8-K
Independent Bank Corp (INDB)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15 (d) of
The Securities and Exchange Act of 1934
DATE OF REPORT:
October 20, 2022
(Date of Earliest Event Reported)
Massachusetts
(State or Other Jurisdiction of Incorporation)
| 1-9047 | 04-2870273 | ||||||
|---|---|---|---|---|---|---|---|
| (Commission File Number) | (I.R.S. Employer identification No.) | INDEPENDENT BANK CORP. | |||||
| --- | --- | --- | --- | --- | |||
| Office Address: | 2036 Washington Street, | Hanover, | Massachusetts | 02339 | |||
| Mailing Address: | 288 Union Street, | Rockland, | Massachusetts | 02370 | |||
| (Address of principal executive offices, including zip code) |
NOT APPLICABLE
(Former Address of Principal Executive Offices)
(781)-878-6100
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||
|---|---|---|---|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | Securities registered pursuant to Section 12(b) of the Act: | |||
| --- | --- | --- | |||
| Title of each Class | Trading Symbol | Name of each exchange on which registered | |||
| Common Stock, $.01 par value per share | INDB | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17CFR 230.405)) or Rule 12b-2 of the Exchange Act (17CFR 240.12b-2).
| Emerging growth company | ☐ |
|---|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
| ITEM 2.02 | RESULTS OF OPERATIONS AND FINANCIAL CONDITION |
|---|
On October 20, 2022, Independent Bank Corp. (the "Company") announced by press release its earnings for the quarter ended September 30, 2022. A copy of the press release is attached hereto as Exhibit 99.1.
The information in this Item 2.02 (including Exhibit 99.1) is being furnished pursuant to Item 2.02 and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
| ITEM 7.01 | REGULATION FD DISCLOSURE |
|---|
The Company is furnishing presentation materials to be discussed during its earnings conference call which are included as Exhibit 99.2 to this report pursuant to Item 7.01.
The information in this Item 7.01 (including Exhibit 99.2) shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
| ITEM 8.01 | OTHER EVENTS |
|---|
On October 20, 2022, the Company also announced the completion of $140 million stock repurchase plan announced in January 2022 as well as the commencement of a new stock repurchase plan which authorizes repurchases by the Company of up to $120 million in common stock. Repurchases under the new plan may be made from time to time on the open market and in privately negotiated transactions, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act. The extent to which the Company repurchases shares and the size and timing of these repurchases will depend on a variety of factors, including pricing, market and economic conditions, the Company’s capital position and amount of retained earnings and legal and contractual requirements. The repurchase plan is scheduled to expire October 19, 2023 and may be modified, suspended or discontinued without prior notice at any time. The Company had approximately 45.6 million shares of common stock outstanding as of September 30, 2022.
| ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
|---|
d. The following exhibits are included with this Report:
| Exhibit Index | |
|---|---|
| Exhibit # | Exhibit Description |
| 99.1 | Q3 2022 Earnings Press Release dated October 20, 2022 |
| 99.2 | Q3 2022 Earnings Presentation |
| 101 | The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document |
| 104 | Cover page interactive data file (formatted as inline XBRL and contained in Exhibit 101) |
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned and hereunto duly authorized.
| INDEPENDENT BANK CORP. | |||
|---|---|---|---|
| Date: | October 20, 2022 | By: | /s/Mark J. Ruggiero |
| MARK J. RUGGIERO | |||
| CHIEF FINANCIAL OFFICER |
Document
Exhibit 99.1
Shareholder Relations NEWS RELEASE
288 Union Street
Rockland, Ma. 02370
INDEPENDENT BANK CORP. REPORTS THIRD QUARTER NET INCOME OF $71.9 MILLION
Higher revenues drive earnings growth
Rockland, Massachusetts (October 20, 2022) Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2022 third quarter net income of $71.9 million, or $1.57 per diluted share, compared to 2022 second quarter net income of $61.8 million, or $1.32 per diluted share, driven primarily by strong net interest margin expansion and profitable deployment of liquid assets.
The Company generated a return on average assets and a return on average common equity of 1.43% and 9.90%, respectively, for the third quarter of 2022, as compared to 1.24% and 8.49%, respectively, for the prior quarter.
“The strength of our third quarter performance is attributable to our long-term, sustained focus on building core relationships and disciplined growth combined with astute balance sheet management,” said Christopher Oddleifson, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “Our results reflect the tireless commitment and dedication of our colleagues, who each day live out our shared mission of forging enduring relationships with each other and with the customers and communities that Rockland Trust serves.”
BALANCE SHEET
Total assets of $19.7 billion at September 30, 2022 decreased by $279.2 million, or 1.4% from the prior quarter due primarily to a decline in cash balances, and increased by $5.2 billion, or 35.6%, as compared to the year ago period, inclusive of the 2021 fourth quarter acquisition of Meridian Bancorp, Inc. ("Meridian") and its subsidiary, East Boston Savings Bank, which closed during the fourth quarter of 2021.
Total loans at September 30, 2022 of $13.7 billion increased by $24.6 million, or 0.7% on an annualized basis compared to the prior quarter level. Excluding $19.4 million of net paydowns associated with the Paycheck Protection Program ("PPP"), the loan portfolio increased by $44.0 million, or 1.3% on an annualized basis, compared to the prior quarter. Strong consumer loan activity continued to be the primary driver of organic loan growth, as the majority of residential real estate loan closings were retained on the balance sheet, resulting in 6.2% growth (24.8% annualized) for the quarter in that portfolio, while increased demand and line utilization fueled 2.0% (8.1% annualized) growth in home equity balances for the quarter. Excluding PPP loans, commercial and industrial balances increased 1.8% (7.0% annualized) during the quarter, driven primarily by increased line utilization and strong closing volumes, but were offset by attrition within the commercial real estate and construction categories resulting in a total commercial portfolio decrease of 1.0%.
Deposit balances of $16.3 billion at September 30, 2022 decreased by $300.6 million, or 1.8%, from the prior quarter primarily attributable to continued runoff in higher-cost time and certain rate sensitive deposits. Despite the reduction in total balances, non-interest bearing deposits rose by $60.1 million, or 1.1%, in the third
quarter as new core account opening activity remained strong. Core deposits comprised 87.8% of total deposits at September 30, 2022, an increase from 86.8% at June 30, 2022, while the total cost of deposits for the quarter increased 10 basis points to 0.15%.
Total borrowings decreased by $25.0 million, or 18.1% when compared to the prior quarter reflecting primarily the maturity of a short-term Federal Home Loan Bank borrowing.
The securities portfolio increased by $212.2 million, or 7.2%, when compared to the prior quarter, reflecting the Company's ongoing strategy to deploy a portion of excess cash balances into investment securities. Total purchases for the quarter were $325.3 million, offset by an unrealized loss of $55.5 million related to the available for sale portfolio, as well as paydowns, calls, and maturities. Total securities represented 16.0% of total assets at September 30, 2022, as compared to 14.7% at June 30, 2022.
During the third quarter, the Company repurchased an additional 443,000 shares of its common stock for $34.6 million, marking the completion of its previously announced stock repurchase program. In total, the Company repurchased 1.8 million shares of its common stock under the program over the first three quarters of 2022 at an average price of $78.32 per share. Stockholders' equity at September 30, 2022 decreased 1.9% when compared to the prior quarter, primarily attributable to the aforementioned share repurchases executed during the third quarter, along with increased other comprehensive losses of $69.6 million, which were partially offset by strong earnings retention. As a result of this decrease in stockholders' equity, book value per share decreased by $0.59, or 0.9%, to $61.73 during the third quarter as compared to the prior quarter. The Company's ratio of common equity to assets of 14.3% at September 30, 2022 represented a decrease of 7 basis points from the prior quarter and an increase of 18.4% from the year ago period. The Company's tangible book value per share at September 30, 2022 declined by $0.75, or 1.9%, from the prior quarter to $39.56, but represented an increase of 6.2% from the year ago period inclusive of the accretive impact of the Meridian acquisition. The Company's ratio of tangible common equity to tangible assets of 9.66% at September 30, 2022 represents a decrease of 13 basis points from the prior quarter and an increase of 9.9% from the year ago period. Please refer to Appendix A for a detailed reconciliation of Non-GAAP metrics.
In consideration of the Company’s strong current capital position, the Company is announcing a new stock
repurchase plan, which authorizes repurchases by the Company of up to $120 million in common stock and is scheduled to expire on October 19, 2023.
NET INTEREST INCOME
Net interest income for the third quarter increased 12.2% to $162.6 million compared to $144.9 million for the prior quarter, primarily reflecting the positive impact of asset repricing in the rising interest rate environment in conjunction with relatively modest deposit rate increases, partially offset by a reduction in net PPP fee income of $1.3 million. Average earning asset levels were essentially flat in the third quarter compared to the prior quarter. The reported net interest margin increased by 37 basis points from the prior quarter to 3.64%, and increased 36 basis points to 3.59% on a core basis when excluding PPP fees, purchase accounting, and other non-recurring items. Please refer to Appendix C for additional details regarding the net interest margin.
NONINTEREST INCOME
Noninterest income of $28.2 million for the third quarter of 2022 was $297,000, or 1.1% higher as compared to the prior quarter. Significant changes in noninterest income for the third quarter compared to the prior quarter included the following:
•Deposit account fees and interchange and ATM fees increased by $433,000, or 7.4%, and $304,000, or 7.5%, respectively, both driven primarily by increased transaction volume during the third quarter.
