Business Wire | Jan 21, 2021 04:15PM EST

Independent Bank Corp. Reports Fourth Quarter Net Income of $34.6 Million

Jan. 21, 2021

ROCKLAND, Mass.--(BUSINESS WIRE)--Jan. 21, 2021--Independent Bank Corp. (Nasdaq Global Select Market: INDB), parent of Rockland Trust Company, today announced 2020 fourth quarter net income of $34.6 million, or $1.05 per diluted share, compared to net income of $34.9 million, or $1.06 per diluted share, reported for the third quarter of 2020. Fourth quarter results included $5.2 million of pretax cost related to the pending closure of two branches and the sale of non-strategic investments. Full year 2020 net income was $121.2 million, or $3.64 on a diluted per share basis, a decrease of $44.0 million, or 26.6%, as compared to the prior year. On an operating basis, full year 2020 net income was $121.7 million, or $3.66 on a diluted per share basis, which excluded a loss on terminated hedges of $684,000 recognized during the third quarter, and represents a decrease of $63.0 million, or 34.1%, as compared to 2019, which excluded certain merger and acquisition expenses as well as a gain on sale of loans. Decreases in the full year 2020 results were primarily driven by the negative impact of the Coronavirus ("COVID-19") pandemic, which resulted in elevated provision for credit losses as compared to the prior year, as well as a lower interest-rate environment.

Rockland Trust continues to monitor the COVID-19 pandemic impact on our colleagues, customers, and the communities we serve. The safety of our colleagues and customers continues to be of the utmost importance, while the Company simultaneously continues to serve customer needs.

"Our core fundamentals served us well as we encountered the unprecedented turbulence and uncertainty brought on by the COVID-19 pandemic and our 2020 results reflect on the strength of our fundamentals. We are confident we are well positioned to continue to successfully navigate forward as we enter 2021," said Christopher Oddleifson, the Chief Executive Officer of Independent Bank Corp. and Rockland Trust Company. "Throughout 2020 as we faced the many challenges of the COVID-19 pandemic, we demonstrated an unwavering commitment to one another, our customers and our communities. I want to extend my sincere thanks my colleagues for the results we achieved in 2020. Each and every day our commitment to one another, our customers and our communities leads to a shared sense of purpose at the Bank Where Each Relationship Matters(r) and inspires us to find meaning in the work we do. This in turn leads to remarkable discretionary effort, which it turn positions us for continuing success in 2021 and beyond."

BALANCE SHEET

Total assets of $13.2 billion at December 31, 2020 increased by $30.6 million, or 0.2%, from the prior quarter, and by $1.8 billion, or 15.9%, as compared to the year ago period. Total asset growth experienced during 2020 is primarily attributable to increases in interest-earning cash balances resulting from strong deposit growth, along with net loan growth for the year, supported primarily by the Company's participation in the Small Business Administration's Paycheck Protection Program ("PPP").

Total loans at December 31, 2020 decreased slightly by $12.3 million, or 0.1% (0.5% annualized), when compared to the prior quarter. Despite strong origination volumes, overall portfolio growth continues to be constrained by ongoing paydowns and re-financings primarily attributable to the low interest-rate environment. Increases during the fourth quarter in most commercial loans categories totaled $77.3 million, or 1.1% (4.4% annualized), were offset by decreases in the consumer portfolio of $88.4 million, or 3.60% (14.3% annualized). Growth across commercial categories, with the exception of construction, reflects strong closing activity diversified across a number of industries and property types. Within the consumer portfolios, the low interest-rate environment has driven record mortgage banking volumes and results, while portfolio balances further declined as the majority of residential mortgage production continues to be sold into the secondary market. Similarly, on the home equity side, despite strong closing activity, loan growth continues to be challenged by attrition.

Deposit balances of $11.0 billion at December 31, 2020 increased by $141.9 million, or 1.3%, (5.2% annualized), from the prior quarter. With customer behavior continuing to foster excess liquidity positions across the industry, the majority of the fourth quarter deposit growth was fueled by increases on existing customer accounts, combined with another strong quarter of new customer account generation. As time deposits continued to run off, core deposits rose to 89.6% of total deposits at December 31, 2020, which, combined with rate reductions across all products, has led to a total cost of deposits for the fourth quarter of 0.14%, representing a reduction of six basis points when compared to the prior quarter.

The securities portfolio increased by $55.5 million, or 5.0%, when compared to the prior quarter, reflecting $174.6 million of purchases offset by paydowns, called securities, and maturities.

Total borrowings decreased $114.7 million, or 38.8% when compared to the prior quarter. The decrease primarily reflects the decision to redeploy excess liquidity to pay down $100.0 million of Federal Home Loan Bank ("FHLB") borrowings early in the fourth quarter. These borrowings had been hedged, and the Company incurred a $684,000 loss during the third quarter of 2020 when it decided to exit its $100 million hedge against these borrowings.

Stockholders' equity at December 31, 2020 increased slightly by 0.8% (3.1% annualized), as compared to the prior quarter. Despite the repurchase of 1.5 million shares totaling $95.1 million that was executed over the first half of 2020, stockholders' equity remained consistent with the year ago period, reflecting strong earnings retention and an increase in accumulated other comprehensive income of $22.5 million. Book value per share increased by $0.38, or 0.7%, to $51.65 during the fourth quarter as compared to the prior quarter. The Company's ratio of common equity to assets of 12.89% increased by six basis points from the prior quarter and decreased by 210 basis points from the year ago period. The Company's tangible book value per share at December 31, 2020 rose by $0.42, or 1.2%, from the prior quarter to $35.59, representing an increase of 4.3% from the year ago period. The Company's ratio of tangible common equity to tangible assets of 9.26% at December 31, 2020 is nine basis points higher than the prior quarter and 154 basis points below the year ago period, largely attributable to the increase in the Company's balance sheet and stock repurchase activity.

NET INTEREST INCOME

Net interest income for the fourth quarter increased to $91.4 million compared to $90.9 million for the prior quarter, reflective of nonaccrual interest recoveries, slightly higher average earning asset levels, and a decline in the amount of loans placed on nonaccrual during the fourth quarter. The 2020 fourth quarter net interest margin of 3.10% represents a reduction of three basis points from the prior quarter. The table below illustrates the changes within the net interest margin for the fourth quarter:

Net interest margin as of September 30, 2020 3.13 %

Loan yields, excluding nonaccrual interest impact (0.06 ) %

Nonaccrual loans interest 0.07 %

Excess liquidity (cash) levels (0.05 ) %

PPP loan impact 0.02 %

Loan purchase accounting (fair value mark amortization/accretion) (0.06 ) %

Decreased cost of funds 0.06 %

Other (0.01 ) %

Net interest margin as of December 31, 2020 3.10 %

Please refer to Appendix C for additional details regarding the net interest margin, including a quarter-to-date reconciliation of adjusted core margin to GAAP net interest margin.

NONINTEREST INCOME

Noninterest income of $27.5 million for the fourth quarter of 2020 was $1.9 million, or 6.4%, lower than the prior quarter. Significant changes in noninterest income for the fourth quarter compared to the prior quarter included the following:

* Deposit account fees increased by $466,000, or 13.6%, primarily driven by an increase in overdraft fees.

* Interchange and ATM fees decreased by $364,000, or 12.0%, due primarily to a seasonal decline in debit card usage along with higher annual debit card branding incentives that occurred in the third quarter of 2020.

* Investment management income increased by $165,000, or 2.2%, due primarily to an increase in market valuation. Assets under administration at December 31, 2020 increased 9.0% to $4.9 billion from the prior quarter.

* Mortgage banking income decreased by $2.3 million, or 30.2%, despite continued strong origination volumes due primarily to narrower spreads in secondary market pricing combined with a higher percentage of closing volume retained in the portfolio.

* The Company recognized a gain on life insurance benefits of $352,000 during the fourth quarter of 2020 with no such gain recorded during the prior quarter.

* Loan level derivative income decreased by $1.3 million, or 53.6%, to $1.1 million during the fourth quarter of 2020, due primarily to decreased customer demand.

* Other noninterest income increased by $1.0 million, or 26.1%, primarily attributable to unrealized gains on equity securities, IRS Code Section 1031 exchange fees, discounted purchases of Massachusetts historical tax credits, as well as capital gain distributions on equity securities.

NONINTEREST EXPENSE

Noninterest expense of $73.7 million for the fourth quarter of 2020 was $7.1 million, or 10.6% higher than the prior quarter. Significant changes in noninterest expense for the fourth quarter compared to the prior quarter included the following:

* Salaries and employee benefits increased by $1.0 million, or 2.7%, mainly due to increases in incentive programs and commissions.

* During the fourth quarter, the Company recorded an impairment charge of $4.2 million reflecting accelerated lease termination costs and the write-off of leasehold improvements related to two branch closure decisions made during the quarter.

* During the third quarter, the Company recorded a $684,000 loss on the termination of a swap derivative contract with a notional amount of $100.0 million. There were no such charges during the fourth quarter.

