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7/21/20220000776901false00007769012022-07-212022-07-210000776901dei:MailingAddressMember2022-07-212022-07-21

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:
July 21, 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 On July 21, 2022, Independent Bank Corp.
Act. ☐




ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(the "Company") announced by press release its earnings for the quarter ended June 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 9.01
FINANCIAL STATEMENTS AND EXHIBITS

d. The following exhibits are included with this Report:
Exhibit Index
Exhibit # Exhibit Description
99.1
99.2
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: July 21, 2022 By: /s/Mark J. Ruggiero
MARK J. RUGGIERO
CHIEF FINANCIAL OFFICER





















EX-99.1 2 exhibit991-indb06x30x2022e.htm EX-99.1 - Q2 2022 EARNINGS PRESS RELEASE Document

Exhibit 99.1

indblogoa55.jpg

Shareholder Relations                 NEWS RELEASE
288 Union Street
Rockland, Ma. 02370

INDEPENDENT BANK CORP. REPORTS SECOND QUARTER NET INCOME OF $61.8 MILLION
Performance driven by higher revenues
    
Rockland, Massachusetts (July 21, 2022) Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2022 second quarter net income of $61.8 million, or $1.32 per diluted share, compared to 2022 first quarter net income of $53.1 million, or $1.12 per diluted share, and 2022 first quarter operating net income of $58.2 million, or $1.23 per diluted share, which excluded pre-tax merger-related costs of $7.1 million associated with the acquisition of Meridian Bancorp, Inc. ("Meridian") and its subsidiary, East Boston Savings Bank ("EBSB"). There were no such costs included in 2022 second quarter results. 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.

“We generated solid results while continuing our focus on disciplined growth. Our core fundamentals were on full display this quarter as evidenced by revenue and loan growth along with a continuing sound balance sheet,” said Christopher Oddleifson, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. “Our ongoing success is a testament to the dedication of my talented colleagues and the enduring relationships they forge with each other and with the customers and communities that Rockland Trust serves. In these uncertain economic times, we remain committed to serving the needs of all our constituents and being the bank Where Each Relationship Matters®.”

BALANCE SHEET
    
Total assets of $20.0 billion at June 30, 2022 decreased by $176.7 million, or 0.9%, from the prior quarter due primarily to the decline in liquid assets, and increased by $5.8 billion, or 40.8%, as compared to the year ago period, inclusive of the 2021 fourth quarter acquisition of Meridian.

Total loans at June 30, 2022 of $13.7 billion increased by $95.7 million, or 2.8% on an annualized basis compared to the prior quarter level. Excluding $69.0 million of net paydowns associated with the Paycheck Protection Program ("PPP"), the loan portfolio increased by $164.7 million, or 4.9% on an annualized basis, compared to the prior quarter. Organic loan growth was driven primarily by strong consumer loan activity, as the majority of residential real estate loan closings were retained on the balance sheet, resulting in 8.1% growth (32.4% annualized) for the quarter in that portfolio, while increased demand and line utilization fueled 3.9% (15.5% annualized) growth in home equity balances. On the commercial side, increased line utilization and higher closing volumes drove solid growth in both the commercial and industrial and construction categories, while elevated attrition outpaced strong closing activity within commercial real estate. Robust small business origination activity led to solid 2.8% growth for the quarter.

Deposit balances of $16.6 billion at June 30, 2022 decreased by $123.8 million, or 0.7%, from the prior quarter primarily attributable to continued runoff in higher-cost time deposits, while growth in municipal deposits was offset by personal and business deposit declines within the core categories. Core deposits comprised 86.8% of total deposits at June 30, 2022, an increase from 85.8% at March 31, 2022.
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The total cost of deposits for the quarter remained at 0.05%.

The securities portfolio increased by $73.2 million, or 2.6%, 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 $196.7 million, offset by an unrealized loss of $30.7 million related to the available for sale portfolio, as well as paydowns, calls, and maturities. Total securities represented 14.7% of total assets as of June 30, 2022, as compared to 14.2% at March 31, 2022

Stockholders' equity at June 30, 2022 decreased 3.2% when compared to the prior quarter, which decrease is primarily attributable to the Company's repurchase of approximately 1.3 million in shares during the second quarter of 2022 under the Company's buyback program, which totaled $103.4 million, along with elevated levels of unrealized losses on available for sale investment securities included in other comprehensive income, which were partially offset by strong earnings retention. As a result of this decrease in stockholders' equity, book value per share decreased by $0.27, or 0.4%, to $62.32 during the second quarter as compared to the prior quarter. The Company's ratio of common equity to assets of 14.37% at June 30, 2022 represented a decrease of 34 basis points from the prior quarter and an increase of 210 basis points from the year ago period. The Company's tangible book value per share at June 30, 2022 declined by $0.84, or 2.0%, from the prior quarter to $40.31, but represented an increase of 9.6% 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 9.79% at June 30, 2022 represents a decrease of 39 basis points from the prior quarter and an increase of 90 basis points from 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 increased 5.4% to $144.9 million compared to $137.4 million for the prior quarter, primarily reflecting the positive impact of asset repricing in the rising interest rate environment in conjunction with relatively stable funding costs, offset by reduced net PPP fee income of $1.7 million. The reported net interest margin increased by 18 basis points from the prior quarter to 3.27%, and increased 23 basis points to 3.23% 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 $27.9 million for the second quarter of 2022 was $1.6 million, or 6.2% higher compared to the prior quarter. Significant changes in noninterest income for the second quarter compared to the prior quarter included the following:

•Deposit account fees and interchange and ATM fees increased by $335,000, or 6.1%, and $418,000, or 11.6%, respectively, both driven by increased transaction volume during the second quarter.

•Investment management income increased by $656,000, or 7.6%, compared to the prior quarter primarily due to seasonal tax preparation fees as well as strong retail and insurance performance, offset partially by depressed market valuations during the second quarter. As of June 30, 2022, total assets under administration had decreased $568.0 million, or 9.9% to $5.2 billion, primarily due to declines in market values.

•Mortgage banking income decreased by $320,000, or 23.5%, despite stronger origination volumes, as a greater portion of new originations were retained in the Company's portfolio versus being sold in the secondary market as compared to the prior quarter.

•Loan level derivative income decreased by $168,000, or 27.8%, to $436,000, due primarily to lower customer volume.

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•Other noninterest income increased by $506,000, or 10.7%, primarily attributable to increases in rental income from equipment leases and discounted purchases of Massachusetts historical tax credits.

NONINTEREST EXPENSE

Noninterest expense of $90.6 million for the second quarter of 2022 represented a $4.9 million, or 5.2%, decrease compared to 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 $827,000, or 1.7%, primarily due to increases in general salary expenses and incentive programs, partially offset by decreases in payroll taxes and retirement costs.

