Independent Bank Corp. Reports Second Quarter Net Income of $61.8 Million

ROCKLAND, Mass.–(BUSINESS WIRE)–Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2022 second quarter net income of $61.8 million, or $1.32 per diluted share, compared to 2022 first quarter net income of $53.1 million, or $1.12 per diluted share, and 2022 first quarter operating net income of $58.2 million, or $1.23 per diluted share, which excluded pre-tax merger-related costs of $7.1 million associated with the acquisition of Meridian Bancorp, Inc. (“Meridian”) and its subsidiary, East Boston Savings Bank (“EBSB”). There were no such costs included in 2022 second quarter results. Please refer to “Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP)” below for a reconciliation of net income to operating net income.

“We generated solid results while continuing our focus on disciplined growth. Our core fundamentals were on full display this quarter as evidenced by revenue and loan growth along with a continuing sound balance sheet,” said Christopher Oddleifson, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “Our ongoing success is a testament to the dedication of my talented colleagues and the enduring relationships they forge with each other and with the customers and communities that Rockland Trust serves. In these uncertain economic times, we remain committed to serving the needs of all our constituents and being the bank Where Each Relationship Matters®.”

BALANCE SHEET

Total assets of $20.0 billion at June 30, 2022 decreased by $176.7 million, or 0.9%, from the prior quarter due primarily to the decline in liquid assets, and increased by $5.8 billion, or 40.8%, as compared to the year ago period, inclusive of the 2021 fourth quarter acquisition of Meridian.

Total loans at June 30, 2022 of $13.7 billion increased by $95.7 million, or 2.8% on an annualized basis compared to the prior quarter level. Excluding $69.0 million of net paydowns associated with the Paycheck Protection Program (“PPP”), the loan portfolio increased by $164.7 million, or 4.9% on an annualized basis, compared to the prior quarter. Organic loan growth was driven primarily by strong consumer loan activity, as the majority of residential real estate loan closings were retained on the balance sheet, resulting in 8.1% growth (32.4% annualized) for the quarter in that portfolio, while increased demand and line utilization fueled 3.9% (15.5% annualized) growth in home equity balances. On the commercial side, increased line utilization and higher closing volumes drove solid growth in both the commercial and industrial and construction categories, while elevated attrition outpaced strong closing activity within commercial real estate. Robust small business origination activity led to solid 2.8% growth for the quarter.

Deposit balances of $16.6 billion at June 30, 2022 decreased by $123.8 million, or 0.7%, from the prior quarter primarily attributable to continued runoff in higher-cost time deposits, while growth in municipal deposits was offset by personal and business deposit declines within the core categories. Core deposits comprised 86.8% of total deposits at June 30, 2022, an increase from 85.8% at March 31, 2022. The total cost of deposits for the quarter remained at 0.05%.

The securities portfolio increased by $73.2 million, or 2.6%, when compared to the prior quarter, reflecting the Company’s ongoing strategy to deploy a portion of excess cash balances into investment securities. Total purchases for the quarter were $196.7 million, offset by an unrealized loss of $30.7 million related to the available for sale portfolio, as well as paydowns, calls, and maturities. Total securities represented 14.7% of total assets as of June 30, 2022, as compared to 14.2% at March 31, 2022

Stockholders’ equity at June 30, 2022 decreased 3.2% when compared to the prior quarter, which decrease is primarily attributable to the Company’s repurchase of approximately 1.3 million in shares during the second quarter of 2022 under the Company’s buyback program, which totaled $103.4 million, along with elevated levels of unrealized losses on available for sale investment securities included in other comprehensive income, which were partially offset by strong earnings retention. As a result of this decrease in stockholders’ equity, book value per share decreased by $0.27, or 0.4%, to $62.32 during the second quarter as compared to the prior quarter. The Company’s ratio of common equity to assets of 14.37% at June 30, 2022 represented a decrease of 34 basis points from the prior quarter and an increase of 210 basis points from the year ago period. The Company’s tangible book value per share at June 30, 2022 declined by $0.84, or 2.0%, from the prior quarter to $40.31, but represented an increase of 9.6% from the year ago period inclusive of the accretive impact of the Meridian acquisition. The Company’s ratio of tangible common equity to tangible assets of 9.79% at June 30, 2022 represents a decrease of 39 basis points from the prior quarter and an increase of 90 basis points from the year ago period. Please refer to Appendix A for a detailed reconciliation of Non-GAAP metrics.

NET INTEREST INCOME

Net interest income for the second quarter increased 5.4% to $144.9 million compared to $137.4 million for the prior quarter, primarily reflecting the positive impact of asset repricing in the rising interest rate environment in conjunction with relatively stable funding costs, offset by reduced net PPP fee income of $1.7 million. The reported net interest margin increased by 18 basis points from the prior quarter to 3.27%, and increased 23 basis points to 3.23% on a core basis when excluding PPP fees, purchase accounting, and other non-recurring items. Please refer to Appendix C for additional details regarding the net interest margin.

NONINTEREST INCOME

Noninterest income of $27.9 million for the second quarter of 2022 was $1.6 million, or 6.2% higher compared to the prior quarter. Significant changes in noninterest income for the second quarter compared to the prior quarter included the following:

  • Deposit account fees and interchange and ATM fees increased by $335,000, or 6.1%, and $418,000, or 11.6%, respectively, both driven by increased transaction volume during the second quarter.
  • Investment management income increased by $656,000, or 7.6%, compared to the prior quarter primarily due to seasonal tax preparation fees as well as strong retail and insurance performance, offset partially by depressed market valuations during the second quarter. As of June 30, 2022, total assets under administration had decreased $568.0 million, or 9.9% to $5.2 billion, primarily due to declines in market values.
  • Mortgage banking income decreased by $320,000, or 23.5%, despite stronger origination volumes, as a greater portion of new originations were retained in the Company’s portfolio versus being sold in the secondary market as compared to the prior quarter.
  • Loan level derivative income decreased by $168,000, or 27.8%, to $436,000, due primarily to lower customer volume.
  • Other noninterest income increased by $506,000, or 10.7%, primarily attributable to increases in rental income from equipment leases and discounted purchases of Massachusetts historical tax credits.

NONINTEREST EXPENSE

Noninterest expense of $90.6 million for the second quarter of 2022 represented a $4.9 million, or 5.2%, decrease compared to the prior quarter. Significant changes in noninterest expense for the second quarter compared to the prior quarter included the following:

  • Salaries and employee benefits increased by $827,000, or 1.7%, primarily due to increases in general salary expenses and incentive programs, partially offset by decreases in payroll taxes and retirement costs.
  • Occupancy and equipment decreased by $1.7 million, or 12.5%, due mostly to decreased snow removal costs from the prior quarter of $1.2 million, utility expenses, and reduced rent related to several terminated locations acquired from EBSB.
  • The Company incurred merger related costs of $7.1 million associated with the Meridian acquisition during the first quarter of 2022. No such costs were recorded during the second quarter.
  • Other noninterest expense increased by $3.2 million, or 14.3%, due primarily to increases in consultant fees, elevated unrealized losses on equity securities, director expenses related to equity compensation granted during the quarter, advertising costs, and recruitment expense.

The Company generated a return on average assets and a return on average common equity of 1.24% and 8.49%, respectively, for the second quarter of 2022, as compared to 1.06% and 7.16%, respectively, or 1.17% and 7.85%, respectively, on an operating basis, for the prior quarter.

The Company’s tax rate for the second quarter of 2022 was 24.8%, compared to 24.4% for the prior quarter.

ASSET QUALITY

During the second quarter of 2022, the Company recorded total net charge-offs of $199,000, equating to 0.01% of average loans on an annualized basis. Nonperforming loans declined slightly to $55.9 million, or 0.41% of total loans at June 30, 2022, as compared to $56.6 million, or 0.42% of total loans at March 31, 2022. Delinquency as a percentage of total loans increased 11 basis points from the prior quarter to 0.40% at June 30, 2022.

