Independent Bank (INDB) - 2025 Q3 - Quarterly Results

Third Quarter 2025 Financial Performance Overview Q3 2025 Key Financial Results GAAP net income decreased to $34.3 million due to merger costs, while operating net income rose to $77.4 million Q3 2025 Key Financial Results (Millions of Dollars) | Metric | Q3 2025 (GAAP) (Millions of Dollars) | Q2 2025 (GAAP) (Millions of Dollars) | Q3 2025 (Operating) (Millions of Dollars) | Q2 2025 (Operating) (Millions of Dollars) | | :-------------------------------- | :------------- | :------------- | :------------------ | :------------------ | | Net Income | $34.3 million | $51.1 million | $77.4 million | $53.5 million | | Diluted EPS | $0.69 | $1.20 | $1.55 | $1.25 | | Pre-tax Merger-Related Costs | $23.9 million | $2.2 million | N/A | N/A | | Provision for Credit Losses (Acquisition-related) | $34.5 million | N/A | N/A | N/A | CEO Statement CEO Jeffrey Tengel highlighted Q3 results aligned with sustainable financial goals, improving net interest margin, fee income, and efficiency - The Enterprise acquisition and solid business activity drove significant net interest margin improvement, improved fee income results, and a meaningful drop in the efficiency ratio[2] - The company remained focused on improving asset quality metrics[2] Enterprise Bancorp, Inc. Acquisition The Enterprise Bancorp, Inc. acquisition completed July 1, 2025, adding 27 branches, $3.9 billion in loans, and $4.4 billion in deposits - Acquisition of Enterprise Bancorp, Inc. completed on July 1, 2025[3] - Added twenty-seven branch locations in northern Massachusetts and southern New Hampshire[3] - Acquired $3.9 billion in loans and assumed $4.4 billion in deposits at fair value[3] - Total merger consideration: $503.1 million, comprising $477.2 million in equity (7,478,906 shares) and $25.9 million in cash[3] Net Assets Acquired at Fair Value (Dollars in thousands) | Assets | Amount (Thousands of Dollars) | | :------------------------------------------ | :------- | | Cash | $123,638 | | Investments | $590,267 | | Loans (including loans held for sale) | $3,913,112 | | Allowance for credit losses on PCD loans | $(9,020) | | Bank premises and equipment | $35,706 | | Goodwill | $98,302 | | Core deposit and other intangibles | $137,503 | | Other assets | $164,908 | | Total assets acquired | $5,054,416 | | Liabilities | | | Deposits | $4,362,710 | | Borrowings | $62,472 | | Subordinated debt | $59,974 | | Other liabilities | $66,116 | | Total liabilities assumed | $4,551,272 | | Purchase price | $503,144 | Financial Highlights Balance Sheet Overview Balance sheet expanded significantly in Q3 2025 due to Enterprise acquisition, increasing total assets by 24.7% to $25.0 billion Key Balance Sheet Metrics (QoQ Change) (Billions of Dollars) | Metric | Sep 30, 2025 (Billions of Dollars) | Jun 30, 2025 (Billions of Dollars) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | | Total Assets | $25.0 billion | $20.1 billion | 24.7% | | Total Deposits | $20.3 billion | $15.9 billion | 27.7% | | Total Loans | $18.5 billion | $14.5 billion | 27.0% | | Wealth Management AUA | $9.2 billion | N/A | N/A | Return Ratios (QoQ Comparison) | Metric | Q3 2025 (GAAP) | Q2 2025 (GAAP) | Q3 2025 (Operating) | Q2 2025 (Operating) | | :-------------------------- | :------------- | :------------- | :------------------ | :------------------ | | Return on Average Assets | 0.55% | 1.04% | 1.23% | 1.09% | | Return on Average Common Equity | 3.82% | 6.68% | 8.63% | 6.99% | Assets and Liabilities - Total assets increased by $4.9 billion, or 24.7%, to $25.0 billion at September 30, 2025, primarily due to the Enterprise acquisition[7] - Deposit balances increased by $4.4 billion, or 27.7%, to $20.3 billion, reflecting Enterprise deposits and strong business