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     101  0 Kommentare Independent Bank Corp. Reports Third Quarter Net Income of $34.9 Million

    Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2020 third quarter net income of $34.9 million, or $1.06 per diluted share, compared to net income of $24.9 million, or $0.76 per diluted share, reported for the second quarter of 2020. Excluding a loss on terminated hedges of $684,000, operating net income was $35.4 million, or $1.07 per diluted share, for the third quarter of 2020. Net income for the year-to-date period was $86.5 million or $2.59 on a diluted per share basis, a decrease of $31.2 million, or 26.5%, as compared to the same period in 2019. On an operating basis, net income for the 2020 year-to-date period was $87.0 million, or $2.61 on a diluted per share basis, representing a decrease of $50.1 million, or 36.5%, as compared to the same period a year ago, which included adjustments for mergers and acquisitions, as well as a gain on sale of loans. Decreases in the current year-to-date results are primarily driven by the negative impact of the elevated provision for credit losses, with the impact of the Coronavirus ("COVID-19") pandemic continuing to be the primary driver of the higher provision levels. Please refer to Appendix D for additional information regarding the Company's Current Expected Credit Losses assumptions and results.

    Rockland Trust continues to monitor the COVID-19 pandemic impact on our colleagues, customers, and the communities we serve. The safety of our colleagues and customers continues to be of the utmost importance, while the Company simultaneously continues to serve customer needs.

    “Our financial position remains strong. Our solid fundamentals entering the COVID-19 pandemic continue to serve us as we navigate the ongoing impacts of the pandemic,” said Christopher Oddleifson, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “At Rockland Trust, the bank Where Each Relationship Matters, my colleagues and I are energized by a shared sense of mission as we continue to stay focused on serving our customers and our communities as we all move forward together. We have helped over 6,100 borrowers obtain Paycheck Protection Program ("PPP") loans, with a total principal amount of approximately $810 million. These funds represent critical lifelines for these small businesses and are being deployed with the goal of saving numerous jobs that would otherwise be lost in the communities we serve. I would like to thank my colleagues for their continued professionalism and dedication during these trying times. Our unwavering dedication to our customers, our communities and to each other is what truly sets us apart.”

    BALANCE SHEET

    Total assets of $13.2 billion at September 30, 2020 increased by $151.2 million, or 1.2%, from the prior quarter, and increased by $1.6 billion, or 14.2%, as compared to the year ago period. Total asset growth for the third quarter is primarily attributable to increases in interest-earning cash balances resulting from strong deposit growth along with net loan growth.

    Total loans rose by $45.5 million, or 0.5% (1.9% annualized), when compared to the prior quarter, fueled by a healthy increase in commercial loan balances of $145.0 million, or 2.1% (8.5% annualized), during the third quarter. Growth across all commercial categories, with the exception of small business, reflects strong closing activity in all major commercial products, as well as a stabilization of line utilization levels, which experienced significant decreases during the early months of the COVID-19 pandemic. Within the consumer portfolios, the low rate environment has driven record mortgage banking volumes and results, while portfolio balances further declined as the majority of residential mortgage production continues to be sold into the secondary market. On the home equity side, despite strong closing activity, portfolio growth continues to be challenged by attrition.

    Deposit balances of $10.9 billion at September 30, 2020 increased by $134.5 million, or 1.3%, (5.0% annualized), from the prior quarter, as a combination of various government stimulus programs and a customer focus on retaining liquidity continued to fuel significant growth during the quarter. In addition to balance increases from existing customers, strong new customer account activity remained a bright spot throughout the uncertain economic conditions. As time deposits continued to run off, core deposits represented 88.0% of the total deposits at September 30, 2020, which, combined with reductions in rates across all products, has led to a total cost of deposits for the third quarter of 0.20%, representing a reduction of 8 basis points when compared to the prior quarter.

    The securities portfolio decreased by $68.1 million, or 5.8%, when compared to the prior quarter, reflecting $28.4 million of purchases offset by paydowns, called securities, and maturities.

    Total borrowings remained consistent with the prior quarter, reflecting only 2.7% of total funding liabilities. In relation to its funding strategy, in light of the steady buildup of its liquidity position, the Company decided to exit its $100 million hedge against the Federal Home Loan Bank ("FHLB") borrowings during the third quarter, resulting in a $684,000 loss included in non-interest expense. In addition, the outstanding borrowings associated with the hedge were paid in full in October 2020.

    Stockholders' equity at September 30, 2020 increased slightly by 1.1%, or 4.3% annualized, as compared to the prior quarter. Despite the repurchase of 1.5 million shares that was executed over the first half of 2020, stockholders' equity increased by 0.4% when compared to the year ago period, reflecting strong earnings retention and an increase in accumulated other comprehensive income of $22.4 million, offsetting the $95.1 million impact of the stock repurchases. Book value per share increased by $0.52, or 1.0%, to $51.27 during the third quarter as compared to the prior quarter. The Company's ratio of common equity to assets of 12.83% decreased by 1 basis point from the prior quarter and decreased by 175 basis points from the same period a year ago. The Company's tangible book value per share at September 30, 2020 rose by $0.58, or 1.7%, from the prior quarter to $35.17, representing an increase of 5.4% from the year ago period. The Company's ratio of tangible common equity to tangible assets of 9.17% at September 30, 2020 is 5 basis points higher than the prior quarter and 125 basis points below the year ago period, largely attributable to the increase in the Company's balance sheet and stock repurchase activity.

    NET INTEREST INCOME

    Net interest income for the third quarter remained relatively flat at $90.9 million compared to $91.1 million for the prior quarter, as increases in earning assets were offset by margin compression. The 2020 third quarter net interest margin of 3.13% represents a reduction of 12 basis points from the prior quarter. The table below illustrates the changes within the net interest margin for the third quarter:

    Net interest margin as of June 30, 2020

     

    3.25

    %

    Loan yields, excluding nonaccrual interest impact

     

    (0.08)

    %

    Nonaccrual loans, interest reversal

     

    (0.05)

    %

    Excess liquidity (cash) levels

     

    (0.07)

    %

    PPP loan activity at 1% interest rate

     

    (0.04)

    %

    PPP loan fee amortization

     

    0.03

    %

    Loan purchase accounting

     

    0.03

    %

    Cost of funds

     

    0.08

    %

    Other

     

    (0.02)

    %

    Net interest margin as of September 30, 2020

     

    3.13

    %

    Please refer to Appendix C for additional details regarding the net interest margin, including a three-quarter trend of an adjusted core margin.

    NONINTEREST INCOME

    Noninterest income of $29.3 million for the third quarter of 2020 was $1.2 million, or 4.1%, higher than the prior quarter. Significant changes in noninterest income for the third quarter compared to the prior quarter included the following:

    • Deposit account fees increased by $599,000, or 21.2%, primarily driven by an increase in overdraft fees.
    • Interchange and ATM fees decreased by $2.2 million, or 41.6%, reflecting the impact of the Durbin Amendment, which the Company became subject to effective July 1, 2020 as a result of crossing the $10 billion asset threshold, offset by increased activity compared to the prior quarter.
    • Investment management income increased by $275,000, or 3.8%, due primarily to an increase in market valuation. Assets under administration at September 30, 2020 increased 3.3% to $4.5 billion.
    • Mortgage banking income grew by $2.7 million, or 53.9%, due primarily to increased gain on sale of loans plus continued strong demand largely driven by the low rate environment.
    • Although remaining at an elevated level of $2.5 million, loan level derivative income decreased by $407,000, or 14.2%.
    • Other noninterest income increased by $494,000, or 14.8%, primarily attributable to increases in investment income and business and consumer credit card fee income, partially offset by reduced unrealized gains on equity securities.

    NONINTEREST EXPENSE

    Noninterest expense of $66.7 million for the third quarter of 2020 was relatively consistent with the prior quarter. Significant changes in noninterest expense for the third quarter compared to the prior quarter included the following:

    • Salaries and employee benefits increased $1.1 million, or 3.1%, mainly due to increases in base salaries, incentive programs and retirement benefits, partially offset by decreases in payroll taxes.
    • FDIC assessment increased by $531,000, as the prior quarter included a partial benefit from the allocation of small bank assessment credits, which resulted in a reduced assessment.
    • During the third quarter, the Company recorded a $684,000 loss on the termination of a swap derivative contract with a notional amount of $100.0 million.
    • Other noninterest expense decreased by $2.4 million, or 13.3%, primarily due to decreases in equity compensation related to director expenses incurred during the prior quarter, along with decreases in prepayment fees on borrowings, retail branch traffic control and consultant fees.

    The Company generated a return on average assets and a return on average common equity of 1.07% and 8.21%, respectively, for the third quarter of 2020, as compared to 0.79% and 5.97%, respectively, for the prior quarter. On an operating basis, return on average assets and return on average common equity were 1.08% and 8.32%, respectively, for the third quarter.

    ASSET QUALITY

    During the third quarter, the Company recorded total net charge-offs of $4.1 million, or 0.17% of average loans on an annualized basis, the majority of which were associated with a large relationship within the hotel industry. In addition, nonperforming loans increased to $98.0 million, or 1.04% of total loans at September 30, 2020 as compared to the prior quarter level of $48.8 million, or 0.52% of total loans at June 30, 2020. The increase in nonperforming loans reflects primarily the migration of three large commercial relationships, all related to industries previously identified as being highly impacted by the COVID-19 pandemic. This increase also resulted in a reduction of interest income of $1.6 million for the third quarter, which was included in the net interest margin compression noted above. Despite the increase in charge-offs and nonperforming loans, the Company recorded a $7.5 million provision for credit losses, reduced significantly from the $20.0 million recorded last quarter, as the third quarter activity reflected loss exposure that was substantially reflected in the June 30, 2020 credit reserve assumptions. The allowance for credit losses on loans was $115.6 million at September 30, 2020, or 1.23% of total loans, as compared to $112.2 million at June 30, 2020, or 1.20% of total loans. Please refer to Appendix E for information regarding loan exposures within industries deemed highly impacted.

