© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day, and welcome to the INDB Independent Bank First Quarter 2024 Earnings Conference Call. [Operator Instructions] 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. 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.
Thanks, Nick. Good morning, and thanks for joining us today. I'm accompanied this morning by CFO and Head of Consumer Lending, Mark Ruggiero. Our first quarter performance continues to demonstrate the resilience of our franchise in a difficult environment and is a testament to our long-term proven operating model as a customer-focused community bank. Mark will take you through the details in a few minutes after I share some thoughts. While the current higher for longer interest rate sentiment clearly creates a challenging environment not only for Rockland Trust but for the entire industry. We continue to definitely navigate this uncertain environment. We are laser focused on a number of key strategic priorities, all centered around protecting short-term earnings while positioning the bank for earnings growth when the overall environment improves. One of those priorities is actively managing our commercial real estate office portfolio while working to create a more diversified loan portfolio. We know we have a CRE concentration but it's important to keep in mind that we've been here before. Throughout the last decade, we have made a number of acquisitions that in some cases, created a temporary CRE concentrations. Each time we actively manage this segment while growing other parts of our business to bring us back in balance. We fully expect to do the same now. This historical context is important to note. We have the muscle memory and experienced staff to execute the same game plan. At the same time, we continue to emphasize deposit gathering and deposit pricing discipline. Our uptick in deposits at quarter end as a result of this renewed emphasis. We believe our customer service is best-in-class and resonates with our commercial and retail customer base. It is this personal touch coupled with investments in technology that creates a winning customer experience. That is why Rockland Trust recently ranked #2 in New England in J.D. Power's 2024 U.S. Retail Banking Satisfaction study. One of the several factors measured in the survey, our highest scores were in the categories of trust and people a direct reflection of the meaningful relationships our colleagues build with those we serve. Our employees continue to be the driving force behind our success. We said last quarter that we didn't expect this year to be easy and it hasn't been but 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 do community banking really well and believe our current market position presents a high level of opportunity. We remain focused on long-term value creation. Another way we will create long-term value is through disciplined organic growth. We will do that by deepening relationships across all of our business lines. We have a differentiated business model where all of our lines of business work seamlessly across the enterprise. It may sound simple but it's been years in the making. Our retail branch colleagues work hand-in-hand with our commercial and mortgage bankers, our wealth management business, IMG receives a majority of its new business leads from our commercial and retail colleagues. We are developing and enhancing measures and metrics to further drive this collaboration. Gaining buy-in and successfully executing this model has earned us a competitive advantage. It is this operating model we are bringing to our new markets, Worcester and the North Shore where we are starting to gain traction. We are also continuing to build out our commercial banking platform with an emphasis on C&I. We've made a number of strategic hires and expect more to come. We are very active in acquiring talent and view talent acquisition and retention is a top priority. Our business model, culture and stability resonates with prospective employees no different than it does with prospective customers. Our commercial loan pipelines at quarter end were higher than a year ago and higher than the last quarter. I mentioned earlier that we are laser-focused on our commercial real estate office exposure. We are confident that our decades of demonstrated credit and portfolio management skills will help mitigate any inherent risk because each office loan has unique characteristics like lease roll, maturity, geography, ownership, tenant makeup, it's difficult to paint the entire portfolio with one brush. That's why we have action plans tailored to each individual loan and relationship and review and discuss every large loan monthly. It is because of these unique characteristics that we believe the credit story will take time to fully play out. Although with each quarter that passes, we believe you'll see the signs of our credit acumen and underwriting discipline mitigating this risk.
As we focus on these priorities, we continue to actively assess M&A opportunities. While M&A activity remains somewhat muted, we will be disciplined and poised to take advantage of opportunities that fit our historical acquisition strategy and pricing parameters when conditions improve.
It's been a proven value driver in the past and we expect it to be one in the future. Additionally, given our level of excess capital, we routinely discuss and evaluate the economics of another stock buyback. Finally, I would be remiss if I didn't give a shout out to our fantastic colleagues. Their dedication and commitment to our customers, colleagues and communities continue to amaze me. You can't win in banking without the best people at our J.D. Power recognition, our Greenwich awards or the Myriad of other awards and recognition illustrate that our people are simply the best. To summarize, we have everything in place to deliver the results the market has been accustomed to over the years including a talented and deep management team, ample capital, highly attractive markets, good expense management, disciplined credit underwriting, strong brand recognition, operating scale, a deep consumer and commercial customer base and an energized and engaged workforce. In short, I believe we are well positioned to not only navigate through the current challenging environment, but to take market share and continue to be an acquirer of choice in the Northeast. And on that note, I'll turn it over to Mark.
