Independent Bank Corp. Reports Third Quarter Net Income of $42.9 Million

Rhea-AI Summary

Independent Bank Corp (Nasdaq: INDB) reported third quarter 2024 net income of $42.9 million, or $1.01 per diluted share, down from $51.3 million in Q2. The decline was primarily due to an increased loan loss provision, partially offset by higher revenue. Key highlights include:

- Total assets remained flat at $19.4 billion
- Total loans decreased slightly by 0.3% to $14.4 billion
- Average deposits increased by 2.2% to $15.4 billion
- Net interest income rose to $141.7 million
- Net interest margin improved by 4 basis points to 3.29%
- Noninterest income increased by 3.8% to $33.5 million
- Noninterest expense grew by 0.8% to $100.4 million

The company's asset quality saw some pressure, with nonperforming loans increasing to 0.73% of total loans, up from 0.40% in Q2. The allowance for credit losses on total loans rose to 1.14% from 1.05% in the previous quarter.

Positive

• Net interest income increased to $141.7 million from $137.9 million in Q2
• Net interest margin improved by 4 basis points to 3.29%
• Average deposits grew by 2.2% (8.74% annualized) compared to Q2
• Noninterest income rose by 3.8% to $33.5 million
• Total assets under administration increased by 4.2% to a record $7.2 billion
• Book value per share increased by 1.9% to $70.08
• Tangible book value per share grew by 3.1% to $46.57

Negative

• Net income decreased to $42.9 million from $51.3 million in Q2
• Loan loss provision increased significantly to $19.5 million from $4.3 million in Q2
• Nonperforming loans increased to 0.73% of total loans, up from 0.40% in Q2
• Net charge-offs rose to $6.7 million (0.18% of average loans annualized) from $339,000 in Q2
• Total loans decreased slightly by 0.3% to $14.4 billion

Insights

Financial Analyst

Independent Bank Corp.'s Q3 2024 results show a mixed performance. Net income decreased to $42.9 million ($1.01 per diluted share) from $51.3 million in Q2, primarily due to an increased loan loss provision. However, there are several positive indicators:

• Net interest income increased to $141.7 million, with net interest margin expanding by 4 basis points to 3.29%
• Average deposits grew by $330.0 million (2.2%), with core deposits representing 81.7% of total deposits
• Noninterest income rose by 3.8% to $33.5 million
• Tangible book value per share increased by 3.1% to $46.57

The increased loan loss provision of $19.5 million is concerning, mainly due to one commercial real estate loan. This led to a rise in nonperforming loans to 0.73% of total loans. However, overall asset quality remains manageable, with delinquencies decreasing to 0.33% of total loans. The bank's strong capital position, with a common equity to assets ratio of 15.34%, provides a buffer against potential credit issues.

Market Research Analyst

INDB's Q3 results reflect the challenging environment for regional banks. While the increased loan loss provision is a concern, it's important to note several positive trends:

• Deposit growth outpacing loan growth, improving liquidity
• Noninterest bearing deposits increasing to 29.3% of total deposits, supporting a relatively low cost of funds
• Asset under administration reaching a record $7.2 billion, indicating strong wealth management performance
• Continued growth in small business lending, up 10.1% year-over-year

The bank's focus on core deposit growth and fee income diversification is prudent in the current high-rate environment. The slight contraction in the loan portfolio (0.3% quarter-over-quarter) suggests a cautious approach to credit risk, which may be viewed positively by investors given the uncertain economic outlook. The bank's strong capital ratios and growing tangible book value provide a solid foundation for navigating potential headwinds. Investors should monitor the commercial real estate portfolio closely, as the single loan issue this quarter could signal broader sector stress.

Results marked by higher revenues, increased credit provision, and deposit growth

ROCKLAND, Mass.--(BUSINESS WIRE)-- Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2024 third quarter net income of $42.9 million, or $1.01 per diluted share, compared to 2024 second quarter net income of $51.3 million, or $1.21 per diluted share. The decline in net income was largely attributable to an increase in the Company’s loan loss provision compared to the prior quarter, partially mitigated by higher revenue levels. The increased loan loss provision was primarily attributable to a reserve allocation associated with one commercial real estate loan, while total levels of criticized and classified loans remained stable.

The Company generated a return on average assets of 0.88% and a return on average common equity of 5.75% for the third quarter of 2024, as compared to 1.07% and 7.10%, respectively, for the prior quarter.

“Our employees continue to provide outstanding service to our clients, resulting in continued improvement over many core elements of the bank, as evidenced by strong tangible book value growth, margin expansion, and core deposit growth for the third quarter,” said Jeffrey Tengel, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “In addition, we believe that we are well positioned to improve profitability with expectations of future Federal Reserve interest rate cuts.”

BALANCE SHEET

Total assets of $19.4 billion at September 30, 2024 remained essentially flat when compared to the prior quarter and increased $40.0 million, or 0.21% when compared to September 30, 2023 levels, with the change compared to the year ago period reflecting a healthy remix of assets from securities into loans.

Total loans at September 30, 2024 of $14.4 billion decreased slightly by $40.1 million, or 0.3% (1.1% annualized), compared to the prior quarter level. This decrease was driven primarily by continued restraint on commercial real estate and construction portfolio growth combined with lower levels of commercial and industrial line utilization despite strong origination volume. On the consumer side, the total loan portfolio grew $18.5 million, or 0.5% (2.0% annualized), from the prior quarter, reflecting increased home equity utilization. Small business lending remains a focal point with the portfolio having grown by 10.1% from a year ago.

