Independent Bank (INDB) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements and management's financial analysis Item 1. Financial Statements (unaudited) Unaudited consolidated financial statements for Independent Bank Corp., covering balance sheets, income statements, and cash flows, are presented with notes Consolidated Balance Sheets This section provides a summary of Independent Bank Corp.'s consolidated balance sheets for June 30, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (Dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | Assets | | | | | | Cash and due from banks | $219,414 | $187,849 | $31,565 | 16.80% | | Interest-earning deposits with banks | $681,820 | $32,041 | $649,779 | 2027.95% | | Total securities | $2,695,280 | $2,711,349 | $(16,069) | -0.59% | | Total loans | $14,533,828 | $14,508,378 | $25,450 | 0.18% | | Net loans | $14,389,055 | $14,338,394 | $50,661 | 0.35% | | Total assets | $20,048,934 | $19,373,565 | $675,369 | 3.49% | | Liabilities | | | | | | Total deposits | $15,893,740 | $15,305,978 | $587,762 | 3.84% | | Total borrowings | $759,428 | $701,374 | $58,054 | 8.28% | | Total liabilities | $16,974,078 | $16,380,445 | $593,633 | 3.62% | | Stockholders' Equity | | | | | | Total stockholders' equity | $3,074,856 | $2,993,120 | $81,736 | 2.73% | Consolidated Statements of Income This section presents Independent Bank Corp.'s consolidated statements of income for the three and six months ended June 30, 2025 and 2024 Consolidated Statements of Income Highlights (Dollars in thousands, except per share data) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | :------------- | | Total interest and dividend income | $218,192 | $211,864 | $6,328 | 2.99% | | Total interest expense | $70,696 | $73,938 | $(3,242) | -4.38% | | Net interest income | $147,496 | $137,926 | $9,570 | 6.94% | | Provision for credit losses | $7,200 | $4,250 | $2,950 | 69.41% | | Total noninterest income | $34,308 | $32,330 | $1,978 | 6.12% | | Total noninterest expenses | $108,798 | $99,614 | $9,184 | 9.22% | | Net income | $51,101 | $51,330 | $(229) | -0.45% | | Basic earnings per share | $1.20 | $1.21 | $(0.01) | -0.83% | | Diluted earnings per share | $1.20 | $1.21 | $(0.01) | -0.83% | | Cash dividends declared per common share | $0.59 | $0.57 | $0.02 | 3.51% | | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | :------------- | | Total interest and dividend income | $430,112 | $419,909 | $10,203 | 2.43% | | Total interest expense | $137,111 | $144,544 | $(7,433) | -5.14% | | Net interest income | $293,001 | $275,365 | $17,636 | 6.40% | | Provision for credit losses | $22,200 | $9,250 | $12,950 | 140.00% | | Total noninterest income | $66,847 | $62,273 | $4,574 | 7.35% | | Total noninterest expenses | $214,676 | $199,501 | $15,175 | 7.61% | | Net income | $95,525 | $99,100 | $(3,575) | -3.61% | | Basic earnings per share | $2.24 | $2.33 | $(0.09) | -3.86% | | Diluted earnings per share | $2.24 | $2.33 | $(0.09) | -3.86% | | Cash dividends declared per common share | $1.18 | $1.14 | $0.04 | 3.51% | Consolidated Statements of Comprehensive Income This section details Independent Bank Corp.'s consolidated statements of comprehensive income for the three and six months ended June 30, 2025 and 2024 Consolidated Statements of Comprehensive Income Highlights (Dollars in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :------------- | | Net income | $51,101 | $51,330 | $(229) | -0.45% | | Net change in fair value of securities available for sale | $9,835 | $3,392 | $6,443 | 189.94% | | Net change in fair value of cash flow hedges | $2,329 | $1,735 | $594 | 34.24% | | Net change in other comprehensive income for defined benefit postretirement plans | $(45) | $(14) | $(31) | 221.43% | | Total other comprehensive income | $12,119 | $5,113 | $7,006 | 137.02% | | Total comprehensive income | $63,220 | $56,443 | $6,777 | 12.01% | | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | | Net income | $95,525 | $99,100 | | Net change in fair value of securities available for sale | $26,229 | $384 | | Net change in fair value of cash flow hedges | $5,785 | $247 | | Net change in other comprehensive income for defined benefit postretirement plans | $(90) | $(29) | | Total other comprehensive income | $31,924 | $602 | | Total comprehensive income | $127,449 | $99,702 | Consolidated Statements of Comprehensive Income Highlights (Dollars in thousands) | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :------------- | | Net income | $95,525 | $99,100 | $(3,575) | -3.61% | | Net change in fair value of securities available for sale | $26,229 | $384 | $25,845 | 6729.95% | | Net change in fair value of cash flow hedges | $5,785 | $247 | $5,538 | 2242.11% | | Net change in other comprehensive income for defined benefit postretirement plans | $(90) | $(29) | $(61) | 210.34% | | Total other comprehensive income | $31,924 | $602 | $31,352 | 5208.00% | | Total comprehensive income | $127,449 | $99,702 | $27,774 | 27.86% | Consolidated Statements of Stockholders' Equity This section outlines Independent Bank Corp.'s consolidated statements of stockholders' equity for the three and six months ended June 30, 2025 and 2024 Consolidated Statements of Stockholders' Equity Highlights (Dollars in thousands) | Item | Balance June 30, 2025 | Balance December 31, 2024 | Change | % Change | | :------------------------------------ | :-------------------- | :------------------------ | :----- | :------- | | Common stock | $424 | $423 | $1 | 0.24% | | Additional paid in capital | $1,914,556 | $1,909,980 | $4,576 | 0.24% | | Retained earnings | $1,217,959 | $1,172,724 | $45,235 | 3.86% | | Accumulated other comprehensive loss | $(58,083) | $(90,007) | $31,924 | -35.47% | | Total stockholders' equity | $3,074,856 | $2,993,120 | $81,736 | 2.73% | - For the six months ended June 30, 2025, common dividends declared per common share were $1.18, an increase from $1.14 in the prior year period[23] - Stock based compensation for the same period was $4,844 thousand, up from $3,439 thousand[23] Consolidated Statements of Cash Flows This section presents Independent Bank Corp.'s consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 Consolidated Statements of Cash Flows Highlights (Dollars in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :------------------------------------ | :--------------------------- | :--------------------------- | :----------- | | Net cash provided by operating activities | $120,061 | $116,794 | $3,267 | | Net cash (used in) provided by investing activities | $(34,593) | $32,037 | $(66,630) | | Net cash provided by (used in) financing activities | $595,876 | $(59,280) | $655,156 | | Net increase in cash and cash equivalents | $681,344 | $89,551 | $591,793 | | Cash and cash equivalents at end of period | $901,234 | $313,881 | $587,353 | Notes to Consolidated Financial Statements This section provides detailed notes explaining the basis of presentation, accounting standards, and specific financial line items Note 1 - Basis of Presentation This note outlines the basis for preparing Independent Bank Corp.'s unaudited interim consolidated financial statements - Independent Bank Corp. is a state-chartered, federally registered bank holding company, with Rockland Trust Company as its sole subsidiary[30] - The financial statements are unaudited, prepared in accordance with GAAP for interim information, and include normal recurring adjustments[31] Note 2 - Recent Accounting Standards Updates This note discusses the Company's evaluation of recent accounting standards updates and their expected impact - The Company is evaluating FASB ASC Subtopic 220-40 (Expense Disaggregation Disclosures) and FASB ASC Topic 740 (Income Taxes) updates, but does not expect their adoption to impact its financial statements[33][34] Note 3 - Securities This note provides detailed information on the Company's securities portfolio, including fair values and unrealized gains or losses Securities Balances (Dollars in thousands) | Security Type | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Trading securities | $4,801 | $4,245 | | Equity securities | $21,258 | $21,204 | | Available for sale securities | $1,286,318 | $1,250,944 | | Held to maturity securities | $1,382,903 | $1,434,956 | | Total securities | $2,695,280 | $2,711,349 | - Trading and equity securities are primarily held in rabbi trusts for employee benefit plans[35][36] - Net gains on equity securities recognized during the six months ended June 30, 2025, were $169 thousand, compared to $502 thousand in the prior year period[35][36][37] Available for Sale Securities Unrealized Losses (Dollars in thousands) | Security Type | June 30, 2025 Gross Unrealized Losses | December 31, 2024 Gross Unrealized Losses | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | U.S. government agency securities | $(13,808) | $(19,792) | | U.S. treasury securities | $(22,797) | $(36,016) | | Agency mortgage-backed securities | $(27,312) | $(37,782) | | Agency collateralized mortgage obligations | $(1,613) | $(2,174) | | State, county, and municipal securities | $(1) | $(3) | | Pooled trust preferred securities | $(82) | $(85) | | Small business administration pooled securities | $(5,644) | $(7,194) | | Total available for sale securities | $(71,257) | $(103,046) | - The Company does not intend to sell available-for-sale securities in an unrealized loss position and does not believe they are credit-impaired, attributing losses to interest rate changes or illiquidity rather than credit quality[39][41][42][44][46] - No sales of AFS or HTM securities occurred in the three and six months ended June 30, 2025 and 2024[39][41][42][44][46] Held to Maturity Securities Unrealized Losses (Dollars in thousands) | Security Type | June 30, 2025 Gross Unrealized Losses | December 31, 2024 Gross Unrealized Losses | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | U.S. treasury securities | $(5,311) | $(7,769) | | Agency mortgage-backed securities | $(45,623) | $(62,198) | | Agency collateralized mortgage obligations | $(53,103) | $(65,143) | | Small business administration pooled securities | $(5,403) | $(8,135) | | Total held to maturity securities | $(109,440) | $(143,245) | Note 4 - Loans, Allowance for Credit Losses and Credit Quality This note details the Company's loan portfolio, allowance for credit losses, and credit quality metrics Allowance for Credit Losses (ACL) Activity (Dollars in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Beginning balance | $144,092 | $146,948 | | Charge-offs | $(6,966) | $(808) | | Recoveries | $447 | $469 | | Provision for credit losses | $7,200 | $4,250 | | Ending balance | $144,773 | $150,859 | | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Beginning balance | $169,984 | $142,222 | | Charge-offs | $(48,366) | $(1,689) | | Recoveries | $955 | $1,076 | | Provision for credit losses | $22,200 | $9,250 | | Ending balance | $144,773 | $150,859 | - The allowance for credit losses decreased by $25.2 million to $144.8 million at June 30, 2025, primarily due to charge-offs on classified commercial loans, partially offset by additional specific reserve allocations[50] - The Company uses a 10-point credit risk-rating system for its commercial portfolio and a pass/default system for its consumer portfolio, based on days past due[56][58] - For consumer loans, FICO scores and LTV ratios are also monitored[64] Weighted Average FICO Scores and LTV Ratios | Portfolio | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Residential real estate FICO score | 756 | 755 | | Residential real estate LTV | 56.9% | 57.9% | | Home equity FICO score | 770 | 769 | | Home equity LTV | 43.5% | 43.9% | Nonaccrual Loans (Dollars in thousands) | Loan Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Commercial and industrial | $13,544 | $14,152 | | Commercial real estate | $28,717 | $74,343 | | Small business | $173 | $302 | | Residential real estate | $10,013 | $10,243 | | Home equity | $3,765 | $2,479 | | Other consumer | $5 | $10 | | Total nonaccrual loans | $56,217 | $101,529 | - Total accrued interest reversed against interest income due to nonaccrual status amounted to $224 thousand for the three months ended June 30, 2025, and $568 thousand for the six months ended June 30, 2025[70] Loan Modifications to Borrowers Experiencing Financial Difficulty (Dollars in thousands) | Type of Modification | 3 Months Ended June 30, 2025 Amortized Cost Basis | 6 Months Ended June 30, 2025 Amortized Cost Basis | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Term Extension | $6,016 | $14,770 | | Other Than Insignificant Payment Delay | $1,036 | $12,038 | | Term Extension and Interest Rate Reduction | $13,337 | $26,371 | | Term Extension and Other Than Insignificant Payment Delay | $22,248 | $22,248 | | Total Outstanding Modified | $42,637 | $75,427 | Note 5 - Borrowings This note provides details on the Company's borrowing activities, including