Independent Bank Corp.
INDB Financial Services Q4 2024
Document 1
Exhibit 99.1
Shareholder Relations NEWS RELEASE
288 Union Street
Rockland, Ma. 02370
INDEPENDENT BANK CORP. REPORTS FOURTH QUARTER NET INCOME OF $50.0 MILLION
Results marked by net interest income growth and stable asset quality
Rockland, Massachusetts (January 16, 2025) - Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2024 fourth quarter net income of $50.0 million, or $1.18 per diluted share, as compared to 2024third quarter net income of $42.9 million, or $1.01 per diluted share. Financial results for the fourth quarter of 2024 also reflected pre-tax merger-related costs of $1.9 million associated with the Company’s pending acquisition of Enterprise Bancorp, Inc. (“Enterprise”) and its subsidiary, Enterprise Bank, announced on December 9, 2024. Excluding these merger-related costs and the related tax effects, operating net income was $51.4 million, or $1.21 per diluted share. No merger-related costs were incurred during the third quarter of 2024. The increase in net income was largely attributable to growth in net interest income, a decrease in loan loss provision, and a reduced tax rate compared to the prior quarter, as detailed below. Full year 2024 net income was $192.1 million, or $4.52 per diluted share, as compared to prior year net income of $239.5 million, or $5.42 per diluted share. In addition, full year operating net income was $193.4 million, or $4.55 on a diluted earnings per share basis, which excluded the aforementioned merger-related costs associated with the pending Enterprise acquisition. There were no non-core adjustments included in the Company’s full year 2023 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.
The Company generated a return on average assets and a return on average common equity of 1.02% and 6.64%, respectively, for the fourth quarter of 2024, as compared to 0.88% and 5.75%, respectively, for the prior quarter, or 1.05% and 6.82%, respectively, on an operating basis for the fourth quarter of 2024. For the full year 2024, the Company generated a return on average assets and return on average common equity of 0.99% and 6.53%, respectively, as compared to 1.24% and 8.31%, respectively, for the prior year. On an operating basis, the Company generated a return on average assets and a return on average common equity of 1.00% and 6.57%, respectively, for the full year 2024.
“Our employees continue to provide outstanding service to our clients, resulting in sustained improvement over many core elements of the bank,” said Jeffrey Tengel, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “Fourth quarter results were driven by a focus on our fundamentals, and we believe that we are well positioned to achieve profitability improvement through both net interest margin expansion and the pending acquisition of Enterprise.”
BALANCE SHEET
Total assets of $19.4 billion at December 31, 2024 remained essentially flat when compared to the prior quarter and increased $26.2 million, or 0.14%, when compared to December 31, 2023 levels, with the change compared to the year ago period reflecting a healthy remix of assets from securities into loans.
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At December 31, 2024, the Company reclassified its portfolio of loans secured by owner-occupied commercial real estate to the commercial and industrial loan category to reflect the variation in the management and underlying risk profile of such loans compared with investor-owned commercial real estate loans. Prior periods were reclassified to conform to the current presentation. Total loans at December 31, 2024 of $14.5 billion increased by $147.6 million, or 1.0% (4.1% annualized), compared to the prior quarter level. Loan growth for the fourth quarter was fueled primarily by increases in the commercial and industrial and construction categories, while commercial real estate balances decreased from the prior quarter, reflecting the Company’s cautious posture on commercial real estate originations. Small business lending also remains a focal point, with growth of 4.4% (17.3% annualized) during the fourth quarter. On the consumer side, the total loan portfolio grew $31.3 million, or 0.9% (3.4% annualized) from the prior quarter, reflecting solid growth in both the residential real estate and home equity products.
Average deposits for the fourth quarter increased by $109.0 million, or 0.7% (2.8% annualized), as compared to the prior quarter average balances, while period end balances of $15.3 billion at December 31, 2024 decreased by $135.0 million, or 0.9%, from September 30, 2024, as growth in consumer balances were offset by seasonal reductions in business checking and municipal deposits. Overall core deposits remained at 81.7% of total deposits at December 31, 2024, consistent with overall core deposits as a percentage of total deposits at September 30, 2024. Total noninterest bearing demand deposits represented 28.7% of total deposits at December 31, 2024, compared to 29.3% at September 30, 2024. The total cost of deposits for the fourth quarter of 1.65% decreased 9 basis points compared to the prior quarter.
Total period end borrowings increased by $38.0 million, or 5.7%, during the fourth quarter of 2024, while average borrowings decreased $21.2 million, or 3.1% for the quarter. The Company’s overall cost of funding decreased by 9 basis point to 1.77% during the fourth quarter, fueled by lower deposit costs, and to a lesser extent, reduced average wholesale borrowing costs.
The securities portfolio balances decreased $54.2 million, or 2.0%, at December 31, 2024 compared to September 30, 2024, as new purchases of $81.6 million were offset by maturities, calls, paydowns and unrealized losses of $15.5 million in the available for sale portfolio. Total securities represented 14.0% and 14.2% of total assets at December 31, 2024 and September 30, 2024, respectively.
Stockholders’ equity at December 31, 2024 increased $16.0 million, or 0.5%, compared to September 30, 2024, driven by strong earnings retention, partially offset by unrealized losses on the available for sale investment securities portfolio and interest rate derivative valuations included in other comprehensive income. The Company’s ratio of common equity to assets of 15.45% at December 31, 2024 represented an increase of 11 basis points from September 30, 2024 and an increase of 49 basis points from December 31, 2023. The Company’s book value per share increased by $0.35, or 0.5%, to $70.43 at December 31, 2024 as compared to the prior quarter. The Company’s tangible book value per share at December 31, 2024 rose by $0.39, or 0.8%, from the prior quarter to $46.96, and has grown by 6.4% from the year ago period. The Company’s ratio of tangible common equity to tangible assets of 10.86% at December 31, 2024 represented an increase of 11 basis points from the prior quarter and an increase of 55 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 fourth quarter of 2024 increased to $144.7 million as compared to $141.7 million for the prior quarter. The net interest margin of 3.33% increased 4 basis points when compared to the prior quarter, and the core margin of 3.31% increased two basis points, driven primarily by decreased funding costs. See Appendix C for additional details regarding the net interest margin and Non-GAAP reconciliation of core margin.
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NONINTEREST INCOME
Noninterest income of $32.2 million for the fourth quarter of 2024 represented a decrease of $1.4 million, or 4.0%, as compared to the prior quarter. Significant changes in noninterest income for the fourth quarter of 2024 compared to the prior quarter included the following:
•Deposit account fees increased by $337,000, or 5.0%, due primarily to increased overdraft and cash management activity.
•Overall investment and advisory income decreased by $250,000, or 2.3%, compared to the prior quarter as slightly higher management fee income was offset by lower retail investment revenue and insurance commissions. Reflecting overall market declines in December, total assets under administration decreased by $125.9 million, or 1.8%, during the quarter to $7.0 billion at December 31, 2024.
•Loan level derivative income decreased by $686,000, or 61.0%, reflecting volatility of customer demand.
•Other noninterest income decreased by $1.1 million, or 16.4%, driven by decreased unrealized gains on equity securities of $603,000 and decreased FHLB dividend income of $214,000.
NONINTEREST EXPENSE
Noninterest expense of $106.4 million for the fourth quarter of 2024 represented an increase of $6.0 million, or 6.0%, as compared to the prior quarter. Significant changes in noninterest expense for the fourth quarter of 2024 compared to the prior quarter included the following:
•Salaries and employee benefits decreased by $899,000, or 1.5%, as compared to the prior quarter, fueled primarily by outsized interest rate-driven valuation fluctuations on the Company’s split-dollar bank-owned life insurance policies, which resulted in a $1.7 million decrease as compared to the prior quarter. This decrease was partially offset by increased base salary costs for the fourth quarter.
•Occupancy and equipment expenses increased by $665,000, or 5.2%, compared to the prior quarter, driven primarily by lease termination costs of approximately $550,000 related to the exit of an inactive branch location associated with a previous acquisition.
•During the fourth quarter of 2024, the Company recognized $1.9 million of merger and acquisition expenses related to the pending acquisition of Enterprise. No such costs were incurred during the prior quarter.
•Other noninterest expense increased by $4.3 million, or 19.2%, attributable largely to an increase in debit card expenses as the prior quarter reflected a one-time credit of $1.1 million, as well as increases in consultant fees of $841,000, unrealized losses on equity securities of $764,000, and card issuance costs of $490,000.
The Company’s tax rate for the fourth quarter of 2024 decreased to 20.49%, as compared to 22.35% for the prior quarter, due to the purchase of additional certificated tax credits during the fourth quarter, as well as the release of $1.2 million in uncertain tax positions.
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ASSET QUALITY
The fourth quarter provision for credit losses decreased to $7.5 million as compared to $19.5 million for the third quarter of 2024, as the prior quarter reflected a large specific reserve charge on one commercial real estate office loan. Nonperforming loans decreased slightly to $101.5 million at December 31, 2024, as compared to $104.2 million at September 30, 2024, representing 0.70% and 0.73% of total loans, respectively. Net charge-offs decreased to $1.2 million for the fourth quarter of 2024, as compared to $6.7 million for the prior quarter, representing 0.03% and 0.18%, respectively, of average loans annualized. Delinquencies as a percentage of total loans increased 27 basis points from the prior quarter to 0.60% at December 31, 2024, driven by the migration of one commercial real estate loan.
The allowance for credit losses on total loans increased to $170.0 million at December 31, 2024 compared to $163.7 million at September 30, 2024, and represented 1.17% and 1.14% of total loans, at December 31, 2024 and September 30, 2024, respectively.
CONFERENCE CALL INFORMATION
Jeffrey Tengel, Chief Executive Officer, and Mark Ruggiero, Chief Financial Officer and Executive Vice President of Consumer Lending, will host a conference call to discuss fourth quarter earnings at 10:00 a.m. Eastern Time on Friday, January 17, 2025. 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: 6760633 and will be available through January 24, 2025. Additionally, a webcast replay will be available on the Company’s website until January 17, 2026.
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. With retail branches in Eastern Massachusetts and Worcester County as well as commercial banking and investment management offices in Massachusetts and Rhode Island, Rockland Trust offers a wide range of banking, investment, and insurance services to individuals, families, and businesses. The Bank also offers a full suite of mobile, online, and telephone banking services. Rockland Trust is an FDIC member and an Equal Housing Lender.
