Independent Bank Corp. Reports Second Quarter Net Income of $37.6 Million
07/22/2021 - 04:15 PM
Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2021 second quarter net income of $37.6 million , or $1.14 per diluted share, compared to net income of $41.7 million , or $1.26 per diluted share, reported for the first quarter of 2021. Second quarter results included merger related costs of $1.7 million associated with the acquisition of Meridian Bancorp Inc. ("Meridian") and its subsidiary East Boston Savings Bank, which is expected to close in the fourth quarter of 2021. Excluding these merger-related costs, net of tax, operating net income was $38.8 million , or $1.17 per diluted share, for the second quarter of 2021. Please refer to "Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP)" below for a reconciliation of net income to operating net income.
"Our core fundamentals are strong and we are well-positioned to continue to take advantage of growth opportunities as the local economy continues to re-adjust post-pandemic,” said Christopher Oddleifson, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “We have been hard at work on our previously announced merger with Meridian Bancorp./East Boston Savings Bank and are excited about the possibilities the transaction represents for our future. I continue to be inspired by the dedication and effort of my colleagues, and their collective commitment to our customers, the communities we serve, and to each other as we live out our mission of being the bank Where Each Relationship Matters®.”
BALANCE SHEET
Total assets of $14.2 billion at June 30, 2021 increased by $420.3 million , or 3.1% , from the prior quarter, and by $1.2 billion , or 9.0% , as compared to the year ago period, driven by continued significant growth in deposits, leading to increased liquid assets in the second quarter of 2021.
Total loans at June 30, 2021 decreased by $307.7 million , or 3.3% (13.3% annualized), when compared to the prior quarter which was primarily attributable to a net reduction in Paycheck Protection Program ("PPP") loan balances of $363.7 million , or 43.0% , as the program concluded its second round of funding with focus pivoting toward loan forgiveness. Exclusive of PPP loan activity, total loans increased $55.9 million , or 2.7% on an annualized basis, reflecting a modest, yet positive shift in overall economic activity. Fueling the net growth, commercial loans increased $66.2 million , or 1.1% (4.3% annualized) during the second quarter, primarily due to growth in residential-based commercial real estate projects, as well as 5.0% (19.9% annualized) growth in small business loans, capitalizing on positive momentum from the successful PPP experience and overall market disruption. Partially offsetting these growth factors, construction loan balances decreased 3.8% from the prior quarter, reflecting an accelerated pace of project completion, while modest new fundings and restrained line utilization in the commercial and industrial portfolio continued to challenge growth. Strong closing volumes were experienced within both the residential and home equity portfolios, with a larger portion of residential closings being retained in the portfolio rather than sold into the secondary market compared to prior quarters. However the low interest-rate environment and excess consumer liquidity positions continued to drive elevated payoff activity and historically low home equity line utilization rates.
Deposit balances of $12.0 billion at June 30, 2021 increased by $393.4 million , or 3.4% (13.6% annualized), from the prior quarter, reflecting additional government stimulus payments along with robust new account activity in both consumer and business product categories. With continued reduction in time deposit balances, core deposits rose to 91.6% of total deposits at June 30, 2021, which, combined with the runoff of higher cost time deposits and further rate reductions across all products, contributed to a total cost of deposits for the second quarter of 0.07% , representing a reduction of three basis points when compared to the prior quarter.
The securities portfolio increased by $251.3 million , or 17.6% , when compared to the prior quarter, reflecting a continued direct strategy to deploy a portion of excess cash balances into securities. Total purchases for the quarter were $340.2 million , offset by paydowns, calls, and maturities.
Total borrowings decreased by $4.7 million , or 2.6% when compared to the prior quarter reflecting repayments of outstanding debt.
Stockholders' equity at June 30, 2021 increased by 1.5% (6.1% annualized), as compared to the prior quarter, reflecting continued strong earnings retention. Book value per share increased by $0.78, or 1.5% , to $52.72 during the second quarter as compared to the prior quarter. The Company's ratio of common equity to assets of 12.27% decreased by 18 basis points from the prior quarter and by 57 basis points from the year ago period. The Company's tangible book value per share at June 30, 2021 rose by $0.82, or 2.3% , from the prior quarter to $36.78, representing an increase of 6.3% from the year ago period. The Company's ratio of tangible common equity to tangible assets of 8.89% at June 30, 2021 represents a 7 basis point decrease compared to the prior quarter and a 23 basis point decrease compared to the year ago period.
Please refer to Appendix A for a detailed reconciliation of Non-GAAP metrics.
NET INTEREST INCOME
Net interest income for the second quarter decreased to $93.4 million compared to $95.6 million for the prior quarter, driven primarily by reductions in PPP fee recognition as $7.2 million was recognized in the second quarter compared to $9.5 million for the prior quarter. The 2021 second quarter net interest margin was heavily impacted by the Company's increased excess liquidity position, decreasing by 26 basis points from the prior quarter to 2.99% . The table below illustrates the changes within the net interest margin for the second quarter:
Net interest margin as of March 31, 2021
3.25
%
Excess liquidity - cash and securities
(0.19)
%
Loan yields
(0.03)
%
PPP loan impact
(0.06)
%
Other noncore adjustments
(0.01)
%
Decreased cost of funds
0.03
%
Net interest margin as of June 30, 2021
2.99
%
Please refer to Appendix C for additional details regarding the net interest margin.
NONINTEREST INCOME
Noninterest income of $25.0 million for the second quarter of 2021 was $279,000, or 1.1% , lower than the prior quarter. Significant changes in noninterest income for the second quarter compared to the prior quarter included the following:
Deposit account fees increased by $238,000, or 6.6% , primarily driven by overdraft fees.
Interchange and ATM fees increased by $348,000, or 12.8% , due primarily to increased volume during the second quarter, reflecting a rise in customer spending.
Investment management income increased by $568,000, or 6.8% , due primarily to an increase in assets under administration along with seasonal tax preparation fees during the second quarter. Assets under administration increased by 4.3% from the prior quarter to a record high of $5.4 billion as of June 30, 2021.
Mortgage banking income decreased by $3.0 million , or 52.9% , reflecting a larger portion of new originations retained in the Company's portfolio versus sold into the secondary market, coupled with gain on sale margin compression during the quarter.
Income from bank owned life insurance policies increased $266,000, or 20.1% , reflecting the full quarter impact of $40.0 million in new policies purchased during the first quarter of 2021.
Other noninterest income increased by $1.7 million , or 52.5% , primarily attributable to $1.1 million in income recognized from other investments, unrealized gains on equity securities, and an increase in income from like-kind exchanges.