•Investment management income decreased by $893,000, or 9.6%, primarily driven by a reduction in seasonal tax preparation fees recognized during the second quarter and a decline in overall asset valuations during the third quarter. The decline in market valuations was mitigated by a healthy volume of new asset inflows, resulting in a modest $65.0 million, or 1.3% decrease in assets under administration to $5.1 billion as of September 30, 2022.
•Mortgage banking income decreased by $457,000, or 43.9%, primarily due to overall reduced activity, with the vast majority of originations being retained in portfolio.
•Other noninterest income increased by $509,000, or 9.7%, primarily attributable to a gain on the sale of a vacated office space recently acquired during the Meridian acquisition and increased foreign currency exchange fees.
NONINTEREST EXPENSE
Noninterest expense of $92.7 million for the third quarter of 2022 was $2.2 million, or 2.4%, higher 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 $3.2 million, or 6.4%, primarily due to increases in salaries and incentives.
•Occupancy and equipment increased by $679,000, or 5.8%, due mainly to increases in office equipment costs and equipment maintenance and repairs.
•Other noninterest expense decreased by $1.6 million, or 6.4%, due primarily to decreases in unrealized losses on equity securities, director expenses (which were incurred during the second quarter related primarily to grants of equity compensation), and reduced consultant fees.
The Company’s tax rate for the third quarter of 2022 remained relatively flat at 24.37%, compared to 24.84% for the prior quarter.
ASSET QUALITY
Nonperforming loans remained consistent at $56.0 million, or 0.41% of total loans at September 30, 2022, as compared to $55.9 million, or 0.41% of total loans at June 30, 2022, with minimal net charge-offs recorded during the third quarter of 2022. Delinquency as a percentage of total loans decreased 23 basis points from the prior quarter to 0.17% at September 30, 2022, due primarily to the resolution and full payoff of a non-performing commercial loan.
In conjunction with the category shifts on current nonperforming loans and no significant changes to the overall economic outlook, the Company recorded a $3.0 million provision for credit losses during the third quarter of 2022. The allowance for credit losses on total loans was $147.3 million, or 1.08% of total loans, at September 30, 2022, as compared to $144.3 million, or 1.06% of total loans, at June 30, 2022.
CONFERENCE CALL INFORMATION
Christopher Oddleifson, Chief Executive Officer, Robert Cozzone, Chief Operating Officer, and Mark Ruggiero, Chief Financial Officer, will host a conference call to discuss third quarter earnings and other matters at 10:00 a.m. Eastern Time on Friday, October 21, 2022. 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: 5395173 and will be available through October 28, 2022. Additionally, a webcast replay will be available on the Company's website until October 21, 2023.
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" 2021 list, an honor earned for the 13th consecutive year. *In 2022, Rockland Trust was ranked #1 in Customer Satisfaction with Retail Banking in New England. 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 over 120 retail branches, commercial and residential lending centers, and investment management offices in eastern Massachusetts, including Greater Boston, South Shore, North 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.
*Rockland Trust received the highest score in a tie in the New England Region of the J.D. Power 2022 U.S. Retail Banking Satisfaction Study of customers’ satisfaction with their primary bank. Visit jdpower.com/awards for more details.
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 any future weakening caused by the COVID-19 pandemic and any uncertainty regarding the length and extent of economic contraction as a result of the pandemic;
•the potential effects of inflationary pressures, labor market shortages and supply chain issues;
•the instability or volatility in financial markets and unfavorable general economic or business conditions, globally, nationally or regionally, caused by geopolitical concerns, including as a result of the conflict between Russia and Ukraine;
•unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, pandemics or other external events;
•adverse changes or volatility in the local real estate market;
•adverse changes in asset quality and any unanticipated credit deterioration in our loan portfolio including those related to one or more large commercial relationships;
•acquisitions may not produce results at levels or within time frames originally anticipated and may result in unforeseen integration issues or impairment of goodwill and/or other intangibles;
•additional regulatory oversight and related compliance costs;
•changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System;
•higher than expected tax expense, 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, geopolitical concerns, including those arising from the conflict between Russia and Ukraine;
•the emergence of widespread health emergencies or pandemics, including the magnitude and duration of the COVID-19 pandemic, any further resurgences or variants of the COVID-19 virus, the efficacy and availability of vaccines, boosters or other treatments, actions taken by governmental authorities in response thereto, other public health crises or man-made events, and their impact on the Company's local economies or the Company's operations;
•a deterioration in the conditions of the securities markets;
•a deterioration of the credit rating for U.S. long-term sovereign debt;
•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.
The Company wishes to caution readers not to place undue reliance on any forward-looking statements as the Company’s business and its forward-looking statements involve substantial known and unknown risks and uncertainties described in the Company’s Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q (“Risk Factors”). Except as required by law, the Company disclaims any intent or obligation to update publicly any such forward-looking statements, whether in response to new information, future events or otherwise. Any public statements or disclosures by the Company following this release which modify or impact any of the forward-looking statements contained in this release will be deemed to modify or supersede such statements in this release. In addition to the information set forth in this press release, you should carefully consider the Risk Factors.
This press release and the appendices attached to it contain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This information includes operating net income and operating earnings per share ("EPS"), operating return on average assets, operating return on average common equity, operating return on average tangible common equity, core net interest margin ("core margin"), tangible book value per share and the tangible common equity ratio.
Operating net income, operating EPS, operating return on average assets and operating return on average common equity, exclude items that management believes are unrelated to the Company's core banking business such as merger and acquisition expenses, provision for credit losses on acquired loan portfolios, and other items, if applicable. Management uses operating net income and related ratios and operating EPS to measure the strength of the Company’s core banking business and to identify trends that may to some extent be obscured by such items. Management reviews its core margin to determine any items that may impact the net interest margin that may be one-time in nature or not reflective of its core operating environment, such as unique low-yielding loans originated through government programs in response to the pandemic, or 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. 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), 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.
Contacts:
Chris Oddleifson
President and Chief Executive Officer
(781) 982-6660
Mark J. Ruggiero
Chief Financial Officer and
Chief Accounting Officer
(781) 982-6281
Category: Earnings Releases
| INDEPENDENT BANK CORP. FINANCIAL SUMMARY | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| (Unaudited, dollars in thousands) | % Change | % Change | ||||||||||||
| September 30<br>2022 | June 30<br>2022 | September 30<br>2021 | Sept 2022 vs. | Sept 2022 vs. | ||||||||||
| Jun 2022 | Sept 2021 | |||||||||||||
| Assets | ||||||||||||||
| Cash and due from banks | $ | 172,615 | $ | 202,802 | $ | 138,148 | (14.88) | % | 24.95 | % | ||||
| Interest-earning deposits with banks | 763,681 | 1,273,465 | 1,869,683 | (40.03) | % | (59.15) | % | |||||||
| Securities | ||||||||||||||
| Trading | 3,538 | 3,637 | 3,504 | (2.72) | % | 0.97 | % | |||||||
| Equities | 20,439 | 21,181 | 22,794 | (3.50) | % | (10.33) | % | |||||||
| Available for sale | 1,425,511 | 1,501,949 | 1,427,210 | (5.09) | % | (0.12) | % | |||||||
| Held to maturity | 1,697,635 | 1,408,189 | 865,249 | 20.55 | % | 96.20 | % | |||||||
| Total securities | 3,147,123 | 2,934,956 | 2,318,757 | 7.23 | % | 35.72 | % | |||||||
| Loans held for sale | 5,100 | 2,358 | 33,553 | 116.28 | % | (84.80) | % | |||||||
| Loans | ||||||||||||||
| Commercial and industrial | 1,548,349 | 1,541,046 | 1,640,709 | 0.47 | % | (5.63) | % | |||||||
| Commercial real estate | 7,677,917 | 7,791,757 | 4,221,259 | (1.46) | % | 81.89 | % | |||||||
