INDB - Earnings call transcript Q4 2019

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Operator

Good day and welcome to the Independent Bank Corp. Fourth Quarter 2019 Earnings Call and Webcast. [Operator Instructions]

Before proceeding, let me mention that this call may contain forward-looking statements with respect to the financial conditions, results of operations and business of Independent Bank Corp. Actual results may be different. actual Report differ our on release. cause in these earnings may Annual our Form that results include to identified press Factors XX-K and

Bank future publicly any relying statements, whether any and Independent to any otherwise. forward-looking you new response forward-looking information, disclaims update any or statements unduly to intent in cautions Corp. events upon against

financial be Independent will financial measures non-GAAP replacements note Please Bank performance. should together discuss Corp.'s also be that not during with this certain measures These and for GAAP non-GAAP we considered call, review should we read as results.

to Relations being these and recorded. Also, regarding on release, the which Please is directly measures our please refer press copy additional information note of reconciliations most Investor measures non-GAAP website a to GAAP measures. obtain event contains earnings non-GAAP to of the our that of the section comparable

CEO. President like ahead. I Chris Mr. would the Oddleifson, to now conference Please go over to and turn

Chris Oddleifson

Happy you Nick, New Rob Operating you, Thank Ruggiero, everyone, Officer, today Officer. and joining our Cozzone, I'm for and by Chief Mark and accompanied to Year Financial us. Chief morning, good and thank

We per quarter another comments Mark or earnings million of cover solid $X.XX our full to on quarter today in shortly. financial $XX.X fourth completed. produced the the I'd details in with my more will like share. performance focus just year

in robust which along volumes EPS year. ROA generated and $X.XX about XXXX. prior respectively, with organic we operating with earnings operating pipelines. for growth record over Financially originations billion of seventh was of in and the year. healthy a We terrific loan X.X% returns $X.X included had consecutive Highlights of XX.X% commercial Strong year ROE the represents XX%

strong commercial runoff to as acquire levels a also some as Hills larger by volatility while higher in cash flow of acquired remained cost being deposits. organic core paydowns higher Blue masked deposit by is runoff offset especially within generation related anticipated and portfolios. Similarly, deposits, the This well

had Credit another management levels group revenue points mere management year. billion. and fairly investment assets with rising rate a remains and XX% a stable asset quality of growth with better the Our $X.X for year three basis administration stellar to loss under XX% non-performing

low Our another rose XX% last share Tangible in value per a book year. was efficiency range. XX% ratio

We fact are quite proud our healthy compounded double this in year. our of five a despite over dividend measure numerous last grown with of shareholders at we many acquisitions. the finally, that key increase XX% And the years has rate loyal last awarded digit another

very all, good in all So our one. in was a XXXX performance

over margins others on the to As with puts XXXX, do industry, we Year lower we headwinds. face that the we calendar page Like revenue levels. pressure into several turn in interest the New head

billion In the Amendment the threshold, half fees the we to addition, having second impact asset commencing crossed related the to the Durbin will of XXXX. [ph] of [incur] XX begin interchange

will and Also rates. [ph] post an this are on expiring on in a you we weights year this returns moment. some earnings which these tax of effective Notwithstanding Mark rates, in more tax credits our solid result give to lending our related increase related to to - expect will growth [Canadian] color

Beyond [ph] the past the progress [Trust] numbers, in many year the franchise continued Rockland to ways. over

in and based advanced our foremost, any bank, number and successful expanded and of the bank one meaningfully us It significantly of acquisition the the and Greater in has Boston Hills Blue deposit Massachusetts Market. into state our deleveraging presence First strategic assimilation has vaulted our position coveted path. share

and our and excellent good in platform progress origination commercial us include and And other growth products market, and and growth It opening, course, enhancements. banking had population continued our has video mortgage a Other downtown also points an powerful we online premier of in team. banking, Boston tellers, state, a new a use the great mortgage streamlined features brought expansion mobile expanded card such talent credit new areas. rate Worcester account as household formation the our above retail multiple of banking of branch, banking new and offering, the products,

our continue excellence to we Global management, Boston We Finance, risk recognitions cyber publications security Forbes, enterprise reputable as programs, strengthened by and Power, further Globe. and of J.D. The such receive

