Independent Bank Corp. Reports Third Quarter Net Income of $60.8 Million

Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2023 third quarter net income of $60.8 million, or $1.38 per diluted share, compared to 2023 second quarter net income of $62.6 million, or $1.42 per diluted share.

The Company generated a return on average assets and a return on average common equity of 1.25% and 8.35%, respectively, for the third quarter of 2023, as compared to 1.29% and 8.78%, respectively, for the prior quarter.

“I am proud of the Company’s fundamental commitment to its customers and communities, as another quarter of strong business activity and solid financial results underscores the inherent value of our relationship banking model,” said Jeffrey Tengel, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “Our strong balance sheet and capital levels position us well for continuing to successfully navigate forward in a challenging environment.”

BALANCE SHEET

Total assets of $19.4 billion at September 30, 2023 remained relatively consistent with the prior quarter and decreased by $335.2 million, or 1.7%, as compared to the prior year period, driven primarily by lower cash and securities balances.

Total loans at September 30, 2023 of $14.2 billion increased by $84.3 million, or 0.6% (2.4% annualized), compared to the prior quarter. The increase was fueled primarily by consumer real estate, which increased $117.0 million, or 3.5% (14.0% annualized), for the quarter, driven primarily by adjustable-rate residential mortgages. Total commercial loans decreased slightly by $35.9 million, or 0.3% (1.3% annualized), compared to the prior quarter, reflecting construction to permanent commercial real estate transfers and solid closing activity offset by decreased line of credit utilization.

Deposit balances of $15.1 billion at September 30, 2023 decreased by $188.5 million, or 1.2%, from June 30, 2023, primarily attributable to seasonal declines in municipal deposits. Reflecting continued demand for higher rate products, time deposits continue to experience steady growth with the total cost of deposits for the quarter increasing 22 basis points to 1.07%. The volume of new account openings remains robust. Core deposits represented 80.5% of total deposits at September 30, 2023, compared to 82.6% at June 30, 2023.

Borrowings increased by $99.1 million, or 11.0%, during the third quarter of 2023, primarily a result of net changes in loans, deposits, and securities for the quarter.

The securities portfolio decreased by $49.1 million, or 1.6%, compared to June 30, 2023 driven primarily by paydowns, calls, and maturities, along with unrealized losses of $10.4 million in the available for sale portfolio during the third quarter. Total securities represented 15.4% of total assets at September 30, 2023, as compared to 15.6% at June 30, 2023.

Stockholders' equity at September 30, 2023 increased 1.1% when compared to June 30, 2023, driven primarily by strong earnings retention, partially offset by unrealized losses on the available for sale investment securities portfolio included in other comprehensive income. The Company's ratio of common equity to assets of 14.90% at September 30, 2023 represented an increase of 18 basis points, or 1.2%, from June 30, 2023 and an increase of 60 basis points, or 4.2%, from September 30, 2022. The Company's book value per share increased by $0.68, or 1.1%, to $65.37 at September 30, 2023 as compared to the prior quarter. The Company's tangible book value per share at September 30, 2023 rose by $0.72, or 1.7%, from the prior quarter to $42.60, and represented an increase of 7.7% from the year ago period. The Company's ratio of tangible common equity to tangible assets of 10.24% at September 30, 2023 represented an increase of 19 basis points from the prior quarter and an increase of 58 basis points from the year ago period. Please refer to Appendix A for a detailed reconciliation of Non-GAAP balance sheet metrics.

In consideration of the Company's strong current capital position, the Company is announcing a new stock repurchase plan, which authorizes repurchases by the Company of up to $100 million in common stock and is scheduled to expire on October 18, 2024.

NET INTEREST INCOME

Net interest income for the third quarter of 2023 decreased 1.7% to $149.9 million compared to $152.5 million for the prior quarter, as rising deposit costs slightly outpaced the benefit of repriced assets. Both the net interest margin and core margin (excluding purchase accounting and other non-core items) were 3.47% for the third quarter, representing reductions of 7 basis points and 5 basis points, respectively, as compared to the prior quarter. Please refer to Appendix C for additional details regarding the net interest margin and Non-GAAP reconciliation of core margin.

NONINTEREST INCOME

Noninterest income of $33.5 million for the third quarter of 2023 represented an increase of $2.8 million, or 9.1%, as compared to the prior quarter. Significant changes in noninterest income for the third quarter of 2023 compared to the prior quarter included the following:

• Deposit account and interchange and ATM fees increased by $758,000, or 7.6%, due primarily to increased overdraft and treasury management activity.

• Investment management income decreased by $102,000, or 1.0%, primarily driven by a reduction in seasonal tax preparation fees, which are primarily recognized during the second quarter, partially offset by increased insurance commissions. Total assets under administration declined by $183.2 million, or 2.9%, to $6.1 billion during the third quarter of 2023, driven primarily by market depreciation.

• The Company received proceeds on life insurance policies resulting in gains of $1.9 million for the third quarter, as compared to gains of $176,000 in the prior quarter.