* During the fourth quarter of 2020, the Company recognized a loss of $1.0 million on the sale of certain Small Business Investment Company ("SBIC") investment holdings that were acquired in the Blue Hills Bancorp, Inc. merger in 2019. No such losses were incurred during the prior quarter.

* Other noninterest expense increased by $1.7 million, or 10.5%, primarily due to increases in consultant fees, software maintenance fees, pension expense adjustments, and other miscellaneous expenses

The Company generated a return on average assets and a return on average common equity of 1.04% and 8.10%, respectively, for the fourth quarter of 2020, as compared to 1.07% and 8.21%, respectively, for the prior quarter.

ASSET QUALITY

During the fourth quarter, the Company recorded total net charge-offs of $2.2 million, or 0.09% of average loans on an annualized basis. In addition, nonperforming loans decreased to $66.9 million, or 0.71% of total loans at December 31, 2020 as compared to $98.0 million, or 1.04% of total loans at September 30, 2020. The decrease in nonperforming loans was primarily due to the successful resolution of two large nonperforming commercial relationships during the quarter, and included approximately $900,000 of interest recoveries on previously deferred interest.

As a result of the COVID-19 pandemic, many loans have had terms modified. Total loans subject to deferral decreased by $410.1 million for the fourth quarter, to $173.6 million, or 1.8% of total loans, at December 31, 2020. The majority of these loans that have been granted deferrals continue to be characterized as current loans. Delinquency as a percentage of total loans was 0.23%, representing a decrease of eight basis points from the prior quarter. Please refer to Appendix F for additional details regarding loans whose terms have been modified as a result of the COVID-19 pandemic.

Reflecting the improvements in asset quality noted above, along with no significant changes to the Company's outlook with respect to general future economic conditions, the Company recorded no provision expense during the fourth quarter, as compared to $7.5 million provision expense recorded in the prior quarter. The allowance for credit losses on loans was $113.4 million at December 31, 2020, or 1.21% of total loans, as compared to $115.6 million at September 30, 2020, or 1.23% of total loans. Please refer to Appendix E for information regarding loan exposures within industries deemed highly impacted by the COVID-19 pandemic.

CONFERENCE CALL INFORMATION

Christopher Oddleifson, Chief Executive Officer, Robert Cozzone, Chief Operating Officer, Mark Ruggiero, Chief Financial Officer, and Gerard Nadeau, President and Chief Commercial Banking Officer will host a conference call to discuss fourth quarter earnings at 10:00 a.m. Eastern Time on Friday, January 22, 2021. Internet access to the call is available on the Company's website at www.RocklandTrust.com or via telephonic access by dial-in at 1-888-336-7153 reference: INDB. A replay of the call will be available by calling 1-877-344-7529, Replay Conference Number: 10149598 and will be available through January 29, 2021. Additionally, a webcast replay will be available until January 22, 2022.

ABOUT INDEPENDENT BANK CORP.

Independent Bank Corp. (NASDAQ Global Select Market: INDB) is the holding company for Rockland Trust Company, a full-service commercial bank headquartered in Massachusetts. Rockland Trust was named to The Boston Globe's "Top Places to Work" 2020 list, an honor earned for the 12th consecutive year. In 2020, Rockland Trust was ranked the #1 Bank in Massachusetts according to Forbes World's Best Banks list. Rockland Trust has a longstanding commitment to equity and inclusion. This commitment is underscored by initiatives such as Diversity and Inclusion leadership training, a colleague Allyship mentoring program, numerous Employee Resource Groups focused on providing colleague support and education, reinforcing a culture of mutual respect and advancing professional development, and Rockland Trust's sponsorship of diverse community organizations through charitable giving and employee-based volunteerism. Rockland Trust is deeply committed to the communities it serves, as reflected in the overall "Outstanding" rating received in its most recent Community Reinvestment Act performance evaluation. Rockland Trust offers a wide range of banking, investment, and insurance services. The Bank serves businesses and individuals through approximately 100 retail branches, commercial and residential lending centers, and investment management offices in eastern Massachusetts, including Greater Boston, the South Shore, Cape Cod and Islands, Worcester County, and Rhode Island. Rockland Trust also offers a full suite of mobile, online, and telephone banking services. Rockland Trust is an FDIC member and an Equal Housing Lender. To find out why Rockland Trust is the bank "Where Each Relationship Matters(r)," please visit RocklandTrust.com.

This press release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and business of the Company. These statements may be identified by such forward-looking terminology as "expect," "achieve," "plan," "believe," "future," "positioned," "continued," "will," "would," "potential," or similar statements or variations of such terms. Actual results may differ from those contemplated by these forward-looking statements.

Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:

* further weakening in the United States economy in general and the regional and local economies within the New England region and the Company's market area, including future weakening caused by the COVID-19 pandemic; * the length and extent of economic contraction as a result of the COVID-19 pandemic; * unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, pandemics or other external events; * adverse changes or volatility in the local real estate market; * adverse changes in asset quality and any unanticipated credit deterioration in our loan portfolio including those related to one or more large commercial relationships; * acquisitions may not produce results at levels or within time frames originally anticipated and may result in unforeseen integration issues or impairment of goodwill and/or other intangibles; * additional regulatory oversight and related compliance costs, including the additional costs associated with the Company's increase in assets to over $10 billion; * changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; * higher than expected tax expense, resulting from failure to comply with general tax laws, changes in tax laws, or failure to comply with requirements of the federal New Markets Tax Credit program; * changes in market interest rates for interest earning assets and/or interest bearing liabilities and changes related to the phase-out of LIBOR; * increased competition in the Company's market areas; * adverse weather, changes in climate, natural disasters, the emergence of widespread health emergencies or pandemics, including the magnitude and duration of the COVID-19 pandemic, other public health crises or man-made events could negatively affect our local economies or disrupt our operations, which would have an adverse effect on our business or results of operations; * a deterioration in the conditions of the securities markets; * a deterioration of the credit rating for U.S. long-term sovereign debt; * inability to adapt to changes in information technology, including changes to industry accepted delivery models driven by a migration to the internet as a means of service delivery; * electronic fraudulent activity within the financial services industry, especially in the commercial banking sector; * adverse changes in consumer spending and savings habits; * the effect of laws and regulations regarding the financial services industry; * changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) generally applicable to the Company's business; * the Company's potential judgments, claims, damages, penalties, fines and reputational damage resulting from pending or future litigation and regulatory and government actions, including as a result of our participation in and execution of government programs related to the COVID-19 pandemic; * changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters including, but not limited to, changes to how the Company accounts for credit losses; * cyber security attacks or intrusions that could adversely impact our businesses; and * other unexpected material adverse changes in our operations or earnings.

Further, the foregoing factors may be exacerbated by the ultimate impact of the COVID-19 pandemic, which is unknown at this time. Statements about the COVID-19 pandemic and its potential impact on our business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that actual results may differ, possibly materially, from what is reflected in such statements due to factors and future developments that are uncertain, unpredictable and, in many cases, beyond our control, including the scope, duration and extent of the pandemic and any resurgences, actions taken by governmental authorities in response to the pandemic and the direct and indirect impact on the Company's employees, customers, business and third-parties with which the Company conducts business.

The Company wishes to caution readers not to place undue reliance on any forward-looking statements as the Company's business and its forward-looking statements involve substantial known and unknown risks and uncertainties described in the Company's Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q ("Risk Factors"). Except as required by law, the Company disclaims any intent or obligation to update publicly any such forward-looking statements, whether in response to new information, future events or otherwise. Any public statements or disclosures by the Company following this release which modify or impact any of the forward-looking statements contained in this release will be deemed to modify or supersede such statements in this release. In addition to the information set forth in this press release, you should carefully consider the Risk Factors.

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This information includes operating net income and operating earnings per share ("EPS"), operating return on average assets, operating return on average common equity, core net margin, tangible book value per share and the tangible common equity ratio.

Operating net income, operating EPS, operating return on average assets and operating return on average common equity exclude items that management believes are unrelated to its core banking business such as merger and acquisition expenses, and other items, if applicable. The Company's management uses operating earnings and related ratios and operating EPS to measure the strength of the Company's core banking business and to identify trends that may to some extent be obscured by such items. Management reviews its core net interest margin to determine any items that may impact the net interest margin that may be one-time in nature or not reflective of its core operating environment, such as out-sized cash balances, unique low-yielding loans originated through government programs in response to the pandemic, or significant purchase accounting adjustments. Management believes that adjusting for these items to arrive at a core margin provides additional insight into the operating environment and how management decisions impact the net interest margin. Similarly, management reviews certain loan metrics such as growth rates and allowance as a percentage of total loans, adjusted to exclude loans that are not considered part of its core portfolio, which includes loans originated in association with government sponsored and guaranteed programs in response to the pandemic, to arrive at adjusted numbers more representative of the core growth of the portfolio and core reserve to loan ratio.