In addition, total loans subject to a COVID-19 related payment deferral decreased significantly to $197.4 million, or 1.4% of total loans, at June 30, 2022, as compared to $304.5 million, or 2.2% of total loans, at March 31, 2022. All loans subject to a payment deferral at June 30, 2022 were performing in accordance with the modified terms.

The Company recorded no provision for credit losses during the second quarter of 2022 as continued strong credit quality metrics countered additional provisioning for net loan growth. The allowance for credit losses on total loans was $144.3 million, or 1.06% of total loans, at June 30, 2022, as compared to $144.5 million, or 1.06% of total loans, at March 31, 2022.

CONFERENCE CALL INFORMATION

Christopher Oddleifson, Chief Executive Officer, Robert Cozzone, Chief Operating Officer, and Mark Ruggiero, Chief Financial Officer, will host a conference call to discuss second quarter earnings at 10:00 a.m. Eastern Time on Friday, July 22, 2022. Internet access to the call is available on the Company’s website at https://INDB.RocklandTrust.com or via telephonic access by dial-in at 1-888-336-7153 reference: INDB. A replay of the call will be available by calling 1-877-344-7529, Replay Conference Number: 9471677 and will be available through July 29, 2022. Additionally, a webcast replay will be available on the Company’s website until July 22, 2023.

ABOUT INDEPENDENT BANK CORP.

Independent Bank Corp. (NASDAQ Global Select Market: INDB) is the holding company for Rockland Trust Company, a full-service commercial bank headquartered in Massachusetts. Rockland Trust was named to The Boston Globe’s “Top Places to Work” 2021 list, an honor earned for the 13th consecutive year. *In 2022, Rockland Trust was ranked #1 in Customer Satisfaction with Retail Banking in New England. Rockland Trust has a longstanding commitment to equity and inclusion. This commitment is underscored by initiatives such as Diversity and Inclusion leadership training, a colleague Allyship mentoring program, and numerous Employee Resource Groups focused on providing colleague support and education, reinforcing a culture of mutual respect and advancing professional development, and Rockland Trust’s sponsorship of diverse community organizations through charitable giving and employee-based volunteerism. In addition, Rockland Trust is deeply committed to the communities it serves, as reflected in the overall “Outstanding” rating in its most recent Community Reinvestment Act performance evaluation. Rockland Trust offers a wide range of banking, investment, and insurance services. The Bank serves businesses and individuals through over 120 retail branches, commercial and residential lending centers, and investment management offices in eastern Massachusetts, including Greater Boston, South Shore, North Shore, Cape Cod and Islands, Worcester County, and Rhode Island. Rockland Trust also offers a full suite of mobile, online, and telephone banking services. Rockland Trust is an FDIC member and an Equal Housing Lender. To find out why Rockland Trust is the bank “Where Each Relationship Matters®,” please visit RocklandTrust.com.

*Rockland Trust received the highest score in a tie in the New England Region of the J.D. Power 2022 U.S. Retail Banking Satisfaction Study of customers’ satisfaction with their primary bank. Visit jdpower.com/awards for more details.

This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and business of the Company. These statements may be identified by such forward-looking terminology as “expect,” “achieve,” “plan,” “believe,” “future,” “positioned,” “continued,” “will,” “would,” “potential,” or similar statements or variations of such terms. Actual results may differ from those contemplated by these forward-looking statements.

Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:

  • further 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, 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.

Further, the foregoing factors may be exacerbated by the ultimate impact of the COVID-19 pandemic, which remains unknown at this time due to factors and future developments that are uncertain, unpredictable and, in many cases, beyond the Company’s control, including the scope, duration and extent of the pandemic and any further resurgences, the efficacy, availability and public acceptance of vaccines, boosters or other treatments, actions taken by governmental authorities in response to the pandemic and the direct and indirect impact of these actions and the pandemic generally on the Company’s employees, customers, business and third-parties with which the Company conducts business.

The Company wishes to caution readers not to place undue reliance on any forward-looking statements as the Company’s business and its forward-looking statements involve substantial known and unknown risks and uncertainties described in the Company’s Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q (“Risk Factors”). Except as required by law, the Company disclaims any intent or obligation to update publicly any such forward-looking statements, whether in response to new information, future events or otherwise. Any public statements or disclosures by the Company following this release which modify or impact any of the forward-looking statements contained in this release will be deemed to modify or supersede such statements in this release. In addition to the information set forth in this press release, you should carefully consider the Risk Factors.

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This information includes operating net income and operating earnings per share (“EPS”), operating return on average assets, operating return on average common equity, operating return on average tangible common equity, core net interest margin (“core margin”), tangible book value per share and the tangible common equity ratio.

Operating net income, operating EPS, operating return on average assets and operating return on average common equity, exclude items that management believes are unrelated to the Company’s core banking business such as merger and acquisition expenses, provision for credit losses on acquired loan portfolios, and other items, if applicable. Management uses operating net income and related ratios and operating EPS to measure the strength of the Company’s core banking business and to identify trends that may to some extent be obscured by such items. Management reviews its core margin to determine any items that may impact the net interest margin that may be one-time in nature or not reflective of its core operating environment, such as out-sized cash balances, unique low-yielding loans originated through government programs in response to the pandemic, or significant purchase accounting adjustments. Management believes that adjusting for these items to arrive at a core margin provides additional insight into the operating environment and how management decisions impact the net interest margin. Similarly, management reviews certain loan metrics such as growth rates and allowance as a percentage of total loans, adjusted to exclude loans that are not considered part of its core portfolio, which includes loans originated in association with government sponsored and guaranteed programs in response to the pandemic, to arrive at adjusted numbers more representative of the core growth of the portfolio and core reserve to loan ratio.

Management also supplements its evaluation of financial performance with analysis of tangible book value per share (which is computed by dividing stockholders’ equity less goodwill and identifiable intangible assets, or “tangible common equity”, by common shares outstanding), the tangible common equity ratio (which is computed by dividing tangible common equity by “tangible assets”, defined as total assets less goodwill and other intangibles), and return on average tangible common equity (which is computed by dividing net income by average tangible common equity). The Company has included information on tangible book value per share, the tangible common equity ratio and return on average tangible common equity because management believes that investors may find it useful to have access to the same analytical tools used by management. As a result of merger and acquisition activity, the Company has recognized goodwill and other intangible assets in conjunction with business combination accounting principles. Excluding the impact of goodwill and other intangibles in measuring asset and capital values for the ratios provided, along with other bank standard capital ratios, provides a framework to compare the capital adequacy of the Company to other companies in the financial services industry.

These non-GAAP measures should not be viewed as a substitute for operating results and other financial measures determined in accordance with GAAP. An item which management excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP performance measures, including operating net income, operating EPS, operating return on average assets, operating return on average common equity, core margin, tangible book value per share and the tangible common equity ratio, are not necessarily comparable to non-GAAP performance measures which may be presented by other companies.

Category: Earnings Releases

 
 

INDEPENDENT BANK CORP. FINANCIAL SUMMARY

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEETS

 

 

 

 

(Unaudited, dollars in thousands)

 

 

 

 

 

 

% Change

 

% Change

 

June 30

2022

 

March 31

2022

 

June 30

2021

 

Jun 2022 vs.

 

Jun 2022 vs.