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:
•adverse economic conditions in the regional and local economies within the New England region and the Company’s market area;
•events impacting the financial services industry, including high profile bank failures, and any resulting decreased confidence in banks among depositors, investors, and other counterparties, as well as competition for deposits, significant disruption, volatility and depressed valuations of equity and other securities of banks in the capital markets;
•the effects to the Company of an increasingly competitive labor market, including the possibility that the Company will have to devote significant resources to attract and retain qualified personnel;
•the instability or volatility in financial markets and unfavorable domestic or global general economic, political or business conditions, whether caused by geopolitical concerns, including the Russia/Ukraine conflict, the conflict in Israel and surrounding areas and the possible expansion of such conflicts, political
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and policy uncertainties associated with the new U.S. presidential administration, changes in U.S. and international trade policies, or other factors, and the potential impact of such factors on the Company and its customers, including the potential for decreases in deposits and loan demand, unanticipated loan delinquencies, loss of collateral and decreased service revenues;
•unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on the Company’s local economies or the Company's business caused by adverse weather conditions and natural disasters, changes in climate, public health crises or other external events and any actions taken by governmental authorities in response to any such events;
•adverse changes or volatility in the local real estate market;
•changes in interest rates and any resulting impact on interest earning assets and/or interest bearing liabilities, the level of voluntary prepayments on loans and the receipt of payments on mortgage-backed securities, decreased loan demand or increased difficulty in the ability of borrowers to repay variable rate loans;
•failure to consummate or a delay in consummating the acquisition of Enterprise, including as a result of any failure to obtain the necessary regulatory approvals, to obtain Enterprise shareholder approval or to satisfy any of the other conditions to the proposed transaction on a timely basis or at all;
•risks related to the company’s pending acquisition of Enterprise and acquisitions generally, including disruption to current plans and operations; difficulties in customer and employee retention; fees, expenses and charges related to these transactions being significantly higher than anticipated; unforeseen integration issues or impairment of goodwill and/or other intangibles; and the Company’s inability to achieve expected revenues, cost savings, synergies, and other benefits at levels or within the timeframes originally anticipated;
•the effect of laws, regulations, new requirements or expectations, or additional regulatory oversight in the highly regulated financial services industry, including as a result of intensified regulatory scrutiny in the aftermath of regional bank failures and the resulting need to invest in technology to meet heightened regulatory expectations, increased costs of compliance or required adjustments to strategy;
•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, including as a result of failure to comply with general tax laws and changes in tax laws;
•increased competition in the Company’s market areas, including competition that could impact deposit gathering, retention of deposits and the cost of deposits, increased competition due to the demand for innovative products and service offerings, and competition from non-depository institutions which may be subject to fewer regulatory constraints and lower cost structures;
•a deterioration in the conditions of the securities markets;
•a deterioration of the credit rating for U.S. long-term sovereign debt or uncertainties surrounding 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, including any inability to effectively implement new technology-driven products, such as artificial intelligence;
•electronic or other 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, including the need to invest in technology to meet heightened regulatory expectations or introduction of new requirements or expectations resulting in increased costs of compliance or required adjustments to strategy;
•changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) generally applicable to the Company’s business and the associated costs of such changes;
•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;
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•operational risks related to the Company and its customers’ reliance on information technology; cyber threats, attacks, intrusions, and fraud; and outages or other issues impacting the Company or its third party service providers which could lead to interruptions or disruptions of the Company’s operating systems, including systems that are customer facing, and adversely impact the Company’s business; and
•any unexpected material adverse changes in the Company’s 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 most recent 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 may include 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, 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 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.
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Contacts:
Jeffrey Tengel
President and Chief Executive Officer
(781) 982-6144
Mark J. Ruggiero
Chief Financial Officer and
Executive Vice President of Consumer Lending
(781) 982-6281
Investor Relations:
Gerry Cronin
Director of Investor Relations
(774) 363-9872
Category: Earnings Releases
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| INDEPENDENT BANK CORP. FINANCIAL SUMMARY | |||||||||||||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||||||||||||
| (Unaudited, dollars in thousands) | % Change | % Change | |||||||||||||||||||||||||||
| December 31 2024 | September 30 2024 | December 31 2023 | Dec 2024 vs. | Dec 2024 vs. | |||||||||||||||||||||||||
| Sept 2024 | Dec 2023 | ||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | 187,849 | $ | 198,987 | $ | 178,861 | (5.60) | % | 5.03 | % | |||||||||||||||||||
| Interest-earning deposits with banks | 32,041 | 225,465 | 45,469 | (85.79) | % | (29.53) | % | ||||||||||||||||||||||
| Securities | |||||||||||||||||||||||||||||
| Trading | 4,245 | 4,410 | 4,987 | (3.74) | % | (14.88) | % | ||||||||||||||||||||||
| Equities | 21,204 | 21,639 | 22,510 | (2.01) | % | (5.80) | % | ||||||||||||||||||||||
| Available for sale | 1,250,944 | 1,247,211 | 1,334,256 | 0.30 | % | (6.24) | % | ||||||||||||||||||||||
| Held to maturity | 1,434,956 | 1,492,315 | 1,569,107 | (3.84) | % | (8.55) | % | ||||||||||||||||||||||
| Total securities | 2,711,349 | 2,765,575 | 2,930,860 | (1.96) | % | (7.49) | % | ||||||||||||||||||||||
| Loans held for sale | 7,271 | 16,259 | 6,368 | (55.28) | % | 14.18 | % | ||||||||||||||||||||||
| Loans | |||||||||||||||||||||||||||||
| Commercial and industrial | 3,047,671 | 2,946,552 | 2,925,823 | 3.43 | % | 4.16 | % | ||||||||||||||||||||||
| Commercial real estate | 6,756,708 | 6,793,329 | 6,695,671 | (0.54) | % | 0.91 | % | ||||||||||||||||||||||
| Commercial construction | 782,078 | 742,042 | 849,586 | 5.40 | % | (7.95) | % | ||||||||||||||||||||||
| Small business | 281,781 | 270,018 | 251,956 | 4.36 | % | 11.84 | % | ||||||||||||||||||||||
| Total commercial | 10,868,238 | 10,751,941 | 10,723,036 | 1.08 | % | 1.35 | % | ||||||||||||||||||||||
| Residential real estate | 2,460,600 | 2,441,859 | 2,424,754 | 0.77 | % | 1.48 | % | ||||||||||||||||||||||
| Home equity - first position | 490,115 | 498,193 | 518,706 | (1.62) | % | (5.51) | % | ||||||||||||||||||||||
| Home equity - subordinate positions | 650,053 | 632,242 | 578,920 | 2.82 | % | 12.29 | % | ||||||||||||||||||||||
| Total consumer real estate | 3,600,768 | 3,572,294 | 3,522,380 | 0.80 | % | 2.23 | % | ||||||||||||||||||||||
| Other consumer | 39,372 | 36,572 | 32,654 | 7.66 | % | 20.57 | % | ||||||||||||||||||||||
| Total loans | 14,508,378 | 14,360,807 | 14,278,070 | 1.03 | % | 1.61 | % | ||||||||||||||||||||||
| Less: allowance for credit losses | (169,984) | (163,696) | (142,222) | 3.84 | % | 19.52 | % | ||||||||||||||||||||||
| Net loans | 14,338,394 | 14,197,111 | 14,135,848 | 1.00 | % | 1.43 | % | ||||||||||||||||||||||
| Federal Home Loan Bank stock | 31,573 | 29,926 | 43,557 | 5.50 | % | (27.51) | % | ||||||||||||||||||||||
| Bank premises and equipment, net | 193,320 | 192,197 | 193,049 | 0.58 | % | 0.14 | % | ||||||||||||||||||||||
| Goodwill | 985,072 | 985,072 | 985,072 | — | % | — | % | ||||||||||||||||||||||
| Other intangible assets | 12,284 | 13,701 | 18,190 | (10.34) | % | (32.47) | % | ||||||||||||||||||||||
| Cash surrender value of life insurance policies | 303,965 | 302,132 | 297,387 | 0.61 | % | 2.21 | % | ||||||||||||||||||||||
| Other assets | 570,447 | 481,692 | 512,712 | 18.43 | % | 11.26 | % | ||||||||||||||||||||||
| Total assets | $ | 19,373,565 | $ | 19,408,117 | $ | 19,347,373 | (0.18) | % | 0.14 | % | |||||||||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 4,390,703 | $ | 4,519,492 | $ | 4,567,083 | (2.85) | % | (3.86) | % | |||||||||||||||||||
| Savings and interest checking | 5,207,548 | 5,188,303 | 5,298,913 | 0.37 | % | (1.72) | % | ||||||||||||||||||||||
| Money market | 2,960,381 | 2,969,809 | 2,818,072 | (0.32) | % | 5.05 | % | ||||||||||||||||||||||
| Time certificates of deposit | 2,747,346 | 2,763,419 | 2,181,479 | (0.58) | % | 25.94 | % | ||||||||||||||||||||||
| Total deposits | 15,305,978 | 15,441,023 | 14,865,547 | (0.87) | % | 2.96 | % | ||||||||||||||||||||||
| Borrowings | |||||||||||||||||||||||||||||
| Federal Home Loan Bank borrowings | 638,514 | 600,521 | 1,105,541 | 6.33 | % | (42.24) | % | ||||||||||||||||||||||
| Junior subordinated debentures, net | 62,860 | 62,859 | 62,858 | — | % | — | % | ||||||||||||||||||||||
| Subordinated debentures, net | — | — | 49,980 | nm | (100.00) | % | |||||||||||||||||||||||
| Total borrowings | 701,374 | 663,380 | 1,218,379 | 5.73 | % | (42.43) | % | ||||||||||||||||||||||
| Total deposits and borrowings | 16,007,352 | 16,104,403 | 16,083,926 | (0.60) | % | (0.48) | % | ||||||||||||||||||||||
| Other liabilities | 373,093 | 326,566 | 368,196 | 14.25 | % | 1.33 | % | ||||||||||||||||||||||
| Total liabilities | 16,380,445 | 16,430,969 | 16,452,122 | (0.31) | % | (0.44) | % | ||||||||||||||||||||||
| Stockholders’ equity | |||||||||||||||||||||||||||||
| Common stock | 423 | 423 | 427 | — | % | (0.94) | % | ||||||||||||||||||||||
| Additional paid in capital | 1,909,980 | 1,907,012 | 1,932,163 | 0.16 | % | (1.15) | % | ||||||||||||||||||||||
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| Retained earnings | 1,172,724 | 1,146,915 | 1,077,488 | 2.25 | % | 8.84 | % | ||||||||||||||||||||||
| Accumulated other comprehensive loss, net of tax | (90,007) | (77,202) | (114,827) | 16.59 | % | (21.62) | % | ||||||||||||||||||||||
| Total stockholders' equity | 2,993,120 | 2,977,148 | 2,895,251 | 0.54 | % | 3.38 | % | ||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 19,373,565 | $ | 19,408,117 | $ | 19,347,373 | (0.18) | % | 0.14 | % | |||||||||||||||||||
| SUMMARY OF RECLASSIFICATION OF OWNER-OCCUPIED LOANS | |||||||||||||||||||||||||||||
| September 30 2024 | December 31 2023 | ||||||||||||||||||||||||||||
| Commercial and industrial previously reported | $ | 1,577,861 | $ | 1,579,986 | |||||||||||||||||||||||||
| Reclassification of certain owner-occupied loans | 1,368,691 | 1,345,837 | |||||||||||||||||||||||||||
| Commercial and industrial after reclassification | $ | 2,946,552 | $ | 2,925,823 | |||||||||||||||||||||||||
| Commercial real estate previously reported | $ | 8,162,020 | $ | 8,041,508 | |||||||||||||||||||||||||
| Reclassification of certain owner-occupied loans | (1,368,691) | (1,345,837) | |||||||||||||||||||||||||||