Management also supplements its evaluation of financial performance with analysis of tangible book value per share (which is computed by dividing stockholders' equity less goodwill and identifiable intangible assets, or "tangible common equity", by common shares outstanding), the tangible common equity ratio (which is computed by dividing tangible common equity by "tangible assets", defined as total assets less goodwill and other intangibles). The Company has included information on tangible book value per share and the tangible common equity ratio because management believes that investors may find it useful to have access to the same analytical tools used by management. As a result of merger and acquisition activity, the Company has recognized goodwill and other intangible assets in conjunction with business combination accounting principles. Excluding the impact of goodwill and other intangibles in measuring asset and capital values for the ratios provided, along with other bank standard capital ratios, provides a framework to compare the capital adequacy of the Company to other companies in the financial services industry.

These non-GAAP measures should not be viewed as a substitute for operating results and other financial measures determined in accordance with GAAP. An item which management deems to be noncore and excludes when computing these non-GAAP measures can be of substantial importance to the Company's results for any particular quarter or year. The Company's non-GAAP performance measures, including operating earnings, operating EPS, operating return on average assets, operating return on average equity, tangible book value per share and the tangible common equity ratio, are not necessarily comparable to non-GAAP performance measures which may be presented by other companies.

Category Earnings Releases

INDEPENDENT BANK CORP. FINANCIAL SUMMARY

CONSOLIDATED BALANCE SHEETS

(Unaudited, dollars % Change % Changein thousands)

Dec 2020 Dec 2020 December 31 September 30 December 31 vs. vs. 2020 2020 2019 Sept 2020 Dec 2019

Assets

Cash and due from $ 169,460 $ 125,103 $ 114,686 35.46 % 47.76 %banks

Interest-earning 1,127,176 1,142,934 36,288 (1.38 ) % nmdeposits with banks

Securities

Trading 2,838 2,612 2,179 8.65 % 30.24 %

Equities 22,107 21,119 21,261 4.68 % 3.98 %

Available for sale 412,860 423,478 426,424 (2.51 ) % (3.18 ) %

Held to maturity 724,512 659,573 740,806 9.85 % (2.20 ) %

Total securities 1,162,317 1,106,782 1,190,670 5.02 % (2.38 ) %

Loans held for sale 58,104 54,713 33,307 6.20 % 74.45 %

Loans

Commercial and 2,103,152 2,062,345 1,395,036 1.98 % 50.76 %industrial

Commercial real 4,173,927 4,125,464 4,002,359 1.17 % 4.29 %estate

Commercial 553,929 573,334 547,293 (3.38 ) % 1.21 %construction

Small business 175,023 167,632 174,497 4.41 % 0.30 %

Total commercial 7,006,031 6,928,775 6,119,185 1.12 % 14.49 %

Residential real 1,296,183 1,352,305 1,590,569 (4.15 ) % (18.51 ) %estate

Home equity - first 633,142 643,187 649,255 (1.56 ) % (2.48 ) %position

Home equity -subordinate 435,648 457,867 484,543 (4.85 ) % (10.09 ) %positions

Total consumer real 2,364,973 2,453,359 2,724,367 (3.60 ) % (13.19 ) %estate

Other consumer 21,862 23,059 30,087 (5.19 ) % (27.34 ) %

Total loans 9,392,866 9,405,193 8,873,639 (0.13 ) % 5.85 %

Less: allowance for (113,392 ) (115,625 ) (67,740 ) (1.93 ) % 67.39 %credit losses

Net loans 9,279,474 9,289,568 8,805,899 (0.11 ) % 5.38 %

Federal Home Loan 10,250 15,090 14,424 (32.07 ) % (28.94 ) %Bank stock

Bank premises and 116,393 121,816 123,674 (4.45 ) % (5.89 ) %equipment, net

Goodwill 506,206 506,206 506,206 - % - %

Other intangible 23,107 24,543 29,286 (5.85 ) % (21.10 ) %assets

Cash surrendervalue of life 200,525 199,453 197,372 0.54 % 1.60 %insurance policies

Other assets 551,289 587,457 343,353 (6.16 ) % 60.56 %

Total assets $ 13,204,301 $ 13,173,665 $ 11,395,165 0.23 % 15.88 %

Liabilities andStockholders' Equity

Deposits

Noninterest-bearing $ 3,762,306 $ 3,715,528 $ 2,662,591 1.26 % 41.30 %demand deposits

Savings andinterest checking 4,047,332 3,912,703 3,232,909 3.44 % 25.19 %accounts

Money market 2,232,903 2,164,436 1,856,552 3.16 % 20.27 %

Time certificates 950,629 1,058,641 1,395,315 (10.20 ) % (31.87 ) %of deposit

Total deposits 10,993,170 10,851,308 9,147,367 1.31 % 20.18 %

Borrowings

Federal Home Loan 35,740 145,765 115,748 (75.48 ) % (69.12 ) %Bank borrowings

Long-term 32,773 37,447 74,906 (12.48 ) % (56.25 ) %borrowings, net

Junior subordinated 62,851 62,850 62,848 - % - %debentures, net

Subordinated 49,696 49,672 49,601 0.05 % 0.19 %debentures, net

Total borrowings 181,060 295,734 303,103 (38.78 ) % (40.26 ) %

Total deposits and 11,174,230 11,147,042 9,450,470 0.24 % 18.24 %borrowings

Other liabilities 327,386 336,899 236,552 (2.82 ) % 38.40 %

Total liabilities 11,501,616 11,483,941 9,687,022 0.15 % 18.73 %

Stockholders' equity

Common stock 328 328 342 - % (4.09 ) %

Additional paid in 945,638 944,218 1,035,450 0.15 % (8.67 ) %capital

Retained earnings 716,024 696,546 654,182 2.80 % 9.45 %

Accumulated othercomprehensive 40,695 48,632 18,169 (16.32 ) % 123.98 %income, net of tax

Total stockholders' 1,702,685 1,689,724 1,708,143 0.77 % (0.32 ) %equity

Total liabilitiesand stockholders' $ 13,204,301 $ 13,173,665 $ 11,395,165 0.23 % 15.88 %equity

nm = not meaningful

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, dollars in thousands, except per share data)

Three Months Ended

% Change

% Change

December 31 2020

September 30 2020

December 31 2019

Dec 2020 vs.

Dec 2020 vs.

Sept 2020

Dec 2019

Interest income

Interest on federal funds sold and short-term investments

$

301

$

254

$

454

18.50

%

(33.70

)

%

Interest and dividends on securities

7,135

7,227

8,161

(1.27

)

%

(12.57

)

%

Interest and fees on loans

89,068

90,112

104,724

(1.16

)

%

(14.95

)

%

Interest on loans held for sale

301

326

364

(7.67

)

%

(17.31

)

%

Total interest income

96,805

97,919

113,703

(1.14

)

%

(14.86

)

%

Interest expense

Interest on deposits

3,982

5,432

11,134

(26.69

)

%

(64.24

)

%

Interest on borrowings

1,380

1,604

2,576

(13.97

)

%

(46.43

)

%

Total interest expense

5,362

7,036

13,710

(23.79

)

%

(60.89

)

%

Net interest income

91,443

90,883

99,993

0.62

%

(8.55

)

%

Provision for credit losses

-

7,500

4,000

(100.00

)

%

(100.00

)

%

Net interest income after provision for credit losses

91,443

83,383

95,993

9.67

%

(4.74

)

%

Noninterest income

Deposit account fees

3,894

3,428

5,255

13.59

%

(25.90

)

%

Interchange and ATM fees

2,680

3,044

5,705

(11.96

)

%

(53.02

)

%

Investment management

7,736

7,571

7,630

2.18

%

1.39

%

Mortgage banking income

5,378

7,704

3,270

(30.19

)

%

64.46

%

Increase in cash surrender value of life insurance policies

1,460

1,314

1,441

11.11

%

1.32

%

Gain on life insurance benefits

352

-

-

100.00

%

100.00

%

Loan level derivative income

1,140

2,457

2,166

(53.60

)

%

(47.37

)

%

Other noninterest income

4,828

3,829

7,830

26.09

%

(38.34

)

%

Total noninterest income

27,468

29,347

33,297

(6.40

)

%

(17.51

)

%

Noninterest expenses

Salaries and employee benefits

39,433

38,409

37,764

2.67

%

4.42

%

Occupancy and equipment expenses

9,187

9,273

9,098

(0.93

)

%

0.98

%

Data processing and facilities management

1,581

1,567

1,633

0.89

%

(3.18

)

%

FDIC assessment

985

1,034

-

(4.74

)

%

100.00

%

Lease impairment

4,163

-

-

100.00

%

100.00

%

Loss on sale of other equity investments

1,033

-

-

100.00

%

100.00

%

Loss on termination of derivatives

-

684

-

(100.00

)

%

n/a

Other noninterest expenses

17,345

15,691

18,950

10.54

%

(8.47

)

