Independent Bank Corp. · NASDAQ:INDB
Independent Bank — 2021 D.A. Davidson 23rd Annual Financial Institutions Virtual Conference
30 slides from Independent Bank's conference presentation, May 5, 2021
Slide 1: 2021 D.A. Davidson 23rd Annual Financial Institutions Virtual Conference
2021 D.A. Davidson 23rd Annual Financial Institutions Virtual Conference May 5 Chris Oddleifson - Chief Executive Officer Rob Cozzone - Executive Vice President and Chief Operating Officer Mark Ruggiero - Chief Financial Officer and Chief Accounting Officer
Slide 2: Who We Are
(2) Who We Are • Independent Bank Corp. (Nasdaq: INDB) ◦ Main Banking Sub: Rockland Trust •Market Cap: $2.7B (as of May 3, 2021) *Excludes impact of pending EBSB merger Loans: $9.2B Deposits: $11.6B Wealth Mgmt: AUA $5.2B Market: Eastern Massachusetts 99 Branches*
Slide 3: Key Messages - Core Franchise
(3) Key Messages - Core Franchise • Extensive history of strong financial performance • Demonstrated resiliency in prior crises • Expanding footprint in growth markets • Healthy loan and core deposit originations • Diversified fee income business lines • Strong capital levels • Strong operating effi
Slide 4: Recent Accomplishments
(4) Recent Accomplishments • East Boston Savings Bank (assets $6.5B) • Strong new business generation despite pandemic • Solid growth in business and consumer households • Growing presence in Worcester County • Growth initiatives – online account opening, credit card launch, de novo branches, expand
Slide 5: Expanding Company Footprint
(5) Source: SNL Financial; Deposit/Market Share data as of June 30, 2020 Expanding Company Footprint Market Share % of INDB Dep. Plymouth County Rank 2020 1 24.9% 36% Norfolk County Rank 2020 3 6.0% 19% Barnstable County (Cape Cod) Rank 2020 4 11.0% 9% Bristol County Rank 2020 5 8.3% 10% Middlesex C
Slide 6: EBSB Pending Merger
(6) EBSB Pending Merger Compelling Combination Creates Significant Shareholder Value Reinforces INDB’s position as the Boston area’s premier community-focused commercial bank; pro forma #1 in commercial loans and #2 in deposit market share (Boston MSA) amongst all banks headquartered in Massachusett
Slide 7: Pro Forma Branch Footprint and Deposit Market Share
(7) 1. Bank of America Corporation 91.4 2. Citizens Financial Group Inc. 50.4 3. Banco Santander S.A. 21.7 4. The Toronto-Dominion Bank 17.3 5. Eastern Bankshares Inc. 16.2 Pro Forma 12.6 6. First Republic Bank 10.0 7. Independent Bank Corp. 7.8 8. M&T Bank Corp. 6.8 9. Meridian Bancorp Inc. 4.8 10.