    As a result of the COVID-19 pandemic, many loans have had terms modified. Total loans subject to deferral decreased by $590.1 million for the third quarter, to $583.8 million, or 6.2% of total loans, at September 30, 2020. The majority of these loans that have been granted deferrals continue to be characterized as current loans. Delinquency as a percentage of total loans was 0.31%, representing an increase of seven basis points from the prior quarter. Please refer to Appendix F for additional details regarding loans whose terms have been modified as a result of COVID-19.

    CONFERENCE CALL INFORMATION

    Christopher Oddleifson, Chief Executive Officer, Robert Cozzone, Chief Operating Officer, Mark Ruggiero, Chief Financial Officer, and Gerard Nadeau, President and Chief Commercial Banking Officer will host a conference call to discuss third quarter earnings at 10:00 a.m. Eastern Time on Friday, October 23, 2020. Internet access to the call is available on the Company’s website at www.RocklandTrust.com or via telephonic access by dial-in at 1-888-336-7153 reference: INDB. A replay of the call will be available by calling 1-877-344-7529, Replay Conference Number: 10146947 and will be available through November 6, 2020. Additionally, a webcast replay will be available until October 23, 2021.

    ABOUT INDEPENDENT BANK CORP.

    Independent Bank Corp. (Nasdaq Global Select Market: INDB) is the holding company for Rockland Trust Company, a full-service commercial bank headquartered in Massachusetts. Rockland Trust was named to The Boston Globe’s “Top Places to Work” 2019 list, an honor earned for the 11th consecutive year. In addition to this recognition, Rockland Trust was ranked the #1 Bank in Massachusetts, according to Forbes 2020 World’s Best Banks list. Rockland Trust is deeply committed to the communities it serves as reflected in the overall “Outstanding” rating received in its most recent Community Reinvestment Act performance evaluation. Rockland Trust offers a wide range of banking, investment, and insurance services. The Bank serves businesses and individuals through approximately 100 retail branches, commercial and residential lending centers, and investment management offices in eastern Massachusetts, including Greater Boston, the South Shore, the Cape, and Islands, as well as in Worcester County and Rhode Island. Rockland Trust also offers a full suite of mobile, online, and telephone banking services. Rockland Trust is an FDIC member and an Equal Housing Lender. To find out why Rockland Trust is the bank “Where Each Relationship Matters,” please visit RocklandTrust.com.

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

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

    • further weakening in the United States economy in general and the regional and local economies within the New England region and the Company’s market area, including future weakening caused by the COVID-19 pandemic;
    • the length and extent of economic contraction as a result of the COVID-19 pandemic;
    • unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, pandemics or other external events;
    • adverse changes or volatility in the local real estate market;
    • adverse changes in asset quality and any unanticipated credit deterioration in our loan portfolio including those related to one or more large commercial relationships;
    • acquisitions may not produce results at levels or within time frames originally anticipated and may result in unforeseen integration issues or impairment of goodwill and/or other intangibles;
    • additional regulatory oversight and related compliance costs, including the additional costs associated with the Company's increase in assets to over $10 billion;
    • changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System;
    • higher than expected tax expense, resulting from failure to comply with general tax laws, changes in tax laws, or failure to comply with requirements of the federal New Markets Tax Credit program;
    • changes in market interest rates for interest earning assets and/or interest bearing liabilities and changes related to the phase-out of LIBOR;
    • increased competition in the Company’s market areas;
    • adverse weather, changes in climate, natural disasters, the emergence of widespread health emergencies or pandemics, including the magnitude and duration of the COVID-19 pandemic, other public health crises or man-made events could negatively affect our local economies or disrupt our operations, which would have an adverse effect on our business or results of operations;
    • a deterioration in the conditions of the securities markets;
    • a deterioration of the credit rating for U.S. long-term sovereign debt;
    • inability to adapt to changes in information technology, including changes to industry accepted delivery models driven by a migration to the internet as a means of service delivery;
    • electronic fraudulent activity within the financial services industry, especially in the commercial banking sector;
    • adverse changes in consumer spending and savings habits;
    • the effect of laws and regulations regarding the financial services industry;
    • changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) generally applicable to the Company’s business;
    • the Company's potential judgments, claims, damages, penalties, fines and reputational damage resulting from pending or future litigation and regulatory and government actions, including as a result of our participation in and execution of government programs related to the COVID-19 pandemic;
    • changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters including, but not limited to , changes to how the Company accounts for credit losses;
    • cyber security attacks or intrusions that could adversely impact our businesses; and
    • other unexpected material adverse changes in our operations or earnings.

    Further, the foregoing factors may be exacerbated by the ultimate impact of the COVID-19 pandemic, which is unknown at this time. Statements about the COVID-19 pandemic and its potential impact on our business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that actual results may differ, possibly materially, from what is reflected in such statements due to factors and future developments that are uncertain, unpredictable and, in many cases, beyond our control, including the scope, duration and extent of the pandemic and any resurgences, actions taken by governmental authorities in response to the pandemic and the direct and indirect impact on the Company’s employees, customers, business and third-parties with which the Company conducts business.

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

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

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

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

    These non-GAAP measures should not be viewed as a substitute for operating results and other financial measures determined in accordance with GAAP. An item which management deems to be noncore and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP performance measures, including operating earnings, operating EPS, operating return on average assets, operating return on average equity, 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.

    INDEPENDENT BANK CORP. FINANCIAL SUMMARY

     

     

     

     

     

     

    CONSOLIDATED BALANCE SHEETS

     

     

     

     

    (Unaudited, dollars in thousands)

     

     

     

     

     

     

    % Change

     

    % Change

     

    September 30
    2020

     

    June 30
    2020

     

    September 30
    2019

     

    Sept 2020 vs.

     

    Sept 2020 vs.

     

     

     

     

    Jun 2020

     

    Sept 2019

    Assets

     

     

     

     

     

     

     

     

     

    Cash and due from banks

    $

    125,103

     

     

    $

    131,615

     

     

    $

    153,000

     

     

    (4.95)

    %

     

    (18.23)

    %

    Interest-earning deposits with banks

    1,142,934

     

     

    974,105

     

     

    66,272

     

     

    17.33

    %

     

    1,624.61

    %

    Securities

     

     

     

     

     

     

     

     

     

    Trading

    2,612

     

     

    2,541

     

     

    1,963

     

     

    2.79

    %

     

    33.06

    %

    Equities

    21,119

     

     

    20,810

     

     

    21,021

     

     

    1.48

    %

     

    0.47

    %

    Available for sale

    423,478

     

     

    420,517

     

     

    391,975

     

     

    0.70

    %

     

    8.04

    %

    Held to maturity

    659,573

     

     

    731,026

     

     

    777,270

     

     

    (9.77)

    %

     

    (15.14)

    %

    Total securities

    1,106,782

     

     

    1,174,894

     

     

    1,192,229

     

     

    (5.80)

    %

     

    (7.17)

    %

    Loans held for sale

    54,713

     

     

    45,395

     

     

    55,937

     

     

    20.53

    %

     

    (2.19)

    %

    Loans

     

     

     

     

     

     

     

     

     

    Commercial and industrial

    2,062,345

     

     

    2,004,645

     

     

    1,411,516

     

     

    2.88

    %

     

    46.11

    %

    Commercial real estate

    4,125,464

     

     

    4,071,047

     

     

    4,000,487

     

     

    1.34

    %

     

    3.12

    %

    Commercial construction

    573,334

     

     

    537,788

     

     

    520,585

     

     

    6.61

    %

     

    10.13

    %

    Small business

    167,632

     

     

    170,288

     

     

    172,038

     

     

    (1.56)

    %

     

    (2.56)

    %

    Total commercial

    6,928,775

     

     

    6,783,768

     

     

    6,104,626

     

     

    2.14

    %

     

    13.50

    %

    Residential real estate

    1,352,305

     

     

    1,431,129

     

     

    1,644,758

     

     

    (5.51)

    %

     

    (17.78)

    %

    Home equity - first position

    643,187

     

     

    650,922

     

     

    644,675

     

     

    (1.19)

    %

     

    (0.23)

    %

    Home equity - subordinate positions

    457,867

     

     

    469,601

     

     

    492,434

     

     

    (2.50)

    %

     

    (7.02)

    %

    Total consumer real estate

    2,453,359

     

     

    2,551,652

     

     

    2,781,867

     

     

    (3.85)

    %

     

    (11.81)

    %

    Other consumer

    23,059

     

     

    24,228

     

     

    27,008

     

     

    (4.82)

    %

     

    (14.62)

    %

    Total loans

    9,405,193

     

     

    9,359,648

     

     

    8,913,501

     

     

    0.49

    %

     

    5.52

    %

    Less: allowance for credit losses

    (115,625)

     

     

    (112,176)

     

     

    (66,942)

     

     

    3.07

    %

     

    72.72

    %

    Net loans

    9,289,568

     

     

    9,247,472

     

     

    8,846,559

     

     

    0.46

    %

     

    5.01

    %

    Federal Home Loan Bank stock

    15,090

     

     

    15,090

     

     

    14,976

     

     

    %

     

    0.76

    %

    Bank premises and equipment, net

    121,816

     

     

    122,172

     

     

    125,026

     

     

    (0.29)

    %

     

    (2.57)

    %

    Goodwill

    506,206

     

