Independent Bank Corp. · NASDAQ:INDB
Independent Bank — Piper Sandler 2023 East Coast Financial Services Conference
24 slides from Independent Bank's conference presentation, Nov 16, 2023
Slide 1: Piper Sandler 2023 East Coast Financial Services Conference
Piper Sandler 2023 East Coast Financial Services Conference Jeff Tengel - Chief Executive Officer Mark Ruggiero - Chief Financial Officer & EVP Consumer Lending Independent Bank Corp. (INDB) (parent of Rockland Trust Company) November 16, 2023
Slide 2: Who We Are
Who We Are Independent Bank Corp. (Nasdaq: INDB) • Main Banking Subsidiary: Rockland Trust • Massachusetts based; New England focused $19.4 B Total assets $14.2 B Loans $15.1 B Deposits $6.1 B Wealth management $2.2 B Market Cap* Key Metrics as of September 30, 2023 2*as of August 31, 2023
Slide 3: Company Overview
3 Company Overview Safe & Sound Customer Centric • Strong, liquid balance sheet • Significant capital buffer • Diversified, low-cost deposit base • Experienced commercial lender with conservative credit culture • Proven operator and acquiror • Full suite of retail and commercial banking product offe
Slide 4: Expanding Company Footprint
Source: SNL Financial; Deposit/Market Share data as of June 30, 2023 Expanding Company Footprint Market Share Rank 2023 % of INDB Deposits Plymouth County 1 25.4% 31% Norfolk County 4 6.6% 15% Barnstable County (Cape Cod) 3 11.8% 9% Bristol County 5 8.8% 9% Middlesex County 15 1.6% 9% Suffolk County
Slide 5: Acquisition Strategy: Driving Long Term Growth & Shareholder Value
Acquisition Strategy: Driving Long Term Growth & Shareholder Value Proven Record of Value Add Transactions 5
Slide 6: Financial Performance - Strong Fundamentals Drive Long-Term Trends
$121.7 $187.6 $268.9 $184.7 $3.66 $5.38 $5.80 $4.16 Operating Earnings Operating EPS 2020 2021 2022 YTD23 $0.0 $50.0 $100.0 $150.0 $200.0 $250.0 $1 $2 $3 $4 $5 $6 $121.2 $121.0 $263.8 $184.7 $3.64 $3.47 $5.69 $4.16 Net Income Diluted EPS 2020 2021 2022 YTD23 $0.0 $50.0 $100.0 $150.0 $200.0 $250.0 $1
Slide 7: Financial Performance - Most Recent Quarter (Q3 2023)
$ 60.8M Net Income $ 1.38 Diluted EPS 1.25% ROAA 8.35% ROAE 12.81% ROATCE 7 Financial Performance - Most Recent Quarter (Q3 2023) • Disciplined loan growth • Seasonal deposit declines; stable product mix • Core NIM* at 3.47%, down 5 basis points • Solid fee income growth • Nonperforming asset decrea
Slide 8: Loan Balances
8 Loan Balances ($ in millions) Period Ended $ Increase % Increase Loan Category 9/30/2023 6/30/2023 (Decrease) (Decrease) Commercial and industrial $ 1,653 $ 1,723 $ (70) (4.1) % Commercial real estate 7,896 7,813 83 1.1 % Commercial construction 965 1,023 (58) (5.7) % Small business 245 237 8 3.4
Slide 9: Loan Portfolios
9 Loan Portfolios 95% CRE & Construction Portfolio $8.9 billion Residential - Related - 34.7% Strip Malls / Retail - 18.8%Mixed Use, Primarily Office - 3.0% Office Buildings - 14.2% Industrial Warehouse - 12.0% Hotels/Motels - 8.1% Healthcare - 2.7% All Other - 6.5% C&I Portfolio $1.7 billion Retail
Slide 10: Focal Point: Non-Owner Occupied CRE Office
10 Focal Point: Non-Owner Occupied CRE Office (inclusive of construction) 95% CRE Office - Total Portfolio ($ in millions) September 30, 2023 June 30, 2023 CRE - Mixed use, primarily office* $ 269 $ 269 CRE - Office: owner occupied 200 201 CRE - Office: non-owner occupied 1,060 1,068 *CRE - Mixed us
Slide 11: Asset Quality
11 Nonperforming Loans ($ in millions) $54.9 $56.2 $45.7 $39.2 0.39% 0.40% 0.32% 0.28% NPLs ($Mil) NPL/Loan% Q4 2022 Q1 2023 Q2 2023 Q3 2023 0.30% 0.40% $0 $30 $60 Net Charge-offs/(Recoveries) ($ in millions) $0.4 $0.5 $23.5 $5.6 0.01% 0.02% 0.67% 0.16% Net Charge-offs (recoveries) Annualized Loss R
Slide 12: Deposit Balances and Cost of Deposits