| Commercial construction | 1,185,157 | 1,194,577 | 515,415 | (0.79) | % | 129.94 | % | |||||||
| Small business | 209,567 | 205,953 | 184,138 | 1.75 | % | 13.81 | % | |||||||
| Total commercial | 10,620,990 | 10,733,333 | 6,561,521 | (1.05) | % | 61.87 | % | |||||||
| Residential real estate | 1,959,254 | 1,844,057 | 1,222,849 | 6.25 | % | 60.22 | % | |||||||
| Home equity - first position | 578,405 | 587,314 | 592,564 | (1.52) | % | (2.39) | % | |||||||
| Home equity - subordinate positions | 508,765 | 478,196 | 407,904 | 6.39 | % | 24.73 | % | |||||||
| Total consumer real estate | 3,046,424 | 2,909,567 | 2,223,317 | 4.70 | % | 37.02 | % | |||||||
| Other consumer | 32,936 | 32,864 | 23,175 | 0.22 | % | 42.12 | % | |||||||
| Total loans | 13,700,350 | 13,675,764 | 8,808,013 | 0.18 | % | 55.54 | % | |||||||
| Less: allowance for credit losses | (147,313) | (144,319) | (92,246) | 2.07 | % | 59.70 | % | |||||||
| Net loans | 13,553,037 | 13,531,445 | 8,715,767 | 0.16 | % | 55.50 | % | |||||||
| Federal Home Loan Bank stock | 5,218 | 6,249 | 8,666 | (16.50) | % | (39.79) | % | |||||||
| Bank premises and equipment, net | 198,408 | 202,221 | 123,528 | (1.89) | % | 60.62 | % | |||||||
| Goodwill | 985,072 | 985,072 | 506,206 | — | % | 94.60 | % | |||||||
| Other intangible assets | 26,934 | 28,845 | 19,055 | (6.63) | % | 41.35 | % | |||||||
| Cash surrender value of life insurance policies | 293,126 | 292,807 | 244,573 | 0.11 | % | 19.85 | % | |||||||
| Other assets | 552,955 | 522,230 | 555,375 | 5.88 | % | (0.44) | % | |||||||
| Total assets | $ | 19,703,269 | $ | 19,982,450 | $ | 14,533,311 | (1.40) | % | 35.57 | % | ||||
| Liabilities and Stockholders' Equity | ||||||||||||||
| Deposits | ||||||||||||||
| Noninterest-bearing demand deposits | $ | 5,622,260 | $ | 5,562,174 | $ | 4,590,492 | 1.08 | % | 22.48 | % | ||||
| Savings and interest checking accounts | 6,094,493 | 6,347,601 | 4,484,208 | (3.99) | % | 35.91 | % | |||||||
| Money market | 3,443,622 | 3,419,170 | 2,399,878 | 0.72 | % | 43.49 | % | |||||||
| Time certificates of deposit | 1,178,619 | 1,310,603 | 785,562 | (10.07) | % | 50.04 | % | |||||||
| Total deposits | 16,338,994 | 16,639,548 | 12,260,140 | (1.81) | % | 33.27 | % | |||||||
| Borrowings | ||||||||||||||
| Federal Home Loan Bank borrowings | 643 | 25,652 | 25,675 | (97.49) | % | (97.50) | % | |||||||
| Long-term borrowings, net | — | — | 18,750 | nm | (100.00) | % | ||||||||
| Junior subordinated debentures, net | 62,855 | 62,854 | 62,853 | — | % | — | % | |||||||
| Subordinated debentures, net | 49,862 | 49,838 | 49,767 | 0.05 | % | 0.19 | % | |||||||
| Total borrowings | 113,360 | 138,344 | 157,045 | (18.06) | % | (27.82) | % | |||||||
| Total deposits and borrowings | 16,452,354 | 16,777,892 | 12,417,185 | (1.94) | % | 32.50 | % | |||||||
| Other liabilities | 433,714 | 333,373 | 360,172 | 30.10 | % | 20.42 | % | |||||||
| Total liabilities | 16,886,068 | 17,111,265 | 12,777,357 | (1.32) | % | 32.16 | % | |||||||
| Stockholders' equity | ||||||||||||||
| Common stock | 454 | 459 | 329 | (1.09) | % | 37.99 | % | |||||||
| Additional paid in capital | 2,113,313 | 2,146,333 | 949,316 | (1.54) | % | 122.61 | % | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| Retained earnings | 882,503 | 833,857 | 787,742 | 5.83 | % | 12.03 | % | |||||||
| Accumulated other comprehensive income (loss), net of tax | (179,069) | (109,464) | 18,567 | 63.59 | % | (1,064.45) | % | |||||||
| Total stockholders' equity | 2,817,201 | 2,871,185 | 1,755,954 | (1.88) | % | 60.44 | % | |||||||
| Total liabilities and stockholders' equity | $ | 19,703,269 | $ | 19,982,450 | $ | 14,533,311 | (1.40) | % | 35.57 | % | ||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| (Unaudited, dollars in thousands, except per share data) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| % Change | % Change | |||||||||||||
| September 30<br>2022 | June 30<br>2022 | September 30<br>2021 | Sept 2022 vs. | Sept 2022 vs. | ||||||||||
| Jun 2022 | Sept 2021 | |||||||||||||
| Interest income | ||||||||||||||
| Interest on federal funds sold and short-term investments | $ | 6,519 | $ | 2,817 | $ | 815 | 131.42 | % | 699.88 | % | ||||
| Interest and dividends on securities | 13,244 | 11,283 | 7,796 | 17.38 | % | 69.88 | % | |||||||
| Interest and fees on loans | 150,157 | 133,988 | 84,212 | 12.07 | % | 78.31 | % | |||||||
| Interest on loans held for sale | 51 | 35 | 193 | 45.71 | % | (73.58) | % | |||||||
| Total interest income | 169,971 | 148,123 | 93,016 | 14.75 | % | 82.73 | % | |||||||
| Interest expense | ||||||||||||||
| Interest on deposits | 6,109 | 2,111 | 1,633 | 189.39 | % | 274.10 | % | |||||||
| Interest on borrowings | 1,261 | 1,151 | 1,292 | 9.56 | % | (2.40) | % | |||||||
| Total interest expense | 7,370 | 3,262 | 2,925 | 125.94 | % | 151.97 | % | |||||||
| Net interest income | 162,601 | 144,861 | 90,091 | 12.25 | % | 80.49 | % | |||||||
| (Release of) provision for credit losses | 3,000 | — | (10,000) | 100.00% | (130.00) | % | ||||||||
| Net interest income after provision for credit losses | 159,601 | 144,861 | 100,091 | 10.18 | % | 59.46 | % | |||||||
| Noninterest income | ||||||||||||||
| Deposit account fees | 6,261 | 5,828 | 4,298 | 7.43 | % | 45.67 | % | |||||||
| Interchange and ATM fees | 4,331 | 4,027 | 3,441 | 7.55 | % | 25.86 | % | |||||||
| Investment management | 8,436 | 9,329 | 9,174 | (9.57) | % | (8.04) | % | |||||||
| Mortgage banking income | 585 | 1,042 | 2,825 | (43.86) | % | (79.29) | % | |||||||
| Increase in cash surrender value of life insurance policies | 1,883 | 1,871 | 1,596 | 0.64 | % | 17.98 | % | |||||||
| Gain on life insurance benefits | 477 | 123 | — | 287.80 | % | 100.00% | ||||||||
| Loan level derivative income | 471 | 436 | 586 | 8.03 | % | (19.62) | % | |||||||
| Other noninterest income | 5,751 | 5,242 | 4,537 | 9.71 | % | 26.76 | % | |||||||
| Total noninterest income | 28,195 | 27,898 | 26,457 | 1.06 | % | 6.57 | % | |||||||
| Noninterest expenses | ||||||||||||||
| Salaries and employee benefits | 52,708 | 49,538 | 42,235 | 6.40 | % | 24.80 | % | |||||||
| Occupancy and equipment expenses | 12,316 | 11,637 | 8,564 | 5.83 | % | 43.81 | % | |||||||
| Data processing and facilities management | 2,259 | 2,247 | 1,673 | 0.53 | % | 35.03 | % | |||||||
| FDIC assessment | 1,677 | 1,743 | 980 | (3.79) | % | 71.12 | % | |||||||
| Merger and acquisition expense | — | — | 1,943 | nm | (100.00) | % | ||||||||
| Other noninterest expenses | 23,768 | 25,397 | 17,024 | (6.41) | % | 39.61 | % | |||||||
| Total noninterest expenses | 92,728 | 90,562 | 72,419 | 2.39 | % | 28.04 | % | |||||||
| Income before income taxes | 95,068 | 82,197 | 54,129 | 15.66 | % | 75.63 | % | |||||||
| Provision for income taxes | 23,171 | 20,421 | 14,122 | 13.47 | % | 64.08 | % | |||||||
| Net Income | $ | 71,897 | $ | 61,776 | $ | 40,007 | 16.38 | % | 79.71 | % | ||||
| Weighted average common shares (basic) | 45,839,555 | 46,665,101 | 33,043,716 | |||||||||||
| Common share equivalents | 16,856 | 14,096 | 15,554 | |||||||||||
| Weighted average common shares (diluted) | 45,856,411 | 46,679,197 | 33,059,270 | |||||||||||
| Basic earnings per share | $ | 1.57 | $ | 1.32 | $ | 1.21 | 18.94 | % | 29.75 | % | ||||
| Diluted earnings per share | $ | 1.57 | $ | 1.32 | $ | 1.21 | 18.94 | % | 29.75 | % | ||||
| Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP): | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| Net income | $ | 71,897 | $ | 61,776 | $ | 40,007 | ||||||||
| Noninterest expense components | ||||||||||||||
| Add - merger and acquisition expenses | — | — | 1,943 | |||||||||||
| Noncore increases to income before taxes | — | — | 1,943 | |||||||||||
| Net tax benefit associated with noncore items (1) | — | — | (546) | |||||||||||
| Noncore increases to net income | — | — | 1,397 | |||||||||||
| Operating net income (Non-GAAP) | $ | 71,897 | $ | 61,776 | $ | 41,404 | 16.38 | % | 73.65 | % | ||||
| Diluted earnings per share, on an operating basis | $ | 1.57 | $ | 1.32 | $ | 1.25 | 18.94 | % | 25.60 | % | ||||
| (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) | 3.64 | % | 3.27 | % | 2.78 | % | ||||||||
| Return on average assets (GAAP) (calculated by dividing net income by average assets) | 1.43 | % | 1.24 | % | 1.11 | % | ||||||||
| Return on average assets on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average assets) | 1.43 | % | 1.24 | % | 1.15 | % | ||||||||
| Return on average common equity (GAAP) (calculated by dividing net income by average common equity) | 9.90 | % | 8.49 | % | 9.04 | % | ||||||||
| Return on average common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average common equity) | 9.90 | % | 8.49 | % | 9.35 | % | ||||||||
| Noninterest income as a % of total revenue (calculated by dividing total noninterest income by net interest income plus total noninterest income) | 14.78 | % | 16.15 | % | 22.70 | % | ||||||||
| Noninterest income as a % of total revenue on an operating basis (Non-GAAP) (calculated by dividing total noninterest income on an operating basis by net interest income plus total noninterest income) | 14.78 | % | 16.15 | % | 22.70 | % | ||||||||
| Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue) | 48.60 | % | 52.42 | % | 62.14 | % | ||||||||
| Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue) | 48.60 | % | 52.42 | % | 60.47 | % | ||||||||
| Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity) | 15.26 | % | 13.01 | % | 12.90 | % | ||||||||
| Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average tangible common equity) | 15.26 | % | 13.01 | % | 13.35 | % | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |||||||
| (Unaudited, dollars in thousands, except per share data) | ||||||||||||||
| Nine Months Ended | ||||||||||||||
| % Change | ||||||||||||||
| September 30<br>2022 | September 30<br>2021 | Sept 2022 vs. | ||||||||||||
| Sept 2021 | ||||||||||||||
| Interest income | ||||||||||||||
| Interest on federal funds sold and short-term investments | $ | 10,222 | $ | 1,654 | 518.02 | % | ||||||||
| Interest and dividends on securities | 34,571 | 21,617 | 59.93 | % | ||||||||||
| Interest and fees on loans | 413,770 | 265,409 | 55.90 | % | ||||||||||
| Interest on loans held for sale | 150 | 675 | (77.78) | % | ||||||||||
| Total interest income | 458,713 | 289,355 | 58.53 | % | ||||||||||
| Interest expense | ||||||||||||||
| Interest on deposits | 10,327 | 6,361 | 62.35 | % | ||||||||||
| Interest on borrowings | 3,492 | 3,965 | (11.93) | % | ||||||||||
| Total interest expense | 13,819 | 10,326 | 33.83 | % | ||||||||||
| Net interest income | 444,894 | 279,029 | 59.44 | % | ||||||||||
| (Release of) provision for credit losses | 1,000 | (17,500) | (105.71) | % | ||||||||||
| Net interest income after provision for credit losses | 443,894 | 296,529 | 49.70 | % | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| Noninterest income | ||||||||||||||
| Deposit account fees | 17,582 | 11,704 | 50.22 | % | ||||||||||
| Interchange and ATM fees | 11,967 | 9,229 | 29.67 | % | ||||||||||
| Investment management | 26,438 | 26,350 | 0.33 | % | ||||||||||
| Mortgage banking income | 2,989 | 11,270 | (73.48) | % | ||||||||||
| Increase in cash surrender value of life insurance policies | 5,549 | 4,508 | 23.09 | % | ||||||||||
| Gain on life insurance benefits | 600 | 258 | 132.56 | % | ||||||||||
| Loan level derivative income | 1,511 | 875 | 72.69 | % | ||||||||||
| Other noninterest income | 15,729 | 12,476 | 26.07 | % | ||||||||||
| Total noninterest income | 82,365 | 76,670 | 7.43 | % | ||||||||||
| Noninterest expenses | ||||||||||||||
| Salaries and employee benefits | 150,957 | 124,759 | 21.00 | % | ||||||||||
| Occupancy and equipment expenses | 37,255 | 26,543 | 40.36 | % | ||||||||||
| Data processing and facilities management | 6,878 | 5,024 | 36.90 | % | ||||||||||
| FDIC assessment | 5,225 | 2,805 | 86.27 | % | ||||||||||
| Merger and acquisition expense | 7,100 | 3,674 | 93.25 | % | ||||||||||
| Other noninterest expenses | 71,375 | 52,598 | 35.70 | % | ||||||||||
| Total noninterest expenses | 278,790 | 215,403 | 29.43 | % | ||||||||||
| Income before income taxes | 247,469 | 157,796 | 56.83 | % | ||||||||||
| Provision for income taxes | 60,699 | 38,506 | 57.64 | % | ||||||||||
| Net Income | $ | 186,770 | $ | 119,290 | 56.57 | % | ||||||||
| Weighted average common shares (basic) | 46,618,209 | 33,024,386 | ||||||||||||
| Common share equivalents | 17,221 | 18,238 | ||||||||||||
| Weighted average common shares (diluted) | 46,635,430 | 33,042,624 | ||||||||||||
| Basic earnings per share | $ | 4.01 | $ | 3.61 | 11.08 | % | ||||||||
| Diluted earnings per share | $ | 4.00 | $ | 3.61 | 10.80 | % | ||||||||
| Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP): | ||||||||||||||
| Net Income | $ | 186,770 | $ | 119,290 | ||||||||||
| Noninterest expense components | ||||||||||||||
| Add - merger and acquisition expenses | 7,100 | 3,674 | ||||||||||||
| Noncore increases to income before taxes | 7,100 | 3,674 | ||||||||||||
| Net tax benefit associated with noncore items (1) | (1,995) | (1,033) | ||||||||||||
| Noncore increases to net income | $ | 5,105 | $ | 2,641 | ||||||||||
| Operating net income (Non-GAAP) | $ | 191,875 | $ | 121,931 | 57.36 | % | ||||||||
| Diluted earnings per share, on an operating basis | $ | 4.11 | $ | 3.69 | 11.38 | % | ||||||||
| (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) | 3.33 | % | 3.00 | % | ||||||||||
| Return on average assets (GAAP) (calculated by dividing net income by average assets) | 1.25 | % | 1.15 | % | ||||||||||
| Return on average assets on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average assets) | 1.28 | % | 1.17 | % | ||||||||||
| Return on average common equity (GAAP) (calculated by dividing net income by average common equity) | 8.51 | % | 9.20 | % | ||||||||||
| Return on average common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average common equity) | 8.74 | % | 9.40 | % | ||||||||||
| Return on average tangible common equity (GAAP) (calculated by dividing net income by average tangible common equity) | 13.00 | % | 13.21 | % | ||||||||||
| Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing Net operating net income by average tangible common equity) | 13.35 | % | 13.51 | % | ||||||||||
| --- | --- | --- | --- | --- | ||||||||||
| Noninterest income as a % of total revenue (calculated by dividing total noninterest income by net interest income plus total noninterest income) | 15.62 | % | 21.55 | % | ||||||||||
| Noninterest income as a % of total revenue on an operating basis (Non-GAAP) (calculated by dividing total noninterest income on an operating basis by net interest income plus total noninterest income) | 15.62 | % | 21.55 | % | ||||||||||
| Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue) | 52.88 | % | 60.56 | % | ||||||||||
| Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue) | 51.53 | % | 59.52 | % | ||||||||||
| Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity) | 13.00 | % | 13.21 | % | ||||||||||
| Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average tangible common equity) | 13.35 | % | 13.51 | % | ||||||||||
| ASSET QUALITY | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| (Unaudited, dollars in thousands) | Nonperforming Assets At | |||||||||||||
| September 30<br>2022 | June 30<br>2022 | September 30<br>2021 | ||||||||||||
| Nonperforming loans | ||||||||||||||
| Commercial & industrial loans | $ | 27,393 | $ | 3,518 | $ | 19,275 | ||||||||
| Commercial real estate loans | 15,982 | 40,074 | 11,788 | |||||||||||
| Small business loans | 50 | 31 | 46 | |||||||||||
| Residential real estate loans | 8,891 | 8,563 | 10,872 | |||||||||||
| Home equity | 3,485 | 3,514 | 3,746 | |||||||||||
| Other consumer | 216 | 215 | 83 | |||||||||||
| Total nonperforming loans | 56,017 | 55,915 | 45,810 | |||||||||||
| Total nonperforming assets | $ | 56,017 | $ | 55,915 | $ | 45,810 | ||||||||
| Nonperforming loans/gross loans | 0.41 | % | 0.41 | % | 0.52 | % | ||||||||
| Nonperforming assets/total assets | 0.28 | % | 0.28 | % | 0.32 | % | ||||||||
| Allowance for credit losses/nonperforming loans | 262.98 | % | 258.10 | % | 201.37 | % | ||||||||
| Allowance for credit losses/total loans | 1.08 | % | 1.06 | % | 1.05 | % | ||||||||
| Delinquent loans/total loans | 0.17 | % | 0.40 | % | 0.21 | % | ||||||||
| Nonperforming Assets Reconciliation for the Three Months Ended | ||||||||||||||
| September 30<br>2022 | June 30<br>2022 | September 30<br>2021 | ||||||||||||
| Nonperforming assets beginning balance | $ | 55,915 | $ | 56,618 | $ | 47,818 | ||||||||
| New to nonperforming | 30,650 | 2,822 | 4,613 | |||||||||||
| Loans charged-off | (741) | (545) | (332) | |||||||||||
| Loans paid-off /sold | (29,450) | (2,239) | (3,488) | |||||||||||
| Loans restored to performing status | (366) | (738) | (2,813) | |||||||||||
| Other | 9 | (3) | 12 | |||||||||||
| Nonperforming assets ending balance | $ | 56,017 | $ | 55,915 | $ | 45,810 | ||||||||
| Net Charge-Offs (Recoveries) | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended | Nine Months Ended | |||||||||||||
| September 30<br>2022 | June 30<br>2022 | September 30<br>2021 | September 30<br>2022 | September 30<br>2021 | ||||||||||
| Net charge-offs (recoveries) | ||||||||||||||
| Commercial and industrial loans | $ | (2) | $ | (29) | $ | — | $ | (44) | $ | 3,374 | ||||
| Commercial real estate loans | (268) | — | — | (271) | (57) | |||||||||
| Small business loans | (88) | (22) | 33 | (88) | 119 | |||||||||
| Residential real estate loans | — | — | — | — | (1) | |||||||||
| Home equity | (65) | 84 | (49) | 17 | (38) | |||||||||
| Other consumer | 429 | 166 | 127 | 995 | 249 | |||||||||
| Total net charge-offs | $ | 6 | $ | 199 | $ | 111 | $ | 609 | $ | 3,646 | ||||
| Net charge-offs to average loans (annualized) | nm | 0.01 | % | 0.00 | % | 0.01 | % | 0.05 | % | |||||
| Troubled Debt Restructurings At | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| September 30<br>2022 | June 30<br>2022 | September 30<br>2021 | ||||||||||||
| Troubled debt restructurings on accrual status | $ | 11,549 | $ | 11,734 | $ | 15,950 | ||||||||
| Troubled debt restructurings on nonaccrual status | 1,538 | 1,677 | 21,104 | |||||||||||
| Total troubled debt restructurings | $ | 13,087 | $ | 13,411 | $ | 37,054 | ||||||||
| BALANCE SHEET AND CAPITAL RATIOS | ||||||||||||||
| September 30<br>2022 | June 30<br>2022 | September 30<br>2021 | ||||||||||||
| Gross loans/total deposits | 83.85 | % | 82.19 | % | 71.84 | % | ||||||||
| Common equity tier 1 capital ratio (1) | 13.98 | % | 13.90 | % | 13.53 | % | ||||||||
| Tier 1 leverage capital ratio (1) | 10.51 | % | 10.42 | % | 9.36 | % | ||||||||
| Common equity to assets ratio GAAP | 14.30 | % | 14.37 | % | 12.08 | % | ||||||||
| Tangible common equity to tangible assets ratio (2) | 9.66 | % | 9.79 | % | 8.79 | % | ||||||||
| Book value per share GAAP | $ | 61.73 | $ | 62.32 | $ | 53.14 | ||||||||
| Tangible book value per share (2) | $ | 39.56 | $ | 40.31 | $ | 37.24 |
(1) Estimated number for September 30, 2022.
