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Independent Bank Corp. Reports First Quarter Net Income of $41.7 Million

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First quarter performance represents growth over prior period results

Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2021 first quarter net income of $41.7 million, or $1.26 per diluted share, compared to net income of $34.6 million, or $1.05 per diluted share, reported for the fourth quarter of 2020. First quarter results were positively impacted by a release of provision for loan loss in the amount of $2.5 million as well as elevated interest income from forgiven Paycheck Protection Program ("PPP") loans, while fourth quarter 2020 results were negatively impacted by approximately $5.2 million in pre-tax expenses attributable to branch closing decisions and sale of investments that did not affect first quarter results.

In a separate news release today the Company announced an agreement to acquire Meridian Bancorp Inc., and its subsidiary East Boston Savings Bank, with $5.3 billion in loans and $5.1 billion in deposits as of March 31, 2021.

"We enjoyed solid performance in the first quarter and we remain optimistic about the opportunities ahead of us. As we lap a full year of the pandemic, we have come to appreciate more than ever the importance of relationships with one another, with our customers, and with our communities. My colleagues inspire me with their incredible dedication and their discretionary effort," said Christopher Oddleifson, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. "Throughout the pandemic and beyond, we have seen firsthand what we can achieve when we are aligned together in our shared vision of being the Bank Where Each Relationship Matters®."

BALANCE SHEET

Total assets of $13.8 billion at March 31, 2021 increased by $569.6 million, or 4.3%, from the prior quarter, and by $1.8 billion, or 15.0%, as compared to the year ago period, as government funded stimulus continued to fuel significant deposit and liquid asset growth.

Total loans at March 31, 2021 decreased by $146.2 million, or 1.6% (6.3% annualized), when compared to the prior quarter. Despite strong origination volumes and loan pipelines across all products, overall portfolio growth continued to be constrained by ongoing paydowns and re-financing activity. Exclusive of PPP activity, total commercial loans decreased 1.70% during the first quarter, primarily reflecting a slowdown in new construction financing and notably lower line utilization levels within the commercial and industrial ("C&I") portfolio, while commercial real estate balances remained relatively stable. Within C&I, PPP loan originations from the new 2021 program of $340.0 million outpaced PPP loan payoffs of $285.6 million on the prior year balances, resulting in a net PPP loan balance increase of $54.4 million for the first quarter of 2021 as compared to the fourth quarter of 2020. Within the consumer portfolios, the majority of mortgage production continued to be sold in the secondary market, while the low interest-rate environment and excess consumer liquidity position continued to drive elevated payoff activity along with low home equity line utilization, resulting in reductions of 4.2% and 3.8% within the mortgage and home equity portfolios, respectively.

Deposit balances of $11.6 billion at March 31, 2021 increased by $600.4 million, or 5.5% (22.1% annualized), from the prior quarter, as a combination of government stimulus payments and loan fundings under the second round of the PPP fueled significant growth during the quarter. With continued reduction in time deposit balances, core deposits rose to 90.9% of total deposits at March 31, 2021, which, combined with further rate reductions across all products, has led to a total cost of deposits for the first quarter of 0.10%, representing a reduction of four basis points when compared to the prior quarter.

The securities portfolio increased by $269.1 million, or 23.2%, when compared to the prior quarter, reflecting a direct strategy to deploy a portion of excess cash balances into securities with a significantly improved return profile given the recent changes in the yield curve, with $373.4 million of purchases offset by paydowns, calls, and maturities.

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

Stockholders' equity at March 31, 2021 increased slightly by 0.7% (3.0% annualized), as compared to the prior quarter, reflecting continued strong earnings retention. Book value per share increased by $0.29, or 0.6%, to $51.94 during the first quarter as compared to the prior quarter. The Company's ratio of common equity to assets of 12.45% decreased by 44 basis points from the prior quarter and decreased by 157 basis points from the year ago period. The Company's tangible book value per share at March 31, 2021 rose by $0.37, or 1.0%, from the prior quarter to $35.96, representing an increase of 4.4% from the year ago period. The Company's ratio of tangible common equity to tangible assets of 8.96% at March 31, 2021 is 30 basis points below the prior quarter and 105 basis points below the year ago period. Please refer to Appendix A for detailed reconciliation from GAAP to Non-GAAP financial measures.