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 3 of the deck, 2024 first quarter GAAP net income was $47.8 million and diluted EPS was $1.12, resulting in a 1% return on assets, a 6.63% return on average common equity and a 10.15% return on average tangible common equity. Though expected margin compression weighed to some degree on overall results this quarter, we remain confident that the positive momentum in our core fundamentals position the bank well for net revenue growth in the near term. The central component of that positive momentum is reflected on Slide 4. Though average deposits declined in Q1 versus the prior quarter, which reflects our typical seasonality, we are encouraged by our consistent growth in new households over the last year and the rebound in balances in March with period-end balances up $178 million or 4.8% annualized when compared to the prior quarter. Municipal customer inflows drove most of the increase while total consumer balances increased as well, driven by steady core household growth and continued time deposit demand. The deposit environment remains competitive but the result of growing deposit balances for the first time since the fourth quarter of 2021 as a reflection of the deposit prioritization that Jeff alluded to in his comments and we are doing so while not sacrificing our pricing discipline that has served us so well through this challenging environment. Though the continued demand for rate drove an increase in the cost of deposits to 1.48% for the quarter, our overall deposit profile positions us well for keeping deposit costs well contained in any rate scenario moving forward. Moving to Slide 5. Total loans increased $53 million or 1.5% annualized to $14.3 billion as of quarter end. The modest balance increase was driven primarily by net growth in combined commercial real estate and construction as well as small business, while all other portfolios remained relatively flat quarter-over-quarter. New commercial real estate activity was diversified across a number of property types with no new activity in nonowner-occupied office commercial real estate. Also worth noting on the heels of our efforts in 2023 to neutralize our interest rate sensitivity, we have successfully shifted the majority of our residential production to the salable market.
Pipelines across all loan portfolios remain solid and we are definitely in the market for core relationship lending that meets our credit underwriting criteria. Using that as a segue to provide an update on asset quality. Slide 6 provides details over a number of key asset quality metrics. To highlight a few, total nonperforming loans remained relatively consistent at $56.9 million and represent 0.4% of total loans. Total nonperforming assets of $57.1 million, which includes minimal other real estate owned, represents 0.3% of total assets. Notable activity for the quarter includes an $11.6 million office loan that moved to nonaccrual, offset by the restoration of an $8.2 million relationship to accrual status, which contain both commercial real estate and C&I balances. With the minimis net charge-offs related to commercial real estate and only $274,000 of net charge-offs in total for the quarter, the provision of $5 million increased the allowance for loan loss ratio by 3 basis points in the quarter. Moving to Slide 7. We have had a number of conversations with the investor community regarding our commercial real estate portfolio and we recognize that providing additional insight into how much of that portfolio is owner-occupied has been helpful. And so we updated the pie chart here to note total owner-occupied balances as a separate component. And in terms of a more detailed update over the nonowner-occupied office portfolio, we can move now to Slide 8. We had $41 million of loans in this segment mature in the first quarter with all loans either renewed or in the process of being renewed with no negative risk migration. The one previously mentioned loan that migrated to nonaccrual was a 2023 fourth quarter maturity and potential loss exposure is appropriately captured in our Q1 provision levels. And in terms of the minimal levels of office loans set to mature over the next few quarters, we are encouraged by the strong credit performance and risk rating assessments among that group. I echo Jeff's earlier comments that we still expect to see some bumps in the road here, but we will continue our process of monitoring and working through the overall exposures in a very methodical manner. In terms of an update on our multifamily portfolio, which includes additional detail on Slide 9. We continue to see pristine asset quality metrics with our one notable previous quarter nonperforming asset of $2.7 million paying off during the first quarter. Switching gears a bit, reflecting on pricing and net margin impact, the longer end of the curve remains stubbornly inverted and continues to pressure new pricing dynamics in this competitive environment. As noted on Slide 10, with some level of increased loan yields more than offset by increased deposit costs, the net interest margin compressed 15 basis points to 3.23% on a reported basis, in line with prior guidance. Appreciating that there is significant investor interest on understanding where and when the margin will bottom out, I would say we anchor that expectation in 2 major drivers. The first being