 

 

111

 

 

1.59

%

 

71,629

 

 

343

 

 

1.93

%

Junior subordinated debentures

 

62,852

 

 

429

 

 

2.74

%

 

62,851

 

 

426

 

 

2.75

%

 

62,849

 

 

446

 

 

2.85

%

Subordinated debentures

 

49,730

 

 

618

 

 

4.98

%

 

49,705

 

 

617

 

 

5.03

%

 

49,635

 

 

618

 

 

5.01

%

Total borrowings

 

$

171,703

 

 

$

1,332

 

 

3.11

%

 

$

176,588

 

 

$

1,342

 

 

3.08

%

 

$

523,506

 

 

$

1,840

 

 

1.41

%

Total interest-bearing liabilities

 

$

7,702,290

 

 

$

3,349

 

 

0.17

%

 

$

7,480,978

 

 

$

4,053

 

 

0.22

%

 

$

7,362,410

 

 

$

8,867

 

 

0.48

%

Noninterest-bearing demand deposits

 

4,237,135

 

 

 

 

 

 

3,895,447

 

 

 

 

 

 

3,371,262

 

 

 

 

 

Other liabilities

 

273,449

 

 

 

 

 

 

285,857

 

 

 

 

 

 

315,979

 

 

 

 

 

Total liabilities

 

$

12,212,874

 

 

 

 

 

 

$

11,662,282

 

 

 

 

 

 

$

11,049,651

 

 

 

 

 

Stockholders' equity

 

1,733,050

 

 

 

 

 

 

1,713,372

 

 

 

 

 

 

1,678,129

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

13,945,924

 

 

 

 

 

 

$

13,375,654

 

 

 

 

 

 

$

12,727,780

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

93,562

 

 

 

 

 

 

$

95,813

 

 

 

 

 

 

$

91,335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

 

 

 

 

2.93

%

 

 

 

 

 

3.16

%

 

 

 

 

 

3.09

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

2.99

%

 

 

 

 

 

3.25

%

 

 

 

 

 

3.25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits, including demand deposits

 

$

11,767,722

 

 

$

2,017

 

 

 

 

$

11,199,837

 

 

$

2,711

 

 

 

 

$

10,210,166

 

 

$

7,027

 

 

 

Cost of total deposits

 

 

 

 

 

0.07

%

 

 

 

 

 

0.10

%

 

 

 

 

 

0.28

%

Total funding liabilities, including demand deposits

 

$

11,939,425

 

 

$

3,349

 

 

 

 

$

11,376,425

 

 

$

4,053

 

 

 

 

$

10,733,672

 

 

$

8,867

 

 

 

Cost of total funding liabilities

 

 

 

 

 

0.11

%

 

 

 

 

 

0.14

%

 

 

 

 

 

0.33

%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $209,000, $229,000, and $237,000 for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, 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, 2021

 

June 30, 2020

 

 

 

 

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

 

$

1,603,407

 

 

$

839

 

 

0.11

%

 

$

398,593

 

 

$

292

 

 

0.15

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

Securities - trading

 

3,150

 

 

 

 

%

 

2,328

 

 

 

 

%

Securities - taxable investments

 

1,383,122

 

 

13,811

 

 

2.01

%

 

1,198,298

 

 

15,788

 

 

2.65

%

Securities - nontaxable investments (1)

 

599

 

 

12

 

 

4.04

%

 

1,191

 

 

23

 

 

3.88

%

Total securities

 

$

1,386,871

 

 

$

13,823

 

 

2.01

%

 

$

1,201,817

 

 

$

15,811

 

 

2.65

%

Loans held for sale

 

38,907

 

 

482

 

 

2.50

%

 

39,329

 

 

591

 

 

3.02

%

Loans

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (1)

 

2,029,075

 

 

43,397

 

 

4.31

%

 

1,659,014

 

 

34,303

 

 

4.16

%

Commercial real estate (1)

 

4,176,202

 

 

81,908

 

 

3.96

%

 

4,031,734

 

 

88,222

 

 

4.40

%

Commercial construction

 

534,933

 

 

10,060

 

 

3.79

%

 

547,254

 

 

12,215

 

 

4.49

%

Small business

 

176,434

 

 

4,583

 

 

5.24

%

 

174,553

 

 

