Independent Bank - Earnings Call - Q4 2024
January 17, 2025
Executive Summary
- Q4 2024 GAAP EPS was $1.18 on net income of $50.0M; operating EPS was $1.21, driven by higher net interest income, a lower provision, and a reduced tax rate (20.49%) versus Q3.
- Net interest margin expanded 4 bps to 3.33% (core 3.31%) as funding costs declined; total revenue was $176.9M (NII $144.7M, noninterest income $32.2M).
- Asset quality was stable: NPLs 0.70% of loans, net charge-offs 0.03% of average loans annualized; provision fell to $7.5M from $19.5M in Q3, aided by specific reserve actions on identified office exposures.
- 2025 guidance (ex-Enterprise) calls for low-to-mid single-digit loan/deposit growth, ~15 bps NIM expansion over 2024 Q4 core (3–4 bps/quarter), lower provisions than 2024, mid-single-digit growth in fees and core expenses, ~23% tax rate; one-time ~$3M core conversion costs expected in 2025.
- Catalysts: margin expansion trajectory and expected resolution of large office credits (short sales pending), plus the strategic/financial merits of the Enterprise Bancorp acquisition and a 4% dividend increase in March 2025 (post-quarter) and a $0.57 dividend paid Jan 6, 2025 (declared Dec 12).
What Went Well and What Went Wrong
What Went Well
- Net interest margin expanded to 3.33% (core 3.31%); management sees continued expansion from fixed-rate asset repricing and favorable deposit dynamics (20% non-time deposit beta, 80% time deposit beta).
- Asset quality stabilized: NPL/loans 0.70% (down from 0.73% in Q3), net charge-offs 0.03% (down from 0.18% in Q3), with provision reduced to $7.5M from $19.5M.
- Strategic progress: 10 new C&I bankers hired; owner-occupied CRE reclassified to C&I to better reflect risk; entering Enterprise Bancorp deal to deepen markets; core system upgrade planned for May 2026 (“meaningful upgrade” enabling efficiencies and better API integration).
What Went Wrong
- Efficiency ratio worsened to 60.18% (from 57.31% in Q3) on higher noninterest expenses ($106.4M), including M&A expense ($1.9M), consulting, unrealized equity losses, and check fraud losses; occupancy had a $550K one-time lease termination cost.
- Noninterest income declined 4% linked-qtr to $32.2M on lower loan-level derivatives and unrealized equity gains; AUA fell 1.8% to $7.0B on December market pullback.
- Delinquencies rose to 0.60% of loans (from 0.33% in Q3), driven by a $30M syndicated downtown Boston office loan hitting early-stage delinquency at maturity (no specific reserve yet; appraisal pending in Q1 2025).
Transcript
Operator (participant)
Before proceeding, please note that during this call, we will be making forward-looking statements. Actual results may differ materially from these statements due to a number of factors, including those described in our earnings release and other SEC filings. We undertake no obligation to publicly update any such statements. In addition, some of our discussions today may include references to certain non-GAAP financial measures. Information about these non-GAAP measures, including reconciliation to GAAP measures, may be found in our earnings release and other SEC filings. These SEC filings can be accessed via the Investor Relations section of our website. Matters relating to our pending acquisition of Enterprise Bancorp will be addressed in a registration statement on Form S-4 to be filed by Independent with the SEC.
That will include a proxy statement for a special meeting of Enterprise's shareholders to approve the proposed transaction, and that will also constitute a prospectus for the Independent common stock that will be issued as part of the proposed transaction. Information regarding the persons who may, under the SEC's rules, be deemed to be participants in the solicitation of proxies from the Enterprise shareholders in connection with the proposed transaction will be set forth in the registration statement. We urge you to read the registration statement when it becomes available because it will contain important information. Finally, please also note that this event is being recorded. I would now like to turn the conference over to Jeff Tengel, CEO. Please go ahead.