| Commercial real estate after reclassification | $ | 6,793,329 | $ | 6,695,671 | |||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||||||||||||
| (Unaudited, dollars in thousands, except per share data) | |||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||
| % Change | % Change | ||||||||||||||||||||||||||||
| December 31 2024 | September 30 2024 | December 31 2023 | Dec 2024 vs. | Dec 2024 vs. | |||||||||||||||||||||||||
| Sept 2024 | Dec 2023 | ||||||||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||||||||
| Interest on federal funds sold and short-term investments | $ | 3,154 | $ | 1,635 | $ | 304 | 92.91 | % | 937.50 | % | |||||||||||||||||||
| Interest and dividends on securities | 14,807 | 14,065 | 14,631 | 5.28 | % | 1.20 | % | ||||||||||||||||||||||
| Interest and fees on loans | 198,177 | 200,597 | 192,178 | (1.21) | % | 3.12 | % | ||||||||||||||||||||||
| Interest on loans held for sale | 182 | 227 | 57 | (19.82) | % | 219.30 | % | ||||||||||||||||||||||
| Total interest income | 216,320 | 216,524 | 207,170 | (0.09) | % | 4.42 | % | ||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||
| Interest on deposits | 64,188 | 66,985 | 49,456 | (4.18) | % | 29.79 | % | ||||||||||||||||||||||
| Interest on borrowings | 7,471 | 7,836 | 12,618 | (4.66) | % | (40.79) | % | ||||||||||||||||||||||
| Total interest expense | 71,659 | 74,821 | 62,074 | (4.23) | % | 15.44 | % | ||||||||||||||||||||||
| Net interest income | 144,661 | 141,703 | 145,096 | 2.09 | % | (0.30) | % | ||||||||||||||||||||||
| Provision for credit losses | 7,500 | 19,500 | 5,500 | (61.54) | % | 36.36 | % | ||||||||||||||||||||||
| Net interest income after provision for credit losses | 137,161 | 122,203 | 139,596 | 12.24 | % | (1.74) | % | ||||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||||||||
| Deposit account fees | 7,116 | 6,779 | 6,126 | 4.97 | % | 16.16 | % | ||||||||||||||||||||||
| Interchange and ATM fees | 4,880 | 4,970 | 4,638 | (1.81) | % | 5.22 | % | ||||||||||||||||||||||
| Investment management and advisory | 10,783 | 11,033 | 9,818 | (2.27) | % | 9.83 | % | ||||||||||||||||||||||
| Mortgage banking income | 1,055 | 972 | 609 | 8.54 | % | 73.23 | % | ||||||||||||||||||||||
| Increase in cash surrender value of life insurance policies | 2,152 | 2,006 | 2,091 | 7.28 | % | 2.92 | % | ||||||||||||||||||||||
| Gain on life insurance benefits | 194 | — | 180 | 100.00% | 7.78 | % | |||||||||||||||||||||||
| Loan level derivative income | 439 | 1,125 | 802 | (60.98) | % | (45.26) | % | ||||||||||||||||||||||
| Other noninterest income | 5,572 | 6,664 | 7,803 | (16.39) | % | (28.59) | % | ||||||||||||||||||||||
| Total noninterest income | 32,191 | 33,549 | 32,067 | (4.05) | % | 0.39 | % | ||||||||||||||||||||||
| Noninterest expenses | |||||||||||||||||||||||||||||
| Salaries and employee benefits | 59,209 | 60,108 | 56,388 | (1.50) | % | 5.00 | % | ||||||||||||||||||||||
| Occupancy and equipment expenses | 13,399 | 12,734 | 13,054 | 5.22 | % | 2.64 | % | ||||||||||||||||||||||
| Data processing and facilities management | 2,559 | 2,510 | 2,423 | 1.95 | % | 5.61 | % | ||||||||||||||||||||||
| FDIC assessment | 2,588 | 2,628 | 3,942 | (1.52) | % | (34.35) | % | ||||||||||||||||||||||
| Merger and acquisition expense | 1,902 | — | — | 100.00% | 100.00% | ||||||||||||||||||||||||
| Other noninterest expenses | 26,765 | 22,463 | 24,940 | 19.15 | % | 7.32 | % | ||||||||||||||||||||||
| Total noninterest expenses | 106,422 | 100,443 | 100,747 | 5.95 | % | 5.63 | % | ||||||||||||||||||||||
| Income before income taxes | 62,930 | 55,309 | 70,916 | 13.78 | % | (11.26) | % | ||||||||||||||||||||||
9
| Provision for income taxes | 12,897 | 12,362 | 16,113 | 4.33 | % | (19.96) | % | ||||||||||||||||||||||
| Net Income | $ | 50,033 | $ | 42,947 | $ | 54,803 | 16.50 | % | (8.70) | % | |||||||||||||||||||
| Weighted average common shares (basic) | 42,494,409 | 42,481,441 | 43,474,734 | ||||||||||||||||||||||||||
| Common share equivalents | 20,432 | 11,622 | 9,474 | ||||||||||||||||||||||||||
| Weighted average common shares (diluted) | 42,514,841 | 42,493,063 | 43,484,208 | ||||||||||||||||||||||||||
| Basic earnings per share | $ | 1.18 | $ | 1.01 | $ | 1.26 | 16.83 | % | (6.35) | % | |||||||||||||||||||
| Diluted earnings per share | $ | 1.18 | $ | 1.01 | $ | 1.26 | 16.83 | % | (6.35) | % | |||||||||||||||||||
| Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP): | |||||||||||||||||||||||||||||
| Net income | $ | 50,033 | $ | 42,947 | $ | 54,803 | |||||||||||||||||||||||
| Noninterest expense components | |||||||||||||||||||||||||||||
| Add - merger and acquisition expenses | 1,902 | — | — | ||||||||||||||||||||||||||
| Noncore increases to income before taxes | 1,902 | — | — | ||||||||||||||||||||||||||
| Net tax benefit associated with noncore items (1) | (535) | — | — | ||||||||||||||||||||||||||
| Noncore increases to net income | 1,367 | — | — | ||||||||||||||||||||||||||
| Operating net income (Non-GAAP) | $ | 51,400 | $ | 42,947 | $ | 54,803 | 19.68 | % | (6.21) | % | |||||||||||||||||||
| Diluted earnings per share, on an operating basis (Non-GAAP) | $ | 1.21 | $ | 1.01 | $ | 1.26 | 19.80 | % | (3.97) | % | |||||||||||||||||||
| (1) The net tax benefit associated with noncore items is determined by assessing whether each noncore item is included or excluded from net taxable income and applying the Company's combined marginal tax rate to only those items included in net taxable income. | |||||||||||||||||||||||||||||
| Performance ratios | |||||||||||||||||||||||||||||
| Net interest margin (FTE) | 3.33 | % | 3.29 | % | 3.38 | % | |||||||||||||||||||||||
| Return on average assets (calculated by dividing net income by average assets) (GAAP) | 1.02 | % | 0.88 | % | 1.13 | % | |||||||||||||||||||||||
| Return on average assets on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average assets) | 1.05 | % | 0.88 | % | 1.13 | % | |||||||||||||||||||||||
| Return on average common equity (calculated by dividing net income by average common equity) (GAAP) | 6.64 | % | 5.75 | % | 7.51 | % | |||||||||||||||||||||||
| Return on average common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average common equity) | 6.82 | % | 5.75 | % | 7.51 | % | |||||||||||||||||||||||
| Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity) | 9.96 | % | 8.67 | % | 11.50 | % | |||||||||||||||||||||||
| Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average tangible common equity) | 10.23 | % | 8.67 | % | 11.50 | % | |||||||||||||||||||||||
| Noninterest income as a % of total revenue (GAAP) (calculated by dividing total noninterest income by net interest income plus total noninterest income) | 18.20 | % | 19.14 | % | 18.10 | % | |||||||||||||||||||||||
| 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) | 18.20 | % | 19.14 | % | 18.10 | % | |||||||||||||||||||||||
| Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue) | 60.18 | % | 57.31 | % | 56.87 | % | |||||||||||||||||||||||
| Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue) | 59.10 | % | 57.31 | % | 56.87 | % | |||||||||||||||||||||||
10
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||
| (Unaudited, dollars in thousands, except per share data) | ||||||||||||||||||||
| Years Ended | ||||||||||||||||||||
| % Change | ||||||||||||||||||||
| December 31 2024 | December 31 2023 | Dec 2024 vs. | ||||||||||||||||||
| Dec 2023 | ||||||||||||||||||||
| Interest income | ||||||||||||||||||||
| Interest on federal funds sold and short-term investments | $ | 5,669 | $ | 5,186 | 9.31 | % | ||||||||||||||
| Interest and dividends on securities | 57,098 | 60,342 | (5.38) | % | ||||||||||||||||
| Interest and fees on loans | 789,274 | 730,008 | 8.12 | % | ||||||||||||||||
| Interest on loans held for sale | 712 | 190 | 274.74 | % | ||||||||||||||||
| Total interest income | 852,753 | 795,726 | 7.17 | % | ||||||||||||||||
| Interest expense | ||||||||||||||||||||
| Interest on deposits | 246,962 | 144,752 | 70.61 | % | ||||||||||||||||
| Interest on borrowings | 44,062 | 44,453 | (0.88) | % | ||||||||||||||||
| Total interest expense | 291,024 | 189,205 | 53.81 | % | ||||||||||||||||
| Net interest income | 561,729 | 606,521 | (7.39) | % | ||||||||||||||||
| Provision for credit losses | 36,250 | 23,250 | 55.91 | % | ||||||||||||||||
| Net interest income after provision for credit losses | 525,479 | 583,271 | (9.91) | % | ||||||||||||||||
| Noninterest income | ||||||||||||||||||||
| Deposit account fees | 26,455 | 23,486 | 12.64 | % | ||||||||||||||||
| Interchange and ATM fees | 19,055 | 18,108 | 5.23 | % | ||||||||||||||||
| Investment management and advisory | 42,744 | 40,191 | 6.35 | % | ||||||||||||||||
| Mortgage banking income | 4,143 | 2,326 | 78.12 | % | ||||||||||||||||
| Increase in cash surrender value of life insurance policies | 8,086 | 7,868 | 2.77 | % | ||||||||||||||||
| Gain on life insurance benefits | 457 | 2,291 | (80.05) | % | ||||||||||||||||
| Loan level derivative income | 2,117 | 3,327 | (36.37) | % | ||||||||||||||||
| Other noninterest income | 24,957 | 27,012 | (7.61) | % | ||||||||||||||||
| Total noninterest income | 128,014 | 124,609 | 2.73 | % | ||||||||||||||||
| Noninterest expenses | ||||||||||||||||||||
| Salaries and employee benefits | 233,653 | 222,135 | 5.19 | % | ||||||||||||||||
| Occupancy and equipment expenses | 52,072 | 50,582 | 2.95 | % | ||||||||||||||||
| Data processing and facilities management | 9,957 | 9,884 | 0.74 | % | ||||||||||||||||
| FDIC assessment | 10,892 | 11,953 | (8.88) | % | ||||||||||||||||
| Merger and acquisition expense | 1,902 | — | 100.00% | |||||||||||||||||
| Other noninterest expenses | 97,890 | 98,192 | (0.31) | % | ||||||||||||||||
| Total noninterest expenses | 406,366 | 392,746 | 3.47 | % | ||||||||||||||||
| Income before income taxes | 247,127 | 315,134 | (21.58) | % | ||||||||||||||||
| Provision for income taxes | 55,046 | 75,632 | (27.22) | % | ||||||||||||||||
| Net Income | $ | 192,081 | $ | 239,502 | (19.80) | % | ||||||||||||||
| Weighted average common shares (basic) | 42,499,492 | 44,181,540 | ||||||||||||||||||
| Common share equivalents | 12,309 | 12,007 | ||||||||||||||||||
| Weighted average common shares (diluted) | 42,511,801 | 44,193,547 | ||||||||||||||||||
| Basic earnings per share | $ | 4.52 | $ | 5.42 | (16.61) | % | ||||||||||||||
| Diluted earnings per share | $ | 4.52 | $ | 5.42 | (16.61) | % | ||||||||||||||
| Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP): | ||||||||||||||||||||
| Net Income | $ | 192,081 | $ | 239,502 | ||||||||||||||||
| Noninterest expense components | ||||||||||||||||||||
| Add - merger and acquisition expenses | 1,902 | — | ||||||||||||||||||
| Noncore increases to income before taxes | 1,902 | — | ||||||||||||||||||
| Net tax benefit associated with noncore items (1) | (535) | — | ||||||||||||||||||
| Noncore increases to net income | 1,367 | — | ||||||||||||||||||
11
| Operating net income (Non-GAAP) | $ | 193,448 | $ | 239,502 | (19.23) | % | ||||||||||||||
| Diluted earnings per share, on an operating basis (Non-GAAP) | $ | 4.55 | $ | 5.42 | (16.05) | % | ||||||||||||||
| (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) | 3.28 | % | 3.54 | % | ||||||||||||||||
| Return on average assets (GAAP) (calculated by dividing net income by average assets) | 0.99 | % | 1.24 | % | ||||||||||||||||
| Return on average assets on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average assets) | 1.00 | % | 1.24 | % | ||||||||||||||||
| Return on average common equity (GAAP) (calculated by dividing net income by average common equity) | 6.53 | % | 8.31 | % | ||||||||||||||||
| Return on average common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average common equity) | 6.57 | % | 8.31 | % | ||||||||||||||||
| Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity) | 9.89 | % | 12.78 | % | ||||||||||||||||
| Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average tangible common equity) | 9.96 | % | 12.78 | % | ||||||||||||||||
| Noninterest income as a % of total revenue (GAAP) (calculated by dividing total noninterest income by net interest income plus total noninterest income) | 18.56 | % | 17.04 | % | ||||||||||||||||
| 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) | 18.56 | % | 17.04 | % | ||||||||||||||||
| Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue) | 58.92 | % | 53.72 | % | ||||||||||||||||
| Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue) | 58.64 | % | 53.72 | % | ||||||||||||||||
nm = not meaningful
12
| ASSET QUALITY | ||||||||||||||||||||
| (Unaudited, dollars in thousands) | Nonperforming Assets At | |||||||||||||||||||
| December 31 2024 | September 30 2024 | December 31 2023 | ||||||||||||||||||
| Nonperforming loans | ||||||||||||||||||||
| Commercial & industrial loans | $ | 14,152 | $ | 12,271 | $ | 26,805 | ||||||||||||||
| Commercial real estate loans | 74,343 | 77,707 | 16,335 | |||||||||||||||||
| Small business loans | 302 | 501 | 398 | |||||||||||||||||
| Residential real estate loans | 10,243 | 9,744 | 7,634 | |||||||||||||||||
| Home equity | 2,479 | 3,992 | 3,171 | |||||||||||||||||
| Other consumer | 10 | 33 | 40 | |||||||||||||||||
| Total nonperforming loans | 101,529 | 104,248 | 54,383 | |||||||||||||||||
| Other real estate owned | — | 110 | 110 | |||||||||||||||||
| Total nonperforming assets | $ | 101,529 | $ | 104,358 | $ | 54,493 | ||||||||||||||
| Nonperforming loans/gross loans | 0.70 | % | 0.73 | % | 0.38 | % | ||||||||||||||
| Nonperforming assets/total assets | 0.52 | % | 0.54 | % | 0.28 | % | ||||||||||||||
| Allowance for credit losses/nonperforming loans | 167.42 | % | 157.03 | % | 261.52 | % | ||||||||||||||
| Allowance for credit losses/total loans | 1.17 | % | 1.14 | % | 1.00 | % | ||||||||||||||
| Delinquent loans/total loans | 0.60 | % | 0.33 | % | 0.44 | % | ||||||||||||||
| Nonperforming Assets Reconciliation for the Three Months Ended | ||||||||||||||||||||
| December 31 2024 | September 30 2024 | December 31 2023 | ||||||||||||||||||
| Nonperforming assets beginning balance | $ | 104,358 | $ | 57,561 | $ | 39,281 | ||||||||||||||
| New to nonperforming | 5,065 | 57,197 | 31,823 | |||||||||||||||||
| Loans charged-off | (1,652) | (7,006) | (4,182) | |||||||||||||||||
| Loans paid-off | (4,975) | (2,306) | (10,905) | |||||||||||||||||
| Loans restored to performing status | (1,234) | (1,058) | (1,534) | |||||||||||||||||
| Sale of other real estate owned | (110) | — | — | |||||||||||||||||
| Other | 77 | (30) | 10 | |||||||||||||||||
| Nonperforming assets ending balance | $ | 101,529 | $ | 104,358 | $ | 54,493 | ||||||||||||||
13
| Net Charge-Offs (Recoveries) | ||||||||||||||||||||||||||||||||
| Three Months Ended | Years Ended | |||||||||||||||||||||||||||||||
| December 31 2024 | September 30 2024 | December 31 2023 | December 31 2024 | December 31 2023 | ||||||||||||||||||||||||||||
| Net charge-offs (recoveries) | ||||||||||||||||||||||||||||||||
| Commercial and industrial loans | $ | 8 | $ | 5,883 | $ | 80 | $ | 5,804 | $ | 23,419 | ||||||||||||||||||||||
| Commercial real estate loans | — | — | 2,783 | — | 7,855 | |||||||||||||||||||||||||||
| Small business loans | 317 | 160 | 267 | 595 | 392 | |||||||||||||||||||||||||||
| Home equity | 283 | 24 | 23 | 37 | (15) | |||||||||||||||||||||||||||
| Other consumer | 604 | 596 | 694 | 2,052 | 1,796 | |||||||||||||||||||||||||||
| Total net charge-offs | $ | 1,212 | $ | 6,663 | $ | 3,847 | $ | 8,488 | $ | 33,447 | ||||||||||||||||||||||
| Net charge-offs to average loans (annualized) | 0.03 | % | 0.18 | % | 0.11 | % | 0.06 | % | 0.24 | % | ||||||||||||||||||||||
| BALANCE SHEET AND CAPITAL RATIOS | ||||||||||||||||||||
| December 31 2024 | September 30 2024 | December 31 2023 | ||||||||||||||||||
| Gross loans/total deposits | 94.79 | % | 93.00 | % | 96.05 | % | ||||||||||||||
| Common equity tier 1 capital ratio (1) | 14.64 | % | 14.57 | % | 14.19 | % | ||||||||||||||
| Tier 1 leverage capital ratio (1) | 11.32 | % | 11.22 | % | 10.96 | % | ||||||||||||||
| Common equity to assets ratio GAAP | 15.45 | % | 15.34 | % | 14.96 | % | ||||||||||||||
| Tangible common equity to tangible assets ratio (2) | 10.86 | % | 10.75 | % | 10.31 | % | ||||||||||||||
| Book value per share GAAP | $ | 70.43 | $ | 70.08 | $ | 67.53 | ||||||||||||||
| Tangible book value per share (2) | $ | 46.96 | $ | 46.57 | $ | 44.13 | ||||||||||||||
(1) Estimated number for December 31, 2024.
(2) See Appendix A for detailed reconciliation from GAAP to Non-GAAP ratios.
14
| INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited, dollars in thousands) | Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2024 | September 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 270,603 | $ | 3,154 | 4.64 | % | $ | 129,827 | $ | 1,635 | 5.01 | % | $ | 42,391 | $ | 304 | 2.85 | % | ||||||||||||||||||||||||||||||||||||||
| Securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities - trading | 4,366 | — | — | % | 4,366 | — | — | % | 4,509 | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Securities - taxable investments | 2,743,469 | 14,805 | 2.15 | % | 2,761,758 | 14,064 | 2.03 | % | 2,923,983 | 14,629 | 1.98 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Securities - nontaxable investments (1) | 195 | 2 | 4.08 | % | 194 | 1 | 2.05 | % | 186 | 2 | 4.27 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total securities | $ | 2,748,030 | $ | 14,807 | 2.14 | % | $ | 2,766,318 | $ | 14,065 | 2.02 | % | $ | 2,928,678 | $ | 14,631 | 1.98 | % | ||||||||||||||||||||||||||||||||||||||
| Loans held for sale | 12,882 | 182 | 5.62 | % | 15,208 | 227 | 5.94 | % | 3,614 | 57 | 6.26 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial (1) | 2,974,746 | 45,449 | 6.08 | % | 2,998,298 | 46,796 | 6.21 | % | 2,989,985 | 46,001 | 6.10 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate (1) | 6,745,244 | 88,630 | 5.23 | % | 6,757,534 | 89,773 | 5.29 | % | 6,567,004 | 83,320 | 5.03 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial construction | 777,094 | 13,805 | 7.07 | % | 749,009 | 13,778 | 7.32 | % | 895,313 | 15,932 | 7.06 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Small business | 275,934 | 4,583 | 6.61 | % | 270,486 | 4,486 | 6.60 | % | 246,411 | 3,956 | 6.37 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total commercial | 10,773,018 | 152,467 | 5.63 | % | 10,775,327 | 154,833 | 5.72 | % | 10,698,713 | 149,209 | 5.53 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Residential real estate | 2,446,478 | 27,325 | 4.44 | % | 2,443,488 | 26,917 | 4.38 | % | 2,380,706 | 24,712 | 4.12 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Home equity | 1,134,521 | 18,901 | 6.63 | % | 1,122,750 | 19,372 | 6.86 | % | 1,097,233 | 18,747 | 6.78 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total consumer real estate | 3,580,999 | 46,226 | 5.14 | % | 3,566,238 | 46,289 | 5.16 | % | 3,477,939 | 43,459 | 4.96 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Other consumer | 37,960 | 663 | 6.95 | % | 35,331 | 665 | 7.49 | % | 32,141 | 667 | 8.23 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total loans | $ | 14,391,977 | $ | 199,356 | 5.51 | % | $ | 14,376,896 | $ | 201,787 | 5.58 | % | $ | 14,208,793 | $ | 193,335 | 5.40 | % | ||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | $ | 17,423,492 | $ | 217,499 | 4.97 | % | $ | 17,288,249 | $ | 217,714 | 5.01 | % | $ | 17,183,476 | $ | 208,327 | 4.81 | % | ||||||||||||||||||||||||||||||||||||||
| Cash and due from banks | 181,566 | 182,151 | 178,100 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Federal Home Loan Bank stock | 29,944 | 30,513 | 37,054 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other assets | 1,801,204 | 1,839,389 | 1,883,317 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 19,436,206 | $ | 19,340,302 | $ | 19,281,947 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposits | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings and interest checking accounts | $ | 5,181,107 | $ | 17,171 | 1.32 | % | $ | 5,163,567 | $ | 17,978 | 1.39 | % | $ | 5,323,667 | $ | 14,315 | 1.07 | % | ||||||||||||||||||||||||||||||||||||||
| Money market | 3,012,556 | 17,612 | 2.33 | % | 2,998,672 | 18,986 | 2.52 | % | 2,851,343 | 15,197 | 2.11 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | 2,779,704 | 29,405 | 4.21 | % | 2,740,982 | 30,021 | 4.36 | % | 2,103,666 | 19,944 | 3.76 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | $ | 10,973,367 | $ | 64,188 | 2.33 | % | $ | 10,903,221 | $ | 66,985 | 2.44 | % | $ | 10,278,676 | $ | 49,456 | 1.91 | % | ||||||||||||||||||||||||||||||||||||||
| Borrowings | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Federal Home Loan Bank borrowings | 601,842 | 6,396 | 4.23 | % | 623,053 | 6,692 | 4.27 | % | 884,441 | 10,836 | 4.86 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Junior subordinated debentures | 62,860 | 1,075 | 6.80 | % | 62,859 | 1,144 | 7.24 | % | 62,857 | 1,164 | 7.35 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Subordinated debentures | — | — | — | % | — | — | — | % | 49,968 | 618 | 4.91 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total borrowings | $ | 664,702 | $ | 7,471 | 4.47 | % | $ | 685,912 | $ | 7,836 | 4.54 | % | $ | 997,266 | $ | 12,618 | 5.02 | % | ||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 11,638,069 | $ | 71,659 | 2.45 | % | $ | 11,589,133 | $ | 74,821 | 2.57 | % | $ | 11,275,942 | $ | 62,074 | 2.18 | % | ||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing demand deposits | 4,481,669 | 4,442,858 | 4,704,888 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 319,220 | 339,075 | 406,029 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | $ | 16,438,958 | $ | 16,371,066 | $ | 16,386,859 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | 2,997,248 | 2,969,236 | 2,895,088 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
15
| Total liabilities and stockholders’ equity | $ | 19,436,206 | $ | 19,340,302 | $ | 19,281,947 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 145,840 | $ | 142,893 | $ | 146,253 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate spread (2) | 2.52 | % | 2.44 | % | 2.63 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin (3) | 3.33 | % | 3.29 | % | 3.38 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Supplemental Information | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total deposits, including demand deposits | $ | 15,455,036 | $ | 64,188 | $ | 15,346,079 | $ | 66,985 | $ | 14,983,564 | $ | 49,456 | ||||||||||||||||||||||||||||||||||||||||||||
| Cost of total deposits | 1.65 | % | 1.74 | % | 1.31 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total funding liabilities, including demand deposits | $ | 16,119,738 | $ | 71,659 | $ | 16,031,991 | $ | 74,821 | $ | 15,980,830 | $ | 62,074 | ||||||||||||||||||||||||||||||||||||||||||||
| Cost of total funding liabilities | 1.77 | % | 1.86 | % | 1.54 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF RECLASSIFICATION OF OWNER-OCCUPIED LOANS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest | Interest | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average | Earned/ | Yield/ | Average | Earned/ | Yield/ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance | Paid (1) | Rate | Balance | Paid (1) | Rate | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial previously reported | $ | 1,585,801 | $ | 28,834 | 7.23 | % | $ | 1,600,886 | $ | 28,990 | 7.18 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Reclassification of certain owner-occupied loans | 1,412,497 | 17,962 | 5.06 | % | 1,389,099 | 17,011 | 4.86 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial after reclassification | $ | 2,998,298 | $ | 46,796 | 6.21 | % | $ | 2,989,985 | $ | 46,001 | 6.10 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate previously reported | $ | 8,170,031 | $ | 107,735 | 5.25 | % | $ | 7,956,103 | $ | 100,331 | 5.00 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Reclassification of certain owner-occupied loans | (1,412,497) | (17,962) | 5.06 | % | (1,389,099) | (17,011) | 4.86 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate after reclassification | $ | 6,757,534 | $ | 89,773 | 5.29 | % | $ | 6,567,004 | $ | 83,320 | 5.03 | % | ||||||||||||||||||||||||||||||||||||||||||||
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis was $1.2 million for each of the three months ended December 31, 2024, September 30, 2024, and December 31, 2023, 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.