the stabilization and/or growth of total deposit levels and its offsetting impact on the need for higher cost wholesale funding and secondly, the pace at which our rate-sensitive deposits move or reprice into higher rates. We believe both of those dynamics and airing inflection points and will be reflected in the updated margin guidance I'll touch upon shortly. Moving to Slide 11 and noninterest items. Noninterest income reflects consistent levels with the prior quarter across all core line items, with the decrease compared to the prior quarter, driven mainly by lower swap fees and reduced benefit from volatile tax credit investments in equity securities valuations. I'll provide a bit more color on our wealth business results here in a second. Before that, just touching upon total expenses, which decreased $860,000 or 0.9% when compared to the prior quarter despite our typical payroll and occupancy related increases in the first quarter. And this reflects a reduction in FDIC assessment expenses combined with the company's focus on appropriate expense containment to counter the revenue challenges in this current environment. We continue to believe this is an area that we can manage effectively while not sacrificing investment in key strategic initiatives. And circling back to the fee income as a quick update on our wealth management activity, we included some additional breakdown of the wealth business income on Slide 12 to provide more clarity over the quarterly results. As reflected, assets under administration grew nicely by 4% to a record $6.8 billion at quarter end with the associated fee revenue up over 3%. Other wealth related income is comprised primarily of retail, insurance and other advisory services with those components down slightly quarter-over-quarter. We continue to see solid activity of new money in this space with recent hires contributing to an already strong sales force with a track record of consistent performance. This is a key business for us and we believe a real source of competitive advantage versus many other comparable banks. And lastly, the tax rate of 23.6% was slightly higher than the guided 23% due primarily to the discrete impact from equity award vesting in the current quarter. In closing out my comments, I'll turn to Slide 14 to provide an update on our forward-looking guidance, which we want to reiterate continues to reflect the level of uncertainty over near-term credit and funding cost conditions. In terms of loan and deposit growth, we reiterate our full year 2024 guidance of low single-digit percentage increases with expectations for relatively flat to modest growth in the near term. Regarding the net interest margin, there are still a number of moving pieces at play that make it difficult to predict specific results. Last quarter, we highlighted the potential for net interest margin improvement in the second half of the year. One of the key conditions for that potential was resumed core funding growth. And as we noted earlier, the March results were encouraging on that front. Another obvious key component lies in the assumptions over the yield curve and its impact on pricing dynamics. With less certainty over the path of rate cuts from the Federal Reserve in 2024, a prolonged inverted yield curve will continue to pressure deposit costs in the near term, but on a positive note, to a lesser degree than prior quarters. Alternatively, we anticipate the inversion will also continue to somewhat limit the benefit of asset repricing. And lastly, we will continue to see securities payoffs and loan hedge maturities provide benefit to the margin over time. Given all these moving pieces, we anticipate the margin for the second quarter to remain in the 3.20% to 3.25% range, with expectations for modest improvement in the second half of the year. As it relates to asset quality, we have no changes to our guidance regarding asset quality and provision for loan loss with office commercial real estate being the primary dynamic and we'll continue to diligently work through maturities in that space. Regarding noninterest income, we expect low single-digit percentage increases in Q2 versus Q1 levels, and we reaffirm a low single-digit percentage increase for full year 2024 versus 2023. And similarly, for noninterest expense, we anticipate low single-digit percentage increases in Q2 versus Q1 as well as full year 2024 versus 2023. And lastly, the tax rate for the remainder of the year is expected to be around 23%. That concludes my comments, and we will now open it up for questions.
[Operator Instructions] The first question comes from Mark Fitzgibbon with Piper Sandler.
This is Greg [indiscernible] going in for Mark at the moment. So I think you just said you're expecting a modest improvement in the NIM in the second half of the year. How many rate cuts are you assuming in that?
Yes. We're sort of following the market expectation there of minimal cuts, either one or two, and that would be later in the year. So in other words, we don't expect it to have too much of an impact on 2024.
Okay. And then would you expect the tax rate to be in the 23.5% to 24% range for the remainder of the year?
No, I do think it will dip back down to around 23% for the rest of the year, right around 23%.
Okay. Then on credit, could you quickly summarize the largest credits that are part of your nonperforming balance at quarter end?