Jeff Tengel (President and CEO)
Thank you. Good morning and thanks for joining us today. I'm accompanied this morning by CFO and head of consumer lending, Mark Ruggiero. I'm pleased to report solid fourth-quarter results driven by net interest margin improvements, stable credit trends, and double-digit annualized growth in our C&I and small business loan segments. Importantly, our average deposits grew at an approximate 3% annualized rate. Our pre-provision net revenue ROA was 1.48% on an operating basis, and our tangible book value improved 1% from the third quarter and 6.4% from the year-ago quarter. As always, this performance reflects our team's continued commitment to developing and deepening customer relationships. Mark will elaborate on our financial results in a few minutes. As I reflect on 2024, I believe we made solid progress on several of our key strategic priorities. First, we made steady progress towards reducing our commercial real estate concentration.
C&I and small business loans were up 4% and 12% respectively in 2024. Conversely, CRE and construction loan balances were essentially flat due to normal amortization and the intentional reduction of transactional CRE business. At year-end, our CRE concentration stood at 305% down 2% from the third quarter. We will continue to reduce transactional CRE business and free up capacity to support our legacy commercial real estate relationships. In 2024, we hired 10 new C&I bankers, reflecting the desirability of our platform and the award-winning culture of Rockland Trust. C&I loan production of approximately $785 million was up 28% in 2024. Importantly, C&I loan production represented 50% of total commercial loan production in 2024, up from 40% in 2023. We also originated $81 million of business banking loans, up 8% from 2023.
And finally, we hired a seasoned banker to lead a newly established not-for-profit vertical within our commercial banking business, which should bolster both commercial loans and deposits. I would note that this quarter we reclassified owner-occupied CRE loans from the CRE bucket to the C&I bucket. We believe this more accurately reflects the purpose and risk of owner-occupied loans and is consistent with industry standards and regulatory guidance. The prior periods have been restated to allow for ease of comparison. Second, in December, we entered into an agreement to acquire Enterprise Bancorp. This transaction will add density to our existing markets while expanding the Rockland Trust franchise into northern Mass and southern New Hampshire. As we mentioned in December, our franchises fit together like two puzzle pieces.
We have made in-person visits to all 27 Enterprise branches, all of which will remain open post-close, and have had numerous cross-functional meetings with the Enterprise team across all business units. No surprise, we've been extremely pleased with the collective outcome of these meetings, which have validated our assumption, namely that their business practices, strong focus on the customer experience, and engagement of their colleagues mirrors that of Rockland Trust. We are even more convinced about the strategic and financial merits of this deal. Third, we finalized plans to upgrade our core FIS processing platform. The move to a new platform within the FIS ecosystem will improve our technology infrastructure, enhance efficiency, and support the future growth of the bank. We plan to convert our systems in May of 2026. Fourth, we prudently grew deposits, which has been a historical strength of ours.
In the fourth quarter, the cost of deposits was 1.65%, highlighting the immense value of our deposit franchise. Mark will provide additional color on our deposits in a few minutes. Fifth, our wealth management business continues to be a key value driver. We grew our AUA by 7.6% in 2024 to $7 billion, inclusive of the December market pullback. This business works seamlessly with our retail and commercial colleagues to deliver a holistic experience that resonates with our clients. The breadth of these services provides one-stop shopping for our clients that includes not only investment management but financial planning, estate planning, tax prep, insurance, and business advisory services. This full suite of products is a differentiating factor for our wealth business. And lastly, I would be remiss if I did not mention our historical discipline: credit underwriting and portfolio management.
Rockland Trust's solid loan underwriting has consistently resulted in low loan losses through various economic cycles. Net charge-offs have averaged five basis points over the last 10 years. While we clearly have some already identified troubled office loans, we have been proactive in monitoring and addressing these credits, many of which were originated by banks that we acquired. As we look into 2025, we remain optimistic about our abilities to navigate an uncertain interest rate environment. We will continue to focus on those actions we have control over and look to capitalize on our historical strengths. There's no magic to our value proposition. We just do community banking really well and believe our current market position represents a high level of opportunity. We remain focused on long-term value creation. A top priority in 2025 will be closing the Enterprise acquisition and integrating the two companies.