deposit growth, partially offset by municipal balance reductions[8] - Total period-end borrowings increased by $15.9 million (2.1%), largely due to assumed Enterprise borrowings, despite the redemption of $60.0 million in subordinated notes and $50.0 million of FHLB borrowings[10] Loans and Deposits - Loan balances increased by $3.9 billion, or 27.0%, to $18.5 billion, mainly from the Enterprise loan portfolio. Organic loan growth was relatively flat overall[8][9] - Commercial and industrial portfolio saw strong organic growth of $148.7 million (3.3%), offset by decreases in commercial real estate and construction[11] - Total consumer loan portfolio grew organically by $17.8 million (0.4%), with home equity increasing by $20.9 million (1.7%)[11] - Overall core deposits comprised 83.1% of total deposits at September 30, 2025, up from 82.8% at June 30, 2025[11] - The total cost of deposits increased 4 basis points to 1.58%, driven by the higher cost of the acquired Enterprise deposit base[11] Securities Portfolio - The Company's securities portfolio increased by $629.7 million, or 23.4%, to $3.3 billion, primarily due to the acquisition of Enterprise's available-for-sale securities[10] - New purchases of $204.6 million in the available-for-sale portfolio were partially offset by sales, maturities, calls, and paydowns[12] Stockholders' Equity and Capital Ratios - Stockholders' equity increased by $472.0 million (15.4%) to September 30, 2025, mainly due to the stock issuance for the Enterprise acquisition and strong earnings retention, partially offset by share repurchases[10] - Common equity to assets ratio decreased by 115 basis points to 14.19%[14] - Tangible common equity to tangible assets ratio decreased by 115 basis points to 9.77%[14] - Book value per share decreased by $0.89 (1.2%) to $71.24[14] - Tangible book value per share declined by $2.17 (4.4%) to $46.63[14] Net Interest Income Net interest income increased 37.9% to $203.3 million in Q3 2025, with net interest margin improving 25 basis points to 3.62% Net Interest Income & Margin (QoQ Comparison) (Millions of Dollars) | Metric | Q3 2025 (Millions of Dollars) | Q2 2025 (Millions of Dollars) | Change (%) | | :---------------- | :-------- | :-------- | :--------- | | Net Interest Income | $203.3 million | $147.5 million | 37.9% | | Net Interest Margin | 3.62% | 3.37% | +25 bps | - Net interest margin increase included an 8 basis point lift from acquired loan purchase accounting accretion[14] - Loan yields increased 21 basis points to 5.71%, driven by higher core yield from Enterprise and purchase accounting[14] - Securities yields increased 52 basis points to 2.84% due to purchase discount accretion and repricing[14] - Overall cost of funding slightly decreased to 1.72% despite a slightly higher cost of deposits[14] Noninterest Income Noninterest income rose 17.8% to $40.4 million in Q3 2025, driven by Enterprise acquisition volume and asset-based revenue Noninterest Income (QoQ Comparison) (Millions of Dollars) | Metric | Q3 2025 (Millions of Dollars) | Q2 2025 (Millions of Dollars) | Change (%) | | :-------------------------- | :-------- | :-------- | :--------- | | Total Noninterest Income | $40.4 million | $34.3 million | 17.8% | | Deposit Account Fees | +$1.7 million | N/A | 23.9% | | Interchange and ATM Fees | +$992,000 | N/A | 19.9% | | Investment and Advisory Income | +$2.3 million | N/A | 20.0% | | Mortgage Banking Income | +$372,000 | N/A | 34.7% | - Investment and advisory income benefited from $1.5 billion of Enterprise assets under administration, increasing total AUA by 25.3% to $9.2 billion[14][16] - Loan level derivative income rose by $1.2 million due to increased customer demand[14] - No gains on life insurance benefits were recognized in Q3 