Average deposits for the third quarter increased by $330.0 million, or 2.2% (8.74% annualized), as compared to the prior quarter average balances, while period end balances of $15.4 billion at September 30, 2024 increased by $31.4 million, or 0.2%, from June 30, 2024, reflecting strong growth in business checking balances offset by reductions in municipal deposits. Overall core deposits represented 81.7% of total deposits at September 30, 2024, as compared to 81.9% at June 30, 2024. Total noninterest bearing demand deposits grew by 2.3% versus the prior quarter and represent 29.3% of total deposits at September 30, 2024, compared to 28.7% at June 30, 2024. The total cost of deposits for the third quarter increased 9 basis points to 1.74% compared to the prior quarter.

In conjunction with deposit growth during the quarter, total period end borrowings declined by $30.0 million, or 4.3%, during the third quarter of 2024, while average borrowings decreased $334.2 million for the quarter, or 32.8%. As such, the overall cost of funding increased by only 1 basis point to 1.86% during the third quarter as increased deposit costs were mitigated by reductions in wholesale borrowing costs.

The securities portfolio balances remained flat at September 30, 2024 compared to June 30, 2024, as new purchases of $47.8 million and unrealized gains of $36.7 million in the available for sale portfolio were offset by maturities, calls and paydowns. Total securities represented 14.2% of total assets at both September 30, 2024 and June 30, 2024.

Stockholders’ equity at September 30, 2024 increased $57.9 million, or 2.0%, compared to June 30, 2024, driven by strong earnings retention as well as unrealized gains on the available for sale investment securities portfolio and interest rate derivative valuations included in other comprehensive income. The Company’s ratio of common equity to assets of 15.34% at September 30, 2024 represented an increase of 30 basis points from June 30, 2024 and an increase of 44 basis points from September 30, 2023. The Company’s book value per share increased by $1.34, or 1.9%, to $70.08 at September 30, 2024 as compared to the prior quarter. The Company’s tangible book value per share at September 30, 2024 rose by $1.38, or 3.1%, from the prior quarter to $46.57, and has grown by 9.3% from the year ago period. The Company’s ratio of tangible common equity to tangible assets of 10.75% at September 30, 2024 represented an increase of 33 basis points from the prior quarter and an increase of 51 basis points from the year ago period. Please refer to Appendix A for a detailed reconciliation of Non-GAAP balance sheet metrics.

NET INTEREST INCOME

Net interest income for the third quarter of 2024 increased to $141.7 million as compared to $137.9 million for the prior quarter. The net interest margin of 3.29% increased 4 basis points when compared to the prior quarter, driven primarily by higher loan yields and securities cash flow deployment, combined with stable overall funding costs.

NONINTEREST INCOME

Noninterest income of $33.5 million for the third quarter of 2024 represented an increase of $1.2 million, or 3.8%, as compared to the prior quarter. Significant changes in noninterest income for the third quarter of 2024 compared to the prior quarter included the following:

• Deposit account fees increased by $447,000, or 7.1%, due primarily to increased overdraft and cash management activity.

• Interchange and ATM fees increased by $217,000, or 4.6%, driven by increased transaction volume during the third quarter of 2024.

• Total assets under administration rose by $290.6 million, or 4.2%, during the quarter to a record level of $7.2 billion at September 30, 2024. The related increase in management fee income was offset partially by a reduction in seasonal tax preparation fees and insurance commissions recognized during the second quarter, resulting in a slight increase in overall investment and advisory income for the third quarter.

• Mortgage banking income decreased by $348,000, or 26.4%, despite higher origination volumes, as a significant portion of the quarter end pipeline remained in an interest rate floating position, affecting the timing of the recognition of the associated expected gain.

• Loan level derivative income rose by $652,000, or 137.8%, reflecting increased customer demand in light of changes in the macroeconomic environment.

• Other noninterest income increased by $199,000, or 3.1%, driven primarily by increased gains on equity securities, partially offset by reduced loan fees and lower FHLB dividend income.

NONINTEREST EXPENSE

Noninterest expense of $100.4 million for the third quarter of 2024 represented an increase of 0.8%, or $829,000, 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 $2.9 million, or 5.15%, as compared to the prior quarter, fueled primarily by outsized interest rate-driven valuation fluctuations on the Company’s split-dollar bank-owned life insurance policies, which resulted in a $1.7 million increase in expense as compared to the prior quarter. Other increases were attributable to timing on retirement contributions and increased base salary costs.

• Occupancy and equipment expenses increased by $262,000, or 2.1%, due mainly to increases in utilities costs and equipment maintenance and repairs, partially offset by reduced cleaning expenses.

• Other noninterest expense decreased by $2.4 million, or 9.7%, due primarily to a one-time credit of $1.1 million on debit card expenses, as well as reduced director equity compensation and consultant fees, partially offset by increased software and subscriptions costs.

The Company’s tax rate for the third quarter of 2024 decreased slightly to 22.35%, compared to 22.69% for the prior quarter.

ASSET QUALITY

The third quarter provision for credit losses was $19.5 million as compared to $4.3 million for the second quarter of 2024, primarily attributable to a reserve allocation associated with one commercial real estate loan from a previously acquired bank that migrated to nonperforming status during the quarter. As such, nonperforming loans increased to $104.2 million at September 30, 2024, as compared to $57.5 million at June 30, 2024, representing 0.73% and 0.40% of total loans at each respective period. Net charge-offs increased to $6.7 million for the third quarter of 2024, as compared to $339,000 for the prior quarter, representing 0.18% and 0.01%, respectfully, of average loans annualized. Net charge-offs for the third quarter were primarily driven by the partial charge-off of one commercial and industrial loan which had been previously reserved for. Delinquencies as a percentage of total loans decreased 4 basis points from the prior quarter to 0.33% at September 30, 2024.