There are a lot of synergies to be captured that are not in any of our estimates. We will also continue to focus on loan portfolio diversification and prudent expense management while we build a best-in-class organization. Underscoring every measure of success is a talented team of engaged, passionate, and highly talented colleagues focused on making a difference for the customers and communities we serve. That is why we are proud to be named a top place to work in Massachusetts by the Boston Globe for the 16th consecutive year. In summary, we are fully equipped to deliver the consistent results the market expects with a skilled and experienced management team, ample capital, attractive markets, disciplined credit underwriting, strong brand recognition, operating scale, a broad consumer, commercial, and wealth customer base, and an energized and engaged workforce.
In short, I believe we are well positioned to realize the benefits of the Enterprise acquisition and continue to take market share in the Northeast. On that note, I'll turn it over to Mark.
Mark Ruggiero (CFO)
Thanks, Jeff. I will now take us through the earnings presentation deck that was included in our 8-K filing and is available on our website in today's investor portal. Starting on slide three of the deck, 2024 fourth quarter GAAP net income was $50 million, and diluted EPS was $1.18, resulting in a 1.02% return on assets, a 6.64% return on average common equity, and a 9.96% return on average tangible common equity. Excluding $1.9 million of merger and acquisition expenses and their related tax benefit, the adjusted operating net income for the quarter was $51.4 million, representing a 1.05% return on assets, a 6.82% return on average common equity, and a 10.23% return on average tangible common equity. The results are largely in line with expectations, highlighted by modest margin expansion offset by some level of outsized expenses that I'll provide additional color on in a bit.
Tangible book value per share increased by $0.39 during the quarter, reflecting solid earnings retention offset by a negative $0.30 impact from other comprehensive unrealized losses. And as Jeff mentioned, tangible book value per share increased $2.83 for the full calendar year, despite the approximately $31 million of share buyback activity earlier in the year. Turning to slide four, the deposit story continues to be a positive one as average balances increased by $109 million, or 0.7% for the quarter, while the period-end balance decline of $135 million reflects typical seasonal outflows within our business and municipal segments. The overall mix of deposits remains stable, with non-interest-bearing DDA comprising 28.7% of total deposits at year-end. Fueling the positive deposit momentum, core households experienced net growth for the quarter, with total net growth of 2.8% for the full year.
In addition, as we have highlighted over the last few quarters, this deposit stabilization provides a clear path for us to be able to reduce the cost of deposits in conjunction with the fourth quarter and any future Federal Reserve rate cuts. Moving to slide five, I'll quickly note that these balances reflect the owner-occupied commercial real estate reclass that Jeff just alluded to earlier. Regarding activity for the quarter, advances in the construction book and solid closings in C&I drove a healthy net increase in total commercial balances, while small business regained strong growth after a fairly muted prior quarter. The approved commercial pipeline sits at $259 million as of December 31st. On the consumer side, both residential mortgage and home equity balances were up nicely in the quarter, as we continue to see consistent demand across the footprint in both products.
Shifting gears to asset quality on slides six and seven, I'll highlight some of the key developments for the quarter. In summary, total non-performing loans remained relatively stable at $101.5 million, or 0.70% of total loans as of year-end. Notable developments on the largest non-performing loans, as detailed here on slide six, are as follows. The $53.8 million office loan remains in workout status, with resolution expected from a short sale of the underlying collateral. There is a signed offer pending, with the offer price serving as the basis for the increase in the specific reserve of $3.9 million to a total of $26.3 million. As the process is still in the early stages, we are anticipating resolution to occur in the second quarter of 2025. The second loan on the list, an $11.7 million office loan, is also anticipated to be resolved via a short sale of the property.