•Occupancy and equipment decreased by $1.7 million, or 12.5%, due mostly to decreased snow removal costs from the prior quarter of $1.2 million, utility expenses, and reduced rent related to several terminated locations acquired from EBSB.

•The Company incurred merger related costs of $7.1 million associated with the Meridian acquisition during the first quarter of 2022. No such costs were recorded during the second quarter.

•Other noninterest expense increased by $3.2 million, or 14.3%, due primarily to increases in consultant fees, elevated unrealized losses on equity securities, director expenses related to equity compensation granted during the quarter, advertising costs, and recruitment expense.

    The Company generated a return on average assets and a return on average common equity of 1.24% and 8.49%, respectively, for the second quarter of 2022, as compared to 1.06% and 7.16%, respectively, or 1.17% and 7.85%, respectively, on an operating basis, for the prior quarter.

The Company’s tax rate for the second quarter of 2022 was 24.8%, compared to 24.4% for the prior quarter.

ASSET QUALITY

During the second quarter of 2022, the Company recorded total net charge-offs of $199,000, equating to 0.01% of average loans on an annualized basis. Nonperforming loans declined slightly to $55.9 million, or 0.41% of total loans at June 30, 2022, as compared to $56.6 million, or 0.42% of total loans at March 31, 2022. Delinquency as a percentage of total loans increased 11 basis points from the prior quarter to 0.40% at June 30, 2022.

In addition, total loans subject to a COVID-19 related payment deferral decreased significantly to $197.4 million, or 1.4% of total loans, at June 30, 2022, as compared to $304.5 million, or 2.2% of total loans, at March 31, 2022. All loans subject to a payment deferral at June 30, 2022 were performing in accordance with the modified terms.

The Company recorded no provision for credit losses during the second quarter of 2022 as continued strong credit quality metrics countered additional provisioning for net loan growth. The allowance for credit losses on total loans was $144.3 million, or 1.06% of total loans, at June 30, 2022, as compared to $144.5 million, or 1.06% of total loans, at March 31, 2022.

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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 second quarter earnings at 10:00 a.m. Eastern Time on Friday, July 22, 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: 9471677 and will be available through July 29, 2022. Additionally, a webcast replay will be available on the Company's website until July 22, 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;
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•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, 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.

Further, the foregoing factors may be exacerbated by the ultimate impact of the COVID-19 pandemic, which remains unknown at this time due to factors and future developments that are uncertain, unpredictable and, in many cases, beyond the Company's control, including the scope, duration and extent of the pandemic and any further resurgences, the efficacy, availability and public acceptance of vaccines, boosters or other treatments, actions taken by governmental authorities in response to the pandemic and the direct and indirect impact of these actions and the pandemic generally 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, 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
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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 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), 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
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INDEPENDENT BANK CORP. FINANCIAL SUMMARY
CONSOLIDATED BALANCE SHEETS
(Unaudited, dollars in thousands) % Change % Change
June 30
2022
March 31
2022
June 30
2021
Jun 2022 vs. Jun 2022 vs.
Mar 2022 Jun 2021
Assets
Cash and due from banks $ 202,802  $ 173,779  $ 141,953  16.70  % 42.87  %
Interest-earning deposits with banks 1,273,465  1,666,580  2,114,477  (23.59) % (39.77) %
Securities
Trading 3,637  3,956  3,439  (8.06) % 5.76  %
Equities 21,181  22,611  22,975  (6.32) % (7.81) %
Available for sale 1,501,949  1,552,731  794,516  (3.27) % 89.04  %
Held to maturity 1,408,189  1,282,441  861,821  9.81  % 63.40  %
Total securities 2,934,956  2,861,739  1,682,751  2.56  % 74.41  %
Loans held for sale 2,358  6,144  25,561  (61.62) % (90.78) %
Loans
Commercial and industrial 1,541,046  1,566,192  1,726,498  (1.61) % (10.74) %
Commercial real estate 7,791,757  7,897,616  4,251,543  (1.34) % 83.27  %
Commercial construction 1,194,577  1,153,945  496,539  3.52  % 140.58  %
Small business 205,953  200,405  182,863  2.77  % 12.63  %
Total commercial 10,733,333  10,818,158  6,657,443  (0.78) % 61.22  %
Residential real estate 1,844,057  1,706,045  1,240,279  8.09  % 48.68  %
Home equity - first position 587,314  577,881  606,332  1.63  % (3.14) %
Home equity - subordinate positions 478,196  447,934  412,076  6.76  % 16.05  %
Total consumer real estate 2,909,567  2,731,860  2,258,687  6.50  % 28.82  %
Other consumer 32,864  30,009  22,858  9.51  % 43.77  %
Total loans 13,675,764  13,580,027  8,938,988  0.70  % 52.99  %
Less: allowance for credit losses (144,319) (144,518) (102,357) (0.14) % 41.00  %
Net loans 13,531,445  13,435,509  8,836,631  0.71  % 53.13  %
Federal Home Loan Bank stock 6,249  11,407  9,079  (45.22) % (31.17) %
Bank premises and equipment, net 202,221  199,106  117,435  1.56  % 72.20  %
Goodwill 985,072  985,072  506,206  —  % 94.60  %
Other intangible assets 28,845  30,759  20,370  (6.22) % 41.61  %
Cash surrender value of life insurance policies 292,807  291,192  242,963  0.55  % 20.52  %
Other assets 522,230  497,891  496,781  4.89  % 5.12  %
Total assets $ 19,982,450  $ 20,159,178  $ 14,194,207  (0.88) % 40.78  %
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing demand deposits $ 5,562,174  $ 5,537,156  $ 4,370,852  0.45  % 27.26  %
Savings and interest checking accounts 6,347,601  6,247,806  4,445,903  1.60  % 42.77  %
Money market 3,419,170  3,579,820  2,352,897  (4.49) % 45.32  %
Time certificates of deposit 1,310,603  1,398,610  817,319  (6.29) % 60.35  %
Total deposits 16,639,548  16,763,392  11,986,971  (0.74) % 38.81  %
Borrowings
Federal Home Loan Bank borrowings 25,652  25,660  35,693  (0.03) % (28.13) %
Long-term borrowings, net —  —  23,425  n/a (100.00) %
Junior subordinated debentures, net 62,854  62,854  62,852  —  % —  %
Subordinated debentures, net 49,838  49,814  49,743  0.05  % 0.19  %
Total borrowings 138,344  138,328  171,713  0.01  % (19.43) %
Total deposits and borrowings 16,777,892  16,901,720  12,158,684  (0.73) % 37.99  %
Other liabilities 333,373  292,019  293,901  14.16  % 13.43  %
Total liabilities 17,111,265  17,193,739  12,452,585  (0.48) % 37.41  %
Stockholders' equity
Common stock 459  472  329  (2.75) % 39.51  %
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Additional paid in capital 2,146,333  2,247,518  948,130  (4.50) % 126.38  %
Retained earnings 833,857  795,651  763,596  4.80  % 9.20  %
Accumulated other comprehensive income (loss), net of tax (109,464) (78,202) 29,567  39.98  % (470.22) %
Total stockholders' equity 2,871,185  2,965,439  1,741,622  (3.18) % 64.86  %
Total liabilities and stockholders' equity $ 19,982,450  $ 20,159,178  $ 14,194,207  (0.88) % 40.78  %