     

    506,206

     

     

    504,562

     

     

    %

     

    0.33

    %

    Other intangible assets

    24,543

     

     

    25,996

     

     

    31,307

     

     

    (5.59)

    %

     

    (21.61)

    %

    Cash surrender value of life insurance policies

    199,453

     

     

    198,124

     

     

    195,883

     

     

    0.67

    %

     

    1.82

    %

    Other assets

    587,457

     

     

    581,431

     

     

    352,888

     

     

    1.04

    %

     

    66.47

    %

    Total assets

    $

    13,173,665

     

     

    $

    13,022,500

     

     

    $

    11,538,639

     

     

    1.16

    %

     

    14.17

    %

    Liabilities and Stockholders' Equity

     

     

     

     

     

     

     

     

     

    Deposits

     

     

     

     

     

     

     

     

     

    Noninterest-bearing demand deposits

    $

    3,715,528

     

     

    $

    3,694,559

     

     

    $

    2,752,150

     

     

    0.57

    %

     

    35.00

    %

    Savings and interest checking accounts

    3,912,703

     

     

    3,896,024

     

     

    3,199,182

     

     

    0.43

    %

     

    22.30

    %

    Money market

    2,164,436

     

     

    2,034,021

     

     

    1,904,643

     

     

    6.41

    %

     

    13.64

    %

    Time certificates of deposit

    1,058,641

     

     

    1,092,217

     

     

    1,470,116

     

     

    (3.07)

    %

     

    (27.99)

    %

    Total deposits

    10,851,308

     

     

    10,716,821

     

     

    9,326,091

     

     

    1.25

    %

     

    16.35

    %

    Borrowings

     

     

     

     

     

     

     

     

     

    Federal Home Loan Bank borrowings

    145,765

     

     

    145,770

     

     

    70,708

     

     

    %

     

    106.15

    %

    Long-term borrowings, net

    37,447

     

     

    37,433

     

     

    74,894

     

     

    0.04

    %

     

    (50.00)

    %

    Junior subordinated debentures, net

    62,850

     

     

    62,850

     

     

    62,848

     

     

    %

     

    %

    Subordinated debentures, net

    49,672

     

     

    49,648

     

     

    84,341

     

     

    0.05

    %

     

    (41.11)

    %

    Total borrowings

    295,734

     

     

    295,701

     

     

    292,791

     

     

    0.01

    %

     

    1.01

    %

    Total deposits and borrowings

    11,147,042

     

     

    11,012,522

     

     

    9,618,882

     

     

    1.22

    %

     

    15.89

    %

    Other liabilities

    336,899

     

     

    338,286

     

     

    237,433

     

     

    (0.41)

    %

     

    41.89

    %

    Total liabilities

    11,483,941

     

     

    11,350,808

     

     

    9,856,315

     

     

    1.17

    %

     

    16.51

    %

    Stockholders' equity

     

     

     

     

     

     

     

     

     

    Common stock

    328

     

     

    328

     

     

    342

     

     

    %

     

    (4.09)

    %

    Additional paid in capital

    944,218

     

     

    942,685

     

     

    1,033,949

     

     

    0.16

    %

     

    (8.68)

    %

    Retained earnings

    696,546

     

     

    676,834

     

     

    621,831

     

     

    2.91

    %

     

    12.02

    %

    Accumulated other comprehensive income, net of tax

    48,632

     

     

    51,845

     

     

    26,202

     

     

    (6.20)

    %

     

    85.60

    %

    Total stockholders' equity

    1,689,724

     

     

    1,671,692

     

     

    1,682,324

     

     

    1.08

    %

     

    0.44

    %

    Total liabilities and stockholders' equity

    $

    13,173,665

     

     

    $

    13,022,500

     

     

    $

    11,538,639

     

     

    1.16

    %

     

    14.17

    %

    CONSOLIDATED STATEMENTS OF INCOME

     

     

     

     

     

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

     

     

     

     

     

     

    Three Months Ended

     

     

     

     

     

     

     

     

     

     

     

    % Change

     

    % Change

     

    September 30
    2020

     

    June 30
    2020

     

    September 30
    2019

     

    Sept 2020 vs.

     

    Sept 2020 vs.

     

     

     

     

    Jun 2020

     

    Sept 2019

    Interest income

     

     

     

     

     

     

     

     

     

    Interest on federal funds sold and short-term investments

    $

    254

     

     

    $

    132

     

     

    $

    680

     

     

    92.42

    %

     

    (62.65)

    %

    Interest and dividends on securities

    7,227

     

     

    7,840

     

     

    8,283

     

     

    (7.82)

    %

     

    (12.75)

    %

    Interest and fees on loans

    90,112

     

     

    91,634

     

     

    110,205

     

     

    (1.66)

    %

     

    (18.23)

    %

    Interest on loans held for sale

    326

     

     

    359

     

     

    456

     

     

    (9.19)

    %

     

    (28.51)

    %

    Total interest income

    97,919

     

     

    99,965

     

     

    119,624

     

     

    (2.05)

    %

     

    (18.14)

    %

    Interest expense

     

     

     

     

     

     

     

     

     

    Interest on deposits

    5,432

     

     

    7,027

     

     

    11,846

     

     

    (22.70)

    %

     

    (54.14)

    %

    Interest on borrowings

    1,604

     

     

    1,840

     

     

    3,180

     

     

    (12.83)

    %

     

    (49.56)

    %

    Total interest expense

    7,036

     

     

    8,867

     

     

    15,026

     

     

    (20.65)

    %

     

    (53.17)

    %

    Net interest income

    90,883

     

     

    91,098

     

     

    104,598

     

     

    (0.24)

    %

     

    (13.11)

    %

    Provision for credit losses

    7,500

     

     

    20,000

     

     

     

     

    (62.50)

    %

     

    100.00%

    Net interest income after provision for credit losses

    83,383

     

     

    71,098

     

     

    104,598

     

     

    17.28

    %

     

    (20.28)

    %

    Noninterest income

     

     

     

     

     

     

     

     

     

    Deposit account fees

    3,428

     

     

    2,829

     

     

    5,299

     

     

    21.17

    %

     

    (35.31)

    %

    Interchange and ATM fees

    3,044

     

     

    5,214

     

     

    6,137

     

     

    (41.62)

    %

     

    (50.40)

    %

    Investment management

    7,571

     

     

    7,296

     

     

    7,188

     

     

    3.77

    %

     

    5.33

    %

    Mortgage banking income

    7,704

     

     

    5,005

     

     

    3,968

     

     

    53.93

    %

     

    94.15

    %

    Increase in cash surrender value of life insurance policies

    1,314

     

     

    1,312

     

     

    1,304

     

     

    0.15

    %

     

    0.77

    %

    Gain on life insurance benefits

     

     

    335

     

     

    434

     

     

    (100.00)

    %

     

    (100.00)

    %

    Loan level derivative income

    2,457

     

     

    2,864

     

     

    2,739

     

     

    (14.21)

    %

     

    (10.30)

    %

    Other noninterest income

    3,829

     

     

    3,335

     

     

    4,747

     

     

    14.81

    %

     

    (19.34)

    %

    Total noninterest income

    29,347

     

     

    28,190

     

     

    31,816

     

     

    4.10

    %

     

    (7.76)

    %

    Noninterest expenses

     

     

     

     

     

     

     

     

     

    Salaries and employee benefits

    38,409

     

     

    37,269

     

     

    39,432

     

     

    3.06

    %

     

    (2.59)

    %

    Occupancy and equipment expenses

    9,273

     

     

    9,273

     

     

    8,555

     

     

    %

     

    8.39

    %

    Data processing and facilities management

    1,567

     

     

    1,459

     

     

    1,515

     

     

    7.40

    %

     

    3.43

    %

    FDIC assessment

    1,034

     

     

    503

     

     

     

     

    105.57

    %

     

    100.00%

    Merger and acquisition expense

     

     

     

     

    705

     

     

    n/a

     

    (100.00)

    %

    Loss on termination of derivatives

    684

     

     

     

     

     

     

    100.00%

     

    100.00%

    Other noninterest expenses

    15,691

     

     

    18,103

     

     

    17,326

     

     

    (13.32)

    %

     

    (9.44)

    %

    Total noninterest expenses

    66,658

     

     

    66,607

     

     

    67,533

     

     

    0.08

    %

     

    (1.30)

    %

    Income before income taxes

    46,072

     

     

    32,681

     

     

    68,881

     

     

    40.97

    %

     

    (33.11)

    %

    Provision for income taxes

    11,199

     

     

    7,779

     

     

    17,036

     

     

    43.96

    %

     

    (34.26)

    %

    Net Income

    $

    34,873

     

     

    $

    24,902

     

     

    $

    51,845

     

     

    40.04

    %

     

    (32.74)

    %

     

     

     

     

     

     

     

     

     

     

    Weighted average common shares (basic)

    32,951,918

     

     

    32,944,761

     

     

    34,361,176

     

     

     

     

     

    Common share equivalents

    24,758

     

     

    28,098

     

     

    39,390

     

     

     

     

     

    Weighted average common shares (diluted)

    32,976,676

     

     

    32,972,859

     

     

    34,400,566

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Basic earnings per share

    $

    1.06

     

     

    $

    0.76

     

     

    $

    1.51

     

     

    39.47

    %

     

    (29.80)

    %

    Diluted earnings per share

    $

    1.06

     

     

    $

    0.76

     

     

    $

    1.51

     

     

    39.47

    %

     

    (29.80)

    %

     

     

     

     

     

     

     

     

     

     

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

     

     

     

     

     

     

    Net income

    $

    34,873

     

     

    $

    24,902

     

     