Slide 8: EBSB Pending Merger: Well-Priced Transaction Relative to Recent Comparable Deals
(8) 1.50x 1.45x Other Recent Transactions 25.0% 10% Other Recent Transactions Source: S&P Global Market Intelligence; Company documents Note: INDB/EBSB transaction metrics based on INDB stock price as of 4/21/21 Note: Includes nationwide whole bank acquisitions announced since 1/1/2019 with deal val
Slide 9: Robust Capital & Reserve Levels
(9) Robust Capital & Reserve Levels (4) >13% Pro Forma CET1 Ratio at Close ~11% Pro Forma TCE / TA Ratio at Close ~1.7% Pro Forma ACL/Loans HFI Ratio at Close 1) Based on consensus estimates 2) Does not include purchase accounting adjustments or balance sheet restructure 3) Based on consensus estima
Slide 10: EBSB Pending Merger Creates Peer-Leading Financial Performance
(10) Source:S&P Global Market Intelligence Note: Peer group includes 27 publicly traded banks nationwide with assets between $15B and $25bn; Profitability metrics based on publicly available 2022 consensus estimates as of 4/21/21 Note: INDB pro forma financial data assumes illustrative 100% phase-in
Slide 11: Retail, Commercial and Wealth Management Opportunities
(11) Retail BankingCommercial Banking Strong demographics attributable to new markets provide upside potential Leverage client facing staff for introductions and opportunities within new client base Capitalize on EBSB relationships to expand centers of influence for new opportunities Leverag
Slide 12: Acquisition Strategy: Driving Long Term Growth and Shareholder Value
(12) Total Shareholder Return(1) 3 Year 5 Year 10 Year INDB 18% 84% 228% KBW Regional Bank 8% 48% 131% 20182013 Source: S&P Global Market Intelligence 1) Per FactSet; closing price as of 4/21/2021; Total return defined as stock appreciation inclusive of reinvestment of dividends into new shares 2) C
Slide 13: Sustaining Business Momentum
(13) Sustaining Business Momentum Business Line • Expand Market Presence/Recruit Seasoned Lenders • Grow Client Base • Expand Specialty Products, e.g. ABL, Floorplan • Optimize Loan Origination Process • Continue to Drive Household Growth • Expand Digital Offerings • Expedite New Account Openings •
Slide 14: Financial Performance - Strong Fundamentals
(14) $129.8 $184.6 $121.7 $41.7 $4.69 $5.62 $3.66 $1.26 Operating Earnings Operating EPS 2018 2019 2020 1Q21 $0.0 $50.0 $100.0 $150.0 $0 $2 $4 $6 $121.6 $165.2 $121.2 $41.7 $4.40 $5.03 $3.64 $1.26 Net Income Diluted EPS 2018 2019 2020 1Q21 $0.0 $25.0 $50.0 $75.0 $100.0 $125.0 $150.0 $1 $2 $3 $4 $5 $
Slide 15: Loan Originations
(15) Loan Originations (Dollars in Millions) $2,676 $2,958 $692 Commercial Residential Mortgage Home Equity Business Banking 2019 2020 Q121 Strong Business Volumes Despite Pandemic
Slide 16: Loan Portfolio - Commercial Diversification
(16) Total Commercial Real Estate Portfolio Residential - Related 31.4% Office Buildings 15.4% Commercial Buildings 16.9% Industrial Warehouse 9.6% Hotels/Motels 8.3% Strip Malls 5.9% All Other 12.5% Loan Portfolio - Commercial Diversification $4.7B as of 3/31/21 Total C&I Loan Portfolio* Retail Tra
Slide 17: Low Cost Deposit Base
(17) Low Cost Deposit Base Demand Deposits 36% Money Market 20% Savings/Now 37% CDs 7% Total Deposits $11.6B 1Q 2021 Core Deposits ($ Bil.) $6.6 $7.6 $9.8 $10.5 88.7% 79.9% 89.6% 90.9% Core Deposits Core to Total 2018 2019 2020 1Q21 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 0.0% 20.0% 40.0% 60.0% 80.0% 1
Slide 18: Investment Management: Transformed Into High Growth Business
(18) Investment Management: Transformed Into High Growth Business Longer Term Trends • Successful business model • Growing source of fee revenues • Strong feeder business from Bank AUAs ($ Bil.) $3.5 $3.6 $4.6 $5.2 2018 2019 2020 1Q21 • Expanding investment center locations • Adding experienced prof
Slide 19: COVID-19 Pandemic Action Steps
(19) COVID-19 Pandemic Action Steps • Revised initial CECL assumptions ◦ Leveraging Moody's economic forecasts ◦ Added qualitative analyses of various exposures • Granted relief to customers ◦ Delayed payments, waived fees, etc. • Enhanced credit monitoring of financial statements and cash flows • P
Slide 20: Credit Review - Loan Deferrals
(20) Credit Review - Loan Deferrals March 31, 2021 Deferrals by Industry (Dollars in thousands) Highly Impacted Industries Accommodation $ 163,073 Food Services 698 Other Services (except public administration) 1,013 Arts, Entertainment, and Recreation 31,126 Total Highly Impacted Industries 195,910
Slide 21: Asset Quality: Well Managed
(21) • Disciplined underwriter • Low loss rates • High average FICOs and low average LTVs in consumer book • Proactive identification and resolution of problem loans C&I 50.4% Home Equity 9.4% CRE 16.3% Residential 22.6% Small Business 1.1% Other Consumer 0.2% Asset Quality: Well Managed NPLs ($Mil.