recent subordinated debt issuances - On March 25, 2025, the Company issued $300.0 million in fixed-to-floating rate subordinated notes maturing April 1, 2035, with a fixed interest rate of 7.25% until April 1, 2030[82] - Proceeds are intended for general corporate purposes, including the redemption of Enterprise Bancorp, Inc.'s subordinated notes[83] Note 6 - Stock Based Compensation This note describes the Company's stock-based compensation plans, including restricted stock awards granted and vested Time-Vested Restricted Stock Awards Granted (6 Months Ended June 30, 2025) | Date | Shares Granted | Grant Date Fair Value Per Share | | :--------- | :------------- | :------------------------------ | | 2/15/2025 | 1,090 | $69.09 | | 2/20/2025 | 113,000 | $68.83 | | 3/15/2025 | 2,600 | $62.84 | | 4/15/2025 | 1,360 | $55.25 | | 5/15/2025 | 1,540 | $65.05 | | 5/20/2025 | 12,194 | $64.03 | | 6/15/2025 | 3,380 | $66.67 | - On February 20, 2025, the Company granted 43,100 performance-based restricted stock awards to executive-level employees, contingent on performance criteria over a three-year period ending December 31, 2027[85] - Awards from February 17, 2022, vested at 78% of maximum target shares on March 19, 2025[86] Note 7 - Derivative and Hedging Activities This note explains the Company's use of derivative financial instruments for risk management and customer requirements - The Company uses derivative financial instruments, primarily interest rate derivatives, to manage interest rate risk and accommodate customer business requirements, but does not engage in proprietary trading[87][88] - Derivatives are carried at fair value[87][88] Derivative Positions (Notional Amount in thousands) | Derivative Type | June 30, 2025 Notional Amount | December 31, 2024 Notional Amount | | :-------------------------- | :------------------------------ | :------------------------------ | | Interest rate swaps on borrowings | $400,000 | $400,000 | | Interest rate swaps on loans | $650,000 | $750,000 | | Interest rate collars on loans | $150,000 | $150,000 | | Total cash flow hedges | $1,200,000 | $1,300,000 | | Loan level swaps (customer related) | $1,708,876 | $1,817,033 | | Foreign exchange contracts (customer related) | $96,253 | $124,276 | | Risk participation agreements (customer related) | $142,782 | $163,121 | - The Company expects approximately $777 thousand (pre-tax) to be reclassified as an increase to net interest income and $7.1 million (pre-tax) as a decrease to net interest income from other comprehensive income related to cash flow hedges in the next twelve months[93] Effect of Derivatives on OCI and Current Earnings (Dollars in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | | Gain in OCI on derivatives (effective portion), net of tax | $2,329 | $1,735 | | Loss reclassified from OCI into interest income or interest expense (effective portion) | $(2,509) | $(5,030) | | Changes in fair value of customer related positions (net) | $(13) | $(2) | | Changes in fair value of mortgage derivatives | $92 | $237 | | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | | Gain in OCI on derivatives (effective portion), net of tax | $5,785 | $247 | | Loss reclassified from OCI into interest income or interest expense (effective portion) | $(5,179) | $(10,886) | | Changes in fair value of customer related positions (net) | $6 | $(39) | | Changes in fair value of mortgage derivatives | $217 | $368 | Note 8 - Fair Value Measurements This note explains the Company's fair value measurements, categorized into a three-level hierarchy based on input observability - Fair value is a market-based measure, prioritized into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[114][115][116][117](index=117&type=chunk] - There were no changes in valuation techniques during the six months ended June 30, 2025[119] Recurring Fair Value Measurements (Dollars in thousands) | Item | June 30, 2025 Balance | Level 1 | Level 2 | Level 3 | | :------------------------------------ | :-------------------- | :------ | :------ | :------ | | Trading securities | $4,801 | $4,801 | — | — | | Equity securities | $21,258 | $21,258 | — | — | | Securities available for sale | $1,286,318 | — | $1,286,318 | — | | Loans held for sale | $16,792 | — | $16,792 | — | | Derivative instruments (assets) | $74,653 | — | $74,653 | — | | Derivative instruments (liabilities) | $86,126 | — | $86,126 | — | | Total recurring fair value measurements | $1,317,696 | $26,059 | $1,291,637 | — | | Item | December 31, 2024 Balance | Level 1 | Level 2 | Level 3 | | :------------------------------------ | :------------------------ | :------ | :------ | :------ | | Trading securities | $4,245 | $4,245 | — | — | | Equity securities | $21,204 | $21,204 | — | — | | Securities available for sale | $1,250,944 | — | $1,250,944 | — | | Loans held for sale | $7,271 | — | $7,271 | — | | Derivative instruments (assets) | $103,958 | — | $103,958 | — | | Derivative instruments (liabilities) | $123,755 | — | $123,755 | — | | Total recurring fair value measurements | $1,263,867 | $25,449 | $1,238,418 | — | Nonrecurring Fair Value Measurements (Dollars in thousands) | Item | June 30, 2025 Balance | Level 1 | Level 2 | Level 3 | | :------------------------------------ | :-------------------- | :------ | :------ | :------ | | Individually assessed collateral dependent loans | $35,684 | — | — | $35,684 | | Other real estate owned and other foreclosed assets | $2,100 | — | — | $2,100 | | Total nonrecurring fair value measurements | $37,784 | — | — | $37,784 | | Item | December 31, 2024 Balance | Level 1 | Level 2 | Level 3 | | :------------------------------------ | :------------------------ | :------ | :------ | :------ | | Individually assessed collateral dependent loans | $43,766 | — | — | $43,766 | | Total nonrecurring fair value measurements | $43,766 | — | — | $43,766 | Note 9 - Revenue Recognition This note outlines the Company's policies for recognizing revenue from contracts with customers in accordance with ASC 606 - The Company recognizes revenue from contracts with customers in accordance with ASC 606, applying a five-step model to identify contracts, performance obligations, transaction price, allocation, and recognition timing[142][145] Disaggregated Revenue from Contracts with Customers (Dollars in thousands) | Revenue Stream | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Deposit account fees | $7,141 | $6,332 | | Interchange and ATM fees | $4,991 | $4,251 | | Investment management and advisory | $11,380 | $10,987 | | Payment processing income | $489 | $449 | | Credit card income | $648 | $596 | | Other noninterest income (in-scope ASC 606) | $1,663 | $1,366 | | Total noninterest income in-scope of ASC 606 | $25,812 | $23,981 | | Revenue Stream | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Deposit account fees | $14,194 | $12,560 | | Interchange and ATM fees | $9,606 | $8,204 | | Investment management and advisory | $22,600 | $20,928 | | Payment processing income | $1,049 | $987 | | Credit card income | $1,235 | $1,129 | | Other noninterest income (in-scope ASC 606) | $3,226 | $2,480 | | Total noninterest income in-scope of ASC 606 | $50,910 | $46,288 | - Revenue recognition for deposit account fees, cash management, interchange, and ATM fees is generally concurrent with service provision or transaction completion[144][146][147][149][151][153] - Investment management fees are recognized in correlation to monthly management fee determinations or as transactional services are provided[144][146][147][149][151][153] - Retail investments and insurance commission revenue is recognized at the point of sale[144][146][147][149][151][153] Note 10 - Other Comprehensive Income (Loss) This note reconciles the components of other comprehensive income (loss) and accumulated other comprehensive income (loss) Reconciliation of Other Comprehensive Income (Loss) (Dollars in thousands) | Item | 3 Months Ended June 30, 2025 (After Tax) | 3 Months Ended June 30, 2024 (After Tax) | | :------------------------------------------------ | :--------------------------------------- | :--------------------------------------- | | Net change in fair value of securities available for sale | $9,835 | $3,392 | | Net change in fair value of cash flow hedges | $2,329 | $1,735 | | Net change in other comprehensive income for defined benefit postretirement plans | $(45) | $(14) | | Total other comprehensive income | $12,119 | $5,113 | | Item | 6 Months Ended June 30, 2025 (After Tax) | 6 Months Ended June 30, 2024 (After Tax) | | :------------------------------------------------ | :--------------------------------------- | :--------------------------------------- | | Net change in fair value of securities available for sale | $26,229 | $384 | | Net change in fair value of cash flow hedges | $5,785 | $247 | | Net change in other comprehensive income for defined benefit postretirement plans | $(90) | $(29) | | Total other comprehensive income | $31,924 | $602 | Accumulated Other Comprehensive Income (Loss) Components (Dollars in thousands) | Component | June 30, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------ | | Unrealized Gain (Loss) on Securities | $(53,259) | $(95,847) | | Unrealized Gain (Loss) on Cash Flow Hedge | $(8,077) | $(20,328) | | Defined Benefit Postretirement Plans | $3,253 | $1,950 | | Accumulated Other Comprehensive Income (Loss) | $(58,083) | $(114,225) | Note 11 - Commitments and Contingencies This note outlines the Company's off-balance sheet transactions, commitments, and pending legal matters - The Company engages in off-balance sheet transactions like commitments to extend credit, loan exposures with recourse, and standby letters of credit, which involve credit and interest rate risk[160][161][162] - These are subject to credit approval and monitoring[163] Financial Instruments with Off-Balance Sheet Risk (Dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Commitments to extend credit | $4,930,562 | $4,663,314 | | Loan exposures sold with recourse | $135,984 | $141,151 | | Standby letters of credit | $25,487 | $24,863 | | Deferred standby letter of credit fees | $224 | $213 | - A new lease agreement for the Company's headquarters became effective in Q2 2025, with the term expected to commence in H2 2026[167] - Pending lawsuits are not expected to have a material adverse effect on the Company's financial position or results of operations[168] Note 12 - Segment Information This note clarifies that the Company operates as a single reportable segment: community banking - The Company operates as a single reportable segment: community banking, providing banking, investment, and financial services[169] - The Chief Executive Officer and Chief Financial Officer, as CODMs, assess performance based on consolidated net income and diluted EPS, emphasizing interest-earning assets and key expenses[170] Note 13 - Subsequent Events This note discloses significant events that occurred after the reporting period, including a major merger - Effective July 1, 2025, the Company completed its merger with Enterprise Bancorp, Inc., adding 27 branch locations, approximately $3.9 billion in loans, and $4.4 billion in deposits[171] - Former Enterprise shareholders received approximately 7.5 million shares of the Company's common stock and $25.8 million in cash[171] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the Company's financial condition and results, including an executive overview, funding, net interest margin, and risk management Cautionary Statement Regarding Forward-Looking Statements This section advises that the report contains forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties, including adverse economic conditions, financial services industry events, competitive labor markets, political uncertainties, market volatility, and acquisition risks[173][174] - The Company disclaims any obligation to update these statements[175] Selected Quarterly Financial Data This section provides a summary of key financial data for recent quarters, offering a quick overview of performance trends Selected Quarterly Financial Data (Dollars in thousands, except per share data) | Item | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Total assets | $20,048,934 | $19,888,209 | $19,373,565 | $19,408,117 | $19,411,037 | | Total deposits | $15,893,740 | $15,676,017 | $15,305,978 | $15,441,023 | $15,409,587 | | Total borrowings | $759,428 | $859,874 | $701,374 | $663,380 | $693,386 | | Stockholders' equity | $3,074,856 | $3,033,392 | $2,993,120 | $2,977,148 | $2,919,249 | | Net income | $51,101 | $44,424 | $50,033 | $42,947 | $51,330 | | Diluted earnings per share | $1.20 | $1.04 | $1.18 | $1.01 | $1.21 | | Net interest margin (FTE) | 3.37% | 3.42% | 3.33% | 3.29% | 3.25% | | Nonperforming loans as a percent of gross loans | 0.39% | 0.62% | 0.70% | 0.73% | 0.40% | | Tangible book value per share | $48.80 | $47.81 | $46.96 | $46.57 | $45.19 | Executive Level Overview This section provides a high-level summary of the Company's financial performance and strategic focus - Management evaluates performance using metrics like net income, EPS, return on assets/equity, net interest margin, and tangible book value per share[180] - The Company focuses on organic growth and opportunistic acquisitions, including the recent Enterprise Bancorp merger[180] - Net income for Q2 2025 was $51.1 million ($1.20 diluted EPS), a slight decrease from Q2 2024[181] - Key drivers included a steady net interest margin of 3.37%, robust commercial & industrial loan growth, reduced loan loss provision, $31.2 million nonperforming asset reduction, solid deposit growth (5.6% annualized), robust capital levels, and a $150 million share repurchase authorization[182] Interest-Earning Assets This section discusses the Company's interest-earning assets and management's approach to loan pricing and credit underwriting - Total interest-earning assets remained relatively consistent over the past five quarters[183] - Management maintains a disciplined approach to loan pricing, considering interest rate sensitivity, and credit underwriting to avoid undue credit risk[185] Funding and Net Interest Margin This section analyzes the Company's funding sources, including deposits and borrowings, and its net interest margin performance - Total funding sources increased in H1 2025, driven by $587.8 million in robust deposit growth, primarily in core deposit accounts[187] - Net borrowings increased by $58.1 million, reflecting a $300.0 million subordinated debt raise partially offset by $238.0 million in FHLB paydowns[187] - The ratio of core deposits to total deposits remained consistent at 82.85% at June 30, 2025[190][286] - The net interest margin was 3.37% for Q2 2025 and 3.40% for H1 2025, representing increases of 12 and 16 basis points, respectively, compared to the prior year periods[190][286] Net Interest Margin and Cost of Deposits Trends | Quarter Ended | Net Interest Margin (FTE) | Cost of Deposits | | :-------------- | :------------------------ | :--------------- | | June 30, 2025 | 3.37% | 1.54% | | March 31, 2025 | 3.42% | 1.55% | | December 31, 2024 | 3.33% | 1.60% | | September 30, 2024 | 3.29% | 1.63% | | June 30, 2024 | 3.25% | 1.65% | Noninterest Income This section examines the trends and drivers of the Company's noninterest income, including fees and other revenue sources - Noninterest income increased by $1.98 million (6.12%) for the three months ended June 30, 2025, and by $4.57 million (7.35%) for the six months ended June 30, 2025, compared to the same prior year periods[303] - This growth was driven by increases in deposit account fees (overdraft and cash management), interchange and ATM fees (transaction volume), and investment management and advisory income (higher assets under administration)[303][304] - Gains on life insurance benefits also significantly increased to $1.7 million in H1 2025 from $263 thousand in H1 2024[303][304] Expense Control This section discusses management's approach to controlling operating expenses while supporting growth initiatives - Management employs a balanced approach to expense control, monitoring operating expenses while investing in growth initiatives[197] - Primary expenses include salaries and benefits, and occupancy and equipment costs[197] Efficiency Ratios | Quarter Ended | Efficiency Ratio (GAAP) | Efficiency Ratio (Non-GAAP Operating Basis) | | :-------------- | :---------------------- | :------------------------------------------ | | June 30, 2025 | 59.84% | 58.61% | | March 31, 2025 | 59.47% | 58.82% | | December 31, 2024 | 60.18% | 59.10% | | September 30, 2024 | 57.31% | 57.31% | | June 30, 2024 | 58.51% | 58.51% | Capital This section reviews the Company's capital position, including drivers of capital growth and dividend policies - Capital growth is driven by earnings retention, dividends, changes in other comprehensive income, and opportunistic share repurchases[202] - The Company declared a quarterly cash dividend of $0.59 per share for Q2 2025, a 3.5% increase from Q2 2024[202] Non-GAAP Measures This section provides reconciliations and explanations of non-GAAP financial measures used by management to assess performance - Management uses non-GAAP measures like operating earnings, operating EPS, tangible book value per share, tangible common equity ratio, and return on average tangible common equity to assess core banking business performance, excluding noncore items such as gains/losses on securities sales, merger expenses, and impairment[203][204] Reconciliation of GAAP Net Income to Operating Net Income (Dollars in thousands, except per share data) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net income available to common shareholders (GAAP) | $51,101 | $51,330 | | Add: merger and acquisition expenses | $2,239 | — | | Net tax benefit associated with noncore items | $(544) | — | | Adjustment for tax effect of previously incurred merger and acquisition expenses | $657 | — | | Operating net income (Non-GAAP) | $53,453 | $51,330 | | Operating diluted earnings per share (Non-GAAP) | $1.25 | $1.21 | | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net income available to common shareholders (GAAP) | $95,525 | $99,100 | | Add: merger and acquisition expenses | $3,394 | — | | Net tax benefit associated with noncore items | $(593) | — | | Adjustment for tax effect of previously incurred merger and acquisition expenses | $381 | — | | Operating net income (Non-GAAP) | $98,707 | $99,100 | | Operating diluted earnings per share (Non-GAAP) | $2.32 | $2.33 | Tangible Common Equity and Book Value Reconciliation (Dollars in thousands, except per share data) | Item | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Stockholders' equity (GAAP) | $3,074,856 | $3,033,392 | $2,993,120 | $2,977,148 | $2,919,249 | | Less: Goodwill and other intangibles | $994,814 | $996,013 | $997,356 | $998,773 | $1,000,233 | | Tangible common equity (Non-GAAP) | $2,080,042 | $2,037,379 | $1,995,764 | $1,978,375 | $1,919,016 | | Assets (GAAP) | $20,048,934 | $19,888,209 | $19,373,565 | $19,408,117 | $19,411,037 | | Less: Goodwill and other intangibles | $994,814 | $996,013 | $997,356 | $998,773 | $1,000,233 | | Tangible assets (Non-GAAP) | $19,054,120 | $18,892,196 | $18,376,209 | $18,409,343 | $18,410,804 | | Tangible common equity to tangible assets ratio (Non-GAAP) | 10.92% | 10.78% | 10.86% | 10.75% | 