Press Release

Independent Bank Corp. Reports Fourth Quarter Net Income of $77.0 Million

1/19/2023 4:15 PM ET

Completes a strong performance in 2022

Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2022 fourth quarter net income of $77.0 million, or $1.69 per diluted share, compared to 2022 third quarter net income of $71.9 million, or $1.57 per diluted share, driven primarily by continued net interest margin expansion combined with solid loan growth and higher fee income. Full year net income was $263.8 million, or $5.69 on a diluted earnings per share basis, an increase of $142.8 million, or 118.0%, as compared to the prior year. In addition, full year operating net income, which excluded non-core adjustments for both periods associated with the Company's fourth quarter 2021 acquisition of Meridian Bancorp, Inc. ("Meridian") and its subsidiary, East Boston Savings Bank, was $268.9 million, or $5.80 on a diluted earnings per share basis, compared to operating net income of $187.6 million, or $5.38 per share for 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.

The Company generated a return on average assets and a return on average common equity of 1.56% and 10.70%, respectively, for the fourth quarter of 2022, as compared to 1.43% and 9.90%, respectively, for the prior quarter. For the full year 2022, the Company generated a return on average assets and return on average common equity of 1.33% and 9.05%, respectively, as compared to 0.81% and 6.34%, respectively, for 2021, or 1.35% and 9.22%, respectively, on an operating basis for 2022, compared to 1.26% and 9.83% on an operating basis for 2021.

“Due to the tireless efforts of my colleagues we were well positioned for rising interest rates, recognized the full year benefit of our most recent acquisition, and increased our loan portfolio,” said Christopher Oddleifson, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company.  “Rockland Trust enjoyed another banner year in 2022, capped off with our recent announcement of my successor.  It has been an honor to serve as CEO for over twenty years and, as I pass the baton, I am confident that Rockland Trust will continue to thrive.”

BALANCE SHEET

Total assets of $19.3 billion at December 31, 2022 decreased by $409.1 million, or 2.1% from total assets at September 30, 2022 and decreased by $1.1 billion, or 5.5%, as compared to December 31, 2021, due primarily to declining cash balances.

Total loans at December 31, 2022 of $13.9 billion increased by $228.3 million, or 1.7% (6.6% annualized), compared to the prior quarter level. The commercial portfolio increased $147.9 million, or 1.4% (5.5% annualized) during the quarter, driven primarily by solid growth within the commercial and industrial category of 5.6% (22.2% annualized), while growth in the combined commercial real estate and construction portfolios reflected strong closing activity, along with transfers from construction into commercial real estate during the period. Residential real estate loan closings remained strong with the vast majority of originations retained on the balance sheet, resulting in 3.9% growth (15.4% annualized) for the quarter while home equity balances remained relatively flat.

Deposit balances of $15.9 billion at December 31, 2022 decreased by $460.0 million, or 2.8%, from September 30, 2022 due primarily to reductions in excess liquidity from both consumer and business segments, while continued competitive pricing pressures fueled a combination of additional deposit outflow and an increase in time deposits for the quarter. Core deposits remained consistent at 87.9% of total deposits at December 31, 2022, compared to 87.8% at September 30, 2022, while the total cost of deposits for the quarter increased 20 basis points to 0.35% in line with the higher rate environment.

The securities portfolio decreased by $17.8 million, or 0.6%, compared to September 30, 2022 as $40.1 million in purchases and unrealized gains of $12.8 million within the available for sale portfolio were offset by paydowns, calls, and maturities. Total securities represented 16.2% of total assets at December 31, 2022, as compared to 16.0% at September 30, 2022.

Stockholders' equity at December 31, 2022 increased 2.5% when compared to the prior quarter, driven primarily by strong earnings retention and other comprehensive income of $16.0 million. As a result of this increase in stockholders' equity, book value per share increased by $1.52, or 2.5%, to $63.25 during the fourth quarter as compared to the prior quarter. The Company's ratio of common equity to assets of 15.0% at December 31, 2022 represented an increase of 66 basis points, or 4.62%, from the prior quarter and an increase of 1.2% from the year ago period. The Company's tangible book value per share at December 31, 2022 rose by $1.56, or 3.9%, from the prior quarter to $41.12, and represented a decrease of 2.7% from the year ago period primarily reflecting the repurchase of 1.8 million shares of common stock during the year along with increased other comprehensive losses mostly attributable to unfavorable valuations within the Company's available for sale securities portfolio compared to the prior year. The Company's ratio of tangible common equity to tangible assets of 10.26% at December 31, 2022 represents an increase of 60 basis points from the prior quarter and a decrease of 5 basis points from the year ago period. Please refer to Appendix A for a detailed reconciliation of Non-GAAP balance sheet metrics.

NET INTEREST INCOME

Net interest income for the 2022 fourth quarter increased 3.5% to $168.4 million compared to $162.6 million for the prior quarter, primarily reflecting the positive impact of asset repricing in the rising interest rate environment as well as strong loan growth, partially offset by higher deposit costs. The reported net interest margin increased by 21 basis points from the prior quarter to 3.85%, and increased by 23 basis points to 3.82% on a core basis when excluding PPP fees, purchase accounting, and other non-core items. Please refer to Appendix C for additional details regarding the net interest margin.

NONINTEREST INCOME

Noninterest income of $32.3 million for the fourth quarter of 2022 was $4.1 million, or 14.6% higher as compared to the prior quarter. Significant changes in noninterest income for the 2022 fourth quarter compared to the prior quarter included the following:

  • Deposit account fees decreased by $473,000, or 7.6%, driven primarily by reduced overdraft activity during the fourth quarter.
  • Investment management income increased by $2.0 million, or 23.2%, primarily driven by an increase in assets under administration of $701.3 million, or 13.8%, to $5.8 billion at December 31, 2022, reflecting healthy new asset inflows and increased market valuations. The income for the quarter also benefited from a one-time incentive of $649,000.
  • The increase in cash surrender value of life insurance policies rose by $253,000, or 13.4% due primarily to annual dividends received during the fourth quarter. The Company also received proceeds on life insurance policies resulting in a gain of $691,000 for the fourth quarter, as compared to $477,000 in the prior quarter.
  • Loan level derivative income increased by $950,000, or 201.7%, due primarily to higher customer demand.
  • Other noninterest income increased by $1.3 million, or 22.8%, due primarily to a $894,000 gain on the sale of a closed branch facility that was consolidated in conjunction with the Meridian acquisition, changes in valuation of equity securities, as well as discounted purchases of Massachusetts historical tax credits.