NONINTEREST EXPENSE
Noninterest expense of $73.3 million for the second quarter of 2021 was $3.6 million , or 5.2% higher than the prior quarter. Significant changes in noninterest expense for the second quarter compared to the prior quarter included the following:
Salaries and employee benefits increased by $2.7 million , or 6.9% , mainly due to increases in incentive compensation, general salaries, and other commissions. These increases were offset partially by decreases in medical plan insurance expenses and payroll taxes.
Occupancy and equipment decreased by $567,000, or 6.1% , mainly due to decreases in snow removal costs and cleaning expenses.
FDIC assessment decreased by $275,000, or 26.2% , reflecting a lower fee for the quarter along with a refund of prior period assessment fees of approximately $109,000.
During the second quarter of 2021 there were $1.7 million of merger and acquisition expenses relating to the Meridian acquisition. No such costs were incurred during the first quarter of 2021.
Other noninterest expense remained flat, primarily due to decreases in consultant fees and card issuance costs, partially offset by increases in legal fees, director expenses related to equity compensation during the quarter and additional reserve for unfunded commitments.
The Company generated a return on average assets and a return on average common equity of 1.08% and 8.70% , respectively, for the second quarter of 2021, as compared to 1.26% and 9.87% , respectively, for the prior quarter. On an operating basis, return on average assets and return on average common equity were 1.12% and 8.98% , respectively, for the second quarter of 2021.
The tax rate of 24.9% for the second quarter was higher than the prior quarter rate of 22.3% , which included $1.4 million of discrete tax benefits related primarily to low income housing tax credits and equity compensation.
ASSET QUALITY
During the second quarter, the Company recorded total net charge-offs of $192,000, or 0.01% of average loans on an annualized basis. Nonperforming loans decreased by 19.2% to $47.8 million , or 0.53% of total loans at June 30, 2021, as compared to $59.2 million , or 0.64% of total loans at March 31, 2021. The decrease was primarily attributable to the full pay-off of one large commercial loan during the second quarter.
In addition, total loans subject to a payment deferral remained relatively consistent with the prior quarter, amounting to $233.8 million , or 2.6% of total loans at June 30, 2021, with the highest concentration remaining in the accommodation portfolio. The majority of the loans subject to a payment deferral at June 30, 2021 were characterized as current loans. As such, delinquency as a percentage of total loans remained low at 0.11% as of June 30, 2021, representing a decrease of one basis point from the prior quarter. Please refer to Appendix E for additional details regarding loans whose terms have been modified as a result of the COVID-19 pandemic.
The Company recorded credit reserve releases of $5.0 million during the second quarter of 2021, reflecting continued improvement in asset quality metrics and overall macro-economic assumptions. The allowance for credit losses on total loans was $102.4 million at June 30, 2021, or 1.15% of total loans, as compared to $107.5 million at March 31, 2021, or 1.16% of total loans. The allowance for credit losses as a percentage of total loans, excluding PPP loans, was 1.21% and 1.28% at June 30, 2021 and March 31, 2021, respectively. Please refer to Appendix D for information regarding loan exposures within industries deemed highly impacted by the COVID-19 pandemic.
CONFERENCE CALL INFORMATION
Christopher Oddleifson, Chief Executive Officer, Robert Cozzone, Chief Operating Officer, Mark Ruggiero, Chief Financial Officer, and Gerard Nadeau, President and Chief Commercial Banking Officer will host a conference call to discuss second quarter earnings at 10:00 a.m. Eastern Time on Friday, July 23, 2021. Internet access to the call is available on the Company’s website at www.RocklandTrust.com or via telephonic access by dial-in at 1-888-336-7153 reference: INDB. A replay of the call will be available by calling 1-877-344-7529, Replay Conference Number: 10157162 and will be available through August 6, 2021. Additionally, a webcast replay will be available until July 23, 2022.
ABOUT INDEPENDENT BANK CORP.
Independent Bank Corp. (NASDAQ Global Select Market: INDB) is the holding company for Rockland Trust Company, a full-service commercial bank headquartered in Massachusetts. Rockland Trust was named to The Boston Globe's "Top Places to Work" 2020 list, an honor earned for the 12th consecutive year. In 2021, Rockland Trust was ranked the #1 Bank in Massachusetts according to Forbes World's Best Banks list for the second year in a row. 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 offers a wide range of banking, investment, and insurance services. The Bank serves businesses and individuals through approximately 100 retail branches, commercial and residential lending centers, and investment management offices in eastern Massachusetts, including Greater Boston, the South Shore, Cape Cod and Islands, Worcester County, and Rhode Island. Rockland Trust also offers a full suite of mobile, online, and telephone banking services. Rockland Trust is an FDIC member and an Equal Housing Lender. To find out why Rockland Trust is the bank "Where Each Relationship Matters®," please visit RocklandTrust.com.
This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and business of the Company. These statements may be identified by such forward-looking terminology as “expect,” “achieve,” “plan,” “believe,” “future,” “positioned,” “continued,” “will,” “would,” “potential,” or similar statements or variations of such terms. Actual results may differ from those contemplated by these forward-looking statements.
Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:
further weakening in the United States economy in general and the regional and local economies within the New England region and the Company’s market area, including future weakening caused by the COVID-19 pandemic;
the length and extent of economic contraction as a result of the COVID-19 pandemic;
unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, pandemics or other external events;
adverse changes or volatility in the local real estate market;
adverse changes in asset quality and any unanticipated credit deterioration in our loan portfolio including those related to one or more large commercial relationships;
acquisitions may not produce results at levels or within time frames originally anticipated and may result in unforeseen integration issues or impairment of goodwill and/or other intangibles;
additional regulatory oversight and related compliance costs, including the additional costs associated with the Company's increase in assets to over $10 billion ;
changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System;
higher than expected tax expense, resulting from failure to comply with general tax laws and changes in tax laws;
changes in market interest rates for interest earning assets and/or interest bearing liabilities and changes related to the phase-out of LIBOR;
increased competition in the Company’s market areas;
adverse weather, changes in climate, natural disasters, the emergence of widespread health emergencies or pandemics, including the magnitude and duration of the COVID-19 pandemic, other public health crises or man-made events could negatively affect our local economies or disrupt our operations, which would have an adverse effect on our business or results of operations;
a deterioration in the conditions of the securities markets;
a deterioration of the credit rating for U.S. long-term sovereign debt;
inability to adapt to changes in information technology, including changes to industry accepted delivery models driven by a migration to the internet as a means of service delivery;
electronic fraudulent activity within the financial services industry, especially in the commercial banking sector;
adverse changes in consumer spending and savings habits;
the effect of laws and regulations regarding the financial services industry;
changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) generally applicable to the Company’s business;
the Company's potential judgments, claims, damages, penalties, fines and reputational damage resulting from pending or future litigation and regulatory and government actions, including as a result of our participation in and execution of government programs related to the COVID-19 pandemic;
changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters including, but not limited to, changes to how the Company accounts for credit losses;
cyber security attacks or intrusions that could adversely impact our businesses; and
other unexpected material adverse changes in our operations or earnings.