This, too, has a pending offer, with the offer price serving as the basis for an increase in the specific reserve on that loan of $2.2 million during the quarter. We are hopeful for a 2025 first quarter resolution on this loan. And third, the equipment rental C&I loan remained unchanged in balances as of December 31st. But on a positive front, a $6 million partial paydown was received subsequent to year-end as a result of collateral sales under the bankruptcy proceedings. Ultimate resolution of the remaining $5.8 million in outstandings will be determined by additional collateral sales. As noted on slide seven, these loans, along with the modest loan growth noted earlier, drove the $7.5 million in provision for loan loss for the quarter, increasing the allowance as a percentage of loans to 1.17% as of year-end.
Jumping to slide nine and a deeper dive on office exposure, we highlight that the total criticized and classified office loans remain virtually unchanged from the prior quarter. We already touched upon the two largest non-performing office loans, while one other notable update would be in regards to the $30 million syndicated loan that reached maturity in the fourth quarter. For this loan, the borrower is receiving new tenant interest for some of the recently vacated space, as well as renewing some existing leases, which will all be incorporated in a new appraisal expected to be finalized and presented to the bank group during the first quarter. With a potential modification and/or ultimate resolution still unknown, no impact on balances or specific reserve was warranted in the quarter.
In terms of office loan maturities for calendar year 2025, the vast majority and number of units are pass rated and performing without any known issues, with the status of the large first quarter non-performing loan already discussed. Switching gears to slide 11, we highlight the net interest margin improved by four basis points in the fourth quarter to 3.33% and improved two basis points on a core basis when excluding outsized benefit from interest recoveries on payoffs and purchase accounting accretion. The drivers of the fourth quarter margin performance should remain intact as we think about the environment going forward. Along those lines, we have added slide 12 to provide additional detail on the company's expectations regarding the overall interest rate risk profile.
To summarize, the bank has approximately 21% of its loan portfolio net of hedge positions that are tied to the short end of the curve and would reprice consistent with any future Fed Reserve rate moves. Similarly, we estimate an approximate 20% deposit beta on our overall non-time-related deposits and an approximate 80% beta on time deposits, the effective timing of which would be in line with the future maturities of that book. Lastly, we currently have low levels of cash and borrowings that are tied to the short end of the curve. From a fixed rate repricing perspective, we project that the cash flows on our securities and loan books will reprice into a longer-term rate curve that will drive yield spread increases on those cash flows of approximately 250 and 125 basis points respectively, based on the current yield curve.
The estimated impact of these moving pieces is reflected here on this slide and serves as the basis for the margin guidance that I'll share with the rest of the full year 2025 guidance shortly. Moving to slide 13, non-interest income decreased in the fourth quarter, driven primarily by reduced loan-level derivative swap income and reduced unrealized gains on equity securities. Overall wealth management income stayed relatively consistent with the prior quarter as the market correction in December challenged revenue growth, with overall assets under management ending the year at $7 billion. Total expenses increased during the quarter, though partially impacted by a couple of large non-recurring items, including a $550,000 one-time expense for final resolution on a lease termination of an exited East Boston branch, as well as $764,000 of unrealized losses on equity securities and the aforementioned $1.9 million of merger and acquisition expenses.
Lastly, for the tax rate, the tax rate for the quarter was approximately 20.5%, down from prior quarters as a result of additional tax credit investments made during the quarter, as well as the statutory release of a $1.2 million uncertain tax position in conjunction with the 2023 tax return filing during the quarter. In closing out my comments, I'll turn to slide 17 for full year 2025 guidance. As Jeff mentioned, we will keep you apprised of any new developments related to the closing of Enterprise Bancorp as that process develops. For now, we reaffirm the high-level results as presented at announcement, with the caveat being the uncertainty for fair value adjustment impact depending on the rate environment at closing. The rest of the guidance I'll provide now relates to Independent Bank Corp as a standalone entity.
In terms of loan and deposit growth, we anticipate low- to mid-single-digit percentage increases for the full year. Regarding the net interest margin, as I laid out earlier, we believe the repricing of fixed-rate assets will drive approximately 12-15 basis points of margin expansion over the course of the year, meaning approximately 3-4 basis points of expansion each quarter. Given the overall profile of the balance sheet, any additional Federal Reserve cuts are expected to have a neutral to slightly modest benefit on the overall margin forecast for the year. Regarding asset quality, we anticipate resolution of the larger non-performing assets already discussed, with minimal impact on provision levels as the expected loss on those loans has already been recognized.