16
| Years Ended | ||||||||||||||||||||||||||||||||||||||
| December 31, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||||||||
| 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 | $ | 125,066 | $ | 5,669 | 4.53 | % | $ | 118,806 | $ | 5,186 | 4.37 | % | ||||||||||||||||||||||||||
| Securities | ||||||||||||||||||||||||||||||||||||||
| Securities - trading | 4,562 | — | — | % | 4,411 | — | — | % | ||||||||||||||||||||||||||||||
| Securities - taxable investments | 2,791,246 | 57,092 | 2.05 | % | 3,027,769 | 60,336 | 1.99 | % | ||||||||||||||||||||||||||||||
| Securities - nontaxable investments (1) | 192 | 7 | 3.65 | % | 190 | 7 | 3.68 | % | ||||||||||||||||||||||||||||||
| Total securities | $ | 2,796,000 | $ | 57,099 | 2.04 | % | $ | 3,032,370 | $ | 60,343 | 1.99 | % | ||||||||||||||||||||||||||
| Loans held for sale | 11,960 | 712 | 5.95 | % | 3,289 | 190 | 5.78 | % | ||||||||||||||||||||||||||||||
| Loans | ||||||||||||||||||||||||||||||||||||||
| Commercial and industrial (1) | 2,980,286 | 182,548 | 6.13 | % | 3,026,327 | 180,551 | 5.97 | % | ||||||||||||||||||||||||||||||
| Commercial real estate (1) | 6,731,055 | 350,539 | 5.21 | % | 6,460,088 | 311,787 | 4.83 | % | ||||||||||||||||||||||||||||||
| Commercial construction | 800,254 | 58,455 | 7.30 | % | 1,019,871 | 66,440 | 6.51 | % | ||||||||||||||||||||||||||||||
| Small business | 267,212 | 17,605 | 6.59 | % | 235,108 | 14,428 | 6.14 | % | ||||||||||||||||||||||||||||||
| Total commercial | 10,778,807 | 609,147 | 5.65 | % | 10,741,394 | 573,206 | 5.34 | % | ||||||||||||||||||||||||||||||
| Residential real estate | 2,434,114 | 106,797 | 4.39 | % | 2,217,971 | 88,210 | 3.98 | % | ||||||||||||||||||||||||||||||
| Home equity | 1,115,598 | 75,543 | 6.77 | % | 1,093,546 | 70,698 | 6.47 | % | ||||||||||||||||||||||||||||||
| Total consumer real estate | 3,549,712 | 182,340 | 5.14 | % | 3,311,517 | 158,908 | 4.80 | % | ||||||||||||||||||||||||||||||
| Other consumer | 33,761 | 2,530 | 7.49 | % | 31,202 | 2,418 | 7.75 | % | ||||||||||||||||||||||||||||||
| Total loans | $ | 14,362,280 | $ | 794,017 | 5.53 | % | $ | 14,084,113 | $ | 734,532 | 5.22 | % | ||||||||||||||||||||||||||
| Total interest-earning assets | $ | 17,295,306 | $ | 857,497 | 4.96 | % | $ | 17,238,578 | $ | 800,251 | 4.64 | % | ||||||||||||||||||||||||||
| Cash and due from banks | 179,955 | 180,553 | ||||||||||||||||||||||||||||||||||||
| Federal Home Loan Bank stock | 37,155 | 33,734 | ||||||||||||||||||||||||||||||||||||
| Other assets | 1,831,516 | 1,853,585 | ||||||||||||||||||||||||||||||||||||
| Total assets | $ | 19,343,932 | $ | 19,306,450 | ||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||||
| Deposits | ||||||||||||||||||||||||||||||||||||||
| Savings and interest checking accounts | $ | 5,169,237 | $ | 66,334 | 1.28 | % | $ | 5,489,923 | $ | 43,073 | 0.78 | % | ||||||||||||||||||||||||||
| Money market | 2,941,539 | 69,998 | 2.38 | % | 3,022,322 | 51,630 | 1.71 | % | ||||||||||||||||||||||||||||||
| Time deposits | 2,600,190 | 110,630 | 4.25 | % | 1,724,625 | 50,050 | 2.90 | % | ||||||||||||||||||||||||||||||
| Total interest-bearing deposits | $ | 10,710,966 | $ | 246,962 | 2.31 | % | $ | 10,236,870 | $ | 144,753 | 1.41 | % | ||||||||||||||||||||||||||
| Borrowings | ||||||||||||||||||||||||||||||||||||||
| Federal Home Loan Bank borrowings | 840,611 | 39,048 | 4.65 | % | 782,121 | 37,624 | 4.81 | % | ||||||||||||||||||||||||||||||
| Junior subordinated debentures | 62,859 | 4,506 | 7.17 | % | 62,857 | 4,359 | 6.93 | % | ||||||||||||||||||||||||||||||
| Subordinated debentures | 10,107 | 508 | 5.03 | % | 49,933 | 2,470 | 4.95 | % | ||||||||||||||||||||||||||||||
| Total borrowings | $ | 913,577 | $ | 44,062 | 4.82 | % | $ | 894,911 | $ | 44,453 | 4.97 | % | ||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 11,624,543 | $ | 291,024 | 2.50 | % | $ | 11,131,781 | $ | 189,206 | 1.70 | % | ||||||||||||||||||||||||||
| Noninterest-bearing demand deposits | 4,431,303 | 4,918,787 | ||||||||||||||||||||||||||||||||||||
| Other liabilities | 345,286 | 374,585 | ||||||||||||||||||||||||||||||||||||
| Total liabilities | $ | 16,401,132 | $ | 16,425,153 | ||||||||||||||||||||||||||||||||||
| Stockholders’ equity | 2,942,800 | 2,881,297 | ||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 19,343,932 | $ | 19,306,450 | ||||||||||||||||||||||||||||||||||
17
| Net interest income | $ | 566,473 | $ | 611,045 | ||||||||||||||||||||||||||||||||||
| Interest rate spread (2) | 2.46 | % | 2.94 | % | ||||||||||||||||||||||||||||||||||
| Net interest margin (3) | 3.28 | % | 3.54 | % | ||||||||||||||||||||||||||||||||||
| Supplemental Information | ||||||||||||||||||||||||||||||||||||||
| Total deposits, including demand deposits | $ | 15,142,269 | $ | 246,962 | $ | 15,155,657 | $ | 144,753 | ||||||||||||||||||||||||||||||
| Cost of total deposits | 1.63 | % | 0.96 | % | ||||||||||||||||||||||||||||||||||
| Total funding liabilities, including demand deposits | $ | 16,055,846 | $ | 291,024 | $ | 16,050,568 | $ | 189,206 | ||||||||||||||||||||||||||||||
| Cost of total funding liabilities | 1.81 | % | 1.18 | % | ||||||||||||||||||||||||||||||||||
| SUMMARY OF RECLASSIFICATION OF OWNER-OCCUPIED LOANS | ||||||||||||||||||||||||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||||||||||||||||||||
| Interest | ||||||||||||||||||||||||||||||||||||||
| Average | Earned/ | Yield/ | ||||||||||||||||||||||||||||||||||||
| Balance | Paid (1) | Rate | ||||||||||||||||||||||||||||||||||||
| Commercial and industrial previously reported | $ | 1,646,939 | $ | 115,752 | 7.03 | % | ||||||||||||||||||||||||||||||||
| Reclassification of certain owner-occupied loans | 1,379,388 | 64,799 | 4.70 | % | ||||||||||||||||||||||||||||||||||
| Commercial and industrial after reclassification | $ | 3,026,327 | $ | 180,551 | 5.97 | % | ||||||||||||||||||||||||||||||||
| Commercial real estate previously reported | $ | 7,839,476 | $ | 376,586 | 4.80 | % | ||||||||||||||||||||||||||||||||
| Reclassification of certain owner-occupied loans | (1,379,388) | (64,799) | 4.70 | % | ||||||||||||||||||||||||||||||||||
| Commercial real estate after reclassification | $ | 6,460,088 | $ | 311,787 | 4.83 | % | ||||||||||||||||||||||||||||||||
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis was $4.7 million and $4.5 million for the years ended ended December 31, 2024 and 2023, 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.