Further, the foregoing factors may be exacerbated by the ultimate impact of the COVID-19 pandemic, which is unknown at this time. Statements about the COVID-19 pandemic and its potential impact on our business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that actual results may differ, possibly materially, from what is reflected in such statements due to factors and future developments that are uncertain, unpredictable and, in many cases, beyond our control, including the scope, duration and extent of the pandemic and any resurgences, actions taken by governmental authorities in response to the pandemic and the direct and indirect impact on the Company’s employees, customers, business and third-parties with which the Company conducts business.
The Company wishes to caution readers not to place undue reliance on any forward-looking statements as the Company’s business and its forward-looking statements involve substantial known and unknown risks and uncertainties described in the Company’s Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q (“Risk Factors”). Except as required by law, the Company disclaims any intent or obligation to update publicly any such forward-looking statements, whether in response to new information, future events or otherwise. Any public statements or disclosures by the Company following this release which modify or impact any of the forward-looking statements contained in this release will be deemed to modify or supersede such statements in this release. In addition to the information set forth in this press release, you should carefully consider the Risk Factors.
This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This information includes operating net income and operating earnings per share ("EPS"), operating return on average assets, operating return on average common equity, core net margin, tangible book value per share and the tangible common equity ratio.
Operating net income, operating EPS, operating return on average assets and operating return on average common equity exclude items that management believes are unrelated to 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 net interest margin to determine any items that may impact the net interest margin that may be one-time in nature or not reflective of its core operating environment, such as out-sized cash balances, unique low-yielding loans originated through government programs in response to the pandemic, or significant purchase accounting adjustments. Management believes that adjusting for these items to arrive at a core margin provides additional insight into the operating environment and how management decisions impact the net interest margin. Similarly, management reviews certain loan metrics such as growth rates and allowance as a percentage of total loans, adjusted to exclude loans that are not considered part of its core portfolio, which includes loans originated in association with government sponsored and guaranteed programs in response to the pandemic, to arrive at adjusted numbers more representative of the core growth of the portfolio and core reserve to loan ratio.
Management also supplements its evaluation of financial performance with analysis of tangible book value per share (which is computed by dividing stockholders' equity less goodwill and identifiable intangible assets, or "tangible common equity", by common shares outstanding), the tangible common equity ratio (which is computed by dividing tangible common equity by "tangible assets", defined as total assets less goodwill and other intangibles). The Company has included information on tangible book value per share and the tangible common equity ratio because management believes that investors may find it useful to have access to the same analytical tools used by management. As a result of merger and acquisition activity, the Company has recognized goodwill and other intangible assets in conjunction with business combination accounting principles. Excluding the impact of goodwill and other intangibles in measuring asset and capital values for the ratios provided, along with other bank standard capital ratios, provides a framework to compare the capital adequacy of the Company to other companies in the financial services industry.
These non-GAAP measures should not be viewed as a substitute for operating results and other financial measures determined in accordance with GAAP. An item which management deems to be noncore and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP performance measures, including operating net income, operating EPS, operating return on average assets, operating return on average common equity, core net margin, tangible book value per share and the tangible common equity ratio, 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
June 30
2021
March 31
2021
June 30
2020
Jun 2021 vs.
Jun 2021 vs.
Mar 2021
Jun 2020
Assets
Cash and due from banks
$
141,953
$
126,651
$
131,615
12.08
%
7.85
%
Interest-earning deposits with banks
2,114,477
1,642,688
974,105
28.72
%
117.07
%
Securities
Trading
3,439
3,269
2,541
5.20
%
35.34
%
Equities
22,975
22,419
20,810
2.48
%
10.40
%
Available for sale
794,516
600,213
420,517
32.37
%
88.94
%
Held to maturity
861,821
805,529
731,026
6.99
%
17.89
%
Total securities
1,682,751
1,431,430
1,174,894
17.56
%
43.23
%
Loans held for sale
25,561
41,632
45,395
(38.60)
%
(43.69)
%
Loans
Commercial and industrial
1,726,498
2,086,671
2,004,645
(17.26)
%
(13.88)
%
Commercial real estate
4,251,543
4,177,617
4,071,047
1.77
%
4.43
%
Commercial construction
496,539
516,362
537,788
(3.84)
%
(7.67)
%
Small business
182,863
174,211
170,288
4.97
%
7.38
%
Total commercial
6,657,443
6,954,861
6,783,768
(4.28)
%
(1.86)
%
Residential real estate
1,240,279
1,241,789
1,431,129
(0.12)
%
(13.34)
%
Home equity - first position
606,332
610,907
650,922
(0.75)
%
(6.85)
%
Home equity - subordinate positions
412,076
417,588
469,601
(1.32)
%
(12.25)
%
Total consumer real estate
2,258,687
2,270,284
2,551,652
(0.51)
%
(11.48)
%
Other consumer
22,858
21,546
24,228
6.09
%
(5.65)
%
Total loans
8,938,988
9,246,691
9,359,648
(3.33)
%
(4.49)
%
Less: allowance for credit losses
(102,357)
(107,549)
(112,176)
(4.83)
%
(8.75)
%
Net loans
8,836,631
9,139,142
9,247,472
(3.31)
%
(4.44)
%
Federal Home Loan Bank stock
9,079
10,250
15,090
(11.42)
%
(39.83)
%
Bank premises and equipment, net
117,435
115,945
122,172
1.29
%
(3.88)
%
Goodwill
506,206
506,206
506,206
—
%
—
%
Other intangible assets
20,370
21,689
25,996
(6.08)
%
(21.64)
%
Cash surrender value of life insurance policies
242,963
241,365
198,124
0.66
%
22.63
%
Other assets
496,781
496,916
581,431
(0.03)
%
(14.56)
%
Total assets
$
14,194,207
$
13,773,914
$
13,022,500
3.05
%
9.00
%
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing demand deposits
$
4,370,852
$
4,136,259
$
3,694,559
5.67
%
18.31
%
Savings and interest checking accounts
4,445,903
4,242,235
3,896,024
4.80
%
14.11
%
Money market
2,352,897
2,346,985
2,034,021
0.25
%
15.68
%
Time certificates of deposit
817,319
868,045
1,092,217
(5.84)
%
(25.17)
%
Total deposits
11,986,971
11,593,524
10,716,821
3.39
%
11.85
%
Borrowings
Federal Home Loan Bank borrowings
35,693
35,717
145,770
(0.07)
%
(75.51)
%
Long-term borrowings, net
23,425
28,099
37,433
(16.63)
%
(37.42)
%
Junior subordinated debentures, net
62,852
62,851
62,850
—
%
—
%
Subordinated debentures, net
49,743
49,720
49,648
0.05
%
0.19
%
Total borrowings
171,713
176,387
295,701
(2.65)
%
(41.93)
%
Total deposits and borrowings
12,158,684
11,769,911
11,012,522
3.30
%
10.41
%
Other liabilities
293,901
288,632
338,286
1.83
%
(13.12)
%
Total liabilities
12,452,585
12,058,543
11,350,808
3.27
%
9.71
%
Stockholders' equity
Common stock
329
329
328
—
%
0.30
%
Additional paid in capital
948,130
946,002
942,685
0.22
%
0.58
%
Retained earnings
763,596
741,883
676,834
2.93
%
12.82
%
Accumulated other comprehensive income, net of tax
29,567
27,157
51,845
8.87
%
(42.97)
%
Total stockholders' equity
1,741,622
1,715,371
1,671,692
1.53
%
4.18
%
Total liabilities and stockholders' equity
$
14,194,207
$
13,773,914
$
13,022,500
3.05
%
9.00
%
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, dollars in thousands, except per share data)
Three Months Ended
% Change
% Change
June 30
2021
March 31
2021
June 30
2020
Jun 2021 vs.