NET INTEREST INCOME

Net interest income for the first quarter increased to $95.6 million compared to $91.4 million for the prior quarter, driven primarily by increased PPP fee recognition of $5.8 million for the quarter. The 2021 first quarter net interest margin rose by 15 basis points from the prior quarter to 3.25%. The table below illustrates the changes within the net interest margin for the first quarter:

Net interest margin as of December 31, 2020

3.10

%

Excess liquidity (cash) levels

(0.03)

%

Securities

(0.05)

%

Loan yields

(0.02)

%

Nonaccrual interest impact, net

(0.03)

%

PPP loan impact

0.20

%

Loan purchase accounting (fair value mark amortization/accretion)

0.03

%

Decreased cost of funds

0.05

%

Net interest margin as of March 31, 2021

3.25

%

Please refer to Appendix B for additional details regarding the net interest margin, including a quarter-to-date reconciliation of adjusted core margin to GAAP net interest margin.

NONINTEREST INCOME

Noninterest income of $25.2 million for the first quarter of 2021 was $2.2 million, or 8.1%, lower than the prior quarter. Significant changes in noninterest income for the first quarter compared to the prior quarter included the following:

  • Deposit account fees decreased by $310,000, or 8.0%, primarily driven by seasonal decreases in overdraft fees.

  • Interchange and ATM fees increased by $40,000, or 1.5%, due primarily to increased volume during the first quarter.

  • Investment management income increased by $568,000, or 7.3%, due primarily to an increase in assets under administration as well as strong sales in retail channels. Assets under administration increased by 4.8% from the prior quarter to a record high $5.2 billion as of March 31, 2021.

  • Mortgage banking income grew by $362,000, or 6.7%, primarily attributable to the recovery of mortgage servicing asset impairment and continued robust loan volumes.

  • Loan level derivative income decreased by $1.0 million, or 84.8%, due primarily to decreased customer demand.

  • Other noninterest income decreased by $1.7 million, or 34.9%, primarily attributable to reduced income from equity securities, equipment rental income, Section 1031 exchange fees, and derivative valuations.

NONINTEREST EXPENSE

Noninterest expense of $69.7 million for the first quarter of 2021 was $4.0 million, or 5.5% lower than the prior quarter. Significant changes in noninterest expense for the first quarter compared to the prior quarter included the following:

  • Salaries and employee benefits increased by $456,000, or 1.2%, mainly due to seasonal increases in payroll taxes, medical and dental plan insurance costs and commissions. These increases were offset partially by decreases in incentive compensation expenses.

  • During the prior quarter, the Company recorded an impairment charge of $4.2 million, reflecting accelerated lease termination costs and the write-off of leasehold improvements related to two branch closure decisions. No such charges were incurred during the first quarter of 2021.

  • During the prior quarter, the Company recognized a loss of $1.0 million on the sale of certain Small Business Investment Company ("SBIC") investment holdings. No such losses were incurred during the first quarter of 2021.

  • Other noninterest expense increased by $460,000, or 2.7%, primarily due to increases in consultant fees, contactless card issuance costs and loan workout costs, which were partially offset by decreases in the reserve for unfunded commitments and advertising.

The Company generated a return on average assets and a return on average common equity of 1.26% and 9.87%, respectively, for the first quarter of 2021, as compared to 1.04% and 8.10%, respectively, for the prior quarter.

The tax rate of 22.3% for the quarter included $1.4 million of discrete tax benefits related primarily to low income housing tax credits and equity compensation. Excluding these discrete benefits, the tax rate would have been approximately 24.8%.

ASSET QUALITY

During the first quarter, the Company recorded total net charge-offs of $3.3 million, or 0.15% of average loans on an annualized basis. Nonperforming loans decreased by 11.5% to $59.2 million, or 0.64% of total loans, at March 31, 2021, as compared to $66.9 million, or 0.71% of total loans, at December 31, 2020.

In addition, total loans subject to a payment deferral increased by $47.0 million during the first quarter. This increase primarily reflects the execution of loans that were in process of a deferral renewal as of December 31, 2020. Total loans subject to payment deferral at March 31, 2021 were $220.6 million, or 2.4% of total loans. The majority of the loans subject to a payment deferral continued to be characterized as current loans. As such, delinquency as a percentage of total loans was 0.12% as of March 31, 2021, representing a decrease of eleven basis points from the prior quarter. Please refer to Appendix D for additional details regarding loans whose terms have been modified as a result of the COVID-19 pandemic.

The Company recorded credit reserve releases of $2.5 million during the first quarter of 2021, reflecting improvements in asset quality metrics and overall macro-economic assumptions, along with lower loan levels. The allowance for credit losses on loans was $107.5 million at March 31, 2021, or 1.16% of total loans, as compared to $113.4 million at December 31, 2020, or 1.21% of total loans. The allowance for credit losses as a percentage of total loans, excluding PPP loans, was 1.28% and 1.32% at March 31, 2021 and December 31, 2020, respectively. Please refer to Appendix C for information regarding loan exposures within industries deemed highly impacted by the COVID-19 pandemic.