(2) See Appendix A for detailed reconciliation from GAAP to Non-GAAP ratios.
nm = not meaningful
| INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited, dollars in thousands) | Three Months Ended | |||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | ||||||||||||||||
| 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 | $ | 1,156,143 | $ | 6,519 | 2.24 | % | $ | 1,377,286 | $ | 2,817 | 0.82 | % | $ | 2,135,031 | $ | 815 | 0.15 | % |
| Securities | ||||||||||||||||||
| Securities - trading | 3,730 | — | — | % | 3,863 | — | — | % | 3,498 | — | — | % | ||||||
| Securities - taxable investments | 3,024,802 | 13,243 | 1.74 | % | 2,889,245 | 11,281 | 1.57 | % | 1,880,863 | 7,792 | 1.64 | % | ||||||
| Securities - nontaxable investments (1) | 196 | 1 | 2.02 | % | 197 | 3 | 6.11 | % | 468 | 5 | 4.24 | % | ||||||
| Total securities | $ | 3,028,728 | $ | 13,244 | 1.73 | % | $ | 2,893,305 | $ | 11,284 | 1.56 | % | $ | 1,884,829 | $ | 7,797 | 1.64 | % |
| Loans held for sale | 4,263 | 51 | 4.75 | % | 3,842 | 35 | 3.65 | % | 30,143 | 193 | 2.54 | % | ||||||
| Loans | ||||||||||||||||||
| Commercial and industrial (1) | 1,520,924 | 19,289 | 5.03 | % | 1,537,883 | 17,496 | 4.56 | % | 1,640,422 | 15,309 | 3.70 | % | ||||||
| Commercial real estate (1) | 7,760,470 | 85,284 | 4.36 | % | 7,827,442 | 76,771 | 3.93 | % | 4,232,575 | 41,469 | 3.89 | % | ||||||
| Commercial construction | 1,157,876 | 14,875 | 5.10 | % | 1,193,353 | 13,456 | 4.52 | % | 507,393 | 4,916 | 3.84 | % | ||||||
| Small business | 207,546 | 2,819 | 5.39 | % | 203,947 | 2,656 | 5.22 | % | 181,953 | 2,341 | 5.10 | % | ||||||
| Total commercial | 10,646,816 | 122,267 | 4.56 | % | 10,762,625 | 110,379 | 4.11 | % | 6,562,343 | 64,035 | 3.87 | % | ||||||
| Residential real estate | 1,909,066 | 16,533 | 3.44 | % | 1,761,986 | 14,879 | 3.39 | % | 1,231,606 | 10,955 | 3.53 | % | ||||||
| Home equity | 1,076,040 | 11,869 | 4.38 | % | 1,046,933 | 9,178 | 3.52 | % | 1,007,371 | 9,043 | 3.56 | % | ||||||
| Total consumer real estate | 2,985,106 | 28,402 | 3.77 | % | 2,808,919 | 24,057 | 3.44 | % | 2,238,977 | 19,998 | 3.54 | % | ||||||
| Other consumer | 31,883 | 523 | 6.51 | % | 31,554 | 507 | 6.44 | % | 25,929 | 398 | 6.09 | % | ||||||
| Total loans | $ | 13,663,805 | $ | 151,192 | 4.39 | % | $ | 13,603,098 | $ | 134,943 | 3.98 | % | $ | 8,827,249 | $ | 84,431 | 3.79 | % |
| Total interest-earning assets | $ | 17,852,939 | $ | 171,006 | 3.80 | % | $ | 17,877,531 | $ | 149,079 | 3.34 | % | $ | 12,877,252 | $ | 93,236 | 2.87 | % |
| Cash and due from banks | 192,003 | 190,501 | 144,556 | |||||||||||||||
| Federal Home Loan Bank stock | 5,745 | 6,249 | 8,904 | |||||||||||||||
| Other assets | 1,854,870 | 1,855,351 | 1,268,199 | |||||||||||||||
| Total assets | $ | 19,905,557 | $ | 19,929,632 | $ | 14,298,911 | ||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||
| Deposits | ||||||||||||||||||
| Savings and interest checking accounts | $ | 6,224,690 | $ | 2,110 | 0.13 | % | $ | 6,192,761 | $ | 710 | 0.05 | % | $ | 4,426,106 | $ | 338 | 0.03 | % |
| Money market | 3,459,212 | 3,025 | 0.35 | % | 3,486,017 | 607 | 0.07 | % | 2,375,492 | 443 | 0.07 | % | ||||||
| Time deposits | 1,246,841 | 974 | 0.31 | % | 1,356,507 | 794 | 0.23 | % | 795,943 | 852 | 0.42 | % | ||||||
| Total interest-bearing deposits | $ | 10,930,743 | $ | 6,109 | 0.22 | % | $ | 11,035,285 | $ | 2,111 | 0.08 | % | $ | 7,597,541 | $ | 1,633 | 0.09 | % |
| Borrowings | ||||||||||||||||||
| Federal Home Loan Bank borrowings | 12,876 | 55 | 1.69 | % | 25,654 | 123 | 1.92 | % | 31,118 | 165 | 2.10 | % | ||||||
| Long-term borrowings | — | — | — | % | — | — | — | % | 18,742 | 77 | 1.63 | % | ||||||
| Junior subordinated debentures | 62,854 | 589 | 3.72 | % | 62,854 | 410 | 2.62 | % | 62,852 | 432 | 2.73 | % | ||||||
| Subordinated debentures | 49,847 | 617 | 4.91 | % | 49,825 | 618 | 4.97 | % | 49,753 | 617 | 4.92 | % | ||||||
| Total borrowings | $ | 125,577 | $ | 1,261 | 3.98 | % | $ | 138,333 | $ | 1,151 | 3.34 | % | $ | 162,465 | $ | 1,291 | 3.15 | % |
| Total interest-bearing liabilities | $ | 11,056,320 | $ | 7,370 | 0.26 | % | $ | 11,173,618 | $ | 3,262 | 0.12 | % | $ | 7,760,006 | $ | 2,924 | 0.15 | % |
| Noninterest-bearing demand deposits | 5,641,742 | 5,546,041 | 4,502,045 | |||||||||||||||
| Other liabilities | 325,507 | 290,467 | 280,754 | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Total liabilities | $ | 17,023,569 | $ | 17,010,126 | $ | 12,542,805 | ||||||||||||
| Stockholders' equity | 2,881,988 | 2,919,506 | 1,756,106 | |||||||||||||||
| Total liabilities and stockholders' equity | $ | 19,905,557 | $ | 19,929,632 | $ | 14,298,911 | ||||||||||||
| Net interest income | $ | 163,636 | $ | 145,817 | $ | 90,312 | ||||||||||||
| Interest rate spread (2) | 3.54 | % | 3.22 | % | 2.72 | % | ||||||||||||
| Net interest margin (3) | 3.64 | % | 3.27 | % | 2.78 | % | ||||||||||||
| Supplemental Information | ||||||||||||||||||
| Total deposits, including demand deposits | $ | 16,572,485 | $ | 6,109 | $ | 16,581,326 | $ | 2,111 | $ | 12,099,586 | $ | 1,633 | ||||||
| Cost of total deposits | 0.15 | % | 0.05 | % | 0.05 | % | ||||||||||||
| Total funding liabilities, including demand deposits | $ | 16,698,062 | $ | 7,370 | $ | 16,719,659 | $ | 3,262 | $ | 12,262,051 | $ | 2,924 | ||||||
| Cost of total funding liabilities | 0.18 | % | 0.08 | % | 0.09 | % |
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.0 million, $956,000, and $220,000 for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, 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, 2022 | September 30, 2021 | |||||||||||
| 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 | $ | 1,477,117 | $ | 10,222 | 0.93 | % | $ | 1,782,463 | $ | 1,654 | 0.12 | % |
| Securities | ||||||||||||
| Securities - trading | 3,775 | — | — | % | 3,267 | — | — | % | ||||
| Securities - taxable investments | 2,881,203 | 34,567 | 1.60 | % | 1,550,859 | 21,603 | 1.86 | % | ||||
| Securities - nontaxable investments (1) | 198 | 5 | 3.38 | % | 555 | 17 | 4.10 | % | ||||
| Total securities | $ | 2,885,176 | $ | 34,572 | 1.60 | % | $ | 1,554,681 | $ | 21,620 | 1.86 | % |
| Loans held for sale | 5,841 | 150 | 3.43 | % | 35,953 | 675 | 2.51 | % | ||||
| Loans | ||||||||||||
| Commercial and industrial (1) | 1,531,421 | 53,816 | 4.70 | % | 1,898,100 | 58,706 | 4.14 | % | ||||
| Commercial real estate (1) | 7,832,534 | 238,085 | 4.06 | % | 4,195,200 | 123,377 | 3.93 | % | ||||
| Commercial construction | 1,180,509 | 40,599 | 4.60 | % | 525,652 | 14,976 | 3.81 | % | ||||
| Small business | 202,151 | 7,891 | 5.22 | % | 178,294 | 6,924 | 5.19 | % | ||||
| Total commercial | 10,746,615 | 340,391 | 4.23 | % | 6,797,246 | 203,983 | 4.01 | % | ||||
| Residential real estate | 1,774,355 | 45,109 | 3.40 | % | 1,242,991 | 34,449 | 3.71 | % | ||||
| Home equity | 1,051,921 | 29,709 | 3.78 | % | 1,027,311 | 26,391 | 3.43 | % | ||||
| Total consumer real estate | 2,826,276 | 74,818 | 3.54 | % | 2,270,302 | 60,840 | 3.58 | % | ||||
| Other consumer | 31,092 | 1,519 | 6.53 | % | 23,382 | 1,241 | 7.10 | % | ||||
| Total loans | $ | 13,603,983 | $ | 416,728 | 4.10 | % | $ | 9,090,930 | $ | 266,064 | 3.91 | % |
| Total interest-earning assets | $ | 17,972,117 | $ | 461,672 | 3.43 | % | $ | 12,464,027 | $ | 290,013 | 3.11 | % |
| Cash and due from banks | 184,754 | 147,269 | ||||||||||
| Federal Home Loan Bank stock | 7,780 | 9,516 | ||||||||||
| Other assets | 1,853,818 | 1,256,066 | ||||||||||