    $

    51,845

     

     

     

     

     

    Noninterest income components

     

     

     

     

     

     

     

     

     

    Less - gain on sale of loans

     

     

     

     

    951

     

     

     

     

     

    Noninterest expense components

     

     

     

     

     

     

     

     

     

    Add - loss on termination of derivatives

    684

     

     

     

     

     

     

     

     

     

    Add - merger and acquisition expenses

     

     

     

     

    705

     

     

     

     

     

    Noncore increases (decreases) to income before taxes

    684

     

     

     

     

    (246)

     

     

     

     

     

    Net tax (benefit) expense associated with noncore items (1)

    (192)

     

     

     

     

    72

     

     

     

     

     

    Total tax impact

    (192)

     

     

     

     

    72

     

     

     

     

     

    Noncore increases (decreases) to net income

    492

     

     

     

     

    (174)

     

     

     

     

     

    Operating net income

    $

    35,365

     

     

    $

    24,902

     

     

    $

    51,671

     

     

    42.02

    %

     

    (31.56)

    %

     

     

     

     

     

     

     

     

     

     

    Diluted earnings per share, on an operating basis

    $

    1.07

     

     

    $

    0.76

     

     

    $

    1.50

     

     

    40.79

    %

     

    (28.67)

    %

     

     

     

     

     

     

     

     

     

     

    (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)

    3.13

    %

     

    3.25

    %

     

    4.03

    %

     

     

     

     

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

    1.07

    %

     

    0.79

    %

     

    1.78

    %

     

     

     

     

    Return on average assets on an operating basis (calculated by
    dividing net operating earnings by average assets)

    1.08

    %

     

    0.79

    %

     

    1.77

    %

     

     

     

     

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

    8.21

    %

     

    5.97

    %

     

    12.33

    %

     

     

     

     

    Return on average common equity on an operating basis
    (calculated by dividing net operating earnings by average
    common equity)

    8.32

    %

     

    5.97

    %

     

    12.29

    %

     

     

     

     

    CONSOLIDATED STATEMENTS OF INCOME

     

     

     

     

     

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

     

     

     

     

     

     

    Nine Months Ended

     

     

     

     

     

     

     

     

    % Change

     

     

    September 30
    2020

     

    September 30
    2019

     

    Sept 2020 vs.

     

     

     

     

    Sept 2019

     

     

     

     

     

     

     

    Interest income

     

     

     

     

     

     

    Interest on federal funds sold and short-term investments

     

    $

    546

     

     

    $

    1,753

     

     

    (68.85)

    %

    Interest and dividends on securities

     

    23,033

     

     

    24,295

     

     

    (5.19)

    %

    Interest and fees on loans

     

    280,768

     

     

    306,736

     

     

    (8.47)

    %

    Interest on loans held for sale

     

    917

     

     

    527

     

     

    74.00

    %

    Total interest income

     

    305,264

     

     

    333,311

     

     

    (8.41)

    %

    Interest expense

     

     

     

     

     

     

    Interest on deposits

     

    23,351

     

     

    30,052

     

     

    (22.30)

    %

    Interest on borrowings

     

    5,628

     

     

    10,117

     

     

    (44.37)

    %

    Total interest expense

     

    28,979

     

     

    40,169

     

     

    (27.86)

    %

    Net interest income

     

    276,285

     

     

    293,142

     

     

    (5.75)

    %

    Provision for loan losses

     

    52,500

     

     

    2,000

     

     

    nm

    Net interest income after provision for loan losses

     

    223,785

     

     

    291,142

     

     

    (23.14)

    %

    Noninterest income

     

     

     

     

     

     

    Deposit account fees

     

    11,227

     

     

    14,785

     

     

    (24.06)

    %

    Interchange and ATM fees

     

    13,154

     

     

    16,447

     

     

    (20.02)

    %

    Investment management

     

    21,696

     

     

    21,089

     

     

    2.88

    %

    Mortgage banking income

     

    13,570

     

     

    8,184

     

     

    65.81

    %

    Increase in cash surrender value of life insurance policies

     

    3,902

     

     

    3,572

     

     

    9.24

    %

    Gain on life insurance benefits

     

    692

     

     

    434

     

     

    59.45

    %

    Loan level derivative income

     

    8,918

     

     

    4,312

     

     

    106.82

    %

    Other noninterest income

     

    10,813

     

     

    13,174

     

     

    (17.92)

    %

    Total noninterest income

     

    83,972

     

     

    81,997

     

     

    2.41

    %

    Noninterest expenses

     

     

     

     

     

     

    Salaries and employee benefits

     

    113,027

     

     

    111,401

     

     

    1.46

    %

    Occupancy and equipment expenses

     

    27,863

     

     

    24,109

     

     

    15.57

    %

    Data processing and facilities management

     

    4,684

     

     

    4,883

     

     

    (4.08)

    %

    FDIC assessment

     

    1,537

     

     

    1,394

     

     

    10.26

    %

    Merger and acquisition expense

     

     

     

    26,433

     

     

    (100.00)

    %

    Loss on termination of derivatives

     

    684

     

     

     

     

    nm

    Other noninterest expenses

     

    52,310

     

     

    48,656

     

     

    7.51

    %

    Total noninterest expenses

     

    200,105

     

     

    216,876

     

     

    (7.73)

    %

    Income before income taxes

     

    107,652

     

     

    156,263

     

     

    (31.11)

    %

    Provision for income taxes

     

    21,126

     

     

    38,565

     

     

    (45.22)

    %

    Net Income

     

    $

    86,526

     

     

    $

    117,698

     

     

    (26.48)

    %

     

     

     

     

     

     

     

    Weighted average common shares (basic)

     

    33,358,879

     

     

    32,283,196

     

     

     

    Common share equivalents

     

    27,871

     

     

    45,416

     

     

     

    Weighted average common shares (diluted)

     

    33,386,750

     

     

    32,328,612

     

     

     

     

     

     

     

     

     

     

    Basic earnings per share

     

    $

    2.59

     

     

    $

    3.65

     

     

    (29.04)

    %

    Diluted earnings per share

     

    $

    2.59

     

     

    $

    3.64

     

     

    (28.85)

    %

     

     

     

     

     

     

     

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

     

     

     

     

     

     

    Net Income

     

    $

    86,526

     

     

    $

    117,698

     

     

     

    Noninterest income components

     

     

     

     

     

     

    Less - gain on sale of loans

     

     

     

    951

     

     

     

    Noninterest expense components

     

     

     

     

     

     

    Add - loss on termination of derivatives

     

    684

     

     

     

     

     

    Add - merger and acquisition expenses

     

     

     

    26,433

     

     

     

    Noncore increases to income before taxes

     

    684

     

     

    25,482

     

     

     

    Net tax benefit associated with noncore items (1)

     

    (192)

     

     

    (6,686)

     

     

     

    Add - adjustment for tax effect of previously incurred merger and
    acquisition expenses

     

     

     

    650

     

     

     

    Total tax impact

     

    (192)

     

     

    (6,036)

     

     

     

    Noncore increases to net income

     

    $

    492

     

     

    $

    19,446

     

     

     

    Operating net income

     

    $

    87,018

     

     

    $

    137,144

     

     

    (36.55)

    %

     

     

     

     

     

     

     

    Diluted earnings per share, on an operating basis

     

    $

    2.61

     

     

    $

    4.24

     

     

    (38.44)

    %

     

     

     

     

     

     

     

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

     

     

     

     

     

     

     

    Performance ratios

     

     

     

     

     

     

    Net interest margin (FTE)

     

    3.36

    %

     

    4.08

    %

     

     

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

     

    0.93

    %

     

    1.47

    %

     

     

    Return on average assets on an operating basis (calculated by dividing net
    operating earnings by average assets)

     

    0.94

    %

     

    1.72

    %

     

     

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

     

    6.80

    %

     

    10.77

    %

     

     

    Return on average common equity on an operating basis (calculated by dividing
    net operating earnings by average common equity)

     

    6.84

    %

     

    12.55

    %

     

     

    nm = not meaningful

    ASSET QUALITY

     

     

    (Unaudited, dollars in thousands)

     

    Nonperforming Assets At

     

     

    September 30
    2020

     

    June 30
    2020

     

    September 30
    2019

    Nonperforming loans

     

     

     

     

     

     

    Commercial & industrial loans

     

    $

    36,851

     

     

    $

    20,736

     

     

    $

    23,507

     

    Commercial real estate loans

     

    38,164

     

     

    6,313

     

     

    1,666

     

    Small business loans

     

    542

     

     

    619

     

     

    112

     

    Residential real estate loans

     

    16,229

     

     

    14,561

     

     

    13,088

     

    Home equity

     

    6,159

     

     

    6,437

     

     

    7,231

     

    Other consumer

     

    80

     

     

    148

     

     

    98

     

    Total nonperforming loans

     

    98,025

     

     

    48,814

     

     

    45,702

     

    Other real estate owned

     

     

     

     

     

    2,500

     

    Total nonperforming assets

     

    $

    98,025

     

     

    $

    48,814

     

     

    $

    48,202

     

     

     

     

     

     

     

     

    Nonperforming loans/gross loans

     

    1.04

    %

     

    0.52

    %

     

    0.51

    %

    Nonperforming assets/total assets

     

    0.74

    %

     

    0.37

    %

     

    0.42

    %

    Allowance for credit losses/nonperforming loans

     

    117.95

    %

     

    229.80

    %

     

    146.47

    %

    Allowance for credit losses/total loans

     

    1.23

    %

     

    1.20

    %

     

    0.75

    %

    Delinquent loans/total loans

     

    0.31

    %

     

    0.24

    %

     

    0.26

    %

     