18
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 2024 | September 30 2024 | December 31 2023 | |||||||||||||||||||||
| Tangible common equity | (Dollars in thousands, except per share data) | ||||||||||||||||||||||
| Stockholders’ equity (GAAP) | $ | 2,993,120 | $ | 2,977,148 | $ | 2,895,251 | (a) | ||||||||||||||||
| Less: Goodwill and other intangibles | 997,356 | 998,773 | 1,003,262 | ||||||||||||||||||||
| Tangible common equity (Non-GAAP) | $ | 1,995,764 | $ | 1,978,375 | $ | 1,891,989 | (b) | ||||||||||||||||
| Tangible assets | |||||||||||||||||||||||
| Assets (GAAP) | $ | 19,373,565 | $ | 19,408,117 | $ | 19,347,373 | (c) | ||||||||||||||||
| Less: Goodwill and other intangibles | 997,356 | 998,773 | 1,003,262 | ||||||||||||||||||||
| Tangible assets (Non-GAAP) | $ | 18,376,209 | $ | 18,409,344 | $ | 18,344,111 | (d) | ||||||||||||||||
| Common Shares | 42,500,611 | 42,480,765 | 42,873,187 | (e) | |||||||||||||||||||
| Common equity to assets ratio (GAAP) | 15.45 | % | 15.34 | % | 14.96 | % | (a/c) | ||||||||||||||||
| Tangible common equity to tangible assets ratio (Non-GAAP) | 10.86 | % | 10.75 | % | 10.31 | % | (b/d) | ||||||||||||||||
| Book value per share (GAAP) | $ | 70.43 | $ | 70.08 | $ | 67.53 | (a/e) | ||||||||||||||||
| Tangible book value per share (Non-GAAP) | $ | 46.96 | $ | 46.57 | $ | 44.13 | (b/e) | ||||||||||||||||
19
APPENDIX B: Non-GAAP Reconciliation of Earnings Metrics
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 and the average assets used to calculate return on average assets and operating return on average assets:
20
| (Unaudited, dollars in thousands) | Three Months Ended | Years Ended | |||||||||||||||||||||||||||
| December 31 2024 | September 30 2024 | December 31 2023 | December 31 2024 | December 31 2023 | |||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 144,661 | $ | 141,703 | $ | 145,096 | $ | 561,729 | $ | 606,521 | |||||||||||||||||||
| Noninterest income (GAAP) | $ | 32,191 | $ | 33,549 | $ | 32,067 | $ | 128,014 | $ | 124,609 | |||||||||||||||||||
| Total revenue (GAAP) | $ | 176,852 | $ | 175,252 | $ | 177,163 | $ | 689,743 | $ | 731,130 | |||||||||||||||||||
| Noninterest expense (GAAP) | $ | 106,422 | $ | 100,443 | $ | 100,747 | $ | 406,366 | $ | 392,746 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Merger and acquisition expense | 1,902 | — | — | 1,902 | — | ||||||||||||||||||||||||
| Noninterest expense on an operating basis (Non-GAAP) | $ | 104,520 | $ | 100,443 | $ | 100,747 | $ | 404,464 | $ | 392,746 | |||||||||||||||||||
| Average assets | $ | 19,436,206 | $ | 19,340,302 | $ | 19,281,947 | $ | 19,343,932 | $ | 19,306,450 | |||||||||||||||||||
| Average common equity (GAAP) | $ | 2,997,248 | $ | 2,969,236 | $ | 2,895,088 | $ | 2,942,800 | $ | 2,881,297 | |||||||||||||||||||
| Less: Average goodwill and other intangibles | 998,004 | 999,604 | 1,004,081 | 1,000,263 | 1,006,658 | ||||||||||||||||||||||||
| Tangible average tangible common equity (Non-GAAP) | $ | 1,999,244 | $ | 1,969,632 | $ | 1,891,007 | $ | 1,942,537 | $ | 1,874,639 | |||||||||||||||||||
| Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP) | |||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 50,033 | $ | 42,947 | $ | 54,803 | $ | 192,081 | $ | 239,502 | |||||||||||||||||||
| Noninterest expense components | |||||||||||||||||||||||||||||
| Add - merger and acquisition expenses | 1,902 | — | — | 1,902 | — | ||||||||||||||||||||||||
| Noncore increases to income before taxes | 1,902 | — | — | 1,902 | — | ||||||||||||||||||||||||
| Net tax benefit associated with noncore items (1) | (535) | — | — | (535) | — | ||||||||||||||||||||||||
| Noncore increases to net income | 1,367 | — | — | 1,367 | — | ||||||||||||||||||||||||
| Operating net income (Non-GAAP) | $ | 51,400 | $ | 42,947 | $ | 54,803 | $ | 193,448 | $ | 239,502 | |||||||||||||||||||
| (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. | |||||||||||||||||||||||||||||
| Ratios | |||||||||||||||||||||||||||||
| Return on average assets (GAAP) (calculated by dividing net income by average assets) | 1.02 | % | 0.88 | % | 1.13 | % | 0.99 | % | 1.24 | % | |||||||||||||||||||
| Return on average assets on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average assets) | 1.05 | % | 0.88 | % | 1.13 | % | 1.00 | % | 1.24 | % | |||||||||||||||||||
| Return on average common equity (GAAP) (calculated by dividing net income by average common equity) | 6.64 | % | 5.75 | % | 7.51 | % | 6.53 | % | 8.31 | % | |||||||||||||||||||
| Return on average common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average common equity) | 6.82 | % | 5.75 | % | 7.51 | % | 6.57 | % | 8.31 | % | |||||||||||||||||||
| Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue) | 60.18 | % | 57.31 | % | 56.87 | % | 58.92 | % | 53.72 | % | |||||||||||||||||||
| Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue) | 59.10 | % | 57.31 | % | 56.87 | % | 58.64 | % | 53.72 | % | |||||||||||||||||||
| Return on average tangible common equity (Non-GAAP) (calculated by dividing annualized net income by average tangible common equity) | 9.96 | % | 8.67 | % | 11.50 | % | 9.89 | % | 12.78 | % | |||||||||||||||||||
| Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing annualized net operating net income by average tangible common equity) | 10.23 | % | 8.67 | % | 11.50 | % | 9.96 | % | 12.78 | % | |||||||||||||||||||
21
APPENDIX C: Net Interest Margin Analysis & Non-GAAP Reconciliation of Core Margin
| (Unaudited, dollars in thousands) | Three Months Ended | ||||||||||||||||||||||
| December 31, 2024 | September 30, 2024 | ||||||||||||||||||||||
| Volume | Interest | Margin Impact | Volume | Interest | Margin Impact | ||||||||||||||||||
| Reported total interest earning assets | $ | 17,423,492 | $ | 145,840 | 3.33 | % | $ | 17,288,249 | $ | 142,893 | 3.29 | % | |||||||||||
| Acquisition fair value marks: | |||||||||||||||||||||||
| Loan accretion | (179) | — | % | (171) | — | % | |||||||||||||||||
| Nonaccrual interest, net | (1,068) | (0.02) | % | (156) | — | % | |||||||||||||||||
| Other noncore adjustments | (3,083) | (54) | — | % | (3,523) | (145) | — | % | |||||||||||||||
| Core margin (Non-GAAP) | $ | 17,420,409 | $ | 144,539 | 3.31 | % | $ | 17,284,726 | $ | 142,421 | 3.29 | % | |||||||||||
22
Document 1
Exhibit 99.2 Q4 2024 Earnings Presentation January 17, 2025
2 Safe & Sound Customer Centric • Full suite of retail banking, commercial banking, and wealth product offerings • Relationship-oriented commercial lending with strong local market knowledge and presence • Exceptional third party customer service recognition in both commercial and retail • Strong brand awareness and reputation Attractive Market • Top performing MA-based bank with scale and density • Supported by strong economic growth and vitality in key markets served • Depth of market offers opportunities for continued growth • The Enterprise acquisition adds density to existing markets and expands the Rockland franchise into Northern MA and Southern NH Strong, Resilient Franchise; Well Positioned for Growth High Performing • Consistent, strong profitability • Focused on maintaining good margins • Fee income contribution from scalable wealth franchise • Efficient cost structure focused on operating leverage • History of organic capital generation • Strong balance sheet • Prudent interest rate and liquidity risk management • Significant capital buffer • Diversified, low-cost deposit base • Experienced commercial lender with conservative credit culture • Proven operator and acquiror Company Overview
3 ($ in millions, except per share) Q4’24 Q4’24 Operating(1) Q3’24 Q4’23 Net Income $50.0 $51.4 $42.9 $54.8 Diluted EPS $1.18 $1.21 $1.01 $1.26 ROAA 1.02% 1.05% 0.88% 1.13% ROACE 6.64% 6.82% 5.75% 7.51% ROATCE(3) 9.96% 10.23% 8.67% 11.50% Net Interest Margin 3.33% 3.31% 3.29% 3.38% (1) See Appendix A for reconciliation of reported key metrics (GAAP) to operating key metrics (non-GAAP). (2) Operating net interest margin represents core net interest margin, a non-GAAP measure. See Appendix B for a reconciliation of core net interest margin to reported net interest margin under GAAP. (3) Return on average tangible common equity (ROATCE) is a non-GAAP measure. See Appendix A for additional information. (4) Tangible book value per share is a non-GAAP measure. See Appendix C for additional information. Q4 2024 Financial Highlights Key Metrics Highlights • Solid loan growth (4.1% annualized) • Core net interest margin expansion of 2 bps to 3.31%(2) • Stable nonperforming assets and reduced provision levels • Average deposit growth (2.8% annualized) • Tangible book value per share growth of $0.39 (4) (2)
4 ($ in millions) Period Ended $ Increase (Decrease % Increase (Decrease)Deposit Product Type Dec 31, 2024 Sep 30, 2024 Noninterest-bearing demand deposits $ 4,391 $ 4,520 $ (129) (2.9)% Savings and interest checking 5,208 5,188 20 0.4% Money market 2,960 2,970 (10) (0.3)% Time certificates of deposit 2,747 2,763 (16) (0.6)% $ 15,306 $ 15,441 $ (135) (0.9)% Average Deposit Balances $ 15,455 $15,346 $109 0.7% $ in b ill io ns Average Balances and Cost of Deposits 14.7 15.0 15.3 15.5 1.48% 1.65% 1.74% 1.65% Deposits Cost of deposits Q1 2024 Q2 2024 Q3 2024 Q4 2024 0.0 5.0 10.0 15.0 0.00% 0.50% 1.00% 1.50% Deposit Composition Consumer 55.4% Business 36.8% Municipal 7.8% Deposit Balances
5 ($ in millions) Period Ended $ Increase (Decrease) % Increase (Decrease)Loan Category Dec 31, 2024 Sep 30, 2024 Commercial and industrial* $ 3,048 $ 2,947 $ 101 3.4% Commercial real estate* 6,756 6,793 (37) (0.5)% Commercial construction 782 742 40 5.4% Small business 282 270 12 4.4% Total commercial 10,868 10,752 116 1.1% Residential real estate 2,461 2,442 19 0.8% Home equity - first position 490 498 (8) (1.6)% Home equity - subordinate positions 650 632 18 2.8% Total consumer real estate 3,601 3,572 29 0.8% Other consumer 39 37 2 5.4% Total loans $ 14,508 $ 14,361 $ 147 1.0% *At December 31, 2024, the Company reclassified its portfolio of loans secured by owner-occupied commercial real estate to the commercial and industrial loan category to reflect the variation in the management and underlying risk profile of such loans compared with investor-owned commercial real estate loans. Prior periods were reclassified to conform to the current presentation. Loan Balances
6 Nonperforming Loans ($ in millions) $56.9 $57.5 $104.2 $101.5 0.40% 0.40% 0.73% 0.70% NPLs ($Mil) NPL/Loan % Q1 2024 Q2 2024 Q3 2024 Q4 2024 0.50% $0 $60 $120 Asset Quality Nonperforming Loans (as of 12/31/2024) ($ in millions) Loan Category Industry Balance Charge-off Specific Reserve Top 5 NPLs: Commercial real estate Office - Class A $53.8 $— $26.3 Commercial real estate Office - Class A 11.7 — 7.0 Commercial & industrial Equip Rental 11.7 5.9 — Commercial real estate Office - Class A 7.2 2.8 — Commercial & industrial Warehouse/ Industrial 1.9 — — (1) Represents balance net of charge-off Commercial Criticized & Classified Loans ($ in millions) $558.3 $578.1 $567.4 $502.9 $486.35.21% 5.36% 5.25% 4.68% 4.47% Criticized & Classified Loans Criticized & Classified Loans as a % of Total Commercial Loans Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 $— $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 —% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% Asset Quality (1) (1)