| Total assets | $ | 20,018,469 | $ | 13,876,878 | ||||||||
| Interest-bearing liabilities | ||||||||||||
| Deposits | ||||||||||||
| Savings and interest checking accounts | $ | 6,224,317 | $ | 3,418 | 0.07 | % | $ | 4,292,992 | $ | 1,145 | 0.04 | % |
| Money market | 3,517,459 | 4,191 | 0.16 | % | 2,337,445 | 1,393 | 0.08 | % | ||||
| Time deposits | 1,355,861 | 2,718 | 0.27 | % | 848,143 | 3,823 | 0.60 | % | ||||
| Total interest-bearing deposits | $ | 11,097,637 | $ | 10,327 | 0.12 | % | $ | 7,478,580 | $ | 6,361 | 0.11 | % |
| Borrowings | ||||||||||||
| Federal Home Loan Bank borrowings | 21,361 | 311 | 1.95 | % | 34,185 | 544 | 2.13 | % | ||||
| Long-term borrowings | 2,988 | 31 | 1.39 | % | 23,434 | 282 | 1.61 | % | ||||
| Junior subordinated debentures | 62,854 | 1,298 | 2.76 | % | 62,852 | 1,287 | 2.74 | % | ||||
| Subordinated debentures | 49,824 | 1,852 | 4.97 | % | 49,729 | 1,852 | 4.98 | % | ||||
| Total borrowings | $ | 137,027 | $ | 3,492 | 3.41 | % | $ | 170,200 | $ | 3,965 | 3.11 | % |
| Total interest-bearing liabilities | $ | 11,234,664 | $ | 13,819 | 0.16 | % | $ | 7,648,780 | $ | 10,326 | 0.18 | % |
| Noninterest-bearing demand deposits | 5,544,476 | 4,213,764 | ||||||||||
| Other liabilities | 303,308 | 280,002 | ||||||||||
| Total liabilities | $ | 17,082,448 | $ | 12,142,546 | ||||||||
| Stockholders' equity | 2,936,021 | 1,734,332 | ||||||||||
| Total liabilities and stockholders' equity | $ | 20,018,469 | $ | 13,876,878 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Net interest income | $ | 447,853 | $ | 279,687 | ||||||||
| Interest rate spread (2) | 3.27 | % | 2.93 | % | ||||||||
| Net interest margin (3) | 3.33 | % | 3.00 | % | ||||||||
| Supplemental Information | ||||||||||||
| Total deposits, including demand deposits | $ | 16,642,113 | $ | 10,327 | $ | 11,692,344 | $ | 6,361 | ||||
| Cost of total deposits | 0.08 | % | 0.07 | % | ||||||||
| Total funding liabilities, including demand deposits | $ | 16,779,140 | $ | 13,819 | $ | 11,862,544 | $ | 10,326 | ||||
| Cost of total funding liabilities | 0.11 | % | 0.12 | % |
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $3.0 million and $658,000 for the nine months ended September 30, 2022 and 2021, 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<br>2022 | June 30<br>2022 | September 30<br>2021 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Tangible common equity | (Dollars in thousands, except per share data) | |||||||||
| Stockholders' equity (GAAP) | $ | 2,817,201 | $ | 2,871,185 | $ | 1,755,954 | (a) | |||
| Less: Goodwill and other intangibles | 1,012,006 | 1,013,917 | 525,261 | |||||||
| Tangible common equity | $ | 1,805,195 | $ | 1,857,268 | $ | 1,230,693 | (b) | |||
| Tangible assets | ||||||||||
| Assets (GAAP) | $ | 19,703,269 | $ | 19,982,450 | $ | 14,533,311 | (c) | |||
| Less: Goodwill and other intangibles | 1,012,006 | 1,013,917 | 525,261 | |||||||
| Tangible assets | $ | 18,691,263 | $ | 18,968,533 | $ | 14,008,050 | (d) | |||
| Common Shares | 45,634,626 | 46,069,761 | 33,043,812 | (e) | ||||||
| Common equity to assets ratio (GAAP) | 14.30 | % | 14.37 | % | 12.08 | % | (a/c) | |||
| Tangible common equity to tangible assets ratio (Non-GAAP) | 9.66 | % | 9.79 | % | 8.79 | % | (b/d) | |||
| Book value per share (GAAP) | $ | 61.73 | $ | 62.32 | $ | 53.14 | (a/e) | |||
| Tangible book value per share (Non-GAAP) | $ | 39.56 | $ | 40.31 | $ | 37.24 | (b/e) |
APPENDIX B: Non-GAAP Reconciliation of Earnings Metrics
(Unaudited, dollars in thousands)
The following table summarizes the impact of noncore items on the Company's calculation of noninterest income and noninterest expense, the impact of noncore items on noninterest income as a percentage of total revenue and the efficiency ratio, as well as the average tangible common equity used to calculate return on average tangible common equity and operating return on tangible common equity for the periods indicated:
| Three Months Ended | Nine Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30<br>2022 | June 30<br>2022 | September 30<br>2021 | September 30<br>2022 | September 30<br>2021 | ||||||||||||
| Net interest income (GAAP) | $ | 162,601 | $ | 144,861 | $ | 90,091 | $ | 444,894 | $ | 279,029 | (a) | |||||
| Noninterest income (GAAP) | $ | 28,195 | $ | 27,898 | $ | 26,457 | $ | 82,365 | $ | 76,670 | (b) | |||||
| Noninterest income on an operating basis (Non-GAAP) | $ | 28,195 | $ | 27,898 | $ | 26,457 | $ | 82,365 | $ | 76,670 | (c) | |||||
| Noninterest expense (GAAP) | $ | 92,728 | $ | 90,562 | $ | 72,419 | $ | 278,790 | $ | 215,403 | (d) | |||||
| Less: | ||||||||||||||||
| Merger and acquisition expense | — | — | 1,943 | 7,100 | 3,674 | |||||||||||
| Noninterest expense on an operating basis (Non-GAAP) | $ | 92,728 | $ | 90,562 | $ | 70,476 | $ | 271,690 | $ | 211,729 | (e) | |||||
| Total revenue (GAAP) | $ | 190,796 | $ | 172,759 | $ | 116,548 | $ | 527,259 | $ | 355,699 | (a+b) | |||||
| Total operating revenue (Non-GAAP) | $ | 190,796 | $ | 172,759 | $ | 116,548 | $ | 527,259 | $ | 355,699 | (a+c) | |||||
| Net income (GAAP) | $ | 71,897 | $ | 61,776 | $ | 40,007 | $ | 186,770 | $ | 119,290 | ||||||
| Operating net income (Non-GAAP) (See income statement for reconciliation of GAAP to Non-GAAP) | $ | 71,897 | $ | 61,776 | $ | 41,404 | $ | 191,875 | $ | 121,931 | ||||||
| Average common equity (GAAP) | $ | 2,881,988 | $ | 2,919,506 | $ | 1,756,106 | $ | 2,936,021 | $ | 1,734,332 | ||||||
| Less: Average goodwill and other intangibles | 1,013,169 | 1,014,953 | 526,032 | 1,015,040 | 527,370 | |||||||||||
| Tangible average tangible common equity (Non-GAAP) | $ | 1,868,819 | $ | 1,904,553 | $ | 1,230,074 | $ | 1,920,981 | $ | 1,206,962 | ||||||
| Ratios | ||||||||||||||||
| Noninterest income as a % of total revenue (GAAP) | 14.78 | % | 16.15 | % | 22.70 | % | 15.62 | % | 21.55 | % | (b/(a+b)) | |||||
| Noninterest income as a % of total revenue on an operating basis (Non-GAAP) | 14.78 | % | 16.15 | % | 22.70 | % | 15.62 | % | 21.55 | % | (c/(a+c)) | |||||
| Efficiency ratio (GAAP) | 48.60 | % | 52.42 | % | 62.14 | % | 52.88 | % | 60.56 | % | (d/(a+b)) | |||||
| Efficiency ratio on an operating basis (Non-GAAP) | 48.60 | % | 52.42 | % | 60.47 | % | 51.53 | % | 59.52 | % | (e/(a+c)) | |||||
| Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity) | 15.26 | % | 13.01 | % | 12.90 | % | 13.00 | % | 13.21 | % | ||||||
| Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average tangible common equity) | 15.26 | % | 13.01 | % | 13.35 | % | 13.35 | % | 13.51 | % |
APPENDIX C: Net Interest Margin Analysis & Non-GAAP Reconciliation of Core Margin
| Three Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2022 | June 30, 2022 | |||||||||||
| Volume | Interest | Margin Impact | Volume | Interest | Margin Impact | |||||||
| (Dollars in thousands) | ||||||||||||
| Reported total interest earning assets | $ | 17,852,939 | $ | 163,636 | 3.64 | % | $ | 17,877,531 | $ | 145,817 | 3.27 | % |
| Core adjustments: | ||||||||||||
| PPP volume @ 1% | (20,071) | (46) | (60,969) | (149) | ||||||||
| PPP fee amortization | (443) | (1,762) | ||||||||||
| Total PPP impact | (20,071) | (489) | (0.01) | % | (60,969) | (1,911) | (0.03) | % | ||||
| Acquisition fair value marks: | ||||||||||||
| Loan amortization (accretion) | (624) | 823 | ||||||||||
| CD accretion | (97) | (437) | ||||||||||
| (721) | (0.02) | % | 386 | 0.01 | % | |||||||
| Nonaccrual interest, net | (556) | (0.01) | % | 205 | — | % | ||||||