We and position internal highly as our by while Mark future today. ourselves leadership success, who such culture and for preserving join ranks, individuals, Rob executive talented of strengthening qualified me our promotions

recently out customer management such as initiatives campaigns, with in priority customer base build online marketing Worcester underwriting extensive, and offerings ATMs Heading into further the our new product Blue continuing to more such include and equity more Martha's and to the extensive pace capitalizing offerings, Vineyard streamlining with especially acquired customer Hills credit with banking. with presence as our access our New processes markets growing management, Year, augmenting and mobile preferences opportunities home keeping investment the our to for continuing branches, card, Nantucket, investment satisfy on

store year another So in us. busy for it's

With by incremental growth the added the pursue making to especially management, the envision increased we opportunities and Hills arising in infrastructure, acquisitions, technology, be operating we'll ensure scale provided Blue risk analytics fully we're concrete and from our to leverage our scale. investments equipped

tighter be foreign well investments While markets. Nationally, risks increasing struggles continue tensions, the it. the with global to associated to and these economic benefits our add labor worth expense will monitor long-term space, we will

is of QX. The steady Massachusetts at an held October, on X.X% the incredible XX-year rate with unemployment Locally, strong for back unchanged a remaining labor market, with XX-year of X.X% an GDP at a has the estimated [indiscernible] continued low. in expansion X.X%, unemployment about

mentioned, just us. around see So, despite the economy to I a healthy we continue rather headwinds

the a of in size different I to XXXX scale, same and we while important we reiterate that Company entered wrapping ways. remain much in up, many want terms In

our and providing a building bank, look products to customers. Specifically, tier we're a stronger on taking while We're and relationships. feel committed of continue customer totally top services, focused even local

and service customer we rankings ongoing Our high satisfaction is success validated our consistently by serving customers receive. the

us continue to of remain focus, has a also be committed served and of will cornerstone a path success. We to which our well discipline and

We from leverage it. track our core [indiscernible] resources pursuits will devote our to at advantages, while the time to competitive same

salute my Once coaching Rockland day. incredible and leaders. an to again, learning every creativity provides that invest potential and next and wish innovation they I integrated colleagues for heavily bring with with energy, the of We generation in work Trust each culture to their us a

XXth year survey our commitment the a For high this in earned very work colleagues. places reflects to Boston row, Globe employees, to in a top which we the of ranking

before who appreciate guidance Brian's voluntarily over down these lastly, and I to I step acknowledge Mark, I'd longest our to this missed. month. years. a support many will greatly be hand decision over Brian made to Director, And like serving He it Tedeschi, earlier

Mark?

Mark Ruggiero

Thank you, Chris.

level and cover I will driven over private the in diluted and quarter fourth by results, results provisioning. more imposed of the macro in of and and EPS X.X% reflect timing decreases XXXX, the now pressure income respectively, of the in net margin rate of net charge-off XX $X primarily quarter from by interest fourth $XX.X GAAP environment quarters X.X% recovery activity million detail. related

their deleveraged XX.X% the the addition, and respectively, decreases income fourth excluding as of to and and compared be In merger quarter, respectively, quarter diluted deemed as When third quarter gain X.X% results. of expenses to results the a non-core, acquisition included and XXXX when compared well fourth associated items reflect to for tax X% X%, and impacts. related EPS increases sale quarter net loans, prior and residential the the results when of reflect with

that key over the a areas the business consistent in Despite in number detail. and across of earnings, with quarter quarter expectations in line decrease more cover I momentum were results strong, reflect will

value X.XX% an $X.XX share average $XX.XX In addition, the cents. book additional quarter, in anchored December value fourth XXXX of to tangible XX, return quarter book bringing tangible in increase assets on the the per of

over full Blue absorbed of the value this represents cost save a Hills share Inclusive yearend impact XX% tangible the the prior year level. of and per in XXXX, book acquisition initiatives increase

average equity for on a with quarter. common return addition, In healthy tangible XX.XX% the

in Included and activity down loans fourth was Included loans QX being balances the the fourth for acquired $XX to commercial approximately portfolio. million outstanding in reflect quarter payoffs results, Hills strong Blue by as residential in XXX the and total Blue and the another slightly associated million accelerated the closing payoff with pay pay Hills decreased in downs. loan offset continued activity the net quarter,

Similar continue event to borrowers to payoff the in commercial book of the in as activity real advantage majority opportunities. occurring portfolio is portfolios, conditions and of the or industrial take to commercial exit estate quarters, refinance favorable and commercial pursue

investment, Countering the payoff a as portfolios, as activity the estate category. strong and X% in real commercial the northeast loan volumes strong reflected economy resulting as to balances, in these increase in construction continues business in solid well closing decline spur the