2025, compared to $1.7 million in Q2 2025[16] Noninterest Expense Noninterest expense increased 47.8% to $160.8 million in Q3 2025, primarily due to merger expenses and expanded operations Noninterest Expense (QoQ Comparison) (Millions of Dollars) | Metric | Q3 2025 (Millions of Dollars) | Q2 2025 (Millions of Dollars) | Change (%) | | :-------------------------- | :-------- | :-------- | :--------- | | Total Noninterest Expense | $160.8 million | $108.8 million | 47.8% | | Merger and Acquisition Expenses | $23.9 million | $2.2 million | 967.13% | | Salaries and Employee Benefits | +$18.3 million | N/A | 29.1% | | Amortization of Intangible Assets | +$6.2 million | N/A | 511.11% | - Increased workforce base and expanded branch network from the Enterprise acquisition led to higher salaries and occupancy expenses[17] - FDIC assessment increased by 29.8% due to an increased assessment base from the acquisition[17] - The majority of merger expenses related to change in control, severance contracts, vendor/systems contract terminations, and legal/professional fees[17] Asset Quality Asset quality metrics showed increased nonperforming loans and delinquencies in Q3 2025, largely due to the acquired Enterprise loan portfolio Asset Quality Metrics (QoQ Comparison) (Millions of Dollars) | Metric | Sep 30, 2025 (Millions of Dollars) | Jun 30, 2025 (Millions of Dollars) | Change (Millions of Dollars) | | :-------------------------------- | :----------- | :----------- | :----- | | Nonperforming Loans | $86.6 million | $56.2 million | +$30.4 million | | Nonperforming Loans as % of Total Loans | 0.47% | 0.39% | +0.08% | | Delinquencies as % of Total Loans | 0.49% | 0.20% | +0.29% | | Provision for Credit Losses | $38.5 million | $7.2 million | +$31.3 million | | Allowance for Credit Losses on Total Loans | $190.5 million | $144.8 million | +$45.7 million | - Approximately $24.5 million of nonperforming loans were from the Enterprise acquired portfolio[17] - The third quarter provision for credit losses included $34.5 million related to non-purchased credit deteriorated loans acquired from Enterprise[21] Corporate Information Conference Call Details Independent Bank Corp. scheduled a conference call for October 17, 2025, to discuss third-quarter earnings - Conference call to discuss Q3 earnings hosted by CEO Jeffrey Tengel and CFO Mark Ruggiero on October 17, 2025, at 10:00 a.m. ET[18] - Internet access available at https://INDB.RocklandTrust.com; telephonic access at 1-888-336-7153 (reference: INDB)[18] About Independent Bank Corp. Independent Bank Corp. is the holding company for Rockland Trust Company, a full-service commercial bank operating across Massachusetts, New Hampshire, and Rhode Island - Independent Bank Corp. (Nasdaq Global Select Market: INDB) is the parent company of Rockland Trust Company[19] - Rockland Trust Company is a full-service commercial bank with retail branches in Eastern Massachusetts, Worcester County, and Southern New Hampshire, and commercial banking/investment management offices in Massachusetts, New Hampshire, and Rhode Island[19] Forward-Looking Statements and Risk Factors The report includes forward-looking statements, cautioning that actual results may differ due to various economic, industry, and acquisition-related risks - Statements identified by terms like "expect," "achieve," "plan," "believe," "future," "positioned," "continued," "will," "would," "potential," or similar variations are forward-looking[20] - Adverse economic conditions in New England and the Company's market area[22] - Events impacting the financial services industry, including bank failures and competition for deposits[22] - Risks related to the Enterprise acquisition, such as integration difficulties, higher-than-anticipated fees, and