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, dollars in thousands, except per share data)
Three Months Ended
% Change % Change
June 30
2022
March 31
2022
June 30
2021
Jun 2022 vs. Jun 2022 vs.
Mar 2022 Jun 2021
Interest income
Interest on federal funds sold and short-term investments $ 2,817  $ 886  $ 513  217.95  % 449.12  %
Interest and dividends on securities 11,283  10,044  7,189  12.34  % 56.95  %
Interest and fees on loans 133,988  129,625  88,814  3.37  % 50.86  %
Interest on loans held for sale 35  64  186  (45.31) % (81.18) %
Total interest income 148,123  140,619  96,702  5.34  % 53.17  %
Interest expense
Interest on deposits 2,111  2,107  2,017  0.19  % 4.66  %
Interest on borrowings 1,151  1,080  1,331  6.57  % (13.52) %
Total interest expense 3,262  3,187  3,348  2.35  % (2.57) %
Net interest income 144,861  137,432  93,354  5.41  % 55.17  %
Provision for credit losses —  (2,000) (5,000) (100.00) % (100.00) %
Net interest income after provision for credit losses 144,861  139,432  98,354  3.89  % 47.29  %
Noninterest income
Deposit account fees 5,828  5,493  3,822  6.10  % 52.49  %
Interchange and ATM fees 4,027  3,609  3,068  11.58  % 31.26  %
Investment management 9,329  8,673  8,872  7.56  % 5.15  %
Mortgage banking income 1,042  1,362  2,705  (23.49) % (61.48) %
Increase in cash surrender value of life insurance policies 1,871  1,795  1,589  4.23  % 17.75  %
Gain on life insurance benefits 123  —  —  100.00% 100.00%
Loan level derivative income 436  604  116  (27.81) % 275.86  %
Other noninterest income 5,242  4,736  4,795  10.68  % 9.32  %
Total noninterest income 27,898  26,272  24,967  6.19  % 11.74  %
Noninterest expenses
Salaries and employee benefits 49,538  48,711  42,635  1.70  % 16.19  %
Occupancy and equipment expenses 11,637  13,302  8,706  (12.52) % 33.67  %
Data processing and facilities management 2,247  2,372  1,686  (5.27) % 33.27  %
FDIC assessment 1,743  1,805  775  (3.43) % 124.90  %
Merger and acquisition expense —  7,100  1,731  (100.00) % (100.00) %
Other noninterest expenses 25,397  22,210  17,769  14.35  % 42.93  %
Total noninterest expenses 90,562  95,500  73,302  (5.17) % 23.55  %
Income before income taxes 82,197  70,204  50,019  17.08  % 64.33  %
Provision for income taxes 20,421  17,107  12,447  19.37  % 64.06  %
Net Income $ 61,776  $ 53,097  $ 37,572  16.35  % 64.42  %
Weighted average common shares (basic) 46,665,101  47,366,753  33,033,578 
Common share equivalents 14,096  20,711  21,270 
Weighted average common shares (diluted) 46,679,197  47,387,464  33,054,848 
Basic earnings per share $ 1.32  $ 1.12  $ 1.14  17.86  % 15.79  %
Diluted earnings per share $ 1.32  $ 1.12  $ 1.14  17.86  % 15.79  %
8


Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP):
Net income $ 61,776  $ 53,097  $ 37,572 
Noninterest expense components
Add - merger and acquisition expenses —  7,100  1,731 
Noncore increases to income before taxes —  7,100  1,731 
Net tax benefit associated with noncore items (1) —  (1,995) (487)
Noncore increases to net income —  5,105  1,244 
Operating net income (Non-GAAP) $ 61,776  $ 58,202  $ 38,816  6.14  % 59.15  %
Diluted earnings per share, on an operating basis $ 1.32  $ 1.23  $ 1.17  7.32  % 12.82  %
(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) 3.27  % 3.09  % 2.99  %
Return on average assets (GAAP) (calculated by dividing net income by average assets) 1.24  % 1.06  % 1.08  %
Return on average assets on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average assets) 1.24  % 1.17  % 1.12  %
Return on average common equity (GAAP) (calculated by dividing net income by average common equity) 8.49  % 7.16  % 8.70  %
Return on average common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average common equity) 8.49  % 7.85  % 8.98  %
Noninterest income as a % of total revenue (calculated by dividing total noninterest income by net interest income plus total noninterest income) 16.15  % 16.05  % 21.10  %
Noninterest income as a % of total revenue on an operating basis (Non-GAAP) (calculated by dividing total noninterest income on an operating basis by net interest income plus total noninterest income) 16.15  % 16.05  % 21.10  %
Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue) 52.42  % 58.34  % 61.95  %
Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue) 52.42  % 54.00  % 60.49  %
Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity) 13.01  % 10.82  % 12.50  %
Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average tangible common equity) 13.01  % 11.86  % 12.91  %

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, dollars in thousands, except per share data)
Six Months Ended
% Change
June 30
2022
June 30
2021
Jun 2022 vs.
Jun 2021
Interest income
Interest on federal funds sold and short-term investments $ 3,703  $ 839  341.36  %
Interest and dividends on securities 21,327  13,821  54.31  %
Interest and fees on loans 263,613  181,197  45.48  %
Interest on loans held for sale 99  482  (79.46) %
Total interest income 288,742  196,339  47.06  %
Interest expense
Interest on deposits 4,218  4,728  (10.79) %
Interest on borrowings 2,231  2,673  (16.54) %
Total interest expense 6,449  7,401  (12.86) %
Net interest income 282,293  188,938  49.41  %
Provision for credit losses (2,000) (7,500) (73.33) %
9