XXXX. bodes which the of addition, continued December strong closing approved as commercial In heading was $XXX volumes into XXXX, pipeline well for million XX,

the secondary overall being balances. the the side, that primarily in estate strong rates robust company's fact continues is results mortgage in market, majority resulting real the income and consumer the residential the to to loan decrease On offsetting banking the of mortgage reduction reflect balances sold

last a growth. over balance And causing temporary demand mortgage quarter, equity strain continued noted to out the curve refinance opportunities, favor yield cash as and shape home

sheet Hills similar, customer sources offset outflow, deposit by sales subsiding being deposit of run municipal the Blue On healthy various deposits, deposit checking well higher are notable and off narrative side, as deposits. cash the a commercial volatility including costs is and of but flow, balance as as core new bank

maturities has the use of replace points, decrease stabilized to the a overall deposits cost broker point of X-basis CD remix with The reflecting and the of prior products quarter. quarter costing deposits fourth higher deposit XX basis cost of from

to borrowing reflected well the retirement as the and subordinated wholesale fourth the of as cost. of funding addition balances, full overall favorite improving also further quarter debentures, In million quarter $XX Company's deposit minimal remix, a the

X.XX% loans full rate the cuts, cut Federal interest income such, October, for fourth September and of as end cut the rate line impact it accretion decline fourth in remains offsetting well and in it July was quarter the $X.X compression. as approximately for margin is quarter and also at level, of quiet inclusive Loan the As an the a quarter. million was an the to the expectations Reserve with elevated the from at net additional both for

attributable Fourth gears quarter. sale X.X% an million when in from non-interest million the deleverage increase was residential quarter, prior gain Shifting represents income quarter a items. the to the excluding operating non-interest to $XX.X $X and third

of administration account new the a income, million generation, billion another temporary assets outflow Key under asset management XX, items quarter the we large by $XXX strong to as following: was quarter December overall custody mitigated investment include that XXXX. $X.X noted of for increasing the to last highlight Regarding quarter the of

increased revenues in along when drove commissions compared shift increases holdings the with third to overall retail asset quarter. in The fee

both both as strong against banking natural elevated derivative remain exceptional in mortgage from longer-term rates. for quarter While income hedge down demand income a third levels, level loan and reflect declines

down compared $X.X included due to in were income recognition bit metrics. million other recovery lastly, fee insurance And to the of update asset Interchange of a detail speak I to the prior category, ATM which and more my as quarter part seasonality. is a quality will on in

slightly million when quarter Total prior the XX.X third non-interest fourth expense the excluding approximately expenses merger XXXX, for quarter elevated related of in level from of quarter. of represents the a $XXX,XXX

stabilized, key credit related and FDIC incentive of Some million correspond the the assessment due assessments, against fund offset credits stays benefits include items expense quarter's in timing utilization, each decreased salaries quarter in to primarily highlight quarter, reserve for level to be due the levels. the to quarter to accruals FDIC $X.X And to additional the third assuming similar that with was earnings quarterly to an future available zero fourth the

alluded optimizing incremental expansion. his is risk credit spending while initiative the prudently in new efficiency, the in administration, market well earlier This as management, overall to continues areas building Company technology on of primarily includes invest and costs prioritization to comments, as scale focused as infrastructure. associated risk And with on and strategic Chris its in

fourth quarter efficiency. associated and of Along infrastructure as exits results increases consulting costs one-time well to lease as in the XXX,XXX build scale those while and lines, maintaining were included with technology in restructures, further

the efficiency ratio the remained level XX.X%. spending, low quarter the at increased Despite fourth modest for of

particular, items Similar on quarter one-off remain a relationships to metrics except quality this fourth million experienced to events, prior previously exit a the claim on charge-off In prior offsetting commercial loan. acquired net $X.X Blue with couple of a acquired strong of scale, experience acquisitions, the estate despite results. a income Hills loan was by the during with charge-off quarter. an real million larger resulting insurance couple payout alluded Asset offset in $X.X associated non-recurring

recovery business Because non-interest the combination, Company's is of loss, in the events is reflected in income. in included timeline provision the charge-off insurance purchase and account of whereas in impact for implications, loan increase the

they events, non-performing general million, total isolated portfolio, with be as within at only approximately assets to not $XX.X of considered characteristics consistent are quarter remain are indicative other deemed items assets. X% point any these the of As prior the or to be credit