 

 

 

 

Mar 2022

 

Jun 2021

Assets

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

202,802

 

 

$

173,779

 

 

$

141,953

 

 

16.70

%

 

42.87

%

Interest-earning deposits with banks

 

1,273,465

 

 

 

1,666,580

 

 

 

2,114,477

 

 

(23.59

) %

 

(39.77

) %

Securities

 

 

 

 

 

 

 

 

 

Trading

 

3,637

 

 

 

3,956

 

 

 

3,439

 

 

(8.06

) %

 

5.76

%

Equities

 

21,181

 

 

 

22,611

 

 

 

22,975

 

 

(6.32

) %

 

(7.81

) %

Available for sale

 

1,501,949

 

 

 

1,552,731

 

 

 

794,516

 

 

(3.27

) %

 

89.04

%

Held to maturity

 

1,408,189

 

 

 

1,282,441

 

 

 

861,821

 

 

9.81

%

 

63.40

%

Total securities

 

2,934,956

 

 

 

2,861,739

 

 

 

1,682,751

 

 

2.56

%

 

74.41

%

Loans held for sale

 

2,358

 

 

 

6,144

 

 

 

25,561

 

 

(61.62

) %

 

(90.78

) %

Loans

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

1,541,046

 

 

 

1,566,192

 

 

 

1,726,498

 

 

(1.61

) %

 

(10.74

) %

Commercial real estate

 

7,791,757

 

 

 

7,897,616

 

 

 

4,251,543

 

 

(1.34

) %

 

83.27

%

Commercial construction

 

1,194,577

 

 

 

1,153,945

 

 

 

496,539

 

 

3.52

%

 

140.58

%

Small business

 

205,953

 

 

 

200,405

 

 

 

182,863

 

 

2.77

%

 

12.63

%

Total commercial

 

10,733,333

 

 

 

10,818,158

 

 

 

6,657,443

 

 

(0.78

) %

 

61.22

%

Residential real estate

 

1,844,057

 

 

 

1,706,045

 

 

 

1,240,279

 

 

8.09

%

 

48.68

%

Home equity – first position

 

587,314

 

 

 

577,881

 

 

 

606,332

 

 

1.63

%

 

(3.14

) %

Home equity – subordinate positions

 

478,196

 

 

 

447,934

 

 

 

412,076

 

 

6.76

%

 

16.05

%

Total consumer real estate

 

2,909,567

 

 

 

2,731,860

 

 

 

2,258,687

 

 

6.50

%

 

28.82

%

Other consumer

 

32,864

 

 

 

30,009

 

 

 

22,858

 

 

9.51

%

 

43.77

%

Total loans

 

13,675,764

 

 

 

13,580,027

 

 

 

8,938,988

 

 

0.70

%

 

52.99

%

Less: allowance for credit losses

 

(144,319

)

 

 

(144,518

)

 

 

(102,357

)

 

(0.14

) %

 

41.00

%

Net loans

 

13,531,445

 

 

 

13,435,509

 

 

 

8,836,631

 

 

0.71

%

 

53.13

%

Federal Home Loan Bank stock

 

6,249

 

 

 

11,407

 

 

 

9,079

 

 

(45.22

) %

 

(31.17

) %

Bank premises and equipment, net

 

202,221

 

 

 

199,106

 

 

 

117,435

 

 

1.56

%

 

72.20

%

Goodwill

 

985,072

 

 

 

985,072

 

 

 

506,206

 

 

%

 

94.60

%

Other intangible assets

 

28,845

 

 

 

30,759

 

 

 

20,370

 

 

(6.22

) %

 

41.61

%

Cash surrender value of life insurance policies

 

292,807

 

 

 

291,192

 

 

 

242,963

 

 

0.55

%

 

20.52

%

Other assets

 

522,230

 

 

 

497,891

 

 

 

496,781

 

 

4.89

%

 

5.12

%

Total assets

$

19,982,450

 

 

$

20,159,178

 

 

$

14,194,207

 

 

(0.88

) %

 

40.78

%

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

$

5,562,174

 

 

$

5,537,156

 

 

$

4,370,852

 

 

0.45

%

 

27.26

%

Savings and interest checking accounts

 

6,347,601

 

 

 

6,247,806

 

 

 

4,445,903

 

 

1.60

%

 

42.77

%

Money market

 

3,419,170

 

 

 

3,579,820

 

 

 

2,352,897

 

 

(4.49

) %

 

45.32

%

Time certificates of deposit

 

1,310,603

 

 

 

1,398,610

 

 

 

817,319

 

 

(6.29

) %

 

60.35

%

Total deposits

 

16,639,548

 

 

 

16,763,392

 

 

 

11,986,971

 

 

(0.74

) %

 

38.81

%

Borrowings

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

25,652

 

 

 

25,660

 

 

 

35,693

 

 

(0.03

) %

 

(28.13

) %

Long-term borrowings, net

 

 

 

 

 

 

 

23,425

 

 

n/a

 

 

(100.00

) %

Junior subordinated debentures, net

 

62,854

 

 

 

62,854

 

 

 

62,852

 

 

%

 

%

Subordinated debentures, net

 

49,838

 

 

 

49,814

 

 

 

49,743

 

 

0.05

%

 

0.19

%

Total borrowings

 

138,344

 

 

 

138,328

 

 

 

171,713

 

 

0.01

%

 

(19.43

) %

Total deposits and borrowings

 

16,777,892

 

 

 

16,901,720

 

 

 

12,158,684

 

 

(0.73

) %

 

37.99

%

Other liabilities

 

333,373

 

 

 

292,019

 

 

 

293,901

 

 

14.16

%

 

13.43

%

Total liabilities

 

17,111,265

 

 

 

17,193,739

 

 

 

12,452,585

 

 

(0.48

) %

 

37.41

%

Stockholders’ equity

 

 

 

 

 

 

 

 

 

Common stock

 

459

 

 

 

472

 

 

 

329

 

 

(2.75

) %

 

39.51

%

Additional paid in capital

 

2,146,333

 

 

 

2,247,518

 

 

 

948,130

 

 

(4.50

) %

 

126.38

%

Retained earnings

 

833,857

 

 

 

795,651

 

 

 

763,596

 

 

4.80

%

 

9.20

%

Accumulated other comprehensive income (loss), net of tax

 

(109,464

)

 

 

(78,202

)

 

 

29,567

 

 

39.98

%

 

(470.22

) %

Total stockholders’ equity

 

2,871,185

 

 

 

2,965,439

 

 

 

1,741,622

 

 

(3.18

) %

 

64.86

%

Total liabilities and stockholders’ equity

$

19,982,450

 

 

$

20,159,178

 

 

$

14,194,207

 

 

(0.88

) %

 

40.78

%

 
 

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

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

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

% Change

 

% Change

 

June 30

2022

 

March 31

2022

 

June 30

2021

 

Jun 2022 vs.

 

Jun 2022 vs.