CONFERENCE CALL INFORMATION

Christopher Oddleifson, Chief Executive Officer, Robert Cozzone, Chief Operating Officer, Mark Ruggiero, Chief Financial Officer, and Gerard Nadeau, President and Chief Commercial Banking Officer will host a conference call to discuss first quarter earnings at 10:30 a.m. Eastern Time on Friday, April 23, 2021. Internet access to the call is available on the Company’s website at www.RocklandTrust.com or via telephonic access by dial-in at 1-888-336-7153 reference: INDB. A replay of the call will be available by calling 1-877-344-7529, Replay Conference Number: 10152332 and will be available through May 7, 2021. Additionally, a webcast replay will be available until April 23, 2022.

ABOUT INDEPENDENT BANK CORP.

Independent Bank Corp. (NASDAQ Global Select Market: INDB) is the holding company for Rockland Trust Company, a full-service commercial bank headquartered in Massachusetts. Rockland Trust was named to The Boston Globe's "Top Places to Work" 2020 list, an honor earned for the 12th consecutive year. In 2020, Rockland Trust was ranked the #1 Bank in Massachusetts according to Forbes World's Best Banks list. Rockland Trust has a longstanding commitment to equity and inclusion. This commitment is underscored by initiatives such as Diversity and Inclusion leadership training, a colleague Allyship mentoring program, numerous Employee Resource Groups focused on providing colleague support and education, reinforcing a culture of mutual respect and advancing professional development, and Rockland Trust’s sponsorship of diverse community organizations through charitable giving and employee-based volunteerism. 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, Cape Cod and Islands, Worcester County, and Rhode Island. Rockland Trust also offers a full suite of mobile, online, and telephone banking services. Rockland Trust is an FDIC member and an Equal Housing Lender. To find out why Rockland Trust is the bank "Where Each Relationship Matters®," please visit RocklandTrust.com.

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

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

  • further weakening in the United States economy in general and the regional and local economies within the New England region and the Company’s market area, including future weakening caused by the COVID-19 pandemic;

  • the length and extent of economic contraction as a result of the COVID-19 pandemic;

  • unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, pandemics or other external events;

  • adverse changes or volatility in the local real estate market;

  • adverse changes in asset quality and any unanticipated credit deterioration in our loan portfolio including those related to one or more large commercial relationships;

  • acquisitions may not produce results at levels or within time frames originally anticipated and may result in unforeseen integration issues or impairment of goodwill and/or other intangibles;

  • additional regulatory oversight and related compliance costs, including the additional costs associated with the Company's increase in assets to over $10 billion;

  • changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System;

  • higher than expected tax expense, resulting from failure to comply with general tax laws, 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 core net margin, tangible book value per share and the tangible common equity to tangible assets ratio.

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 to tangible assets 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 to tangible assets 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 core margin, tangible book value per share and the tangible common equity to tangible assets ratio, are not necessarily comparable to non-GAAP performance measures which may be presented by other companies.

Category: Earnings Releases

INDEPENDENT BANK CORP. FINANCIAL SUMMARY

CONSOLIDATED BALANCE SHEETS

(Unaudited, dollars in thousands)

% Change

% Change

March 31
2021

December 31
2020

March 31
2020

Mar 2021 vs.

Mar 2021 vs.

Dec 2020

Mar 2020

Assets

Cash and due from banks

$

126,651

$

169,460

$

125,638

(25.26)

%

0.81

%

Interest-earning deposits with banks

1,642,688

1,127,176

345,739

45.73

%

375.12

%

Securities

Trading

3,269

2,838

2,247

15.19

%

45.48

%

Equities

22,419

22,107

19,439

1.41

%

15.33

%

Available for sale

600,213

412,860

437,296

45.38

%

37.26

%

Held to maturity

805,529

724,512

777,798

11.18

%

3.57

%

Total securities

1,431,430

1,162,317

1,236,780

23.15

%

15.74

%

Loans held for sale

41,632

58,104

43,756

(28.35)

%

(4.85)

%

Loans

Commercial and industrial

2,086,671

2,103,152

1,448,224

(0.78)

%

44.08

%

Commercial real estate

4,177,617

4,173,927

4,061,347

0.09

%

2.86

%

Commercial construction

516,362

553,929

527,138

(6.78)