NONINTEREST EXPENSE

Noninterest expense of $94.9 million for the fourth quarter of 2022 was $2.1 million, or 2.3%, higher as compared to the prior quarter. Significant changes in noninterest expense for the fourth quarter compared to the prior quarter included the following:

  • Salaries and employee benefits increased by $1.0 million, or 2.0%, primarily due to valuation changes in the Company's life insurance obligations.
  • Occupancy and equipment increased by $270,000, or 2.2%, due mainly to increases in building maintenance and repairs, as well as seasonal increases in utility costs, partially offset by reduced office equipment costs.
  • Other noninterest expense increased by $596,000, or 2.5%, due primarily to increases in software maintenance, customer fraud reimbursement, and advertising costs, partially offset by reduced unrealized losses on equity securities.

The Company’s tax rate for the fourth quarter of 2022 decreased slightly to 23.18%, compared to 24.37% for the prior quarter. The fourth quarter decline was due to the recognition of discrete items in the quarter.

ASSET QUALITY

The fourth quarter provision for credit losses of $5.5 million primarily reflects an additional reserve allocation associated with further credit deterioration of a large commercial and industrial credit that migrated to nonperforming status during the third quarter of 2022. Nonperforming loans declined slightly during the quarter to $54.9 million, or 0.39% of total loans at December 31, 2022, as compared to $56.0 million, or 0.41% of total loans at September 30, 2022. Net charge-offs were minimal at $394,000 or 0.01% of average loans annualized for the fourth quarter of 2022. Delinquency as a percentage of total loans increased 13 basis points from the prior quarter to 0.30% at December 31, 2022.

The allowance for credit losses on total loans was $152.4 million, or 1.09% of total loans at December 31, 2022, as compared to $147.3 million, or 1.08% of total loans, at September 30, 2022.

CONFERENCE CALL INFORMATION

Christopher Oddleifson, Chief Executive Officer, Robert Cozzone, Chief Operating Officer, and Mark Ruggiero, Chief Financial Officer, will host a conference call to discuss fourth quarter earnings and other matters at 10:00 a.m. Eastern Time on Friday, January 20, 2023. 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: 6538963 and will be available through January 27, 2023. Additionally, a webcast replay will be available on the Company's website until January 20, 2024.

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" 2022 list, an honor earned for the 14th 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 Coronavirus ("COVID-19") pandemic and any uncertainty regarding the length and extent of economic contraction as a result of the pandemic;
  • the 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, any further resurgences or variants of the COVID-19 virus, the efficacy and availability of vaccines, boosters or other treatments, actions taken by governmental authorities in response thereto, other public health crises or man-made events, and their impact on the Company's local economies or the Company's operations;
  • a deterioration in the conditions of the securities markets;
  • a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, or uncertainties surrounding the debt ceiling and the federal budget;
  • 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;
  • 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;
  • cyber security attacks or intrusions that could adversely impact our businesses; and
  • other unexpected material adverse changes in our operations or earnings.

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

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

Operating net income, operating EPS, operating return on average assets and operating return on average common equity, exclude items that management believes are unrelated to the Company's core banking business such as merger and acquisition expenses, provision for credit losses on acquired loan portfolios, and other items, if applicable. Management uses operating net income and related ratios and operating EPS to measure the strength of the Company’s core banking business and to identify trends that may to some extent be obscured by such items. Management reviews its core margin to determine any items that may impact the net interest margin that may be one-time in nature or not reflective of its core operating environment, such as low-yielding loans originated through government programs in response to the pandemic, or significant purchase accounting adjustments, or other adjustments such as nonaccrual interest reversals/recoveries and prepayment penalties. Management believes that adjusting for these items to arrive at a core margin provides additional insight into the operating environment and how management decisions impact the net interest margin.

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

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

Category: Earnings Releases

INDEPENDENT BANK CORP. FINANCIAL SUMMARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited, dollars in thousands)

 

 

 

 

 

 

% Change

 

% Change

 

December 31
2022

 

September 30
2022

 

December 31
2021

 

Dec 2022 vs.

 

Dec 2022 vs.

 

 

 

 

Sept 2022

 

Dec 2021

Assets

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

175,843

 

 

$

172,615

 

 

$

141,581

 

 

1.87

%

 

24.20

%

Interest-earning deposits with banks

 

177,090

 

 

 

763,681

 

 

 

2,099,103

 

 

(76.81

)%

 

(91.56

)%

Securities

 

 

 

 

 

 

 

 

 

Trading

 

3,888

 

 

 

3,538

 

 

 

3,720

 

 

9.89

%

 

4.52

%

Equities

 

21,119

 

 

 

20,439

 

 

 

23,173

 

 

3.33

%

 

(8.86

)%

Available for sale

 

1,399,154

 

 

 

1,425,511

 

 

 

1,571,148

 

 

(1.85

)%

 

(10.95

)%

Held to maturity

 

1,705,120

 

 

 

1,697,635

 

 

 

1,066,818

 

 

0.44

%

 

59.83

%

Total securities

 

3,129,281

 

 

 

3,147,123

 

 

 

2,664,859

 

 

(0.57

)%

 

17.43

%

Loans held for sale

 

2,803

 

 

 

5,100

 

 

 

24,679

 

 

(45.04

)%

 

(88.64

)%

Loans

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

1,635,103

 

 

 

1,548,349

 

 

 

1,563,279

 

 

5.60

%

 

4.59

%

Commercial real estate

 

7,760,230

 

 

 

7,677,917

 

 

 

7,992,344

 

 

1.07

%

 

(2.90

)%

Commercial construction

 

1,154,413

 

 

 

1,185,157

 

 

 

1,165,457

 

 

(2.59

)%

 

(0.95

)%

Small business

 

219,102

 

 

 

209,567

 

 

 

193,189

 

 

4.55

%

 

13.41

%

Total commercial

 

10,768,848

 

 

 

10,620,990

 

 

 

10,914,269

 

 

1.39

%

 

(1.33

)%

Residential real estate

 

2,035,524

 

 

 

1,959,254

 

 

 

1,604,686

 

 

3.89

%

 

26.85

%

Home equity - first position

 

566,166

 

 

 

578,405

 

 

 

589,550

 

 

(2.12

)%

 

(3.97

)%

Home equity - subordinate positions

 

522,584

 

 

 

508,765

 

 

 

450,061

 

 

2.72

%

 

16.11

%

Total consumer real estate

 

3,124,274

 

 

 

3,046,424

 

 

 

2,644,297

 

 