Sure. So within total nonperformers, there's really 3 larger commercial credits within our nonperforming bucket. The first is a C&I relationship that's a larger participated deal that we are not the lead and we actually talked about that credit in a prior quarter. When it went nonaccrual, we have reserve allocations within our individual evaluated loan methodology. We expect somewhere in a $4 million loss range given some of the valuations we have on the underlying collateral there. But that's still a resolution that is to be determined but we believe we have our loss exposure adequately reserved. The second nonperforming asset is new to nonperforming here in the first quarter. That's the $11 million loan that I mentioned in my comments. That's another deal where we are not the lead, that's a participated deal. That was an office loan that matured in the fourth quarter of 2023. There's a major tenant there that's looking to downsize its occupancy and we're seeing less commitment from the owner to fund tenant improvements. So right now, it looks as though a potential resolution could be through a short sale and that may lead to about a 20% to 25% loss exposure, which was, in fact, included also in our Q1 provision. And then lastly, the third largest nonperformer is about an $8 million office loan. That's the loan we took a $2.5 million charge-off in the prior quarter. So that loss has already been accounted for as well. So those are the 3 major components on the commercial side and the nonperforming.
Awesome. And then pivoting to the TD maturities, I think on Slide 10, are you expecting those to reprice that when they mature?
Yes. As I mentioned, with less expectation for Fed cuts, I would imagine most of that will reprice up into the high. We have still have some promotional money out there at 5%. So assuming the majority of that will move into our highest rate, I would expect on average that to reprice up into the high 4s, call it 4.80%, 4.85% range.
And then lastly, could you share with us any data on how the Worcester expansion is going?
Worcester expansion? Sorry.
Yes. yes.
Yes. We don't have -- we don't break that out typically as a specific initiative but I can tell you that we feel good about the progress we're making. We are growing loans and deposits in that market. In general, feel good about the progress that we've made and we're going to continue to -- as I said earlier in my comments, bring our operating model to that market, continue to look for talented bankers to add to the mix. But again, feel good about the progress to date.
Our next question comes from Steve Moss with Raymond James.
Maybe just starting with the margin here. Just curious, where are you at -- at what rate are you adding new deposits these days? Just kind of thinking about your funding cost are and maybe where they peak out?
Yes. It depends, Steve, to be honest. I mean I think the positive that we saw in late March and I would expect to have some momentum heading into Q2 is to grow core deposits that are not rate sensitive. So we're starting to see some traction in our checking account activity, whether it's noninterest-bearing or some of our modestly priced savings accounts. So I do think there is a level to which our core lower cost deposits stock to grow. But at the same time, we will absolutely continue to see demand in some of our commercial products, whether it's our ICS product or CDs that will continue to be high 4%, 5%. So you're really seeing that mix of good core household operating accounts that are low cost and then those that are looking for rate again, is continued to be in the 5% range.
Okay. And then in terms of loan pricing these days, what's the uptick in the pipeline? Just curious where are new loans and renewals coming on the books these days?
Yes. It's been a challenge through the first quarter, as you can imagine, the mid-part of the curve continue to stay somewhat depressed. So in the first quarter, a lot of our fixed commercial pricing has been probably in the mid-to-high 6s certainly, anything priced off the short end of the curve was up around 8%. I think the positive there is that you're starting to see the middle 3 to 7-year part of the curve move up a bit. So I would expect we should start to see our fixed rate commercial pricing back in the 7 here in the second quarter and anything [indiscernible] continue to be in that 8% range.
And I also think as we continue to try and emphasize C&I, a lot of that -- or lines of credit that tend to be floating. And so we'll get the benefit from that as we continue to emphasize that segment.
Not as big of an impact. I'll just add, Steve. We are seeing a bit of an uptick lately in home equity utilization as well on our line side, which is all prime based. So we're seeing a little bit of a lift there on the home equity side as well.
And in terms of just the construction balances you guys had have come down, probably call it 20% year-over-year. Just curious, are we getting closer to a bottom in commercial construction? Or do you see further runoff in that portfolio?
I think we're going to probably see further runoff with some ups and downs. I don't know that it's going to be a linear line down, but we're obviously much more disciplined or I should say, we still are very disciplined as the market has made it more difficult for the -- a lot of the construction loans to pencil out because of the interest rate environment and the increase in construction costs. So I don't see that bucket increasing much from here. And again, if anything, I think it will be down.
Okay. I appreciate that. And then in terms of the office portfolio, 2 questions on that. What was the class -- the office property that we open status this quarter, Class A, B or C? Any color you can give around the rate of occupancy of that loan?
The one that went nonperforming, I believe, is a Class B, but I don't have at my fingertips here, Steve. Okay. And sorry, what was the second part of your question?