inability to achieve expected synergies[23] - Changes in interest rates, laws, regulations, and increased competition[23] - Operational risks related to information technology, cyber threats, and fraud[23] - Readers are cautioned not to place undue reliance on forward-looking statements and should consider Risk Factors detailed in the Company's Form 10-K and 10-Q reports[24] Non-GAAP Financial Measures Explanation The report uses non-GAAP measures like operating net income to provide insights into core banking business, excluding merger expenses, but not as GAAP substitutes - Non-GAAP measures include operating net income, operating EPS, operating return on average assets, operating return on average common equity, adjusted net interest margin, tangible book value per share, and the tangible common equity ratio[25] - Management uses these non-GAAP measures to assess the strength of the core banking business, identify trends, and compare capital adequacy, by excluding items like merger and acquisition expenses and significant purchase accounting adjustments[26][27] - These non-GAAP measures are not substitutes for GAAP results and may not be comparable to those presented by other companies[28] Appendices: Detailed Financial Data Consolidated Balance Sheets Consolidated balance sheets show significant growth in assets, liabilities, and equity from Q2 to Q3 2025, driven by the Enterprise acquisition Consolidated Balance Sheet Highlights (Dollars in thousands) | Metric | Sep 30, 2025 (Thousands of Dollars) | Jun 30, 2025 (Thousands of Dollars) | Sep 30, 2024 (Thousands of Dollars) | % Change (QoQ) | % Change (YoY) | | :-------------------------------- | :----------- | :----------- | :----------- | :------------- | :------------- | | Total Assets | $24,993,239 | $20,048,934 | $19,408,117 | 24.66% | 28.78% | | Total Securities | $3,325,015 | $2,695,280 | $2,765,575 | 23.36% | 20.23% | | Total Loans (Gross) | $18,452,443 | $14,533,828 | $14,360,807 | 26.96% | 28.49% | | Total Deposits | $20,295,869 | $15,893,740 | $15,441,023 | 27.70% | 31.44% | | Total Borrowings | $775,377 | $759,428 | $663,380 | 2.10% | 16.88% | | Total Stockholders' Equity | $3,546,887 | $3,074,856 | $2,977,148 | 15.35% | 19.14% | Summary of Reclassification of Small Business Loans The company reclassified certain small business loans to align with updated definitions, impacting reported balances and yields across periods Reclassification of Small Business Loans (June 30, 2025) (Thousands of Dollars) | Category | Previously Reported (Thousands of Dollars) | Reclassification (Thousands of Dollars) | After Reclassification (Thousands of Dollars) | | :------------------------------------------------------------------------------------------------ | :------------------ | :--------------- | :--------------------- | | Commercial and industrial | $3,215,480 | $211,458 | $3,426,938 | | Commercial real estate | $6,525,438 | $89,085 | $6,614,523 | Reclassification of Small Business Loans (Three Months Ended June 30, 2025) (Thousands of Dollars) | Category | Average Balance (Previously Reported) (Thousands of Dollars) | Interest Earned/Paid (Thousands of Dollars) | Yield/Rate | Average Balance (After Reclassification) (Thousands of Dollars) | Interest Earned/Paid (After Reclassification) (Thousands of Dollars) | Yield/Rate (After Reclassification) | | :------------------------------------------------------------------------------------------------ | :------------------------------------ | :------------------- | :--------- | :--------------------------------------- | :-------------------------------------------- | :---------------------------------- | | Commercial and industrial | $3,156,455 | $47,583 | 6.05% | $3,363,944 | $51,287 | 6.12% | | Commercial real estate | $6,585,559 | $85,871 | 5.23% | $6,672,633 | $87,096 | 5.24% | Reclassification of Small Business Loans (Nine Months Ended September 30, 2024) (Thousands of Dollars) | Category | Average Balance (Previously Reported) (Thousands of Dollars) | Interest Earned/Paid (Thousands of Dollars) | Yield/Rate | Average Balance (After Reclassification) (Thousands of Dollars) | Interest Earned/Paid (After Reclassification) (Thousands of Dollars) | Yield/Rate (After Reclassification) | | :------------------------------------------------------------------------------------------------ | :------------------------------------ | :------------------- | :--------- | :--------------------------------------- | :-------------------------------------------- | :---------------------------------- | | Commercial and industrial | $2,982,147 | $137,099 | 6.14% | $3,166,270 | $146,867 | 6.20% | | Commercial real estate | $6,725,750 | $261,907 | 5.20% | $6,805,910 | $265,161 | 5.20% | Consolidated Statements of Income Consolidated statements of income reflect increased net interest income due to the Enterprise acquisition, but GAAP net income decreased from higher provisions and merger expenses Consolidated Statements of Income (Three Months Ended) (Dollars in thousands) | Metric (Dollars in thousands) | Sep 30, 2025 (Thousands of Dollars) | Jun 30, 2025 (Thousands of Dollars) | Sep 30, 2024 (Thousands of Dollars) | % Change (QoQ) | % Change (YoY) | | :-------------------------------- | :----------- | :----------- | :----------- | :------------- | :------------- | | Total Interest Income | $294,753 | $218,192 | $216,524 | 35.09% | 36.13% | | Total Interest Expense | $91,409 | $70,696 | $74,821 | 29.30% | 22.17% | | Net Interest Income | $203,344 | $147,496 | $141,703 | 37.86% | 43.50% | | Provision for Credit Losses | $38,519 | $7,200 | $19,500 | 434.99% | 97.53% | | Total Noninterest Income | $40,398 | $34,308 | $33,549 | 17.75% | 20.41% | | Total Noninterest Expenses | $160,836 | $108,798 | $100,443 | 47.83% | 60.13% | | Net Income (GAAP) | $34,262 | $51,101 | $42,947 | (32.95)% | (20.22)% | | Operating Net Income (Non-GAAP) | $77,354 | $53,453 | $42,947 | 44.71% | 80.12% | | Diluted EPS (GAAP) | $0.69 | $1.20 | $1.01 | (42.50)% | (31.68)% | | Diluted EPS (Operating, Non-GAAP) | $1.55 | $1.25 | $1.01 | 24.00% | 53.47% | Consolidated Statements of Income (Nine Months Ended) (Dollars in thousands) | Metric (Dollars in thousands) | Sep 30, 2025 (Thousands of Dollars) | Sep 30, 2024 (Thousands of Dollars) | % Change (YoY) | | :-------------------------------- | :----------- | :----------- | :------------- | | Total Interest Income | $724,865 | $636,433 | 13.89% | | Total Interest Expense | $228,520 | $219,365 | 4.17% | | Net Interest Income | $496,345 | $417,068 | 19.01% | | Provision for Credit Losses | $60,719 | $28,750 | 111.20% | | Total Noninterest Income | $107,245 | $95,822 | 11.92% | | Total Noninterest Expenses | $375,512 | $299,944 | 25.19% | | Net Income (GAAP) | $129,787 | $142,047 | (8.63)% | | Operating Net Income (Non-GAAP) | $176,061 | $142,047 | 23.95% | | Diluted EPS (GAAP) | $2.88 | $3.34 | (13.77)% | | Diluted EPS (Operating, Non-GAAP) | $3.91 | $3.34 | 17.07% | Performance Ratios Performance ratios for Q3 2025 show declining GAAP return metrics due to acquisition costs, while operating metrics demonstrate improved profitability and efficiency Performance Ratios (Three Months Ended) | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :------------------------------------------------------------------------------------------------ | :----------- | :----------- | :----------- | | Net Interest Margin (FTE) | 3.62% | 3.37% | 3.29% | | Return on Average Assets (GAAP) | 0.55% | 1.04% | 0.88% | | Return on Average Assets (Operating, Non-GAAP) | 