As we have been saying through the entire year, we will still expect to see some more bumps along the way, but given our view of the portfolio today, we would expect provision levels to come down from 2024 results and be driven by loan growth and any negative credit migration that's not already identified. Regarding non-interest income, we expect a mid-single-digit % increase for full year 2025 versus 2024, and for non-interest expense, we would suggest core expenses, excluding M&A, to increase at a mid-single-digit pace as well. As we work through integration with Enterprise, we are also committed to moving forward with a significant core system upgrade, which Jeff just mentioned earlier. The upgrade will likely be effective in the first half of 2026, with no material impact on the future expense run rate.
However, we anticipate one-time expenses in 2025 in the $3 million range related to non-capitalized implementation costs, and we will highlight that spend separately throughout the year. Lastly, the tax rate for the full year is expected to be around 23%. And with that, we will now open it up for questions.
Operator (participant)
We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Steve Moss with Raymond James. Please go ahead.
Steve Moss (Analyst)
Hey, guys. Good morning.
Jeff Tengel (President and CEO)
Hey, Steve. Morning.
Steve Moss (Analyst)
Maybe just starting off with the loan growth outlook for 2025 here. It feels like a little bit of a step up with including mid-single digits for the upcoming year. Jeff, I know you mentioned at the beginning of the call highlighting a number of hires. Just kind of curious, have you seen an improvement in loan demand here in the last couple of months, or is this more just the hires you highlighted in terms of expectations?
Jeff Tengel (President and CEO)
On balance, I think it's more the people that we've hired. The customer sentiment we get is still kind of cautiously optimistic, but I wouldn't characterize it as being we're seeing any kind of robust economic activity. So I would characterize it more as some of the people that we're hiring and taking share. Okay. Great.
Then in terms of the margin outlook here, I guess the details in the deck really were helpful, but I just was curious with regard to the reference rates you guys put for loans and securities. I'm assuming you're referring to the Treasury curve. So are you thinking in terms of new loans coming on, they're coming on around a 6% rate? Am I reading that correctly?
Mark Ruggiero (CFO)
No. Fourth quarter, Steve, we experienced probably mid-sixes. Certainly, with the tick up here in the last few weeks, there's the potential that we see new volumes coming on around 7%. But we are seeing the weighted average coupon of what's rolling off in the low to mid-fives in any given quarter. So that's sort of the basis for the 125 basis points spread that we referenced in the material.
Steve Moss (Analyst)
Okay. Great. Appreciate that. Then just one last one for me.
In terms of the $49 million in past dues in office, just curious, is one of those, I'm assuming, is the $30 million substandard that you guys gave the update on? And is there another loan within that past due bucket there?
Mark Ruggiero (CFO)
Yes. That's right. The $30 million is the largest. There's another $7 million office loan that we actually highlighted earlier in 2024 that at one point was subject to a note sale. That deal had fallen through. We believe there's another opportunity for a note sale here that is pending, and then there is also, I believe, an $11 million past due that is also in negotiations right now of a short sale. And that's the loan we took an additional $2.2 million reserve during the quarter on.
So it's primarily three loans that make up the majority of that.
Jeff Tengel (President and CEO)
Most of which we've talked about.
Mark Ruggiero (CFO)
That's right.
Steve Moss (Analyst)
Okay. Perfect. Well, I really appreciate all the color and nice quarter. Thanks, guys.
Jeff Tengel (President and CEO)
Thank you.
Thank you.
Operator (participant)
The next question comes from Mark Fitzgibbon with Piper Sandler. Please go ahead.
Mark Fitzgibbon (Analyst)
Hey, guys. Happy Friday.