The allowance for credit losses on total loans increased to $163.7 million at September 30, 2024 compared to $150.9 million at June 30, 2024, and represented 1.14% and 1.05% of total loans, at September 30, 2024 and June 30, 2024, respectively.

CONFERENCE CALL INFORMATION

Jeffrey Tengel, Chief Executive Officer, and Mark Ruggiero, Chief Financial Officer and Executive Vice President of Consumer Lending, will host a conference call to discuss third quarter earnings at 10:00 a.m. Eastern Time on Friday, October 18, 2024. 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: 8729400 and will be available through October 25, 2024. Additionally, a webcast replay will be available on the Company’s website until October 15, 2025.

ABOUT INDEPENDENT BANK CORP.

Independent Bank Corp. (NASDAQ Global Select Market: INDB) is the holding company for Rockland Trust Company, a full-service commercial bank headquartered in Massachusetts. With retail branches in Eastern Massachusetts and Worcester County as well as commercial banking and investment management offices in Massachusetts and Rhode Island, Rockland Trust offers a wide range of banking, investment, and insurance services to individuals, families, and businesses. The Bank also offers a full suite of mobile, online, and telephone banking services. Rockland Trust is an FDIC member and an Equal Housing Lender.

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

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

• adverse economic conditions in the regional and local economies within the New England region and the Company’s market area;
• events impacting the financial services industry, including high profile bank failures, and any resulting decreased confidence in banks among depositors, investors, and other counterparties, as well as competition for deposits, significant disruption, volatility and depressed valuations of equity and other securities of banks in the capital markets;
• the effects to the Company of an increasingly competitive labor market, including the possibility that the Company will have to devote significant resources to attract and retain qualified personnel;
• the instability or volatility in financial markets and unfavorable domestic or global general economic, political or business conditions, whether caused by geopolitical concerns, including the Russia/Ukraine conflict, the conflict in Israel and surrounding areas and the possible expansion of such conflicts, political and policy uncertainties with the approach of the U.S. presidential election, changes in U.S. and international trade policies, or other factors, and the potential impact of such factors on the Company and its customers, including the potential for decreases in deposits and loan demand, unanticipated loan delinquencies, loss of collateral and decreased service revenues;
• unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on the Company’s local economies or the Company's business caused by adverse weather conditions and natural disasters, changes in climate, public health crises or other external events and any actions taken by governmental authorities in response to any such events;
• adverse changes or volatility in the local real estate market;
• changes in interest rates and any resulting impact on interest earning assets and/or interest bearing liabilities, the level of voluntary prepayments on loans and the receipt of payments on mortgage-backed securities, decreased loan demand or increased difficulty in the ability of borrowers to repay variable rate loans;
• 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;
• the effect of laws, regulations, new requirements or expectations, or additional regulatory oversight in the highly regulated financial services industry, including as a result of intensified regulatory scrutiny in the aftermath of regional bank failures and the resulting need to invest in technology to meet heightened regulatory expectations, increased costs of compliance or required adjustments to strategy;
• changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System;
• higher than expected tax expense, including as a result of failure to comply with general tax laws and changes in tax laws;
• increased competition in the Company’s market areas, including competition that could impact deposit gathering, retention of deposits and the cost of deposits, increased competition due to the demand for innovative products and service offerings, and competition from non-depository institutions which may be subject to fewer regulatory constraints and lower cost structures;
• a deterioration in the conditions of the securities markets;
• a deterioration of the credit rating for U.S. long-term sovereign debt or uncertainties surrounding the federal budget;
• inability to adapt to changes in information technology, including changes to industry accepted delivery models driven by a migration to the internet as a means of service delivery, including any inability to effectively implement new technology-driven products, such as artificial intelligence;
• electronic or other fraudulent activity within the financial services industry, especially in the commercial banking sector;
• adverse changes in consumer spending and savings habits;
• the effect of laws and regulations regarding the financial services industry, including the need to invest in technology to meet heightened regulatory expectations or introduction of new requirements or expectations resulting in increased costs of compliance or required adjustments to strategy;
• changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) generally applicable to the Company’s business and the associated costs of such changes;
• the Company’s potential judgments, claims, damages, penalties, fines and reputational damage resulting from pending or future litigation and regulatory and government actions;
• changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters;
• operational risks related to the Company and its customers’ reliance on information technology; cyber threats, attacks, intrusions, and fraud; and outages or other issues impacting the Company or its third party service providers which could lead to interruptions or disruptions of the Company’s operating systems, including systems that are customer facing, and adversely impact the Company’s business;
• any unexpected material adverse changes in the Company’s operations or earnings.