1.23% | 1.09% | 0.88% | | Return on Average Common Equity (GAAP) | 3.82% | 6.68% | 5.75% | | Return on Average Common Equity (Operating, Non-GAAP) | 8.63% | 6.99% | 5.75% | | Efficiency Ratio (GAAP) | 65.99% | 59.84% | 57.31% | | Efficiency Ratio (Operating, Non-GAAP) | 56.18% | 58.61% | 57.31% | Performance Ratios (Nine Months Ended) | Metric | Sep 30, 2025 | Sep 30, 2024 | | :------------------------------------------------------------------------------------------------ | :----------- | :----------- | | Net Interest Margin (FTE) | 3.49% | 3.26% | | Return on Average Assets (GAAP) | 0.81% | 0.98% | | Return on Average Assets (Operating, Non-GAAP) | 1.10% | 0.98% | | Return on Average Common Equity (GAAP) | 5.39% | 6.49% | | Return on Average Common Equity (Operating, Non-GAAP) | 7.31% | 6.49% | | Efficiency Ratio (GAAP) | 62.21% | 58.48% | | Efficiency Ratio (Operating, Non-GAAP) | 57.69% | 58.48% | Asset Quality Details Detailed asset quality metrics show increased nonperforming loans and assets in Q3 2025, primarily due to the Enterprise acquisition Nonperforming Assets At (Dollars in thousands) | Metric | Sep 30, 2025 (Thousands of Dollars) | Jun 30, 2025 (Thousands of Dollars) | Sep 30, 2024 (Thousands of Dollars) | | :-------------------------------- | :----------- | :----------- | :----------- | | Total Nonperforming Loans | $86,597 | $56,217 | $104,248 | | Total Nonperforming Assets | $88,697 | $58,317 | $104,358 | | Nonperforming Loans/Gross Loans | 0.47% | 0.39% | 0.73% | | Nonperforming Assets/Total Assets | 0.35% | 0.29% | 0.54% | | Allowance for Credit Losses/Nonperforming Loans | 219.96% | 257.53% | 157.03% | | Allowance for Credit Losses/Total Loans | 1.03% | 1.00% | 1.14% | | Delinquent Loans/Total Loans | 0.49% | 0.20% | 0.33% | Net Charge-Offs (Recoveries) (Dollars in thousands) | Metric | Q3 2025 (Thousands of Dollars) | Q2 2025 (Thousands of Dollars) | Q3 2024 (Thousands of Dollars) | | :-------------------------------- | :------ | :------ | :------ | | Total Net Charge-Offs | $1,836 | $6,519 | $6,663 | | Net Charge-Offs to Average Loans (annualized) | 0.04% | 0.18% | 0.18% | - Nonperforming assets beginning balance was $58,317 thousand, with $24,487 thousand from Enterprise nonperforming assets at July 1, 2025[40] Balance Sheet and Capital Ratios (Detailed) Detailed balance sheet and capital ratios show a decrease in key capital ratios from Q2 to Q3 2025, reflecting the Enterprise acquisition's impact Balance Sheet and Capital Ratios | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :-------------------------------- | :----------- | :----------- | :----------- | | Gross Loans/Total Deposits | 90.92% | 91.44% | 93.00% | | Common Equity Tier 1 Capital Ratio | 12.94% | 14.70% | 14.57% | | Tier 1 Leverage Capital Ratio | 10.15% | 11.44% | 11.22% | | Common Equity to Assets Ratio (GAAP) | 14.19% | 15.34% | 15.34% | | Tangible Common Equity to Tangible Assets Ratio (Non-GAAP) | 9.77% | 10.92% | 10.75% | | Book Value Per Share (GAAP) | $71.24 | $72.13 | $70.08 | | Tangible Book Value Per Share (Non-GAAP) | $46.63 | $48.80 | $46.57 | Appendix: Supplemental Interest Rate Data This section details average balances, interest, and yields for assets and liabilities, highlighting the Enterprise acquisition's impact on net interest margin and funding costs Interest-Earning Assets and Liabilities (Three Months Ended Sep 30, 2025) (Thousands of Dollars) | Category | Average Balance (Thousands of Dollars) | Interest Earned/Paid (Thousands of Dollars) | Yield/Rate | | :------------------------------------------ | :-------------- | :------------------- | :--------- | | Interest-earning deposits with banks, federal funds sold, and short term investments | $688,394 | $7,245 | 4.18% | | Total securities | $3,293,344 | $23,566 | 2.84% | | Total loans | $18,432,862 | $265,104 | 5.71% | | Total interest-earning assets | $22,430,232 | $296,140 | 5.24% | | Total interest-bearing deposits | $14,549,513 | $80,739 | 2.20% | | Total borrowings | $784,215 | $10,670 | 5.40% | | Total interest-bearing liabilities | $15,333,728 | $91,409 | 2.37% | | Net interest income | N/A | $204,731 | N/A | | Interest rate spread | N/A | N/A | 2.87% | | Net interest margin | N/A | N/A | 3.62% | | Cost of total deposits | N/A | N/A | 1.58% | | Cost of total funding liabilities | N/A | N/A | 1.72% | Interest-Earning Assets and Liabilities (Nine Months Ended Sep 30, 2025) (Thousands of Dollars) | Category | Average Balance (Thousands of Dollars) | Interest Earned/Paid (Thousands of Dollars) | Yield/Rate | | :------------------------------------------ | :-------------- | :------------------- | :--------- | | Interest earning deposits with banks, federal funds sold, and short term investments | $413,974 | $13,076 | 4.22% | | Total securities | $2,931,066 | $54,744 | 2.50% | | Total loans | $15,824,867 | $660,288 | 5.58% | | Total interest-earning assets | $19,180,563 | $728,565 | 5.08% | | Total interest-bearing deposits | $12,309,201 | $200,018 | 2.17% | | Total borrowings | $737,046 | $28,502 | 5.17% | | Total interest-bearing liabilities | $13,046,247 | $228,520 | 2.34% | | Net interest income | N/A | $500,045 | N/A | | Interest rate spread | N/A | N/A | 2.74% | | Net interest margin | N/A | N/A | 3.49% | | Cost of total deposits | N/A | N/A | 1.56% | | Cost of total funding liabilities | N/A | N/A | 1.71% | Appendix A: Organic Loan and Deposit Growth Appendix A details organic loan and deposit growth, showing that while the Enterprise acquisition boosted total balances, organic growth was modest Linked Quarter Organic Loan and Deposit Growth (Dollars in thousands) | Category | Sep 30, 2025 (Thousands of Dollars) | Jun 30, 2025 (Thousands of Dollars) | Enterprise Balances Acquired (Thousands of Dollars) | Organic Growth/(Decline) (Thousands of Dollars) | Organic Growth/(Decline)% | | :-------------------------- | :----------- | :----------- | :--------------------------- | :----------------------- | :------------------------ | | Total loans | $18,452,443 | $14,533,828 | $3,913,112 | $5,503 | 0.03% | | Total deposits | $20,295,869 | $15,893,740 | $4,362,710 | $39,419 | 0.19% | | Commercial and industrial loans | $4,667,262 | $3,426,938 | $1,091,649 | $148,675 | 3.29% | | Commercial real estate loans | $8,106,490 | $6,614,523 | $1,629,698 | $(137,731) | (1.67)% | | Noninterest-bearing demand deposits | $5,635,911 | $4,525,907 | $1,040,758 | $69,246 | 1.24% | | Money market deposits | $4,128,400 | $3,368,354 | $815,532 | $(55,486) | (1.33)% | Year-to-Date Organic Loan and Deposit Growth (Dollars in thousands) | Category | Sep 30, 2025 (Thousands of Dollars) | Dec 31, 2024 (Thousands of Dollars) | Enterprise Balances Acquired (Thousands of Dollars) | Organic Growth/(Decline) (Thousands of Dollars) | Organic Growth/(Decline)% | | :-------------------------- | :----------- | :----------- | :--------------------------- | :----------------------- | :------------------------ | | Total loans | $18,452,443 | $14,508,378 | $3,913,112 | $30,953 | 0.17% | | Total deposits | $20,295,869 | $15,305,978 | $4,362,710 | $627,181 | 3.19% | | Commercial and industrial loans | $4,667,262 | $3,246,455 | $1,091,649 | $329,158 | 7.59% | | Commercial real estate loans | $8,106,490 | $6,839,705 | $1,629,698 | $(362,913) | (4.28)% | | Noninterest-bearing demand deposits | $5,635,911 | $4,390,703 | $1,040,758 | $204,450 | 3.76% | | Money market deposits | $4,128,400 | $2,960,381 | $815,532 | $352,487 | 9.34% | Appendix B: NON-GAAP Reconciliation of Balance Sheet Metrics Appendix B reconciles GAAP to