2.56

%

 

18.15

%

Other consumer

 

35,553

 

 

 

32,936

 

 

 

28,720

 

 

7.95

%

 

23.79

%

Total loans

 

13,928,675

 

 

 

13,700,350

 

 

 

13,587,286

 

 

1.67

%

 

2.51

%

Less: allowance for credit losses

 

(152,419

)

 

 

(147,313

)

 

 

(146,922

)

 

3.47

%

 

3.74

%

Net loans

 

13,776,256

 

 

 

13,553,037

 

 

 

13,440,364

 

 

1.65

%

 

2.50

%

Federal Home Loan Bank stock

 

5,218

 

 

 

5,218

 

 

 

11,407

 

 

%

 

(54.26

)%

Bank premises and equipment, net

 

196,504

 

 

 

198,408

 

 

 

195,590

 

 

(0.96

)%

 

0.47

%

Goodwill

 

985,072

 

 

 

985,072

 

 

 

985,072

 

 

%

 

%

Other intangible assets

 

25,068

 

 

 

26,934

 

 

 

32,772

 

 

(6.93

)%

 

(23.51

)%

Cash surrender value of life insurance policies

 

293,323

 

 

 

293,126

 

 

 

289,304

 

 

0.07

%

 

1.39

%

Other assets

 

527,716

 

 

 

552,955

 

 

 

538,674

 

 

(4.56

)%

 

(2.03

)%

Total assets

$

19,294,174

 

 

$

19,703,269

 

 

$

20,423,405

 

 

(2.08

)%

 

(5.53

)%

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

$

5,441,584

 

 

$

5,622,260

 

 

$

5,479,503

 

 

(3.21

)%

 

(0.69

)%

Savings and interest checking accounts

 

5,898,009

 

 

 

6,094,493

 

 

 

6,350,016

 

 

(3.22

)%

 

(7.12

)%

Money market

 

3,343,673

 

 

 

3,443,622

 

 

 

3,556,375

 

 

(2.90

)%

 

(5.98

)%

Time certificates of deposit

 

1,195,741

 

 

 

1,178,619

 

 

 

1,531,150

 

 

1.45

%

 

(21.91

)%

Total deposits

 

15,879,007

 

 

 

16,338,994

 

 

 

16,917,044

 

 

(2.82

)%

 

(6.14

)%

Borrowings

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

637

 

 

 

643

 

 

 

25,667

 

 

(0.93

)%

 

(97.52

)%

Long-term borrowings, net

 

 

 

 

 

 

 

14,063

 

 

nm

 

(100.00

)%

Junior subordinated debentures, net

 

62,855

 

 

 

62,855

 

 

 

62,853

 

 

%

 

%

Subordinated debentures, net

 

49,885

 

 

 

49,862

 

 

 

49,791

 

 

0.05

%

 

0.19

%

Total borrowings

 

113,377

 

 

 

113,360

 

 

 

152,374

 

 

0.01

%

 

(25.59

)%

Total deposits and borrowings

 

15,992,384

 

 

 

16,452,354

 

 

 

17,069,418

 

 

(2.80

)%

 

(6.31

)%

Other liabilities

 

415,089

 

 

 

433,714

 

 

 

335,538

 

 

(4.29

)%

 

23.71

%

Total liabilities

 

16,407,473

 

 

 

16,886,068

 

 

 

17,404,956

 

 

(2.83

)%

 

(5.73

)%

Stockholders' equity

 

 

 

 

 

 

 

 

 

Common stock

 

455

 

 

 

454

 

 

 

472

 

 

0.22

%

 

(3.60

)%

Additional paid in capital

 

2,114,888

 

 

 

2,113,313

 

 

 

2,249,078

 

 

0.07

%

 

(5.97

)%

Retained earnings

 

934,442

 

 

 

882,503

 

 

 

766,716

 

 

5.89

%

 

21.88

%

Accumulated other comprehensive income (loss), net of tax

 

(163,084

)

 

 

(179,069

)

 

 

2,183

 

 

(8.93

)%

 

(7,570.64

)%

Total stockholders' equity

 

2,886,701

 

 

 

2,817,201

 

 

 

3,018,449

 

 

2.47

%

 

(4.36

)%

Total liabilities and stockholders' equity

$

19,294,174

 

 

$

19,703,269

 

 

$

20,423,405

 

 

(2.08

)%

 

(5.53

)%

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

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

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

% Change

 

% Change

 

December 31
2022

 

September 30
2022

 

December 31
2021

 

Dec 2022 vs.

 

Dec 2022 vs.

 

 

 

 

Sept 2022

 

Dec 2021

Interest income

 

 

 

 

 

 

 

 

 

Interest on federal funds sold and short-term investments

$

4,163

 

 

$

6,519

 

 

$

840

 

 

(36.14

)%

 

395.60

%

Interest and dividends on securities

 

15,789

 

 

 

13,244

 

 

 

8,876

 

 

19.22

%

 

77.88

%

Interest and fees on loans

 

164,153

 

 

 

150,157

 

 

 

116,024

 

 

9.32

%

 

41.48

%

Interest on loans held for sale

 

22

 

 

 

51

 

 

 

181

 

 

(56.86

)%

 

(87.85

)%

Total interest income

 

184,127

 

 

 

169,971

 

 

 

125,921

 

 

8.33

%

 

46.22

%

Interest expense

 

 

 

 

 

 

 

 

 

Interest on deposits

 

14,325

 

 

 

6,109

 

 

 

1,966

 

 

134.49

%

 

628.64

%

Interest on borrowings

 

1,447

 

 

 

1,261

 

 

 

1,425

 

 

14.75

%

 

1.54

%

Total interest expense

 

15,772

 

 

 

7,370

 

 

 

3,391

 

 

114.00

%

 

365.11

%

Net interest income

 

168,355

 

 

 

162,601

 

 

 

122,530

 

 

3.54

%

 

37.40

%

Provision for credit losses

 

5,500

 

 

 

3,000

 

 

 

35,705

 

 

83.33

%

 

(84.60

)%

Net interest income after provision for credit losses

 

162,855

 

 

 

159,601

 

 

 

86,825

 

 

2.04

%

 

87.57

%

Noninterest income

 

 

 

 

 

 

 

 

 

Deposit account fees

 

5,788

 

 

 

6,261

 

 

 

5,041

 

 

(7.55

)%

 

14.82

%

Interchange and ATM fees

 

4,282

 

 

 

4,331

 

 

 

3,758

 

 

(1.13

)%

 

13.94

%

Investment management

 