7 Charge-off and Provisioning Trends ($ in millions) $0.3 $0.3 $6.7 $1.2 $5.0 $4.3 $19.5 $7.5 0.01% 0.01% 0.18% 0.03% Net Charge-offs Provision for Credit Losses Annualized Charge-off Rate Q1 2024 Q2 2024 Q3 2024 Q4 2024 $0.0 $10.0 $20.0 0.00% 0.10% 0.20% Allowance for Credit Loss & Delinquency Trends 1.03% 1.05% 1.14% 1.17% 0.52% 0.37% 0.33% 0.60% Allowance for Credit Losses/Total Loans Delinquent Loans/Total Loans Q1 2024 Q2 2024 Q3 2024 Q4 2024 0.00% 0.50% 1.00% Asset Quality (continued)
8 95% CRE & Construction Portfolio $7.5 billion Multi-Family - 26.7% Residential - Related - 14.2% Office - 14.2% Mixed-Use Office - 1.8% Industrial/ Warehouse - 10.4% Lodging - 10.4% Retail - 17.8% Healthcare - 1.6% Other - 2.9% C&I Portfolio $3.0 billion Retail Trade - 21.0% Real Estate/Rental and Leasing - 12.6% Construction - 8.9% Health Care and Social Assistance - 8.3% Wholesale Trade - 8.2% Manufacturing - 7.5% Accommodation and Food Services - 5.7% Educational Services - 5.5% All Other (11 Sectors) - 22.3% Consumer Portfolio $3.6 billion Residential real estate - 67.5% Home equity - first position - 13.5% Home equity - subordinate positions - 17.9% Other consumer - 1.1% $7.5 $7.5 $7.5 $7.5 318% 306% 307% 305% CRE CRE/Capital * Q1 2024 Q2 2024** Q3 2024 Q4 2024 $0.0 $4.0 $8.0 300% 325% 350% ($Bil) *Rockland Trust Bank only. Ratio for Q4 2024 is an estimated number **Includes reclassification of $170 million out of CRE Loan Portfolios
9 Top 20 Borrowers All Others Total Portfolio ($ in millions) Total Avg Loan ($ in millions) Total Avg Loan ($ in millions) Total Avg Loan Class A $320.1 $32.0 Class A $173.8 $6.4 Class A $493.9 $13.3 Class B/C 193.3 21.5 Class B/C 269.8 1.9 Class B/C 463.1 3.1 Medical 26.5 26.5 Medical 87.1 4.0 Medical 113.6 4.9 $539.9 $27.0 $530.7 $2.8 $1,070.6 $5.1 Criticized $15.7 Criticized $38.6 Criticized $54.3 Classified (perf) 51.6 Classified (perf) 8.6 Classified (perf) 60.2 Nonperforming 53.6 Nonperforming 18.9 Nonperforming 72.5 • Top 20 loans are actively managed • Majority is RTC originated, conservative underwriting • Primarily Massachusetts based • Approx. $289M came from acquisitions Maturity Schedule ($ in millions) Past Due 2025 Q1 2025 Q2 2025 Q3 2025 Q4 2026 2027 2028+ Total Pass Rating $— $37.0 $22.0 $72.6 $12.4 $91.5 $157.9 $490.3 $883.7 Criticized — 3.2 — — 15.7 14.3 11.0 10.1 54.3 Classified 49.4 53.6 — — — 21.01 — 8.60 132.61 Total $49.4 $93.8 $22.0 $72.6 $28.1 $126.8 $168.9 $509.0 $1,070.6 % of Total 4% 9% 2% 7% 3% 12% 16% 47% 100% CRE & Construction Portfolio $7.5 billion Office ($1.07B) - 14.2% Other CRE & Construction - 85.8% Focal Point | CRE Office (inclusive of construction)
10 Multifamily Portfolio Period Ended ($ in millions) Dec 31, 2024 Sep 30, 2024 Total Balances $ 2,016.2 $ 1,983.8 Total Average Loan Size 2.8 2.7 Average Loan Size - Top 20 25.8 24.3 Average Loan Size - All Others 2.1 2.1 Asset Quality Criticized $ 0.5 —% $ 24.5 1.2% Classified (perf) 0.9 —% 0.9 —% Non-performing — —% — —% Composition Low Income Housing Tax Credit - 9.1% Residential Apart. - Affordable Housing >20% - 13.3% Residential Apart. - Market Rate - 47.0% Mixed Use, Primarily Residential - 30.6% Key Portfolio Characteristics • Strong Boston market asset class • 85% of portfolio Massachusetts based; 99% New England based • No delinquencies • Minimal exposure to luxury properties in Greater Boston Maturity Schedule 2025 2026 2027 2028+ Total ($) 6% 9% 3% 82% $2.016B Focal Point | Multifamily CRE
11 Net Interest Margin 3.23% 3.25% 3.29% 3.33% 3.21% 3.24% 3.29% 3.31% Reported NIM Core NIM* Q1 2024 Q2 2024 Q3 2024 Q4 2024 3.00% 3.20% 3.40% Total Loan Portfolio Rate Characteristics 43% 27% 30%Fixed Rate Floating Rate Variable Rate ($ in m ill io ns ) Time Deposit Maturities (and weighted average rate) $1,287 $1,126 $190 $77 $67 Q1 2025 Q2 2025 Q3 2025 Q4 2025 2026+ $— $500 $1,000 ($ in m ill io ns ) Loan Hedging Maturities (and weighted average "receive fixed" SOFR rate) $50 $50 $50 $50 $400 $300 Q1 2025 Q2 2025 Q3 2025 Q4 2025 2026 2027+ $— $200 $400 4.33% 3.89% 2.79% 2.89% 3.39% 2.46% Net Interest Margin Analysis 2.48% 2.02% 3.07% 2.87% 2.82% *Operating net interest margin represents core net interest margin, a non- GAAP measure. See Appendix B for a reconciliation of core net interest margin to reported net interest margin under GAAP.
12 One Year Net Interest Margin Roadmap Estimated Repricing Impact 25bp Cut Annualized Margin Impact Annualized Margin Impact Short Term (< 3 months) Cash 0bps (tied to Fed Funds) Floating loans: 27% Fixed rate hedges: (6%) (4-5bps) Net loans: 21% Core Deposits: Estimated 20% beta 4bps Time Deposits (< 3 month maturity): Estimated 80% beta 1-2bps FHLB overnight borrowings FHLB ST borrowings 0-1bps Subordinated Debt Total Short Term (< 3 months) ~1-2bps Short term (3-12 months) Time Deposits (3-12 month maturity): Estimated 80% beta ~2bps (driven by Fed Funds) Longer term - fixed rate repricing Cash flows (yield spread on new originations less repricing/ maturities) ~12-15bps (driven by 3-10 year indices) Securities: Assume 2.5% spread Loans: Assume 1.25% spread } }
13 Noninterest Income Noninterest Expense ($ in thousands) ($ in thousands) Q4 2024 Q3 2024 Q4 2024 Q3 2024 Deposit account fees $ 7,116 $ 6,779 Salaries and employee benefits $ 59,209 $ 60,108 Interchange and ATM fees 4,880 4,970 Occupancy and equipment expenses 13,399 12,734 Investment management and advisory 10,783 11,033 Data processing and facilities management 2,559 2,510 Mortgage banking income 1,055 972 FDIC assessment 2,588 2,628 Increase in cash surrender value of life insurance policies 2,152 2,006 Merger and acquisition expense 1,902 — Gain on life insurance benefits 194 — Other noninterest expenses 26,765 22,463 Loan level derivative income 439 1,125 Total noninterest expenses $ 106,422 $ 100,443 Other noninterest income 5,572 6,664 Total noninterest income $ 32,191 $ 33,549 Noninterest Income/Expense
14 $ in m ill io ns Assets Under Administration $6,804 $6,871 $7,161 $7,035 Q1 2024 Q2 2024 Q3 2024 Q4 2024 $6,000 $6,500 $7,000 $7,500 ($ in thousands) Q4 2024 Q3 2024 % Change Assets under administration $7,035,315 $7,161,264 (1.8)% Asset based revenue 9,607 9,408 2.1% Other revenue: Retail commission revenue 760 1,053 Insurance commission revenue 90 316 Other advisory revenue 326 256 Total reported revenue $10,783 $11,033 (2.3)% Focal Point | Investment Management and Advisory
15 Available for Sale (AFS) Held to Maturity (HTM) Portfolio Composition at December 31, 2024 Book Value Fair Value Unrealized Gain/(Loss) Book Value Fair Value Unrealized Gain/(Loss) ($ in millions) U.S. government agency securities $ 230 $ 210 $ (20) $ — $ — $ — U.S. treasury securities 628 592 (36) 101 93 (8) Agency mortgage-backed securities 416 378 (38) 788 726 (62) Agency collateralized mortgage obligations 31 29 (2) 423 358 (65) Other 49 42 (7) 123 115 (8) Total securities $ 1,354 $ 1,251 $ (103) $ 1,435 $ 1,292 $ (143) Duration of portfolio 3.0 Years 4.3 Years Capital Impact ($ in millions) $ % of Tangible Assets Tangible capital (Non-GAAP) $ 1,996 10.86% Less: HTM unrealized loss, net of tax (104) Tangible capital adjusted for HTM $ 1,892 10.38% ($ in m ill io ns ) Projected Cash Flows $301 $630 $421 2025 2026 2027 $0 $250 $500 $750 Securities Portfolio
16 Overview of Enterprise Bancorp Acquisition Source: S&P Capital IQ Pro; Preliminary financial data as of the quarter ended 9/30/2024; Market data as of 12/6/2024 Note: Estimated financial impact is presented for illustrative purposes only. Includes purchase accounting marks and transaction related expenses; See Appendix for Pro Forma Net income and EPS reconciliation. Pro Forma data is subject to various assumptions and uncertainties. For key financial assumptions, see slides 10 and 15 of the presentation materials previously furnished with the SEC as Exhibit 99.2 of Independent’s Form 8-K, dated December 9, 2024. Please also refer to “Disclaimer and Caution Regarding Forward-Looking Statements”. 1. Includes impact of subordinated debt raise; 18.2% GAAP EPS accretion excluding subordinated debt raise 2. Includes one electronic branch Pro Forma Combined Company $25Bn in Assets $20Bn in Deposits $19Bn in Loans $8.7Bn of Wealth AUM 151 Branches $3.6Bn Market Cap Financially Attractive Acquisition 16.2% GAAP EPS Accretion (2026E)1 Enterprise is a key addition to attractive Boston area franchise ~3 Yrs TBV Earnback >20% Internal Rate of Return (IRR) 1.14% Pro Forma ROAA (2026E) 15.7% Pro Forma ROATCE (2026E)
17 Loans • Low to mid-single digit percentage increase expected Deposits • Low to mid-single digit percentage increase expected Net Interest Margin • Expected margin expansion through 2025 of approximately 15 bps from core 2024 Q4 results; or 3-4 bps each quarter* Asset Quality • Provision driven by emerging credit trends; expected to be lower than 2024 levels Non-interest Income • Mid-single digit percentage increase expected Non-interest Expense • Mid-single digit percentage increase expected *Based on current forward Treasury curve 2025 Forward Guidance The following guidance excludes the anticipated impact of the Enterprise acquisition:
18 This presentation 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,” “outlook”, “projected”, “future,” “positioned,” “continued,” “will,” “would,” “potential,” “anticipated,” “guidance,” “targeted” 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: • adverse economic conditions in the regional and local economies within the New England region and the Company’s market area; • events impacting the financial services industry, including high profile bank failures, and any resulting decreased confidence in banks among depositors, investors, and other counterparties, as well as competition for deposits, significant disruption, volatility and depressed valuations of equity and other securities of banks in the capital markets; • the effects to the Company of an increasingly competitive labor market, including the possibility that the Company will have to devote significant resources to attract and retain qualified personnel; • the instability or volatility in financial markets and unfavorable domestic or global general economic, political or business conditions, whether caused by geopolitical concerns, including the Russia/Ukraine conflict, the conflict in Israel and surrounding areas and the possible expansion of such conflicts, political and policy uncertainties associated with the new U.S. presidential administration, changes in U.S. and international trade policies, or other factors, and the potential impact of such factors on the Company and its customers, including the potential for decreases in deposits and loan demand, unanticipated loan delinquencies, loss of collateral and decreased service revenues; • unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on the Company’s local economies or the Company's business caused by adverse weather conditions and natural disasters, changes in climate, public health crises or other external events and any actions taken by governmental authorities in response to any such events; • adverse changes or volatility in the local real estate market; • changes in interest rates and any resulting impact on interest earning assets and/or interest bearing liabilities, the level of voluntary prepayments on loans and the receipt of payments on mortgage-backed securities, decreased loan demand or increased difficulty in the ability of borrowers to repay variable rate loans; • failure to consummate or a delay in consummating the acquisition