Jun 2021 vs.
Mar 2021
Jun 2020
Interest income
Interest on federal funds sold and short-term investments
$
513
$
326
$
132
57.36
%
288.64
%
Interest and dividends on securities
7,189
6,632
7,840
8.40
%
(8.30)
%
Interest and fees on loans
88,814
92,383
91,634
(3.86)
%
(3.08)
%
Interest on loans held for sale
186
296
359
(37.16)
%
(48.19)
%
Total interest income
96,702
99,637
99,965
(2.95)
%
(3.26)
%
Interest expense
Interest on deposits
2,017
2,711
7,027
(25.60)
%
(71.30)
%
Interest on borrowings
1,331
1,342
1,840
(0.82)
%
(27.66)
%
Total interest expense
3,348
4,053
8,867
(17.39)
%
(62.24)
%
Net interest income
93,354
95,584
91,098
(2.33)
%
2.48
%
Provision for credit losses
(5,000)
(2,500)
20,000
100.00
%
(125.00)
%
Net interest income after provision for credit losses
98,354
98,084
71,098
0.28
%
38.34
%
Noninterest income
Deposit account fees
3,822
3,584
2,829
6.64
%
35.10
%
Interchange and ATM fees
3,068
2,720
5,214
12.79
%
(41.16)
%
Investment management
8,872
8,304
7,296
6.84
%
21.60
%
Mortgage banking income
2,705
5,740
5,005
(52.87)
%
(45.95)
%
Increase in cash surrender value of life insurance policies
1,589
1,323
1,312
20.11
%
21.11
%
Gain on life insurance benefits
—
258
335
(100.00)
%
(100.00)
%
Loan level derivative income
116
173
2,864
(32.95)
%
(95.95)
%
Other noninterest income
4,795
3,144
3,335
52.51
%
43.78
%
Total noninterest income
24,967
25,246
28,190
(1.11)
%
(11.43)
%
Noninterest expenses
Salaries and employee benefits
42,635
39,889
37,269
6.88
%
14.40
%
Occupancy and equipment expenses
8,706
9,273
9,273
(6.11)
%
(6.11)
%
Data processing and facilities management
1,686
1,665
1,459
1.26
%
15.56
%
FDIC assessment
775
1,050
503
(26.19)
%
54.08
%
Merger and acquisition expense
1,731
—
—
100.00%
100.00%
Other noninterest expenses
17,769
17,805
18,103
(0.20)
%
(1.84)
%
Total noninterest expenses
73,302
69,682
66,607
5.20
%
10.05
%
Income before income taxes
50,019
53,648
32,681
(6.76)
%
53.05
%
Provision for income taxes
12,447
11,937
7,779
4.27
%
60.01
%
Net Income
$
37,572
$
41,711
$
24,902
(9.92)
%
50.88
%
Weighted average common shares (basic)
33,033,578
32,995,332
32,944,761
Common share equivalents
21,270
30,098
28,098
Weighted average common shares (diluted)
33,054,848
33,025,430
32,972,859
Basic earnings per share
$
1.14
$
1.26
$
0.76
(9.52)
%
50.00
%
Diluted earnings per share
$
1.14
$
1.26
$
0.76
(9.52)
%
50.00
%
Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP):
Net income
$
37,572
$
41,711
$
24,902
Noninterest expense components
Add - merger and acquisition expenses
1,731
—
—
Noncore increases to income before taxes
1,731
—
—
Net tax benefit associated with noncore items (1)
(487)
—
—
Noncore increases to net income
1,244
—
—
Operating net income (Non-GAAP)
$
38,816
$
41,711
$
24,902
(6.94)
%
55.88
%
Diluted earnings per share, on an operating basis
$
1.17
$
1.26
$
0.76
(7.14)
%
53.95
%
(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)
2.99
%
3.25
%
3.25
%
Return on average assets (GAAP) (calculated by dividing net income by average assets)
1.08
%
1.26
%
0.79
%
Return on average assets on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average assets)
1.12
%
1.26
%
0.79
%
Return on average common equity (GAAP) (calculated by dividing net income by average common equity)
8.70
%
9.87
%
5.97
%
Return on average common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average common equity)
8.98
%
9.87
%
5.97
%
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, dollars in thousands, except per share data)
Six Months Ended
% Change
June 30
2021
June 30
2020
Jun 2021 vs.