10,394

 

 

 

8,436

 

 

 

8,958

 

 

23.21

%

 

16.03

%

Mortgage banking income

 

526

 

 

 

585

 

 

 

2,010

 

 

(10.09

)%

 

(73.83

)%

Increase in cash surrender value of life insurance policies

 

2,136

 

 

 

1,883

 

 

 

1,923

 

 

13.44

%

 

11.08

%

Gain on life insurance benefits

 

691

 

 

 

477

 

 

 

 

 

44.86

%

 

100.00

%

Loan level derivative income

 

1,421

 

 

 

471

 

 

 

2,382

 

 

201.70

%

 

(40.34

)%

Other noninterest income

 

7,064

 

 

 

5,751

 

 

 

5,108

 

 

22.83

%

 

38.29

%

Total noninterest income

 

32,302

 

 

 

28,195

 

 

 

29,180

 

 

14.57

%

 

10.70

%

Noninterest expenses

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

53,754

 

 

 

52,708

 

 

 

47,827

 

 

1.98

%

 

12.39

%

Occupancy and equipment expenses

 

12,586

 

 

 

12,316

 

 

 

9,722

 

 

2.19

%

 

29.46

%

Data processing and facilities management

 

2,442

 

 

 

2,259

 

 

 

1,875

 

 

8.10

%

 

30.24

%

FDIC assessment

 

1,726

 

 

 

1,677

 

 

 

1,175

 

 

2.92

%

 

46.89

%

Merger and acquisition expense

 

 

 

 

 

 

 

37,166

 

 

nm

 

(100.00

)%

Other noninterest expenses

 

24,364

 

 

 

23,768

 

 

 

19,361

 

 

2.51

%

 

25.84

%

Total noninterest expenses

 

94,872

 

 

 

92,728

 

 

 

117,126

 

 

2.31

%

 

(19.00

)%

Income before income taxes

 

100,285

 

 

 

95,068

 

 

 

(1,121

)

 

5.49

%

 

(9,046.03

)%

Provision for income taxes

 

23,242

 

 

 

23,171

 

 

 

(2,823

)

 

0.31

%

 

(923.31

)%

Net Income

$

77,043

 

 

$

71,897

 

 

$

1,702

 

 

7.16

%

 

4,426.62

%

 

 

 

 

 

 

 

 

 

 

Weighted average common shares (basic)

 

45,641,605

 

 

 

45,839,555

 

 

 

40,354,728

 

 

 

 

 

Common share equivalents

 

20,090

 

 

 

16,856

 

 

 

20,438

 

 

 

 

 

Weighted average common shares (diluted)

 

45,661,695

 

 

 

45,856,411

 

 

 

40,375,166

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

1.69

 

 

$

1.57

 

 

$

0.04

 

 

7.64

%

 

4,125.00

%

Diluted earnings per share

$

1.69

 

 

$

1.57

 

 

$

0.04

 

 

7.64

%

 

4,125.00

%

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Net income

$

77,043

 

 

$

71,897

 

 

$

1,702

 

 

 

 

 

Provision for non-PCD acquired loans

 

 

 

 

 

 

 

50,705

 

 

 

 

 

Noninterest expense components

 

 

 

 

 

 

 

 

 

Add - merger and acquisition expenses

 

 

 

 

 

 

 

37,166

 

 

 

 

 

Noncore increases to income before taxes

 

 

 

 

 

 

 

87,871

 

 

 

 

 

Net tax benefit associated with noncore items (1)

 

 

 

 

 

 

 

(23,866

)

 

 

 

 

Noncore increases to net income

 

 

 

 

 

 

 

64,005

 

 

 

 

 

Operating net income (Non-GAAP)

$

77,043

 

 

$

71,897

 

 

$

65,707

 

 

7.16

%

 

17.25

%

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share, on an operating basis

$

1.69

 

 

$

1.57

 

 

$

1.63

 

 

7.64

%

 

3.68

%

 

 

 

 

 

 

 

 

 

 

(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)

 

3.85

%

 

 

3.64

%

 

 

3.05

%

 

 

 

 

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

 

1.56

%

 

 

1.43

%

 

 

0.04

%

 

 

 

 

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

 

1.56

%

 

 

1.43

%

 

 

1.47

%

 

 

 

 

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

 

10.70

%

 

 

9.90

%

 

 

0.28

%

 

 

 

 

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

 

10.70

%

 

 

9.90

%

 

 

10.75

%

 

 

 

 

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

 

16.57

%

 

 

15.26

%

 

 

0.41

%

 

 

 

 

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

 

16.57

%

 

 

15.26

%

 

 

15.92

%

 

 

 

 

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

 

16.10

%

 

 

14.78

%

 

 

19.23

%

 

 

 

 

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

%

 

 

14.78

%

 

 

19.23

%

 

 

 

 

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

 

47.28

%

 

 

48.60

%

 

 

77.20

%

 

 

 

 

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

 

47.28

%

 

 

48.60

%

 

 

52.71

%

 

 

 

 

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

 

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

 

 

 

 

 

 

Years Ended

 

 

 

 

 

 

 

 

% Change

 

 

December 31
2022

 

December 31
2021

 

Dec 2022 vs.

 

 

 

 

Dec 2021

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

Interest on federal funds sold and short-term investments

 

$

14,385

 

 

$

2,494

 

 

476.78

%

Interest and dividends on securities

 

 

50,360

 

 

 

30,493

 

 

65.15

%

Interest and fees on loans

 

 

577,923

 

 

 

381,433

 

 

51.51

%

Interest on loans held for sale

 

 

172

 

 

 

856

 

 

(79.91

)%

Total interest income

 

 

642,840

 

 

 

415,276

 

 

54.80

%

Interest expense

 

 

 

 

 

 

Interest on deposits

 

 

24,652

 

 

 

8,327

 

 

196.05

%

Interest on borrowings

 

 

4,939

 

 

 

5,390

 

 

(8.37

)%

Total interest expense

 

 

29,591

 

 

 

13,717

 

 

115.73

%

Net interest income

 

 

613,249

 

 

 

401,559

 

 

52.72

%

Provision for credit losses

 

 

6,500

 

 

 

18,205

 

 

(64.30

)%

Net interest income after provision for credit losses

 

 

606,749

 

 

 

383,354

 

 

58.27

%

Noninterest income

 

 

 

 

 

 

Deposit account fees

 

 

23,370

 

 

 

16,745

 

 

39.56

%

Interchange and ATM fees

 

 

16,249

 

 

 

12,987

 

 