4,950

 

 

5.70

%

Total commercial

 

6,916,644

 

 

139,948

 

 

4.08

%

 

6,412,555

 

 

139,690

 

 

4.38

%

Residential real estate

 

1,248,778

 

 

23,494

 

 

3.79

%

 

1,517,667

 

 

28,420

 

 

3.77

%

Home equity

 

1,037,446

 

 

17,348

 

 

3.37

%

 

1,134,983

 

 

21,959

 

 

3.89

%

Total consumer real estate

 

2,286,224

 

 

40,842

 

 

3.60

%

 

2,652,650

 

 

50,379

 

 

3.82

%

Other consumer

 

22,087

 

 

843

 

 

7.70

%

 

26,406

 

 

1,072

 

 

8.16

%

Total loans

 

$

9,224,955

 

 

$

181,633

 

 

3.97

%

 

$

9,091,611

 

 

$

191,141

 

 

4.23

%

Total interest-earning assets

 

$

12,254,140

 

 

$

196,777

 

 

3.24

%

 

$

10,731,350

 

 

$

207,835

 

 

3.89

%

Cash and due from banks

 

148,499

 

 

 

 

 

 

121,199

 

 

 

 

 

Federal Home Loan Bank stock

 

9,828

 

 

 

 

 

 

18,937

 

 

 

 

 

Other assets

 

1,249,898

 

 

 

 

 

 

1,227,199

 

 

 

 

 

Total assets

 

$

13,662,365

 

 

 

 

 

 

$

12,098,685

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

Savings and interest checking accounts

 

$

4,225,331

 

 

$

807

 

 

0.04

%

 

$

3,475,223

 

 

$

3,035

 

 

0.18

%

Money market

 

2,318,106

 

 

950

 

 

0.08

%

 

1,922,495

 

 

4,550

 

 

0.48

%

Time deposits

 

874,676

 

 

2,971

 

 

0.68

%

 

1,266,540

 

 

10,334

 

 

1.64

%

Total interest-bearing deposits

 

$

7,418,113

 

 

$

4,728

 

 

0.13

%

 

$

6,664,258

 

 

$

17,919

 

 

0.54

%

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

35,746

 

 

379

 

 

2.14

%

 

235,309

 

 

961

 

 

0.82

%

Long-term borrowings

 

25,818

 

 

205

 

 

1.60

%

 

73,271

 

 

904

 

 

2.48

%

Junior subordinated debentures

 

62,851

 

 

855

 

 

2.74

%

 

62,849

 

 

924

 

 

2.96

%

Subordinated debentures

 

49,717

 

 

1,235

 

 

5.01

%

 

49,623

 

 

1,235

 

 

5.00

%

Total borrowings

 

$

174,132

 

 

$

2,674

 

 

3.10

%

 

$

421,052

 

 

$

4,024

 

 

1.92

%

Total interest-bearing liabilities

 

$

7,592,245

 

 

$

7,402

 

 

0.20

%

 

$

7,085,310

 

 

$

21,943

 

 

0.62

%

Noninterest-bearing demand deposits

 

4,067,235

 

 

 

 

 

 

3,025,990

 

 

 

 

 

Other liabilities

 

279,620

 

 

 

 

 

 

283,724

 

 

 

 

 

Total liabilities

 

$

11,939,100

 

 

 

 

 

 

$

10,395,024

 

 

 

 

 

Stockholders' equity

 

1,723,265

 

 

 

 

 

 

1,703,661

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

13,662,365

 

 

 

 

 

 

$

12,098,685

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

189,375

 

 

 

 

 

 

$

185,892

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

 

 

 

 

3.04

%

 

 

 

 

 

3.27

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

3.12

%

 

 

 

 

 

3.48

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits, including demand deposits

 

$

11,485,348

 

 

$

4,728

 

 

 

 

$

9,690,248

 

 

$

17,919

 

 

 

Cost of total deposits

 

 

 

 

 

0.08

%

 

 

 

 

 

0.37

%

Total funding liabilities, including demand deposits

 

$

11,659,480

 

 

$

7,402

 

 

 

 

$

10,111,300

 

 

$

21,943

 

 

 

Cost of total funding liabilities

 

 

 

 

 

0.13

%

 

 

 

 

 

0.44

%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $438,000 and $490,000 for the six months ended June 30, 2021 and 2020, 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.