Net interest income after provision for credit losses 284,293  196,438  44.72  %
Noninterest income
Deposit account fees 11,321  7,406  52.86  %
Interchange and ATM fees 7,636  5,788  31.93  %
Investment management 18,002  17,176  4.81  %
Mortgage banking income 2,404  8,445  (71.53) %
Increase in cash surrender value of life insurance policies 3,666  2,912  25.89  %
Gain on life insurance benefits 123  258  (52.33) %
Loan level derivative income 1,040  289  259.86  %
Other noninterest income 9,978  7,939  25.68  %
Total noninterest income 54,170  50,213  7.88  %
Noninterest expenses
Salaries and employee benefits 98,249  82,524  19.06  %
Occupancy and equipment expenses 24,939  17,979  38.71  %
Data processing and facilities management 4,619  3,351  37.84  %
FDIC assessment 3,548  1,825  94.41  %
Merger and acquisition expense 7,100  1,731  310.17  %
Other noninterest expenses 47,607  35,574  33.83  %
Total noninterest expenses 186,062  142,984  30.13  %
Income before income taxes 152,401  103,667  47.01  %
Provision for income taxes 37,528  24,384  53.90  %
Net Income $ 114,873  $ 79,283  44.89  %
Weighted average common shares (basic) 47,013,989  33,014,561 
Common share equivalents 17,403  25,085 
Weighted average common shares (diluted) 47,031,392  33,039,646 
Basic earnings per share $ 2.44  $ 2.40  1.67  %
Diluted earnings per share $ 2.44  $ 2.40  1.67  %
Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP):
Net Income $ 114,873  $ 79,283 
Noninterest expense components
Add - merger and acquisition expenses 7,100  1,731 
Noncore increases to income before taxes 7,100  1,731 
Net tax benefit associated with noncore items (1) (1,995) (487)
Noncore increases to net income $ 5,105  $ 1,244 
Operating net income (Non-GAAP) $ 119,978  $ 80,527  48.99  %
Diluted earnings per share, on an operating basis $ 2.55  $ 2.44  4.51  %
(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) 3.18  % 3.12  %
Return on average assets (GAAP) (calculated by dividing net income by average assets) 1.15  % 1.17  %
Return on average assets on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average assets) 1.21  % 1.19  %
Return on average common equity (GAAP) (calculated by dividing net income by average common equity) 7.82  % 9.28  %
Return on average common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average common equity) 8.16  % 9.42  %
Return on average tangible common equity (GAAP) (calculated by dividing net income by average tangible common equity) 11.89  % 13.38  %
10


Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing Net operating net income by average tangible common equity) 12.42  % 13.59  %
Noninterest income as a % of total revenue (calculated by dividing total noninterest income by net interest income plus total noninterest income) 16.10  % 21.00  %
Noninterest income as a % of total revenue on an operating basis (Non-GAAP) (calculated by dividing total noninterest income on an operating basis by net interest income plus total noninterest income) 16.10  % 21.00  %
Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue) 55.30  % 59.79  %
Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue) 53.19  % 59.06  %
Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity) 11.89  % 13.38  %
Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average tangible common equity) 12.42  % 13.59  %


11


ASSET QUALITY
(Unaudited, dollars in thousands) Nonperforming Assets At
June 30
2022
March 31
2022
June 30
2021
Nonperforming loans
Commercial & industrial loans $ 3,518  $ 3,517  $ 20,831 
Commercial real estate loans 40,074  40,470  9,031 
Small business loans 31  20  558 
Residential real estate loans 8,563  8,457  12,786 
Home equity 3,514  3,761  4,517 
Other consumer 215  393  95 
Total nonperforming loans 55,915  56,618  47,818 
Total nonperforming assets $ 55,915  $ 56,618  $ 47,818 
Nonperforming loans/gross loans 0.41  % 0.42  % 0.53  %
Nonperforming assets/total assets 0.28  % 0.28  % 0.34  %
Allowance for credit losses/nonperforming loans 258.10  % 255.25  % 214.06  %
Allowance for credit losses/total loans 1.06  % 1.06  % 1.15  %
Delinquent loans/total loans 0.40  % 0.29  % 0.11  %
Nonperforming Assets Reconciliation for the Three Months Ended
June 30
2022
March 31
2022
June 30
2021
Nonperforming assets beginning balance $ 56,618  $ 27,820  $ 59,201 
New to nonperforming 2,822  33,754  2,233 
Loans charged-off (545) (706) (481)
Loans paid-off /sold (2,239) (1,485) (10,364)
Loans restored to performing status (738) (2,702) (2,771)
Other (3) (63) — 
Nonperforming assets ending balance $ 55,915  $ 56,618  $ 47,818 

12


Net Charge-Offs (Recoveries)
Three Months Ended Six Months Ended
June 30
2022
March 31
2022
June 30
2021
June 30
2022
June 30
2021
Net charge-offs (recoveries)
Commercial and industrial loans $ (29) $ (13) $ 107  $ (42) $ 3,374 
Commercial real estate loans —  (3) —  (3) (57)
Small business loans (22) 22  31  —  86 
Residential real estate loans —  —  —  —  (1)
Home equity 84  (2) 24  82  11 
Other consumer 166  400  30  566  122 
Total net charge-offs $ 199  $ 404  $ 192  $ 603  $ 3,535 
Net charge-offs to average loans (annualized) 0.01  % 0.01  % 0.01  % 0.01  % 0.08  %
Troubled Debt Restructurings At
June 30
2022
March 31
2022
June 30
2021
Troubled debt restructurings on accrual status $ 11,734  $ 13,288  $ 19,495 
Troubled debt restructurings on nonaccrual status 1,677  1,972  20,212 
Total troubled debt restructurings $ 13,411  $ 15,260  $ 39,707 
BALANCE SHEET AND CAPITAL RATIOS
June 30
2022
March 31
2022
June 30
2021
Gross loans/total deposits 82.19  % 81.01  % 74.57  %
Common equity tier 1 capital ratio (1) 13.90  % 14.45  % 13.31  %
Tier 1 leverage capital ratio (1) 10.42  % 10.62  % 9.41  %
Common equity to assets ratio GAAP 14.37  % 14.71  % 12.27  %
Tangible common equity to tangible assets ratio (2) 9.79  % 10.18  % 8.89  %
Book value per share GAAP $ 62.32  $ 62.59  $ 52.72 
Tangible book value per share (2) $ 40.31  $ 41.15  $ 36.78 
(1) Estimated number for June 30, 2022.
(2) See Appendix A for detailed reconciliation from GAAP to Non-GAAP ratios.

    

