%

Total noninterest expenses

73,727

66,658

67,445

10.60

%

9.31

%

Income before income taxes

45,184

46,072

61,845

(1.93

)

%

(26.94

)

%

Provision for income taxes

10,543

11,199

14,368

(5.86

)

%

(26.62

)

%

Net Income

$

34,641

$

34,873

$

47,477

(0.67

)

%

(27.04

)

%

Weighted average common shares (basic)

32,964,090

32,951,918

34,374,953

Common share equivalents

26,348

24,758

46,245

Weighted average common shares (diluted)

32,990,438

32,976,676

34,421,198

Basic earnings per share

$

1.05

$

1.06

$

1.38

(0.94

)

%

(23.91

)

%

Diluted earnings per share

$

1.05

$

1.06

$

1.38

(0.94

)

%

(23.91

)

%

Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP):

Net income

$

34,641

$

34,873

$

47,477

Noninterest expense components

Add - loss on termination of derivatives

-

684

-

Noncore increases to income before taxes

-

684

-

Net tax benefit associated with noncore items (1)

-

(192

)

-

Total tax impact

-

(192

)

-

Noncore increases to net income

-

492

-

Operating net income

$

34,641

$

35,365

$

47,477

(2.05

)

%

(27.04

)

%

Diluted earnings per share, on an operating basis

$

1.05

$

1.07

$

1.38

(1.87

)

%

(23.91

)

%

(1) The net tax benefit associated with noncore items is determined by assessing whether each noncore item is included or excluded from net taxable income and applying the Company's combined marginal tax rate to only those items included in net taxable income.

Performance ratios

Net interest margin (FTE)

3.10

%

3.13

%

3.90

%

Return on average assets GAAP (calculated by dividing net income by average assets)

1.04

%

1.07

%

1.64

%

Return on average assets on an operating basis (calculated by dividing net operating earnings by average assets)

1.04

%

1.08

%

1.64

%

Return on average common equity GAAP (calculated by dividing net income by average common equity)

8.10

%

8.21

%

11.06

%

Return on average common equity on an operating basis (calculated by dividing net operating earnings by average common equity)

8.10

%

8.32

%

11.06

%

CONSOLIDATEDSTATEMENTS OF INCOME

(Unaudited,dollars inthousands, except pershare data)

Three Months Ended

% Change % Change

Dec 2020 Dec 2020 December 31 September 30 December 31 vs. vs. 2020 2020 2019 Sept 2020 Dec 2019

Interest income

Interest onfederalfunds sold $ 301 $ 254 $ 454 18.50 % (33.70 ) %andshort-terminvestments

Interest anddividends on 7,135 7,227 8,161 (1.27 ) % (12.57 ) %securities

Interest andfees on 89,068 90,112 104,724 (1.16 ) % (14.95 ) %loans

Interest onloans held 301 326 364 (7.67 ) % (17.31 ) %for sale

Totalinterest 96,805 97,919 113,703 (1.14 ) % (14.86 ) %income

Interest expense

Interest on 3,982 5,432 11,134 (26.69 ) % (64.24 ) %deposits

Interest on 1,380 1,604 2,576 (13.97 ) % (46.43 ) %borrowings

Totalinterest 5,362 7,036 13,710 (23.79 ) % (60.89 ) %expense

Net interest 91,443 90,883 99,993 0.62 % (8.55 ) %income

Provisionfor credit - 7,500 4,000 (100.00 ) % (100.00 ) %losses

Net interestincome afterprovision 91,443 83,383 95,993 9.67 % (4.74 ) %for creditlosses

Noninterest income

Deposit 3,894 3,428 5,255 13.59 % (25.90 ) %account fees

Interchange 2,680 3,044 5,705 (11.96 ) % (53.02 ) %and ATM fees

Investment 7,736 7,571 7,630 2.18 % 1.39 %management

Mortgagebanking 5,378 7,704 3,270 (30.19 ) % 64.46 %income

Increase incashsurrendervalue of 1,460 1,314 1,441 11.11 % 1.32 %lifeinsurancepolicies

Gain on lifeinsurance 352 - - 100.00 % 100.00 %benefits

Loan levelderivative 1,140 2,457 2,166 (53.60 ) % (47.37 ) %income

Othernoninterest 4,828 3,829 7,830 26.09 % (38.34 ) %income

Totalnoninterest 27,468 29,347 33,297 (6.40 ) % (17.51 ) %income

Noninterest expenses

Salaries andemployee 39,433 38,409 37,764 2.67 % 4.42 %benefits

Occupancyand 9,187 9,273 9,098 (0.93 ) % 0.98 %equipmentexpenses

Dataprocessingand 1,581 1,567 1,633 0.89 % (3.18 ) %facilitiesmanagement

FDIC 985 1,034 - (4.74 ) % 100.00 %assessment

Lease 4,163 - - 100.00 % 100.00 %impairment

Loss on saleof other 1,033 - - 100.00 % 100.00 %equityinvestments

Loss ontermination - 684 - (100.00 ) % n/a ofderivatives

Othernoninterest 17,345 15,691 18,950 10.54 % (8.47 ) %expenses

Totalnoninterest 73,727 66,658 67,445 10.60 % 9.31 %expenses

Incomebefore 45,184 46,072 61,845 (1.93 ) % (26.94 ) %income taxes

Provisionfor income 10,543 11,199 14,368 (5.86 ) % (26.62 ) %taxes

Net Income $ 34,641 $ 34,873 $ 47,477 (0.67 ) % (27.04 ) %



Weightedaveragecommon 32,964,090 32,951,918 34,374,953 shares(basic)

Common share 26,348 24,758 46,245 equivalents

Weightedaveragecommon 32,990,438 32,976,676 34,421,198 shares(diluted)



Basicearnings per $ 1.05 $ 1.06 $ 1.38 (0.94 ) % (23.91 ) %share

Dilutedearnings per $ 1.05 $ 1.06 $ 1.38 (0.94 ) % (23.91 ) %share



Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP):

Net income $ 34,641 $ 34,873 $ 47,477

Noninterestexpense components

Add - lossontermination - 684 - ofderivatives

Noncoreincreases to - 684 - incomebefore taxes

Net taxbenefitassociated - (192 ) - with noncoreitems (1)

Total tax - (192 ) - impact

Noncoreincreases to - 492 - net income

Operating $ 34,641 $ 35,365 $ 47,477 (2.05 ) % (27.04 ) %net income



Dilutedearnings pershare, on an $ 1.05 $ 1.07 $ 1.38 (1.87 ) % (23.91 ) %operatingbasis



(1) The net tax benefit associated with noncore items is determined byassessing whether each noncore item is included or excluded from net taxableincome and applying the Company's combined marginal tax rate to only thoseitems included in net taxable income.



Performance ratios

Net interest 3.10 % 3.13 % 3.90 % margin (FTE)

Return onaverageassets GAAP(calculated 1.04 % 1.07 % 1.64 % by dividingnet incomeby averageassets)

Return onaverageassets on anoperatingbasis(calculated 1.04 % 1.08 % 1.64 % by dividingnetoperatingearnings byaverageassets)

Return onaveragecommonequity GAAP(calculated 8.10 % 8.21 % 11.06 % by dividingnet incomeby averagecommonequity)

Return onaveragecommonequity on anoperatingbasis(calculated 8.10 % 8.32 % 11.06 % by dividingnetoperatingearnings byaveragecommonequity)

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, dollars in thousands, except per share data)

Years Ended

% Change

December 31 2020

December 31 2019

Dec 2020 vs.

Dec 2019

Interest income

Interest on federal funds sold and short-term investments

$

847

$

2,207

(61.62

)

%

Interest and dividends on securities

30,168

32,456

(7.05

)

%

Interest and fees on loans

369,836

411,460

(10.12

)

%

Interest on loans held for sale

1,218

891

36.70

%

Total interest income

402,069

447,014

(10.05

)

%

Interest expense

Interest on deposits

27,333

41,186

(33.64

)

%

Interest on borrowings

7,008

12,693

(44.79

)

%

Total interest expense

34,341

53,879

(36.26

)

%

Net interest income

367,728

393,135

(6.46

)

%

Provision for credit losses

52,500

6,000

nm

Net interest income after provision for credit losses

315,228

387,135

(18.57

)

%

Noninterest income

Deposit account fees

15,121

20,040

(24.55

)

%

Interchange and ATM fees

15,834

22,152

(28.52

)

%

Investment management

29,432

28,719

2.48

%

Mortgage banking income

18,948

11,454

65.43

%

Increase in cash surrender value of life insurance policies

5,362

5,013

6.96

%

Gain on life insurance benefits

1,044

434

140.55

%

Loan level derivative income

10,058

6,478

55.26

%

Other noninterest income

15,641

21,004

(25.53

)

%

Total noninterest income

111,440

115,294

(3.34

)

