Rockland Trust parent company doubles annual profits, ending 2022 with $264M

PROVIDENCE – Rising interest rates and a $1.2 billion acquisition of another Massachusetts bank helped Independent Bank Corp. to more than double its 2022 profits compared with the prior year, the company reported on Thursday.

The parent company for Rockland Trust Co. ended the year with $263.8 million in earnings, up 118% over the prior year.  The earnings hike comes thanks to rising interest rates and more interest-earning assets from the company’s 2021 acquisition of holding company Meridian Bancorp Inc. and its subsidiary East Boston Savings Bank. 

Earnings per diluted share rose by $2.22, to $5.69 per share.

While based in Rockland, Mass., Rockland Trust operates a commercial lending and investment office in Providence, and has bank branches in Seekonk and Attleboro.

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Like banks nationwide, the company benefited from a series of federal interest rate hikes over the course of the year, which helped to drive up interest income by 54.8% to $642.8 million. This was partially offset by rising interest expenses – also reflecting higher interest rates – which rose more than two-fold to $29.6 million.

Net interest margin – the difference between interest income generated and the amount of interest paid out to lenders – rose 44 basis points to 3.46%.

Unlike other financial institutions across the country which have sought to build up reserves in anticipation of bad loans from a recession, Independent Bank Corp. cut its annual credit loss provisions. The $6.5 million added in 2022 marked a 64.3% decrease over the prior year, which reflected that it no longer needed as much in reserves now that the Meridian acquisition was completed.

Annual noninterest income grew by 8.3% to $114.7 million, driven by gains in deposit account fees, interchange and ATM fees, and gains on life insurance benefits. This was partially offset by a loss in mortgage banking income, which was cut by 73.5% to $3.5 million.

Noninterest expenses increased 12.4% to $373.7 million, including higher salaries and employee benefits and occupancy and equipment costs. However, the company spent 82.6% less, down to $7.1 million, on merger and acquisition-related costs.

Total assets stood at $19.3 billion as of Dec. 31, down 5.5% over a year ago, due primarily to declining cash balances, the company stated. The $13.9 billion in total loans and leases marked a 2.5% bump over a year ago, with the largest increases in residential real estate and small-business loans.

Total deposits fell 6.1% to $15.9 billion, with losses across deposit types amid efforts to reduce excess liquidity, the company stated.

For the fourth quarter of 2022, the company reported a $77.1 million profit, which was more than 45 times the amount it earned in the fourth quarter of 2021. The profit spike again reflected the post-acquisition benefits, such as lower acquisition-related expenses and stronger interest income. Rising interest rates also played a role.

Quarterly interest income rose 46.2% to $184.1 million, although the gains were partially offset by higher interest expenses, which rose nearly five-fold.

The company also socked away $5.5 million in its quarterly loan loss reserves, an 84.6% drop over the fourth quarter of 2021, which again reflected the Meridian acquisition.

Quarterly noninterest income of $32.3 million marked a 10.7% increase year over year, with gains in deposit account, interchange and ATM fees, along with investment management fees. 

Quarterly noninterest expenses fell 19%, reflecting that the company no longer has costs associated with the Meridian merger (in the fourth quarter of 2021, it reported $37.2 million in merger-related costs).

“Due to the tireless efforts of my colleagues, we were well-positioned for rising interest rates, recognized the full year benefit of our most recent acquisition, and increased our loan portfolio,” Christopher Oddleifson, CEO of Independent Bank Corp. and Rockland Trust Co., said in a statement. “Rockland Trust enjoyed another banner year in 2022, capped off with our recent announcement of my successor. It has been an honor to serve as CEO for over 20 years and, as I pass the baton, I am confident that Rockland Trust will continue to thrive.” 

Rockland Trust recently named Jeffrey J. Tengel as its next CEO, slated to succeed Oddleifson as company leader next month.

Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.