12 ($ in millions) Period Ended $ Increase % Increase Deposit Product Type 9/30/2023 6/30/2023 (Decrease) (Decrease) Noninterest-bearing demand deposits $ 4,796 $ 4,861 $ (65) (1.3) % Savings and interest checking deposits 5,398 5,525 (127) (2.3) % Money market deposits 2,852 3,066 (214) (7.0) % Tim
Slide 13: Securities Portfolio
13 Securities Portfolio Available for Sale (AFS) Held to Maturity (HTM) Portfolio Composition as of September 30, 2023 Book Value Fair Value Unrealized Gain/(Loss) Book Value Fair Value Unrealized Gain/(Loss) ($ in millions) U.S. government agency securities $ 231 $ 200 $ (31) $ 30 $ 28 $ (2) U.S. t
Slide 14: Strong Capital Position
Book Value $51.65 $63.75 $63.25 $65.37 12.89% 14.78% 14.96% 14.90% 9.56% 12.03% 10.99% 11.12% Book Value Per Share Equity/Assets % Tier 1 Leverage 2020 2021 2022 3Q23 $0 $10 $20 $30 $40 $50 $60 $70 0% 5% 10% 15% 20% 25% Tangible Book Value* $35.59 $42.25 $41.12 $42.60 9.26% 10.31% 10.26% 10.24% TBV
Slide 15: Net Interest Margin Analysis
15 Net Interest Margin Analysis Net Interest Margin 3.85% 3.79% 3.54% 3.47% 3.82% 3.78% 3.52% 3.47% Reported NIM Core NIM Q4 2022 Q1 2023 Q2 2023 Q3 2023 3.40% 3.60% 3.80% 4.00% Loan Betas 27.9% 25.6% 34.1% 32.0% 41.1% 25.4% 25.4% 27.1% 27.8% 26.4% Quarter Cumulative Q3 2022 Q4 2022 Q1 2023 Q2 2023
Slide 16: Investment Management
Investment Management Longer Term Trends • Successful business model • Growing source of fee revenues • Strong feeder business from Bank • Adding experienced professionals • Capitalizing on cross-sell opportunity in acquired bank markets AUA ($ Bil.) $4.9 $5.7 $5.8 $6.1 2020 2021 2022 3Q23 Revenues
Slide 17: Near-Term Priorities
Near-Term Priorities 17 • Sustaining progress under new CEO • Deepening of risk management infrastructure • Robust portfolio management activity in CRE office asset class • Stabilizing interest rate risk through volatile rate environment • Prioritizing liquidity and capital risk management • Taking
Slide 18: Sustaining Business Momentum
Sustaining Business Momentum Business Line • Extend market presence/recruit seasoned bankers • Grow client base/expanded lending capacity • Expand specialty products, e.g. ABL, floorplan • Optimize loan/deposit origination process • Continue to drive household growth • Expand digital offerings • Exp
Slide 19: INDB Investment Merits
INDB Investment Merits • High quality franchise in attractive markets • Consistent, strong financial performance • Strong organic business volumes • Growing brand recognition • Leverageable operating platform • Capitalizing on in-market consolidation opportunities • Diligent stewards of shareholder
Slide 20: Appendix A: Non-GAAP Reconciliation of Capital Metrics
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 Tangible
Slide 21: Appendix B: Non-GAAP Reconciliation of Earnings Metrics
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 for the time periods indicated: (Dollars in thousands, except per share
Slide 22: Appendix C: Non-GAAP Reconciliation of Core Net Interest Margin
Appendix C: Non-GAAP Reconciliation of Core Net Interest Margin The following table reconciles net interest margin which is a GAAP measure, to core net interest margin, which is a Non-GAAP measure, for the periods indicated: Three Months Ended September 30, 2023 June 30, 2023 March 31, 2023 December
Slide 23: Forward-looking statements
This presentation contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and business of the Company. These statements may be identified by such forward-looking terminolog
Slide 24: Non-GAAP financial information
This presentation contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This information may include operating net income and operating earnings per share ("EPS"), operating return on aver
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