     

     

     

     

     

     

     

     

    Nonperforming Assets Reconciliation for the Three Months Ended

     

     

    September 30
    2020

     

    June 30
    2020

     

    September 30
    2019

     

     

     

     

     

     

     

    Nonperforming assets beginning balance

     

    $

    48,814

     

     

    $

    48,040

     

     

    $

    48,183

     

    New to nonperforming

     

    60,850

     

     

    8,215

     

     

    4,946

     

    Loans charged-off

     

    (4,304)

     

     

    (710)

     

     

    (707)

     

    Loans paid-off

     

    (5,050)

     

     

    (2,210)

     

     

    (3,041)

     

    Loans restored to performing status

     

    (2,229)

     

     

    (4,529)

     

     

    (714)

     

    Valuation write down

     

     

     

     

     

    (389)

     

    Other

     

    (56)

     

     

    8

     

     

    (76)

     

    Nonperforming assets ending balance

     

    $

    98,025

     

     

    $

    48,814

     

     

    $

    48,202

     

     

     

    Net Charge-Offs (Recoveries)

     

     

    Three Months Ended

     

    Nine Months Ended

     

     

    September 30
    2020

     

    June 30
    2020

     

    September 30
    2019

     

    September 30
    2020

     

    September 30
    2019

    Net charge-offs (recoveries)

     

     

     

     

     

     

     

     

     

     

    Commercial and industrial loans

     

    $

    184

     

     

    $

    (4)

     

     

    $

    (1,003)

     

     

    $

    138

     

     

    $

    (1,127)

     

    Commercial real estate loans

     

    3,876

     

     

     

     

    (24)

     

     

    3,876

     

     

    (70)

     

    Small business loans

     

    47

     

     

    33

     

     

    64

     

     

    186

     

     

    211

     

    Residential real estate loans

     

    (1)

     

     

     

     

    (140)

     

     

    (2)

     

     

    (141)

     

    Home equity

     

    (21)

     

     

    (91)

     

     

    (166)

     

     

    (32)

     

     

    (66)

     

    Other consumer

     

    (34)

     

     

    262

     

     

    287

     

     

    469

     

     

    544

     

    Total net charge-offs (recoveries)

     

    $

    4,051

     

     

    $

    200

     

     

    $

    (982)

     

     

    $

    4,635

     

     

    $

    (649)

     

     

     

     

     

     

     

     

     

     

     

     

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

     

    0.17

    %

     

    0.01

    %

     

    (0.04)

    %

     

    0.07

    %

     

    (0.01)

    %

     

     

    Troubled Debt Restructurings At

     

     

    September 30
    2020

     

    June 30
    2020

     

    September 30
    2019

    Troubled debt restructurings on accrual status

     

    $

    17,521

     

     

    $

    17,741

     

     

    $

    20,182

     

    Troubled debt restructurings on nonaccrual status

     

    23,810

     

     

    24,098

     

     

    26,232

     

    Total troubled debt restructurings

     

    $

    41,331

     

     

    $

    41,839

     

     

    $

    46,414

     

     

     

     

     

     

     

     

    BALANCE SHEET AND CAPITAL RATIOS

     

     

     

     

     

     

     

     

    September 30
    2020

     

    June 30
    2020

     

    September 30
    2019

    Gross loans/total deposits

     

    86.67

    %

     

    87.34

    %

     

    95.58

    %

    Common equity tier 1 capital ratio (1)

     

    12.40

    %

     

    12.26

    %

     

    12.52

    %

    Tier 1 leverage capital ratio (1)

     

    9.52

    %

     

    9.57

    %

     

    10.83

    %

    Common equity to assets ratio GAAP

     

    12.83

    %

     

    12.84

    %

     

    14.58

    %

    Tangible common equity to tangible assets ratio (2)

     

    9.17

    %

     

    9.12

    %

     

    10.42

    %

    Book value per share GAAP

     

    $

    51.27

     

     

    $

    50.75

     

     

    $

    48.95

     

    Tangible book value per share (2)

     

    $

    35.17

     

     

    $

    34.59

     

     

    $

    33.36

     

    (1) Estimated number for September 30, 2020.
    (2) See Appendix A for detailed reconciliation from GAAP to Non-GAAP ratios.

    INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    (Unaudited, dollars in thousands)

     

    Three Months Ended

     

     

    September 30, 2020

     

    June 30, 2020

     

    September 30, 2019

     

     

     

     

    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

     

    $

    997,921

     

     

    $

    254

     

     

    0.10

    %

     

    $

    724,634

     

     

    $

    132

     

     

    0.07

    %

     

    $

    115,255

     

     

    $

    680

     

     

    2.34

    %

    Securities

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Securities - trading

     

    2,607

     

     

     

     

    %

     

    2,393

     

     

     

     

    %

     

    1,947

     

     

     

     

    %

    Securities - taxable investments

     

    1,139,843

     

     

    7,218

     

     

    2.52

    %

     

    1,206,631

     

     

    7,831

     

     

    2.61

    %

     

    1,204,314

     

     

    8,269

     

     

    2.72

    %

    Securities - nontaxable investments (1)

     

    1,146

     

     

    11

     

     

    3.82

    %

     

    1,145

     

     

    11

     

     

    3.86

    %

     

    1,739

     

     

    18

     

     

    4.11

    %

    Total securities

     

    $

    1,143,596

     

     

    $

    7,229

     

     

    2.51

    %

     

    $

    1,210,169

     

     

    $

    7,842

     

     

    2.61

    %

     

    $

    1,208,000

     

     

    $

    8,287

     

     

    2.72

    %

    Loans held for sale

     

    50,709

     

     

    326

     

     

    2.56

    %

     

    50,613

     

     

    359

     

     

    2.85

    %

     

    102,065

     

     

    456

     

     

    1.77

    %

    Loans

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial and industrial (1)

     

    2,033,385

     

     

    17,724

     

     

    3.47

    %

     

    1,914,830

     

     

    17,363

     

     

    3.65

    %

     

    1,380,007

     

     

    20,274

     

     

    5.83

    %

    Commercial real estate (1)

     

    4,086,594

     

     

    41,578

     

     

    4.05

    %

     

    4,051,342

     

     

    42,371

     

     

    4.21

    %

     

    4,017,670

     

     

    49,139

     

     

    4.85

    %

    Commercial construction

     

    568,007

     

     

    5,126

     

     

    3.59

    %

     

    538,767

     

     

    5,314

     

     

    3.97

    %

     

    510,277

     

     

    7,155

     

     

    5.56

    %

    Small business

     

    168,662

     

     

    2,303

     

     

    5.43

    %

     

    174,438

     

     

    2,388

     

     

    5.51

    %

     

    172,942

     

     

    2,626

     

     

    6.02

    %

    Total commercial

     

    6,856,648

     

     

    66,731

     

     

    3.87

    %

     

    6,679,377

     

     

    67,436

     

     

    4.06

    %

     

    6,080,896

     

     

    79,194

     

     

    5.17

    %

    Residential real estate

     

    1,387,055

     

     

    13,436

     

     

    3.85

    %

     

    1,474,495

     

     

    13,801

     

     

    3.76

    %

     

    1,644,467

     

     

    17,329

     

     

    4.18

    %

    Home equity

     

    1,107,685

     

     

    9,658

     

     

    3.47

    %

     

    1,133,034

     

     

    10,132

     

     

    3.60

    %

     

    1,142,137

     

     

    13,309

     

     

    4.62

    %

    Total consumer real estate

     

    2,494,740

     

     

    23,094

     

     

    3.68

    %

     

    2,607,529

     

     

    23,933

     

     

    3.69

    %

     

    2,786,604

     

     

    30,638

     

     

    4.36

    %

    Other consumer

     

    24,134

     

     

    515

     

     

    8.49

    %

     

    24,971

     

     

    500

     

     

    8.05

    %

     

    30,294

     

     

    627

     

     

    8.21

    %

    Total loans

     

    $

    9,375,522

     

     

    $

    90,340

     

     

    3.83

    %

     

    $

    9,311,877

     

     

    $

    91,869

     

     

    3.97

    %

     

    $

    8,897,794

     

     

    $

    110,459

     

     

    4.93

    %

    Total interest-earning assets

     

    $

    11,567,748

     

     

    $

    98,149

     

     

    3.38

    %

     

    $

    11,297,293

     

     

    $

    100,202

     

     

    3.57

    %

     

    $

    10,323,114

     

     

    $

    119,882

     

     

    4.61

    %

    Cash and due from banks

     

    124,482

     

     

     

     

     

     

    119,692

     

     

     

     

     

     

    121,515

     

     

     

     

     

    Federal Home Loan Bank stock

     

    15,090

     

     

     

     

     

     

    23,175

     

     

     

     

     

     

    15,781

     

     

     

     

     

    Other assets

     

    1,313,194

     

     

     

     

     

     

    1,287,620

     

     

     

     

     

     

    1,119,388

     

     

     

     

     

    Total assets

     

    $

    13,020,514

     

     

     

     

     

     

    $

    12,727,780

     

     

     

     

     

     

    $

    11,579,798

     

     

     

     

     

    Interest-bearing liabilities

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Deposits

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Savings and interest
    checking accounts

     

    $

    3,836,488

     

     

    $

    838

     

     

    0.09

    %

     

    $

    3,679,729

     

     

    $

    1,101

     

     

    0.12

    %

     

    $

    3,157,870

     

     

    $

    2,120

     

     

    0.27

    %

    Money market

     

    2,087,822

     

     

    945

     

     

    0.18

    %

     

    1,972,986

     

     

    1,377

     

     

    0.28

    %

     

    1,942,932

     

     

    4,220

     