%

Noninterest expenses

Salaries and employee benefits

152,460

149,165

2.21

%

Occupancy and equipment expenses

37,050

33,207

11.57

%

Data processing and facilities management

6,265

6,516

(3.85

)

%

FDIC assessment

2,522

1,394

80.92

%

Lease impairment

4,163

-

100.00

%

Loss on sale of other equity investments

1,033

-

100.00

%

Loss on termination of derivatives

684

-

100.00

%

Merger and acquisition expense

-

26,433

(100.00

)

%

Other noninterest expenses

69,655

67,606

3.03

%

Total noninterest expenses

273,832

284,321

(3.69

)

%

Income before income taxes

152,836

218,108

(29.93

)

%

Provision for income taxes

31,669

52,933

(40.17

)

%

Net Income

$

121,167

$

165,175

(26.64

)

%

Weighted average common shares (basic)

33,259,643

32,810,433

Common share equivalents

25,646

45,801

Weighted average common shares (diluted)

33,285,289

32,856,234

Basic earnings per share

$

3.64

$

5.03

(27.63

)

%

Diluted earnings per share

$

3.64

$

5.03

(27.63

)

%

Reconciliation of Net Income (GAAP) to Operating Net Income (Non-GAAP):

Net Income

$

121,167

$

165,175

Noninterest income components

Less - gain on sale of loans

-

951

Noninterest expense components

Add - loss on termination of derivatives

684

-

Add - merger and acquisition expenses

-

26,433

Noncore increases to income before taxes

684

25,482

Net tax benefit associated with noncore items (1)

(192

)

(6,686

)

Add - adjustment for tax effect of previously incurred merger and acquisition expenses

-

650

Total tax impact

(192

)

(6,036

)

Noncore increases to net income

$

492

$

19,446

Operating net income

$

121,659

$

184,621

(34.10

)

%

Diluted earnings per share, on an operating basis

$

3.66

$

5.62

(34.88

)

%

(1) The net tax benefit associated with noncore items is determined by assessing whether each noncore item is included or excluded from net taxable income and applying the Company's combined marginal tax rate to only those items included in net taxable income.

Performance ratios

Net interest margin (FTE)

3.29

%

4.04

%

Return on average assets GAAP (calculated by dividing net income by average assets)

0.96

%

1.52

%

Return on average assets on an operating basis (calculated by dividing net operating earnings by average assets)

0.97

%

1.70

%

Return on average common equity GAAP (calculated by dividing net income by average common equity)

7.13

%

10.85

%

Return on average common equity on an operating basis (calculated by dividing net operating earnings by average common equity)

7.16

%

12.13

%

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, dollars inthousands, except per share data)

Years Ended

% Change

Dec 2020 December 31 December 31 vs. 2020 2019 Dec 2019



Interest income

Interest on federal funds sold $ 847 $ 2,207 (61.62 ) %and short-term investments

Interest and dividends on 30,168 32,456 (7.05 ) %securities

Interest and fees on loans 369,836 411,460 (10.12 ) %

Interest on loans held for sale 1,218 891 36.70 %

Total interest income 402,069 447,014 (10.05 ) %

Interest expense

Interest on deposits 27,333 41,186 (33.64 ) %

Interest on borrowings 7,008 12,693 (44.79 ) %

Total interest expense 34,341 53,879 (36.26 ) %

Net interest income 367,728 393,135 (6.46 ) %

Provision for credit losses 52,500 6,000 nm

Net interest income after 315,228 387,135 (18.57 ) %provision for credit losses

Noninterest income

Deposit account fees 15,121 20,040 (24.55 ) %

Interchange and ATM fees 15,834 22,152 (28.52 ) %

Investment management 29,432 28,719 2.48 %

Mortgage banking income 18,948 11,454 65.43 %

Increase in cash surrendervalue of life insurance 5,362 5,013 6.96 %policies

Gain on life insurance benefits 1,044 434 140.55 %

Loan level derivative income 10,058 6,478 55.26 %

Other noninterest income 15,641 21,004 (25.53 ) %

Total noninterest income 111,440 115,294 (3.34 ) %

Noninterest expenses

Salaries and employee benefits 152,460 149,165 2.21 %

Occupancy and equipment 37,050 33,207 11.57 %expenses

Data processing and facilities 6,265 6,516 (3.85 ) %management

FDIC assessment 2,522 1,394 80.92 %

Lease impairment 4,163 - 100.00 %

Loss on sale of other equity 1,033 - 100.00 %investments

Loss on termination of 684 - 100.00 %derivatives

Merger and acquisition expense - 26,433 (100.00 ) %

Other noninterest expenses 69,655 67,606 3.03 %

Total noninterest expenses 273,832 284,321 (3.69 ) %

Income before income taxes 152,836 218,108 (29.93 ) %

Provision for income taxes 31,669 52,933 (40.17 ) %

Net Income $ 121,167 $ 165,175 (26.64 ) %



Weighted average common shares 33,259,643 32,810,433 (basic)

Common share equivalents 25,646 45,801

Weighted average common shares 33,285,289 32,856,234 (diluted)



Basic earnings per share $ 3.64 $ 5.03 (27.63 ) %

Diluted earnings per share $ 3.64 $ 5.03 (27.63 ) %



Reconciliation of Net Income(GAAP) to Operating Net Income (Non-GAAP):

Net Income $ 121,167 $ 165,175

Noninterest income components

Less - gain on sale of loans - 951

Noninterest expense components

Add - loss on termination of 684 - derivatives

Add - merger and acquisition - 26,433 expenses

Noncore increases to income 684 25,482 before taxes

Net tax benefit associated with (192 ) (6,686 ) noncore items (1)

Add - adjustment for tax effectof previously incurred merger - 650 and acquisition expenses

Total tax impact (192 ) (6,036 )

Noncore increases to net income $ 492 $ 19,446

Operating net income $ 121,659 $ 184,621 (34.10 ) %



Diluted earnings per share, on $ 3.66 $ 5.62 (34.88 ) %an operating basis



(1) The net tax benefit associated with noncore items is determined byassessing whether each noncore item is included or excluded from net taxableincome and applying the Company's combined marginal tax rate to only thoseitems included in net taxable income.



Performance ratios

Net interest margin (FTE) 3.29 % 4.04 %

Return on average assets GAAP(calculated by dividing net 0.96 % 1.52 % income by average assets)

Return on average assets on anoperating basis (calculated by 0.97 % 1.70 % dividing net operating earningsby average assets)

Return on average common equityGAAP (calculated by dividing 7.13 % 10.85 % net income by average commonequity)

Return on average common equityon an operating basis(calculated by dividing net 7.16 % 12.13 % operating earnings by averagecommon equity)

ASSET QUALITY

(Unaudited, dollars in thousands)

Nonperforming Assets At

December 31 2020

September 30 2020

December 31 2019

Nonperforming loans

Commercial & industrial loans

$

34,729

$

36,851

$

22,574

Commercial real estate loans

10,195

38,164

3,234

Small business loans

825

542

311

Residential real estate loans

15,528

16,229

15,012

Home equity

5,427

6,159

6,835

Other consumer

157

80

83

Total nonperforming loans

66,861

98,025

48,049

Other real estate owned

-

-

-

Total nonperforming assets

$

66,861

$

98,025

$

48,049

Nonperforming loans/gross loans

0.71

%

1.04

%

0.54

%

Nonperforming assets/total assets

0.51

%

0.74

%

0.42

%

Allowance for credit losses/nonperforming loans

169.59

%

117.95

%

140.98

%

Allowance for credit losses/total loans

1.21

%

1.23

%

0.76

%

Delinquent loans/total loans

0.23

%

0.31

%

0.29

%

Nonperforming Assets Reconciliation for the Three Months Ended

December 31 2020

September 30 2020

December 31 2019

Nonperforming assets beginning balance

$

98,025

$

48,814

$

48,202

New to nonperforming

22,052

60,850

13,457

Loans charged-off

(2,698

)

(4,304

)

(3,467

)

Loans paid-off

(45,327

)

(5,050

)

(7,222

)

Loans restored to performing status

(5,373

)

(2,229

)

(391

)

Sale of other real estate owned

-

-

(2,500

)

Other

182

(56

)

(30

)

Nonperforming assets ending balance

$

66,861

$

98,025

$

48,049

'

ASSET QUALITY

(Unaudited, dollars in Nonperforming Assets Atthousands)

December 31 September 30 December 31 2020 2020 2019

Nonperforming loans

Commercial & industrial loans $ 34,729 $ 36,851 $ 22,574

Commercial real estate loans 10,195 38,164 3,234

Small business loans 825 542 311

Residential real estate loans 15,528 16,229 15,012

Home equity 5,427 6,159 6,835

Other consumer 157 80 83

Total nonperforming loans 66,861 98,025 48,049

Other real estate owned - - -

Total nonperforming assets $ 66,861 $ 98,025 $ 48,049



Nonperforming loans/gross loans 0.71 % 1.04 % 0.54 %

Nonperforming assets/total 0.51 % 0.74 % 0.42 %assets

Allowance for credit losses/ 169.59 % 117.95 % 140.98 %nonperforming loans

Allowance for credit losses/ 1.21 % 1.23 % 0.76 %total loans

Delinquent loans/total loans 0.23 % 0.31 % 0.29 %



Nonperforming Assets Reconciliation for the Three Months Ended

December 31 September 30 December 31 2020 2020 2019



Nonperforming assets beginning $ 98,025 $ 48,814 $ 48,202 balance

New to nonperforming 22,052 60,850 13,457

Loans charged-off (2,698 ) (4,304 ) (3,467 )