10.42% | | Tangible book value per share (Non-GAAP) | $48.80 | $47.81 | $46.96 | $46.57 | $45.19 | Critical Accounting Estimates This section highlights accounting estimates requiring significant management judgment and potential impact on financial results - Critical accounting estimates involve significant management judgments and uncertainties that could materially impact financial results[210] - No material changes in these estimates occurred during the first six months of 2025[211] FINANCIAL POSITION This section provides an overview of the Company's financial position, including its securities portfolio, loan portfolio, and asset quality Securities Portfolio This section details the composition and performance of the Company's securities portfolio - The securities portfolio, primarily U.S. Treasury and agency securities, remained consistent at $2.7 billion in H1 2025[212] - New purchases and unrealized gains were offset by maturities and paydowns[213] - Securities represented 13.4% of total assets at June 30, 2025[213] Residential Mortgage Loan Sales This section describes the Bank's residential mortgage loan origination and sales activities in the secondary market - The Bank originates residential mortgage loans for sale in the secondary market, retaining or releasing servicing rights[214] - No material losses related to residential mortgage repurchases were incurred in Q2 or H1 2025/2024[214] Closed Residential Real Estate Loans (Dollars in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Held in portfolio | $87,116 | $56,974 | | Sold or held for sale in secondary market | $58,018 | $64,381 | | Total closed loans | $145,134 | $121,355 | | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Held in portfolio | $132,366 | $87,512 | | Sold or held for sale in secondary market | $96,290 | $110,882 | | Total closed loans | $228,656 | $198,394 | Residential Mortgage Loan Sales (Dollars in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Sold with servicing rights released | $49,914 | $56,495 | | Sold with servicing rights retained | $102 | $1,388 | | Total loans sold | $50,016 | $57,883 | | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Sold with servicing rights released | $85,885 | $94,731 | | Sold with servicing rights retained | $1,207 | $4,752 | | Total loans sold | $87,092 | $99,483 | - The mortgage servicing asset balance was $2.29 million at June 30, 2025, compared to $2.57 million at June 30, 2024[220] - The principal balance of loans serviced by the Bank for investors was $271.2 million at June 30, 2025[221] Loan Portfolio This section provides an overview of the Company's loan portfolio, including growth trends and diversification across segments - The Company's total loan portfolio remained consistent at June 30, 2025, compared to December 31, 2024[222] - Commercial and industrial loans grew by $167.8 million (5.5%), and small business loans increased by $18.8 million (6.7%) in H1 2025, offset by a $231.3 million (3.42%) runoff in commercial real estate[222] - The commercial real estate portfolio is diversified across various property types, including nonowner-occupied commercial, retail, office, industrial, and multi-family residential[224] - The commercial and industrial portfolio is diversified across industry groups, with loans generally secured by business assets and personal guarantees[230] - The consumer portfolio, comprising residential real estate, home equity, and other consumer loans, totaled $3.7 billion at June 30, 2025, showing modest growth in H1 2025[222][234] Asset Quality This section details the Company's asset quality, including nonperforming assets, allowance for credit losses, and net charge-offs - The Company actively monitors loan portfolio asset quality, managing delinquencies, classifying nonaccrual loans (generally 90+ days past due), and modifying loans for borrowers experiencing financial difficulty to minimize losses[236][237][239] Nonperforming Assets (Dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :------------------------------------ | :------------ | :---------------- | :------------ | | Total nonperforming loans | $56,217 | $101,529 | $57,451 | | Other real estate owned | $2,100 | — | $110 | | Total nonperforming assets | $58,317 | $101,529 | $57,561 | | Nonperforming loans as a percent of gross loans | 0.39% | 0.70% | 0.40% | | Nonperforming assets as a percent of total assets | 0.29% | 0.52% | 0.30% | Activity in Nonperforming Assets (Dollars in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Nonperforming assets beginning balance | $89,493 | $57,051 | | New to nonperforming | $13,411 | $6,201 | | Loans charged-off | $(6,966) | $(808) | | Loans paid-off | $(35,977) | $(3,458) | | Loans transferred to OREO | $(2,100) | — | | Loans restored to performing status | $(1,659) | $(1,429) | | Nonperforming assets ending balance | $58,317 | $57,561 | | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Nonperforming assets beginning balance | $101,529 | $54,493 | | New to nonperforming | $55,188 | $25,459 | | Loans charged-off | $(48,366) | $(1,689) | | Loans paid-off | $(46,909) | $(10,440) | | Loans transferred to OREO | $(2,100) | — | | Loans restored to performing status | $(3,015) | $(10,284) | | Nonperforming assets ending balance | $58,317 | $57,561 | - The allowance for credit losses (ACL) is estimated using the CECL methodology, incorporating a quantitative model adjusted for qualitative factors and a 12-month economic forecast (Moody's Baseline)[246][248][249] - The ACL as a percentage of total loans was 1.00% at June 30, 2025, down from 1.17% at December 31, 2024[246][248][249][301] Summary of Net Charge-Offs/(Recoveries) to Average Loans Outstanding | Loan Category | 3 Months Ended June 30, 2025 Ratio | 6 Months Ended June 30, 2025 Ratio | | :------------------------------------ | :--------------------------------- | :--------------------------------- | | Commercial and industrial | 0.35% | 0.18% | | Commercial real estate | 0.20% | 1.31% | | Commercial construction | —% | —% | | Small business | 0.07% | 0.10% | | Residential real estate | —% | —% | | Home equity | (0.02)% | 0.01% | | Other consumer | 4.79% | 5.93% | | Total | 0.18% | 0.66% | | Loan Category | 3 Months Ended June 30, 2024 Ratio | 6 Months Ended June 30, 2024 Ratio | | :------------------------------------ | :--------------------------------- | :--------------------------------- | | Commercial and industrial | —% | (0.01)% | | Commercial real