The occupancy, if you have that by any chance?
Yes. So that's where we have the situation with a major tenant looking to downsize and they take up about half of that building and the rest of the occupancy there has been somewhat challenged. So it's looking to be trending towards somewhere in the 50% to 60% range, which is why there's expectation that this may come to a sale or some sort of resolution here in the near term with some pressure on the valuation to the extent of 20% to 25% loss exposure.
Right. Okay. And then just in terms of the other office property, the $8 million one that was not performing in the fourth quarter. Just curious, is that -- I was thinking that was going to be resolved here in the near term, just any update on the resolution there?
Yes. We were hoping so, too. And there was a pending note sale on that as we talked about it last quarter. Unfortunately, that deal fell through. But right now, there is an expectation or negotiations that we may -- again, this is a -- this is a club deal. We're not the only participant on this one, but that there's potential for a direct workout with the borrower at a discounted sort of payoff price. And if that plays out the way it is, we would expect that the loss there would be pretty much in line with the charge-off we took based upon where we thought the note sale was going to happen.
Our next question comes from Laura Hunsicker with Seaport Research.
Just wanted to stay with Steve's line of questioning on the office and obviously, outside of office, things look great. Appreciate your new multifamily slide. But just going back to just the -- so the first credit that came on last quarter, it was -- it started -- and I had in my notes, it started $11.3 million. You had $2.8 million of charge-offs, so down to $8.5 million. That's still an $8.5 million loan?
It is. Yes. So that is still in NPA. I think it's actually paid down to about $8 million or so, Laura. But that's the one I was just alluding to that had the pending note sale at one point that now may go through with a different resolution, but we still believe that's the right value based on our understanding of where that could get resolved at this point, expect...
Do you -- okay. So you don't have any other specific reserve against it, it's down to $8 million?
Correct. Charge down to $8 million, right?
Down to 8. Okay, great. And then your -- the $11 million, and I think you flagged this is showing an early stage delinquency last quarter. I'm assuming it's the same one that just went -- what did you set aside in provision this quarter, we look at your provision? What's the remark for them?
Yes. So we took about a $2.5 million specific allocation on that loan.
Okay. Great. And then just looking here at your criticized your linked quarter criticized in office. Maybe just help us think about that, that went from $55 million up to $115 million linked quarter. Certainly, no surprise we're seeing weakness. But just can you help us think about those and what we should be watching or worried about here, how you're thinking about that? Any color would be helpful.
Sure. So -- and I think I want to make sure I heard you right. You have in your material that went from $85 million to $115 million?
I had it going from $55 million last quarter, criticized is $55 million up to $115 million this quarter. At $55.3 million last quarter and now at $114.9 million? Maybe that's the wrong number. But I mean maybe if...
You're right. Actually, some of it, I think, is improvement going from classified to criticized. But the biggest one, I think that's worth noting that there's one new relationship that downgraded to criticized, which is the $30 million that you see reflected in our material as a Q4 maturity. So that's a syndicated deal. It's a much larger relationship. It's really our only true downtown Boston Financial District exposure.
The occupancy on that property is pretty good at 85%. It got downgraded because the debt service coverage had dropped a little bit over 1%. So the FDIC as part of their SNC review actually downgraded that to the 7. So we have some insight based on our conversations with the lead bank suggesting there's still adequate value from an LTV perspective. We'll see how this plays out as we come up to Q4 maturity, but we believe there's plenty of protection there. And it's probably a relationship, to be honest, we'd look to exit if we can.
We have a couple of other tenants, I think, that they're getting ready to sign up that will, I think, push the occupancy up into the 90s. So we don't feel like there's any loss content at all in that.
Okay. Okay. Very helpful. Okay. And then just switching back to margin. What was your March spot margin?
March margin was 3.21%. I think what's interesting on that, too, Laura, if we talked a lot about the pickup in period-end deposits. So even from most of March, the average deposits were in the 14.8% range, which means we had higher allocation of wholesale borrowings. So again, just later in that month, having some core deposit growth already provides a bit of a boost to that level heading into April. So just want to put that caveat on the 3.21% is really reflective of the lower deposit balances as well.
Got it. Got it. And just remind us, when in the quarter could you guys actually redeem the $50 million in sub debt? What was the timing on that?
That was late February, early March but that was at $475 million prior to redemption, if we held on to that, that would have repriced to a floating rate. So you really just shifted a 4.75% fixed debt borrowings at 5%. So it won't have too much impact.