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

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

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 2024				June 30 2024				September 30 2023				Sept 2024 vs.			Sept 2024 vs.
													Jun 2024			Sept 2023
Assets
Cash and due from banks	$	198,987			$	192,845			$	176,930			3.18	%		12.47	%
Interest-earning deposits with banks		225,465				121,036				43,198			86.28	%		421.93	%
Securities
Trading		4,410				4,384				4,476			0.59	%		(1.47	)%
Equities		21,639				21,028				21,475			2.91	%		0.76	%
Available for sale		1,247,211				1,220,656				1,353,744			2.18	%		(7.87	)%
Held to maturity		1,492,315				1,519,655				1,594,279			(1.80	)%		(6.40	)%
Total securities		2,765,575				2,765,723				2,973,974			(0.01	)%		(7.01	)%
Loans held for sale		16,259				17,850				3,998			(8.91	)%		306.68	%
Loans
Commercial and industrial		1,577,861				1,602,752				1,653,003			(1.55	)%		(4.55	)%
Commercial real estate		8,162,020				8,151,805				7,896,230			0.13	%		3.37	%
Commercial construction		742,042				786,743				965,442			(5.68	)%		(23.14	)%
Small business		270,018				269,270				245,335			0.28	%		10.06	%
Total commercial		10,751,941				10,810,570				10,760,010			(0.54	)%		(0.07	)%
Residential real estate		2,441,859				2,439,646				2,338,102			0.09	%		4.44	%
Home equity - first position		498,193				504,403				529,938			(1.23	)%		(5.99	)%
Home equity - subordinate positions		632,242				612,404				565,617			3.24	%		11.78	%
Total consumer real estate		3,572,294				3,556,453				3,433,657			0.45	%		4.04	%
Other consumer		36,572				33,919				30,568			7.82	%		19.64	%
Total loans		14,360,807				14,400,942				14,224,235			(0.28	)%		0.96	%
Less: allowance for credit losses		(163,696	)			(150,859	)			(140,569	)		8.51	%		16.45	%
Net loans		14,197,111				14,250,083				14,083,666			(0.37	)%		0.81	%
Federal Home Loan Bank stock		29,926				32,738				43,878			(8.59	)%		(31.80	)%
Bank premises and equipment, net		192,197				191,303				191,560			0.47	%		0.33	%
Goodwill		985,072				985,072				985,072			—	%		—	%
Other intangible assets		13,701				15,161				19,825			(9.63	)%		(30.89	)%
Cash surrender value of life insurance policies		302,132				300,111				295,670			0.67	%		2.19	%
Other assets		481,692				539,115				550,338			(10.65	)%		(12.47	)%
Total assets	$	19,408,117			$	19,411,037			$	19,368,109			(0.02	)%		0.21	%
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing demand deposits	$	4,519,492			$	4,418,891			$	4,796,148			2.28	%		(5.77	)%
Savings and interest checking		5,188,303				5,241,154				5,398,322			(1.01	)%		(3.89	)%
Money market		2,969,809				3,058,109				2,852,293			(2.89	)%		4.12	%
Time certificates of deposit		2,763,419				2,691,433				2,012,763			2.67	%		37.29	%
Total deposits		15,441,023				15,409,587				15,059,526			0.20	%		2.53	%
Borrowings
Federal Home Loan Bank borrowings		600,521				630,527				887,548			(4.76	)%		(32.34	)%
Junior subordinated debentures, net		62,859				62,859				62,857			—	%		—	%
Subordinated debentures, net		—				—				49,957			nm			(100.00	)%
Total borrowings		663,380				693,386				1,000,362			(4.33	)%		(33.69	)%
Total deposits and borrowings		16,104,403				16,102,973				16,059,888			0.01	%		0.28	%
Other liabilities		326,566				388,815				422,813			(16.01	)%		(22.76	)%
Total liabilities		16,430,969				16,491,788				16,482,701			(0.37	)%		(0.31	)%
Stockholders’ equity
Common stock		423				423				440			—	%		(3.86	)%
Additional paid in capital		1,907,012				1,904,869				1,999,448			0.11	%		(4.62	)%
Retained earnings		1,146,915				1,128,182				1,046,266			1.66	%		9.62	%
Accumulated other comprehensive loss, net of tax		(77,202	)			(114,225	)			(160,746	)		(32.41	)%		(51.97	)%
Total stockholders' equity		2,977,148				2,919,249				2,885,408			1.98	%		3.18	%
Total liabilities and stockholders’ equity	$	19,408,117			$	19,411,037			$	19,368,109			(0.02	)%		0.21	%

