• Net Income: $50 million for Q4 2024.
• Diluted EPS: $1.18 for Q4 2024.
• Return on Assets (ROA): 1.02% for Q4 2024.
• Return on Average Common Equity: 6.64% for Q4 2024.
• Return on Average Tangible Common Equity: 9.96% for Q4 2024.
• Adjusted Operating Net Income: $51.4 million for Q4 2024.
• Net Interest Margin: Improved by 4 basis points to 3.33% in Q4 2024.
• Average Deposits Growth: 3% annualized rate.
• Tangible Book Value Per Share: Increased by $0.39 during Q4 2024.
• Allowance for Loan Losses: 1.17% of total loans as of year-end 2024.
• Assets Under Management (AUA): Grew by 7.6% in 2024 to $7 billion.
• Provision for Loan Loss: $7.5 million for Q4 2024.
• Cost of Deposits: 1.65% in Q4 2024.
• Nonperforming Loans: $101.5 million or 0.70% of total loans as of year-end 2024.
• Tax Rate: Approximately 20.5% for Q4 2024.

• Warning! GuruFocus has detected 6 Warning Sign with STT.

Release Date: January 17, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Independent Bank Corp (NASDAQ:INDB) reported solid fourth quarter results with net interest margin improvement and stable credit trends.
• The company achieved double-digit annualized growth in C&I and small business loan segments.
• Average deposits grew at an approximate 3% annualized rate, highlighting the strength of the deposit franchise.
• The acquisition of Enterprise Bancorp is expected to add density to existing markets and expand the Rockland Trust franchise.
• Wealth management business grew AUA by 7.6% in 2024, reaching $7 billion, contributing to a holistic client experience.

Negative Points

• The company faced outsized expenses, including $1.9 million in merger and acquisition costs.
• There are ongoing challenges with nonperforming loans, including a $53.8 million office loan in workout status.
• The cost of deposits increased to 1.65% in the fourth quarter, impacting overall profitability.
• The company anticipates onetime expenses of $3 million in 2025 related to a core system upgrade.
• There is uncertainty regarding the resolution of large nonperforming assets, which could impact future provisions.

Q & A Highlights

Q: Can you elaborate on the loan growth outlook for 2025 and whether recent hires have influenced expectations? A: Jeffrey Tangel, CEO: The anticipated loan growth is primarily due to the new hires we've made. While customer sentiment remains cautiously optimistic, we haven't observed a significant increase in economic activity. The growth is more about capturing market share through our new team members.

Q: Regarding the margin outlook, are new loans expected to come in at around a 6% rate? A: Mark Ruggiero, CFO: In the fourth quarter, we saw new loans coming in at mid-six percent rates, and with recent rate increases, new volumes could approach 7%. The weighted average coupon of loans rolling off is in the low to mid-fives, which supports the 125-basis point spread mentioned.

Q: Could you clarify the $49 million in past-due office loans? A: Mark Ruggiero, CFO: The $30 million syndicated loan is the largest component, with another $7 million loan that was previously highlighted and an $11 million loan currently in short sale negotiations. These three loans make up the majority of the past-due amount.

Q: What is the rationale behind reclassifying owner-occupied commercial real estate to C&I? A: Jeffrey Tangel, CEO: Owner-occupied CRE is more aligned with C&I as the repayment typically comes from a business operation, making it a different risk profile than investor CRE. This reclassification helps better reflect the risk and composition of our balance sheet.

Q: Can you provide details on the core conversion planned for next year and its benefits? A: Jeffrey Tangel, CEO: We're upgrading to a platform more suited to our size and complexity, which will improve efficiency and product capabilities. It will enhance cash management, wire functions, and streamline branch-related activities, aligning with our growth and customer service goals.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.