estate | —% | —% | | Commercial construction | —% | —% | | Small business | 0.07% | 0.09% | | Residential real estate | —% | —% | | Home equity | (0.05)% | (0.05)% | | Other consumer | 5.58% | 5.55% | | Total | 0.01% | 0.01% | - Net charge-offs were $6.5 million for Q2 2025 and $47.4 million for H1 2025, significantly higher than prior year periods, primarily due to charge-offs on three classified commercial loans in Q1 2025[252] Allocation of Allowance for Credit Losses (Dollars in thousands) | Loan Category | June 30, 2025 Allowance Amount | June 30, 2025 % of Total Allowance | December 31, 2024 Allowance Amount | December 31, 2024 % of Total Allowance | | :------------------------------------ | :------------------------------- | :--------------------------------- | :------------------------------- | :--------------------------------- | | Commercial and industrial | $35,309 | 24.4% | $27,800 | 16.4% | | Commercial real estate | $59,504 | 41.0% | $92,535 | 54.4% | | Commercial construction | $8,183 | 5.7% | $8,166 | 4.8% | | Small business | $4,565 | 3.2% | $4,182 | 2.5% | | Residential real estate | $25,414 | 17.6% | $25,238 | 14.8% | | Home equity | $10,911 | 7.5% | $11,007 | 6.5% | | Other consumer | $887 | 0.6% | $1,056 | 0.6% | | Total | $144,773 | 100.0% | $169,984 | 100.0% | Federal Home Loan Bank Stock This section discusses the Company's holdings in Federal Home Loan Bank stock and their purpose - FHLB stock holdings, a necessary long-term investment for liquidity, decreased to $21.1 million at June 30, 2025, from $31.6 million at December 31, 2024, due to paydowns of FHLB term borrowings[258] Goodwill and Other Intangible Assets This section provides information on the Company's goodwill and other intangible assets, including impairment testing - Goodwill and other intangible assets were $994.8 million at June 30, 2025[259] - The Company performs annual impairment testing in Q3, with no impairment indicated as of August 31, 2024, or during Q2 2025[260] Cash Surrender Value of Life Insurance Policies This section details the cash surrender value of life insurance policies and related income recognized by the Company - Cash surrender value of life insurance policies was $305.1 million at June 30, 2025[261] - The Company recorded tax-exempt income of $2.0 million for Q2 2025 and $4.1 million for H1 2025, and gains on life insurance benefits of $1.7 million for H1 2025[262][263] Deposits This section provides an overview of the Company's deposit base, including growth, composition, and cost - Total deposits increased by $587.8 million (3.8%) to $15.9 billion at June 30, 2025[264] - Noninterest-bearing demand deposits comprised 28.5% of total deposits[264] - The total cost of deposits was 1.54% for Q2 2025 and 1.55% for H1 2025[264] - Core deposits represented 82.8% of total deposits at June 30, 2025[265] - Uninsured deposits were estimated at $5.7 billion at June 30, 2025, including $1.1 billion of collateralized deposits and $1.1 billion through the IntraFi Network[266] Borrowings This section details the Company's borrowing activities, including changes in total borrowings and pledged assets - Total borrowings increased by $58.1 million (8.3%) to $759.4 million at June 30, 2025, driven by a $300.0 million subordinated debt raise, partially offset by $238.0 million in FHLB paydowns[267] - $8.7 billion of assets were pledged as collateral[268] Capital Resources This section reviews the Company's capital resources, regulatory capital ratios, and dividend declarations - The Board declared a cash dividend of $0.59 per share on June 18, 2025[269] - The Company and Bank exceeded all minimum regulatory capital requirements at June 30, 2025, including the capital conservation buffer of 2.5%[270][271][275] Company and Bank's Capital Amounts and Ratios (Dollars in thousands) | Capital Ratio | June 30, 2025 Actual Ratio | Minimum for Capital Adequacy | December 31, 2024 Actual Ratio | Minimum for Capital Adequacy | | :------------------------------------ | :------------------------- | :--------------------------- | :------------------------- | :--------------------------- | | Company Total capital (to risk weighted assets) | 18.08% | ≥ 8.0% | 16.04% | ≥ 8.0% | | Company Common equity tier 1 capital (to risk weighted assets) | 14.70% | ≥ 4.5% | 14.65% | ≥ 4.5% | | Company Tier 1 capital (to risk weighted assets) | 14.70% | ≥ 6.0% | 14.65% | ≥ 6.0% | | Company Tier 1 capital (to average assets) | 11.44% | ≥ 4.0% | 11.32% | ≥ 4.0% | | Bank Total capital (to risk weighted assets) | 16.29% | ≥ 8.0% | 15.43% | ≥ 8.0% | | Bank Common equity tier 1 capital (to risk weighted assets) | 15.35% | ≥ 4.5% | 14.46% | ≥ 4.5% | | Bank Tier 1 capital (to risk weighted assets) | 15.35% | ≥ 6.0% | 14.46% | ≥ 6.0% | | Bank Tier 1 capital (to average assets) | 11.95% | ≥ 4.0% | 11.18% | ≥ 4.0% | Dividend Restrictions This section outlines the regulatory restrictions on dividends paid by the Bank to the Company - The Company relies on dividends from Rockland Trust Company, which are subject to federal and state regulatory limits[276] - Dividends paid by the Bank to the Company totaled $51.5 million for Q2 2025 and $87.6 million for H1 2025[277] Investment Management This section provides an overview of the Company's investment management services and assets under administration Assets Under Administration (Dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :------------------------------------ | :------------ | :---------------- | :------------ | | Assets under administration | $7,360,635 | $7,035,315 | $6,870,636 | | Number of trust, fiduciary and agency accounts | 6,743 | 6,637 | 6,620 | - The Investment Management Group provides services to individuals and institutions, generating gross fee revenues of $10.3 million for Q2 2025 and $20.4 million for H1 2025[280] - Total assets under administration increased by 7.1% to $7.4 billion at June 30, 2025, compared to June 30, 2024[280] RESULTS OF OPERATIONS This section analyzes the Company's financial performance, focusing on net interest income, provision for credit losses, and noninterest income/expense Net Interest Income This section analyzes the Company's net interest income, including drivers of changes in interest income and expense Summary of Results of Operations (Dollars in thousands, except per share data) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net income | $51,101 | $51,330 | | Diluted earnings per share | $1.20 | $1.21 | | Return