| Other noncore adjustments | (637) | (0.01) | % | (1,106) | (0.02) | % | ||||||
| Core margin (Non-GAAP) | $ | 17,832,868 | $ | 161,233 | 3.59 | % | $ | 17,816,562 | $ | 143,391 | 3.23 | % |
19
earningsreleasepresentat
Exhibit 99.2 Q3 2022 Earnings Presentation October 21, 2022
Forward Looking Statements This presentation 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,” "anticipated," "guidance," "targeted" 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 any future weakening caused by the COVID-19 pandemic and any uncertainty regarding the length and extent of economic contraction as a result of the pandemic; the potential effects of inflationary pressures, labor market shortages and supply chain issues; the instability or volatility in financial markets and unfavorable general economic or business conditions, globally, nationally or regionally, caused by geopolitical concerns, including as a result of the conflict between Russia and Ukraine; unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, pandemics or other external events; adverse changes or volatility in the local real estate market; adverse changes in asset quality and any unanticipated credit deterioration in our loan portfolio including those related to one or more large commercial relationships; acquisitions, may not produce results at levels or within time frames originally anticipated and may result in unforeseen integration issues or impairment of goodwill and/or other intangibles; additional regulatory oversight and related compliance costs; changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; higher than expected tax expense, 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, geopolitical concerns, including those arising from the conflict between Russia and Ukraine; the emergence of widespread health emergencies or pandemics, including the magnitude and duration of the COVID-19 pandemic, any further resurgences or variants of the COVID-19 virus, the efficacy and availability of vaccines, boosters or other treatments, actions taken by governmental authorities in response thereto, other public health crises or man-made events, and their impact on the Company's local economies or the Company's operations; a deterioration in the conditions of the securities markets, a deterioration 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. 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 presentation which modify or impact any of the forward-looking statements contained in this presentation will be deemed to modify or supersede such statements in this presentation. In addition to the information set forth in this presentation, you should carefully consider the Risk Factors. 2
Non-GAAP Financial Measures This presentation 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, operating return on average tangible common equity, core net interest margin ("core NIM" or "core margin"), tangible book value per share and the tangible common equity ratio. Operating net income, operating EPS, operating return on average assets and operating return on average common equity, exclude items that management believes are unrelated to the Company's core banking business such as merger and acquisition expenses, provision for credit losses on acquired loan portfolios, and other items, if applicable. Management uses operating net income and related ratios and operating EPS to measure the strength of the Company’s core banking business and to identify trends that may to some extent be obscured by such items. Management reviews its core margin to determine any items that may impact the net interest margin that may be one-time in nature or not reflective of its core operating environment, such as unique low-yielding loans originated through government programs in response to the pandemic, or 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. 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), 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 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 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. 3
Key Operating Metrics Q3 2022 Net Income (in millions) $ 71.9 Diluted Earnings Per Share $ 1.57 Return on Average Assets 1.43% Return on Average Equity 9.90% Return on Average Tangible Common Equity* 15.26% 4 Highlights * See Appendix A for reconciliation of non-GAAP earnings metrics ** See slide 8 for reconciliation of non-GAAP core NIM Key Drivers of Q3 2022: • Core NIM** expansion of 36 basis points from Q2 2022 • 1.3% annualized net loan growth, excluding PPP runoff • Continued modest cash deployment into the securities portfolio • Strong core deposit account openings and low deposit betas • Modest provision for credit loss; non- performing assets remained flat • Strong fee income • 49% efficiency ratio • 443,000 shares repurchased, completing current repurchase plan
5 Loan Portfolio Period Ended $ Increase % Increase Loan Category 9/30/2022 6/30/2022 (Decrease) (Decrease) ($ in millions) Commercial and industrial $ 1,537 $ 1,511 $ 26 1.7 % Paycheck Protection Program ("PPP") loans 11 30 (19) (63.3) % Commercial real estate 7,678 7,792 (114) (1.5) % Commercial construction 1,185 1,195 (10) (0.8) % Small business 210 206 4 1.9 % Total commercial 10,621 10,734 (113) (1.1) % Residential real estate 1,959 1,844 115 6.2 % Home equity - first position 578 587 (9) (1.5) % Home equity - subordinate positions 509 478 31 6.5 % Total consumer real estate 3,046 2,909 137 4.7 % Other consumer 33 33 — — % Total loans 13,700 13,676 24 0.2 % Less: PPP loans 11 30 (19) Total loans, excluding PPP loans $ 13,689 $ 13,646 $ 43 0.3 % (annualized 1.3%)
6 Commercial Loans (1) ($ in millions) Q3 2022 commitments closed $522 Approved pipeline $383 (1) Amounts shown above exclude small business category PPP Loan Summary ($ in millions) PPP Q3 2022 outstanding balance $11 PPP Q3 2022 unearned fees, net $0.2 Loan Highlights Residential & Home Equity Closings ($ in millions) Residential real estate $186 Home equity 112 Total $298 Residential Volume Breakout Q3 2022 Closing Activity • CRE and Construction - property types: ◦ Apartment complex - multi-family ◦ 1 - 4 family residential ◦ Retail • Commercial & Industrial - by industry: ◦ Real Estate and Leasing ◦ Construction $ in m ill io ns $165 $226 $21 $19 Retained in Portfolio Sold/To be Sold Q3 2022 Q2 2022 $0 $50 $100 $150 $200 $250 89% 11% 92% 8%
Period Ended $ Increase % Increase Deposit Customer Type 9/30/2022 6/30/2022 (Decrease) (Decrease) ($ in millions) Consumer deposits $ 7,869 $ 7,918 $ (49) (0.6) % Time certificates of deposits 1,169 1,301 (132) (10.1) % Business/Commercial deposits 6,092 6,073 19 0.3 % Municipal deposits (1) 1,209 1,348 (139) (10.3) % $ 16,339 $ 16,640 $ (301) (1.8) % (1) Municipal deposits include municipal time certificates of deposits. 7 Period Ended $ Increase % Increase Deposit Product Type 9/30/2022 6/30/2022 (Decrease) (Decrease) ($ in millions) Noninterest-bearing demand deposits $ 5,622 $ 5,562 $ 60 1.1 % Savings and interest checking accounts 6,094 6,348 (254) (4.0) % Money market deposits 3,444 3,419 25 0.7 % Time certificates of deposit 1,179 1,311 (132) (10.1) % $ 16,339 $ 16,640 $ (301) (1.8) % Deposit Balances $ in b ill io ns $14,843 $16,775 $16,581 $16,572 0.05% 0.05% 0.05% 0.15% Average Deposits Cost of Deposits Q4 2021 Q1 2022 Q2 2022 Q3 2022 $0 $5,000 $10,000 $15,000 $20,000 0.00% 0.05% 0.10% 0.15% 0.20%