13



INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited, dollars in thousands) Three Months Ended
June 30, 2022 March 31, 2022 June 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 $ 1,377,286  $ 2,817  0.82  % $ 1,906,164  $ 886  0.19  % $ 1,882,285  $ 513  0.11  %
Securities
Securities - trading 3,863  —  —  % 3,732  —  —  % 3,359  —  —  %
Securities - taxable investments 2,889,245  11,281  1.57  % 2,726,281  10,043  1.49  % 1,514,336  7,184  1.90  %
Securities - nontaxable investments (1) 197  6.11  % 201  2.02  % 555  4.34  %
Total securities $ 2,893,305  $ 11,284  1.56  % $ 2,730,214  $ 10,044  1.49  % $ 1,518,250  $ 7,190  1.90  %
Loans held for sale 3,842  35  3.65  % 9,475  64  2.74  % 28,279  186  2.64  %
Loans
Commercial and industrial (1) 1,537,883  17,496  4.56  % 1,535,619  17,031  4.50  % 1,944,026  20,351  4.20  %
Commercial real estate (1) 7,827,442  76,771  3.93  % 7,911,349  76,030  3.90  % 4,196,171  41,532  3.97  %
Commercial construction 1,193,353  13,456  4.52  % 1,190,659  12,268  4.18  % 514,935  4,777  3.72  %
Small business 203,947  2,656  5.22  % 194,819  2,416  5.03  % 178,525  2,302  5.17  %
Total commercial 10,762,625  110,379  4.11  % 10,832,446  107,745  4.03  % 6,833,657  68,962  4.05  %
Residential real estate 1,761,986  14,879  3.39  % 1,649,157  13,697  3.37  % 1,226,520  11,058  3.62  %
Home equity 1,046,933  9,178  3.52  % 1,032,308  8,662  3.40  % 1,024,798  8,591  3.36  %
Total consumer real estate 2,808,919  24,057  3.44  % 2,681,465  22,359  3.38  % 2,251,318  19,649  3.50  %
Other consumer 31,554  507  6.44  % 29,814  489  6.65  % 22,471  411  7.34  %
Total loans $ 13,603,098  $ 134,943  3.98  % $ 13,543,725  $ 130,593  3.91  % $ 9,107,446  $ 89,022  3.92  %
Total interest-earning assets $ 17,877,531  $ 149,079  3.34  % $ 18,189,578  $ 141,587  3.16  % $ 12,536,260  $ 96,911  3.10  %
Cash and due from banks 190,501  171,533  142,198 
Federal Home Loan Bank stock 6,249  11,407  9,410 
Other assets 1,855,351  1,851,196  1,258,056 
Total assets $ 19,929,632  $ 20,223,714  $ 13,945,924 
Interest-bearing liabilities
Deposits
Savings and interest checking accounts $ 6,192,761  $ 710  0.05  % $ 6,255,843  $ 598  0.04  % $ 4,339,645  $ 384  0.04  %
Money market 3,486,017  607  0.07  % 3,608,793  559  0.06  % 2,347,852  429  0.07  %
Time deposits 1,356,507  794  0.23  % 1,466,651  950  0.26  % 843,090  1,204  0.57  %
Total interest-bearing deposits $ 11,035,285  $ 2,111  0.08  % $ 11,331,287  $ 2,107  0.08  % $ 7,530,587  $ 2,017  0.11  %
Borrowings
Federal Home Loan Bank borrowings 25,654  123  1.92  % 25,696  133  2.10  % 35,704  191  2.15  %
Long-term borrowings —  —  —  % 9,063  31  1.39  % 23,417  94  1.61  %
Junior subordinated debentures 62,854  410  2.62  % 62,853  299  1.93  % 62,852  429  2.74  %
Subordinated debentures 49,825  618  4.97  % 49,800  617  5.02  % 49,730  618  4.98  %
Total borrowings $ 138,333  $ 1,151  3.34  % $ 147,412  $ 1,080  2.97  % $ 171,703  $ 1,332  3.11  %
Total interest-bearing liabilities $ 11,173,618  $ 3,262  0.12  % $ 11,478,699  $ 3,187  0.11  % $ 7,702,290  $ 3,349  0.17  %
Noninterest-bearing demand deposits 5,546,041  5,443,465  4,237,135 
Other liabilities 290,467  293,597  273,449 
Total liabilities $ 17,010,126  $ 17,215,761  $ 12,212,874 
Stockholders' equity 2,919,506  3,007,953  1,733,050 
14


Total liabilities and stockholders' equity $ 19,929,632  $ 20,223,714  $ 13,945,924 
Net interest income $ 145,817  $ 138,400  $ 93,562 
Interest rate spread (2) 3.22  % 3.05  % 2.93  %
Net interest margin (3) 3.27  % 3.09  % 2.99  %
Supplemental Information
Total deposits, including demand deposits $ 16,581,326  $ 2,111  $ 16,774,752  $ 2,107  $ 11,767,722  $ 2,017 
Cost of total deposits 0.05  % 0.05  % 0.07  %
Total funding liabilities, including demand deposits $ 16,719,659  $ 3,262  $ 16,922,164  $ 3,187  $ 11,939,425  $ 3,349 
Cost of total funding liabilities 0.08  % 0.08  % 0.11  %

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $956,000, $968,000, and $209,000 for the three months ended June 30, 2022, March 31, 2022, and June 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.

15


Six Months Ended
June 30, 2022 June 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 $ 1,640,264  $ 3,703  0.46  % $ 1,603,407  $ 839  0.11  %
Securities
Securities - trading 3,798  —  —  % 3,150  —  —  %
Securities - taxable investments 2,808,213  21,324  1.53  % 1,383,122  13,811  2.01  %
Securities - nontaxable investments (1) 199  4.05  % 599  12  4.04  %
Total securities $ 2,812,210  $ 21,328  1.53  % $ 1,386,871  $ 13,823  2.01  %
Loans held for sale 6,643  99  3.01  % 38,907  482  2.50  %
Loans
Commercial and industrial (1) 1,536,757  34,527  4.53  % 2,029,075  43,397  4.31  %
Commercial real estate (1) 7,869,164  152,800  3.92  % 4,176,202  81,908  3.96  %
Commercial construction 1,192,013  25,724  4.35  % 534,933  10,060  3.79  %
Small business 199,408  5,072  5.13  % 176,434  4,583  5.24  %
Total commercial 10,797,342  218,123  4.07  % 6,916,644  139,948  4.08  %
Residential real estate 1,705,883  28,576  3.38  % 1,248,778  23,494  3.79  %
Home equity 1,039,661  17,840  3.46  % 1,037,446  17,348  3.37  %
Total consumer real estate 2,745,544  46,416  3.41  % 2,286,224  40,842  3.60  %
Other consumer 30,690  996  6.54  % 22,087  843  7.70  %
Total loans $ 13,573,576  $ 265,535  3.94  % $ 9,224,955  $ 181,633  3.97  %
Total interest-earning assets $ 18,032,693  $ 290,665  3.25  % $ 12,254,140  $ 196,777  3.24  %
Cash and due from banks 181,069  148,499 
Federal Home Loan Bank stock 8,814  9,828 
Other assets 1,853,285  1,249,898 
Total assets $ 20,075,861  $ 13,662,365 
Interest-bearing liabilities
Deposits
Savings and interest checking accounts $ 6,224,128  $ 1,308  0.04  % $ 4,225,331  $ 807  0.04  %
Money market 3,547,066  1,166  0.07  % 2,318,106  950  0.08  %
Time deposits 1,411,275  1,744  0.25  % 874,676  2,971  0.68  %
Total interest-bearing deposits $ 11,182,469  $ 4,218  0.08  % $ 7,418,113  $ 4,728  0.13  %
Borrowings
Federal Home Loan Bank borrowings 25,675  256  2.01  % 35,746  379  2.14  %
Long-term borrowings 4,506  31  1.39  % 25,818  205  1.60  %
Junior subordinated debentures 62,854  709  2.27  % 62,851  855  2.74  %
Subordinated debentures 49,813  1,235  5.00  % 49,717  1,235  5.01  %
Total borrowings $ 142,848  $ 2,231  3.15  % $ 174,132  $ 2,674  3.10  %
Total interest-bearing liabilities $ 11,325,317  $ 6,449  0.11  % $ 7,592,245  $ 7,402  0.20  %
Noninterest-bearing demand deposits 5,495,036  4,067,235 
Other liabilities 292,023  279,620 
Total liabilities $ 17,112,376  $ 11,939,100 
Stockholders' equity 2,963,485  1,723,265 
16