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, dollars in thousands, except per share data)
	Three Months Ended
													% Change			% Change
	September 30 2024				June 30 2024				September 30 2023				Sept 2024 vs.			Sept 2024 vs.
													Jun 2024			Sept 2023
Interest income
Interest on federal funds sold and short-term investments	$	1,635			$	397			$	905			311.84	%		80.66	%
Interest and dividends on securities		14,065				13,994				14,818			0.51	%		(5.08	)%
Interest and fees on loans		200,597				197,274				187,145			1.68	%		7.19	%
Interest on loans held for sale		227				199				60			14.07	%		278.33	%
Total interest income		216,524				211,864				202,928			2.20	%		6.70	%
Interest expense
Interest on deposits		66,985				61,469				40,713			8.97	%		64.53	%
Interest on borrowings		7,836				12,469				12,335			(37.16	)%		(36.47	)%
Total interest expense		74,821				73,938				53,048			1.19	%		41.04	%
Net interest income		141,703				137,926				149,880			2.74	%		(5.46	)%
Provision for credit losses		19,500				4,250				5,500			358.82	%		254.55	%
Net interest income after provision for credit losses		122,203				133,676				144,380			(8.58	)%		(15.36	)%
Noninterest income
Deposit account fees		6,779				6,332				5,936			7.06	%		14.20	%
Interchange and ATM fees		4,970				4,753				4,808			4.57	%		3.37	%
Investment management and advisory		11,033				10,987				10,246			0.42	%		7.68	%
Mortgage banking income		972				1,320				739			(26.36	)%		31.53	%
Increase in cash surrender value of life insurance policies		2,006				2,000				1,983			0.30	%		1.16	%
Gain on life insurance benefits		—				—				1,924			nm			(100.00	)%
Loan level derivative income		1,125				473				842			137.84	%		33.61	%
Other noninterest income		6,664				6,465				7,065			3.08	%		(5.68	)%
Total noninterest income		33,549				32,330				33,543			3.77	%		0.02	%
Noninterest expenses
Salaries and employee benefits		60,108				57,162				54,797			5.15	%		9.69	%
Occupancy and equipment expenses		12,734				12,472				12,321			2.10	%		3.35	%
Data processing and facilities management		2,510				2,405				2,404			4.37	%		4.41	%
FDIC assessment		2,628				2,694				2,727			(2.45	)%		(3.63	)%
Other noninterest expenses		22,463				24,881				25,533			(9.72	)%		(12.02	)%
Total noninterest expenses		100,443				99,614				97,782			0.83	%		2.72	%
Income before income taxes		55,309				66,392				80,141			(16.69	)%		(30.99	)%
Provision for income taxes		12,362				15,062				19,333			(17.93	)%		(36.06	)%
Net Income	$	42,947			$	51,330			$	60,808			(16.33	)%		(29.37	)%
Weighted average common shares (basic)		42,481,441				42,468,658				44,135,487
Common share equivalents		11,622				4,308				11,417
Weighted average common shares (diluted)		42,493,063				42,472,966				44,146,904
Basic earnings per share	$	1.01			$	1.21			$	1.38			(16.53	)%		(26.81	)%
Diluted earnings per share	$	1.01			$	1.21			$	1.38			(16.53	)%		(26.81	)%
Performance ratios
Net interest margin (FTE)		3.29	%			3.25	%			3.47	%
Return on average assets (calculated by dividing net income by average assets) (GAAP)		0.88	%			1.07	%			1.25	%
Return on average common equity (calculated by dividing net income by average common equity) (GAAP)		5.75	%			7.10	%			8.35	%
Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity)		8.67	%			10.83	%			12.81	%
Noninterest income as a % of total revenue (GAAP) (calculated by dividing total noninterest income by net interest income plus total noninterest income)		19.14	%			18.99	%			18.29	%
Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue)		57.31	%			58.51	%			53.31	%

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, dollars in thousands, except per share data)
		Nine Months Ended
										% Change
		September 30 2024				September 30 2023				Sept 2024 vs.
										Sept 2023
Interest income
Interest on federal funds sold and short-term investments		$	2,515			$	4,882			(48.48	)%
Interest and dividends on securities			42,291				45,711			(7.48	)%
Interest and fees on loans			591,097				537,830			9.90	%
Interest on loans held for sale			530				133			298.50	%
Total interest income			636,433				588,556			8.13	%
Interest expense
Interest on deposits			182,774				95,297			91.79	%
Interest on borrowings			36,591				31,835			14.94	%
Total interest expense			219,365				127,132			72.55	%
Net interest income			417,068				461,424			(9.61	)%
Provision for credit losses			28,750				17,750			61.97	%
Net interest income after provision for credit losses			388,318				443,674			(12.48	)%
Noninterest income
Deposit account fees			19,339				17,360			11.40	%
Interchange and ATM fees			14,175				13,470			5.23	%
Investment management and advisory			31,961				30,373			5.23	%
Mortgage banking income			3,088				1,717			79.85	%
Increase in cash surrender value of life insurance policies			5,934				5,777			2.72	%
Gain on life insurance benefits			263				2,111			(87.54	)%
Loan level derivative income			1,678				2,525			(33.54	)%
Other noninterest income			19,384				19,209			0.91	%
Total noninterest income			95,822				92,542			3.54	%
Noninterest expenses
Salaries and employee benefits			174,444				165,747			5.25	%
Occupancy and equipment expenses			38,673				37,528			3.05	%
Data processing and facilities management			7,398				7,461			(0.84	)%
FDIC assessment			8,304				8,011			3.66	%
Other noninterest expenses			71,125				73,251			(2.90	)%
Total noninterest expenses			299,944				291,998			2.72	%
Income before income taxes			184,196				244,218			(24.58	)%
Provision for income taxes			42,149				59,519			(29.18	)%
Net Income		$	142,047			$	184,699			(23.09	)%
Weighted average common shares (basic)			42,501,199				44,419,731
Common share equivalents			9,602				12,851
Weighted average common shares (diluted)			42,510,801				44,432,582
Basic earnings per share		$	3.34			$	4.16			(19.71	)%
Diluted earnings per share		$	3.34			$	4.16			(19.71	)%
Performance ratios
Net interest margin (FTE)			3.26	%			3.60	%
Return on average assets (GAAP) (calculated by dividing net income by average assets)			0.98	%			1.28	%
Return on average common equity (GAAP) (calculated by dividing net income by average common equity)			6.49	%			8.58	%
Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity)			9.86	%			13.21	%
Noninterest income as a % of total revenue (GAAP) (calculated by dividing total noninterest income by net interest income plus total noninterest income)			18.68	%			16.71	%
Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue)			58.48	%			52.71	%