%

(2.04)

%

Small business

174,211

175,023

177,820

(0.46)

%

(2.03)

%

Total commercial

6,954,861

7,006,031

6,214,529

(0.73)

%

11.91

%

Residential real estate

1,241,789

1,296,183

1,528,416

(4.20)

%

(18.75)

%

Home equity - first position

610,907

633,142

656,994

(3.51)

%

(7.01)

%

Home equity - subordinate positions

417,588

435,648

489,276

(4.15)

%

(14.65)

%

Total consumer real estate

2,270,284

2,364,973

2,674,686

(4.00)

%

(15.12)

%

Other consumer

21,546

21,862

27,215

(1.45)

%

(20.83)

%

Total loans

9,246,691

9,392,866

8,916,430

(1.56)

%

3.70

%

Less: allowance for credit losses

(107,549)

(113,392)

(92,376)

(5.15)

%

16.43

%

Net loans

9,139,142

9,279,474

8,824,054

(1.51)

%

3.57

%

Federal Home Loan Bank stock

10,250

10,250

23,274

%

(55.96)

%

Bank premises and equipment, net

115,945

116,393

121,873

(0.38)

%

(4.86)

%

Goodwill

506,206

506,206

506,206

%

%

Other intangible assets

21,689

23,107

27,466

(6.14)

%

(21.03)

%

Cash surrender value of life insurance policies

241,365

200,525

197,772

20.37

%

22.04

%

Other assets

496,916

551,289

527,682

(9.86)

%

(5.83)

%

Total assets

$

13,773,914

$

13,204,301

$

11,980,240

4.31

%

14.97

%

Liabilities and Stockholders' Equity

Deposits

Noninterest-bearing demand deposits

$

4,136,259

$

3,762,306

$

2,820,312

9.94

%

46.66

%

Savings and interest checking accounts

4,242,235

4,047,332

3,428,546

4.82

%

23.73

%

Money market

2,346,985

2,232,903

1,897,632

5.11

%

23.68

%

Time certificates of deposit

868,045

950,629

1,269,708

(8.69)

%

(31.63)

%

Total deposits

11,593,524

10,993,170

9,416,198

5.46

%

23.12

%

Borrowings

Federal Home Loan Bank borrowings

35,717

35,740

358,591

(0.06)

%

(90.04)

%

Long-term borrowings, net

28,099

32,773

74,920

(14.26)

%

(62.49)

%

Junior subordinated debentures, net

62,851

62,851

62,849

%

%

Subordinated debentures, net

49,720

49,696

49,625

0.05

%

0.19

%

Total borrowings

176,387

181,060

545,985

(2.58)

%

(67.69)

%

Total deposits and borrowings

11,769,911

11,174,230

9,962,183

5.33

%

18.15

%

Other liabilities

288,632

327,386

338,401

(11.84)

%

(14.71)

%

Total liabilities

12,058,543

11,501,616

10,300,584

4.84

%

17.07

%

Stockholders' equity

Common stock

329

328

331

0.30

%

(0.60)

%

Additional paid in capital

946,002

945,638

962,513

0.04

%

(1.72)

%

Retained earnings

741,883

716,024

667,084

3.61

%

11.21

%

Accumulated other comprehensive income, net of tax

27,157

40,695

49,728

(33.27)

%

(45.39)

%

Total stockholders' equity

1,715,371

1,702,685

1,679,656

0.75

%

2.13

%

Total liabilities and stockholders' equity

$

13,773,914

$

13,204,301

$

11,980,240

4.31

%

14.97

%

CONSOLIDATED STATEMENTS OF INCOME

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

Three Months Ended

% Change

% Change

March 31
2021

December 31
2020

March 31
2020

Mar 2021 vs.

Mar 2021 vs.

Dec 2020

Mar 2020

Interest income

Interest on federal funds sold and short-term investments

$

326

$

301

$

160

8.31

%

103.75

%

Interest and dividends on securities

6,632

7,135

7,966

(7.05)

%

(16.75)

%

Interest and fees on loans

92,383

89,068

99,022

3.72

%

(6.70)

%

Interest on loans held for sale

296

301

232

(1.66)

%

27.59

%

Total interest income

99,637

96,805

107,380

2.93

%

(7.21)

%

Interest expense

Interest on deposits

2,711

3,982

10,892

(31.92)

%

(75.11)

%

Interest on borrowings

1,342

1,380

2,184

(2.75)

%

(38.55)

%

Total interest expense

4,053

5,362

13,076

(24.41)