Total liabilities and stockholders' equity $ 20,075,861  $ 13,662,365 
Net interest income $ 284,216  $ 189,375 
Interest rate spread (2) 3.14  % 3.04  %
Net interest margin (3) 3.18  % 3.12  %
Supplemental Information
Total deposits, including demand deposits $ 16,677,505  $ 4,218  $ 11,485,348  $ 4,728 
Cost of total deposits 0.05  % 0.08  %
Total funding liabilities, including demand deposits $ 16,820,353  $ 6,449  $ 11,659,480  $ 7,402 
Cost of total funding liabilities 0.08  % 0.13  %
(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $1.9 million and $438,000 for the six months ended June 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:
June 30
2022
March 31
2022
June 30
2021
Tangible common equity (Dollars in thousands, except per share data)
Stockholders' equity (GAAP) $ 2,871,185  $ 2,965,439  $ 1,741,622  (a)
Less: Goodwill and other intangibles 1,013,917  1,015,831  526,576 
Tangible common equity $ 1,857,268  $ 1,949,608  $ 1,215,046  (b)
Tangible assets
Assets (GAAP) $ 19,982,450  $ 20,159,178  $ 14,194,207  (c)
Less: Goodwill and other intangibles 1,013,917  1,015,831  526,576 
Tangible assets $ 18,968,533  $ 19,143,347  $ 13,667,631  (d)
Common Shares 46,069,761  47,377,125  33,037,859  (e)
Common equity to assets ratio (GAAP) 14.37  % 14.71  % 12.27  % (a/c)
Tangible common equity to tangible assets ratio (Non-GAAP) 9.79  % 10.18  % 8.89  % (b/d)
Book value per share (GAAP) $ 62.32  $ 62.59  $ 52.72  (a/e)
Tangible book value per share (Non-GAAP) $ 40.31  $ 41.15  $ 36.78  (b/e)

17


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 Six Months Ended
June 30
2022
March 31
2022
June 30
2021
June 30
2022
June 30
2021
Net interest income (GAAP) $ 144,861  $ 137,432  $ 93,354  $ 282,293  $ 188,938  (a)
Noninterest income (GAAP) $ 27,898  $ 26,272  $ 24,967  $ 54,170  $ 50,213  (b)
Noninterest income on an operating basis (Non-GAAP) $ 27,898  $ 26,272  $ 24,967  $ 54,170  $ 50,213  (c)
Noninterest expense (GAAP) $ 90,562  $ 95,500  $ 73,302  $ 186,062  $ 142,984  (d)
Less:
Merger and acquisition expense —  7,100  1,731  7,100  1,731 
Noninterest expense on an operating basis (Non-GAAP) $ 90,562  $ 88,400  $ 71,571  $ 178,962  $ 141,253  (e)
Total revenue (GAAP) $ 172,759  $ 163,704  $ 118,321  $ 336,463  $ 239,151  (a+b)
Total operating revenue (Non-GAAP) $ 172,759  $ 163,704  $ 118,321  $ 336,463  $ 239,151  (a+c)
Net income (GAAP) $ 61,776  $ 53,097  $ 37,572  $ 114,873  $ 79,283 
Operating net income (Non-GAAP) (See income statement for reconciliation of GAAP to Non-GAAP) $ 61,776  $ 58,202  $ 38,816  $ 119,978  $ 80,527 
Average common equity (GAAP) $ 2,919,506  $ 3,007,953  $ 1,733,050  $ 2,963,485  $ 1,723,265 
Less: Average goodwill and other intangibles 1,014,953  1,017,040  527,337  1,015,991  528,050 
Tangible average tangible common equity (Non-GAAP) $ 1,904,553  $ 1,990,913  $ 1,205,713  $ 1,947,494  $ 1,195,215 
Ratios
Noninterest income as a % of total revenue (GAAP) 16.15  % 16.05  % 21.10  % 16.10  % 21.00  % (b/(a+b))
Noninterest income as a % of total revenue on an operating basis (Non-GAAP) 16.15  % 16.05  % 21.10  % 16.10  % 21.00  % (c/(a+c))
Efficiency ratio (GAAP) 52.42  % 58.34  % 61.95  % 55.30  % 59.79  % (d/(a+b))
Efficiency ratio on an operating basis (Non-GAAP) 52.42  % 54.00  % 60.49  % 53.19  % 59.06  % (e/(a+c))
Return on average tangible common equity (Non-GAAP) (calculated by dividing net income by average tangible common equity) 13.01  % 10.82  % 12.50  % 11.89  % 13.38  %
Return on average tangible common equity on an operating basis (Non-GAAP) (calculated by dividing net operating net income by average tangible common equity) 13.01  % 11.86  % 12.91  % 12.42  % 13.59  %

18


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


Three Months Ended
June 30, 2022 March 31, 2022
Volume Interest Margin Impact  Volume  Interest Margin Impact
(Dollars in thousands)
Reported total interest earning assets $ 17,877,531  $ 145,817  3.27  % $ 18,189,578  $ 138,403  3.09  %
Core adjustments:
PPP volume @ 1% (60,969) (149) (148,384) (362)
PPP fee amortization (1,762) (3,486)
Total PPP impact (60,969) (1,911) (0.03) % (148,384) (3,848) (0.07) %
Acquisition related:
Loan fair value amortization (accretion) 823  (83)
CD fair market accretion (437) (684)
386  0.01  % (767) (0.02) %
Nonaccrual interest 205 —  % 310 0.01  %
Other noncore adjustments (1,106) (0.02) % (773) (0.01) %
Core margin (Non-GAAP) $ 17,816,562  $ 143,391  3.23  % $ 18,041,194  $ 133,325  3.00  %