nm = not meaningful

ASSET QUALITY
(Unaudited, dollars in thousands)		Nonperforming Assets At
		September 30 2024				June 30 2024				September 30 2023
Nonperforming loans
Commercial & industrial loans		$	12,027			$	17,793			$	2,953
Commercial real estate loans			77,951				23,479				23,867
Small business loans			501				437				372
Residential real estate loans			9,744				10,629				8,493
Home equity			3,992				5,090				3,411
Other consumer			33				23				75
Total nonperforming loans			104,248				57,451				39,171
Other real estate owned			110				110				110
Total nonperforming assets		$	104,358			$	57,561			$	39,281
Nonperforming loans/gross loans			0.73	%			0.40	%			0.28	%
Nonperforming assets/total assets			0.54	%			0.30	%			0.20	%
Allowance for credit losses/nonperforming loans			157.03	%			262.59	%			358.86	%
Allowance for credit losses/total loans			1.14	%			1.05	%			0.99	%
Delinquent loans/total loans			0.33	%			0.37	%			0.22	%
		Nonperforming Assets Reconciliation for the Three Months Ended
		September 30 2024				June 30 2024				September 30 2023
Nonperforming assets beginning balance		$	57,561			$	57,051			$	45,812
New to nonperforming			57,197				6,201				3,455
Loans charged-off			(7,006	)			(808	)			(6,018	)
Loans paid-off			(2,306	)			(3,458	)			(2,915	)
Loans restored to performing status			(1,058	)			(1,429	)			(1,428	)
Other			(30	)			4				375
Nonperforming assets ending balance		$	104,358			$	57,561			$	39,281

		Net Charge-Offs (Recoveries)
		Three Months Ended												Nine Months Ended
		September 30 2024				June 30 2024				September 30 2023				September 30 2024				September 30 2023
Net charge-offs (recoveries)
Commercial and industrial loans		$	5,883			$	(2	)		$	(111	)		$	5,796			$	23,339
Commercial real estate loans			—				—				5,072				—				5,072
Small business loans			160				48				77				278				125
Home equity			24				(137	)			(12	)			(246	)			(38	)
Other consumer			596				430				552				1,448				1,102
Total net charge-offs		$	6,663			$	339			$	5,578			$	7,276			$	29,600
Net charge-offs to average loans (annualized)			0.18	%			0.01	%			0.16	%			0.07	%			0.28	%

BALANCE SHEET AND CAPITAL RATIOS
		September 30 2024				June 30 2024				September 30 2023
Gross loans/total deposits			93.00	%			93.45	%			94.45	%
Common equity tier 1 capital ratio (1)			14.59	%			14.40	%			14.41	%
Tier 1 leverage capital ratio (1)			11.22	%			11.09	%			11.12	%
Common equity to assets ratio GAAP			15.34	%			15.04	%			14.90	%
Tangible common equity to tangible assets ratio (2)			10.75	%			10.42	%			10.24	%
Book value per share GAAP		$	70.08			$	68.74			$	65.37
Tangible book value per share (2)		$	46.57			$	45.19			$	42.60