Jun 2020
Interest income
Interest on federal funds sold and short-term investments
$
839
$
292
187.33
%
Interest and dividends on securities
13,821
15,806
(12.56)
%
Interest and fees on loans
181,197
190,656
(4.96)
%
Interest on loans held for sale
482
591
(18.44)
%
Total interest income
196,339
207,345
(5.31)
%
Interest expense
Interest on deposits
4,728
17,919
(73.61)
%
Interest on borrowings
2,673
4,024
(33.57)
%
Total interest expense
7,401
21,943
(66.27)
%
Net interest income
188,938
185,402
1.91
%
Provision for credit losses
(7,500)
45,000
(116.67)
%
Net interest income after provision for credit losses
196,438
140,402
39.91
%
Noninterest income
Deposit account fees
7,406
7,799
(5.04)
%
Interchange and ATM fees
5,788
10,110
(42.75)
%
Investment management
17,176
14,125
21.60
%
Mortgage banking income
8,445
5,866
43.97
%
Increase in cash surrender value of life insurance policies
2,912
2,588
12.52
%
Gain on life insurance benefits
258
692
(62.72)
%
Loan level derivative income
289
6,461
(95.53)
%
Other noninterest income
7,939
6,984
13.67
%
Total noninterest income
50,213
54,625
(8.08)
%
Noninterest expenses
Salaries and employee benefits
82,524
74,618
10.60
%
Occupancy and equipment expenses
17,979
18,590
(3.29)
%
Data processing and facilities management
3,351
3,117
7.51
%
FDIC assessment
1,825
503
262.82
%
Merger and acquisition expense
1,731
—
100.00%
Other noninterest expenses
35,574
36,619
(2.85)
%
Total noninterest expenses
142,984
133,447
7.15
%
Income before income taxes
103,667
61,580
68.35
%
Provision for income taxes
24,384
9,927
145.63
%
Net Income
$
79,283
$
51,653
53.49
%
Weighted average common shares (basic)
33,014,561
33,564,596
Common share equivalents
25,085
31,991
Weighted average common shares (diluted)
33,039,646
33,596,587
Basic earnings per share
$
2.40
$
1.54
55.84
%
Diluted earnings per share
$
2.40
$
1.54
55.84
%
Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP):
Net Income
$
79,283
$
51,653
Noninterest expense components
Add - merger and acquisition expenses
1,731
—
Noncore increases to income before taxes
1,731
—
Net tax benefit associated with noncore items (1)
(487)
—
Noncore increases to net income
$
1,244
$
—
Operating net income (Non-GAAP)
$
80,527
$
51,653
55.90
%
Diluted earnings per share, on an operating basis
$
2.44
$
1.54
58.44
%
(1) The net tax benefit associated with noncore items is determined by assessing whether each noncore item is included or excluded from net taxable income and applying the Company's combined marginal tax rate to only those items included in net taxable income.
Performance ratios
Net interest margin (FTE)
3.12
%
3.48
%
Return on average assets (GAAP) (calculated by dividing net income by average assets)
1.17
%
0.86
%
Return on average assets on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average assets)
1.19
%
0.86
%
Return on average common equity (GAAP) (calculated by dividing net income by average common equity)
9.28
%
6.10
%
Return on average common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average common equity)
9.42
%
6.10
%
ASSET QUALITY
(Unaudited, dollars in thousands)
Nonperforming Assets At
June 30
2021
March 31
2021
June 30
2020
Nonperforming loans
Commercial & industrial loans
$
20,831
$
29,785
$
20,736
Commercial real estate loans
9,031
9,635
6,313
Small business loans
558
660
619
Residential real estate loans
12,786
13,392
14,561
Home equity
4,517
5,592
6,437
Other consumer
95
137
148
Total nonperforming loans
47,818
59,201
48,814
Total nonperforming assets
$
47,818
$
59,201
$
48,814
Nonperforming loans/gross loans
0.53
%
0.64
%
0.52
%
Nonperforming assets/total assets
0.34
%
0.43
%
0.37
%
Allowance for credit losses/nonperforming loans
214.06
%
181.67
%
229.80
%
Allowance for credit losses/total loans
1.15
%
1.16
%
1.20
%
Delinquent loans/total loans
0.11
%
0.12
%
0.24
%
Nonperforming Assets Reconciliation for the Three Months Ended
June 30
2021
March 31
2021
June 30
2020
Nonperforming assets beginning balance
$
59,201
$
66,861
$
48,040
New to nonperforming
2,233
2,359
8,215
Loans charged-off
(481)
(3,686)
(710)
Loans paid-off
(10,364)
(4,025)
(2,210)
Loans restored to performing status
(2,771)
(2,559)
(4,529)
Other
—
251
8
Nonperforming assets ending balance
$
47,818
$
59,201
$
48,814
Net Charge-Offs (Recoveries)
Three Months Ended
Six Months Ended
June 30
2021
March 31
2021
June 30
2020
June 30
2021
June 30
2020
Net charge-offs (recoveries)
Commercial and industrial loans
$
107
$
3,267
$
(4)
$
3,374
$
(46)
Commercial real estate loans
—
(57)
—
(57)
—
Small business loans
31
55
33
86
139
Residential real estate loans
—
(1)
—
(1)
(1)
Home equity
24
(13)
(91)
11
(11)
Other consumer
30
92
262
122
503
Total net charge-offs
$
192
$
3,343
$
200
$
3,535
$
584
Net charge-offs to average loans (annualized)
0.01
%
0.15
%
0.01
%
0.08
%
0.01
%
Troubled Debt Restructurings At
June 30
2021
March 31
2021
June 30
2020
Troubled debt restructurings on accrual status
$
19,495
$
20,262
$
17,741
Troubled debt restructurings on nonaccrual status
20,212
21,167
24,098
Total troubled debt restructurings
$
39,707
$
41,429
$
41,839
BALANCE SHEET AND CAPITAL RATIOS
June 30
2021
March 31
2021
June 30
2020
Gross loans/total deposits
74.57
%
79.76
%
87.34
%
Common equity tier 1 capital ratio (1)
13.24
%
13.16
%
12.26
%
Tier 1 leverage capital ratio (1)
9.41
%
9.63
%
9.57
%
Common equity to assets ratio GAAP
12.27
%
12.45
%
12.84
%
Tangible common equity to tangible assets ratio (2)
8.89
%
8.96
%
9.12
%
Book value per share GAAP
$
52.72
$
51.94
$
50.75
Tangible book value per share (2)
$
36.78
$
35.96
$
34.59
(1) Estimated number for June 30, 2021.
(2) See Appendix A for detailed reconciliation from GAAP to Non-GAAP ratios.
INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited, dollars in thousands)
Three Months Ended
June 30, 2021
March 31, 2021
June 30, 2020
Interest
Interest
Interest
Average
Earned/
Yield/
Average
Earned/
Yield/
Average
Earned/
Yield/
Balance
Paid (1)
Rate
Balance
Paid (1)
Rate
Balance
Paid (1)
Rate
Interest-earning assets
Interest-earning deposits with banks, federal funds sold, and short term investments
$
1,882,285
$
513
0.11
%
$
1,321,430
$
326
0.10
%
$
724,634
$
132
0.07
%
Securities
Securities - trading
3,359
—
—
%
2,939
—
—
%
2,393
—
—
%
Securities - taxable investments
1,514,336
7,184
1.90
%
1,250,451
6,627
2.15
%
1,206,631
7,831
2.61
%
Securities - nontaxable investments (1)
555
6
4.34
%
642
6
3.79
%
1,145
11
3.86
%
Total securities
$
1,518,250
$
7,190
1.90
%
$
1,254,032
$
6,633
2.15
%
$
1,210,169
$
7,842
2.61
%
Loans held for sale
28,279
186
2.64
%
49,652
296
2.42
%
50,613
359
2.85
%
Loans
Commercial and industrial (1)
1,944,026
20,351
4.20
%
2,115,069
23,046
4.42
%
1,914,830
17,363
3.65
%
Commercial real estate (1)
4,196,171
41,532
3.97
%
4,156,012
40,376
3.94
%
4,051,342
42,371
4.21
%
Commercial construction
514,935
4,777
3.72
%
555,153
5,283
3.86
%
538,767
5,314
3.97
%
Small business
178,525
2,302
5.17
%
174,320
2,281
5.31
%
174,438
2,388
5.51
%
Total commercial
6,833,657
68,962
4.05
%
7,000,554
70,986
4.11
%
6,679,377
67,436
4.06
%
Residential real estate
1,226,520
11,058
3.62
%
1,271,283
12,436
3.97
%
1,474,495
13,801
3.76
%
Home equity
1,024,798
8,591
3.36
%
1,050,234
8,757
3.38
%
1,133,034
10,132
3.60
%
Total consumer real estate
2,251,318
19,649
3.50
%
2,321,517
21,193
3.70
%
2,607,529
23,933
3.69
%
Other consumer
22,471
411
7.34
%
21,698
432
8.07
%
24,971
500
8.05
%
Total loans
$
9,107,446
$
89,022
3.92
%
$
9,343,769
$
92,611
4.02
%
$
9,311,877
$
91,869
3.97
%
Total interest-earning assets
$
12,536,260
$
96,911
3.10
%
$
11,968,883
$
99,866
3.38
%
$
11,297,293
$
100,202
3.57
%
Cash and due from banks
142,198
154,870
119,692
Federal Home Loan Bank stock
9,410
10,250
23,175
Other assets
1,258,056
1,241,651
1,287,620
Total assets
$
13,945,924
$
13,375,654
$
12,727,780
Interest-bearing liabilities
Deposits
Savings and interest checking accounts
$
4,339,645
$
384
0.04
%
$
4,109,747
$
423
0.04
%
$
3,679,729
$
1,101
0.12
%
Money market
2,347,852
429
0.07
%
2,288,030
521
0.09
%
1,972,986
1,377
0.28
%
Time deposits
843,090
1,204
0.57
%
906,613
1,767
0.79
%
1,186,189
4,549
1.54
%
Total interest-bearing deposits
$
7,530,587
$
2,017
0.11
%
$
7,304,390
$
2,711
0.15
%
$
6,838,904
$
7,027
0.41
%
Borrowings
Federal Home Loan Bank borrowings
35,704
191
2.15
%
35,785
188
2.13
%
339,393
433
0.51
%
Long-term borrowings
23,417
94
1.61
%
28,247
111
1.59
%
71,629
343
1.93
%
Junior subordinated debentures
62,852
429
2.74
%
62,851
426
2.75
%
62,849
446
2.85
%
Subordinated debentures
49,730
618
4.98
%
49,705
617
5.03
%
49,635
618
5.01
%
Total borrowings
$
171,703
$
1,332
3.11
%
$
176,588
$
1,342
3.08
%
$
523,506
$
1,840
1.41
%
Total interest-bearing liabilities
$
7,702,290
$
3,349
0.17
%
$
7,480,978
$
4,053
0.22
%
$
7,362,410
$
8,867
0.48
%
Noninterest-bearing demand deposits
4,237,135
3,895,447
3,371,262
Other liabilities
273,449
285,857
315,979
Total liabilities
$
12,212,874
$
11,662,282
$
11,049,651
Stockholders' equity
1,733,050
1,713,372
1,678,129
Total liabilities and stockholders' equity
$
13,945,924
$
13,375,654
$
12,727,780
Net interest income
$
93,562
$
95,813
$
91,335
Interest rate spread (2)
2.93
%
3.16
%
3.09
%
Net interest margin (3)
2.99
%
3.25
%
3.25
%
Supplemental Information
Total deposits, including demand deposits
$
11,767,722
$
2,017
$
11,199,837
$
2,711
$
10,210,166
$
7,027
Cost of total deposits
0.07
%
0.10
%
0.28
%
Total funding liabilities, including demand deposits
$
11,939,425
$
3,349
$
11,376,425
$
4,053
$
10,733,672
$
8,867
Cost of total funding liabilities
0.11
%
0.14
%
0.33
%
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $209,000, $229,000, and $237,000 for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, respectively, determined by applying the Company's marginal tax rates in effect during each respective quarter.