19
EX-99.2 3 earningsreleasepresentat.htm EX-99.2 - Q2 2022 EARNINGS RELEASE PRESENTATION earningsreleasepresentat
Exhibit 99.2 Q2 2022 Earnings Presentation July 22, 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, other public health crises or man-made events, and their impact on the Company's local economies or disrupt 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. Further, the foregoing factors may be exacerbated by the ultimate impact of the COVID-19 pandemic, which remains unknown at this time due to factors and future developments that are uncertain, unpredictable and, in many cases, beyond the Company's control, including the scope, duration and extent of the pandemic and any further resurgences, the efficacy, availability and public acceptance of vaccines, boosters or other treatments, actions taken by governmental authorities in response to the pandemic and the direct and indirect impact of these actions and the pandemic generally 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. 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 related 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 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), 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 Q2 2022 Net Income (in millions) $ 61.8 Diluted Earnings Per Share $ 1.32 Return on Average Assets 1.24% Return on Average Equity 8.49% Return on Average Tangible Common Equity* 13.01% 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 Q2 2022: • 4.9% annualized net loan growth, excluding PPP runoff • Improved core NIM** when excluding purchase accounting and PPP related impact • Modest cash deployment into the securities portfolio • Strong core deposit account openings • Minimal credit losses, resulting in zero provision • Solid fee income results • Improved efficiency ratio • 1.3 million shares repurchased


 
5 $ in m ill io ns $13,580 $(610) $(69) $607 $181 $(13) $13,676 Balance 3/31/2022 Amortization/Attrition PPP Loan Paydowns New Funding Line Utilization Change Other Balance 6/30/2022 $13,000 Loan Portfolio Period Ended $ Increase % Increase Loan Category 6/30/2022 3/31/2022 (Decrease) (Decrease) ($ in millions) Commercial and industrial $ 1,511 $ 1,467 $ 44 3.0 % Paycheck Protection Program ("PPP") loans 30 99 (69) (69.7) % Commercial real estate 7,792 7,898 (106) (1.3) % Commercial construction 1,195 1,154 41 3.6 % Small business 206 200 6 3.0 % Total commercial 10,734 10,818 (84) (0.8) % Residential real estate 1,844 1,706 138 8.1 % Home equity - first position 587 578 9 1.6 % Home equity - subordinate positions 478 448 30 6.7 % Total consumer real estate 2,909 2,732 177 6.5 % Other consumer 33 30 3 10.0 % Total loans $ 13,676 13,580 $ 96 0.7 %


 
6 Commercial Loans (1) ($ in millions) Q2 2022 commitments closed $557 Approved pipeline $372 (1) Amounts shown above exclude small business category PPP Loan Summary ($ in millions) PPP Q2 2022 outstanding balance $31 PPP Q2 2022 unearned fees, net $0.6 Loan Highlights Residential & Home Equity Closings ($ in millions) Residential real estate $244 Home equity 154 Total $398 Residential Volume Breakout Q2 2022 Closing Activity • CRE and Construction - property types: ◦ Apartment complex - multi-family ◦ 1 - 4 family residential • Commercial & Industrial - by industry: ◦ Retail trade ◦ Construction $ in m ill io ns $226 $181 $19 $37 Retained in Portfolio Sold/To be Sold Q2 2022 Q1 2022 $0 $50 $100 $150 $200 $250 92% 8% 83% 17%


 
Period Ended $ Increase % Increase Deposit Customer Type 6/30/2022 3/31/2022 (Decrease) (Decrease) ($ in millions) Consumer deposits $ 7,918 $ 7,975 $ (57) (0.7) % Time certificates of deposits 1,301 1,389 (88) (6.3) % Business/Commercial deposits 6,073 6,220 (147) (2.4) % Municipal deposits (1) 1,348 1,180 168 14.2 % $ 16,640 $ 16,764 $ (124) (0.7) % (1) Municipal deposits include municipal time certificates of deposits. 7 Period Ended $ Increase % Increase Deposit Product Type 6/30/2022 3/31/2022 (Decrease) (Decrease) ($ in millions) Noninterest-bearing demand deposits $ 5,562 $ 5,537 $ 25 0.5 % Savings and interest checking accounts 6,348 6,248 100 1.6 % Money market deposits 3,419 3,580 (161) (4.5) % Time certificates of deposit 1,311 1,399 (88) (6.3) % $ 16,640 $ 16,764 $ (124) (0.7) % Deposit Balances $ in b ill io ns $12,100 $14,843 $16,775 $16,581 0.05% 0.05% 0.05% 0.05% Average Deposits Cost of Deposits Q3 2021 Q4 2021 Q1 2022 Q2 2022 $0 $5,000 $10,000 $15,000 0.00% 0.05% 0.10% 0.15%


 
Q2 2022 Q1 2022 Volume Interest Margin Impact Volume Interest Margin Impact ($ in millions) Reported Total $ 17,877.5 $ 145.8 3.27 % $ 18,189.6 $ 138.4 3.09 % Core adjustments: PPP volume @1% (61.0) (0.1) (148.4) (0.4) PPP fee amort (1.8) (3.4) Total PPP impact (61.0) (1.9) (0.03) % (148.4) (3.8) (0.07) % Acquisition related: Loan fair value amortization (accretion) 0.8 (0.1) CD fair market accretion (0.4) (0.7) 0.4 0.01 % (0.8) (0.02) % Nonaccrual interest 0.2 — % 0.3 0.01 % Other noncore adjustments (1.1) (0.02) % (0.8) (0.01) % Core Margin (Non-GAAP) $ 17,816.5 143.4 3.23 % $ 18,041.2 $ 133.3 3.00 % 8 Net Interest Margin Analysis Net Interest Margin 2.78% 3.05% 3.09% 3.27% 2.70% 2.83% 3.00% 3.23% Reported NIM Core NIM Q3 2021 Q4 2021 Q1 2022 Q2 2022 2.50% 2.75% 3.00% 3.25% 3.50% Asset Sensitivity: Balances Subject to Reprice Interest earning cash 100% Loans 30-35% Less: Loan hedges (8-9%) Less: In the money floors (0-1%) Strong core deposit funding source = historical low deposit betas


 
9 Nonperforming Loans ($ in millions) $45.8 $27.8 $56.6 $55.9 0.52% 0.20% 0.42% 0.41% NPLs ($Mil) NPL/Loan% Q3 2021 Q4 2021 Q1 2022 Q2 2022 0.00% 0.40% 0.80% $0 $30 $60 Net Charge-offs/(Recoveries) ($ in millions) $0.1 $(2.4) $0.4 $0.2 0.00% (0.09)% 0.01% 0.01% Net Charge-offs (recoveries) Annualized Loss Rate Q3 2021 Q4 2021 Q1 2022 Q2 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) $ 197 $ 8,986 2.2 % Other portfolios — 4,690 — % Total active deferrals as of June 30, 2022 $ 197 $ 13,676 1.4 % COVID-19 Deferrals Maturity Schedule Q4 2022 2023 2024 Total Commercial real estate (1) $ 137 $ 51 $ 9 $ 197 (1) Balances include commercial construction deferrals. Asset Quality Allowance for Credit Loss & Delinquency Trends 1.05% 1.08% 1.06% 1.06% 0.21% 0.34% 0.29% 0.40% Allowance for Credit Losses/Total Loans Delinquent Loans/Total Loans Q3 2021 Q4 2021 Q1 2022 Q2 2022 0.00% 0.50% 1.00% 1.50%