25.12

%

Investment management

 

 

36,832

 

 

 

35,308

 

 

4.32

%

Mortgage banking income

 

 

3,515

 

 

 

13,280

 

 

(73.53

)%

Increase in cash surrender value of life insurance policies

 

 

7,685

 

 

 

6,431

 

 

19.50

%

Gain on life insurance benefits

 

 

1,291

 

 

 

258

 

 

400.39

%

Loan level derivative income

 

 

2,932

 

 

 

3,257

 

 

(9.98

)%

Other noninterest income

 

 

22,793

 

 

 

17,584

 

 

29.62

%

Total noninterest income

 

 

114,667

 

 

 

105,850

 

 

8.33

%

Noninterest expenses

 

 

 

 

 

 

Salaries and employee benefits

 

 

204,711

 

 

 

172,586

 

 

18.61

%

Occupancy and equipment expenses

 

 

49,841

 

 

 

36,265

 

 

37.44

%

Data processing and facilities management

 

 

9,320

 

 

 

6,899

 

 

35.09

%

FDIC assessment

 

 

6,951

 

 

 

3,980

 

 

74.65

%

Merger and acquisition expense

 

 

7,100

 

 

 

40,840

 

 

(82.62

)%

Other noninterest expenses

 

 

95,739

 

 

 

71,959

 

 

33.05

%

Total noninterest expenses

 

 

373,662

 

 

 

332,529

 

 

12.37

%

Income before income taxes

 

 

347,754

 

 

 

156,675

 

 

121.96

%

Provision for income taxes

 

 

83,941

 

 

 

35,683

 

 

135.24

%

Net Income

 

$

263,813

 

 

$

120,992

 

 

118.04

%

 

 

 

 

 

 

 

Weighted average common shares (basic)

 

 

46,372,051

 

 

 

34,872,034

 

 

 

Common share equivalents

 

 

17,938

 

 

 

16,484

 

 

 

Weighted average common shares (diluted)

 

 

46,389,989

 

 

 

34,888,518

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

5.69

 

 

$

3.47

 

 

63.98

%

Diluted earnings per share

 

$

5.69

 

 

$

3.47

 

 

63.98

%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Net Income

 

$

263,813

 

 

$

120,992

 

 

 

Provision for non-PCD acquired loans

 

 

 

 

 

50,705

 

 

 

Noninterest expense components

 

 

 

 

 

 

Add - merger and acquisition expenses

 

 

7,100

 

 

 

40,840

 

 

 

Noncore increases to income before taxes

 

 

7,100

 

 

 

91,545

 

 

 

Net tax benefit associated with noncore items (1)

 

 

(1,995

)

 

 

(24,899

)

 

 

Noncore increases to net income

 

$

5,105

 

 

$

66,646

 

 

 

Operating net income (Non-GAAP)

 

$

268,918

 

 

$

187,638

 

 

43.32

%

 

 

 

 

 

 

 

Diluted earnings per share, on an operating basis

 

$

5.80

 

 

$

5.38

 

 

7.81

%

 

 

 

 

 

 

 

(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)

 

 

3.46

%

 

 

3.02

%

 

 

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

 

 

1.33

%

 

 

0.81

%

 

 

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

 

 

1.35

%

 

 

1.26

%

 

 

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

 

 

9.05

%

 

 

6.34

%

 

 

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

 

 

9.22

%

 

 

9.83

%

 

 

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

 

 

13.87

%

 

 

9.20

%

 

 

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

 

 

14.14

%

 

 

14.26

%

 

 

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

 

 

15.75

%

 

 

20.86

%

 

 

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

 

 

15.75

%

 

 

20.86

%

 

 

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

 

 

51.33

%

 

 

65.53

%

 

 

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

 

 

50.36

%

 

 

57.49

%

 

 

ASSET QUALITY

 

 

(Unaudited, dollars in thousands)

 

Nonperforming Assets At

 

 

December 31
2022

 

September 30
2022

 

December 31
2021

Nonperforming loans

 

 

 

 

 

 

Commercial & industrial loans

 

$

26,693

 

 

$

27,393

 

 

$

3,439

 

Commercial real estate loans

 

 

15,730

 

 

 

15,982

 

 

 

10,870

 

Small business loans

 

 

104

 

 

 

50

 

 

 

44

 

Residential real estate loans

 

 

8,479

 

 

 

8,891

 

 

 

9,182

 

Home equity

 

 

3,400

 

 

 

3,485

 

 

 

3,781

 

Other consumer

 

 

475

 

 

 

216

 

 

 

504

 

Total nonperforming loans

 

 

54,881

 

 

 

56,017

 

 

 

27,820

 

Total nonperforming assets

 

$

54,881

 

 

$

56,017

 

 

$

27,820

 

 

 

 

 

 

 

 

Nonperforming loans/gross loans

 

 

0.39

%

 

 

0.41

%

 

 

0.20

%

Nonperforming assets/total assets

 

 

0.28

%

 

 

0.28

%

 

 

0.14

%

Allowance for credit losses/nonperforming loans

 

 

277.73

%

 

 

262.98

%

 

 

528.12

%

Allowance for credit losses/total loans

 

 

1.09

%

 

 

1.08

%

 

 

1.08

%

Delinquent loans/total loans

 

 

0.30

%

 

 

0.17

%

 

 

0.34

%

 

 

 

 

 

 

 

 

 

Nonperforming Assets Reconciliation for the Three Months Ended

 

 

December 31
2022

 

September 30
2022

 

December 31
2021

 

 

 

 

 

 

 

Nonperforming assets beginning balance

 

$

56,017

 

 

$

55,915

 

 

$

45,810

 

New to nonperforming

 

 

5,734

 

 

 

30,650

 

 

 

3,875

 

Acquired loans

 

 

 

 

 

 

 

 

4,463

 

Loans charged-off

 

 

(660

)

 

 

(741

)

 

 

(445

)

Loans paid-off /sold

 

 

(2,448

)

 

 

(29,450

)

 

 

(21,162

)

Loans restored to performing status

 

 

(3,846

)

 

 

(366

)

 

 

(4,925

)

Other

 

 

84

 

 

 

9

 

 

 

204

 

Nonperforming assets ending balance

 

$

54,881

 

 

$

56,017

 

 

$

27,820

 

 

 

Net Charge-Offs (Recoveries)

 

 

Three Months Ended

 

Years Ended

 

 

December 31
2022

 

September 30
2022

 

December 31
2021

 

December 31
2022

 

December 31
2021

Net charge-offs (recoveries)

 

 

 