Loans paid-off (45,327 ) (5,050 ) (7,222 )

Loans restored to performing (5,373 ) (2,229 ) (391 ) status

Sale of other real estate owned - - (2,500 )

Other 182 (56 ) (30 )

Nonperforming assets ending $ 66,861 $ 98,025 $ 48,049 balance

'

Net Charge-Offs (Recoveries)

Three Months Ended Years Ended

December 31 September December 31 December 31 December 31 2020 30 2019 2020 2019 2020

Netcharge-offs (recoveries)

Commercialand $ 1,882 $ 184 $ 240 $ 2,020 $ (887 ) industrialloans

Commercialreal estate - 3,876 2,532 3,876 2,462 loans

Smallbusiness 161 47 176 347 387 loans

Residentialreal estate 105 (1 ) (1 ) 103 (142 ) loans

Home equity (36 ) (21 ) (12 ) (68 ) (78 )

Other 121 (34 ) 267 590 811 consumer

Total net $ 2,233 $ 4,051 $ 3,202 $ 6,868 $ 2,553 charge-offs



Netcharge-offsto average 0.09 % 0.17 % 0.14 % 0.07 % 0.03 %loans(annualized)

Troubled Debt Restructurings At

December 31 2020

September 30 2020

December 31 2019

Troubled debt restructurings on accrual status

$

16,983

$

17,521

$

19,599

Troubled debt restructurings on nonaccrual status

22,209

23,810

24,766

Total troubled debt restructurings

$

39,192

$

41,331

$

44,365

BALANCE SHEET AND CAPITAL RATIOS

December 31 2020

September 30 2020

December 31 2019

Gross loans/total deposits

85.44

%

86.67

%

97.01

%

Common equity tier 1 capital ratio (1)

12.65

%

12.41

%

12.86

%

Tier 1 leverage capital ratio (1)

9.56

%

9.52

%

11.28

%

Common equity to assets ratio GAAP

12.89

%

12.83

%

14.99

%

Tangible common equity to tangible assets ratio (2)

9.26

%

9.17

%

10.80

%

Book value per share GAAP

$

51.65

$

51.27

$

49.69

Tangible book value per share (2)

$

35.59

$

35.17

$

34.11

(1) Estimated number for December 31, 2020.(2) See Appendix A for detailed reconciliation from GAAP to Non-GAAP ratios.

Troubled Debt Restructurings At

December September December 31 30 31 2020 2020 2019

Troubled debt restructurings on accrual $ 16,983 $ 17,521 $ 19,599 status

Troubled debt restructurings on 22,209 23,810 24,766 nonaccrual status

Total troubled debt restructurings $ 39,192 $ 41,331 $ 44,365



BALANCE SHEET AND CAPITAL RATIOS

December September December 31 30 31 2020 2020 2019

Gross loans/total deposits 85.44 % 86.67 % 97.01 %

Common equity tier 1 capital ratio (1) 12.65 % 12.41 % 12.86 %

Tier 1 leverage capital ratio (1) 9.56 % 9.52 % 11.28 %

Common equity to assets ratio GAAP 12.89 % 12.83 % 14.99 %

Tangible common equity to tangible assets 9.26 % 9.17 % 10.80 %ratio (2)

Book value per share GAAP $ 51.65 $ 51.27 $ 49.69

Tangible book value per share (2) $ 35.59 $ 35.17 $ 34.11

(1) Estimated number for December 31, 2020.(2) See Appendix A for detailed reconciliation from GAAP to Non-GAAP ratios.

INDEPENDENT BANK CORP. SUPPLEMENTAL FINANCIAL INFORMATION



(Unaudited, dollars in Three Months Endedthousands)

December 31, 2020 September 30, 2020 December 31, 2019

Interest Interest Interest

Average Earned/ Yield/ Average Earned/ Yield/ Average Earned/ Yield/

Balance Paid (1) Rate Balance Paid (1) Rate Balance Paid (1) Rate

Interest-earning assets

Interest-earning depositswith banks, federal funds $ 1,190,965 $ 301 0.10 % $ 997,921 $ 254 0.10 % $ 99,173 $ 454 1.82 %sold, and short terminvestments

Securities

Securities - trading 2,660 - - % 2,607 - - % 2,041 - - %

Securities - taxable 1,122,055 7,127 2.53 % 1,139,843 7,218 2.52 % 1,177,084 8,150 2.75 %investments

Securities - nontaxable 1,041 10 3.82 % 1,146 11 3.82 % 1,476 14 3.76 %investments (1)

Total securities $ 1,125,756 $ 7,137 2.52 % $ 1,143,596 $ 7,229 2.51 % $ 1,180,601 $ 8,164 2.74 %

Loans held for sale 48,604 301 2.46 % 50,709 326 2.56 % 41,127 364 3.51 %

Loans

Commercial and industrial 2,080,045 18,308 3.50 % 2,033,385 17,724 3.47 % 1,384,063 18,534 5.31 %(1)

Commercial real estate (1) 4,130,945 41,213 3.97 % 4,086,594 41,578 4.05 % 3,994,496 48,673 4.83 %

Commercial construction 582,900 5,609 3.83 % 568,007 5,126 3.59 % 555,328 7,226 5.16 %

Small business 169,645 2,276 5.34 % 168,662 2,303 5.43 % 172,647 2,560 5.88 %

Total commercial 6,963,535 67,406 3.85 % 6,856,648 66,731 3.87 % 6,106,534 76,993 5.00 %

Residential real estate 1,322,016 12,020 3.62 % 1,387,055 13,436 3.85 % 1,607,939 15,024 3.71 %

Home equity 1,086,781 9,379 3.43 % 1,107,685 9,658 3.47 % 1,134,192 12,367 4.33 %

Total consumer real estate 2,408,797 21,399 3.53 % 2,494,740 23,094 3.68 % 2,742,131 27,391 3.96 %

Other consumer 23,860 468 7.80 % 24,134 515 8.49 % 28,407 593 8.28 %

Total loans $ 9,396,192 $ 89,273 3.78 % $ 9,375,522 $ 90,340 3.83 % $ 8,877,072 $ 104,977 4.69 %

Total interest-earning $ 11,761,517 $ 97,012 3.28 % $ 11,567,748 $ 98,149 3.38 % $ 10,197,973 $ 113,959 4.43 %assets

Cash and due from banks 136,602 124,482 120,758

Federal Home Loan Bank 10,475 15,090 13,113 stock

Other assets 1,284,948 1,313,194 1,122,737

Total assets $ 13,193,542 $ 13,020,514 $ 11,454,581

Interest-bearing liabilities

Deposits

Savings and interest $ 3,975,140 $ 540 0.05 % $ 3,836,488 $ 838 0.09 % $ 3,225,413 $ 2,117 0.26 %checking accounts

Money market 2,232,007 671 0.12 % 2,087,822 945 0.18 % 1,880,638 3,756 0.79 %

Time deposits 1,014,388 2,771 1.09 % 1,076,546 3,649 1.35 % 1,427,513 5,261 1.46 %

Total interest-bearing $ 7,221,535 $ 3,982 0.22 % $ 7,000,856 $ 5,432 0.31 % $ 6,533,564 $ 11,134 0.68 %deposits

Borrowings

Federal Home Loan Bank 36,297 195 2.14 % 145,766 408 1.11 % 74,094 410 2.20 %borrowings

Long-term borrowings 32,765 131 1.59 % 37,439 141 1.50 % 74,839 612 3.24 %

Junior subordinated 62,850 436 2.76 % 62,850 438 2.77 % 62,848 497 3.14 %debentures

Subordinated debentures 49,683 618 4.95 % 49,659 617 4.94 % 66,593 1,057 6.30 %

Total borrowings $ 181,595 $ 1,380 3.02 % $ 295,714 $ 1,604 2.16 % $ 278,374 $ 2,576 3.67 %

Total interest-bearing $ 7,403,130 $ 5,362 0.29 % $ 7,296,570 $ 7,036 0.38 % $ 6,811,938 $ 13,710 0.80 %liabilities

Noninterest-bearing demand 3,770,580 3,700,902 2,712,829 deposits

Other liabilities 318,981 332,937 226,223

Total liabilities $ 11,492,691 $ 11,330,409 $ 9,750,990

Stockholders' equity 1,700,851 1,690,105 1,703,591

Total liabilities and $ 13,193,542 $ 13,020,514 $ 11,454,581 stockholders' equity