     

    0.86

    %

    Time deposits

     

    1,076,546

     

     

    3,649

     

     

    1.35

    %

     

    1,186,189

     

     

    4,549

     

     

    1.54

    %

     

    1,471,749

     

     

    5,506

     

     

    1.48

    %

    Total interest-bearing deposits

     

    $

    7,000,856

     

     

    $

    5,432

     

     

    0.31

    %

     

    $

    6,838,904

     

     

    $

    7,027

     

     

    0.41

    %

     

    $

    6,572,551

     

     

    $

    11,846

     

     

    0.72

    %

    Borrowings

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Federal Home Loan Bank borrowings

     

    145,766

     

     

    408

     

     

    1.11

    %

     

    339,393

     

     

    433

     

     

    0.51

    %

     

    156,054

     

     

    945

     

     

    2.40

    %

    Long-term borrowings

     

    37,439

     

     

    141

     

     

    1.50

    %

     

    71,629

     

     

    343

     

     

    1.93

    %

     

    74,885

     

     

    684

     

     

    3.62

    %

    Junior subordinated debentures

     

    62,850

     

     

    438

     

     

    2.77

    %

     

    62,849

     

     

    446

     

     

    2.85

    %

     

    62,848

     

     

    506

     

     

    3.19

    %

    Subordinated debentures

     

    49,659

     

     

    617

     

     

    4.94

    %

     

    49,635

     

     

    618

     

     

    5.01

    %

     

    84,319

     

     

    1,045

     

     

    4.92

    %

    Total borrowings

     

    $

    295,714

     

     

    $

    1,604

     

     

    2.16

    %

     

    $

    523,506

     

     

    $

    1,840

     

     

    1.41

    %

     

    $

    378,106

     

     

    $

    3,180

     

     

    3.34

    %

    Total interest-bearing liabilities

     

    $

    7,296,570

     

     

    $

    7,036

     

     

    0.38

    %

     

    $

    7,362,410

     

     

    $

    8,867

     

     

    0.48

    %

     

    $

    6,950,657

     

     

    $

    15,026

     

     

    0.86

    %

    Noninterest-bearing demand deposits

     

    3,700,902

     

     

     

     

     

     

    3,371,262

     

     

     

     

     

     

    2,753,596

     

     

     

     

     

    Other liabilities

     

    332,937

     

     

     

     

     

     

    315,979

     

     

     

     

     

     

    207,924

     

     

     

     

     

    Total liabilities

     

    $

    11,330,409

     

     

     

     

     

     

    $

    11,049,651

     

     

     

     

     

     

    $

    9,912,177

     

     

     

     

     

    Stockholders' equity

     

    1,690,105

     

     

     

     

     

     

    1,678,129

     

     

     

     

     

     

    1,667,621

     

     

     

     

     

    Total liabilities and
    stockholders' equity

     

    $

    13,020,514

     

     

     

     

     

     

    $

    12,727,780

     

     

     

     

     

     

    $

    11,579,798

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Net interest income

     

     

     

    $

    91,113

     

     

     

     

     

     

    $

    91,335

     

     

     

     

     

     

    $

    104,856

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Interest rate spread (2)

     

     

     

     

     

    3.00

    %

     

     

     

     

     

    3.09

    %

     

     

     

     

     

    3.75

    %

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Net interest margin (3)

     

     

     

     

     

    3.13

    %

     

     

     

     

     

    3.25

    %

     

     

     

     

     

    4.03

    %

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Supplemental Information

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total deposits, including
    demand deposits

     

    $

    10,701,758

     

     

    $

    5,432

     

     

     

     

    $

    10,210,166

     

     

    $

    7,027

     

     

     

     

    $

    9,326,147

     

     

    $

    11,846

     

     

     

    Cost of total deposits

     

     

     

     

     

    0.20

    %

     

     

     

     

     

    0.28

    %

     

     

     

     

     

    0.50

    %

    Total funding liabilities,
    including demand deposits

     

    $

    10,997,472

     

     

    $

    7,036

     

     

     

     

    $

    10,733,672

     

     

    $

    8,867

     

     

     

     

    $

    9,704,253

     

     

    $

    15,026

     

     

     

    Cost of total funding liabilities

     

     

     

     

     

    0.25

    %

     

     

     

     

     

    0.33

    %

     

     

     

     

     

    0.61

    %

    (1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $230,000, $237,000, and $258,000 for the three months ended September 30, 2020, June 30, 2020, and September 30, 2019, respectively, determined by applying the Company's marginal tax rates in effect during each respective quarter.
    (2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
    (3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

     

     

    Nine Months Ended

     

     

    September 30, 2020

     

    September 30, 2019

     

     

     

     

    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

     

    $

    599,827

     

     

    $

    546

     

     

    0.12

    %

     

    $

    96,305

     

     

    $

    1,753

     

     

    2.43

    %

    Securities

     

     

     

     

     

     

     

     

     

     

     

     

    Securities - trading

     

    2,421

     

     

     

     

    %

     

    1,820

     

     

     

     

    %

    Securities - taxable investments

     

    1,178,671

     

     

    23,006

     

     

    2.61

    %

     

    1,176,961

     

     

    24,255

     

     

    2.76

    %

    Securities - nontaxable investments (1)

     

    1,176

     

     

    34

     

     

    3.86

    %

     

    1,739

     

     

    52

     

     

    4.00

    %

    Total securities

     

    $

    1,182,268

     

     

    $

    23,040

     

     

    2.60

    %

     

    $

    1,180,520

     

     

    $

    24,307

     

     

    2.75

    %

    Loans held for sale

     

    43,150

     

     

    917

     

     

    2.84

    %

     

    40,768

     

     

    527

     

     

    1.73

    %

    Loans

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial and industrial (1)

     

    1,784,715

     

     

    52,027

     

     

    3.89

    %

     

    1,300,815

     

     

    55,674

     

     

    5.72

    %

    Commercial real estate (1)

     

    4,050,154

     

     

    129,800

     

     

    4.28

    %

     

    3,785,964

     

     

    139,229

     

     

    4.92

    %

    Commercial construction

     

    554,222

     

     

    17,341

     

     

    4.18

    %

     

    453,097

     

     

    20,037

     

     

    5.91

    %

    Small business

     

    172,575

     

     

    7,253

     

     

    5.61

    %

     

    168,280

     

     

    7,720

     

     

    6.13

    %

    Total commercial

     

    6,561,666

     

     

    206,421

     

     

    4.20

    %

     

    5,708,156

     

     

    222,660

     

     

    5.22

    %

    Residential real estate

     

    1,473,812

     

     

    41,856

     

     

    3.79

    %

     

    1,442,007

     

     

    44,351

     

     

    4.11

    %

    Home equity

     

    1,125,817

     

     

    31,617

     

     

    3.75

    %

     

    1,125,144

     

     

    38,797

     

     

    4.61

    %

    Total consumer real estate

     

    2,599,629

     

     

    73,473

     

     

    3.78

    %

     

    2,567,151

     

     

    83,148

     

     

    4.33

    %

    Other consumer

     

    25,643

     

     

    1,587

     

     

    8.27

    %

     

    25,317

     

     

    1,623

     

     

    8.57

    %

    Total loans

     

    $

    9,186,938

     

     

    $

    281,481

     

     

    4.09

    %

     

    $

    8,300,624

     

     

    $

    307,431

     

     

    4.95

    %

    Total interest-earning assets

     

    $

    11,012,183

     

     

    $

    305,984

     

     

    3.71

    %

     

    $

    9,618,217

     

     

    $

    334,018

     

     

    4.64

    %

    Cash and due from banks

     

    122,302

     

     

     

     

     

     

    117,465

     

     

     

     

     

    Federal Home Loan Bank stock

     

    17,645

     

     

     

     

     

     

    16,561

     

     

     

     

     

    Other assets

     

    1,256,074

     

     

     

     

     

     

    927,837

     

     

     

     

     

    Total assets

     

    $

    12,408,204

     

     

     

     

     

     

    $

    10,680,080

     

     

     

     

     

    Interest-bearing liabilities

     

     

     

     

     

     

     

     

     

     

     

     

    Deposits

     

     

     

     

     

     

     

     

     

     

     

     

    Savings and interest checking accounts

     

    $

    3,592,069

     

     

    $

    3,873

     

     

    0.14

    %

     

    $

    3,085,974

     

     

    $

    6,249

     

     

    0.27

    %

    Money market

     

    1,978,006

     

     

    5,495

     

     

    0.37

    %

     

    1,796,081

     

     

    11,379

     

     

    0.85

    %

    Time deposits

     

    1,202,746

     

     

    13,983

     

     

    1.55

    %

     

    1,190,950

     

     

    12,424

     

     

    1.39

    %

    Total interest-bearing deposits

     

    $

    6,772,821

     

     

    $

    23,351

     

     

    0.46

    %

     

    $

    6,073,005

     

     

    $

    30,052

     

     

    0.66

    %

    Borrowings

     

     

     

     

     

     

     

     

     

     

     

     

    Federal Home Loan Bank borrowings

     

    205,244

     

     

    1,369

     

     

    0.89

    %

     

    213,896

     

     

    4,028

     

     

    2.52

    %

    Line of Credit

     

     

     

     

     

    %

     

    3,595

     

     

    104

     

     

    3.87

    %

    Long-term borrowings

     

    61,240

     

     

    1,045

     

     

    2.28

    %

     

    51,327

     

     

    1,461

     

     

    3.81

    %

    Junior subordinated debentures

     

    62,849

     

     

    1,362

     

     

    2.89

    %

     

    69,176

     

     

    1,891

     

     

    3.65

    %

    Subordinated debentures

     