 
10 Noninterest Income Three Months Ended Noninterst Income June 30 2022 March 31 2022 ($ in thousands) Deposit account fees $5,828 $5,493 Interchange and ATM fees 4,027 3,609 Investment management 9,329 8,673 Mortgage banking income 1,042 1,362 Increase in cash surrender value of life insurance policies 1,871 1,795 Gain on life insurance benefits 123 — Loan level derivative income 436 604 Other noninterest income 5,242 4,736 Total noninterest income $27,898 $26,272 $ in m ill io ns Assets Under Administration $5,435 $5,726 $5,725 $5,157 Q3 2021 Q4 2021 Q1 2022 Q2 2022 $4,000 $5,000 Investment management: Focal Point $ in m ill io ns Gross New Assets $174 $180 $284 $138 Q3 2021 Q4 2021 Q1 2022 Q2 2022 $0 $100 $200 $300


 
11 Efficiency Ratio - Operating Basis* 60.47% 52.71% 54.00% 52.42% Q3 2021 Q4 2021 Q1 2022 Q2 2022 50.00% 55.00% 60.00% 65.00% Noninterest Expense * See Appendix B for reconciliation of non-GAAP earnings metrics Three Months Ended Noninterest Expenses June 30 2022 March 31 2022 ($ in thousands) Salaries and employee benefits $49,538 $48,711 Occupancy and equipment expenses 11,637 13,302 Data processing and facilities management 2,247 2,372 FDIC assessment 1,743 1,805 Merger and acquisition expense — 7,100 Other noninterest expenses 25,397 22,210 Total noninterest expenses $90,562 $95,500 Less: Merger and acquisition expense 0 7,100 Total noninterest expense on an operating basis (Non- GAAP)* $90,562 $88,400 Efficiency Ratio - GAAP Basis 62.14% 77.20% 58.34% 52.42% Q3 2021 Q4 2021 Q1 2022 Q2 2022 50.00% 60.00% 70.00% 80.00%


 
12 Tax Rate Loan Growth Deposit Growth Noninterest Income Asset Quality Full Year 2022 Guidance • Total commercial: Flat to low single digit % growth expected in the 2nd half 2022, resulting in a relatively flat to low single digit % decrease in balances for the full year including attrition of Meridian balances and PPP runoff; • Residential real estate: mid to high single digit % growth expected in the 2nd half of 2022, resulting in approximately 20% growth for the full year; • Home equity: low to mid-single digit % growth expected in the 2nd half of 2022, resulting in mid to high single digit % growth for full year. • Asset sensitivity is expected to benefit net interest income and margin due to recent and anticipated increases in rates. • Time deposit and rate sensitive balance runoff is anticipated, resulting in relatively flat to modest decreases in total deposits in the 2nd half of 2022. • Mortgage closing volume is expected to decrease, with high % retained in portfolio; • Wealth management fee revenue expected to decrease in the near term due to reduced asset levels as of June 30. • Tax rate for the 2nd half of the year is expected to be approximately 25%. Net Interest Income • Though overall asset quality remains strong, economic uncertainty exists; • Based on today's environment, we anticipate current allowance levels to hold steady for the foreseeable future, with future charge-offs serving as a proxy for provision levels. Noninterest Expense • Expected to increase in the 2nd half at low to mid-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 2021 Q4 2021 Q1 2022 Q2 2022 ($ in millions, except per share data) Net income available to common shareholders (GAAP) $ 40.0 $ 1.21 $ 1.7 $ 0.04 $ 53.1 $ 1.12 $ 61.8 $ 1.32 (a) Non-GAAP adjustments Provision for non-PCD acquired loans — — 50.7 1.26 — — — — Noninterest expense components Merger and acquisition expenses 1.9 0.06 37.2 0.92 7.1 0.15 — — Total impact of noncore items 1.9 0.06 87.9 2.18 7.1 0.15 — — Less - net tax benefit associated with noncore items (1) (0.5) (0.02) (23.9) (0.59) (2.0) (0.04) — — Noncore increases to net income 1.4 0.04 64.0 1.59 5.1 0.11 — — Operating net income (Non-GAAP) $ 41.4 $ 1.25 $ 65.7 $ 1.63 $ 58.2 $ 1.23 $ 61.8 $ 1.32 (b) Average assets $ 14,298.9 $ 17,755.7 20,223.7 $ 19,929.6 (c) Average equity 1,756.1 2,424.4 3,008.0 2,919.5 (d) Less: Average goodwill and other intangibles 526.0 786.6 $ 1,017.0 $ 1,015.0 Tangible average common equity 1,230.1 $ 1,637.8 $ 1,991.0 $ 1,904.5 (e) Return on average assets 1.11 % 0.04 % 1.06 % 1.24 % (a/(c)) Return on average assets on an operating basis (Non-GAAP) 1.15 % 1.47 % 1.17 % 1.24 % (b)/(c) Return on average common equity 9.04 % 0.28 % 7.16 % 8.49 % (a)/(d) Return on average common equity on an operating basis (Non-GAAP) 9.35 % 10.75 % 7.85 % 8.49 % (b)/(d) Return on Average Tangible Common Equity (Non-GAAP) 12.90 % 0.41 % 10.82 % 13.01 % (a/e) Return on Average Tangible Common Equity on an operating basis (Non-GAAP) 13.35 % 15.92 % 11.86 % 13.01 % (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 2021 Q4 2021 Q1 2022 Q2 2022 ($ in millions) Net interest income (GAAP) $ 90.1 $ 122.5 $ 137.4 $ 144.9 (a) Noninterest income (GAAP) $ 26.5 $ 29.2 $ 26.3 $ 27.9 (b) Noninterest income on an operating basis (Non- GAAP) $ 26.5 $ 29.2 $ 26.3 $ 27.9 (c) Noninterest expense (GAAP) $ 72.4 $ 117.1 $ 95.5 $ 90.6 (d) Less: Merger and acquisition expense 1.9 37.2 7.1 — Noninterest expense on an operating basis (Non-GAAP) $ 70.5 $ 79.9 $ 88.4 $ 90.6 (e) Total revenue (GAAP) $ 116.6 $ 151.7 $ 163.7 $ 172.8 (a+b) Total operating revenue (Non-GAAP) $ 116.6 $ 151.7 $ 163.7 $ 172.8 (a+c) Ratios Noninterest income as a % of total revenue (GAAP based) 22.70 % 19.23 % 16.05 % 16.15 % (b/(a+b)) Noninterest income as a % of total revenue on an operating basis (Non-GAAP) 22.70 % 19.23 % 16.05 % 16.15 % (c/(a+c)) Efficiency ratio (GAAP based) 62.14 % 77.20 % 58.34 % 52.42 % (d/(a+b)) Efficiency ratio on an operating basis (Non- GAAP) 60.47 % 52.71 % 54.00 % 52.42 % (e/(a+c)) Appendix B: Non-GAAP Reconciliation of Earnings Metrics 14