Slide 22: Asset Quality: A Look Back
(22) Asset Quality: A Look Back • Strong credit results through prior financial crisis • Experienced management and loan workout team • Consistent and conservative credit philosophy
Slide 23: Strong Capital Position
(23) Book Value $38.23 $49.69 $51.65 $51.94 12.13% 14.99% 12.89% 12.45% 10.69% 11.28% 9.56% 9.63% Book Value Per Share Equity/Assets % Tier 1 Leverage 2018 2019 2020 1Q21 $0 $10 $20 $30 $40 $50 0% 5% 10% 15% 20% 25% Strong Capital Position Tangible Book Value* $28.57 $34.11 $35.59 $35.96 9.35% 10.80
Slide 24: Near-Term Priorities
(24) Near-Term Priorities • Preparing for EBSB closing and integration • Fulfilling demand for current round of PPP • Extending our presence in attractive Worcester market • Branch optimization including select openings and closings • Expansion of dealer floor-plan efforts • Maximizing use of Salesf
Slide 25: INDB Investment Merits
(25) INDB Investment Merits • High quality franchise in attractive markets • Regained momentum following prior crises • Consistent, strong financial performance • Strong organic business volumes • Growing brand recognition • Leverageable operating platform • Capitalizing on in-market consolidation o
Slide 26: Appendix A: Non-GAAP Reconciliation of Capital Metrics
(26) Appendix A: Non-GAAP Reconciliation of Capital Metrics The following table reconciles Book Value per share, which is a GAAP based measure to Tangible Book Value per share, which is a non-GAAP based measure. It also reconciles the ratio of Equity to Assets, which is a GAAP based measure, to Tang
Slide 27: Appendix B: Non-GAAP Reconciliation of Earnings Metrics
(27) Appendix B: Non-GAAP Reconciliation of Earnings Metrics The following table reconciles net income and diluted EPS, which are GAAP measures, to operating earnings and diluted EPS on an operating basis, which are Non-GAAP Measures as of the time periods indicated: 2018 2019 2020 1Q21 (Dollars in
Slide 28: Credit Review - Potentially Impacted COVID-19 Industries
(28) Credit Review - Potentially Impacted COVID-19 Industries Accommodations Balance $ 402,259 Average borrower loan size $ 4,193 % secured by real estate 99.8 % Weighted average loan to value 54.3 % Other information: – The accommodation portfolio consists of 68 properties representing a combinatio
Slide 29: Credit Review - Potentially Impacted COVID-19 Industries - Cont'd
(29) Credit Review - Potentially Impacted COVID-19 Industries - Cont'd Other Services (except Public Administration) Balance $ 147,968 Average borrower loan size $ 259 % secured by real estate 51.0 % Weighted average loan to value 50.4 % Other information: – The other services portfolio consists of
Slide 30: (30) NASDAQ Ticker: INDB www.rocklandtrust.com Mark Ruggiero – CFO & Chief Accounting Officer Shareholder
(30) NASDAQ Ticker: INDB www.rocklandtrust.com Mark Ruggiero – CFO & Chief Accounting Officer Shareholder Relations: (781) 982-6737 Statements contained in this presentation that are not historical facts are “forward-looking statements” that are subject to risks and uncertainties which could cause a
Independent Bank — 2021 D.A. Davidson 23rd Annual Financial Institutions Virtual Conference on 6ix