 

 

 

 

Mar 2022

 

Jun 2021

Interest income

 

 

 

 

 

 

 

 

 

Interest on federal funds sold and short-term investments

$

2,817

 

 

$

886

 

 

$

513

 

 

217.95

%

 

449.12

%

Interest and dividends on securities

 

11,283

 

 

 

10,044

 

 

 

7,189

 

 

12.34

%

 

56.95

%

Interest and fees on loans

 

133,988

 

 

 

129,625

 

 

 

88,814

 

 

3.37

%

 

50.86

%

Interest on loans held for sale

 

35

 

 

 

64

 

 

 

186

 

 

(45.31

) %

 

(81.18

) %

Total interest income

 

148,123

 

 

 

140,619

 

 

 

96,702

 

 

5.34

%

 

53.17

%

Interest expense

 

 

 

 

 

 

 

 

 

Interest on deposits

 

2,111

 

 

 

2,107

 

 

 

2,017

 

 

0.19

%

 

4.66

%

Interest on borrowings

 

1,151

 

 

 

1,080

 

 

 

1,331

 

 

6.57

%

 

(13.52

) %

Total interest expense

 

3,262

 

 

 

3,187

 

 

 

3,348

 

 

2.35

%

 

(2.57

) %

Net interest income

 

144,861

 

 

 

137,432

 

 

 

93,354

 

 

5.41

%

 

55.17

%

Provision for credit losses

 

 

 

 

(2,000

)

 

 

(5,000

)

 

(100.00

) %

 

(100.00

) %

Net interest income after provision for credit losses

 

144,861

 

 

 

139,432

 

 

 

98,354

 

 

3.89

%

 

47.29

%

Noninterest income

 

 

 

 

 

 

 

 

 

Deposit account fees

 

5,828

 

 

 

5,493

 

 

 

3,822

 

 

6.10

%

 

52.49

%

Interchange and ATM fees

 

4,027

 

 

 

3,609

 

 

 

3,068

 

 

11.58

%

 

31.26

%

Investment management

 

9,329

 

 

 

8,673

 

 

 

8,872

 

 

7.56

%

 

5.15

%

Mortgage banking income

 

1,042

 

 

 

1,362

 

 

 

2,705

 

 

(23.49

) %

 

(61.48

) %

Increase in cash surrender value of life insurance policies

 

1,871

 

 

 

1,795

 

 

 

1,589

 

 

4.23

%

 

17.75

%

Gain on life insurance benefits

 

123

 

 

 

 

 

 

 

 

100.00

%

 

100.00

%

Loan level derivative income

 

436

 

 

 

604

 

 

 

116

 

 

(27.81

) %

 

275.86

%

Other noninterest income

 

5,242

 

 

 

4,736

 

 

 

4,795

 

 

10.68

%

 

9.32

%

Total noninterest income

 

27,898

 

 

 

26,272

 

 

 

24,967

 

 

6.19

%

 

11.74

%

Noninterest expenses

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

49,538

 

 

 

48,711

 

 

 

42,635

 

 

1.70

%

 

16.19

%

Occupancy and equipment expenses

 

11,637

 

 

 

13,302

 

 

 

8,706

 

 

(12.52

) %

 

33.67

%

Data processing and facilities management

 

2,247

 

 

 

2,372

 

 

 

1,686

 

 

(5.27

) %

 

33.27

%

FDIC assessment

 

1,743

 

 

 

1,805

 

 

 

775

 

 

(3.43

) %

 

124.90

%

Merger and acquisition expense

 

 

 

 

7,100

 

 

 

1,731

 

 

(100.00

) %

 

(100.00

) %

Other noninterest expenses

 

25,397

 

 

 

22,210

 

 

 

17,769

 

 

14.35

%

 

42.93

%

Total noninterest expenses

 

90,562

 

 

 

95,500

 

 

 

73,302

 

 

(5.17

) %

 

23.55

%

Income before income taxes

 

82,197

 

 

 

70,204

 

 

 

50,019

 

 

17.08

%

 

64.33

%

Provision for income taxes

 

20,421

 

 

 

17,107

 

 

 

12,447

 

 

19.37

%

 

64.06

%

Net Income

$

61,776

 

 

$

53,097

 

 

$

37,572

 

 

16.35

%

 

64.42

%

 

 

 

 

 

 

 

 

 

 

Weighted average common shares (basic)

 

46,665,101

 

 

 

47,366,753

 

 

 

33,033,578

 

 

 

 

 

Common share equivalents

 

14,096

 

 

 

20,711

 

 

 

21,270

 

 

 

 

 

Weighted average common shares (diluted)

 

46,679,197

 

 

 

47,387,464

 

 

 

33,054,848

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

1.32

 

 

$

1.12

 

 

$

1.14

 

 

17.86

%

 

15.79

%

Diluted earnings per share

$

1.32

 

 

$

1.12

 

 

$

1.14

 

 

17.86

%

 

15.79

%

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Net income

$

61,776

 

 

$

53,097

 

 

$

37,572

 

 

 

 

 

Noninterest expense components

 

 

 

 

 

 

 

 

 

Add – merger and acquisition expenses

 

 

 

 

7,100

 

 

 

1,731

 

 

 

 

 

Noncore increases to income before taxes

 

 

 

 

7,100

 

 

 

1,731

 

 

 

 

 

Net tax benefit associated with noncore items (1)

 

 

 

 

(1,995

)

 

 

(487

)

 

 

 

 

Noncore increases to net income

 

 

 

 

5,105

 

 

 

1,244

 

 

 

 

 

Operating net income (Non-GAAP)

$

61,776

 

 

$

58,202

 

 

$

38,816

 

 

6.14

%

 

59.15

%

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share, on an operating basis

$

1.32

 

 

$

1.23

 

 

$

1.17

 

 

7.32

%

 

12.82

%

 

 

 

 

 

 

 

 

 

 

(1) The net tax benefit associated with noncore items is determined by assessing whether each noncore item is included or excluded from net taxable income and applying the Company’s combined marginal tax rate to only those items included in net taxable income.

 

 

 

 

 

 

 

 

 

 

Performance ratios

 

 

 

 

 

 

 

 

 

Net interest margin (FTE)

 

3.27

%

 

 

3.09

%

 

 

2.99

%

 

 

 

 

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

 

1.24

%

 

 

1.06

%

 

 

1.08

%

 

 

 

 

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

 

1.24

%

 

 

1.17

%

 

 

1.12

%

 

 

 

 

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

 

8.49

%

 

 

7.16

%

 

 

8.70

%

 

 

 

 

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

 

8.49

%

 

 

7.85

%

 

 

8.98

%

 

 

 

 

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

 

16.15

%

 

 

16.05

%

 

 

21.10

%

 

 

 

 

Noninterest income as a % of total revenue on an operating basis (Non-GAAP) (calculated by dividing total noninterest income on an operating basis by net interest income plus total noninterest income)

 

16.15

%

 

 

16.05

%

 

 

21.10

%

 

 

 

 

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

 

52.42

%

 

 

58.34

%

 

 

61.95

%

 

 

 

 

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

 

52.42

%

 

 

54.00

%

 

 

60.49

%

 

 

 

 

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

 

13.01

%

 

 

10.82

%

 

 

12.50

%

 

 

 

 

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

 

13.01

%

 

 

11.86

%

 

 

12.91

%

 

 

 

 

 
 

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

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

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

 

 

% Change

 

 

June 30

2022

 

June 30

2021

 

Jun 2022 vs.

 

 

 

 

Jun 2021

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

Interest on federal funds sold and short-term investments

 

$

3,703

 

 

$

839

 

 

341.36

%

Interest and dividends on securities

 

 

21,327

 

 

 

13,821

 

 

54.31

%

Interest and fees on loans

 

 

263,613

 

 

 

181,197

 

 

45.48

%

Interest on loans held for sale

 

 

99

 

 

 

482

 

 

(79.46

) %

Total interest income

 

 

288,742

 

 

 

196,339

 

 

47.06

%

Interest expense

 

 

 

 

 

 

Interest on deposits

 

 

4,218

 

 

 

4,728

 

 

(10.79

) %

Interest on borrowings

 

 

2,231

 

 

 

2,673

 

 

(16.54

) %

Total interest expense

 

 

6,449

 

 

 

7,401

 

 

(12.86

) %

Net interest income

 

 

282,293

 

 

 

188,938

 

 

49.41

%

Provision for credit losses

 

 

(2,000

)

 

 

(7,500

)

 

(73.33

) %

Net interest income after provision for credit losses

 

 

284,293

 

 

 

196,438

 

 

44.72

%

Noninterest income

 

 

 

 

 

 

Deposit account fees

 

 

11,321

 

 

 

7,406

 

 

52.86

%

Interchange and ATM fees

 

 

7,636

 

 

 

5,788

 

 

31.93

%

Investment management

 

 

18,002

 

 

 