• Loan level derivative income decreased by $433,000, or 34.0%, compared to the prior quarter due primarily to lower customer demand.

• Other noninterest income increased by $703,000, or 11.0%, due primarily to outsized loan fees and increased Federal Home Loan Bank dividend income, partially offset by unrealized gains on equity securities and interest on income tax refunds received in the prior quarter.

NONINTEREST EXPENSE

Noninterest expense of $97.8 million for the third quarter of 2023 represented an increase of $2.2 million, or 2.3%, as compared to 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 by $822,000, or 1.5%, due primarily to increased commissions, timing on certain retirement benefits, and severance.

• Other noninterest expense increased by $1.5 million, or 6.4%, due primarily to increased consultant fees, unrealized losses on equity securities and card issuance costs.

The Company’s tax rate for the third quarter of 2023 decreased slightly to 24.12%, compared to 24.30% for the prior quarter.

ASSET QUALITY

The third quarter provision for credit losses was $5.5 million, as compared to $5.0 million in the prior quarter. Net charge-offs were $5.6 million for the third quarter of 2023, driven predominantly by a partial charge-off of a single commercial real estate credit which had previously been placed on nonaccrual and was largely reserved for during the second quarter. Nonperforming loans decreased by 14.3% to $39.2 million, or 0.28% of total loans at September 30, 2023, as compared to $45.7 million, or 0.32% of total loans at June 30, 2023. Delinquency as a percentage of total loans decreased eight basis points from the prior quarter to 0.22% at September 30, 2023.

The allowance for credit losses on total loans remained flat at $140.6 million, or 0.99% of total loans, at September 30, 2023 and June 30, 2023, respectively.

CONFERENCE CALL INFORMATION

Jeffrey Tengel, Chief Executive Officer, and Mark Ruggiero, Chief Financial Officer and Executive Vice President of Consumer Lending, will host a conference call to discuss third quarter earnings at 10:00 a.m. Eastern Time on Friday, October 20, 2023. Internet access to the call is available on the Company’s website at https://INDB.RocklandTrust.com or via telephonic access by dial-in at 1-888-336-7153 reference: INDB. A replay of the call will be available by calling 1-877-344-7529, Replay Conference Number: 7087586 and will be available through October 27, 2023. Additionally, a webcast replay will be available on the Company's website until October 20, 2024.

ABOUT INDEPENDENT BANK CORP.

Independent Bank Corp. (NASDAQ Global Select Market: INDB) is the holding company for Rockland Trust Company, a full-service commercial bank headquartered in Massachusetts. With retail branches in Eastern Massachusetts and Worcester County as well as commercial banking and investment management offices in Massachusetts and Rhode Island, Rockland Trust offers a wide range of banking, investment, and insurance services to individuals, families, and businesses. The Bank also offers a full suite of mobile, online, and telephone banking services. Rockland Trust was named to The Boston Globe's "Top Places to Work" 2022 list, an honor earned for the 14th consecutive year. Rockland Trust has a longstanding commitment to equity and inclusion. This commitment is underscored by initiatives such as Diversity and Inclusion leadership training, a colleague Allyship mentoring program, and numerous Employee Resource Groups focused on providing colleague support and education, reinforcing a culture of mutual respect and advancing professional development, and Rockland Trust's sponsorship of diverse community organizations through charitable giving and employee-based volunteerism. In addition, Rockland Trust is deeply committed to the communities it serves, as reflected in the overall "Outstanding" rating in its most recent Community Reinvestment Act performance evaluation. Rockland Trust is an FDIC member and an Equal Housing Lender.

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

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

• 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;
• the effects of inflationary pressures, labor market shortages and supply chain issues;
• the instability or volatility in financial markets and unfavorable general economic or business conditions, globally, nationally or regionally, whether caused by geopolitical concerns, including the Russia/Ukraine conflict, the conflict in Israel and surrounding areas and the possible expansion of such conflicts, recent disruptions in the banking industry, or other factors;
• unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, pandemics or other external events;
• adverse changes or volatility in the local real estate market;
• adverse changes in asset quality and any unanticipated credit deterioration in our loan portfolio including those related to one or more large commercial relationships;
• acquisitions may not produce results at levels or within time frames originally anticipated and may result in unforeseen integration issues or impairment of goodwill and/or other intangibles;
• additional regulatory oversight and related compliance costs;
• changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System;
• higher than expected tax expense, including as a result of failure to comply with general tax laws and changes in tax laws;
• changes in market interest rates for interest earning assets and/or interest bearing liabilities;
• increased competition in the Company’s market areas;
• adverse weather, changes in climate, natural disasters, and geopolitical concerns;
• the emergence of widespread health emergencies or pandemics, any further resurgences or variants of the "COVID-19 virus", actions taken by governmental authorities in response thereto, other public health crises or man-made events, and their impact on the Company's local economies or the Company's operations;
• a deterioration in the conditions of the securities markets;
• a deterioration of the credit rating for U.S. long-term sovereign debt or uncertainties surrounding the federal budget;
• inability to adapt to changes in information technology, including changes to industry accepted delivery models driven by a migration to the internet as a means of service delivery;
• 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, including any such changes in laws and regulations as a result of recent disruptions in the banking industry, and the associated costs of such changes;
• the Company's potential judgments, claims, damages, penalties, fines and reputational damage resulting from pending or future litigation and regulatory and government actions;
• changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters;
• cyber security attacks or intrusions that could adversely impact our businesses; and
• other unexpected material adverse changes in our operations or earnings.

