Independent Bank Corp. · NASDAQ:INDB
Independent Bank — D.A. Davidson Financial Institutions Virtual Conference 2020
26 slides from Independent Bank's conference presentation, May 7, 2020
Slide 1: D.A. Davidson Financial Institutions Virtual Conference
D.A. Davidson Financial Institutions Virtual Conference May 7 & 8, 2020 Chris 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: $8.9B • Deposits: $9.4B • AUA: $4.0B • Market Cap: $2.5B • Nasdaq: INDB (2)
Slide 3: Key Messages - Core Franchise
Key Messages - Core Franchise • Extensive history of strong financial performance • Healthy loan and core deposit originations • Growing Investment Management business • Expanding footprint in growth markets • Proven integrator of acquired banks • Increased size providing scale advantages • Tangible
Slide 4: Recent Accomplishments
Recent Accomplishments • Seven consecutive years of record operating earnings** • Fully integrated Blue Hills Bancorp acquisition • Increased presence in Worcester County • Capitalizing on expansion moves in vibrant Greater Boston market • Growth initiatives – online account opening, credit card lau
Slide 5: Expanding Company Footprint
Expanding Company Footprint % of Market Share INDB Dep. Plymouth County Rank 2019 1 24.1% 33% Norfolk County Rank 2019 3 6.1% 19% Barnstable County (Cape Cod) Rank 2019 4 10.9% 10% Bristol County Rank 2019 7 7.2% 9% Middlesex County Rank 2019 22 1.0% 7% Suffolk County Rank 2019 9 1.2% 14% Dukes Coun
Slide 6: COVID-19 Pandemic - Key Messages
COVID-19 Pandemic - Key Messages • Customer support a key priority • Maintaining high service levels and operational availability • Focused intensely on physical and financial well-being of employees • Resilient, as proven over prior crises • Have the people, business model, and balance sheet to per
Slide 7: COVID-19 Pandemic - Action Steps
COVID-19 Pandemic - Action Steps • Revised initial CECL assumptions ◦ Incorporated Moody's S4 scenario as baseline ◦ Added qualitative analyses of various exposures • Granted relief to customers ◦ Delayed payments, waived fees, etc. • Participated in PPP program ◦ Received over 5,000 loan applicatio
Slide 8: Commercial Diversification
Commercial Diversification Total C&I Loan Portfolio Total Commercial Real Estate Portfolio $1.4B as of 3/31/2020 $4.6B as of 3/31/2020 All Other (11 Sectors): 15.1% Accommodation and food services: All Other 13.9% 4.1% Administrative Support/Waste Retail Trade: Residential - Related Mgmt/Remediation
Slide 9: Potentially Impacted COVID-19 Industries
Potentially Impacted COVID-19 Industries The table below provides total outstanding balances of commercial loans as of March 31, 2020 within industries that could potentially be more impacted by the COVID-19 pandemic: Potentially Impacted COVID-19 Industries (Dollars in thousands) % of total % Secur
Slide 10: Potentially Impacted COVID-19 Industries (cont.)
Potentially Impacted COVID-19 Industries (cont.) Potentially Impacted COVID-19 Industries (Dollars in thousands) % of total % Secured by Balance Loans Real Estate Additional commentary: The other services portfolio consists of various for-profit and not-for-profit services diversified across religio
Slide 11: Strong Fundamentals Driving Performance
Strong Fundamentals Driving Performance Longer Term Trends Net Income ($Mil)* $165.2 +38% CAGR $150.0 $5.5 • Robust loan/deposit $121.6 originations $125.0 $5.03 $4.5 $100.0 $87.2 $4.40 • Strong core deposit base $3.5 $75.0 • Low funding costs $3.19 $2.5 $50.0 • $26.8 Powerful mortgage platform $25.
Slide 12: Low Cost Deposit Base
Low Cost Deposit Base Total Deposits $9.4B • Sizable demand deposit component 1Q 2020 • <1% of HH's are CD only CDs 13% Demand • Valuable source of liquidity Deposits 30% • Relationship-based approach Savings/Now 37% Money Market • Expanded digital access 20% • Growing commercial base Core Deposits
Slide 13: Investment Management: Transformed Into High Growth Business
Investment Management: Transformed Into High Growth Business Longer Term Trends AUAs • Successful business model ($ Bil.) CAGR+6% • Growing source of fee revenues • $4.6 Strong feeder business from Bank $3.5 $3.6 $4.0 • Expanding investment center locations 2017 2018 2019 1Q20 • Adding experienced p
Slide 14: Asset Quality: Well Managed
Asset Quality: Well Managed NPLs Other Consumer 0.2% Small Business 0.9% • Disciplined underwriter CRE 10.3% • Low loss rates Home Equity 13.7% • High average FICOs and low C&I 44.7% average LTVs in consumer book Residential 30.2% NPLs Net Charge-offs ($Mil.) ($Mil.) 6bps $60.0 $49.6 1.00% $4.0 6bps
Slide 15: Strong Capital Position
Strong Capital Position Cash Dividends Declared Per Share • Strong internal capital generation $2.00 $1.76 $1.52 • History of healthy dividend increases $1.50 $1.28 • TBV rising even with multiple acquisitions $1.00 $0.46 $0.50 • No storehousing of excess capital $0.00 • Completed 1.5 million share
Slide 16: 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 17: 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 (17) R
Slide 18: 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 • Increased Lending Capacity • Continue to Drive Household Growth • Expand Digital Offerings • Optimize Branch Network • Capitalize on St
Slide 19: INDB Investments Merits
INDB Investments Merits • High quality franchise in attractive markets • Regained momentum following prior crises • Consistent, strong financial performance • Strong organic business volumes All Acquisitions Immediately • Growing brand recognitionAccretive • Leverageable operating platform • Capital
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 as of the time periods indicated: 2017 2018 2019 1Q20 (Dollars in thous
Slide 22: Appendix C: Current Expected Credit Loss (CECL)
Appendix C: Current Expected Credit Loss ("CECL") • Adoption: ◦ January 1, 2020 adoption of CECL resulted in a minimal change to the allowance as compared to the previous incurred loss methodology. ◦ The table below details the changes in composition of the allowance by portfolio, which are primaril
Slide 23: Appendix D: Rockland Trust COVID-19 Response
Appendix D: Rockland Trust COVID-19 Response Colleagues • We have maintained full time compensation for employees despite reduced work schedules; • We have not laid off or furloughed any employees due to COVID-19 to date; • We have rapidly provided almost 600 employees, or about 86% of our non-retai
Slide 24: Appendix E: COVID-19 Related Modifications through April 17, 2020
Appendix E: COVID-19 Related Modifications through April 17,2020 Rockland Trust has offered needs based payment relief options for commercial and small business loans, residential mortgages, and home equity loans and lines of credit and monitors loan modification requests daily. The following table
Slide 25: Appendix F: PPP and Liquidity Monitoring
Appendix F: Paycheck Protection Program (PPP) and Liquidity Monitoring PPP Information As of Wednesday, May 6, 2020 Rockland Trust Company had: • Received over 5,000 PPP loan applications; • Processed an SBA guarantee for over 5,100 PPP loans, with an aggregate dollar value of approximately $818.9 m
Slide 26: Contact
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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