$X the the million growth, come of organic coverage with over The well provision for of that for allocation. allocation as for provides general loan loss zero run-off large essentially as acquired loan charge-off, replacing balances reserve

arrival is validation associated the its long-awaited model finalizing into implementation is the and complete with of And controls. Company its heading with out and model processes build of XXXX, and documentation CECL

we such, to As specific this it point. at feel disclose result is premature a

However, indicating to on impact be we one reserve that expected are comfortable the day immaterial. is the

rate filing fourth which XX.X%, quarter the the Lastly, of revised for reflects state tax to tax a benefit declined the position.

year-to-date as the well resulted XXXX discrete Company expense in rate. additional the a lower benefit $XXX,XXX effective to in for quarter, newly the the recorded tax benefit returns such, tax tax filed adjusting fourth as determined tax As amended which previously

the this expense, quarter. also other $XXX,XXX in the approximate which In consulting of incurred contributed position, increase conjunction expenses with to Company noted amended this

gears now guidance. XXXX switch provide full I'll to year

Assuming is no be expected significant the to digit changes loan and competitive the single to economic low range. in growth landscape, current net

both activity in in the be loan insight, challenge acquired the loan strong as bit to range. well expected outside closing net for growth increase Hills XXXX, current recent in could from impacted of a more results volatility rate this will likely provide to new while or are as Changes the environment. remain the To by into off either growth pay commitments portfolio, assumption continue result Blue

guidance, growth also single-digit the is low to growth net loan expected deposit in with be Consistent range.

with improve is slightly balances from to deposits of year. an deposits a of the static and and mature the deposits, expected the over rate to expectation environment cost Assuming continuing shift upcoming time course core of to overall

from in margin, range, interest XXXX be approximately anticipate levels year net the total we which margin points. full mid-to-high represents XX the to XXX to the decline Regarding basis of XXXX a XX

portfolio changes guidance from slightly, level stabilizing $X.X to accretion a yield following This from reserve, level with to No overall costs compression the funding quarter. turnover, assumptions: the of of million and improve includes loan loan $X XXXX of million interest some to per nominal Fed normalized resulting rates

to on Operating other XXXX adjusted income with recognized fee remain essentially sales. should million the recovery baseline and compared large results, flat one-time in insurance XXXX $X excluding for as gains asset number that aforementioned

an from weighing year. Amendment of One factors $X.X reduction Durbin the million million over assumed to income the on six of is revenue of in last the interchange $X months the

are Operating expenses, despite mid-single infrastructure excluding to increase year-over-year contained market capabilities, internal merger low related and range, new to the other investment non-core digital expenses be expansion. incurred digit in in and in anticipated XXXX, with well continued

at long-term net be and over bad not do experienced should this the by materially any reserve which of to point. from for provisioning concern change driven known primarily under the horizon levels, on Similar conditions, not debt significant the impact CECL both model will and previous economic general pose charge the in off credit

expiration And increase approximately is level benefit tax to for market benefit, some the to equity credit rate lastly, compensation quarter expected discrete with vesting year the first due new of with awards. to the the XXXX tax of in XX% of final

That my comments. concludes Chris?

Chris Oddleifson

Nick, Mark. Thanks, for we're questions. ready some Great.

Operator

[Operator question Sandler. Mark from Instructions] Fitzgibbon, First comes ahead. Please Piper go

Mark Fitzgibbon

of million if to that is first wondered a say year, apologize, about it. that in excluding the I I the in the including $X million or comment you of fees you - lost $X.X could clarify fees; half I that missed that? was second just interchange that made did you interchange

Mark Ruggiero

includes that guidance Mark. The reduction,

Mark Fitzgibbon

quarter? sort help you we can go Does accretion think accounting touch purchase the move lower? secondly, that the about then a first us of And into as

Mark Ruggiero

of QX the recall, was last $X.X you accretion couple QX income Yes, $X.X million. quarters, if we've about does. been million, the was over It about experiencing

million Our I expectations on is in a quarter. gave guidance normalized about level $X $X.X included margin the to million a

So, a those. down to But marks we credits yes. But on what contingent that for a on on we anticipate anticipate come come always somewhat to do we do have again, basis, to degree, individual may and whole down.