    49,635

     

     

    1,852

     

     

    4.98

    %

     

    71,242

     

     

    2,633

     

     

    4.94

    %

    Total borrowings

     

    $

    378,968

     

     

    $

    5,628

     

     

    1.98

    %

     

    $

    409,236

     

     

    $

    10,117

     

     

    3.31

    %

    Total interest-bearing liabilities

     

    $

    7,151,789

     

     

    $

    28,979

     

     

    0.54

    %

     

    $

    6,482,241

     

     

    $

    40,169

     

     

    0.83

    %

    Noninterest-bearing demand deposits

     

    3,257,058

     

     

     

     

     

     

    2,572,357

     

     

     

     

     

    Other liabilities

     

    300,248

     

     

     

     

     

     

    164,783

     

     

     

     

     

    Total liabilities

     

    $

    10,709,095

     

     

     

     

     

     

    $

    9,219,381

     

     

     

     

     

    Stockholders' equity

     

    1,699,109

     

     

     

     

     

     

    1,460,699

     

     

     

     

     

    Total liabilities and stockholders' equity

     

    $

    12,408,204

     

     

     

     

     

     

    $

    10,680,080

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Net interest income

     

     

     

    $

    277,005

     

     

     

     

     

     

    $

    293,849

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Interest rate spread (2)

     

     

     

     

     

    3.17

    %

     

     

     

     

     

    3.81

    %

     

     

     

     

     

     

     

     

     

     

     

     

     

    Net interest margin (3)

     

     

     

     

     

    3.36

    %

     

     

     

     

     

    4.08

    %

     

     

     

     

     

     

     

     

     

     

     

     

     

    Supplemental Information

     

     

     

     

     

     

     

     

     

     

     

     

    Total deposits, including demand deposits

     

    $

    10,029,879

     

     

    $

    23,351

     

     

     

     

    $

    8,645,362

     

     

    $

    30,052

     

     

     

    Cost of total deposits

     

     

     

     

     

    0.31

    %

     

     

     

     

     

    0.46

    %

    Total funding liabilities, including demand deposits

     

    $

    10,408,847

     

     

    $

    28,979

     

     

     

     

    $

    9,054,598

     

     

    $

    40,169

     

     

     

    Cost of total funding liabilities

     

     

     

     

     

    0.37

    %

     

     

     

     

     

    0.59

    %

    (1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $720,000 and $707,000 for the nine months ended September 30, 2020 and 2019, respectively.
    (2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
    (3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

    APPENDIX A: NON-GAAP Reconciliation of Capital Metrics

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

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

     

     

    September 30
    2020

     

    June 30
    2020

     

    September 30
    2019

     

    Tangible common equity

     

    (Dollars in thousands, except per share data)

     

    Stockholders' equity (GAAP)

     

    $

    1,689,724

     

     

    $

    1,671,692

     

     

    $

    1,682,324

     

    (a)

    Less: Goodwill and other intangibles

     

    530,749

     

     

    532,202

     

     

    535,869

     

     

    Tangible common equity

     

    $

    1,158,975

     

     

    $

    1,139,490

     

     

    $

    1,146,455

     

    (b)

    Tangible assets

     

     

     

     

     

     

     

    Assets (GAAP)

     

    $

    13,173,665

     

     

    $

    13,022,500

     

     

    $

    11,538,639

     

    (c)

    Less: Goodwill and other intangibles

     

    530,749

     

     

    532,202

     

     

    535,869

     

     

    Tangible assets

     

    $

    12,642,916

     

     

    $

    12,490,298

     

     

    $

    11,002,770

     

    (d)

     

     

     

     

     

     

     

     

    Common Shares

     

    32,955,547

     

     

    32,942,110

     

     

    34,366,781

     

    (e)

     

     

     

     

     

     

     

     

    Common equity to assets ratio (GAAP)

     

    12.83

    %

     

    12.84

    %

     

    14.58

    %

    (a/c)

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

     

    9.17

    %

     

    9.12

    %

     

    10.42

    %

    (b/d)

    Book value per share (GAAP)

     

    $

    51.27

     

     

    $

    50.75

     

     

    $

    48.95

     

    (a/e)

    Tangible book value per share (Non-GAAP)

     

    $

    35.17

     

     

    $

    34.59

     

     

    $

    33.36

     

    (b/e)

    APPENDIX B: Non-GAAP Reconciliation of Earnings Metrics

    (Unaudited, dollars in thousands)

    The following table summarizes the impact of noncore items on the Company's calculation of noninterest income and noninterest expense, as well as the impact of noncore items on noninterest income as a percentage of total revenue and the efficiency ratio for the periods indicated:

     

    Three Months Ended

     

    Nine Months Ended

     

     

    September 30
    2020

     

    June 30
    2020

     

    September 30
    2019

     

    September 30
    2020

     

    September 30
    2019

     

    Net interest income (GAAP)

    $

    90,883

     

     

    $

    91,098

     

     

    $

    104,598

     

     

    $

    276,285

     

     

    $

    293,142

     

    (a)

     

     

     

     

     

     

     

     

     

     

     

    Noninterest income (GAAP)

    $

    29,347

     

     

    $

    28,190

     

     

    $

    31,816

     

     

    $

    83,972

     

     

    $

    81,997

     

    (b)

    Less:

     

     

     

     

     

     

     

     

     

     

    Gain on sale of loans

     

     

     

     

    951

     

     

     

     

    951

     

     

    Noninterest income on an operating
    basis (Non-GAAP)

    $

    29,347

     

     

    $

    28,190

     

     

    $

    30,865

     

     

    $

    83,972

     

     

    $

    81,046

     

    (c)

     

     

     

     

     

     

     

     

     

     

     

    Noninterest expense (GAAP)

    $

    66,658

     

     

    $

    66,607

     

     

    $

    67,533

     

     

    $

    200,105

     

     

    $

    216,876

     

    (d)

    Less:

     

     

     

     

     

     

     

     

     

     

    Merger and acquisition expense

     

     

     

     

    705

     

     

     

     

    26,433

     

     

    Loss on termination of derivatives

    684

     

     

     

     

     

     

    684

     

     

     

     

    Noninterest expense on an
    operating basis (Non-GAAP)

    $

    65,974

     

     

    $

    66,607

     

     

    $

    66,828

     

     

    $

    199,421

     

     

    $

    190,443

     

    (e)

     

     

     

     

     

     

     

     

     

     

     

    Total revenue (GAAP)

    $

    120,230

     

     

    $

    119,288

     

     

    $

    136,414

     

     

    $

    360,257

     

     

    $

    375,139

     

    (a+b)

    Total operating revenue (Non-GAAP)

    $

    120,230

     

     

    $

    119,288

     

     

    $

    135,463

     

     

    $

    360,257

     

     

    $

    374,188

     

    (a+c)

     

     

     

     

     

     

     

     

     

     

     

    Ratios

     

     

     

     

     

     

     

     

     

     

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

    24.41

    %

     

    23.63

    %

     

    23.32

    %

     

    23.31

    %

     

    21.86

    %

    (b/(a+b))

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

    24.41

    %

     

    23.63

    %

     

    22.78

    %

     

    23.31

    %

     

    21.66

    %

    (c/(a+c))

    Efficiency ratio (GAAP based)

    55.44

    %

     

    55.84

    %

     

    49.51

    %

     

    55.55

    %

     

    57.81

    %

    (d/(a+b))

    Efficiency ratio on an operating
    basis (Non-GAAP)

    54.87

    %

     

    55.84

    %

     

    49.33

    %

     

    55.36

    %

     

    50.90

    %

    (e/(a+c))

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

     

    2020

     

    Q3

     

    Q2

     

    Q1

     

    Volume

    Interest

    Margin
    Impact

     

    Volume

    Interest

    Margin
    Impact

     

    Volume

    Interest

    Margin
    Impact

     

    (Dollars in thousands)

    Reported Total (GAAP)

    $

    11,567,747

     

    $

    91,112

     

    3.13

    %

     

    $

    11,297,293

     

    $

    91,335

     

    3.25

    %

     

    $

    10,165,408

     

    $

    94,558

     

    3.74

    %

    Adjustments

     

     

     

     

     

     

     

     

     

     

     

    PPP Volume @ 1%

    (806,584)

     

    (2,060)

     

    0.16

    %

     

    (581,351)

     

    (1,474)

     

    0.12

    %

     

     

     

    %

    PPP Fee amortization

     

    (3,172)

     

    (0.11)

    %

     

     

    (2,247)

     

    (0.08)

    %

     

     

     

    %

    Cash Position (vs $100M)

    (897,921)

     

    (229)

     

    0.26

    %

     

    (624,634)

     

    (106)

     

    0.19

    %

     

    27,448

     

    (135)

     

    (0.01)

    %

    Adjusted Margin

     

     

    3.44

    %

     

     

     

    3.48

    %

     

     

     

    3.73

    %

    Acquired loan accretion

     

    (2,700)

     

    (0.09)

    %

     

     

    (1,660)

     

    (0.06)

    %

     

     

    (866)

     

    (0.03)

    %

    CD fair value
    mark amortization

     

    (26)

     

    %

     

     

    (149)

     

    (0.01)

    %

     

     

    (210)

     

    (0.01)

    %

    Other

     

    (561)

     

    (0.02)

    %

     

     

    (477)

     

    (0.01)

    %

     

     

    (396)

     

    (0.02)

    %

    Core Margin
    (Non-GAAP)

     

     

    3.33

    %

     

     

     

    3.40

    %

     

     

     

    3.67

    %

     

     

     

     

     

     

     

     

     

     

     

     

    Core Margin Compression

    (0.07)

    %

     

     

     

    (0.27)

