Independent Bank Corp. · NASDAQ:INDB
Independent Bank — Piper Jaffray Financial Institutions Conference 2019
25 slides from Independent Bank's conference presentation, May 14, 2019
Slide 1: Piper Jaffray Financial Institutions Conference
Piper Jaffray Financial Institutions Conference May 14, 2019 Christopher Oddleifson - Chief Executive Officer Robert Cozzone - Executive Vice President and Chief Operating Officer Mark Ruggiero - Chief Financial Officer and Chief Accounting Officer
Slide 2: Who We Are
Who We Are • Main Sub: Rockland Trust • Market: Eastern Massachusetts • Loans: $9.1B * • Deposits: $9.4B * • $AUA: $4.0B • Market Cap: $2.8B * • Nasdaq: INDB (2) *Pro forma for April 1, 2019 acquisition of Blue Hills Bancorp
Slide 3: Key Messages
Key Messages • Operating earnings and returns at record levels • Healthy loan and core deposit originations • Growing Investment Management business • Proven integrator of acquired banks • Expanding footprint in growth markets • Tangible book value steadily growing * • Steadily improving operating e
Slide 4: Expanding Company Footprint
Expanding Company Footprint % of Market Share INDB Dep. Plymouth County Rank 2018 1 23.3% 38% Norfolk County Rank 2018 4 5.1% 20% Barnstable County (Cape Cod) Rank 2018 4 11.3% 12% Bristol County Rank 2018 6 7.4% 11% Middlesex County Rank 2018 23 1% 9% Suffolk County Rank 2018 18 0.3% 3% Dukes Count
Slide 5: Recent Accomplishments
Recent Accomplishments • Six consecutive years of record operating earnings** • Completed acquisition of Blue Hills Bancorp • Increased presence in Worcester County • Capitalizing on expansion moves in vibrant Greater Boston market • Reached $4.0B in Assets Under Administration • Growth initiatives
Slide 6: Blue Hills Bancorp Acquisition
Blue Hills Bancorp Acquisition In Market Transaction Fortifying INDB Core Franchise • Expands presence in attractive, affluents markets within the Boston MSA and Nantucket • Combines two profitable and growing banks Strategically • Pro forma over $11 billion in assets with the largest deposit market
Slide 7: Blue Hills Overview - A High Quality Bank
Blue Hills Overview - A High Quality Bank • Founded in 1871 as Hyde Park Saving Bank • New management with extensive commercial bank expertise hired in 2010 • Rebranded as Blue Hills Bank in 2011 with the launch of commercial banking platform • Attractively positioned in Norfolk, Suffolk and Nantuck
Slide 8: Strengthens INDB Position in Greater Boston Market, Adds Nantucket
Strengthens INDB Position in Greater Boston Market, Adds Nantucket (8) Note: Market share information as of June 30, 2018 and is pro forma for INDB's acquisition of Blue Hills Bancorp; Source: S&P Global Market Intelligence, FDIC
Slide 9: Blue Hills Integration Well Underway
Blue Hills Integration Well Underway • Balance sheet deleveraging already begun and continuing • Blue Hills resi mortgage platform retained • Systems conversions scheduled out (early June) • Branch consolidations identified • 3 BHBK board members added as directors (9)
Slide 10: Building Franchise Value: Disciplined Acquisitions
Building Franchise Value Disciplined Acquisitions Slade’s Ferry Benjamin Central Mayflower Peoples Federal Bancorp Franklin Bancorp Bancorp Bancorp Bancshares Mar '08 Apr '09 Nov '12 Nov '13 Feb '15 $630mm Assets $994mm Assets $537mm Assets $243mm Assets $640 mm Assets $411mm Deposits $701mm Deposit
Slide 11: Major Opportunities in Acquired Bank Markets
Major Opportunities in Acquired Bank Markets: Capitalizing on Rockland Trust Brand Investment Commercial Banking Management • Sophisticated products • $4.0 billion AUA • Expanded capacity • Wealth/Institutional • In-depth market • Strong referral knowledge network Acquired Bank Customer Bases (11) R
Slide 12: Strong Fundamentals Driving Performance
Strong Fundamentals Driving Performance • Robust customer activity Net Income ($Mil) $121.6 +26% CAGR • Strong core deposit base $115.0 $4.5 $4.40 $87.2 $3.5 $90.0 $76.6 • Fee revenues increasing $3.19 $65.0 $2.90 $2.5 $35.2 • Low funding costs $40.0 $1.5 $1.25 • Low credit loss rates $15.0 $0.5 201