Mark Fitzgibbon

getting think end Blue the then that? much Are the more Hills to we how of do And Okay. portfolio? from is runoff you likely

Mark Ruggiero

say they of there credits up we big handful Yes, on deal transactional were a that would and certainly looked or anticipated closed would not that up for came refinance extend, of their When I'd portfolio, picture. nature, just that renewal in when the we term. we here the near out because the

would fourth say I has So, majority that the the of exited through quarter.

all been payoffs we down compared wouldn't anticipate means, by and see I subside. that paydown to any seeing. that say So, the we've us that but certainly level should it's of the we come levels do - behind should should

Mark Fitzgibbon

I lastly, worried quarter you're back But you're you know from a are the things or what there credit little a this out that couple dialing And things idiosyncratic. then credit maybe that the were of perspective, avoiding? Okay. bit of had about kinds

Mark Ruggiero

when portfolio growth portfolio, certainly, think we I the opportunities that's a seeing. that inherently and risky. very the that in about But say, very, I'd feel good be to portfolio you been more we've seem look may at our construction

for our have the result, And those I underwriting lot lending with and very familiar that is to pricing there such getting And think interesting well, very in those less is a dynamic construction we're deals particular, they as meet standards, banker a types of really seeing of underwriting. are construction we're have an local that a good competition deals, spreads there. we looking

that's And get side. to more on gets underwriting coming the we refinancing, away we're where may into equity competitors And relationships permanent stage into see more those of the to deals level not borrower. see the market. in putting permanent when from little borrowers loose. The step from other permanent a those We when deals. coming bit willing the a to see those are and typically We that's looking equity get may often

Chris Oddleifson

cranes things of, in things see involved market, staying from. multifamily in our - and we away mean I avoid around not the sort and it's historically large developments, mean, to the something like high-end eyebrows been I we we Boston. concern avoid, When us that we that's the that look housing the have are all we're raises that continue it. you

that's secured a we we're worries we, So, have you and we disciplined very sort lenders time, mean, are don't super, right feel just shape. in we're we we lot I - well a as know, just Mark, over now. - and and really of conservative fairly of good

Operator

next ahead. D.A. Davidson. David question Bishop, from Please Our go comes

David Bishop

quick A question.

terms operating outlook, market details infrastructure new specifics? and in provide mentioned terms some expense a you're there, just of can color bit what You initiatives in terms Any of of thinking in you investment. more little

Chris Oddleifson

we we've the start. that mean, months, long out last a one us begun over wanting is sort that. I'll we've build It just I enter took to markets Worcester. of of the the doing really who And for around. sort a could of while been of team time sort figure to XX

As commercial joined our is month Worcester And team treasury opening we've Mike Crawford or services. we're folks, we will a a so? us management be in and announced branch so, in out while a with building and leading this first ago, there that is

Rob Cozzone

yes. Right,

Chris Oddleifson

That's right.

that approach. in one management lot technology lot related a suitable did risk work very, of our for operations our market our believe on That's activities. operating we big thing. So and Trust cyber, of would We very on really and be area is Rockland a

first, fleshing of and defense. third fully out lines We more are second

the a good And risk of formed had Board. approach. always risk have management we've We committee a

higher on there. areas added us in technology, making billion - And headcount expectations us, we risk headway in help our We've higher on our expectations $XX meet to a some lot even we're of places crossing think I a were those. us.

Mark Ruggiero

that front. I to would add just

framework grow. to I build a we can we those leverage so lot scale, is continue that as to spends of that looking think really

still prudent spends as we I and in thing we out think term the infrastructure. incremental is creates near to to build do, feel the continue value longer-term that

opportunity us point and then is scale of the really incremental right growth for level money So, point. at future at it right to and get doing spending a to right the this thing this

that that'll that's we the a transition of - the a elevated bit expense fourth we're XXXX. talked we're bit about in quarter, into and where seeing So, little more

David Bishop

And sense of there. of in this perspective? numbers the it or…? how ring share too terms you're the fence there Chris, potential potential it. can growth growth or then, in at is you Got effort Worcester maybe terms you dollar just thinking from point any the mentioned Any or loan-to-deposit Any a early targets to

Rob Cozzone

probably probably too - It's little specific Dave, Yes, too share Rob. any early targets. it's to

to we're the In terms that XXXX. before and and a and, third in development have location branch with shared of in end expense mid-year that's expect you. early the another maybe we've plan, open the we even we what Mark branch Chris mentioned, numbers hoping And by February can of one contemplated

of I And Berkshire, will deposits the in about just tell People's and you, is United. then by who BofA primarily billion the Worcester $X and Worcester. market owned United has acquired that of city just

acquisition Bank by So, there's some United. United Commerce disruption Berkshire the People's there and then acquisition of of with ago, years recently, more a few

in last already a to what couple market. there's growth, been bank a to a think they've growing make addition also the of market, in that in initiatives in our we that opportunity we seen of meaningful expect a years. There revitalized. are city difference drive It's additional nicely So, itself number of decent the a to for commercial it's scale

about the in really opportunity. we're excited we've right individuals people Worcester fortunate So to of been a find history a and that is long number based market. with key finding being this And there successful the of