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, tangible book value per share, and loan and allowance metrics, exclusive of PPP loan balances at the dates indicated:

 

 

June 30
2021

 

March 31
2021

 

June 30
2020

 

Tangible common equity

 

(Dollars in thousands, except per share data)

 

Stockholders' equity (GAAP)

 

$

1,741,622

 

 

$

1,715,371

 

 

$

1,671,692

 

(a)

Less: Goodwill and other intangibles

 

526,576

 

 

527,895

 

 

532,202

 

 

Tangible common equity

 

$

1,215,046

 

 

$

1,187,476

 

 

$

1,139,490

 

(b)

Tangible assets

 

 

 

 

 

 

 

Assets (GAAP)

 

$

14,194,207

 

 

$

13,773,914

 

 

$

13,022,500

 

(c)

Less: Goodwill and other intangibles

 

526,576

 

 

527,895

 

 

532,202

 

 

Tangible assets

 

$

13,667,631

 

 

$

13,246,019

 

 

$

12,490,298

 

(d)

 

 

 

 

 

 

 

 

Common Shares

 

33,037,859

 

 

33,024,882

 

 

32,942,110

 

(e)

 

 

 

 

 

 

 

 

Common equity to assets ratio (GAAP)

 

12.27

%

 

12.45

%

 

12.84

%

(a/c)

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

 

8.89

%

 

8.96

%

 

9.12

%

(b/d)

Book value per share (GAAP)

 

$

52.72

 

 

$

51.94

 

 

$

50.75

 

(a/e)

Tangible book value per share (Non-GAAP)

 

$

36.78

 

 

$

35.96

 

 

$

34.59

 

(b/e)

 

 

 

 

 

 

 

 

Total loans (GAAP)

 

$

8,938,988

 

 

$

9,246,691

 

 

$

9,359,648

 

 

Total loans, excluding PPP (Non-GAAP)

 

$

8,456,338

 

 

$

8,400,390

 

 

$

8,566,665

 

 

 

 

 

 

 

 

 

 

Allowance as a % of total loans (GAAP)

 

1.15

%

 

1.16

%

 

1.20

%

 

Allowance as a % of total loans, excluding PPP (Non-GAAP)

 

1.21

%

 

1.28

%

 

1.31

%

 

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, as well as the impact of noncore items on noninterest income as a percentage of total revenue and the efficiency ratio for the periods indicated:

 

Three Months Ended

 

Six Months Ended

 

 

June 30
2021

 

March 31
2021

 

June 30
2020

 

June 30
2021

 

June 30
2020

 

Net interest income (GAAP)

$

93,354

 

 

$

95,584

 

 

$

91,098

 

 

$

188,938

 

 

$

185,402

 

(a)

 

 

 

 

 

 

 

 

 

 

 

Noninterest income (GAAP)

$

24,967

 

 

$

25,246

 

 

$

28,190

 

 

$

50,213

 

 

$

54,625

 

(b)

Noninterest income on an operating basis (Non-GAAP)

$

24,967

 

 

$

25,246

 

 

$

28,190

 

 

$

50,213

 

 

$

54,625

 

(c)

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (GAAP)

$

73,302

 

 

$

69,682

 

 

$

66,607

 

 

$

142,984

 

 

$

133,447

 

(d)

Less:

 

 

 

 

 

 

 

 

 

 

Merger and acquisition expense

1,731

 

 

 

 

 

 

1,731

 

 

 

 

Noninterest expense on an operating basis (Non-GAAP)

$

71,571

 

 

$

69,682

 

 

$

66,607

 

 

$

141,253

 

 

$

133,447

 

(e)

 

 

 

 

 

 

 

 

 

 

 

Total revenue (GAAP)

$

118,321

 

 

$

120,830

 

 

$

119,288

 

 

$

239,151

 

 

$

240,027

 

(a+b)

Total operating revenue (Non-GAAP)

$

118,321

 

 

$

120,830

 

 

$

119,288

 

 

$

239,151

 

 

$

240,027

 

(a+c)

 

 

 

 

 

 

 

 

 

 

 

Ratios

 

 

 

 

 

 

 

 

 

 

Noninterest income as a % of total revenue (GAAP based)