Net interest income $ 91,650 $ 91,113 $ 100,249



Interest rate spread (2) 2.99 % 3.00 % 3.63 %



Net interest margin (3) 3.10 % 3.13 % 3.90 %



Supplemental Information

Total deposits, including $ 10,992,115 $ 3,982 $ 10,701,758 $ 5,432 $ 9,246,393 $ 11,134 demand deposits

Cost of total deposits 0.14 % 0.20 % 0.48 %

Total funding liabilities, $ 11,173,710 $ 5,362 $ 10,997,472 $ 7,036 $ 9,524,767 $ 13,710 including demand deposits

Cost of total funding 0.19 % 0.25 % 0.57 %liabilities

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $207,000, $230,000, and $256,000 for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, respectively, determined by applying the Company's marginal tax rates in effect during each respective quarter. (2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities. (3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

Years Ended

December 31, 2020 December 31, 2019

Interest Interest

Average Earned/ Yield/ Average Earned/ Yield/

Balance Paid Rate Balance Paid Rate

Interest-earning assets

Interest earningdeposits withbanks, federal $ 748,419 $ 847 0.11 % $ 97,028 $ 2,207 2.27 %funds sold, andshort terminvestments

Securities

Securities - 2,481 - - % 1,876 - - %trading

Securities - 1,164,439 30,133 2.59 % 1,176,992 32,405 2.75 %taxable investments

Securities -nontaxable 1,142 44 3.85 % 1,673 66 3.95 %investments (1)

Total securities $ 1,168,062 $ 30,177 2.58 % $ 1,180,541 $ 32,471 2.75 %

Loans held for sale 44,521 1,218 2.74 % 40,858 891 2.18 %

Loans

Commercial and 1,858,951 70,335 3.78 % 1,321,798 74,208 5.61 %industrial (1)

Commercial real 4,070,462 171,013 4.20 % 3,838,526 187,902 4.90 %estate (1)

Commercial 561,431 22,950 4.09 % 478,865 27,263 5.69 %construction

Small business 171,839 9,529 5.55 % 169,381 10,280 6.07 %

Total commercial 6,662,683 273,827 4.11 % 5,808,570 299,653 5.16 %

Residential real 1,435,655 53,876 3.75 % 1,483,831 59,375 4.00 %estate

Home equity 1,116,005 40,996 3.67 % 1,127,425 51,164 4.54 %

Total consumer real 2,551,660 94,872 3.72 % 2,611,256 110,539 4.23 %estate

Other consumer 25,195 2,055 8.16 % 26,095 2,216 8.49 %

Total loans $ 9,239,538 $ 370,754 4.01 % $ 8,445,921 $ 412,408 4.88 %

Totalinterest-earning $ 11,200,540 $ 402,996 3.60 % $ 9,764,348 $ 447,977 4.59 %assets

Cash and due from 125,896 118,295 banks

Federal Home Loan 15,843 15,692 Bank stock

Other assets 1,263,332 976,962

Total assets $ 12,605,611 $ 10,875,297

Interest-bearing liabilities

Deposits

Savings andinterest checking $ 3,688,360 $ 4,413 0.12 % $ 3,121,120 $ 8,366 0.27 %accounts

Money market 2,041,853 6,166 0.30 % 1,817,394 15,135 0.83 %

Time deposits 1,155,399 16,754 1.45 % 1,250,577 17,685 1.41 %

Totalinterest-bearing $ 6,885,612 $ 27,333 0.40 % $ 6,189,091 $ 41,186 0.67 %deposits

Borrowings

Federal Home Loan 162,776 1,564 0.96 % 178,658 4,438 2.48 %Bank borrowings

Line of Credit - - - % 2,673 104 3.89 %

Long-term 54,082 1,176 2.17 % 57,270 2,073 3.62 %borrowings

Junior subordinated 62,850 1,798 2.86 % 67,581 2,388 3.53 %debentures

Subordinated 49,647 2,470 4.98 % 70,070 3,690 5.27 %debentures

Total borrowings $ 329,355 $ 7,008 2.13 % $ 376,252 $ 12,693 3.37 %

Totalinterest-bearing $ 7,214,967 $ 34,341 0.48 % $ 6,565,343 $ 53,879 0.82 %liabilities

Noninterest-bearing 3,386,140 2,607,763 demand deposits

Other liabilities 304,957 180,270

Total liabilities $ 10,906,064 $ 9,353,376

Stockholders' 1,699,547 1,521,921 equity

Total liabilitiesand stockholders' $ 12,605,611 $ 10,875,297 equity



Net interest income $ 368,655 $ 394,098



Interest rate 3.12 % 3.77 %spread (2)



Net interest margin 3.29 % 4.04 %(3)



Supplemental Information

Total deposits,including demand $ 10,271,752 $ 27,333 $ 8,796,854 $ 41,186 deposits

Cost of total 0.27 % 0.47 %deposits

Total fundingliabilities, $ 10,601,107 $ 34,341 $ 9,173,106 $ 53,879 including demanddeposits

Cost of total 0.32 % 0.59 %funding liabilities

(1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $927,000 and $963,000 for the years ended December 31, 2020 and 2019, respectively. (2) Interest rate spread represents the difference between weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities. (3) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

APPENDIX A: NON-GAAP Reconciliation of Capital Metrics

(Unaudited, dollars in thousands, except per share data)

The following table summarizes the calculation of the Company's tangible common equity ratio and tangible book value per share at the dates indicated:

December 31 September 30 December 31 2020 2020 2019

Tangible common equity (Dollars in thousands, except per share data)

Stockholders' equity $ 1,702,685 $ 1,689,724 $ 1,708,143 (a)(GAAP)

Less: Goodwill and other 529,313 530,749 535,492 intangibles

Tangible common equity $ 1,173,372 $ 1,158,975 $ 1,172,651 (b)

Tangible assets

Assets (GAAP) $ 13,204,301 $ 13,173,665 $ 11,395,165 (c)

Less: Goodwill and other 529,313 530,749 535,492 intangibles

Tangible assets $ 12,674,988 $ 12,642,916 $ 10,859,673 (d)



Common Shares 32,965,692 32,955,547 34,377,388 (e)



Common equity to assets 12.89 % 12.83 % 14.99 % (a/ratio (GAAP) c)

Tangible common equity (b/to tangible assets ratio 9.26 % 9.17 % 10.80 % d)(Non-GAAP)

Book value per share $ 51.65 $ 51.27 $ 49.69 (a/(GAAP) e)

Tangible book value per $ 35.59 $ 35.17 $ 34.11 (b/share (Non-GAAP) e)

APPENDIX B: Non-GAAP Reconciliation of Earnings Metrics

(Unaudited, dollars in thousands)

The following table summarizes the impact of noncore items on the Company's calculation of noninterest income and noninterest expense, as well as the impact of noncore items on noninterest income as a percentage of total revenue and the efficiency ratio for the periods indicated:

Three Months Ended Years Ended

December 31 September December 31 December 31 December 31 2020 30 2019 2020 2019 2020

Netinterest $ 91,443 $ 90,883 $ 99,993 $ 367,728 $ 393,135 (a)income(GAAP)



Noninterestincome $ 27,468 $ 29,347 $ 33,297 $ 111,440 $ 115,294 (b)(GAAP)

Less:

Gain onsale of - - - - 951 loans

Noninterestincome onan $ 27,468 $ 29,347 $ 33,297 $ 111,440 $ 114,343 (c)operatingbasis(Non-GAAP)



Noninterestexpense $ 73,727 $ 66,658 $ 67,445 $ 273,832 $ 284,321 (d)(GAAP)

Less:

Merger andacquisition - - - - 26,433 expense

Loss ontermination - 684 - 684 - ofderivatives

Noninterestexpense onan $ 73,727 $ 65,974 $ 67,445 $ 273,148 $ 257,888 (e)operatingbasis(Non-GAAP)



Totalrevenue $ 118,911 $ 120,230 $ 133,290 $ 479,168 $ 508,429 (a+b)(GAAP)

Totaloperating $ 118,911 $ 120,230 $ 133,290 $ 479,168 $ 507,478 (a+c)revenue(Non-GAAP)



Ratios

Noninterestincome as a% of total 23.10 % 24.41 % 24.98 % 23.26 % 22.68 % (b/revenue (a+b))(GAAPbased)

Noninterestincome as a% of totalrevenue on 23.10 % 24.41 % 24.98 % 23.26 % 22.53 % (c/an (a+c))operatingbasis(Non-GAAP)

Efficiency (d/ratio (GAAP 62.00 % 55.44 % 50.60 % 57.15 % 55.92 % (a+b))based)

Efficiencyratio on an (e/operating 62.00 % 54.87 % 50.60 % 57.00 % 50.82 % (a+c))basis(Non-GAAP)

APPENDIX C: Net Interest Margin Analysis & Non-GAAP Reconciliation of Core Margin

