Independent Bank (US:INDB)2026-01-23 16:02Financial Data and Key Metrics Changes - Fourth quarter GAAP net income was $75.3 million, with diluted earnings per share of $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% and operating ROAA rose by 40 basis points from the first quarter to the fourth quarter of 2025 [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 [6] - Total commercial loans closed were $789 million in the fourth quarter, up from $754 million in the previous quarter [6] - Non-time deposits grew organically by 4.2% in 2025, with DDAs representing 28% of overall deposits [7] Market Data and Key Metrics Changes - The cost of total deposits was 1.46% in the fourth quarter, reflecting the value of the deposit franchise [7] - 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 moving into 2026 [10] - Plans to hire more commercial lenders and align 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 [32] 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 company expects to build on strong performance in the upcoming quarters, with a focus on prudent expense and capital management [10] - Management noted that credit metrics have stabilized, allowing for a more open approach to resuming normal commercial real estate growth [9] 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 [14] Q&A Session Summary Question: Can you walk through the dynamics of the criticized classified loans? - Management noted 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 [27][29] Question: What is the outlook on deposit betas with potential rate cuts? - Management indicated confidence in maintaining a 20% beta on non-CD deposits and 80% on CDs, supported by their deposit franchise structure [30][31] Question: What is the long-term capital target for the company? - Long-term capital targets are set at CET1 in the high 11%-12% range, suggesting tangible capital in the 8.75%-9% range [39] Question: What is the outlook for M&A activity? - Management stated that they are not focused on M&A at the moment, prioritizing organic growth and successful integration of the Enterprise acquisition [32] Question: How do you view the current credit cycle? - Management believes they are close to the peak of the credit cycle, with no significant loss exposures currently in workout status [43][44] Question: What are the plans for hiring additional commercial loan officers? - Management expressed confidence in the new hires from the previous year and their ability to drive activity and volumes in the commercial lending space [57]