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

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

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

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

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

Category: Earnings Releases

INDEPENDENT BANK CORP. FINANCIAL SUMMARY
CONSOLIDATED BALANCE SHEETS
(Unaudited, dollars in thousands)													% Change			% Change
	September 30 2023				June 30 2023				September 30 2022				Sept 2023 vs.			Sept 2023 vs.
													Jun 2023			Sept 2022
Assets
Cash and due from banks	$	176,930			$	181,810			$	172,615			(2.68	)%		2.50	%
Interest-earning deposits with banks		43,198				126,454				763,681			(65.84	)%		(94.34	)%
Securities
Trading		4,476				4,477				3,538			(0.02	)%		26.51	%
Equities		21,475				21,800				20,439			(1.49	)%		5.07	%
Available for sale		1,353,744				1,372,903				1,425,511			(1.40	)%		(5.03	)%
Held to maturity		1,594,279				1,623,892				1,697,635			(1.82	)%		(6.09	)%
Total securities		2,973,974				3,023,072				3,147,123			(1.62	)%		(5.50	)%
Loans held for sale		3,998				6,577				5,100			(39.21	)%		(21.61	)%
Loans
Commercial and industrial		1,653,003				1,723,219				1,548,349			(4.07	)%		6.76	%
Commercial real estate		7,896,230				7,812,796				7,677,917			1.07	%		2.84	%
Commercial construction		965,442				1,022,796				1,185,157			(5.61	)%		(18.54	)%
Small business		245,335				237,092				209,567			3.48	%		17.07	%
Total commercial		10,760,010				10,795,903				10,620,990			(0.33	)%		1.31	%
Residential real estate		2,338,102				2,221,284				1,959,254			5.26	%		19.34	%
Home equity - first position		529,938				546,240				578,405			(2.98	)%		(8.38	)%
Home equity - subordinate positions		565,617				549,158				508,765			3.00	%		11.17	%
Total consumer real estate		3,433,657				3,316,682				3,046,424			3.53	%		12.71	%
Other consumer		30,568				27,326				32,936			11.86	%		(7.19	)%
Total loans		14,224,235				14,139,911				13,700,350			0.60	%		3.82	%
Less: allowance for credit losses		(140,569	)			(140,647	)			(147,313	)		(0.06	)%		(4.58	)%
Net loans		14,083,666				13,999,264				13,553,037			0.60	%		3.92	%
Federal Home Loan Bank stock		43,878				39,488				5,218			11.12	%		740.90	%
Bank premises and equipment, net		191,560				193,642				198,408			(1.08	)%		(3.45	)%
Goodwill		985,072				985,072				985,072			—	%		—	%
Other intangible assets		19,825				21,537				26,934			(7.95	)%		(26.39	)%
Cash surrender value of life insurance policies		295,670				296,687				293,126			(0.34	)%		0.87	%
Other assets		550,338				527,328				552,955			4.36	%		(0.47	)%
Total assets	$	19,368,109			$	19,400,931			$	19,703,269			(0.17	)%		(1.70	)%
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing demand deposits	$	4,796,148			$	4,861,092			$	5,622,260			(1.34	)%		(14.69	)%
Savings and interest checking accounts		5,398,322				5,525,223				6,094,493			(2.30	)%		(11.42	)%
Money market		2,852,293				3,065,520				3,443,622			(6.96	)%		(17.17	)%
Time certificates of deposit		2,012,763				1,796,216				1,178,619			12.06	%		70.77	%
Total deposits		15,059,526				15,248,051				16,338,994			(1.24	)%		(7.83	)%
Borrowings
Federal Home Loan Bank borrowings		887,548				788,479				643			12.56	%		nm
Junior subordinated debentures, net		62,857				62,857				62,855			—	%		—	%
Subordinated debentures, net		49,957				49,933				49,862			0.05	%		0.19	%
Total borrowings		1,000,362				901,269				113,360			10.99	%		782.46	%
Total deposits and borrowings		16,059,888				16,149,320				16,452,354			(0.55	)%		(2.39	)%
Other liabilities		422,813				396,697				433,714			6.58	%		(2.51	)%
Total liabilities		16,482,701				16,546,017				16,886,068			(0.38	)%		(2.39	)%
Stockholders' equity
Common stock		440				440				454			—	%		(3.08	)%
Additional paid in capital		1,999,448				1,997,674				2,113,313			0.09	%		(5.39	)%
Retained earnings		1,046,266				1,009,735				882,503			3.62	%		18.56	%
Accumulated other comprehensive loss, net of tax		(160,746	)			(152,935	)			(179,069	)		5.11	%		(10.23	)%
Total stockholders' equity		2,885,408				2,854,914				2,817,201			1.07	%		2.42	%
Total liabilities and stockholders' equity	$	19,368,109			$	19,400,931			$	19,703,269			(0.17	)%		(1.70	)%