17,176

 

 

4.81

%

Mortgage banking income

 

 

2,404

 

 

 

8,445

 

 

(71.53

) %

Increase in cash surrender value of life insurance policies

 

 

3,666

 

 

 

2,912

 

 

25.89

%

Gain on life insurance benefits

 

 

123

 

 

 

258

 

 

(52.33

) %

Loan level derivative income

 

 

1,040

 

 

 

289

 

 

259.86

%

Other noninterest income

 

 

9,978

 

 

 

7,939

 

 

25.68

%

Total noninterest income

 

 

54,170

 

 

 

50,213

 

 

7.88

%

Noninterest expenses

 

 

 

 

 

 

Salaries and employee benefits

 

 

98,249

 

 

 

82,524

 

 

19.06

%

Occupancy and equipment expenses

 

 

24,939

 

 

 

17,979

 

 

38.71

%

Data processing and facilities management

 

 

4,619

 

 

 

3,351

 

 

37.84

%

FDIC assessment

 

 

3,548

 

 

 

1,825

 

 

94.41

%

Merger and acquisition expense

 

 

7,100

 

 

 

1,731

 

 

310.17

%

Other noninterest expenses

 

 

47,607

 

 

 

35,574

 

 

33.83

%

Total noninterest expenses

 

 

186,062

 

 

 

142,984

 

 

30.13

%

Income before income taxes

 

 

152,401

 

 

 

103,667

 

 

47.01

%

Provision for income taxes

 

 

37,528

 

 

 

24,384

 

 

53.90

%

Net Income

 

$

114,873

 

 

$

79,283

 

 

44.89

%

 

 

 

 

 

 

 

Weighted average common shares (basic)

 

 

47,013,989

 

 

 

33,014,561

 

 

 

Common share equivalents

 

 

17,403

 

 

 

25,085

 

 

 

Weighted average common shares (diluted)

 

 

47,031,392

 

 

 

33,039,646

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

2.44

 

 

$

2.40

 

 

1.67

%

Diluted earnings per share

 

$

2.44

 

 

$

2.40

 

 

1.67

%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Net Income

 

$

114,873

 

 

$

79,283

 

 

 

Noninterest expense components

 

 

 

 

 

 

Add – merger and acquisition expenses

 

 

7,100

 

 

 

1,731

 

 

 

Noncore increases to income before taxes

 

 

7,100

 

 

 

1,731

 

 

 

Net tax benefit associated with noncore items (1)

 

 

(1,995

)

 

 

(487

)

 

 

Noncore increases to net income

 

$

5,105

 

 

$

1,244

 

 

 

Operating net income (Non-GAAP)

 

$

119,978

 

 

$

80,527

 

 

48.99

%

 

 

 

 

 

 

 

Diluted earnings per share, on an operating basis

 

$

2.55

 

 

$

2.44

 

 

4.51

%

 

 

 

 

 

 

 

(1) The net tax benefit associated with noncore items is determined by assessing whether each noncore item is included or excluded from net taxable income and applying the Company’s combined marginal tax rate to only those items included in net taxable income.

 

 

 

 

 

 

 

Performance ratios

 

 

 

 

 

 

Net interest margin (FTE)

 

 

3.18

%

 

 

3.12

%

 

 

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

 

 

1.15

%

 

 

1.17

%

 

 

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

 

 

1.21

%

 

 

1.19

%

 

 

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

 

 

7.82

%

 

 

9.28

%

 

 

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

 

 

8.16

%

 

 

9.42

%

 

 

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

 

 

11.89

%

 

 

13.38

%

 

 

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

 

 

12.42

%

 

 

13.59

%

 

 

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

 

 

16.10

%

 

 

21.00

%

 

 

Noninterest income as a % of total revenue on an operating basis (Non-GAAP) (calculated by dividing total noninterest income on an operating basis by net interest income plus total noninterest income)

 

 

16.10

%

 

 

21.00

%

 

 

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

 

 

55.30

%

 

 

59.79

%

 

 

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

 

 

53.19

%

 

 

59.06

%

 

 

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

 

 

11.89

%

 

 

13.38

%

 

 

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

 

 

12.42

%

 

 

13.59

%

 

 

 
 

ASSET QUALITY

 

 

(Unaudited, dollars in thousands)

 

Nonperforming Assets At

 

 

June 30

2022

 

March 31

2022

 

June 30

2021

Nonperforming loans

 

 

 

 

 

 

Commercial & industrial loans

 

$

3,518

 

 

$

3,517

 

 

$

20,831

 

Commercial real estate loans

 

 

40,074

 

 

 

40,470

 

 

 

9,031

 

Small business loans

 

 

31

 

 

 

20

 

 

 

558

 

Residential real estate loans

 

 

8,563

 

 

 

8,457

 

 

 

12,786

 

Home equity

 

 

3,514

 

 

 

3,761

 

 

 

4,517

 

Other consumer

 

 

215

 

 

 

393

 

 

 

95

 

Total nonperforming loans

 

 

55,915

 

 

 

56,618

 

 

 

47,818

 

Total nonperforming assets

 

$

55,915

 

 

$

56,618

 

 

$

47,818

 

 

 

 

 

 

 

 

Nonperforming loans/gross loans

 

 

0.41

%

 

 

0.42

%

 

 

0.53

%

Nonperforming assets/total assets

 

 

0.28

%

 

 

0.28

%

 

 

0.34

%

Allowance for credit losses/nonperforming loans

 

 

258.10

%

 

 

255.25

%

 

 

214.06

%

Allowance for credit losses/total loans

 

 

1.06

%

 

 

1.06

%

 

 

1.15

%

Delinquent loans/total loans

 

 

0.40

%

 

 

0.29

%

 

 

0.11

%

 

 

 

 

 

 

 

 

 

Nonperforming Assets Reconciliation for the Three Months Ended

 

 

June 30

2022

 

March 31

2022

 

June 30

2021

 

 

 

 

 

 

 

Nonperforming assets beginning balance

 

$

56,618

 

 

$

27,820

 

 

$

59,201

 

New to nonperforming

 

 

2,822

 

 

 

33,754

 

 

 

2,233

 

Loans charged-off

 

 

(545

)

 

 

(706

)

 

 

(481

)

Loans paid-off /sold

 

 

(2,239

)

 

 

(1,485

)

 

 

(10,364

)

Loans restored to performing status

 

 

(738

)

 

 

(2,702

)

 

 

(2,771

)

Other

 

 

(3

)

 

 

(63

)

 

 

 

Nonperforming assets ending balance

 

$

55,915

 

 

$

56,618

 

 

$

47,818

 

 
 

 

 

Net Charge-Offs (Recoveries)

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30

2022

 

March 31

2022

 

June 30

2021

 

June 30

2022

 

June 30

2021

Net charge-offs (recoveries)

 

 

 

 

 

 

 

 

 

 

Commercial and industrial loans

 

$

(29

)

 

$

(13

)

 

$

107

 

 

$

(42

)

 

$

3,374

 

Commercial real estate loans

 

 

 

 

 

(3

)

 

 

 

 

 

(3

)

 

 

(57

)

Small business loans

 

 

(22

)

 

 

22

 

 

 

31

 

 

 

 

 

 

86

 

Residential real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

Home equity

 

 

84

 

 

 

(2

)

 

 

24

 

 

 

82

 

 

 

11

 

Other consumer

 

 

166

 

 

 

400

 

 

 

30

 

 

 

566

 

 

 

122

 

Total net charge-offs

 

$

199

 

 

$

404

 

 

$

192

 

 

$

603

 

 

$

3,535

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs to average loans (annualized)

 

 

0.01

%

 

 

0.01

%

 

 

0.01

%

 

 

0.01

%

 

 

0.08

%

 
 

 

 