non-GAAP tangible balance sheet metrics, highlighting goodwill and intangible asset impact on capital adequacy Non-GAAP Reconciliation of Balance Sheet Metrics (Dollars in thousands, except per share data) | Metric | Sep 30, 2025 (Thousands of Dollars) | Jun 30, 2025 (Thousands of Dollars) | Sep 30, 2024 (Thousands of Dollars) | | :-------------------------------- | :----------- | :----------- | :----------- | | Stockholders' equity (GAAP) | $3,546,887 | $3,074,856 | $2,977,148 | | Less: Goodwill and other intangibles | $1,225,106 | $994,814 | $998,773 | | Tangible common equity (Non-GAAP) | $2,321,781 | $2,080,042 | $1,978,375 | | Assets (GAAP) | $24,993,239 | $20,048,934 | $19,408,116 | | Less: Goodwill and other intangibles | $1,225,106 | $994,814 | $998,773 | | Tangible assets (Non-GAAP) | $23,768,133 | $19,054,120 | $18,409,343 | | Common equity to assets ratio (GAAP) | 14.19% | 15.34% | 15.34% | | Tangible common equity to tangible assets ratio (Non-GAAP) | 9.77% | 10.92% | 10.75% | | Book value per share (GAAP) | $71.24 | $72.13 | $70.08 | | Tangible book value per share (Non-GAAP) | $46.63 | $48.80 | $46.57 | Appendix C: Non-GAAP Reconciliation of Earnings Metrics Appendix C reconciles GAAP net income to operating net income, adjusting for non-core items like merger expenses, to show underlying operational performance Non-GAAP Reconciliation of Earnings Metrics (Three Months Ended, Dollars in thousands) | Metric | Sep 30, 2025 (Thousands of Dollars) | Jun 30, 2025 (Thousands of Dollars) | Sep 30, 2024 (Thousands of Dollars) | | :-------------------------------- | :----------- | :----------- | :----------- | | Net income (GAAP) | $34,262 | $51,101 | $42,947 | | Provision for non-PCD acquired loans | $34,519 | — | — | | Add - merger and acquisition expenses | $23,893 | $2,239 | — | | Operating net income (Non-GAAP) | $77,354 | $53,453 | $42,947 | | Return on average assets (GAAP) | 0.55% | 1.04% | 0.88% | | Return on average assets on an operating basis (Non-GAAP) | 1.23% | 1.09% | 0.88% | | Efficiency ratio (GAAP) | 65.99% | 59.84% | 57.31% | | Efficiency ratio on an operating basis (Non-GAAP) | 56.18% | 58.61% | 57.31% | Non-GAAP Reconciliation of Earnings Metrics (Nine Months Ended, Dollars in thousands) | Metric | Sep 30, 2025 (Thousands of Dollars) | Sep 30, 2024 (Thousands of Dollars) | | :-------------------------------- | :----------- | :----------- | | Net income (GAAP) | $129,787 | $142,047 | | Provision for non-PCD acquired loans | $34,519 | — | | Add - merger and acquisition expenses | $27,287 | — | | Operating net income (Non-GAAP) | $176,061 | $142,047 | | Return on average assets (GAAP) | 0.81% | 0.98% | | Return on average assets on an operating basis (Non-GAAP) | 1.10% | 0.98% | | Efficiency ratio (GAAP) | 62.21% | 58.48% | | Efficiency ratio on an operating basis (Non-GAAP) | 57.69% | 58.48% | Appendix D: Net Interest Margin Analysis & Non-GAAP Reconciliation of Adjusted Margin Appendix D analyzes net interest margin and reconciles it to an adjusted non-GAAP margin, highlighting acquisition fair value marks and loan accretion impact Net Interest Margin Analysis & Non-GAAP Reconciliation (Three Months Ended, Dollars in thousands) | Metric | Sep 30, 2025 (Thousands of Dollars) | Jun 30, 2025 (Thousands of Dollars) | | :-------------------------------- | :----------- | :----------- | | Reported total interest earning assets | $22,430,232 | $17,672,302 | | Reported Net Interest Income | $204,731 | $148,672 | | Reported Net Interest Margin | 3.62% | 3.37% | | Loan accretion impact on margin | (0.08)% | — % | | Adjusted margin (Non-GAAP) | 3.54% | 3.37% | - The adjusted margin for Q3 2025 was 3.54%, after accounting for acquisition fair value marks, including a negative impact of 0.08% from loan accretion[59]