Independent Bank (US:INDB)2026-01-23 16:00Financial Data and Key Metrics Changes - The fourth quarter GAAP net income was $75.3 million, with diluted earnings per share at $1.52, resulting in a 1.20% return on assets and an 8.38% return on average common equity [12] - Adjusted operating net income for the quarter was $84.4 million, or $1.70 diluted EPS, representing a 1.34% return on assets and a 9.38% return on average common equity [12] - Operating EPS increased by 60% from Q1 2025 to Q4 2025, with operating ROAA rising by 40 basis points and operating ROTC improving by 529 basis points [2] Business Line Data and Key Metrics Changes - C&I loans increased 9% organically in 2025, now representing 25% of total loans compared to 22% at year-end 2024 [5] - Total commercial loans closed were $789 million in Q4, up from $754 million in the previous quarter, with funding on these commitments at $454 million [5] - The wealth management business maintained stable AUA at $9.2 billion in Q4, with revenues growing at a 4% annual rate [8] Market Data and Key Metrics Changes - The cost of total deposits was 1.46% in Q4, reflecting the value of the deposit franchise [7] - Average core deposits grew by 3.6% annualized in Q4, despite a 0.8% decline in total period-end deposit balances due to seasonal business deposit activity [15][16] - Legacy Rockland Trust branches generated record new business relationships, totaling 6,921, with 100% of branches achieving positive net new consumer growth [8] Company Strategy and Development Direction - The company aims to focus on organic growth, expense management, and capital optimization in 2026, with a commitment to returning excess capital to shareholders [10] - The strategy includes hiring commercial lenders and aligning incentive structures to emphasize both loan and deposit growth [9] - The company is not currently focused on M&A, prioritizing organic growth and successful integration of the enterprise acquisition [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning across markets, driven by product strength and employee dedication [10] - The outlook for 2026 includes targeting mid-single-digit percentage growth for C&I loans and low single-digit growth for combined CRE and construction [21] - Management noted that geopolitical noise and potential tariffs create some customer anxiety, but overall asset quality metrics are expected to remain stable [40] Other Important Information - The company returned $164 million of capital to shareholders in 2025, including the repurchase of 913,000 shares for $61 million [8] - The fourth quarter results benefited from a lower tax rate due to one-time adjustments associated with the 2024 corporate tax return [13] - Total non-performing assets remained stable at $85.7 million, or 0.45% of total loans [16] Q&A Session Summary Question: Can you walk through the dynamics of the criticized classified loans? - Management indicated that the increase in non-performing assets was primarily due to one specific loan that is now in the first quarter 2026 maturity bucket, with expectations for resolution early in 2026 [26][27] Question: What is the outlook on deposit betas with potential rate cuts? - Management believes they can maintain a 20% beta on non-CD deposits and 80% on CDs, leveraging their deposit franchise structure [28][29] Question: What is the outlook on M&A? - Management stated they are not focused on M&A at the moment, prioritizing organic growth and successful integration of the enterprise acquisition [30] Question: What are the long-term capital targets? - Long-term capital targets for CET1 are in the high 11%-12% range, suggesting tangible capital in the 8.75%-9% range [36] Question: What is the competitive landscape for C&I and CRE loans? - Management noted that while competition is present, they are still able to secure deals at desired pricing levels [48] Question: What are the plans for hiring additional commercial loan officers? - Management indicated they are in a good position with new hires from the previous year and expect inherent growth from these additions [55]