(2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
Six Months Ended
June 30, 2021
June 30, 2020
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
$
1,603,407
$
839
0.11
%
$
398,593
$
292
0.15
%
Securities
Securities - trading
3,150
—
—
%
2,328
—
—
%
Securities - taxable investments
1,383,122
13,811
2.01
%
1,198,298
15,788
2.65
%
Securities - nontaxable investments (1)
599
12
4.04
%
1,191
23
3.88
%
Total securities
$
1,386,871
$
13,823
2.01
%
$
1,201,817
$
15,811
2.65
%
Loans held for sale
38,907
482
2.50
%
39,329
591
3.02
%
Loans
Commercial and industrial (1)
2,029,075
43,397
4.31
%
1,659,014
34,303
4.16
%
Commercial real estate (1)
4,176,202
81,908
3.96
%
4,031,734
88,222
4.40
%
Commercial construction
534,933
10,060
3.79
%
547,254
12,215
4.49
%
Small business
176,434
4,583
5.24
%
174,553
4,950
5.70
%
Total commercial
6,916,644
139,948
4.08
%
6,412,555
139,690
4.38
%
Residential real estate
1,248,778
23,494
3.79
%
1,517,667
28,420
3.77
%
Home equity
1,037,446
17,348
3.37
%
1,134,983
21,959
3.89
%
Total consumer real estate
2,286,224
40,842
3.60
%
2,652,650
50,379
3.82
%
Other consumer
22,087
843
7.70
%
26,406
1,072
8.16
%
Total loans
$
9,224,955
$
181,633
3.97
%
$
9,091,611
$
191,141
4.23
%
Total interest-earning assets
$
12,254,140
$
196,777
3.24
%
$
10,731,350
$
207,835
3.89
%
Cash and due from banks
148,499
121,199
Federal Home Loan Bank stock
9,828
18,937
Other assets
1,249,898
1,227,199
Total assets
$
13,662,365
$
12,098,685
Interest-bearing liabilities
Deposits
Savings and interest checking accounts
$
4,225,331
$
807
0.04
%
$
3,475,223
$
3,035
0.18
%
Money market
2,318,106
950
0.08
%
1,922,495
4,550
0.48
%
Time deposits
874,676
2,971
0.68
%
1,266,540
10,334
1.64
%
Total interest-bearing deposits
$
7,418,113
$
4,728
0.13
%
$
6,664,258
$
17,919
0.54
%
Borrowings
Federal Home Loan Bank borrowings
35,746
379
2.14
%
235,309
961
0.82
%
Long-term borrowings
25,818
205
1.60
%
73,271
904
2.48
%
Junior subordinated debentures
62,851
855
2.74
%
62,849
924
2.96
%
Subordinated debentures
49,717
1,235
5.01
%
49,623
1,235
5.00
%
Total borrowings
$
174,132
$
2,674
3.10
%
$
421,052
$
4,024
1.92
%
Total interest-bearing liabilities
$
7,592,245
$
7,402
0.20
%
$
7,085,310
$
21,943
0.62
%
Noninterest-bearing demand deposits
4,067,235
3,025,990
Other liabilities
279,620
283,724
Total liabilities
$
11,939,100
$
10,395,024
Stockholders' equity
1,723,265
1,703,661
Total liabilities and stockholders' equity
$
13,662,365
$
12,098,685
Net interest income
$
189,375
$
185,892
Interest rate spread (2)
3.04
%
3.27
%
Net interest margin (3)
3.12
%
3.48
%
Supplemental Information
Total deposits, including demand deposits
$
11,485,348
$
4,728
$
9,690,248
$
17,919
Cost of total deposits
0.08
%
0.37
%
Total funding liabilities, including demand deposits
$
11,659,480
$
7,402
$
10,111,300
$
21,943
Cost of total funding liabilities
0.13
%
0.44
%
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $438,000 and $490,000 for the six months ended June 30, 2021 and 2020, respectively.
(2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
APPENDIX A: NON-GAAP Reconciliation of 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, tangible book value per share, and loan and allowance metrics, exclusive of PPP loan balances at the dates indicated:
June 30
2021
March 31
2021
June 30
2020
Tangible common equity
(Dollars in thousands, except per share data)
Stockholders' equity (GAAP)
$
1,741,622
$
1,715,371
$
1,671,692
(a)
Less: Goodwill and other intangibles
526,576
527,895
532,202
Tangible common equity
$
1,215,046
$
1,187,476
$
1,139,490
(b)
Tangible assets
Assets (GAAP)
$
14,194,207
$
13,773,914
$
13,022,500
(c)
Less: Goodwill and other intangibles
526,576
527,895
532,202
Tangible assets
$
13,667,631
$
13,246,019
$
12,490,298
(d)
Common Shares
33,037,859
33,024,882
32,942,110
(e)
Common equity to assets ratio (GAAP)
12.27
%
12.45
%
12.84
%
(a/c)
Tangible common equity to tangible assets ratio (Non-GAAP)
8.89
%
8.96
%
9.12
%
(b/d)
Book value per share (GAAP)
$
52.72
$
51.94
$
50.75
(a/e)
Tangible book value per share (Non-GAAP)
$
36.78
$
35.96
$
34.59
(b/e)
Total loans (GAAP)
$
8,938,988
$
9,246,691
$
9,359,648
Total loans, excluding PPP (Non-GAAP)
$
8,456,338
$
8,400,390
$
8,566,665
Allowance as a % of total loans (GAAP)
1.15
%
1.16
%
1.20
%
Allowance as a % of total loans, excluding PPP (Non-GAAP)
1.21
%
1.28
%
1.31
%
APPENDIX B: Non-GAAP Reconciliation of Earnings Metrics
(Unaudited, dollars in thousands)
The following table summarizes the impact of noncore items on the Company's calculation of noninterest income and noninterest expense, as well as the impact of noncore items on noninterest income as a percentage of total revenue and the efficiency ratio for the periods indicated:
Three Months Ended
Six Months Ended
June 30
2021
March 31
2021
June 30
2020
June 30
2021
June 30
2020
Net interest income (GAAP)
$
93,354
$
95,584
$
91,098
$
188,938
$
185,402
(a)
Noninterest income (GAAP)
$
24,967
$
25,246
$
28,190
$
50,213
$
54,625
(b)
Noninterest income on an operating basis (Non-GAAP)
$
24,967
$
25,246
$
28,190
$
50,213
$
54,625
(c)
Noninterest expense (GAAP)
$
73,302
$
69,682
$
66,607
$
142,984
$
133,447
(d)
Less:
Merger and acquisition expense
1,731
—
—
1,731
—
Noninterest expense on an operating basis (Non-GAAP)
$
71,571
$
69,682
$
66,607
$
141,253
$
133,447
(e)
Total revenue (GAAP)
$
118,321
$
120,830
$
119,288
$
239,151
$
240,027
(a+b)
Total operating revenue (Non-GAAP)
$
118,321
$
120,830
$
119,288
$
239,151
$
240,027
(a+c)
Ratios
Noninterest income as a % of total revenue (GAAP based)
21.10
%
20.89
%
23.63
%
21.00
%
22.76
%
(b/(a+b))
Noninterest income as a % of total revenue on an operating basis (Non-GAAP)
21.10
%
20.89
%
23.63
%
21.00
%
22.76
%
(c/(a+c))
Efficiency ratio (GAAP based)
61.95
%
57.67
%
55.84
%
59.79
%
55.60
%
(d/(a+b))
Efficiency ratio on an operating basis (Non-GAAP)
60.49
%
57.67
%
55.84
%
59.06
%
55.60
%
(e/(a+c))
APPENDIX C: Net Interest Margin Analysis & Non-GAAP Reconciliation of Core Margin
2021
2021
Q2
Q1
Volume
Interest
Margin Impact
Volume
Interest
Margin Impact
(Dollars in thousands)
Reported total (GAAP)
$
12,535,962
$
93,564
2.99
%
$
11,968,884
$
95,812
3.25
%
Core adjustments:
PPP volume @ 1%
(717,847)
(1,794)
(837,986)
(2,081)
PPP fee amortization
(7,217)
—
(9,487)
Total PPP impact
(717,847)
(9,011)
(0.12)
%
(837,986)
(11,568)
(0.18)
%
Acquisition fair value accretion
(1,664)
(0.06)
%
(1,731)
(0.06)
%
Nonaccrual interest
33
—
%
28
—
%
Other noncore adjustments
(410)
(0.01)
%
(626)
(0.02)
%
Core margin (Non-GAAP)*
$
11,818,115
$
82,512
2.80
%
$
11,130,898
$
81,915
2.99
%
*The presentation above has changed as compared to previously reported periods to include the entire cash balance impact in the “core margin” results.