 

 

 

 

 

 

 

Commercial and industrial loans

 

$

(5

)

 

$

(2

)

 

$

(2,586

)

 

$

(49

)

 

$

788

 

Commercial real estate loans

 

 

 

 

 

(268

)

 

 

 

 

 

(271

)

 

 

(57

)

Small business loans

 

 

135

 

 

 

(88

)

 

 

2

 

 

 

47

 

 

 

121

 

Residential real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

Home equity

 

 

(16

)

 

 

(65

)

 

 

(142

)

 

 

1

 

 

 

(180

)

Other consumer

 

 

280

 

 

 

429

 

 

 

295

 

 

 

1,275

 

 

 

544

 

Total net charge-offs (recoveries)

 

$

394

 

 

$

6

 

 

$

(2,431

)

 

$

1,003

 

 

$

1,215

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs (recoveries) to average loans (annualized)

 

 

0.01

%

 

nm

 

 

(0.09

)%

 

 

0.01

%

 

 

0.01

%

 

 

Troubled Debt Restructurings At

 

 

December 31
2022

 

September 30
2022

 

December 31
2021

Troubled debt restructurings on accrual status

 

$

11,278

 

 

$

11,549

 

 

$

14,635

 

Troubled debt restructurings on nonaccrual status

 

 

1,429

 

 

 

1,538

 

 

 

1,993

 

Total troubled debt restructurings

 

$

12,707

 

 

$

13,087

 

 

$

16,628

 

 

 

 

 

 

 

 

BALANCE SHEET AND CAPITAL RATIOS

 

 

 

 

 

 

 

 

December 31
2022

 

September 30
2022

 

December 31
2021

Gross loans/total deposits

 

 

87.72

%

 

 

83.85

%

 

 

80.32

%

Common equity tier 1 capital ratio (1)

 

 

14.33

%

 

 

13.98

%

 

 

14.22

%

Tier 1 leverage capital ratio (1)

 

 

10.99

%

 

 

10.51

%

 

 

12.38

%

Common equity to assets ratio GAAP

 

 

14.96

%

 

 

14.30

%

 

 

14.78

%

Tangible common equity to tangible assets ratio (2)

 

 

10.26

%

 

 

9.66

%

 

 

10.31

%

Book value per share GAAP

 

$

63.25

 

 

$

61.73

 

 

$

63.75

 

Tangible book value per share (2)

 

$

41.12

 

 

$

39.56

 

 

$

42.25

 

(1) Estimated number for December 31, 2022.

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

 

nm = not meaningful

INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited, dollars in thousands)

 

Three Months Ended

 

 

December 31, 2022

 

September 30, 2022

 

December 31, 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

 

$

466,691

 

$

4,163

 

3.54

%

 

$

1,156,143

 

$

6,519

 

2.24

%

 

$

2,107,325

 

$

840

 

0.16

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities - trading

 

 

3,732

 

 

 

%

 

 

3,730

 

 

 

%

 

 

3,572

 

 

 

%

Securities - taxable investments

 

 

3,147,635

 

 

15,787

 

1.99

%

 

 

3,024,802

 

 

13,243

 

1.74

%

 

 

2,520,248

 

 

8,874

 

1.40

%

Securities - nontaxable investments (1)

 

 

189

 

 

2

 

4.20

%

 

 

196

 

 

1

 

2.02

%

 

 

216

 

 

3

 

5.51

%

Total securities

 

$

3,151,556

 

$

15,789

 

1.99

%

 

$

3,028,728

 

$

13,244

 

1.73

%

 

$

2,524,036

 

$

8,877

 

1.40

%

Loans held for sale

 

 

1,607

 

 

22

 

5.43

%

 

 

4,263

 

 

51

 

4.75

%

 

 

28,428

 

 

181

 

2.53

%

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (1)

 

 

1,560,885

 

 

23,258

 

5.91

%

 

 

1,520,924

 

 

19,289

 

5.03

%

 

 

1,603,776

 

 

21,046

 

5.21

%

Commercial real estate (1)

 

 

7,732,925

 

 

88,508

 

4.54

%

 

 

7,760,470

 

 

85,284

 

4.36

%

 

 

6,207,248

 

 

62,531

 

4.00

%

Commercial construction

 

 

1,223,695

 

 

17,205

 

5.58

%

 

 

1,157,876

 

 

14,875

 

5.10

%

 

 

884,243

 

 

9,720

 

4.36

%

Small business

 

 

213,384

 

 

2,995

 

5.57

%

 

 

207,546

 

 

2,819

 

5.39

%

 

 

186,939

 

 

2,352

 

4.99

%

Total commercial

 

 

10,730,889

 

 

131,966

 

4.88

%

 

 

10,646,816

 

 

122,267

 

4.56

%

 

 

8,882,206

 

 

95,649

 

4.27

%

Residential real estate

 

 

2,001,042

 

 

18,334

 

3.64

%

 

 

1,909,066

 

 

16,533

 

3.44

%

 

 

1,415,488

 

 

11,830

 

3.32

%

Home equity

 

 

1,088,846

 

 

14,339

 

5.22

%

 

 

1,076,040

 

 

11,869

 

4.38

%

 

 

1,021,354

 

 

8,769

 

3.41

%

Total consumer real estate

 

 

3,089,888

 

 

32,673

 

4.20

%

 

 

2,985,106

 

 

28,402

 

3.77

%

 

 

2,436,842

 

 

20,599

 

3.35

%

Other consumer

 

 

34,638

 

 

595

 

6.82

%

 

 

31,883

 

 

523

 

6.51

%

 

 

25,378

 

 

427

 

6.68

%

Total loans

 

$

13,855,415

 

$

165,234

 

4.73

%

 

$

13,663,805

 

$

151,192

 

4.39

%

 

$

11,344,426

 

$

116,675

 

4.08

%

Total interest-earning assets

 

$

17,475,269

 

$

185,208

 

4.20

%

 

$

17,852,939

 

$

171,006

 

3.80

%

 

$

16,004,215

 

$

126,573

 

3.14

%

Cash and due from banks

 

 

184,985

 

 

 

 

 

 

192,003

 

 

 

 

 

 

168,907

 

 

 

 

Federal Home Loan Bank stock

 

 

5,218

 

 

 

 

 

 

5,745

 

 

 

 

 

 

12,557

 

 

 

 

Other assets

 

 

1,871,241

 

 

 

 

 

 

1,854,870

 

 

 

 

 

 

1,569,995

 

 

 

 

Total assets

 

$

19,536,713

 

