Independent Bank (INDB) Q4 2023 earnings summary

Executive summary

• Q4 2023 net income was $54.8M, or $1.26 diluted EPS, down 9.9% QoQ; FY 2023 net income was $239.5M, or $5.42 diluted EPS, down 9.2% YoY.

• Q4 ROAA was 1.13%, return on average common equity was 7.51%, and core NIM was 3.35%.

• Loan growth was modest, deposits declined with seasonal business cash flows, and nonperforming loans increased while net charge-offs remained low.

Financial highlights

• Q4 net interest income fell 3.2% QoQ to $145.1M; noninterest income declined 4.4% to $32.1M, while noninterest expense rose 3.0% to $100.7M.

• FY 2023 net interest income was $606.5M, down 1.1% YoY; net income was $239.5M, down 9.2%, and diluted EPS was $5.42 versus $5.69.

• Q4 tax rate fell to 22.72% from 24.12% QoQ, reflecting low-income housing tax investment items and release of tax reserves after the 2022 tax return filing.

• Q4 expenses included a one-time $1.1M FDIC special assessment and termination costs for two leased locations tied to the 2021 Meridian acquisition.

Outlook and guidance

• 2024 full-year loan growth is expected in the low single digits; Q1 loan balances are expected to decline by a low single-digit percentage.

• 2024 H1 NIM is expected in the mid-3.20% range, assuming the current forward Treasury curve.

• Asset quality is expected to stabilize; office CRE is expected to drive provision requirements.

• 2024 full-year noninterest income and expense are each guided to increase by a low single-digit percentage; Q1 income is expected near Q4 levels and expenses relatively flat.