APPENDIX D: Commercial Loan Portfolio Characteristics
Commercial Industries Highly Impacted by COVID-19 Pandemic
While Rockland Trust is unable to know with certainty the direct, indirect, and likely far-reaching impacts of the COVID-19 pandemic, we continue to monitor daily the loan balances and the loan exposures for commercial loan categories we have deemed to be highly impacted by the pandemic (i.e., Accommodations, Food Services, Retail Trade, Other Services (except Public Administration) and Arts, Entertainments & Recreation). We do not have any material loan exposure to the Oil & Gas, Casino & Gambling, Aviation, or Cruise Line industries.
The table below provides total outstanding balances of commercial loans as of June 30, 2021, within industries that we have deemed to be highly impacted by the COVID-19 pandemic:
Highly Impacted COVID-19 Industries - Balances
June 30, 2021
(Dollars in thousands)
Accommodations
$
400,463
Food Services
136,613
Retail Trade
528,404
Other Services (except Public Administration)
146,270
Arts, Entertainment, and Recreation
96,837
Total (1)
$
1,308,587
(1) Amounts presented above exclude $144.2 million of outstanding PPP loans.
Highly Impacted COVID-19 Industries - Details
June 30, 2021
(Dollars in thousands)
Accommodations
Balance
$
400,463
Average borrower loan size
$
4,200
% secured by real estate
99.8
%
Weighted average loan to value
54.1
%
Other information:
– The accommodation portfolio consists of 68 properties representing a combination of flagged (59% ) and non-flagged (41% ) hotels, motels and inns.
– Loans secured by hotel properties deemed to be located in areas of leisure comprise $166.1 million , or 42% of the hotel portfolio.
– Approximately 89% of the balances outstanding are secured by properties located within the six New England states with the largest concentration in Massachusetts (58% ).
Food Services
Balance
$
136,613
Average borrower loan size
$
360
% secured by real estate
70.3
%
Weighted average loan to value
49.8
%
Other information:
– The food services portfolio includes full-service restaurants (59% ), limited service restaurants and fast food (39% ), and other types of food service (caterers, bars, mobile food service 2% ).
Retail Trade
Balance
$
528,404
Average borrower loan size
$
498
% secured by real estate
43.0
%
Weighted average loan to value
57.3
%
Other information:
– The retail trade portfolio consists broadly of food and beverage stores (46% ), motor vehicle and parts dealers (25% ), gasoline stations (14% ). All other retailers account for 15% of the current outstanding balance.
– Collateral for these loans varies and may consist of real estate, motor vehicles inventories, other types of inventories and general business assets.
Other Services (except Public Administration)
Balance
$
146,270
Average borrower loan size
$
258
% secured by real estate
52.6
%
Weighted average loan to value
51.2
%
Other information:
– The other services portfolio consists of various for-profit and not-for-profit services diversified across religious, civic and social service organizations (41% ), repair and maintenance business (31% ) and other personal services, including beauty salons, laundry services, pet care and other types of services (28% ).
Arts, Entertainment, and Recreation
Balance
$
96,837
Average borrower loan size
$
775
% secured by real estate
84.2
%
Weighted average loan to value
52.1
%
Other information:
– Amusement, gambling and recreational industries make up a majority of this category (94% ) and include amusement/theme parks, bowling centers, fitness centers, golf courses, marinas, and other recreational industries. Other industries including museums, performing arts, and spectator sports account for the remaining outstanding balances (6% ).
Other Commercial Loan Portfolio Characteristics
Average total loan size varies across the commercial portfolio with commercial real estate loans having an average size of $1.1 million , commercial and industrial loans having an average loan size of $134,000 and small business loans, which are each under $5.0 million , having an average loan size of $33,000. Additional details are provided below regarding loan sizes of the commercial real estate and commercial and industrial portfolios as of June 30, 2021:
Commercial Real Estate (Including Construction)
<$5M
$5-10M
$10-20M
>$20M
Total
Dollar Amount (in '000s)
$
2,630,121
$
901,529
$
773,225
$
443,207
$
4,748,082
# of loans
4,040
129
57
18
4,244
Commercial and Industrial (Including PPP)
<$5M
$5-10M
$10-20M
>$20M
Total
Dollar Amount (in '000s)
$
1,213,192
$
212,666
$
273,974
$
26,666
$
1,726,498
# of loans
12,797
32
20
1
12,850
APPENDIX E: COVID-19 Related Modifications Details
Deferrals by Modification Type
Deferral of Principal and Interest
Deferral of Principal Only
Total Deferrals
Total Portfolio
% Deferral
(Dollars in thousands)
Commercial and industrial
$
—
$
1,972
$
1,972
$
1,726,498
0.1
%
Commercial real estate (1)
590
230,589
231,179
4,748,082
4.9
%
Business banking
—
636
636
182,863
0.3
%
Residential real estate
—
—
—
1,240,279
—
%
Home equity
—
—
—
1,018,408
—
%
Consumer
—
—
—
22,858
—
%
Total active deferrals as of June 30, 2021
$
590
$
233,197
$
233,787
$
8,938,988
2.6
%
(1) Balances include commercial construction deferrals.
Deferrals by Industry
June 30, 2021
(Dollars in thousands)
Highly Impacted Industries
Accommodation
$
176,721
Food Services
262
Arts, Entertainment, and Recreation
14,181
Total Highly Impacted Industries
191,164
Other Industries
Real Estate and Leasing
41,123
Transportation and Warehousing
578
All Other Industries
922
Total Other Industries
42,623
Grand Total
$
233,787
View source version on businesswire.com: https://www.businesswire.com/news/home/20210722005974/en/