21.10

%

 

20.89

%

 

23.63

%

 

21.00

%

 

22.76

%

(b/(a+b))

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

21.10

%

 

20.89

%

 

23.63

%

 

21.00

%

 

22.76

%

(c/(a+c))

Efficiency ratio (GAAP based)

61.95

%

 

57.67

%

 

55.84

%

 

59.79

%

 

55.60

%

(d/(a+b))

Efficiency ratio on an operating basis (Non-GAAP)

60.49

%

 

57.67

%

 

55.84

%

 

59.06

%

 

55.60

%

(e/(a+c))

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

 

2021

 

2021

 

Q2

 

Q1

 

Volume

Interest

Margin Impact

 

Volume

Interest

Margin Impact

 

(Dollars in thousands)

Reported total (GAAP)

$

12,535,962

 

$

93,564

 

2.99

%

 

$

11,968,884

 

$

95,812

 

3.25

%

Core adjustments:

 

 

 

 

 

 

 

PPP volume @ 1%

(717,847)

 

(1,794)

 

 

 

(837,986)

 

(2,081)

 

 

PPP fee amortization

 

(7,217)

 

 

 

 

(9,487)

 

 

Total PPP impact

(717,847)

 

(9,011)

 

(0.12)

%

 

(837,986)

 

(11,568)

 

(0.18)

%

Acquisition fair value accretion

 

(1,664)

 

(0.06)

%

 

 

(1,731)

 

(0.06)

%

Nonaccrual interest

 

33

 

%

 

 

28

 

%

Other noncore adjustments

 

(410)

 

(0.01)

%

 

 

(626)

 

(0.02)

%

Core margin (Non-GAAP)*

$

11,818,115

 

$

82,512

 

2.80

%

 

$

11,130,898

 

$

81,915

 

2.99

%

 

 

 

 

 

 

 

 

*The presentation above has changed as compared to previously reported periods to include the entire cash balance impact in the “core margin” results.

APPENDIX D: Commercial Loan Portfolio Characteristics

Commercial Industries Highly Impacted by COVID-19 Pandemic

While Rockland Trust is unable to know with certainty the direct, indirect, and likely far-reaching impacts of the COVID-19 pandemic, we continue to monitor daily the loan balances and the loan exposures for commercial loan categories we have deemed to be highly impacted by the pandemic (i.e., Accommodations, Food Services, Retail Trade, Other Services (except Public Administration) and Arts, Entertainments & Recreation). We do not have any material loan exposure to the Oil & Gas, Casino & Gambling, Aviation, or Cruise Line industries.

The table below provides total outstanding balances of commercial loans as of June 30, 2021, within industries that we have deemed to be highly impacted by the COVID-19 pandemic:

Highly Impacted COVID-19 Industries - Balances

 

 

 

June 30, 2021

 

(Dollars in thousands)

Accommodations

$

400,463

 

Food Services

136,613

 

Retail Trade

528,404

 

Other Services (except Public Administration)

146,270

 

Arts, Entertainment, and Recreation

96,837

 

Total (1)

$

1,308,587

 

(1) Amounts presented above exclude $144.2 million of outstanding PPP loans.

Highly Impacted COVID-19 Industries - Details

 

June 30, 2021

 

(Dollars in thousands)

Accommodations

 

Balance

$

400,463

 

Average borrower loan size

$

4,200

 

% secured by real estate

99.8

%

Weighted average loan to value

54.1

%

Other information:

 

– The accommodation portfolio consists of 68 properties representing a combination of flagged (59%) and non-flagged (41%) hotels, motels and inns.

– Loans secured by hotel properties deemed to be located in areas of leisure comprise $166.1 million, or 42% of the hotel portfolio.

– Approximately 89% of the balances outstanding are secured by properties located within the six New England states with the largest concentration in Massachusetts (58%).

 

 

Food Services

 

Balance

$

136,613

 

Average borrower loan size

$

360

 

% secured by real estate

70.3

%

Weighted average loan to value

49.8

%

Other information:

 

– The food services portfolio includes full-service restaurants (59%), limited service restaurants and fast food (39%), and other types of food service (caterers, bars, mobile food service 2%).