Jeff Tengel (President and CEO)
Happy Friday. Mark,
Mark Fitzgibbon (Analyst)
just to be clear, the uptick in delinquencies was the $11 million past due. Is that correct?
Mark Ruggiero (CFO)
No. So there was a lot of moving pieces. The uptick in delinquencies this quarter is the syndicated downtown Boston loan for $30 million. So that reached maturity in the fourth quarter and obviously is now an early-stage delinquency without a modification at this point.
Mark Fitzgibbon (Analyst)
Okay. Fair enough. And then just sort of at a higher level, another bank in New England did a call this morning, and they said they see the inflection point in credit quality being sort of mid-2025. I'm curious if you guys would agree with that.
Jeff Tengel (President and CEO)
Kind of hard to say. It does feel like it's getting a little bit better, but these things are, each loan is so unique. So if we were speaking broadly, I would say I wouldn't necessarily argue with that. I'm not here to call the pivot point, but I wouldn't necessarily disagree per se. But it is because, especially with some of the legacy East Boston Savings loans we have that are sizable, I'll feel a lot better answering that question if we get a number of these note sales and short sales accomplished in the next quarter or two and are on the other side of that.
Mark Fitzgibbon (Analyst)
Okay. I guess I was curious your thoughts around reclassifying owner-occupied commercial real estate to C&I.
I guess I'm curious, what, if any, benefit do you sort of get from that other than the optics of it?
Jeff Tengel (President and CEO)
Well, I mean, as long as I've been doing this, I've always thought of owner-occupied CRE as C&I because your ultimate repayment is coming from typically a company that's making something or distributing something. And it's a much different risk and a much different asset class than kind of investor commercial real estate. And so just even internally in our reporting, I think it helps orient you to what kind of risks we're taking on the balance sheet and what the composition of the balance sheet is.
And then as it gets reflected externally, I'm assuming that the investment community is smart enough to know that when we break out the difference between owner-occupied and non-owner-occupied, that they can do the math, but I guess we're just doing it for them in some respects. But I do think it's the right way to profile it. If you think about what goes into the CRE concentration that the regulators measure, owner-occupied CRE is not included in that measure. So it's just trying to be consistent across the entire portfolio as to how we view the risk.
Mark Fitzgibbon (Analyst)
Okay. And then lastly, on the wealth business, I guess I was curious if you could share with us what client flows look like in the quarter versus the impact from market appreciation.
Mark Ruggiero (CFO)
Sure. Mark, we saw about $20 million or so of net outflows for the quarter.
New originations have been strong, but slowed down a little bit in the last couple of quarters. For the quarter, we still saw net market appreciation, but the flows have been fairly neutral the last couple of quarters.
Mark Fitzgibbon (Analyst)
Thank you.
Mark Ruggiero (CFO)
You're welcome.
Jeff Tengel (President and CEO)
You're welcome.
Operator (participant)
The next question comes from Lori Hunsicker with Seaport Research Partners. Please go ahead.
Lori Hunsicker (Analyst)
Hi. Thanks. Good morning. Just wondered, Mark, if we could start with your spot margin here. Thanks.
Mark Ruggiero (CFO)
Sure. So December spot margin was 333 on a core basis.
Lori Hunsicker (Analyst)
Okay. Great. And then just going back to that $30 million loan, there are no specific reserves on that at the moment, correct?
Mark Ruggiero (CFO)
Correct.
Lori Hunsicker (Analyst)
Okay. And then the new appraisal comes this quarter. Just want to make sure I got that correct.
Jeff Tengel (President and CEO)
Yeah. That's our expectation.
Lori Hunsicker (Analyst)
Okay. And then as of last quarter, I had in my notes that was 77% occupied.
Do you have an updated occupancy number on that right now?
Mark Ruggiero (CFO)
Yeah. So we think with the potential for a new tenant coming in to vacate some of the partially vacated space from a larger loss of a tenant, that that would get back to around 80% in the near term.
Jeff Tengel (President and CEO)
And the other thing to keep in mind here, Lori, is some of the new tenants are still burning through a free rent period, which impacts some of the near-term cash flows.
