Independent Bank Corp (Mass) (NASDAQ:INDB) Q4 2019 Earnings Conference Call - Final Transcript
Jan 17, 2020 • 10:00 am ET
total 2019 levels of approximately 15 to 20 basis points. This 2020 guidance includes the following assumptions. No changes to interest rates from the fed reserve; loan yields stabilizing with some nominal level of compression resulting from portfolio turnover; overall funding costs to improve slightly; and a normalized level of loan accretion of $2 million to $2.5 million per quarter.
Operating fee income should remain essentially flat as compared to adjusted 2019 results, with that baseline number excluding $5 million recognized in 2019 for the aforementioned insurance recovery and other large one-time gains on asset sales. One of the factors weighing on revenue levels is an assumed reduction in interchange income from the Durbin Amendment of $5 million to $5.5 million over the last six months of the year.
Operating expenses excluding merger related and other non-core expenses incurred in 2019 are anticipated to be well contained, with the year-over-year increase in the low to mid single digit range despite continued investment in digital capabilities, internal infrastructure and new market expansion. Similar to the impact on the reserve, provisioning for bad debt under the CECL model should not materially change from previous levels and will be driven primarily by net charge-off experience and general economic and credit conditions, both of which do not pose any known significant concern over the long term horizon at this point.
And lastly, with the 2019 final expiration of new market tax credit benefit, the tax rate is expected to increase to approximately 26% for the year, with some level of discrete benefit in the first quarter due to vesting of equity compensation awards.
That concludes my comments. Chris?
Great. Thanks, Mark.
And, Nick, we're ready for some questions.