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, dollars in thousands, except per share data)
	Three Months Ended
													% Change			% Change
	September 30 2023				June 30 2023				September 30 2022				Sept 2023 vs.			Sept 2023 vs.
													Jun 2023			Sept 2022
Interest income
Interest on federal funds sold and short-term investments	$	905			$	3,312			$	6,519			(72.68	)%		(86.12	)%
Interest and dividends on securities		14,818				15,583				13,244			(4.91	)%		11.88	%
Interest and fees on loans		187,145				179,759				150,157			4.11	%		24.63	%
Interest on loans held for sale		60				39				51			53.85	%		17.65	%
Total interest income		202,928				198,693				169,971			2.13	%		19.39	%
Interest expense
Interest on deposits		40,713				31,909				6,109			27.59	%		566.44	%
Interest on borrowings		12,335				14,238				1,261			(13.37	)%		878.19	%
Total interest expense		53,048				46,147				7,370			14.95	%		619.78	%
Net interest income		149,880				152,546				162,601			(1.75	)%		(7.82	)%
Provision for credit losses		5,500				5,000				3,000			10.00	%		83.33	%
Net interest income after provision for credit losses		144,380				147,546				159,601			(2.15	)%		(9.54	)%
Noninterest income
Deposit account fees		5,936				5,508				6,261			7.77	%		(5.19	)%
Interchange and ATM fees		4,808				4,478				4,331			7.37	%		11.01	%
Investment management		10,246				10,348				8,436			(0.99	)%		21.46	%
Mortgage banking income		739				670				585			10.30	%		26.32	%
Increase in cash surrender value of life insurance policies		1,983				1,940				1,883			2.22	%		5.31	%
Gain on life insurance benefits		1,924				176				477			993.18	%		303.35	%
Loan level derivative income		842				1,275				471			(33.96	)%		78.77	%
Other noninterest income		7,065				6,362				5,751			11.05	%		22.85	%
Total noninterest income		33,543				30,757				28,195			9.06	%		18.97	%
Noninterest expenses
Salaries and employee benefits		54,797				53,975				52,708			1.52	%		3.96	%
Occupancy and equipment expenses		12,321				12,385				12,316			(0.52	)%		0.04	%
Data processing and facilities management		2,404				2,530				2,259			(4.98	)%		6.42	%
FDIC assessment		2,727				2,674				1,677			1.98	%		62.61	%
Other noninterest expenses		25,533				23,991				23,768			6.43	%		7.43	%
Total noninterest expenses		97,782				95,555				92,728			2.33	%		5.45	%
Income before income taxes		80,141				82,748				95,068			(3.15	)%		(15.70	)%
Provision for income taxes		19,333				20,104				23,171			(3.84	)%		(16.56	)%
Net Income	$	60,808			$	62,644			$	71,897			(2.93	)%		(15.42	)%
Weighted average common shares (basic)		44,135,487				44,129,152				45,839,555
Common share equivalents		11,417				7,573				16,856
Weighted average common shares (diluted)		44,146,904				44,136,725				45,856,411
Basic earnings per share	$	1.38			$	1.42			$	1.57			(2.82	)%		(12.10	)%
Diluted earnings per share	$	1.38			$	1.42			$	1.57			(2.82	)%		(12.10	)%
Performance ratios
Net interest margin (FTE)		3.47	%			3.54	%			3.64	%
Return on average assets (calculated by dividing net income by average assets)		1.25	%			1.29	%			1.43	%
Return on average common equity (calculated by dividing net income by average common equity) (GAAP)		8.35	%			8.78	%			9.90	%
Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity)		12.81	%			13.54	%			15.26	%
Noninterest income as a % of total revenue (calculated by dividing total noninterest income by net interest income plus total noninterest income)		18.29	%			16.78	%			14.78	%
Efficiency ratio (calculated by dividing total noninterest expense by total revenue)		53.31	%			52.13	%			48.60	%