%

(69.00)

%

Net interest income

95,584

91,443

94,304

4.53

%

1.36

%

Provision for credit losses

(2,500)

25,000

(100.00%)

(110.00)

%

Net interest income after provision for credit losses

98,084

91,443

69,304

7.26

%

41.53

%

Noninterest income

Deposit account fees

3,584

3,894

4,970

(7.96)

%

(27.89)

%

Interchange and ATM fees

2,720

2,680

4,896

1.49

%

(44.44)

%

Investment management

8,304

7,736

6,829

7.34

%

21.60

%

Mortgage banking income

5,740

5,378

861

6.73

%

566.67

%

Increase in cash surrender value of life insurance policies

1,323

1,460

1,276

(9.38)

%

3.68

%

Gain on life insurance benefits

258

352

357

(26.70)

%

(27.73)

%

Loan level derivative income

173

1,140

3,597

(84.82)

%

(95.19)

%

Other noninterest income

3,144

4,828

3,649

(34.88)

%

(13.84)

%

Total noninterest income

25,246

27,468

26,435

(8.09)

%

(4.50)

%

Noninterest expenses

Salaries and employee benefits

39,889

39,433

37,349

1.16

%

6.80

%

Occupancy and equipment expenses

9,273

9,187

9,317

0.94

%

(0.47)

%

Data processing and facilities management

1,665

1,581

1,658

5.31

%

0.42

%

FDIC assessment

1,050

985

6.60

%

100.00%

Lease impairment

4,163

(100.00)

%

n/a

Loss on sale of other equity investments

1,033

(100.00)

%

n/a

Other noninterest expenses

17,805

17,345

18,516

2.65

%

(3.84)

%

Total noninterest expenses

69,682

73,727

66,840

(5.49)

%

4.25

%

Income before income taxes

53,648

45,184

28,899

18.73

%

85.64

%

Provision for income taxes

11,937

10,543

2,148

13.22

%

455.73

%

Net Income

$

41,711

$

34,641

$

26,751

20.41

%

55.92

%

Weighted average common shares (basic)

32,995,332

32,964,090

34,184,431

Common share equivalents

30,098

26,348

36,827

Weighted average common shares (diluted)

33,025,430

32,990,438

34,221,258

Basic earnings per share

$

1.26

$

1.05

$

0.78

20.00

%

61.54

%

Diluted earnings per share

$

1.26

$

1.05

$

0.78

20.00

%

61.54

%

Performance ratios

Net interest margin (FTE)

3.25

%

3.10

%

3.74

%

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

1.26

%

1.04

%

0.94

%

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

9.87

%

8.10

%

6.22

%

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

20.89

%

23.10

%

21.89

%

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

57.67

%

62.00

%

55.36

%

ASSET QUALITY

(Unaudited, dollars in thousands)

Nonperforming Assets At

March 31
2021

December 31
2020

March 31
2020

Nonperforming loans

Commercial & industrial loans

$

29,785

$

34,729

$

21,435

Commercial real estate loans

9,635

10,195

4,949

Small business loans

660

825

450

Residential real estate loans

13,392

15,528

14,502

Home equity

5,592

5,427

6,571

Other consumer

137

157

133

Total nonperforming loans

59,201

66,861

48,040

Total nonperforming assets

$

59,201

$

66,861

$

48,040

Nonperforming loans/gross loans

0.64

%

0.71

%

0.54

%

Nonperforming assets/total assets

0.43

%

0.51

%

0.40

%

Allowance for credit losses/nonperforming loans

181.67

%

169.59

%

192.29

%

Allowance for credit losses/total loans

1.16

%

1.21

%

1.04

%

Delinquent loans/total loans

0.12

%

0.23

%

0.33

%

Nonperforming Assets Reconciliation for the Three Months Ended

March 31
2021

December 31
2020

March 31
2020

Nonperforming assets beginning balance

$

66,861

$

98,025

$

48,049

New to nonperforming

2,359

22,052

6,515

Loans charged-off

(3,686)

(2,698)

(734)

Loans paid-off

(4,025)

(45,327)

(5,079)

Loans restored to performing status

(2,559)

(5,373)

(561)

Sale of other real estate owned

Other

251

182

(150)

Nonperforming assets ending balance

$

59,201

$

66,861

$

48,040

Net Charge-Offs (Recoveries)

Three Months Ended

March 31
2021

December 31
2020

March 31
2020

Net charge-offs (recoveries)

Commercial and industrial loans

$

3,267

$

1,882

$

(42)

Commercial real estate loans

(57)