2020

Q4 Q3

Volume Interest Margin Volume Interest Margin Impact Impact

(Dollars in thousands)

Reported Total (GAAP) $ 11,761,516 $ 91,650 3.10 % $ 11,567,747 $ 91,112 3.13 %

Adjustments

PPP Volume @ 1% (808,566 ) (2,067 ) 0.15 % (806,584 ) (2,060 ) 0.16 %

PPP Fee amortization - (3,642 ) (0.12 ) % - (3,172 ) (0.11 ) %

Cash Position (vs (1,090,965 ) (276 ) 0.31 % (897,921 ) (229 ) 0.26 %$100M)

Adjusted Margin 3.44 % 3.44 %

Acquired loan (1,002 ) (0.03 ) % (2,700 ) (0.09 ) %accretion

CD fair value mark (26 ) - % (26 ) - %amortization

Other (564 ) (0.02 ) % (561 ) (0.02 ) %

Core Margin 3.39 % 3.33 %(Non-GAAP)



Core Margin Change: 0.06 %



Loans: rate (0.06 ) % compression

Loans: nonaccrual 0.07 % interest

Deposits 0.06 %

Borrowings 0.01 %

Other (0.02 ) %

0.06 %

APPENDIX D: Current Expected Credit Loss ("CECL")

The following table shows the allowance by category for the periods indicated:

December 31 September 30 June 30 March 31 January 1 December 31 2020 2020 2020 2020 2020 2019

Incurred Loss Methodology

(Dollars in thousands)

Commercialand $ 21,086 $ 28,219 $ 25,662 $ 21,649 $ 15,659 $ 17,594 industrial

Commercial 45,009 39,386 36,956 29,498 20,224 32,935 real estate

Commercial 5,397 5,210 4,501 3,747 2,401 6,053 construction

Small 5,095 4,593 4,561 3,829 2,241 1,746 business

Residential 14,275 14,163 15,046 14,847 13,691 3,440 real estate

Home equity 22,060 23,572 24,860 17,910 12,907 5,576

Other 470 482 590 896 637 396 consumer

Totalallowance $ 113,392 $ 115,625 $ 112,176 $ 92,376 $ 67,760 $ 67,740 for creditlosses



Total Loans $ 9,392,866 $ 9,405,193 $ 9,359,648 $ 8,916,430 $ 8,873,639 $ 8,873,639 (GAAP)

Total Loans,excluding $ 8,600,956 $ 8,593,470 $ 8,566,665 $ 8,916,430 $ 8,873,639 $ 8,873,639 PPP(Non-GAAP)



Allowance asa % of total 1.21 % 1.23 % 1.20 % 1.04 % 0.76 % 0.76 %loans (GAAP)

Allowance asa % of totalloans, 1.32 % 1.35 % 1.31 % 1.04 % 0.76 % 0.76 %excludingPPP(Non-GAAP)



APPENDIX E: Commercial Loan Portfolio Characteristics

Commercial Industries Highly Impacted by COVID-19 Pandemic

While Rockland Trust is unable to know with certainty the direct, indirect, and likely far-reaching impacts of the COVID-19 pandemic, we continue to monitor daily the loan balances and the loan exposures for commercial loan categories we have deemed to be highly impacted by the pandemic (i.e., Accommodations, Food Services, Retail Trade, Other Services (except Public Administration) and Arts, Entertainments & Recreation). We do not have any material loan exposure to the Oil & Gas, Casino & Gambling, Aviation, or Cruise Line industries.

The table below provides total outstanding balances of commercial loans as of December 31, 2020, within industries that we have deemed to be highly impacted by the COVID-19 pandemic:

Highly Impacted COVID-19 Industries - Balances



December 31, 2020 (1)

(Dollars in thousands)

Accommodations $ 400,351

Food Services 136,509

Retail Trade 520,649

Other Services (except Public Administration) 150,653

Arts, Entertainment, and Recreation 99,830

Total $ 1,307,992

(1) Amounts presented above exclude $179.1 million of processed PPP loans.

Highly Impacted COVID-19 Industries - Details

December 31, 2020

(Dollars in thousands)

Accommodations

Balance $ 400,351

Average borrower loan size $ 4,055

% secured by real estate 99.7 %

Weighted average loan to value 54.4 %

Other information:

- The accommodation portfolio consists of 68 properties representing acombination of flagged (59%) and non-flagged (41%) hotels, motels and inns.

- Properties deemed to be located in areas of leisure comprise $157.6 million,or 39% of the total accommodation portfolio.

- Approximately 89% of the balances outstanding are secured by propertieslocated within the six New England states with the largest concentration inMassachusetts (59%).



Food Services

Balance $ 136,509

Average borrower loan size $ 374

% secured by real estate 65.6 %

Weighted average loan to value 51.2 %

Other information:

- The food services portfolio includes full-service restaurants (59%), limitedservice restaurants and fast food (38%), and other types of food service(caterers, bars, mobile food service 3%).





Retail Trade

Balance $ 520,649

Average borrower loan size $ 490

% secured by real estate 42.2 %

Weighted average loan to value 55.5 %

Other information:

- The retail trade portfolio consists broadly of food and beverage stores(42%), motor vehicle and parts dealers (29%), gasoline stations (13%), and allother retailers account for (16%) of the current outstanding balance.

- Collateral for these loans varies and may consist of real estate, motorvehicles inventories, other types of inventories and general business assets.



Other Services (except Public Administration)

Balance $ 150,653

Average borrower loan size $ 257

% secured by real estate 51.0 %

Weighted average loan to value 50.8 %

Other information:

- The other services portfolio consists of various for-profit andnot-for-profit services diversified across religious, civic and social serviceorganizations (41%), repair and maintenance business (31%) and personalservices, including car washes, beauty salons, laundry services, funeral homes,pet care and other types of services (28%).



Arts, Entertainment, and Recreation

Balance $ 99,830

Average borrower loan size $ 807

% secured by real estate 84.1 %

Weighted average loan to value 52.9 %

Other information:

- Amusement, gambling and recreational industries make up a majority of thiscategory (94%) and include amusement/theme parks, bowling centers, fitnesscenters, golf courses, marinas, and other recreational industries. Otherindustries including museums, performing arts, and spectator sports account forthe remaining outstanding balances (6%).





Other Commercial Loan Portfolio Characteristics

Average total loan size varies across the commercial portfolio with commercial real estate loans have an average size of $1.1 million, commercial and industrial loans have an average loan size of $141,000 and small business loans, which are each under $5.0 million, have an average loan size of $32,000. Additional details are provided below regarding loan sizes of the commercial real estate and commercial and industrial portfolios as of December 31, 2020:

Commercial Real Estate (Including Construction)

<$5M $5-10M $10-20M >$20M Total

Dollar Amount (in $ 2,631,887 $ 896,451 $ 782,708 $ 416,810 $ 4,727,856'000s)

# of loans 4,036 128 56 17 4,237

Commercial and Industrial (Including PPP)

<$5M $5-10M $10-20M >$20M Total

Dollar Amount (in $ 1,486,114 $ 296,149 $ 280,357 $ 40,532 $ 2,103,152'000s)

# of loans 14,874 45 21 2 14,942

APPENDIX F: COVID-19 Related Modifications Details

Deferrals by Modification Type

Deferral Deferral of of Deferral of Total Total % Principal Principal Interest Deferrals Portfolio Deferral and Only Only (2) Interest

(Dollars in thousands)

Commercialand $ 2,300 $ 298 $ 3,453 $ 6,051 $ 2,103,152 0.3 %industrial

Commercialreal estate 14,393 17,311 132,485 164,189 4,727,856 3.5 %(1)

Business - 669 - 669 175,023 0.4 %banking

Residential 1,804 - - 1,804 1,296,183 0.1 %real estate

Home equity 285 - 638 923 1,068,790 0.1 %

Consumer - - - - 21,862 - %

Totalactivedeferrals $ 18,782 $ 18,278 $ 136,576 $ 173,636 $ 9,392,866 1.8 %as ofDecember31, 2020

(1) Balances include commercial construction deferrals. (2) Includes $134.2 million of loans with previous full payment deferrals which have transitioned to interest only deferrals.

Deferrals by Industry

December 31, 2020

(Dollars in thousands)

Highly Impacted Industries

Accommodation $ 113,542

Food Services 4,298

Retail Trade 177

Arts, Entertainment, and Recreation 28,817

Total Highly Impacted Industries 146,834



Other Industries

Real Estate and Leasing 23,280

Transportation and Warehousing 581

All Other Industries 328

Total Other Industries 24,189



Consumer (residential, home equity and other) 2,613

Grand Total $ 173,636

View source version on businesswire.com: https://www.businesswire.com/news/home/20210121005923/en/

CONTACT: Chris Oddleifson President and Chief Executive Officer (781) 982-6660

CONTACT: Mark J. Ruggiero Chief Financial Officer and Chief Accounting Officer (781) 982-6281