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, dollars in thousands, except per share data)
		Nine Months Ended
										% Change
		September 30 2023				September 30 2022				Sept 2023 vs.
										Sept 2022
Interest income
Interest on federal funds sold and short-term investments		$	4,882			$	10,222			(52.24	)%
Interest and dividends on securities			45,711				34,571			32.22	%
Interest and fees on loans			537,830				413,770			29.98	%
Interest on loans held for sale			133				150			(11.33	)%
Total interest income			588,556				458,713			28.31	%
Interest expense
Interest on deposits			95,297				10,327			822.79	%
Interest on borrowings			31,835				3,492			811.66	%
Total interest expense			127,132				13,819			819.98	%
Net interest income			461,424				444,894			3.72	%
Provision for credit losses			17,750				1,000			1,675.00	%
Net interest income after provision for credit losses			443,674				443,894			(0.05	)%
Noninterest income
Deposit account fees			17,360				17,582			(1.26	)%
Interchange and ATM fees			13,470				11,967			12.56	%
Investment management			30,373				26,438			14.88	%
Mortgage banking income			1,717				2,989			(42.56	)%
Increase in cash surrender value of life insurance policies			5,777				5,549			4.11	%
Gain on life insurance benefits			2,111				600			251.83	%
Loan level derivative income			2,525				1,511			67.11	%
Other noninterest income			19,209				15,729			22.12	%
Total noninterest income			92,542				82,365			12.36	%
Noninterest expenses
Salaries and employee benefits			165,747				150,957			9.80	%
Occupancy and equipment expenses			37,528				37,255			0.73	%
Data processing and facilities management			7,461				6,878			8.48	%
FDIC assessment			8,011				5,225			53.32	%
Merger and acquisition expense			—				7,100			(100.00	)%
Other noninterest expenses			73,251				71,375			2.63	%
Total noninterest expenses			291,998				278,790			4.74	%
Income before income taxes			244,218				247,469			(1.31	)%
Provision for income taxes			59,519				60,699			(1.94	)%
Net Income		$	184,699			$	186,770			(1.11	)%
Weighted average common shares (basic)			44,419,731				46,618,209
Common share equivalents			12,851				17,221
Weighted average common shares (diluted)			44,432,582				46,635,430
Basic earnings per share		$	4.16			$	4.01			3.74	%
Diluted earnings per share		$	4.16			$	4.00			4.00	%
Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP):
Net Income		$	184,699			$	186,770
Noninterest expense components
Add - merger and acquisition expenses			—				7,100
Noncore increases to income before taxes			—				7,100
Net tax benefit associated with noncore items (1)			—				(1,995	)
Noncore increases to net income		$	—			$	5,105
Operating net income (Non-GAAP)		$	184,699			$	191,875			(3.74	)%
Diluted earnings per share, on an operating basis		$	4.16			$	4.11			1.22	%
(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)			3.60	%			3.33	%
Return on average assets (GAAP) (calculated by dividing net income by average assets)			1.28	%			1.25	%
Return on average assets on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average assets)			1.28	%			1.28	%
Return on average common equity (GAAP) (calculated by dividing net income by average common equity)			8.58	%			8.51	%
Return on average common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average common equity)			8.58	%			8.74	%
Return on average tangible common equity (GAAP) (calculated by dividing net income by average tangible common equity)			13.21	%			13.00	%
Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average tangible common equity)			13.21	%			13.35	%
Noninterest income as a % of total revenue (calculated by dividing total noninterest income by net interest income plus total noninterest income)			16.71	%			15.62	%
Noninterest income as a % of total revenue on an operating basis (Non-GAAP) (calculated by dividing total noninterest income on an operating basis by net interest income plus total noninterest income)			16.71	%			15.62	%
Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue)			52.71	%			52.88	%
Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue)			52.71	%			51.53	%

ASSET QUALITY
(Unaudited, dollars in thousands)		Nonperforming Assets At
		September 30 2023				June 30 2023				September 30 2022
Nonperforming loans
Commercial & industrial loans		$	2,953			$	3,235			$	27,393
Commercial real estate loans			23,867				29,910				15,982
Small business loans			372				348				50
Residential real estate loans			8,493				8,179				8,891
Home equity			3,411				3,944				3,485
Other consumer			75				86				216
Total nonperforming loans			39,171				45,702				56,017
Other real estate owned			110				110				—
Total nonperforming assets		$	39,281			$	45,812			$	56,017
Nonperforming loans/gross loans			0.28	%			0.32	%			0.41	%
Nonperforming assets/total assets			0.20	%			0.24	%			0.28	%
Allowance for credit losses/nonperforming loans			358.86	%			307.75	%			262.98	%
Allowance for credit losses/total loans			0.99	%			0.99	%			1.08	%
Delinquent loans/total loans			0.22	%			0.30	%			0.17	%
		Nonperforming Assets Reconciliation for the Three Months Ended
		September 30 2023				June 30 2023				September 30 2022
Nonperforming assets beginning balance		$	45,812			$	56,235			$	55,915
New to nonperforming			3,455				18,018				30,650
Loans charged-off			(6,018	)			(23,767	)			(741	)
Loans paid-off			(2,915	)			(3,984	)			(29,450	)
Loans restored to performing status			(1,428	)			(680	)			(366	)
Other			375				(10	)			9
Nonperforming assets ending balance		$	39,281			$	45,812			$	56,017