    %

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Cash

     

     

    %

     

     

     

    %

     

     

     

     

    Securities

     

     

    (0.02)

    %

     

     

     

    %

     

     

     

     

    Loans: rate compression

     

    (0.08)

    %

     

     

     

    (0.43)

    %

     

     

     

     

    Loans: nonaccrual interest reversal

     

    (0.05)

    %

     

     

     

    (0.01)

    %

     

     

     

     

    Deposits

     

     

    0.07

    %

     

     

     

    0.15

    %

     

     

     

     

    Borrowings

     

     

    0.01

    %

     

     

     

    0.02

    %

     

     

     

     

     

     

     

    (0.07)

    %

     

     

     

    (0.27)

    %

     

     

     

     

    APPENDIX D: Current Expected Credit Loss ("CECL")

    The following table shows the allowance by category for the periods indicated:

     

    September 30
    2020

    June 30
    2020

    March 31
    2020

    January 1
    2020

     

    December 31
    2019

     

    CECL Methodology

     

    Incurred Loss
    Methodology

     

    (Dollars in thousands)

    Commercial and industrial

    $

    28,219

     

    $

    25,662

     

    $

    21,649

     

    $

    15,659

     

     

    $

    17,594

     

    Commercial real estate

    39,386

     

    36,956

     

    29,498

     

    20,224

     

     

    32,935

     

    Commercial construction

    5,210

     

    4,501

     

    3,747

     

    2,401

     

     

    6,053

     

    Small business

    4,593

     

    4,561

     

    3,829

     

    2,241

     

     

    1,746

     

    Residential real estate

    14,163

     

    15,046

     

    14,847

     

    13,691

     

     

    3,440

     

    Home equity

    23,572

     

    24,860

     

    17,910

     

    12,907

     

     

    5,576

     

    Other consumer

    482

     

    590

     

    896

     

    637

     

     

    396

     

    Total allowance for credit losses

    $

    115,625

     

    $

    112,176

     

    $

    92,376

     

    $

    67,760

     

     

    $

    67,740

     

     

     

     

     

     

     

     

    Total Loans (GAAP)

    $

    9,405,193

     

    $

    9,359,648

     

    $

    8,916,430

     

    $

    8,873,639

     

     

    $

    8,873,639

     

    Total Loans, excluding PPP (Non-GAAP)

    $

    8,593,470

     

    $

    8,566,665

     

    $

    8,916,430

     

    $

    8,873,639

     

     

    $

    8,873,639

     

     

     

     

     

     

     

     

    Allowance as a % of total loans (GAAP)

    1.23

    %

    1.20

    %

    1.04

    %

    0.76

    %

     

    0.76

    %

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

    1.35

    %

    1.31

    %

    1.04

    %

    0.76

    %

     

    0.76

    %

     

     

     

     

     

     

     

    APPENDIX E: Commercial Loan Portfolio Characteristics

    Commercial Industries Highly Impacted by COVID-19 Pandemic

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

    The table below provides total outstanding balances of commercial loans as of September 30, 2020, within industries that are deemed to be highly impacted by the COVID-19 pandemic:

    Highly Impacted COVID-19 Industries - Balances

     

     

    September 30, 2020 (1)

     

    (Dollars in thousands)

    Accommodations

    $

    420,099

     

    Food Services

    154,846

     

    Retail Trade

    493,270

     

    Other Services (except Public Administration)

    147,984

     

    Arts, Entertainment, and Recreation

    97,962

     

    Total

    $

    1,314,161

     

    (1) Amounts presented above exclude $182.3 million of processed PPP loans.

    Highly Impacted COVID-19 Industries - Details

     

    September 30, 2020

     

    (Dollars in thousands)

    Accommodations

     

    Balance

    $

    420,099

     

    Average borrower loan size

    $

    4,194

     

    % secured by real estate

    99.7

    %

    Weighted average loan to value

    52.2

    %

    Other information:

     

    – The accommodation portfolio consists of 71 properties representing a combination of flagged (61%) and non-flagged
    (39%) hotels, motels and inns.

    – Properties deemed to be located in areas of leisure comprise $169.8 million, or 41% of the total accommodation portfolio.

    – Approximately 90% of the balances outstanding are secured by properties located within the six New England states
    with the largest concentration in Massachusetts (60%).

     

     

    Food Services

     

    Balance

    $

    154,846

     

    Average borrower loan size

    $

    417

     

    % secured by real estate

    61.5

    %

    Weighted average loan to value

    50.3

    %

    Other information:

     

    – The food services portfolio includes full-service restaurants (65%), limited service restaurants and fast food (33%),
    and other types of food service (caterers, bars, mobile food service 2%).

     

     

     

     

    Retail Trade

     

    Balance

    $

    493,270

     

    Average borrower loan size

    $

    485

     

    % secured by real estate

    43.8

    %

    Weighted average loan to value

    55.4

    %

    Other information:

     

    – The retail trade portfolio consists broadly of food and beverage stores (42%), motor vehicle and parts dealers
    (26%), gasoline stations (14%), and all other retailers account for (18%).

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

     

     

    Other Services (except Public Administration)

     

    Balance

    $

    147,984

     

    Average borrower loan size

    $

    258

     

    % secured by real estate

    51.2

    %

    Weighted average loan to value

    48.4

    %

    Other information:

     

    – The other services portfolio consists of various for-profit and not-for-profit services diversified across religious, civic
    and social service organizations (42%), repair and maintenance business (30%) and personal services, including car
    washes, beauty salons, laundry services, funeral homes, pet care and other types of services (28%).

     

     

    Arts, Entertainment, and Recreation

     

    Balance

    $

    97,962

     

    Average borrower loan size

    $

    769

     

    % secured by real estate

    83.8

    %

    Weighted average loan to value

    50.8

    %

    Other information:

     

    – Amusement, gambling and recreational industries make up a majority of this category (95%) and include
    amusement/theme parks, bowling centers, fitness centers, golf courses, marinas, and other recreational industries.
    Other industries including museums, performing arts, and spectator sports account for the remaining outstanding
    balances (5%).

     

     

    Other Commercial Loan Portfolio Characteristics

    Average total loan size varies across the commercial portfolio with commercial real estate loans having an average size of $1.1 million, commercial and industrial loans have an average loan size of $142,000 and small business loans, which are all under $5.0 million, have an average loan size of $31,000. Additional details below are provided regarding loan sizes of the commercial real estate and commercial and industrial portfolios as of September 30, 2020:

    Commercial Real Estate (Including Construction)

     

    <$5M

     

    $5-10M

     

    $10-20M

     

    >$20M

     

    Total

    Dollar Amount (in '000s)

    $

    2,580,215

     

     

    $

    876,906

     

     

    $

    847,254

     

     

    $

    394,423

     

     

    $

    4,698,798

     

    # of loans

    4,031

     

     

    124

     

     

    60

     

     

    16

     

     

    4,231

     

    Commercial and Industrial (Including PPP)

     

    <$5M

     

    $5-10M

     

    $10-20M

     

    >$20M

     

    Total

    Dollar Amount (in '000s)

    $

    1,468,905

     

     

    $

    286,560

     

     

    $

    243,257

     

     

    $

    63,623

     

     

    $

    2,062,345

     

    # of loans

    14,454

     

     

    45

     

     

    18

     

     

    3

     

     

    14,520

     

    APPENDIX F: COVID-19 Related Modifications Details

    Deferrals by Modification Type

     

    Deferral of
    Principal
    and
    Interest

     

    Deferral
    of
    Principal
    Only

     

    Deferral of
    Interest
    Only

     

    Total
    Deferrals

     

    Total
    Portfolio

     

    % Deferral

     

     

     

     

     

    (Dollars in thousands)

     

     

     

     

    Commercial and industrial

    $

    5,658

     

     

    $

    33,032

     

     

    $

    582

     

     

    $

    39,272

     

     

    $

    2,062,345

     

     

    1.9

    %

    Commercial real estate (1)

    230,873

     

     

    228,521

     

     

    26,561

     

     

    485,955

     

     

    4,698,798

     

     

    10.3

    %

    Business Banking

    1,047

     

     

    4,339

     

     

    236

     

     

    5,622

     

     

    167,632

     

     

    3.4

    %

    Residential real estate

    37,173

     

     

    2,515

     

     

     

     

    39,688

     

     

    1,352,305

     

     

    2.9

    %

    Home equity

    6,667

     

     

     

     

    6,482

     

     

    13,149

     

     

    1,101,054

     

     

    1.2

    %

    Consumer

    94

     

     

     

     

     

     

    94

     

     

    23,059

     

     

    0.4

    %

    Total active deferrals as of September
    30, 2020

    $

    281,512

     

     

    $

    268,407

     

     

    $

    33,861

     

     

    $

    583,780

     

     

    $

    9,405,193

     

     

    6.2

    %

    (1) Balances include commercial construction deferrals.

    Deferrals by Industry

     

    September 30, 2020

     

    (Dollars in thousands)

    Highly Impacted Industries

     

    Accommodation

    $

    209,288

     

    Food Services

    26,679

     

    Retail Trade

    9,649

     

    Other Services (except Public Administration)

    17,928

     

    Arts, Entertainment, and Recreation

    37,703

     

    Total Highly Impacted Industries

    301,247

     

     

     

    Other Industries

     

    Real Estate and Leasing

    175,270

     

    Health Care and Social Assistance

    21,503

     

    Transportation and Warehousing

    13,679

     

    Educational Services

    665

     

    All Other Industries

    19,218

     

    Total Other Industries

    230,335

     

     

     

    Consumer (residential, home equity and other)

    52,198

     

    Grand Total

    $

    583,780

     

     



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