Troubled Debt Restructurings At

 

 

June 30

2022

 

March 31

2022

 

June 30

2021

Troubled debt restructurings on accrual status

 

$

11,734

 

 

$

13,288

 

 

$

19,495

 

Troubled debt restructurings on nonaccrual status

 

 

1,677

 

 

 

1,972

 

 

 

20,212

 

Total troubled debt restructurings

 

$

13,411

 

 

$

15,260

 

 

$

39,707

 

 

 

 

 

 

 

 

 

BALANCE SHEET AND CAPITAL RATIOS

 

 

 

 

 

 

 

 

June 30

2022

 

March 31

2022

 

June 30

2021

Gross loans/total deposits

 

 

82.19

%

 

 

81.01

%

 

 

74.57

%

Common equity tier 1 capital ratio (1)

 

 

13.90

%

 

 

14.45

%

 

 

13.31

%

Tier 1 leverage capital ratio (1)

 

 

10.42

%

 

 

10.62

%

 

 

9.41

%

Common equity to assets ratio GAAP

 

 

14.37

%

 

 

14.71

%

 

 

12.27

%

Tangible common equity to tangible assets ratio (2)

 

 

9.79

%

 

 

10.18

%

 

 

8.89

%

Book value per share GAAP

 

$

62.32

 

 

$

62.59

 

 

$

52.72

 

Tangible book value per share (2)

 

$

40.31

 

 

$

41.15

 

 

$

36.78

 

(1) Estimated number for June 30, 2022.

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

 

INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited, dollars in thousands)

 

Three Months Ended

 

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

 

 

 

 

Interest

 

 

 

 

Interest

 

 

 

 

Interest

 

 

 

 

Average

 

Earned/

Yield/

 

Average

 

Earned/

Yield/

 

Average

 

Earned/

 

Yield/

 

 

Balance

 

Paid (1)

 

Rate

 

Balance

 

Paid (1)

 

Rate

 

Balance

 

Paid (1)

 

Rate

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning deposits with banks, federal funds sold, and short term investments

 

$

1,377,286

 

$

2,817

 

0.82

%

 

$

1,906,164

 

$

886

 

0.19

%

 

$

1,882,285

 

$

513

 

0.11

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities – trading

 

 

3,863

 

 

 

%

 

 

3,732

 

 

 

%

 

 

3,359

 

 

 

%

Securities – taxable investments

 

 

2,889,245

 

 

11,281

 

1.57

%

 

 

2,726,281

 

 

10,043

 

1.49

%

 

 

1,514,336

 

 

7,184

 

1.90

%

Securities – nontaxable investments (1)

 

 

197

 

 

3

 

6.11

%

 

 

201

 

 

1

 

2.02

%

 

 

555

 

 

6

 

4.34

%

Total securities

 

$

2,893,305

 

$

11,284

 

1.56

%

 

$

2,730,214

 

$

10,044

 

1.49

%

 

$

1,518,250

 

$

7,190

 

1.90

%

Loans held for sale

 

 

3,842

 

 

35

 

3.65

%

 

 

9,475

 

 

64

 

2.74

%

 

 

28,279

 

 

186

 

2.64

%

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (1)

 

 

1,537,883

 

 

17,496

 

4.56

%

 

 

1,535,619

 

 

17,031

 

4.50

%

 

 

1,944,026

 

 

20,351

 

4.20

%

Commercial real estate (1)

 

 

7,827,442

 

 

76,771

 

3.93

%

 

 

7,911,349

 

 

76,030

 

3.90

%

 

 

4,196,171

 

 

41,532

 

3.97

%

Commercial construction

 

 

1,193,353

 

 

13,456

 

4.52

%

 

 

1,190,659

 

 

12,268

 

4.18

%

 

 

514,935

 

 

4,777

 

3.72

%

Small business

 

 

203,947

 

 

2,656

 

5.22

%

 

 

194,819

 

 

2,416

 

5.03

%

 

 

178,525

 

 

2,302

 

5.17

%

Total commercial

 

 

10,762,625

 

 

110,379

 

4.11

%

 

 

10,832,446

 

 

107,745

 

4.03

%

 

 

6,833,657

 

 

68,962

 

4.05

%

Residential real estate

 

 

1,761,986

 

 

14,879

 

3.39

%

 

 

1,649,157

 

 

13,697

 

3.37

%

 

 

1,226,520

 

 

11,058

 

3.62

%

Home equity

 

 

1,046,933

 

 

9,178

 

3.52

%

 

 

1,032,308

 

 

8,662

 

3.40

%

 

 

1,024,798

 

 

8,591

 

3.36

%

Total consumer real estate

 

 

2,808,919

 

 

24,057

 

3.44

%

 

 

2,681,465

 

 

22,359

 

3.38

%

 

 

2,251,318

 

 

19,649

 

3.50

%

Other consumer

 

 

31,554

 

 

507

 

6.44

%

 

 

29,814

 

 

489

 

6.65

%

 

 

22,471

 

 

411

 

7.34

%

Total loans

 

$

13,603,098

 

$

134,943

 

3.98

%

 

$

13,543,725

 

$

130,593

 

3.91

%

 

$

9,107,446

 

$

89,022

 

3.92

%

Total interest-earning assets

 

$

17,877,531

 

$

149,079

 

3.34

%

 

$

18,189,578

 

$

141,587

 

3.16

%

 

$

12,536,260

 

$

96,911

 

3.10

%

Cash and due from banks

 

 

190,501

 

 

 

 

 

 

171,533

 

 

 

 

 

 

142,198

 

 

 

 

Federal Home Loan Bank stock

 

 

6,249

 

 

 

 

 

 

11,407

 

 

 

 

 

 

9,410

 

 

 

 

Other assets

 

 

1,855,351

 

 

 

 

 

 

1,851,196

 

 

 

 

 

 

1,258,056

 

 

 

 

Total assets

 

$

19,929,632

 

 

 

 

 

$

20,223,714

 

 

 

 

 

$

13,945,924

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings and interest checking accounts

 

$

6,192,761

 

$

710

 

0.05

%

 

$

6,255,843

 

$

598

 

0.04

%

 

$

4,339,645

 

$

384

 

0.04

%

Money market

 

 

3,486,017

 

 

607

 

0.07

%

 

 

3,608,793

 

 

559

 

0.06

%

 

 

2,347,852

 

 

429

 

0.07

%

Time deposits

 

 

1,356,507

 

 

794

 

0.23

%

 

 

1,466,651

 

 

950

 

0.26

%

 

 

843,090

 

 

1,204

 

0.57

%

Total interest-bearing deposits

 

$

11,035,285

 

$

2,111

 

0.08

%

 

$

11,331,287

 

$

2,107

 

0.08

%

 

$

7,530,587

 

$

2,017

 

0.11

%

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

 

25,654

 

 

123

 

1.92

%

 

 

25,696

 

 

133

 

2.10

%

 

 

35,704

 

 

191

 

2.15

%

Long-term borrowings

 

 

 

 

 

%

 

 

9,063

 

 

31

 

1.39

%

 

 

23,417

 

 

94

 

1.61

%

Junior subordinated debentures

 

 

62,854

 

 

410

 

2.62

%

 

 

62,853

 

 

299

 

1.93

%

 

 

62,852

 

 

429

 

2.74

%

Subordinated debentures

 

 

49,825

 

 

618

 

4.97

%

 

 

49,800

 

 

617

 

5.02

%

 

 

49,730

 

 

618

 

4.98

%

Total borrowings

 

$

138,333

 

$

1,151

 

3.34

%

 

$

147,412

 

$

1,080

 

2.97

%

 

$

171,703

 

$

1,332

 

3.11

%

Total interest-bearing liabilities

 

$

11,173,618

 

$

3,262

 