 

 

 

 

Retail Trade

 

Balance

$

528,404

 

Average borrower loan size

$

498

 

% secured by real estate

43.0

%

Weighted average loan to value

57.3

%

Other information:

 

– The retail trade portfolio consists broadly of food and beverage stores (46%), motor vehicle and parts dealers (25%), gasoline stations (14%). All other retailers account for 15% of the current outstanding balance.

– Collateral for these loans varies and may consist of real estate, motor vehicles inventories, other types of inventories and general business assets.

 

 

Other Services (except Public Administration)

 

Balance

$

146,270

 

Average borrower loan size

$

258

 

% secured by real estate

52.6

%

Weighted average loan to value

51.2

%

Other information:

 

– The other services portfolio consists of various for-profit and not-for-profit services diversified across religious, civic and social service organizations (41%), repair and maintenance business (31%) and other personal services, including beauty salons, laundry services, pet care and other types of services (28%).

 

 

Arts, Entertainment, and Recreation

 

Balance

$

96,837

 

Average borrower loan size

$

775

 

% secured by real estate

84.2

%

Weighted average loan to value

52.1

%

Other information:

 

– Amusement, gambling and recreational industries make up a majority of this category (94%) and include amusement/theme parks, bowling centers, fitness centers, golf courses, marinas, and other recreational industries. Other industries including museums, performing arts, and spectator sports account for the remaining outstanding balances (6%).

 

 

Other Commercial Loan Portfolio Characteristics

Average total loan size varies across the commercial portfolio with commercial real estate loans having an average size of $1.1 million, commercial and industrial loans having an average loan size of $134,000 and small business loans, which are each under $5.0 million, having an average loan size of $33,000. Additional details are provided below regarding loan sizes of the commercial real estate and commercial and industrial portfolios as of June 30, 2021:

Commercial Real Estate (Including Construction)

 

<$5M

 

$5-10M

 

$10-20M

 

>$20M

 

Total

Dollar Amount (in '000s)

$

2,630,121

 

 

$

901,529

 

 

$

773,225

 

 

$

443,207

 

 

$

4,748,082

 

# of loans

4,040

 

 

129

 

 

57

 

 

18

 

 

4,244

 

Commercial and Industrial (Including PPP)

 

<$5M

 

$5-10M

 

$10-20M

 

>$20M

 

Total

Dollar Amount (in '000s)

$

1,213,192

 

 

$

212,666

 

 

$

273,974

 

 

$

26,666

 

 

$

1,726,498

 

# of loans

12,797

 

 

32

 

 

20

 

 

1

 

 

12,850

 

APPENDIX E: COVID-19 Related Modifications Details

Deferrals by Modification Type

 

Deferral of Principal and Interest

 

Deferral of Principal Only

 

 

Total Deferrals

 

Total Portfolio

 

% Deferral

 

(Dollars in thousands)

Commercial and industrial

$

 

 

$

1,972

 

 

 

$

1,972

 

 

$

1,726,498

 

 

0.1

%

Commercial real estate (1)

590

 

 

230,589

 

 

 

231,179

 

 

4,748,082

 

 

4.9

%

Business banking

 

 

636

 

 

 

636

 

 

182,863

 

 

0.3

%

Residential real estate

 

 

 

 

 

 

 

1,240,279

 

 

%

Home equity

 

 

 

 

 

 

 

1,018,408

 

 

%

Consumer

 

 

 

 

 

 

 

22,858

 

 

%

Total active deferrals as of June 30, 2021

$

590

 

 

$

233,197

 

 

 

$

233,787

 

 

$

8,938,988

 

 

2.6

%

(1) Balances include commercial construction deferrals.

Deferrals by Industry

 

June 30, 2021

 

(Dollars in thousands)

Highly Impacted Industries

 

Accommodation

$

176,721

 

Food Services

262

 

Arts, Entertainment, and Recreation

14,181

 

Total Highly Impacted Industries

191,164

 

 

 

Other Industries

 

Real Estate and Leasing

41,123

 

Transportation and Warehousing

578

 

All Other Industries

922

 

Total Other Industries

42,623

 

Grand Total

$

233,787

 

 

Chris Oddleifson
President and Chief Executive Officer
(781) 982-6660

Mark J. Ruggiero
Chief Financial Officer and
Chief Accounting Officer
(781) 982-6281

Source: Independent Bank Corp.

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