 

 

 

 

$

19,905,557

 

 

 

 

 

$

17,755,674

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings and interest checking accounts

 

$

5,966,326

 

$

4,921

 

0.33

%

 

$

6,224,690

 

$

2,110

 

0.13

%

 

$

5,471,560

 

$

465

 

0.03

%

Money market

 

 

3,408,441

 

 

7,492

 

0.87

%

 

 

3,459,212

 

 

3,025

 

0.35

%

 

 

3,049,300

 

 

537

 

0.07

%

Time deposits

 

 

1,175,667

 

 

1,912

 

0.65

%

 

 

1,246,841

 

 

974

 

0.31

%

 

 

1,196,889

 

 

964

 

0.32

%

Total interest-bearing deposits

 

$

10,550,434

 

$

14,325

 

0.54

%

 

$

10,930,743

 

$

6,109

 

0.22

%

 

$

9,717,749

 

$

1,966

 

0.08

%

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

 

639

 

 

2

 

1.24

%

 

 

12,876

 

 

55

 

1.69

%

 

 

63,428

 

 

353

 

2.21

%

Long-term borrowings

 

 

 

 

 

%

 

 

 

 

 

%

 

 

14,063

 

 

49

 

1.38

%

Junior subordinated debentures

 

 

62,855

 

 

827

 

5.22

%

 

 

62,854

 

 

589

 

3.72

%

 

 

62,853

 

 

405

 

2.56

%

Subordinated debentures

 

 

49,873

 

 

618

 

4.92

%

 

 

49,847

 

 

617

 

4.91

%

 

 

49,776

 

 

618

 

4.93

%

Total borrowings

 

$

113,367

 

$

1,447

 

5.06

%

 

$

125,577

 

$

1,261

 

3.98

%

 

$

190,120

 

$

1,425

 

2.97

%

Total interest-bearing liabilities

 

$

10,663,801

 

$

15,772

 

0.59

%

 

$

11,056,320

 

$

7,370

 

0.26

%

 

$

9,907,869

 

$

3,391

 

0.14

%

Noninterest-bearing demand deposits

 

 

5,606,055

 

 

 

 

 

 

5,641,742

 

 

 

 

 

 

5,124,859

 

 

 

 

Other liabilities

 

 

410,679

 

 

 

 

 

 

325,507

 

 

 

 

 

 

298,557

 

 

 

 

Total liabilities

 

$

16,680,535

 

 

 

 

 

$

17,023,569

 

 

 

 

 

$

15,331,285

 

 

 

 

Stockholders' equity

 

 

2,856,178

 

 

 

 

 

 

2,881,988

 

 

 

 

 

 

2,424,389

 

 

 

 

Total liabilities and stockholders' equity

 

$

19,536,713

 

 

 

 

 

$

19,905,557

 

 

 

 

 

$

17,755,674

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

169,436

 

 

 

 

 

$

163,636

 

 

 

 

 

$

123,182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

 

 

 

 

3.61

%

 

 

 

 

 

3.54

%

 

 

 

 

 

3.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

3.85

%

 

 

 

 

 

3.64

%

 

 

 

 

 

3.05

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits, including demand deposits

 

$

16,156,489

 

$

14,325

 

 

 

$

16,572,485

 

$

6,109

 

 

 

$

14,842,608

 

$

1,966

 

 

Cost of total deposits

 

 

 

 

 

0.35

%

 

 

 

 

 

0.15

%

 

 

 

 

 

0.05

%

Total funding liabilities, including demand deposits

 

$

16,269,856

 

$

15,772

 

 

 

$

16,698,062

 

$

7,370

 

 

 

$

15,032,728

 

$

3,391

 

 

Cost of total funding liabilities

 

 

 

 

 

0.38

%

 

 

 

 

 

0.18

%

 

 

 

 

 

0.09

%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.1 million, $1.0 million, and $652,000 for the three months ended December 31, 2022, September 30, 2022, and December 31, 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.

 

 

Years Ended

 

 

December 31, 2022

 

December 31, 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

 

$

1,222,434

 

$

14,385

 

1.18

%

 

$

1,864,346

 

$

2,494

 

0.13

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

Securities - trading

 

 

3,764

 

 

 

%

 

 

3,344

 

 

 

%

Securities - taxable investments

 

 

2,948,358

 

 

50,354

 

1.71

%

 

 

1,795,199

 

 

30,477

 

1.70

%

Securities - nontaxable investments (1)

 

 

196

 

 

7

 

3.57

%

 

 

469

 

 

20

 

4.26

%

Total securities

 

$

2,952,318

 

$

50,361

 

1.71

%

 

$

1,799,012

 

$

30,497

 

1.70

%

Loans held for sale

 

 

4,774

 

 

172

 

3.60

%

 

 

34,056

 

 

856

 

2.51

%

Loans

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (1)

 

 

1,538,848

 

 

77,074

 

5.01

%

 

 

1,823,914

 

 

79,752

 

4.37

%

Commercial real estate (1)

 

 

7,807,427

 

 

326,593

 

4.18

%

 

 

4,702,346

 

 

185,908

 

3.95

%

Commercial construction

 

 

1,191,394

 

 

57,804

 

4.85

%

 

 

616,037

 

 

24,696

 

4.01

%

Small business

 

 

204,982

 

 

10,886

 

5.31

%

 

 

180,473

 

 

9,276

 

5.14

%

Total commercial

 

 

10,742,651

 

 

472,357

 

4.40

%

 

 

7,322,770

 

 

299,632

 

4.09

%

Residential real estate

 

 

1,831,493

 

 

63,443

 

3.46

%

 

 

1,286,470

 

 

46,279

 

3.60

%

Home equity

 

 

1,061,228

 

 

44,048

 

4.15

%

 

 

1,025,809

 

 

35,160

 

3.43

%

Total consumer real estate

 

 

2,892,721

 

 

107,491

 

3.72

%

 

 

2,312,279

 

 

81,439

 

3.52

%

Other consumer

 

 

31,986

 

 

2,114

 

6.61

%

 

 

23,885

 

 

1,668

 

6.98

%

Total loans

 

$

13,667,358

 

$

581,962

 

4.26

%

 

$

9,658,934

 

$

382,739

 

3.96

%

Total interest-earning assets

 

$

17,846,884

 

$

646,880

 

3.62

%

 

$

13,356,348

 

$

416,586

 

3.12

%

Cash and due from banks

 

 

184,812

 

 

 

 

 

 

152,723

 

 

 

 

Federal Home Loan Bank stock

 