David Bishop

in color was additions in noted follow-up of bit to credit, flowed the in non-accrual? additions uptick increase of terms what in And terms one of the maybe of to little venture just a any an in there non-accrual,

Chris Oddleifson

of were bit sort this with events residential and broader characteristics. portfolios. them of inflow to on nominal associated any at individual any Nothing, And there again a what consider credits. wouldn't I book we more commercial fairly to represents as sort some would side say say of But I'd were These overall our be of credit concern the in on well. isolated point whole of terms additional of a both as compared was concern, increase little indicative portfolio

Operator

Gilbert, from comes question go ahead. Please next Our Collyn KBW.

Collyn Gilbert

to cuts, Mark, and kind know just you XXX of the start how you about trajectory the I or that kind for Fed your if that little the next of we just of to remainder could guidance indicated more NIM playing mid sort high you And a that could appreciate you going? just see I talk with range, XXXX indicating bit some had dynamics expect in so but you that the out how of assumes see then no the the quarter of year? and

Mark Ruggiero

Sure, Collyn.

So stems I'd from we peg basis. on normalized say where really a quarter it margin the fourth

for you environment range as we mid-XXX rate million sort of we So margin remains benign quarter sort purchase level reported of back and my I the know, $X.X in the X.X% the to static, peg accretion. of margin our would in essentially guidance normalized a the accounting and that provided with that that assuming scale in If the range.

those lower to Going the try to opportunity continue and think core just down, the do with cost higher rest time in year naturally of our cost replace this we XXXX, throughout deposits deposits.

There may some opportunities as on also the side funding well. be

funding headway our cost we think So a we should add the of make margin. overall can increase bit incremental do of to on a which

increasing on yields that a of that think in of I'd level quarter range. stabilized to should side with being rate normalized some us I pegged run what combination the mid through say to high the funding put loan fourth XXX So is

Collyn Gilbert

you're Can guidance, be it's where you're where, kind banking. of seeing in that baked growth the total, I know just and some thinking kind there? are talk but business into fee of mortgage mean, I expecting on you're just trends incremental what the about there to you of demand of about about trying think how your then to sort And just

Rob Cozzone

been the Rob. a XX annualize annually. be produced very over LOs successful the and with three $X last in it for is year, XXX if production. would of producing billion million we in us combination now Blue the this And quarters a It's with almost have business XXXX mortgage Collyn, Hills you

there, XXXX, to with continued the and excited into strong very the of healthy about application mix has opportunity continues refinance. momentum volume we're So a purchase be

has is of healthy fair difference entity being to as market stability that purchase XX% a production the yield Refi secondary remains long XX% amount stable, that percentage of to the continue into is of we're there combined this high of and about that think there's curve demand I and purchase to and expect and volume. it be be potential volume in think we meaningful And as the market healthy volume healthy, a a purchase made is volume sold to having the and our local And strong real we pricing. the is estate where refinance continues getting still

generate So this in momentum surprised the to meaningful a slowing certainly been we any combined us that point. has we've extent be but as next at of is are couple that of It to good. that able quarters, expect level team, the the to production there no signs

Collyn Gilbert

on Hills on that was million $XX seeing, Hills you in down resi Blue then the opening guys side. pay this side $XXX on dynamics your you I think that correctly, million comments, indicated down and $XXX if of I it just the commercial took then the Blue And are like of

kind Rockland? how curious standalone saw what you of just compares to that in Just

Rob Cozzone

To be down activity honest, pay on we Rockland payoff and the even actually portfolio. more had legacy

addition in the another to also associated So million you $XXX over retail side. portfolio numbers payoff Blue for and our legacy activity Hills, commercial on also million with saw of the mentioned $XXX we

success down payoff as back add strong activity. $X.X And that at that originations. bigger pay fourth quarter, overall almost growth, about fundings in in that bring when and talking to on sort translating just in to just of we billion we're look picture to So you just the up flat loan new

existing customers of relationships. million lending to increased $X.X new to close So funding or on

a that lot over going activity of is the there's a quarters. the couple to lot last and of essentially So washing of net balances through volume book

extent very the some into feel about good does this closing the pipelines the runoff to we volumes of and subside, why, that's So activity heading XXXX.