of Enterprise, including as a result of any failure to obtain the necessary regulatory approvals, to obtain Enterprise shareholder approval or to satisfy any of the other conditions to the proposed transaction on a timely basis or at all; • risks related to the company’s pending acquisition of Enterprise and acquisitions generally, including disruption to current plans and operations; difficulties in customer and employee retention; fees, expenses and charges related to these transactions being significantly higher than anticipated; unforeseen integration issues or impairment of goodwill and/or other intangibles; and the Company’s inability to achieve expected revenues, cost savings, synergies, and other benefits at levels or within the timeframes originally anticipated; • the effect of laws, regulations, new requirements or expectations, or additional regulatory oversight in the highly regulated financial services industry, including as a result of intensified regulatory scrutiny in the aftermath of regional bank failures and the resulting need to invest in technology to meet heightened regulatory expectations, increased costs of compliance or required adjustments to strategy; • 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, including as a result of failure to comply with general tax laws and changes in tax laws; • increased competition in the Company’s market areas, including competition that could impact deposit gathering, retention of deposits and the cost of deposits, increased competition due to the demand for innovative products and service offerings, and competition from non-depository institutions which may be subject to fewer regulatory constraints and lower cost structures; • a deterioration in the conditions of the securities markets; • a deterioration of the credit rating for U.S. long-term sovereign debt or uncertainties surrounding 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, including any inability to effectively implement new technology-driven products, such as artificial intelligence; • electronic or other 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, including the need to invest in technology to meet heightened regulatory expectations or introduction of new requirements or expectations resulting in increased costs of compliance or required adjustments to strategy; • changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) generally applicable to the Company’s business and the associated costs of such changes; • 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; • operational risks related to the Company and its customers’ reliance on information technology; cyber threats, attacks, intrusions, and fraud; and outages or other issues impacting the Company or its third party service providers which could lead to interruptions or disruptions of the Company’s operating systems, including systems that are customer facing, and adversely impact the Company’s business; and • any unexpected material adverse changes in the Company’s 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 presentation which modify or impact any of the forward-looking statements contained in this presentation will be deemed to modify or supersede such statements in this presentation. In addition to the information set forth in this presentation, you should carefully consider the Risk Factors. Forward Looking Statements
19 This presentation contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This information may include 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 NIM” or “core margin”), tangible book value per share, tangible common equity ratio and return on average tangible common equity. 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. 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 deems to be noncore and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP performance measures, including operating net income, operating EPS, operating return on average assets, operating return on average common equity, core 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. Non-GAAP Financial Measures
20 ADDITIONAL INFORMATION AND WHERE TO FIND IT This communication is being made with respect to the proposed transaction involving Independent and Enterprise. This material is not a solicitation of any vote or approval of the Enterprise shareholders and is not a substitute for the proxy statement/prospectus or any other documents that Independent and Enterprise may send to their respective shareholders in connection with the proposed transaction. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed transaction between Independent and Enterprise, Independent will file with the SEC a Registration Statement on Form S-4 (the “Registration Statement”) that will that will include a proxy statement for a special meeting of Enterprise’s shareholders to approve the proposed transaction and that will also constitute a prospectus for the Independent common stock that will be issued in the proposed transaction, as well as other relevant documents concerning the proposed transaction. BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS, INVESTORS AND SHAREHOLDERS OF INDEPENDENT AND ENTERPRISE ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Enterprise will mail the proxy statement/prospectus to its shareholders. Shareholders are also urged to carefully review and consider Independent’s and Enterprise’s public filings with the SEC, including, but not limited to, their respective proxy statements, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Copies of the Registration Statement and of the proxy statement/ prospectus and other filings incorporated by reference therein, as well as other filings containing information about Independent and Enterprise, can be obtained, free of charge, as they become available at the SEC’s website (http://www.sec.gov). Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy statement/prospectus can also be obtained, without charge, by directing a request to Independent Investor Relations, 288 Union Street, Rockland, Massachusetts 02370, telephone (774) 363-9872 or to Enterprise Bancorp, Inc., 222 Merrimack Street, Lowell, MA 01852, Attention: Corporate Secretary, telephone (978) 656-5578. PARTICIPANTS IN THE SOLICITATION Independent, Enterprise, and certain of their respective directors, executive officers and employees may, under the SEC’s rules, be deemed to be participants in the solicitation of proxies from the shareholders of Enterprise in connection with the proposed transaction. Information regarding Independent’s directors and executive officers is available in its definitive proxy statement relating to its 2024 Annual Meeting of Shareholders, which was filed with the SEC on March 28, 2024, and its Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 28, 2024, and other documents filed by Independent with the SEC. Information regarding Enterprise’s directors and executive officers is available in its definitive proxy statement relating to its 2024 Annual Meeting of Shareholders, which was filed with the SEC on April 3, 2024, and its Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 8, 2024 and other documents filed by Enterprise with the SEC. Other information regarding the persons who may, under the SEC’s rules, be deemed to be participants in the proxy solicitation of Enterprise’s shareholders in connection with the proposed transaction, and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus regarding the proposed transaction and other relevant materials filed with the SEC when they become available, which may be obtained free of charge as described in the preceding paragraph. Additional Information
21 Appendix A - Reconciliation of Non-GAAP Earnings Metrics (Unaudited, dollars in thousands) Three Months Ended December 31 2024 September 30 2024 December 31 2023 Net interest income (GAAP) $144,661 $141,703 $145,096 Noninterest income (GAAP) $32,191 $33,549 $32,067 Noninterest expense (GAAP) $106,422 $100,443 $100,747 Less: Merger and acquisition expense 1,902 — — Noninterest expense on an operating basis (Non-GAAP) $104,520 $100,443 $100,747 Total revenue (GAAP) $176,852 $175,252 $177,163 Average assets $19,436,206 $19,340,302 $19,281,947 Average common equity (GAAP) $2,997,248 $2,969,236 $2,895,088 Less: Average goodwill and other intangibles 998,004 999,604 1,004,081 Tangible average tangible common equity (Non-GAAP) $1,999,244 $1,969,632 $1,891,007 Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP) Net income (GAAP) $50,033 $42,947 $54,803 Noninterest expense components Add - merger and acquisition expenses 1,902 — — Noncore increases to income before taxes 1,902 — — Net tax benefit associated with noncore items (1) (535) — — Noncore increases to net income 1,367 — — Operating net income (Non-GAAP) $51,400 $42,947 $54,803 Weighted average common shares (diluted) 42,514,841 42,493,063 43,484,208 Diluted earnings per share (GAAP) $1.18 $1.01 $1.26 Diluted earnings per share, on an operating basis (Non-GAAP) $1.21 $1.01 $1.26 (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. Ratios Return on average assets (GAAP) (calculated by dividing net income by average assets) 1.02% 0.88% 1.13% Return on average assets on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average assets) 1.05% 0.88% 1.13% Return on average common equity (GAAP) (calculated by dividing net income by average common equity) 6.64% 5.75% 7.51% Return on average common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average common equity) 6.82% 5.75% 7.51% Return on average tangible common equity (Non-GAAP) (calculated by dividing annualized net income by average tangible common equity) 9.96% 8.67% 11.50% Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing annualized net operating net income by average tangible common equity) 10.23% 8.67% 11.50%
22 Three Months Ended December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Volume Interest Margin Impact Volume Interest Margin Impact Volume Interest Margin Impact Volume Interest Margin Impact Volume Interest Margin Impact (Unaudited, dollars in thousands) Reported total interest earning assets $17,423,492 $145,840 3.33% $17,288,249 $142,893 3.29% $17,223,604 $139,124 3.25% $17,244,542 $138,614 3.23% $17,183,476 $146,253 3.38% Acquisition fair value marks: Loan accretion (179) (171) (74) (109) (1,156) CD amortization — — — 9 11 (179) —% (171) —% (74) —% (100) —% (1,145) (0.03)% Nonaccrual interest, net (1,068) (0.02)% (156) —% (131) —% (341) (0.01)% 549 0.01% Other noncore adjustments (3,083) (54) —% (3,523) (145) —% (4,020) (499) (0.01)% (4,460) (582) (0.01)% (4,913) (574) (0.01)% Core margin (Non- GAAP) $17,420,409 $144,539 3.31% $17,284,726 $142,421 3.29% $17,219,584 $138,420 3.24% $17,240,082 $137,591 3.21% $17,178,563 $145,083 3.35% Appendix B - Non-GAAP Reconciliation of Core Margin
23 Appendix C - Reconciliation of Non-GAAP Capital Metrics (Unaudited, dollars in thousands, except per share data) December 31 2024 September 30 2024 December 31 2023 Tangible common equity Stockholders’ equity (GAAP) $ 2,993,120 $ 2,977,148 $ 2,895,251 (a) Less: Goodwill and other intangibles 997,356 998,773 1,003,262 Tangible common equity (Non-GAAP) $ 1,995,764 $ 1,978,375 $ 1,891,989 (b) Common Shares 42,500,611 42,480,765 42,873,187 (c) Book value per share (GAAP) $ 70.43 $ 70.08 $ 67.53 (a/c) Tangible book value per share (Non-GAAP) $ 46.96 $ 46.57 $ 44.13 (b/c)