(1) Estimated number for September 30, 2024.
(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, 2024									June 30, 2024									September 30, 2023
					Interest									Interest									Interest
		Average			Earned/			Yield/			Average			Earned/			Yield/			Average			Earned/			Yield/
		Balance			Paid (1)			Rate			Balance			Paid (1)			Rate			Balance			Paid (1)			Rate
Interest-earning assets
Interest-earning deposits with banks, federal funds sold, and short term investments		$	129,827		$	1,635		5.01	%		$	47,598		$	397		3.35	%		$	89,449		$	905		4.01	%
Securities
Securities - trading			4,366			—		—	%			4,739			—		—	%			4,546			—		—	%
Securities - taxable investments			2,761,758			14,064		2.03	%			2,793,145			13,992		2.01	%			3,000,736			14,817		1.96	%
Securities - nontaxable investments (1)			194			1		2.05	%			189			2		4.26	%			188			1		2.11	%
Total securities		$	2,766,318		$	14,065		2.02	%		$	2,798,073		$	13,994		2.01	%		$	3,005,470		$	14,818		1.96	%
Loans held for sale			15,208			227		5.94	%			12,610			199		6.35	%			4,072			60		5.85	%
Loans
Commercial and industrial (1)			1,585,801			28,834		7.23	%			1,583,858			28,305		7.19	%			1,682,000			30,739		7.25	%
Commercial real estate (1)			8,170,031			107,735		5.25	%			8,112,683			104,449		5.18	%			7,823,525			94,861		4.81	%
Commercial construction			749,009			13,778		7.32	%			834,876			15,451		7.44	%			1,007,814			16,829		6.62	%
Small business			270,486			4,486		6.60	%			265,273			4,376		6.63	%			240,782			3,752		6.18	%
Total commercial			10,775,327			154,833		5.72	%			10,796,690			152,581		5.68	%			10,754,121			146,181		5.39	%
Residential real estate			2,443,488			26,917		4.38	%			2,427,635			26,472		4.39	%			2,276,882			23,197		4.04	%
Home equity			1,122,750			19,372		6.86	%			1,109,979			18,826		6.82	%			1,093,479			18,313		6.64	%
Total consumer real estate			3,566,238			46,289		5.16	%			3,537,614			45,298		5.15	%			3,370,361			41,510		4.89	%
Other consumer			35,331			665		7.49	%			31,019			593		7.69	%			30,775			608		7.84	%
Total loans		$	14,376,896		$	201,787		5.58	%		$	14,365,323		$	198,472		5.56	%		$	14,155,257		$	188,299		5.28	%
Total interest-earning assets		$	17,288,249		$	217,714		5.01	%		$	17,223,604		$	213,062		4.98	%		$	17,254,248		$	204,082		4.69	%
Cash and due from banks			182,151									178,558									184,003
Federal Home Loan Bank stock			30,513									41,110									38,252
Other assets			1,839,389									1,876,081									1,859,099
Total assets		$	19,340,302								$	19,319,353								$	19,335,602
Interest-bearing liabilities
Deposits
Savings and interest checking accounts		$	5,163,567		$	17,978		1.39	%		$	5,166,340		$	16,329		1.27	%		$	5,393,209		$	11,860		0.87	%
Money market			2,998,672			18,986		2.52	%			2,909,503			17,409		2.41	%			2,945,450			13,709		1.85	%
Time deposits			2,740,982			30,021		4.36	%			2,579,336			27,731		4.32	%			1,860,440			15,144		3.23	%
Total interest-bearing deposits		$	10,903,221		$	66,985		2.44	%		$	10,655,179		$	61,469		2.32	%		$	10,199,099		$	40,713		1.58	%
Borrowings
Federal Home Loan Bank borrowings			623,053			6,692		4.27	%			957,268			11,329		4.76	%			869,646			10,568		4.82	%
Junior subordinated debentures			62,859			1,144		7.24	%			62,859			1,140		7.29	%			62,857			1,150		7.26	%
Subordinated debentures			—			—		—	%			—			—		—	%			49,944			617		4.90	%
Total borrowings		$	685,912		$	7,836		4.54	%		$	1,020,127		$	12,469		4.92	%		$	982,447		$	12,335		4.98	%
Total interest-bearing liabilities		$	11,589,133		$	74,821		2.57	%		$	11,675,306		$	73,938		2.55	%		$	11,181,546		$	53,048		1.88	%
Noninterest-bearing demand deposits			4,442,858									4,360,897									4,883,009
Other liabilities			339,075									375,629									381,483
Total liabilities		$	16,371,066								$	16,411,832								$	16,446,038
Stockholders’ equity			2,969,236									2,907,521									2,889,564
Total liabilities and stockholders’ equity		$	19,340,302								$	19,319,353								$	19,335,602
Net interest income					$	142,893								$	139,124								$	151,034
Interest rate spread (2)								2.44	%								2.43	%								2.81	%
Net interest margin (3)								3.29	%								3.25	%								3.47	%
Supplemental Information
Total deposits, including demand deposits		$	15,346,079		$	66,985					$	15,016,076		$	61,469					$	15,082,108		$	40,713
Cost of total deposits								1.74	%								1.65	%								1.07	%
Total funding liabilities, including demand deposits		$	16,031,991		$	74,821					$	16,036,203		$	73,938					$	16,064,555		$	53,048
Cost of total funding liabilities								1.86	%								1.85	%								1.31	%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis was $1.2 million for each of the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, 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, 2024									September 30, 2023
					Interest									Interest
		Average			Earned/			Yield/			Average			Earned/			Yield/
		Balance			Paid			Rate			Balance			Paid			Rate
Interest-earning assets
Interest earning deposits with banks, federal funds sold, and short term investments		$	76,199		$	2,515		4.41	%		$	144,558		$	4,882		4.52	%
Securities
Securities - trading			4,627			—		—	%			4,377			—		—	%
Securities - taxable investments			2,807,287			42,287		2.01	%			3,062,745			45,707		2.00	%
Securities - nontaxable investments (1)			191			5		3.50	%			191			5		3.50	%
Total securities		$	2,812,105		$	42,292		2.01	%		$	3,067,313		$	45,712		1.99	%
Loans held for sale			11,651			530		6.08	%			3,180			133		5.59	%
Loans
Commercial and industrial (1)			1,576,580			84,746		7.18	%			1,662,459			86,762		6.98	%
Commercial real estate (1)			8,131,317			314,260		5.16	%			7,800,173			276,255		4.74	%
Commercial construction			808,570			44,650		7.38	%			1,061,847			50,508		6.36	%
Small business			264,283			13,022		6.58	%			231,299			10,472		6.05	%
Total commercial			10,780,750			456,678		5.66	%			10,755,778			423,997		5.27	%
Residential real estate			2,429,963			79,472		4.37	%			2,163,130			63,498		3.92	%
Home equity			1,109,245			56,642		6.82	%			1,092,304			51,951		6.36	%
Total consumer real estate			3,539,208			136,114		5.14	%			3,255,434			115,449		4.74	%
Other consumer			32,350			1,867		7.71	%			30,885			1,751		7.58	%
Total loans		$	14,352,308		$	594,659		5.53	%		$	14,042,097		$	541,197		5.15	%
Total interest-earning assets		$	17,252,263		$	639,996		4.96	%		$	17,257,148		$	591,924		4.59	%
Cash and due from banks			179,414									181,380
Federal Home Loan Bank stock			39,576									32,615
Other assets			1,841,696									1,843,564
Total assets		$	19,312,949								$	19,314,707
Interest-bearing liabilities
Deposits
Savings and interest checking accounts		$	5,165,252		$	49,163		1.27	%		$	5,545,951		$	28,758		0.69	%
Money market			2,917,693			52,386		2.40	%			3,079,942			36,433		1.58	%
Time deposits			2,539,915			81,225		4.27	%			1,596,889			30,106		2.52	%
Total interest-bearing deposits		$	10,622,860		$	182,774		2.30	%		$	10,222,782		$	95,297		1.25	%
Borrowings
Federal Home Loan Bank borrowings			920,781			32,652		4.74	%			747,640			26,788		4.79	%
Junior subordinated debentures			62,859			3,431		7.29	%			62,856			3,195		6.80	%
Subordinated debentures			13,501			508		5.03	%			49,921			1,852		4.96	%
Total borrowings		$	997,141		$	36,591		4.90	%		$	860,417		$	31,835		4.95	%
Total interest-bearing liabilities		$	11,620,001		$	219,365		2.52	%		$	11,083,199		$	127,132		1.53	%
Noninterest-bearing demand deposits			4,414,392									4,990,869
Other liabilities			354,038									363,989
Total liabilities		$	16,388,431								$	16,438,057
Stockholders’ equity			2,924,518									2,876,650
Total liabilities and stockholders’ equity		$	19,312,949								$	19,314,707
Net interest income					$	420,631								$	464,792
Interest rate spread (2)								2.44	%								3.06	%
Net interest margin (3)								3.26	%								3.60	%
Supplemental Information
Total deposits, including demand deposits		$	15,037,252		$	182,774					$	15,213,651		$	95,297
Cost of total deposits								1.62	%								0.84	%
Total funding liabilities, including demand deposits		$	16,034,393		$	219,365					$	16,074,068		$	127,132
Cost of total funding liabilities								1.83	%								1.06	%