Chris Oddleifson

And lot And producing really of our the what Hills couple fourth a bodes so for of also strong. $X.X XX%, in noting like that in coming lending is of the mean commercial team a significant XX% online I originations probably the worth and billion of contributor Blue was previous quarter, sort sort a us. that above they're well things for XXXX that highs,

Collyn Gilbert

And that recent then just quarter, that wanted guys was to you charge-off clarify on you saw acquisition, assume so we the that credit the Hills? Blue side, indicated this can net

Chris Oddleifson

That’s correct.

Collyn Gilbert

Okay. saw tied those separate issues? directly the And gain to you that insurance claim is two that are then or

Chris Oddleifson

events. Those separate are two

Mark Ruggiero

That same conveniently. in happen very the quarter

Collyn Gilbert

you I a a would of did of The specific surprise just Blue the of Hills, what on background a curious, diligence, this good, came you maybe obvious good assume when that charged-off? credit? you credit why what, as and what of happened color a So just dive to is with question kind so deep fact little acquired bit this the that bit or little is as sort

Mark Ruggiero

at time tenant indicated this performing, it credit tenant actually an evidence the sorry. acquisition, Yes, individual since real went borrower single bankrupt commercial that bankrupt, estate was was facility, no of time a deterioration. was the deal The the the of went of acquisition it

it that was with bankrupt facility facility. a in single large just went one tenant The and tenant

it what that a resulted it actually see as as the in fourth which property exited result, typically a facility, really is of large portfolio. marketable. the did full, the So in in indicative charge-off in we But was longer take been of a paid-off we that not our associated in full quarter. has and tenant We've relationship no function single was

Chris Oddleifson

been special thing would a had rehab special of up to get bit was writing, to of so understanding somewhat my us it require standard. purpose And that

Mark Ruggiero

trying sort market of for or at The the that property the the depressed was sold. to time, of value pricing be refund

Collyn Gilbert

of that? credit geography the curious that to where was Just

Mark Ruggiero

It area. market was in our

Collyn Gilbert

Okay.

Chris Oddleifson

market our to adjacent area. it commercial Just within

Collyn Gilbert

lastly, mean and I question I guess just both then Chris for And the

but know, continue build of Mark, lot a guys you capital. to you

any buy deployment Can update back capital You on give not just quarter. could just Chris, about capital targets seeing of and did landscape? talk the then how you're if shares buyback, sort this M&A you kind goals, for whether you an of appetite plans

Chris Oddleifson

any than happy. I'd past be in after to happy what be would Mark, I'd the but said be it different I've

Mark Ruggiero

dividend bode our capital a do, And very certainly take and management capital a from what for payout would levels, revisit. in as healthy at nominal we we and we say you to customarily a first will I’d for quarter sizable which have we perspective, as increase noted, we'll again, dividends. expect the look

that. look obviously buyback in yet, going we really radar. quarters over to that at tangible exact have corresponding quarterly of from say certainly right number to we'll the value, of levels that the on book continues couple we be our to and but our the been The look when able change determined the And increase capital rate generate we And think safe to to last we a forward. it at stock I haven't continue in make look that it's perspective,

is That we want buy authorization multiple as book. economic is one at that what really an make back that tangible our level the to right decision over to of a

certainly we'll that'll year. may it's that grow economic continue still buyback. So over as do the sense. something that feel execute to makes when we be XXXX, be to capital to it closely there an that on prudent But monitor we And opportunity only throughout again

Collyn Gilbert

Okay.

Chris Oddleifson

And yes M&A, ahead. go

Collyn Gilbert

to the look at do in it No, you was sense, on the would that of it economic harder push in would that dilution going at you of on Mark, could I acquisition a buyback you similar or? terms take to little you in way the you bit terms say look

Mark Ruggiero

dilution on back corresponding turn the on tangibles. Yes, the the on on return tangible book benefit and multiple

we matter right. pricing doesn't about So think it how deals, really

dynamics Just that of understanding the earn-back.

Collyn Gilbert

go Chris. Okay, ahead,

whole You're strategy. a going a us to M&A dazzle whole with new, new

Chris Oddleifson

trend X%, about the year. banks since per of Yes, a exactly XX being for we of or or with XXXX, steady X.X% acquired merged have years pretty

banks banks Now prediction to actually I it's and make mean we're that X,XXX any going since to acceleration of years. in that that's the we've the sort the come the taken that de the heightened not in significant going of that today. about we're to novo of scrutiny bold sort going see XX And into I'm entered not, we've last to banks down from and sort of given regulatory country, XX,XXX Dodd-Frank