 

7,134

 

 

 

 

 

 

10,283

 

 

 

 

Other assets

 

 

1,858,210

 

 

 

 

 

 

1,335,193

 

 

 

 

Total assets

 

$

19,897,040

 

 

 

 

 

$

14,854,547

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

Savings and interest checking accounts

 

$

6,159,289

 

$

8,339

 

0.14

%

 

$

4,590,055

 

$

1,610

 

0.04

%

Money market

 

 

3,489,981

 

 

11,683

 

0.33

%

 

 

2,516,871

 

 

1,930

 

0.08

%

Time deposits

 

 

1,310,442

 

 

4,630

 

0.35

%

 

 

936,046

 

 

4,787

 

0.51

%

Total interest-bearing deposits

 

$

10,959,712

 

$

24,652

 

0.22

%

 

$

8,042,972

 

$

8,327

 

0.10

%

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

 

16,138

 

 

313

 

1.94

%

 

 

41,556

 

 

897

 

2.16

%

Long-term borrowings

 

 

2,235

 

 

31

 

1.39

%

 

 

21,072

 

 

331

 

1.57

%

Junior subordinated debentures

 

 

62,854

 

 

2,125

 

3.38

%

 

 

62,852

 

 

1,692

 

2.69

%

Subordinated debentures

 

 

49,837

 

 

2,470

 

4.96

%

 

 

49,741

 

 

2,470

 

4.97

%

Total borrowings

 

$

131,064

 

$

4,939

 

3.77

%

 

$

175,221

 

$

5,390

 

3.08

%

Total interest-bearing liabilities

 

$

11,090,776

 

$

29,591

 

0.27

%

 

$

8,218,193

 

$

13,717

 

0.17

%

Noninterest-bearing demand deposits

 

 

5,559,997

 

 

 

 

 

 

4,443,410

 

 

 

 

Other liabilities

 

 

330,371

 

 

 

 

 

 

284,679

 

 

 

 

Total liabilities

 

$

16,981,144

 

 

 

 

 

$

12,946,282

 

 

 

 

Stockholders' equity

 

 

2,915,896

 

 

 

 

 

 

1,908,265

 

 

 

 

Total liabilities and stockholders' equity

 

$

19,897,040

 

 

 

 

 

$

14,854,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

617,289

 

 

 

 

 

$

402,869

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

 

 

 

 

3.35

%

 

 

 

 

 

2.95

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

3.46

%

 

 

 

 

 

3.02

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits, including demand deposits

 

$

16,519,709

 

$

24,652

 

 

 

$

12,486,382

 

$

8,327

 

 

Cost of total deposits

 

 

 

 

 

0.15

%

 

 

 

 

 

0.07

%

Total funding liabilities, including demand deposits

 

$

16,650,773

 

$

29,591

 

 

 

$

12,661,603

 

$

13,717

 

 

Cost of total funding liabilities

 

 

 

 

 

0.18

%

 

 

 

 

 

0.11

%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $4.0 million and $1.3 million for the years ended months ended December 31, 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:

 

 

December 31
2022

 

September 30
2022

 

December 31
2021

 

Tangible common equity

 

(Dollars in thousands, except per share data)

 

Stockholders' equity (GAAP)

 

$

2,886,701

 

 

$

2,817,201

 

 

$

3,018,449

 

(a)

Less: Goodwill and other intangibles

 

 

1,010,140

 

 

 

1,012,006

 

 

 

1,017,844

 

 

Tangible common equity

 

$

1,876,561

 

 

$

1,805,195

 

 

$

2,000,605

 

(b)

Tangible assets

 

 

 

 

 

 

 

Assets (GAAP)

 

$

19,294,174

 

 

$

19,703,269

 

 

$

20,423,405

 

(c)

Less: Goodwill and other intangibles

 

 

1,010,140

 

 

 

1,012,006

 

 

 

1,017,844

 

 

Tangible assets

 

$

18,284,034

 

 

$

18,691,263

 

 

$

19,405,561

 

(d)

 

 

 

 

 

 

 

 

Common Shares

 

 

45,641,238

 

 

 

45,634,626

 

 

 

47,349,778

 

(e)

 

 

 

 

 

 

 

 

Common equity to assets ratio (GAAP)

 

 

14.96

%

 

 

14.30

%

 

 

14.78

%

(a/c)

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

 

 

10.26

%

 

 

9.66

%

 

 

10.31

%

(b/d)

Book value per share (GAAP)

 

$

63.25

 

 

$

61.73

 

 

$

63.75

 

(a/e)

Tangible book value per share (Non-GAAP)

 

$

41.12

 

 

$

39.56

 

 

$

42.25

 

(b/e)

 

 

 

 

 

 

 

 

APPENDIX B: Non-GAAP Reconciliation of Earnings Metrics

(Unaudited, dollars in thousands)

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

 

Three Months Ended

 

Years Ended

 

 

December 31
2022

 

September 30
2022

 

December 31
2021

 

December 31
2022

 

December 31
2021

 

Net interest income (GAAP)

$

168,355

 

 

$

162,601

 

 

$

122,530

 

 

$

613,249

 

 

$

401,559

 

(a)

 

 

 

 

 

 

 

 

 

 

 

Noninterest income (GAAP)

$

32,302

 

 

$

28,195

 

 

$

29,180

 

 

$

114,667

 

 

$

105,850

 

(b)

Noninterest income on an operating basis (Non-GAAP)

$

32,302

 

 

$

28,195

 

 

$

29,180

 

 

$

114,667

 

 

$

105,850

 

(c)

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (GAAP)

$

94,872

 

 

$

92,728

 

 

$

117,126

 

 

$

373,662

 

 

$

332,529

 

(d)

Less:

 

 

 

 

 

 

 

 

 

 

Merger and acquisition expense

 

 

 

 

 

 

 

37,166

 

 

 

7,100

 

 

 

40,840

 

 

Noninterest expense on an operating basis (Non-GAAP)

$

94,872

 

 

$

92,728

 

 

$

79,960

 

 

$

366,562

 

 

$

291,689

 

(e)

 

 

 

 

 

 

 

 

 

 

 

Total revenue (GAAP)

$

200,657

 

 

$

190,796

 

 

$

151,710

 

 

$

727,916

 

 

$

507,409

 

(a+b)

Total operating revenue (Non-GAAP)

$

200,657

 

 

$

190,796

 

 

$

151,710

 

 

$

727,916

 

 

$

507,409

 

(a+c)

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

$

77,043

 

 

$

71,897

 

 

$

1,702