Slide 13: Asset Sensitivity and Low Cost Deposits Drive Higher Margin
Asset Sensitivity and Low Cost Deposits Drive Higher Margin 5% 4.05% 4.14% 3.89% 3.94% 4% 3.77% 3.65% 3.64% 3.51% 3.60% 3% 2% 1% 0.30% 0.34% 0.39% 0.18% 0.18% 0.20% 0.22% 0.24% 0.27% 0% Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Net Interest Margin Cost of Total Deposits (13)
Slide 14: Vibrant Commercial Lending Franchise
Vibrant Commercial Lending Franchise Total Loans $7.0B • Long-term CRE/C&I lender Avg. Yield: 4.90% 1Q 2019 • Increased small business focus • Strong name recognition in local markets Home Eq • Opened LPO in Worcester 15% • Added senior leaders from competitors Resi Mtg 13% • Growing in sophisticati
Slide 15: Commercial Diversification
Commercial Diversification Total Commercial Real Estate Portfolio Total C&I Loan Portfolio $3.6B as of 3/31/2019 $1.2B as of 3/31/2019 Accommodation and food services: Professional, Scientific and Strip Malls 6.0% 4.6% Technical: 4.4% Finance and Insurance: 6.8% Industrial Warehouse 8.1% Residential
Slide 16: Low Cost Deposit Base
Low Cost Deposit Base Total Deposits $7.5B • Sizable demand deposit component 1Q 2019 • <1% of HH's are CD only CDs 10% Demand • Valuable source of liquidity Deposits 31% • Relationship-based approach Savings/Now 39% Money • Expanded digital access Market 20% • Growing commercial base Core Deposits
Slide 17: Investment Management: Transformed Into High Growth Business
Investment Management: Transformed Into High Growth Business AUAs ($ Mil.) CAGR +15% • Successful business model • Growing source of fee revenues $3,486 $3,613 $3,990 $2,919 • Strong feeder business from Bank 2016 2017 2018 1Q19 • Expanding investment center locations • Adding experienced profession
Slide 18: Asset Quality: Well Managed
Asset Quality: Well Managed NPLs • Disciplined underwriter Home Equity 16.6% • Low loss rates • High average FICOs and low average LTVs in consumer book Residential 19.7% C&I 59.7% Small Business 0.4% CRE 3.6% NPLs Net Chargeoffs ($Mil.) ($Mil.) 6bps $70.0 $57.4 1.10% $7.0 6bps $60.0 $49.6 $45.4 1.0
Slide 19: Strong Capital Position
Strong Capital Position Cash Dividends Declared Per Share $1.52 • Strong internal capital generation $1.50 $1.28 $1.16 • History of healthy dividend increases $1.00 • TBV rising even with multiple acquisitions $0.44 $0.50 • No storehousing of excess capital $0.00 2016 2017 2018 1Q19 Book Value Tangi
Slide 20: Sustaining Business Momentum
Sustaining Business Momentum Business Line Focal Points • Expand Market Presence/Recruit Seasoned Lenders • Grow Client Base • Expand Specialty Products, e.g. ABL, Leasing • Lender Development Programs • Continue to Drive Household Growth • Expand Digital Offerings • Optimize Branch Network • Capita
Slide 21: Optimizing Retail Delivery Network
Optimizing Retail Delivery Network Recent optimization decisions include: • Utilizing specialized analytics software/location model • Shifting branch distribution • Closed/consolidated 5 • Opened 1 • Relocated 1 • Redesigned 1 • Added 3: Milford National acquisition (Nov 2018) • Announced Blue Hills
Slide 22: INDB Investments Merits
INDB Investments Merits • High quality franchise in attractive markets • Consistent, strong financial performance • Strong organic business volumes • Growing brand recognition • Capitalizing on in-market consolidation opportunities • Operating platform that can be leveraged further • Diligent stewar
Slide 23: Appendix A
Appendix A 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 Tangible Equity to Tangible Assets, a non-GAAP measur
Slide 24: Appendix B
Appendix B 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: 2016 2017 2018 1Q19 (Dollars in thousands, except per share data) Net income avail
Slide 25: NASDAQ Ticker: INDB www.rocklandtrust.com Mark Ruggiero – CFO & Chief Accounting Officer Shareholder Relations:
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 actual
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