Lori Hunsicker (Analyst)
Got it. Yeah. And along those lines, I have the debt service sitting at about 10. Do you have an update on that, or?
Jeff Tengel (President and CEO)
I think, again, some of it is when you say debt service, is it IO, or are we talking about amortization, which is obviously some of the things we're talking to the client about now? But if it's IO at their current occupancy, I think they're positive cash flow.
Lori Hunsicker (Analyst)
Got it. Okay. Got it. As always, thank you for all the color on your office. Just wanted to shift over last question on expenses. Mark and I appreciate the expense guide, but can you help us think about the mid-single digit growth? What number you're specifically using? I'm looking at core non-interest expense at about $404.7 million. I don't know if that's a good number. And then, yeah, is that the right number to use, or is there a different number?
Mark Ruggiero (CFO)
Nope. That's the right number.
Jeff Tengel (President and CEO)
Yep.
Lori Hunsicker (Analyst)
Off that quarter. Okay. And then the other expense line, just looking linked quarter, going from $22.5 million to $26.8 million. I know you had some things in there like the life insurance adjustment last quarter and the credit on the debit processing, etc. But can you just maybe high-level step us through the difference in those two buckets just so that we have an apples-to-apples on a core comparison there?
Mark Ruggiero (CFO)
Sure. Yeah. I know one of the items I noted in the prepared comments was some of the noise we get on the equity securities. So just to reiterate it, we look at that on a quarter-to-quarter basis. So if we see unrealized gains for the full quarter, we'll report that as non-interest income for that quarter. If there's unrealized losses net for the quarter, that'll flow through as a non-interest expense. So in the fourth quarter, we had net unrealized losses to the tune of about $800,000. So that's obviously a volatile number impacting the fourth quarter. We had some outsized consulting-related expenses in the fourth quarter, some projects that just timing-wise had trailed into the fourth quarter.
So consulting, though we typically have a run rate in every given quarter, that was up about $700,000-$800,000 quarter over quarter. We did see a bit more check fraud losses in the fourth quarter. One instance in particular, like we've heard with other banks as well, there's some issue with treasurer's checks, believe it or not, that are getting put back to banks. So we conservatively took that loss now as we continue to research and negotiate to see if we get a recovery on that. So we had some outsized check losses in the fourth quarter as well.
Lori Hunsicker (Analyst)
And how much?
Mark Ruggiero (CFO)
The treasurer's check situation is about $350,000, but we had some other check losses as well during the quarter of $200,000-$300,000 outsized.
Lori Hunsicker (Analyst)
Okay.
Mark Ruggiero (CFO)
So I think those are the biggest components, Lori, off the top of my head.
Lori Hunsicker (Analyst)
Okay. Great. That's helpful. I'll leave it there. Thanks so much.
Mark Ruggiero (CFO)
Okay. Thank you.
Operator (participant)
Again, if you have a question, please press star, then one. Our next question comes from Christopher O'Connell with KBW. Please go ahead.
Christopher O'Connell (Analyst)
Hey. Morning, Jeff. Morning, Mark.
Jeff Tengel (President and CEO)
Hey, Chris.
Christopher O'Connell (Analyst)
Just wanted to see if you could provide any details on the core conversion set for next year and just how significant of an upgrade is it for you guys? What do you see as the largest benefits? And does it allow you to expand into any kind of new verticals or anything like that?
Jeff Tengel (President and CEO)
Yeah. So the platform we're on right now, just to put it in context, we're the largest bank on it.
The average size bank on the platform we're on right now is around $1-$2 billion. So we've really outgrown it. The platform we're migrating to would be very consistent with a number of our peers and some companies much larger than ours, two, three, four times as big as we are. So one, it's way more efficient, and so it'll create some efficiencies. Two, it'll enable us to have greater product capability because it's much easier to plug APIs into this platform. And it's just a more it's a platform that's more consistent with the size and complexity that we are, can handle multi-bank loans, whereas the platform we're on right now struggles to do that a bit. So it's a meaningful upgrade. It's something that we spent a lot of time looking at to make sure it was something we thought we should do.