Q3 2022 Q2 2022 Volume Interest Margin Impact Volume Interest Margin Impact ($ in millions) Reported Total $ 17,852.9 $ 163.6 3.64 % $ 17,877.5 $ 145.8 3.27 % Core adjustments: PPP volume @1% (20.1) — (61.0) (0.1) PPP fee amort (0.4) (1.8) Total PPP impact (20.1) (0.4) (0.01) % (61.0) (1.9) (0.03) % Acquisition fair value marks: Loan amortization (accretion) (0.6) 0.8 CD accretion (0.1) (0.4) (0.7) (0.02) % 0.4 0.01 % Nonaccrual interest (0.6) (0.01) % 0.2 — % Other noncore adjustments (0.6) (0.01) % (1.1) (0.02) % Core Margin (Non-GAAP) $ 17,832.8 161.3 3.59 % $ 17,816.5 $ 143.4 3.23 % 8 Net Interest Margin Analysis Net Interest Margin 3.05% 3.09% 3.27% 3.64% 2.83% 3.00% 3.23% 3.59% Reported NIM Core NIM Q1 2022 Q2 2022 Q3 2022 2.50% 3.00% 3.50% 4.00% Asset Sensitivity: Balances Subject to Reprice Interest earning cash 100% Loans 30-35% Less: Loan hedges (10-11%) Strong core deposit funding source = historical low deposit betas
9 Nonperforming Loans ($ in millions) $27.8 $56.6 $55.9 $56.0 0.20% 0.42% 0.41% 0.41% NPLs ($Mil) NPL/Loan% Q4 2021 Q1 2022 Q2 2022 Q3 2022 0.16% 0.32% 0.48% $0 $30 $60 Net Charge-offs/(Recoveries) ($ in millions) $(2.4) $0.4 $0.2 $0.0 (0.09)% 0.01% 0.01% 0.00% Net Charge-offs (recoveries) Annualized Loss Rate Q4 2021 Q1 2022 Q2 2022 Q3 2022 $(5) $0 $5 $10 (0.10)% 0.00% 0.10% 0.20% COVID-19 Deferrals by Modification Type Deferral of Principal Only Total Portfolio % Deferral ($ in millions) Commercial real estate (1) $ 193 $ 8,863 2.2 % Other portfolios — 4,837 — % Total active deferrals as of September 30, 2022 $ 193 $ 13,700 1.4 % COVID-19 Deferrals Maturity Schedule Q4 2022 2023 2024 Total Commercial real estate (1) $ 137 $ 47 $ 9 $ 193 (1) Balances include commercial construction deferrals. Asset Quality Allowance for Credit Loss & Delinquency Trends 1.08% 1.06% 1.06% 1.08% 0.34% 0.29% 0.40% 0.17% Allowance for Credit Losses/Total Loans Delinquent Loans/Total Loans Q4 2021 Q1 2022 Q2 2022 Q3 2022 0.00% 0.50% 1.00% 1.50%
10 Noninterest Income Three Months Ended Noninterest Income September 30 2022 June 30 2022 ($ in thousands) Deposit account fees $6,261 $5,828 Interchange and ATM fees 4,331 4,027 Investment management 8,436 9,329 Mortgage banking income 585 1,042 Increase in cash surrender value of life insurance policies 1,883 1,871 Gain on life insurance benefits 477 123 Loan level derivative income 471 436 Other noninterest income 5,751 5,242 Total noninterest income $28,195 $27,898 $ in m ill io ns Assets Under Administration $5,726 $5,725 $5,157 $5,092 Q4 2021 Q1 2022 Q2 2022 Q3 2022 $5,000 $5,500 Investment management: Focal Point $ in m ill io ns Gross New Assets $180 $284 $138 $267 Q4 2021 Q1 2022 Q2 2022 Q3 2022 $0 $100 $200 $300
11 Efficiency Ratio - Operating Basis* 52.71% 54.00% 52.42% 48.60% Q4 2021 Q1 2022 Q2 2022 Q3 2022 50.00% 52.50% 55.00% Noninterest Expense * See Appendix B for reconciliation of non-GAAP earnings metrics Three Months Ended Noninterest Expense September 30 2022 June 30 2022 ($ in thousands) Salaries and employee benefits $52,708 $49,538 Occupancy and equipment expenses 12,316 11,637 Data processing and facilities management 2,259 2,247 FDIC assessment 1,677 1,743 Other noninterest expenses 23,768 25,397 Total noninterest expenses $92,728 $90,562 Efficiency Ratio - GAAP Basis 77.20% 58.34% 52.42% 48.60% Q4 2021 Q1 2022 Q2 2022 Q3 2022 40.00% 60.00% 80.00%
12 Tax Rate Loan Growth Deposit Growth Noninterest Income Asset Quality 2022 Fourth Quarter Guidance • Total loans are expected to stay relatively flat • Asset sensitivity is expected to benefit net interest income and margin due to recent and anticipated increases in rates • Modest changes to short term liquidity are expected • Q4 beta estimates: Fed Cash 100%, Loans 20-25%, Deposits 10-15% (all deposits) • Core deposits are expected to stay relatively flat • Time deposits are expected to decrease modestly • Modest decreases are anticipated driven primarily by seasonal declines in deposit and interchange income • Tax rate expected to be approximately 25% Net Interest Income • Though overall asset quality remains strong, economic uncertainty exists • Based on today's environment, credit loss and provision levels are expected to be minimal Noninterest Expense • Expected increases at low single digit % rate, driven mostly by wage and other inflationary factors
The following table reconciles net income and diluted EPS, which are GAAP measures, to operating earnings and diluted EPS on an operating basis, which are Non-GAAP measures, as well as the average tangible common equity used to calculate return on average tangible common equity and operating return on average tangible common equity, return on average assets on an operating basis and return on average common equity on an operating basis, which are Non-GAAP measures, as of the time periods indicated: Q3 2022 Q2 2022 Q1 2022 Q4 2021 ($ in millions, except per share data) Net income available to common shareholders (GAAP) $ 71.9 $ 1.57 $ 61.8 $ 1.32 $ 53.1 $ 1.12 $ 1.7 $ 0.04 (a) Non-GAAP adjustments Provision for non-PCD acquired loans — — — — — — 50.7 1.26 Noninterest expense components Merger and acquisition expenses — — — — 7.1 0.15 37.2 0.92 Total impact of noncore items — — — — 7.1 0.15 87.9 2.18 Less - net tax benefit associated with noncore items (1) — — — — (2.0) (0.04) (23.9) (0.59) Noncore increases to net income — — — — 5.1 0.11 64.0 1.59 Operating net income (Non-GAAP) $ 71.9 $ 1.57 $ 61.8 $ 1.32 $ 58.2 $ 1.23 $ 65.7 $ 1.63 (b) Average assets $ 19,905.6 19,929.6 $ 20,223.7 $ 17,755.7 (c) Average equity 2,882.0 2,919.5 3,008.0 2,424.4 (d) Less: Average goodwill and other intangibles 1,013.2 1,015.0 1,017.0 786.6 Tangible average common equity $ 1,868.8 $ 1,904.5 $ 1,991.0 1,637.8 (e) Return on average assets 1.43 % 1.24 % 1.06 % 0.04 % (a/(c)) Return on average assets on an operating basis (Non-GAAP) 1.43 % 1.24 % 1.17 % 1.47 % (b)/(c) Return on average common equity 9.90 % 8.49 % 7.16 % 0.28 % (a)/(d) Return on average common equity on an operating basis (Non-GAAP) 9.90 % 8.49 % 7.85 % 10.75 % (b)/(d) Return on Average Tangible Common Equity (Non-GAAP) 15.26 % 13.01 % 10.82 % 0.41 % (a/e) Return on Average Tangible Common Equity on an operating basis (Non-GAAP) 15.26 % 13.01 % 11.86 % 15.92 % (b/e) Appendix A: Non-GAAP Reconciliation of Earnings Metrics 13 (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.
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 interest income as a percentage to total revenue and the efficiency ratio for the periods indicated: Q3 2022 Q2 2022 Q1 2022 Q4 2021 ($ in millions) Net interest income (GAAP) $ 162.6 $ 144.9 $ 137.4 $ 122.5 (a) Noninterest income (GAAP) $ 28.2 $ 27.9 $ 26.3 $ 29.2 (b) Noninterest income on an operating basis (Non- GAAP) $ 28.2 $ 27.9 $ 26.3 $ 29.2 (c) Noninterest expense (GAAP) $ 92.7 $ 90.6 $ 95.5 $ 117.1 (d) Less: Merger and acquisition expense — — 7.1 37.2 Noninterest expense on an operating basis (Non-GAAP) $ 92.7 $ 90.6 $ 88.4 $ 79.9 (e) Total revenue (GAAP) $ 190.8 $ 172.8 $ 163.7 $ 151.7 (a+b) Total operating revenue (Non-GAAP) $ 190.8 $ 172.8 $ 163.7 $ 151.7 (a+c) Ratios Noninterest income as a % of total revenue (GAAP based) 14.78 % 16.15 % 16.05 % 19.23 % (b/(a+b)) Noninterest income as a % of total revenue on an operating basis (Non-GAAP) 14.78 % 16.15 % 16.05 % 19.23 % (c/(a+c)) Efficiency ratio (GAAP based) 48.60 % 52.42 % 58.34 % 77.20 % (d/(a+b)) Efficiency ratio on an operating basis (Non- GAAP) 48.60 % 52.42 % 54.00 % 52.71 % (e/(a+c)) Appendix B: Non-GAAP Reconciliation of Earnings Metrics 14