0.12

%

 

$

11,478,699

 

$

3,187

 

0.11

%

 

$

7,702,290

 

$

3,349

 

0.17

%

Noninterest-bearing demand deposits

 

 

5,546,041

 

 

 

 

 

 

5,443,465

 

 

 

 

 

 

4,237,135

 

 

 

 

Other liabilities

 

 

290,467

 

 

 

 

 

 

293,597

 

 

 

 

 

 

273,449

 

 

 

 

Total liabilities

 

$

17,010,126

 

 

 

 

 

$

17,215,761

 

 

 

 

 

$

12,212,874

 

 

 

 

Stockholders’ equity

 

 

2,919,506

 

 

 

 

 

 

3,007,953

 

 

 

 

 

 

1,733,050

 

 

 

 

Total liabilities and stockholders’ equity

 

$

19,929,632

 

 

 

 

 

$

20,223,714

 

 

 

 

 

$

13,945,924

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

145,817

 

 

 

 

 

$

138,400

 

 

 

 

 

$

93,562

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

 

 

 

 

3.22

%

 

 

 

 

 

3.05

%

 

 

 

 

 

2.93

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

3.27

%

 

 

 

 

 

3.09

%

 

 

 

 

 

2.99

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits, including demand deposits

 

$

16,581,326

 

$

2,111

 

 

 

$

16,774,752

 

$

2,107

 

 

 

$

11,767,722

 

$

2,017

 

 

Cost of total deposits

 

 

 

 

 

0.05

%

 

 

 

 

 

0.05

%

 

 

 

 

 

0.07

%

Total funding liabilities, including demand deposits

 

$

16,719,659

 

$

3,262

 

 

 

$

16,922,164

 

$

3,187

 

 

 

$

11,939,425

 

$

3,349

 

 

Cost of total funding liabilities

 

 

 

 

 

0.08

%

 

 

 

 

 

0.08

%

 

 

 

 

 

0.11

%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $956,000, $968,000, and $209,000 for the three months ended June 30, 2022, March 31, 2022, and June 30, 2021, respectively, determined by applying the Company’s marginal tax rates in effect during each respective quarter.

(2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

 
 

 

 

Six Months Ended

 

 

June 30, 2022

 

June 30, 2021

 

 

 

 

Interest

 

 

 

 

 

Interest

 

 

 

 

Average

 

Earned/

 

Yield/

 

Average

 

Earned/

 

Yield/

 

 

Balance

 

Paid

 

Rate

 

Balance

 

Paid

 

Rate

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning deposits with banks, federal funds sold, and short term investments

 

$

1,640,264

 

$

3,703

 

0.46

%

 

$

1,603,407

 

$

839

 

0.11

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

Securities – trading

 

 

3,798

 

 

 

%

 

 

3,150

 

 

 

%

Securities – taxable investments

 

 

2,808,213

 

 

21,324

 

1.53

%

 

 

1,383,122

 

 

13,811

 

2.01

%

Securities – nontaxable investments (1)

 

 

199

 

 

4

 

4.05

%

 

 

599

 

 

12

 

4.04

%

Total securities

 

$

2,812,210

 

$

21,328

 

1.53

%

 

$

1,386,871

 

$

13,823

 

2.01

%

Loans held for sale

 

 

6,643

 

 

99

 

3.01

%

 

 

38,907

 

 

482

 

2.50

%

Loans

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (1)

 

 

1,536,757

 

 

34,527

 

4.53

%

 

 

2,029,075

 

 

43,397

 

4.31

%

Commercial real estate (1)

 

 

7,869,164

 

 

152,800

 

3.92

%

 

 

4,176,202

 

 

81,908

 

3.96

%

Commercial construction

 

 

1,192,013

 

 

25,724

 

4.35

%

 

 

534,933

 

 

10,060

 

3.79

%

Small business

 

 

199,408

 

 

5,072

 

5.13

%

 

 

176,434

 

 

4,583

 

5.24

%

Total commercial

 

 

10,797,342

 

 

218,123

 

4.07

%

 

 

6,916,644

 

 

139,948

 

4.08

%

Residential real estate

 

 

1,705,883

 

 

28,576

 

3.38

%

 

 

1,248,778

 

 

23,494

 

3.79

%

Home equity

 

 

1,039,661

 

 

17,840

 

3.46

%

 

 

1,037,446

 

 

17,348

 

3.37

%

Total consumer real estate

 

 

2,745,544

 

 

46,416

 

3.41

%

 

 

2,286,224

 

 

40,842

 

3.60

%

Other consumer

 

 

30,690

 

 

996

 

6.54

%

 

 

22,087

 

 

843

 

7.70

%

Total loans

 

$

13,573,576

 

$

265,535

 

3.94

%

 

$

9,224,955

 

$

181,633

 

3.97

%

Total interest-earning assets

 

$

18,032,693

 

$

290,665

 

3.25

%

 

$

12,254,140

 

$

196,777

 

3.24

%

Cash and due from banks

 

 

181,069

 

 

 

 

 

 

148,499

 

 

 

 

Federal Home Loan Bank stock

 

 

8,814

 

 

 

 

 

 

9,828

 

 

 

 

Other assets

 

 

1,853,285

 

 

 

 

 

 

1,249,898

 

 

 

 

Total assets

 

$

20,075,861

 

 

 

 

 

$

13,662,365

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

Savings and interest checking accounts

 

$

6,224,128

 

$

1,308

 

0.04

%

 

$

4,225,331

 

$

807

 

0.04

%

Money market

 

 

3,547,066

 

 

1,166

 

0.07

%

 

 

2,318,106

 

 

950

 

0.08

%

Time deposits

 

 

1,411,275

 

 

1,744

 

0.25

%

 

 

874,676

 

 

2,971

 

0.68

%

Total interest-bearing deposits

 

$

11,182,469

 

$

4,218

 

0.08

%

 

$

7,418,113

 

$

4,728

 

0.13

%

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

 

25,675

 

 

256

 

2.01

%

 

 

35,746

 

 

379

 

2.14

%

Long-term borrowings

 

 

4,506

 

 

31

 

1.39

%

 

 

25,818

 

 

205

 

1.60

%

Junior subordinated debentures

 

 

62,854

 

 

709

 

2.27

%

 

 

62,851

 

 

855

 

2.74

%

Subordinated debentures

 

 

49,813

 

 

1,235

 

5.00

%

 

 

49,717

 

 

1,235

 

5.01

%

Total borrowings

 

$

142,848

 

$

2,231

 

3.15

%

 

$

174,132

 

$

2,674

 

3.10

%

Total interest-bearing liabilities

 

$

11,325,317

 

$

6,449

 

0.11

%

 

$

7,592,245

 

$

7,402

 

0.20

%

Noninterest-bearing demand deposits

 

 

5,495,036

 

 

 

 

 

 

4,067,235

 

 

 

 

Other liabilities

 

 

292,023

 

 

 

 

 

 

279,620

 

 

 

 

Total liabilities

 

$

17,112,376

 

 

 

 

 

$

11,939,100

 

 

 

 

Stockholders’ equity

 

 

2,963,485

 

 

 

 

 

 

1,723,265

 

 

 

 

Total liabilities and stockholders’ equity

 

$

20,075,861

 

 

 

 

 

$

13,662,365

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

284,216

 

 

 

 

 

$

189,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

 

 

 

 

3.14

%

 

 

 

 

 

3.04

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

3.18

%

 

 

 

 

 

3.12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits, including demand deposits

 

$

16,677,505

 

$

4,218

 

 

 

$

11,485,348

 

$

4,728

 

 

Cost of total deposits

 

 

 

 

 

0.05

%

 

 

 

 

 

0.08

%

Total funding liabilities, including demand deposits

 

$

16,820,353

 

$

6,449

 

 

 

$

11,659,480

 

$

7,402

 

 

Cost of total funding liabilities

 

 

 

 

 

0.08

%

 

 

 

 

 

0.13

%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.9 million and $438,000 for the six months ended June 30, 2022 and 2021, respectively.