Small business loans

55

161

106

Residential real estate loans

(1)

105

(1)

Home equity

(13)

(36)

80

Other consumer

92

121

241

Total net charge-offs

$

3,343

$

2,233

$

384

Net charge-offs to average loans (annualized)

0.15

%

0.09

%

0.02

%

Troubled Debt Restructurings At

March 31
2021

December 31
2020

March 31
2020

Troubled debt restructurings on accrual status

$

20,262

$

16,983

$

18,129

Troubled debt restructurings on nonaccrual status

21,167

22,209

23,842

Total troubled debt restructurings

$

41,429

$

39,192

$

41,971

BALANCE SHEET AND CAPITAL RATIOS

March 31
2021

December 31
2020

March 31
2020

Gross loans/total deposits

79.76

%

85.44

%

94.69

%

Common equity tier 1 capital ratio (1)

13.20

%

12.67

%

11.95

%

Tier 1 leverage capital ratio (1)

9.63

%

9.56

%

10.74

%

Common equity to assets ratio GAAP

12.45

%

12.89

%

14.02

%

Tangible common equity to tangible assets ratio (2)

8.96

%

9.26

%

10.01

%

Book value per share GAAP

$

51.94

$

51.65

$

50.50

Tangible book value per share (2)

$

35.96

$

35.59

$

34.46

(1) Estimated number for March 31, 2021.
(2) See Appendix A for detailed reconciliation from GAAP to Non-GAAP ratios.

INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited, dollars in thousands)

Three Months Ended

March 31, 2021

December 31, 2020

March 31, 2020

Interest

Interest

Interest

Average

Earned/

Yield/

Average

Earned/

Yield/

Average

Earned/

Yield/

Balance

Paid (1)

Rate

Balance

Paid (1)

Rate

Balance

Paid (1)

Rate

Interest-earning assets

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

$

1,321,430

$

326

0.10

%

$

1,190,965

$

301

0.10

%

$

72,552

$

160

0.89

%

Securities

Securities - trading

2,939

%

2,660

%

2,263

%

Securities - taxable investments

1,250,451

6,627

2.15

%

1,122,055

7,127

2.53

%

1,189,965

7,957

2.69

%

Securities - nontaxable investments (1)

642

6

3.79

%

1,041

10

3.82

%

1,237

12

3.90

%

Total securities

$

1,254,032

$

6,633

2.15

%

$

1,125,756

$

7,137

2.52

%

$

1,193,465

$

7,969

2.69

%

Loans held for sale

49,652

296

2.42

%

48,604

301

2.46

%

28,045

232

3.33

%

Loans

Commercial and industrial (1)

2,115,069

23,046

4.42

%

2,080,045

18,308

3.50

%

1,403,199

16,940

4.86

%

Commercial real estate (1)