		Net Charge-Offs (Recoveries)
		Three Months Ended												Nine Months Ended
		September 30 2023				June 30 2023				September 30 2022				September 30 2023				September 30 2022
Net charge-offs (recoveries)
Commercial and industrial loans		$	(111	)		$	23,174			$	(2	)		$	23,339			$	(44	)
Commercial real estate loans			5,072				—				(268	)			5,072				(271	)
Small business loans			77				51				(88	)			125				(88	)
Home equity			(12	)			(10	)			(65	)			(38	)			17
Other consumer			552				269				429				1,102				995
Total net charge-offs (recoveries)		$	5,578			$	23,484			$	6			$	29,600			$	609
Net charge-offs (recoveries) to average loans (annualized)			0.16	%			0.67	%		nm					0.28	%			0.01	%

nm = not meaningful

BALANCE SHEET AND CAPITAL RATIOS
		September 30 2023				June 30 2023				September 30 2022
Gross loans/total deposits			94.45	%			92.73	%			83.85	%
Common equity tier 1 capital ratio (1)			14.42	%			14.06	%			13.98	%
Tier 1 leverage capital ratio (1)			11.12	%			10.85	%			10.51	%
Common equity to assets ratio GAAP			14.90	%			14.72	%			14.30	%
Tangible common equity to tangible assets ratio (2)			10.24	%			10.05	%			9.66	%
Book value per share GAAP		$	65.37			$	64.69			$	61.73
Tangible book value per share (2)		$	42.60			$	41.88			$	39.56

(1) Estimated number for September 30, 2023.