No. Okay. Perfect. Perfect. And then, Jeff, just last question for you. You mentioned considering another buyback. Obviously, you're down substantially below where you just repurchased. Can you help us think a little bit more about that?
Yes, we've got a pretty consistent answer here that I think we'll obviously continue to weigh that as a tool that we think we would be able to having the toolkit to be opportunistic with. You mentioned our valuation and our levels of capital. I think certainly suggest that something we would want to be considering to have available. So we haven't made a decision. Obviously, we haven't announced anything yet there, but I think it's safe to say it's something we will continue to talk about here in the near term.
Our next question comes from Chris O'Connell with KBW.
I just wanted to follow up on the kind of robust capital levels that you guys have here and you have the opportunity to kind of deploy that going forward. You have enough capital in the securities yields, it's still a big book and the yield is still just under 2%. I mean is there any potential for securities restructuring at some point in 2024?
Yes. It's a strategy. We've done some analysis on, Chris. And I think it's one that personally, I've struggled a little bit with just the optics of taking the loss now to improve the earnings. I would say I think there's better margin now where that structure probably makes a bit more sense. But we're getting to a point now where I think we even announced this material on one of the slides.
If you look at what's expected to pay off on the securities portfolio, in the near term. That book will get down to probably 13.5% of total assets by the end of the year. And that's really a level where we'd be much more comfortable. We're a bank that historically has operated around 12% to 13% of assets in the securities book. So accelerating to get to that level, I think, isn't completely off the table, but even just allowing for normal payoffs. We get there relatively shortly. And I think that's a much better balance sheet profile for the longer term that we'd like to be in.
So long way of saying we'll continue to assess that opportunity, but it isn't something that I would -- I think we feel compelled to do given the trajectory of where it's already heading.
Got it. And you guys mentioned still looking at M&A opportunities as always. I mean, has there been any uptick in conversations there at all in your markets?
Not really. I mean not appreciably, it continues -- I think everybody is continuing to struggle with the same issues around trying to make the math work and uncertainty around the regulatory environment.
Got it. And then just circling back to office here. For the total office portfolio, do you guys have a reserve number that's applied against that entire portfolio?
Yes. We don't disclose anything publicly there. We still have our formal pool allocation is total commercial real estate and construction. But we do look through to the underlying property types to guide how much from a qualitative perspective, we would want to be allocating to that total pool. So I would say we definitely have increased reserve allocation as a result of the office book. I'd say we do some analysis to support the overall allocation by looking at risk ratings and stressing valuations on those that are criticized and classified that type of analysis probably suggests that, I think, though not publicly disclosed, we probably intuitively are around 2.5% to 3% on the office book with the rest of commercial real estate, call it, 75 basis points.
And we think that reserve allocation is actually pretty conservative in terms of allocating loss containment where we see the risk in the criticized and classified bucket.
Great. That's helpful. And I appreciate the detail on the 2024 maturities. Do you have what portion of the 2025 maturities are currently criticized?
I do of the 2025 maturities, there is one large criticized loan that's a $50 million exposure in 2025. That's the biggest. Really, the only notable criticized loan in 2025. And that one where -- we've had conversations with the bar that we don't have a near-term expectation of that, but it's something we'll provide a bit more of an update as we go over the next couple of quarters.
Very helpful. And is there anything else? I mean, you mentioned the multifamily improvement from the one credit this quarter? Any additional detail on the slides that all looks very solid. I mean is there any other areas outside of office that you guys are seeing any sort of outsized credit pressure at this time?
Yes, not really. I mean, if you zoom out a little bit and look at our levels of criticized and classified assets together. It's actually very stable, not just over the last couple of quarters, but it's very consistent with the last few years, which is, again, why we feel relatively comfortable with where we are in this credit environment because the level of criticized and classified assets is not remarkably different. It's really no different than it has been over the past several years.
Great. And then last one, do you have the amount of non-floating rate loans that are set to reprice or mature in 2024?
In 2024, I do not in front of me, but it's not a significantly -- we have, obviously, the -- you said the non-floating, right? -- so adjustable rate.
Yes, are fixed.
Yes. I don't have it in front of me, Chris, but I can get you that.
This concludes our question-and-answer session. I would like to turn the conference back over to Jeff Tengel for any closing remarks.
Thanks, Nick, and thank you for your continued interest in Independent Bank Corp. Have a great day.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.