4,156,012

40,376

3.94

%

4,130,945

41,213

3.97

%

4,012,125

45,851

4.60

%

Commercial construction

555,153

5,283

3.86

%

582,900

5,609

3.83

%

555,741

6,901

4.99

%

Small business

174,320

2,281

5.31

%

169,645

2,276

5.34

%

174,668

2,562

5.90

%

Total commercial

7,000,554

70,986

4.11

%

6,963,535

67,406

3.85

%

6,145,733

72,254

4.73

%

Residential real estate

1,271,283

12,436

3.97

%

1,322,016

12,020

3.62

%

1,560,839

14,619

3.77

%

Home equity

1,050,234

8,757

3.38

%

1,086,781

9,379

3.43

%

1,136,931

11,827

4.18

%

Total consumer real estate

2,321,517

21,193

3.70

%

2,408,797

21,399

3.53

%

2,697,770

26,446

3.94

%

Other consumer

21,698

432

8.07

%

23,860

468

7.80

%

27,843

572

8.26

%

Total loans

$

9,343,769

$

92,611

4.02

%

$

9,396,192

$

89,273

3.78

%

$

8,871,346

$

99,272

4.50

%

Total interest-earning assets

$

11,968,883

$

99,866

3.38

%

$

11,761,517

$

97,012

3.28

%

$

10,165,408

$

107,633

4.26

%

Cash and due from banks

154,870

136,602

122,707

Federal Home Loan Bank stock

10,250

10,475

14,699

Other assets

1,241,651

1,284,948

1,166,775

Total assets

$

13,375,654

$

13,193,542

$

11,469,589

Interest-bearing liabilities

Deposits

Savings and interest checking accounts

$

4,109,747

$

423

0.04

%

$

3,975,140

$

540

0.05

%

$

3,270,719

$

1,934

0.24

%

Money market

2,288,030

521

0.09

%

2,232,007

671

0.12

%

1,872,003

3,173

0.68

%

Time deposits

906,613

1,767

0.79

%

1,014,388

2,771

1.09

%

1,346,890

5,785

1.73

%

Total interest-bearing deposits

$

7,304,390

$

2,711

0.15

%

$

7,221,535

$

3,982

0.22

%

$

6,489,612

$

10,892

0.68

%

Borrowings

Federal Home Loan Bank borrowings

35,785

188

2.13

%

36,297

195

2.14

%

131,225

528

1.62

%

Long-term borrowings

28,247

111

1.59

%

32,765

131

1.59

%

74,912

561

3.01

%

Junior subordinated debentures

62,851

426

2.75

%

62,850

436

2.76

%

62,849

478

3.06

%

Subordinated debentures

49,705

617

5.03

%

49,683

618

4.95

%

49,612

617

5.00

%

Total borrowings

$

176,588

$

1,342

3.08

%

$

181,595

$

1,380

3.02

%

$

318,598

$

2,184

2.76

%

Total interest-bearing liabilities

$

7,480,978

$

4,053

0.22

%

$

7,403,130

$

5,362

0.29

%

$

6,808,210

$

13,076

0.77

%

Noninterest-bearing demand deposits

3,895,447

3,770,580

2,680,718

Other liabilities

285,857

318,981

251,469

Total liabilities

$

11,662,282

$

11,492,691

$

9,740,397

Stockholders' equity

1,713,372

1,700,851

1,729,192

Total liabilities and stockholders' equity

$

13,375,654

$

13,193,542

$

11,469,589

Net interest income

$

95,813

$

91,650

$

94,557

Interest rate spread (2)

3.16

%

2.99

%

3.49

%

Net interest margin (3)

3.25

%

3.10

%

3.74

%

Supplemental Information

Total deposits, including demand deposits

$

11,199,837

$

2,711

$

10,992,115

$

3,982

$

9,170,330

$

10,892

Cost of total deposits

0.10

%

0.14

%

0.48

%

Total funding liabilities, including demand deposits

$

11,376,425

$

4,053

$

11,173,710

$

5,362

$

9,488,928

$

13,076

Cost of total funding liabilities

0.14

%

0.19

%

0.55

%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $229,000, $207,000, and $253,000 for the three months ended March 31, 2021, December 31, 2020, and March 31, 2020, respectively, determined by applying the Company's marginal tax rates in effect during each respective quarter.
(2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

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 to tangible assets ratio and tangible book value per share at the dates indicated:

March 31
2021

December 31
2020

March 31
2020

Tangible common equity

(Dollars in thousands, except per share data)

Stockholders' equity (GAAP)

$

1,715,371

$

1,702,685

$

1,679,656

(a)

Less: Goodwill and other intangibles

527,895

529,313

533,672

Tangible common equity

$

1,187,476

$

1,173,372

$

1,145,984

(b)

Tangible assets

Assets (GAAP)

$

13,773,914

$

13,204,301

$

11,980,240

(c)

Less: Goodwill and other intangibles

527,895

529,313

533,672

Tangible assets

$

13,246,019

$

12,674,988

$

11,446,568

(d)

Common Shares

33,024,882

32,965,692

33,260,005

(e)

Common equity to assets ratio (GAAP)

12.45

%

12.89

%

14.02

%

(a/c)

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

8.96

%

9.26

%

10.01

%

(b/d)

Book value per share (GAAP)

$

51.94

$

51.65

$

50.50

(a/e)

Tangible book value per share (Non-GAAP)

$

35.96

$

35.59

$

34.46

(b/e)

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

2021

2020

Q1

Q4

Volume

Interest

Margin Impact

Volume

Interest

Margin Impact

(Dollars in thousands)

Reported total (GAAP)

$

11,968,884

$

95,812

3.25

%

$

11,761,516

$

91,650

3.10

%

Core adjustments:

PPP volume @ 1%

(837,986)

(2,081)

(808,566)

(2,067)

PPP fee amortization

(9,487)

(3,642)

Total PPP impact

(837,986)

(11,568)

(0.18)

%

(808,566)

(5,709)

0.02

%

Excess cash (vs $100M)

(1,221,430)

(301)

0.37

%

(1,090,965)

(276)

0.33

%

Acquisition fair value accretion

(1,731)

(0.07)

%

(1,028)

(0.04)

%

Nonaccrual interest

28

%

(727)

(0.03)