(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, 2023									June 30, 2023									September 30, 2022
					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		$	89,449		$	905		4.01	%		$	270,443		$	3,312		4.91	%		$	1,156,143		$	6,519		2.24	%
Securities
Securities - trading			4,546			—		—	%			4,487			—		—	%			3,730			—		—	%
Securities - taxable investments			3,000,736			14,817		1.96	%			3,071,752			15,581		2.03	%			3,024,802			13,243		1.74	%
Securities - nontaxable investments (1)			188			1		2.11	%			191			2		4.20	%			196			1		2.02	%
Total securities		$	3,005,470		$	14,818		1.96	%		$	3,076,430		$	15,583		2.03	%		$	3,028,728		$	13,244		1.73	%
Loans held for sale			4,072			60		5.85	%			2,977			39		5.25	%			4,263			51		4.75	%
Loans
Commercial and industrial (1)			1,682,000			30,739		7.25	%			1,686,348			29,451		7.00	%			1,520,924			19,289		5.03	%
Commercial real estate (1)			7,823,525			94,861		4.81	%			7,803,702			91,813		4.72	%			7,760,470			85,284		4.36	%
Commercial construction			1,007,814			16,829		6.62	%			1,044,650			17,212		6.61	%			1,157,876			14,875		5.10	%
Small business			240,782			3,752		6.18	%			230,371			3,501		6.10	%			207,546			2,819		5.39	%
Total commercial			10,754,121			146,181		5.39	%			10,765,071			141,977		5.29	%			10,646,816			122,267		4.56	%
Residential real estate			2,276,882			23,197		4.04	%			2,153,563			20,943		3.90	%			1,909,066			16,533		3.44	%
Home equity			1,093,479			18,313		6.64	%			1,094,329			17,394		6.38	%			1,076,040			11,869		4.38	%
Total consumer real estate			3,370,361			41,510		4.89	%			3,247,892			38,337		4.73	%			2,985,106			28,402		3.77	%
Other consumer			30,775			608		7.84	%			28,863			566		7.87	%			31,883			523		6.51	%
Total loans		$	14,155,257		$	188,299		5.28	%		$	14,041,826		$	180,880		5.17	%		$	13,663,805		$	151,192		4.39	%
Total interest-earning assets		$	17,254,248		$	204,082		4.69	%		$	17,391,676		$	199,814		4.61	%		$	17,852,939		$	171,006		3.80	%
Cash and due from banks			184,003									178,707									192,003
Federal Home Loan Bank stock			38,252									44,619									5,745
Other assets			1,859,099									1,826,879									1,854,870
Total assets		$	19,335,602								$	19,441,881								$	19,905,557
Interest-bearing liabilities
Deposits
Savings and interest checking accounts		$	5,393,209		$	11,860		0.87	%		$	5,512,995		$	9,425		0.69	%		$	6,224,690		$	2,110		0.13	%
Money market			2,945,450			13,709		1.85	%			3,044,486			12,331		1.62	%			3,459,212			3,025		0.35	%
Time deposits			1,860,440			15,144		3.23	%			1,630,015			10,153		2.50	%			1,246,841			974		0.31	%
Total interest-bearing deposits		$	10,199,099		$	40,713		1.58	%		$	10,187,496		$	31,909		1.26	%		$	10,930,743		$	6,109		0.22	%
Borrowings
Federal Home Loan Bank borrowings			869,646			10,568		4.82	%			1,068,585			12,576		4.72	%			12,876			55		1.69	%
Junior subordinated debentures			62,857			1,150		7.26	%			62,856			1,044		6.66	%			62,854			589		3.72	%
Subordinated debentures			49,944			617		4.90	%			49,921			618		4.97	%			49,847			617		4.91	%
Total borrowings		$	982,447		$	12,335		4.98	%		$	1,181,362		$	14,238		4.83	%		$	125,577		$	1,261		3.98	%
Total interest-bearing liabilities		$	11,181,546		$	53,048		1.88	%		$	11,368,858		$	46,147		1.63	%		$	11,056,320		$	7,370		0.26	%
Noninterest-bearing demand deposits			4,883,009									4,873,767									5,641,742
Other liabilities			381,483									336,210									325,507
Total liabilities		$	16,446,038								$	16,578,835								$	17,023,569
Stockholders' equity			2,889,564									2,863,046									2,881,988
Total liabilities and stockholders' equity		$	19,335,602								$	19,441,881								$	19,905,557
Net interest income					$	151,034								$	153,667								$	163,636
Interest rate spread (2)								2.81	%								2.98	%								3.54	%
Net interest margin (3)								3.47	%								3.54	%								3.64	%
Supplemental Information
Total deposits, including demand deposits		$	15,082,108		$	40,713					$	15,061,263		$	31,909					$	16,572,485		$	6,109
Cost of total deposits								1.07	%								0.85	%								0.15	%
Total funding liabilities, including demand deposits		$	16,064,555		$	53,048					$	16,242,625		$	46,147					$	16,698,062		$	7,370
Cost of total funding liabilities								1.31	%								1.14	%								0.18	%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.2 million, $1.1 million, and $1.0 million for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022, 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, 2023									September 30, 2022
					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		$	144,558		$	4,882		4.52	%		$	1,477,117		$	10,222		0.93	%
Securities
Securities - trading			4,377			—		—	%			3,775			—		—	%
Securities - taxable investments			3,062,745			45,707		2.00	%			2,881,203			34,567		1.60	%
Securities - nontaxable investments (1)			191			5		3.50	%			198			5		3.38	%
Total securities		$	3,067,313		$	45,712		1.99	%		$	2,885,176		$	34,572		1.60	%
Loans held for sale			3,180			133		5.59	%			5,841			150		3.43	%
Loans
Commercial and industrial (1)			1,662,459			86,762		6.98	%			1,531,421			53,816		4.70	%
Commercial real estate (1)			7,800,173			276,255		4.74	%			7,832,534			238,085		4.06	%
Commercial construction			1,061,847			50,508		6.36	%			1,180,509			40,599		4.60	%
Small business			231,299			10,472		6.05	%			202,151			7,891		5.22	%
Total commercial			10,755,778			423,997		5.27	%			10,746,615			340,391		4.23	%
Residential real estate			2,163,130			63,498		3.92	%			1,774,355			45,109		3.40	%
Home equity			1,092,304			51,951		6.36	%			1,051,921			29,709		3.78	%
Total consumer real estate			3,255,434			115,449		4.74	%			2,826,276			74,818		3.54	%
Other consumer			30,885			1,751		7.58	%			31,092			1,519		6.53	%
Total loans		$	14,042,097		$	541,197		5.15	%		$	13,603,983		$	416,728		4.10	%
Total interest-earning assets		$	17,257,148		$	591,924		4.59	%		$	17,972,117		$	461,672		3.43	%
Cash and due from banks			181,380									184,754
Federal Home Loan Bank stock			32,615									7,780
Other assets			1,843,564									1,853,818
Total assets		$	19,314,707								$	20,018,469
Interest-bearing liabilities
Deposits
Savings and interest checking accounts		$	5,545,951		$	28,758		0.69	%		$	6,224,317		$	3,418		0.07	%
Money market			3,079,942			36,433		1.58	%			3,517,459			4,191		0.16	%
Time deposits			1,596,889			30,106		2.52	%			1,355,861			2,718		0.27	%
Total interest-bearing deposits		$	10,222,782		$	95,297		1.25	%		$	11,097,637		$	10,327		0.12	%
Borrowings
Federal Home Loan Bank borrowings			747,640			26,788		4.79	%			21,361			311		1.95	%
Long-term borrowings			—			—		—	%			2,988			31		1.39	%
Junior subordinated debentures			62,856			3,195		6.80	%			62,854			1,298		2.76	%
Subordinated debentures			49,921			1,852		4.96	%			49,824			1,852		4.97	%
Total borrowings		$	860,417		$	31,835		4.95	%		$	137,027		$	3,492		3.41	%
Total interest-bearing liabilities		$	11,083,199		$	127,132		1.53	%		$	11,234,664		$	13,819		0.16	%
Noninterest-bearing demand deposits			4,990,869									5,544,476
Other liabilities			363,989									303,308
Total liabilities		$	16,438,057								$	17,082,448
Stockholders' equity			2,876,650									2,936,021
Total liabilities and stockholders' equity		$	19,314,707								$	20,018,469
Net interest income					$	464,792								$	447,853
Interest rate spread (2)								3.06	%								3.27	%
Net interest margin (3)								3.60	%								3.33	%
Supplemental Information
Total deposits, including demand deposits		$	15,213,651		$	95,297					$	16,642,113		$	10,327
Cost of total deposits								0.84	%								0.08	%
Total funding liabilities, including demand deposits		$	16,074,068		$	127,132					$	16,779,140		$	13,819
Cost of total funding liabilities								1.06	%								0.11	%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $3.4 million and $3.0 million for the nine months ended September 30, 2023 and 2022, respectively.

