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An increase in its set-aside for troubled loans as speculation grows about a possible recession saw Rockland Trust’s net income tick downwards in the first quarter.
Rockland announced a 2025 first-quarter net income of $44.4 million, compared to a 2024 fourth-quarter net income of $50 million. Net income is also down year-over-year: Rockland reported $47.8 million in the first quarter of 2024. The bank noted that the decrease in net income was primarily due to its higher loan loss provision, which it grew from $7.5 million in the fourth quarter to $15 million in the first quarter.
The bank also saw net charge-offs increase to $40.9 million,compared to $1.2 million in the prior quarter. This was primarily due to three previously classified commercial loans, two of which had been reserved for in prior periods.
Bank executives told stock analysts that a $54 million office loan is also expected to be sold during the second quarter and resulted in a $24.9 million charge-off. Additionally a $30 million syndicated office loan in downtown Boston migrated to non-performing status in the first quarter. Rockland executives said that they are working through a potential loan modification with the borrower but felt that it was appropriate to charge of the balance down to the building’s current appraised value, which resulted in a $8.1 million charge-off.
“Regarding asset quality, we anticipate resolution of the larger non performing assets already discussed with the provision for loan loss driven by any loss emergence, not already identified,” CFO Mark Ruggiero said during the bank’s quarterly earnings call. “Although we feel we have identified and fully reserved for the highest risk loans in our portfolio, we feel it is appropriate to pull specific provision for loan loss guidance given the increasing uncertainty over broader economic conditions.”
The bank reported its deposits increased to $15.7 billion, an increase of $370 million, or 2.4 percent, from the fourth quarter of 2024.
Executives also noted that its pending acquisition of Lowell-based Enterprise Bank will close in the third quarter and that 32 of Enterprise’s 33 commercial bankers will join Rockland post-merger.
“Despite the growing uncertainty in the overall economic environment, our results reflect positive activity in our core fundamentals,” CEO Jeffrey Tengel said. “We continue to have success in balancing our commercial loan originations, deposits grew nicely, our margin expanded, we kept expenses well maintained, and we increased our dividend for the 15th consecutive year. In addition, we remain on track with our integration efforts related to the pending acquisition of Enterprise.”
