Rockland Trust Reports Strong Q1 Earnings Amid Economic Uncertainty
Independent Bank Corp, the parent company of Rockland Trust, reported solid earnings for the first quarter of 2025, with core operating results driven by net interest margin improvement, fee revenue growth, and well-controlled expenses. The bank's pre-provision net revenue (PPNR) rose on both a linked-quarter and year-over-year basis, with PPNR return on average assets (ROAA) coming in at 1.52% on an operating basis.
Despite the strong earnings performance, credit costs for the quarter were elevated as the bank continues to resolve problem loans. Chief Executive Officer Jeff Tengel noted that one of the largest non-performing loans (NPLs) is still expected to be resolved in the second quarter, with another large NPL slipping into Q2 from the initial expectation of resolution in Q1.
Notably, one large problem loan did move to nonperforming status in Q1. However, the bank's management team emphasized that they have identified the significant stress loans and have a detailed action plan for each one of them.
The company also highlighted its progress on key strategic priorities in Q1. Commercial and industrial (C&I) and small business loans were up 2.1% and 2.6%, respectively, while commercial real estate and construction loan balances declined by 1.2%. The bank continues to reduce transactional CRE business and free up capacity to support its legacy commercial real estate relationships.
Mark Ruggiero, CFO and Head of Consumer Lending, mentioned that the successful $300 million sub debt raise will lead to an expected pro forma CRE concentration slightly north of 300% inclusive of the impact of the Enterprise acquisition. The company continues to prepare for the closing of its pending acquisition of Enterprise, which is now expected to occur in the third quarter of the year.
Rockland Trust also highlighted its people strategy, adding 7 C&I bankers over the past year, taking its total to 31%. Two recent hires include a highly respected and experienced individual as regional manager for middle market, C&I and specialty banking, and an experienced international banker to lead efforts in FX and trade finance.
The company also emphasized its preparations for the core FIS processing platform upgrade scheduled for May '26. The move will improve technology infrastructure, enhance efficiency, and support future growth. Additionally, Rockland Trust prudently grew deposits in Q1, which has been a historical strength of the bank.
Despite these positive developments, Chief Executive Officer Jeff Tengel noted that economic uncertainty, driven by tariffs and potential federal government actions, continues to affect clients' behavior. Most clients are taking a wait-and-see approach, pausing significant expansion or growth initiatives as they assess the economic landscape.