%

Other noncore adjustments

(626)

(0.03)

%

(564)

(0.02)

%

Core Margin (Non-GAAP)

9,909,468

81,614

3.34

%

9,861,985

83,346

3.36

%

Core Margin Change:

(0.02)

%

(0.02)

%

Cash

%

Securities

(0.05)

%

Loans

(0.02)

%

Deposits

0.05

%

(0.02)

%

APPENDIX C: 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 March 31, 2021, within industries that we have deemed to be highly impacted by the COVID-19 pandemic:

Highly Impacted COVID-19 Industries - Balances

March 31, 2021

(Dollars in thousands)

Accommodations

$

402,259

Food Services

135,480

Retail Trade

530,544

Other Services (except Public Administration)

147,968

Arts, Entertainment, and Recreation

99,919

Total (1)

$

1,316,170

(1) Amounts presented above exclude $222.9 million of outstanding PPP loans.

Highly Impacted COVID-19 Industries - Details

March 31, 2021

(Dollars in thousands)

Accommodations

Balance

$

402,259

Average borrower loan size

$

4,193

% secured by real estate

99.8

%

Weighted average loan to value

54.3

%

Other information:

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

– Loans secured by hotel properties deemed to be located in areas of leisure comprise $167.5 million, or 42% of the hotel portfolio.

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

Food Services

Balance

$

135,480

Average borrower loan size

$

363

% secured by real estate

69.4

%

Weighted average loan to value

50.4

%

Other information:

– The food services portfolio includes full-service restaurants (60%), limited service restaurants and fast food (38%), and other types of food service (caterers, bars, mobile food service 2%).

Retail Trade

Balance

$

530,544

Average borrower loan size

$

492

% secured by real estate

42.7

%

Weighted average loan to value

56.6

%

Other information:

– The retail trade portfolio consists broadly of food and beverage stores (43%), motor vehicle and parts dealers (28%), gasoline stations (14%). All other retailers account for 15% of the current outstanding balance.

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

Other Services (except Public Administration)

Balance

$

147,968

Average borrower loan size

$

259

% secured by real estate

51.0

%

Weighted average loan to value

50.4

%

Other information:

– The other services portfolio consists of various for-profit and not-for-profit services diversified across religious, civic and social service organizations (41%), repair and maintenance business (31%) 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

$

99,919

Average borrower loan size

$

805

% secured by real estate

83.9

%

Weighted average loan to value

52.9

%

Other information:

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

Other Commercial Loan Portfolio Characteristics

Average total loan size varies across the commercial portfolio with commercial real estate loans having an average size of $1.1 million, commercial and industrial loans having an average loan size of $131,000 and small business loans, which are each under $5.0 million, having an average loan size of $32,000. Additional details are provided below regarding loan sizes of the commercial real estate and commercial and industrial portfolios as of March 31, 2021:

Commercial Real Estate (Including Construction)

<$5M

$5-10M

$10-20M

>$20M

Total

Dollar Amount (in '000s)

$

2,617,537

$

898,800

$

763,481

$

414,161

$

4,693,979

# of loans

4,056

129

55

17

4,257

Commercial and Industrial (Including PPP)

<$5M

$5-10M

$10-20M

>$20M

Total

Dollar Amount (in '000s)

$

1,517,175

$

266,820

$

282,464

$

20,212

$

2,086,671

# of loans

15,837

41

21

1

15,900

APPENDIX D: 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

$

2,300

$

1,636

$

1,765

$

5,701

$

2,086,671

0.3

%

Commercial real estate (1)

10,425

203,319

213,744

4,693,979

4.6

%

Business banking

294

645

939

174,211

0.5

%

Residential real estate

87

87

1,241,789

%

Home equity

153

153

1,028,495

%

Consumer

21,546

%

Total active deferrals as of March 31, 2021

$

13,259

$

205,600

$

1,765

$

220,624

$

9,246,691

2.4

%

(1) Balances include commercial construction deferrals.

Deferrals by Industry

March 31, 2021

(Dollars in thousands)

Highly Impacted Industries

Accommodation

$

163,073

Food Services

698

Other services (except public administration)

1,013

Arts, Entertainment, and Recreation

31,126

Total Highly Impacted Industries

195,910

Other Industries

Real Estate and Leasing

23,584

Transportation and Warehousing

587

All Other Industries

304

Total Other Industries

24,475

Consumer (residential, home equity and other)

239

Grand Total

$

220,624

View source version on businesswire.com: https://www.businesswire.com/news/home/20210422006064/en/

Contacts

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

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