And ultimately, we came to the conclusion that if we were going to continue to grow and to service our customers the way that we want to and the way that they expect to be serviced, we really needed a platform that would enable us to do that.
Mark Ruggiero (CFO)
I would just add, Chris, a couple of specifics to areas that we're really good at where technology can only make us better. I would suggest cash management in our wire function right now could certainly use an upgrade. And this new platform provides meaningful efficiencies in treasury management capabilities. And then a second area, we have a lot of activity through the branches. It's one of our strongest core differentiators. But right now, that's a bit manual and inefficient in terms of getting some of the branch-related activity and communications to the back office functions.
This would streamline communication, case management, customer relationship-type notes between the front lines and the back office, which for a bank like us is very valuable.
Christopher O'Connell (Analyst)
Great. Appreciate the color. And then is there any update, I guess, on the sub-debt timing related to the deal?
Mark Ruggiero (CFO)
No specific update quite yet on that, but we are still planning to look to execute here when we believe we'll get best pricing and certainty of execution. As I noted at announcement time, we're not going to necessarily try and time the market perfectly here to line it up right before we plan to close. We'll be working with our partners to, like I say, assess the market and look to execute when we think the timing's right. So if that means it's a couple of months before the close, we're okay with that.
Christopher O'Connell (Analyst)
Great.
And then as it relates to the deal, we've seen a number of competitors with recently announced deals coming in at a little bit of a faster pace than they have perhaps over the past two or three years. So far, I know it's early in the process. Have you seen any change in tone or in discussions or your relationship with the regulators so far with this deal?
Jeff Tengel (President and CEO)
Yeah. So far, I would say no. But we had a really good relationship coming into it prior to making the announcement. But we haven't heard anything that has given us pause, and nor have we heard anything from the regulators that would suggest it's going to be an expedited approval. So we're going to continue to plan the way we always would, and we'll react to the approval process as it unfolds.
Christopher O'Connell (Analyst)
Great. Thank you.
And then on slide 12, I just wanted to clarify on the longer-term fixed-rate repricing for the loans and securities. You have the annualized margin impact of the 12-15 basis points. Is that longer-term, as in maturing over the next year, two years, or is that the entire backbook for the loans and securities?
Mark Ruggiero (CFO)
Yeah. That's a good question. That's essentially a one-year outlook, meaning call it a basis point a month of what we expect to reprice over the next year. So point in time a year from now is where we'd see sort of the full 12-15 basis points baked into the margin.
Christopher O'Connell (Analyst)
Okay. Great. That's helpful.
Then, based on the rest of the details on that slide, kind of the short-term net one to two basis points and what we've already seen come through with 100 basis points of Fed cuts, and then on the prior slide, you have the good detail and kind of the time to deposit maturities, which are heavily weighted towards one and two Q25. Do you expect to see more of an outsized margin pickup in the first quarter or the first and second quarter of the year?
Mark Ruggiero (CFO)
Yeah. Certainly, the CD repricing dynamic, I think, would drive what we're reflecting on this slide, which is potentially a couple of basis points over the next quarter or two that you would not necessarily maybe get in the second half of the year where maybe the CD repricing dynamic is not as beneficial.
So I think the core deposit and loan movements will essentially offset each other. And as you're highlighting, the CD repricing would give us that net lift of a few basis points in the first half of the year. And then if there are no other cuts, I think that short end of the curve impact essentially becomes a moot point. And it's the longer-term repricing that drives the margin expansion.
Christopher O'Connell (Analyst)
Great. Thanks for taking my questions.
Mark Ruggiero (CFO)
No problem.
Operator (participant)
This concludes our question-and-answer session. I would like to turn the conference back over to Jeff Tengel for any closing remarks.
Jeff Tengel (President and CEO)
Thanks. And appreciate everybody's interest in Rockland Trust and INDB. Have a great day.