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

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

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

APPENDIX A: NON-GAAP Reconciliation of Balance Sheet Metrics

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

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

		September 30 2023				June 30 2023				September 30 2022
Tangible common equity		(Dollars in thousands, except per share data)
Stockholders' equity (GAAP)		$	2,885,408			$	2,854,914			$	2,817,201		(a)
Less: Goodwill and other intangibles			1,004,897				1,006,609				1,012,006
Tangible common equity (Non-GAAP)		$	1,880,511			$	1,848,305			$	1,805,195		(b)
Tangible assets
Assets (GAAP)		$	19,368,109			$	19,400,931			$	19,703,269		(c)
Less: Goodwill and other intangibles			1,004,897				1,006,609				1,012,006
Tangible assets (Non-GAAP)		$	18,363,212			$	18,394,322			$	18,691,263		(d)
Common Shares			44,141,973				44,130,901				45,634,626		(e)
Common equity to assets ratio (GAAP)			14.90	%			14.72	%			14.30	%	(a/c)
Tangible common equity to tangible assets ratio (Non-GAAP)			10.24	%			10.05	%			9.66	%	(b/d)
Book value per share (GAAP)		$	65.37			$	64.69			$	61.73		(a/e)
Tangible book value per share (Non-GAAP)		$	42.60			$	41.88			$	39.56		(b/e)

APPENDIX B: Non-GAAP Reconciliation of Earnings Metrics

(Unaudited, dollars in thousands)

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

	Three Months Ended												Nine Months Ended
	September 30 2023				June 30 2023				September 30 2022				September 30 2023				September 30 2022
Net interest income (GAAP)	$	149,880			$	152,546			$	162,601			$	461,424			$	444,894		(a)
Noninterest income (GAAP)	$	33,543			$	30,757			$	28,195			$	92,542			$	82,365		(b)
Noninterest income on an operating basis (Non-GAAP)	$	33,543			$	30,757			$	28,195			$	92,542			$	82,365		(c)
Noninterest expense (GAAP)	$	97,782			$	95,555			$	92,728			$	291,998			$	278,790		(d)
Less:
Merger and acquisition expense		—				—				—				—				7,100
Noninterest expense on an operating basis (Non-GAAP)	$	97,782			$	95,555			$	92,728			$	291,998			$	271,690		(e)
Total revenue (GAAP)	$	183,423			$	183,303			$	190,796			$	553,966			$	527,259		(a+b)
Total operating revenue (Non-GAAP)	$	183,423			$	183,303			$	190,796			$	553,966			$	527,259		(a+c)
Net income (GAAP)	$	60,808			$	62,644			$	71,897			$	184,699			$	186,770
Operating net income (Non-GAAP) (See income statement for reconciliation of GAAP to Non-GAAP)	$	60,808			$	62,644			$	71,897			$	184,699			$	191,875
Average common equity (GAAP)	$	2,889,564			$	2,863,046			$	2,881,988			$	2,876,650			$	2,936,021
Less: Average goodwill and other intangibles		1,005,778				1,007,500				1,013,169				1,007,526				1,015,040
Tangible average tangible common equity (Non-GAAP)	$	1,883,786			$	1,855,546			$	1,868,819			$	1,869,124			$	1,920,981
Ratios
Noninterest income as a % of total revenue (GAAP) (calculated by dividing total noninterest income by total revenue)		18.29	%			16.78	%			14.78	%			16.71	%			15.62	%	(b/(a+b))
Noninterest income as a % of total revenue on an operating basis (Non-GAAP) (calculated by dividing total noninterest income on an operating basis by total revenue)		18.29	%			16.78	%			14.78	%			16.71	%			15.62	%	(c/(a+c))
Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue)		53.31	%			52.13	%			48.60	%			52.71	%			52.88	%	(d/(a+b))
Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue)		53.31	%			52.13	%			48.60	%			52.71	%			51.53	%	(e/(a+c))
Return on average tangible common equity (Non-GAAP) (calculated by dividing annualized net income by average tangible common equity)		12.81	%			13.54	%			15.26	%			13.21	%			13.00	%
Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing annualized net operating net income by average tangible common equity)		12.81	%			13.54	%			15.26	%			13.21	%			13.35	%

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

	Three Months Ended
	September 30, 2023									June 30, 2023
	Volume			Interest			Margin Impact			Volume			Interest			Margin Impact
	(Dollars in thousands)
Reported total interest earning assets	$	17,254,248		$	151,034		3.47	%		$	17,391,676		$	153,667		3.54	%
Acquisition fair value marks:
Loan accretion					(330	)								(862	)
CD amortization					11									11
					(319	)	—	%						(851	)	(0.02	)%
Nonaccrual interest, net					67		—	%						231		0.01	%
Other noncore adjustments		(5,448	)		(77	)	—	%			(6,362	)		(287	)	(0.01	)%
Core margin (Non-GAAP)	$	17,248,800		$	150,705		3.47	%		$	17,385,314		$	152,760		3.52	%

 

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