on average assets | 1.04% | 1.07% | | Return on average equity | 6.68% | 7.10% | | Net interest margin | 3.37% | 3.25% | | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net income | $95,525 | $99,100 | | Diluted earnings per share | $2.24 | $2.33 | | Return on average assets | 0.98% | 1.03% | | Return on average equity | 6.32% | 6.87% | | Net interest margin | 3.40% | 3.24% | - Net interest income on a fully tax equivalent (FTE) basis increased by $9.5 million (6.9%) for Q2 2025 and $17.6 million (6.3%) for H1 2025, driven by higher yields on interest-earning assets and decreased funding costs[286] - The net interest margin increased by 12 basis points to 3.37% for Q2 2025 and by 16 basis points to 3.40% for H1 2025[286] Volume Rate Analysis - Change in Net Interest Income (Dollars in thousands) | Item | 3 Months Ended June 30, 2025 vs 2024 | 6 Months Ended June 30, 2025 vs 2024 | | :------------------------------------ | :----------------------------------- | :----------------------------------- | | Change in income on interest-earning assets | $6,306 | $10,143 | | Change in expense of interest-bearing liabilities | $(3,242) | $(7,433) | | Change in net interest income | $9,548 | $17,576 | Provision For Credit Losses This section discusses the Company's provision for credit losses, including the factors influencing its changes - The provision for credit losses increased to $7.2 million for Q2 2025 and $22.2 million for H1 2025, compared to $4.3 million and $9.3 million in the prior year periods, primarily due to elevated charge-off activity and additional specific reserves[300] Noninterest Income This section analyzes the components and trends of the Company's noninterest income Noninterest Income (Dollars in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | | :------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :------------- | | Deposit account fees | $7,141 | $6,332 | $809 | 12.78% | | Interchange and ATM fees | $4,997 | $4,753 | $244 | 5.13% | | Investment management and advisory | $11,380 | $10,987 | $393 | 3.58% | | Mortgage banking income | $1,072 | $1,320 | $(248) | -18.79% | | Increase in cash surrender value of life insurance policies | $2,038 | $2,000 | $38 | 1.90% | | Gain on life insurance benefits | $1,650 | — | $1,650 | 100.00% | | Loan level derivative income | $66 | $473 | $(407) | -86.05% | | Other noninterest income | $5,964 | $6,465 | $(501) | -7.75% | | Total | $34,308 | $32,330 | $1,978 | 6.12% | | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Deposit account fees | $14,194 | $12,560 | | Interchange and ATM fees | $9,619 | $9,205 | | Investment management | $22,600 | $20,928 | | Mortgage banking income | $1,813 | $2,116 | | Increase in cash surrender value of life insurance policies | $4,103 | $3,928 | | Gain on life insurance benefits | $1,650 | $263 | | Loan level derivative income | $1,108 | $553 | | Other noninterest income | $11,760 | $12,720 | | Total | $66,847 | $62,273 | Noninterest Income (Dollars in thousands) | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | | :------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :------------- | | Deposit account fees | $14,194 | $12,560 | $1,634 | 13.01% | | Interchange and ATM fees | $9,619 | $9,205 | $414 | 4.50% | | Investment management | $22,600 | $20,928 | $1,672 | 7.99% | | Mortgage banking income | $1,813 | $2,116 | $(303) | -14.32% | | Increase in cash surrender value of life insurance policies | $4,103 | $3,928 | $175 | 4.46% | | Gain on life insurance benefits | $1,650 | $263 | $1,387 | 527.38% | | Loan level derivative income | $1,108 | $553 | $555 | 100.36% | | Other noninterest income | $11,760 | $12,720 | $(960) | -7.55% | | Total | $66,847 | $62,273 | $4,574 | 7.35% | - Deposit account fees and interchange/ATM fees increased due to higher transaction volumes[303][304] - Investment management income rose with a 7.1% increase in assets under administration[303][304] - Gains on life insurance benefits significantly increased[303][304] - Other noninterest income decreased due to lower FHLB dividend income and commercial loan fees[303][304] Noninterest Expense This section analyzes the components and trends of the Company's noninterest expenses Noninterest Expense (Dollars in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | | :------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :------------- | | Salaries and employee benefits | $62,856 | $57,162 | $5,694 | 9.96% | | Occupancy and equipment expenses | $13,158 | $12,472 | $686 | 5.50% | | Data processing & facilities management | $2,783 | $2,405 | $378 | 15.72% | | Software and subscriptions | $5,166 | $4,475 | $691 | 15.44% | | FDIC assessment | $2,373 | $2,694 | $(321) | -11.92% | | Debit card expense | $1,984 | $1,602 | $382 | 23.85% | | Advertising costs | $1,797 | $1,826 | $(29) | -1.59% | | Amortization of intangible assets | $1,197 | $1,465 | $(268) | -18.29% | | Consulting expense | $1,018 | $1,997 | $(979) | -49.02% | | Merger and acquisition expenses | $2,239 | — | $2,239 | 100.00% | | Other noninterest expenses | $14,227 | $13,516 | $711 | 5.26% | | Total | $108,798 | $99,614 | $9,184 | 9.22% | | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Salaries and employee benefits | $124,787 | $114,336 | | Occupancy and equipment expenses | $27,017 | $25,939 | | Data processing & facilities management | $5,425 | $4,888 | | Software and subscriptions | $10,193 | $8,569 | | FDIC assessment | $5,361 | $5,676 | | Debit card expense | $3,919 | $4,080 | | Advertising expense | $3,242 | $2,986 | | Amortization of intangible assets | $2,541 | $3,028 | | Consulting expense | $2,115 | $3,425 | | Merger and acquisition expenses | $3,394 | — | | Other noninterest expenses | $26,682 | $26,574 | | Total | $214,676 | $199,501 | Noninterest Expense (Dollars in thousands) | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | | :------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :------------- | | Salaries and employee benefits | $124,787 | $114,336 | $10,451 | 9.14% | | Occupancy and equipment expenses | $27,017 | $25,939 | $1,078 | 4.16% | | Data processing & facilities management | $5,425 | $4,888 | $537 | 10.99% | | Software and subscriptions | $10,193 | $8,569 | $1,624 | 18.95% | | FDIC assessment | $5,361 | $5,676 | $(315) | -5.55% | | Debit card expense | $3,919 | $4,080 | $(161) | -3.95% | | Advertising expense | $3,242 | $2,986 | $256 | 8.57% | | Amortization of intangible assets | $2,541 | $3,02