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis was $3.6 million and $3.4 million for the nine months ended September 30, 2024 and 2023, respectively.
(2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

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

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 2024				June 30 2024				September 30 2023
Tangible common equity		(Dollars in thousands, except per share data)
Stockholders’ equity (GAAP)		$	2,977,148			$	2,919,249			$	2,885,408			(a)
Less: Goodwill and other intangibles			998,773				1,000,233				1,004,897
Tangible common equity (Non-GAAP)		$	1,978,375			$	1,919,016			$	1,880,511			(b)
Tangible assets
Assets (GAAP)		$	19,408,117			$	19,411,037			$	19,368,109			(c)
Less: Goodwill and other intangibles			998,773				1,000,233				1,004,897
Tangible assets (Non-GAAP)		$	18,409,344			$	18,410,804			$	18,363,212			(d)
Common Shares			42,480,765				42,469,867				44,141,973			(e)
Common equity to assets ratio (GAAP)			15.34	%			15.04	%			14.90	%		(a/c)
Tangible common equity to tangible assets ratio (Non-GAAP)			10.75	%			10.42	%			10.24	%		(b/d)
Book value per share (GAAP)		$	70.08			$	68.74			$	65.37			(a/e)
Tangible book value per share (Non-GAAP)		$	46.57			$	45.19			$	42.60			(b/e)

APPENDIX B: Non-GAAP Reconciliation of Earnings Metrics

(Unaudited, dollars in thousands)

The following table summarizes the calculation of the Company’s return on average tangible common equity for the periods indicated:

	Three Months Ended												Nine Months Ended
	September 30 2024				June 30 2024				September 30 2023				September 30 2024				September 30 2023
Net income (GAAP)	$	42,947			$	51,330			$	60,808			$	142,047			$	184,699
Average common equity (GAAP)	$	2,969,236			$	2,907,521			$	2,889,564			$	2,924,518			$	2,876,650
Less: Average goodwill and other intangibles		999,604				1,000,972				1,005,778				1,001,022				1,007,526
Tangible average tangible common equity (Non-GAAP)	$	1,969,632			$	1,906,549			$	1,883,786			$	1,923,496			$	1,869,124
Return on average tangible common equity (Non-GAAP) (calculated by dividing annualized net income by average tangible common equity)		8.67	%			10.83	%			12.81	%			9.86	%			13.21	%

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

	Three Months Ended
	September 30, 2024									June 30, 2024
	Volume			Interest			Margin Impact			Volume			Interest			Margin Impact
	(Dollars in thousands)
Reported total interest earning assets	$	17,288,249		$	142,893		3.29	%		$	17,223,604		$	139,124		3.25	%
Acquisition fair value marks:
Loan accretion					(171	)	—	%						(74	)	—	%
Nonaccrual interest, net					(156	)	—	%						(131	)	—	%
Other noncore adjustments		(3,523	)		(145	)	—	%			(4,020	)		(499	)	(0.01	)%
Core margin (Non-GAAP)	$	17,284,726		$	142,421		3.29	%		$	17,219,584		$	138,420		3.24	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241016417820/en/

Jeffrey Tengel

President and Chief Executive Officer

(781) 982-6144

Mark J. Ruggiero

Chief Financial Officer and

Executive Vice President of Consumer Lending

(781) 982-6281

Source: Independent Bank Corp.

FAQ

What was Independent Bank Corp's (INDB) net income for Q3 2024?

Independent Bank Corp reported a net income of $42.9 million, or $1.01 per diluted share, for the third quarter of 2024.

How did INDB's Q3 2024 net income compare to the previous quarter?

INDB's Q3 2024 net income of $42.9 million decreased from $51.3 million in Q2 2024, primarily due to an increased loan loss provision.

What was Independent Bank Corp's (INDB) net interest margin in Q3 2024?

INDB's net interest margin for Q3 2024 was 3.29%, an increase of 4 basis points compared to the previous quarter.

How much did INDB's average deposits grow in Q3 2024?

INDB's average deposits increased by $330.0 million, or 2.2% (8.74% annualized), compared to the previous quarter.

What was the allowance for credit losses on total loans for INDB in Q3 2024?

The allowance for credit losses on total loans increased to $163.7 million, representing 1.14% of total loans, as of September 30, 2024.