with two North the Sovereign an of sort Locally and Citizens announced month Bank or marketplace. of acquisitions the great days heyday acquisitions are over. Those up mopping or every

traded are they even wanted added time publicly to bank a handful pool could with sold mutual have that that to conversions. from You be to, of really time is if that

to our like we acquisitions and been three-year we've there's that in continue wait done among then beneficiary period and be we've years the we a And last XX mean XX know I but out that a maybe to can't wait go we up to decide control is we to to board bank banks, really by linking we and a a do directors store need currency of can't our to idea. good buyer

view currency. maintain we high that our is doing on what to so And really our multiple charge

culture be treat we and maintain just one be good made we and what endeavor going developed we we attractive good to of well acquirer what this have reputation to want also it do being to that. to we we And a say we an would continue have the do and and a buyer. say we So that we're people we

fixed need and I'll in at when look the hope But opportunistic say in would point, last in terms today I we get really rear way. acquisitions been the would sort you started at say as to pretty would will. risk it really bank that we're an now overhead the we XX, to we thing. scale add to of predictions, this hard continue with it's it's appropriate all looked our to of interestingly, in I back that view imagined acquisition need the mirror, important a and run I say. a And that scale XX

a long So that's way saying nothing. of

Collyn Gilbert

that. it’s helpful. to hear That’s your always, always on That’s good thoughts

Thanks everyone. you, I had. Thank all Chris and Okay. that's

Chris Oddleifson

thanks. Great,

Mark Ruggiero

Thank you.

Operator

comes question ahead. next Our Polaris go Instructions] Horn, Capital. Please Bernard [Operator from

Bernard Horn

understand I something unfunded was mostly could, missed why on about talks an you On of an because didn't provision provision the I it expense, just up press don't there. in unfunded commitments maybe non-interest you'd have a other release I maybe increased - or it commitments. on

Chris Oddleifson

guidance the to applying prescriptive doesn't similar the credit, that actually into Yes, nominal but extend of a that. rate anticipation for in roll a you've is that that to extent allowance. reserve in credit It loss extending requirement speaks to committed and legally default the accounting that to balance,

stage on volatile loans the certain can So number of be what pipeline depending that are.

So I were in to quarter. of resulted the fourth had level mentioned at book bit our end the approved the that pipeline pipeline in was just of It in of increase shift the stage pretty consistent happened quarter. which really we a that with terms we to third where of the

Bernard Horn

all Okay, right.

asset margin hear on The anything net is interest the like other shifting takes and and on deposits. bit little [ALCO] to on same kind a deposits just XXXX? the puts that question had ALCO for bit But to ALCO is much little positioning, you there change I some I and but on guidance next know a you borrowings we anticipate the expecting positioning I see about position, around are of be your year it the kind you looks But talk sensitive. must of the for

Chris Oddleifson

We XXXX have continue exposure. made throughout we sensitive, asset that reducing to but be of strides great

Just loan against of to the place million in against $XXX rates going that already million, is $XXX of have to reiterate, down, now of hedges million we $XXX our money. protect in portfolio that

$XX provided So today that based are is has protection on we where million already that in rates, neutral. of

give And extent cut. $XX will It us collar one in market range. to more are the additional that million rates the we current right last where the of then have protection was a middle

hedge the down more environment us would to So continue probably some like rate on we to more a we give that to that's ideally put bit a play We look protection at program risk. at.

It's been challenge the future of just loss actually those taking for diminished. certainly last for least Reserve here and there rates flat to really the seems round in a of the outlook future of while hold cuts have over is specific improved. seen see meetings, that consensus the last the over to relatively lock-in to Fed in risks be any hedges, sort The should has comforting order at so convincing essentially the protection. rate has at months, there that all market execute couple ourselves We've pricing really to now

may put provide we about will good on right XXXX. a the to we implement through So strategy able more protection during pricing but very to little the the been level and execute we've have, opportunities it continue feel XXXX to

Bernard Horn

And built into the that Those guidance margin guidance. net I'm built. that is assuming interest are hedges

Chris Oddleifson

are They correct.

Operator

question-and-answer This like any to for turn And closing conference back over the Oddleifson remarks. would concludes I Chris Mr. to our session.

Chris Oddleifson

XXXX talking the we Thank thank everybody first a Bye. winter. to and for Great. you us rest Have three you forward look results. Nick and months to good about of the much, today very time in you joining our quarter

Operator

is The concluded. attending for you today's conference presentation. Thank now

disconnect. may You now

Independent Bank (INDB) 17 Jan 202019 Q4 Earnings call transcript