(2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

Certain amounts in prior year financial statements have been reclassified to conform to the current year’s presentation.

APPENDIX A: NON-GAAP Reconciliation of Balance Sheet Metrics

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

The following table summarizes the calculation of the Company’s tangible common equity to tangible assets ratio and tangible book value per share, at the dates indicated:

 

 

June 30

2022

 

March 31

2022

 

June 30

2021

 

Tangible common equity

 

(Dollars in thousands, except per share data)

 

Stockholders’ equity (GAAP)

 

$

2,871,185

 

 

$

2,965,439

 

 

$

1,741,622

 

(a)

Less: Goodwill and other intangibles

 

 

1,013,917

 

 

 

1,015,831

 

 

 

526,576

 

 

Tangible common equity

 

$

1,857,268

 

 

$

1,949,608

 

 

$

1,215,046

 

(b)

Tangible assets

 

 

 

 

 

 

 

Assets (GAAP)

 

$

19,982,450

 

 

$

20,159,178

 

 

$

14,194,207

 

(c)

Less: Goodwill and other intangibles

 

 

1,013,917

 

 

 

1,015,831

 

 

 

526,576

 

 

Tangible assets

 

$

18,968,533

 

 

$

19,143,347

 

 

$

13,667,631

 

(d)

 

 

 

 

 

 

 

 

Common Shares

 

 

46,069,761

 

 

 

47,377,125

 

 

 

33,037,859

 

(e)

 

 

 

 

 

 

 

 

Common equity to assets ratio (GAAP)

 

 

14.37

%

 

 

14.71

%

 

 

12.27

%

(a/c)

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

 

 

9.79

%

 

 

10.18

%

 

 

8.89

%

(b/d)

Book value per share (GAAP)

 

$

62.32

 

 

$

62.59

 

 

$

52.72

 

(a/e)

Tangible book value per share (Non-GAAP)

 

$

40.31

 

 

$

41.15

 

 

$

36.78

 

(b/e)

 

 

 

 

 

 

 

 

APPENDIX B: Non-GAAP Reconciliation of Earnings Metrics

(Unaudited, dollars in thousands)

The following table summarizes the impact of noncore items on the Company’s calculation of noninterest income and noninterest expense, the impact of noncore items on noninterest income as a percentage of total revenue and the efficiency ratio, as well as the average tangible common equity used to calculate return on average tangible common equity and operating return on tangible common equity for the periods indicated:

 

Three Months Ended

 

Six Months Ended

 

 

June 30

2022

 

March 31

2022

 

June 30

2021

 

June 30

2022

 

June 30

2021

 

Net interest income (GAAP)

$

144,861

 

 

$

137,432

 

 

$

93,354

 

 

$

282,293

 

 

$

188,938

 

(a)

 

 

 

 

 

 

 

 

 

 

 

Noninterest income (GAAP)

$

27,898

 

 

$

26,272

 

 

$

24,967

 

 

$

54,170

 

 

$

50,213

 

(b)

Noninterest income on an operating basis (Non-GAAP)

$

27,898

 

 

$

26,272

 

 

$

24,967

 

 

$

54,170

 

 

$

50,213

 

(c)

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (GAAP)

$

90,562

 

 

$

95,500

 

 

$

73,302

 

 

$

186,062

 

 

$

142,984

 

(d)

Less:

 

 

 

 

 

 

 

 

 

 

Merger and acquisition expense

 

 

 

 

7,100

 

 

 

1,731

 

 

 

7,100

 

 

 

1,731

 

 

Noninterest expense on an operating basis (Non-GAAP)

$

90,562

 

 

$

88,400

 

 

$

71,571

 

 

$

178,962

 

 

$

141,253

 

(e)

 

 

 

 

 

 

 

 

 

 

 

Total revenue (GAAP)

$

172,759

 

 

$

163,704

 

 

$

118,321

 

 

$

336,463

 

 

$

239,151

 

(a+b)

Total operating revenue (Non-GAAP)

$

172,759

 

 

$

163,704

 

 

$

118,321

 

 

$

336,463

 

 

$

239,151

 

(a+c)

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

$

61,776

 

 

$

53,097

 

 

$

37,572

 

 

$

114,873

 

 

$

79,283

 

 

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

$

61,776

 

 

$

58,202

 

 

$

38,816

 

 

$

119,978

 

 

$

80,527

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common equity (GAAP)

$

2,919,506

 

 

$

3,007,953

 

 

$

1,733,050

 

 

$

2,963,485

 

 

$

1,723,265

 

 

Less: Average goodwill and other intangibles

 

1,014,953

 

 

 

1,017,040

 

 

 

527,337

 

 

 

1,015,991

 

 

 

528,050

 

 

Tangible average tangible common equity (Non-GAAP)

$

1,904,553

 

 

$

1,990,913

 

 

$

1,205,713

 

 

$

1,947,494

 

 

$

1,195,215

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios

 

 

 

 

 

 

 

 

 

 

Noninterest income as a % of total revenue (GAAP)

 

16.15

%

 

 

16.05

%

 

 

21.10

%

 

 

16.10

%

 

 

21.00

%

(b/(a+b))

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

 

16.15

%

 

 

16.05

%

 

 

21.10

%

 

 

16.10

%

 

 

21.00

%

(c/(a+c))

Efficiency ratio (GAAP)

 

52.42

%

 

 

58.34

%

 

 

61.95

%

 

 

55.30

%

 

 

59.79

%

(d/(a+b))

Efficiency ratio on an operating basis (Non-GAAP)

 

52.42

%

 

 

54.00

%

 

 

60.49

%

 

 

53.19

%

 

 

59.06

%

(e/(a+c))

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

 

13.01

%

 

 

10.82

%

 

 

12.50

%

 

 

11.89

%

 

 

13.38

%

 

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

 

13.01

%

 

 

11.86

%

 

 

12.91

%

 

 

12.42

%

 

 

13.59

%

 

 
 

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

 

Three Months Ended

 

June 30, 2022

 

March 31, 2022

 

Volume

Interest

Margin

Impact

 

Volume

Interest

Margin

Impact

 

(Dollars in thousands)

Reported total interest earning assets

$

17,877,531

 

$

145,817

 

3.27

%

 

$

18,189,578

 

$

138,403

 

3.09

%

Core adjustments:

 

 

 

 

 

 

 

PPP volume @ 1%

 

(60,969

)

 

(149

)

 

 

 

(148,384

)

 

(362

)

 

PPP fee amortization

 

 

(1,762

)

 

 

 

 

(3,486

)

 

Total PPP impact

 

(60,969

)

 

(1,911

)

(0.03

) %

 

 

(148,384

)

 

(3,848

)

(0.07

) %

Acquisition related:

 

 

 

 

 

 

 

Loan fair value amortization (accretion)

 

 

823

 

 

 

 

 

(83

)

 

CD fair market accretion

 

 

(437

)

 

 

 

 

(684

)

 

 

 

 

386

 

0.01

%

 

 

 

(767

)

(0.02

) %

 

 

 

 

 

 

 

 

Nonaccrual interest

 

 

205

 

%

 

 

 

310

 

0.01

%

 

 

 

 

 

 

 

 

Other noncore adjustments

 

 

(1,106

)

(0.02

) %

 

 

 

(773

)

(0.01

) %

 

 

 

 

 

 

 

 

Core margin (Non-GAAP)

$

17,816,562

 

$

143,391

 

3.23

%

 

$

18,041,194

 

$

133,325

 

3.00

%

 

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