Independent Bank Corp. · NASDAQ:INDB
Independent Bank — Piper Sandler East Coast Financial Services Conference November 2020
24 slides from Independent Bank's conference presentation, Nov 10, 2020
Slide 1: Piper Sandler East Coast Financial Services Conference November 2020
Piper Sandler East Coast Financial Services Conference November 2020 Chris Oddleifson - Chief Executive Officer Gerard Nadeau - President and Chief Commercial Banking Officer Robert Cozzone - Executive Vice President and Chief Operating Officer Mark Ruggiero - Chief Financial Officer and Chief Accou
Slide 2: Who We Are
Who We Are • Independent Bank Corp. (Nasdaq: INDB) ◦ Main Banking Sub: Rockland Trust • Market Cap: $2.2B (as of November 9, 2020) Market: Loans: $9.4B Eastern Massachusetts 97 Branches Deposits: $10.9B Wealth Mgmt: AUA $4.5B Non-int. Income: 24.4% of revenue (2)
Slide 3: Key Messages - Core Franchise
Key Messages - Core Franchise • Extensive history of strong financial performance • Strong capital levels • Demonstrated resiliency in prior crises • Proven integrator of acquired banks • Expanding footprint in growth markets • Healthy loan and core deposit originations • Diversified fee income busi
Slide 4: Recent Accomplishments
Recent Accomplishments • Seven consecutive years of record operating earnings through 2019** • Strong new business generation despite pandemic • Growing presence in Worcester County • Growth initiatives – online account opening, credit card launch, de novo branches, expanded digital offerings, enhan
Slide 5: Expanding Company Footprint
Expanding Company Footprint % of Market Share 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 County Rank 2020 21 1.1% 8% Suffolk County Rank 2020 11 0.8% 10% Dukes Cou
Slide 6: COVID-19 Pandemic Key Messages
COVID-19 Pandemic Key Messages • Customer support a key priority • Maintaining high service levels and operational availability • Proactive credit monitoring and problem resolution • Loan deferral levels declining • Focused intensely on physical and financial well-being of employees • Have the peopl
Slide 7: COVID-19 Pandemic Action Steps
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 • Partic
Slide 8: Loan Portfolio - Commercial Diversification
Loan Portfolio - Commercial Diversification Total Commercial Real Estate Total C&I Loan Portfolio Portfolio $2.1B as of 9/30/20 $4.7B as of 9/30/20 All Other 13.2% All Other (11 Sectors): 21.2% Strip Malls 5.7% Residential - Retail Trade: 15.9% * Related 30.4% Finance and Insurance:3.7% Hotels/Motel
Slide 9: Credit Review - Potentially Impacted COVID-19 Industries
Credit Review - Potentially Impacted COVID-19 Industries The table below provides total outstanding balances of commercial loans as of September 30, 2020 within industries that could potentially be more impacted by the COVID-19 pandemic: Highly Impacted COVID-19 Industries - Balances September 30, 2
Slide 10: Credit Review - Potentially Impacted COVID-19 Industries - Cont'd
Credit Review - Potentially Impacted COVID-19 Industries - Cont'd Retail Trade Balance $ 493,270 Average borrower loan size $ 485 % secured by real estate 43.8 % Weighted average loan to value 55.4 % Other information: – The retail trade portfolio consists broadly of food and beverage stores (42%),
Slide 11: Credit Review - Loan Deferrals
Credit Review - Loan Deferrals Loan Modification Requests by Loan Category: Deferral of Deferral of Principal and Deferral of Interest Total Interest Principal Only Only Deferrals Total Portfolio % Deferral (Dollars in thousands) Commercial and industrial $ 5,658 $ 33,032 $ 582 $ 39,272 $ 2,062,345
Slide 12: Asset Quality: Well Managed
Asset Quality: Well Managed NPLs • Disciplined underwriter Other Consumer 0.1% • Low loss rates Small Business 0.6% C&I 37.7% • High average FICOs and low CRE 38.9% average LTVs in consumer book • 3Q NPL & NCO increases related to 3 credits in identified COVID- exposed industries Home Equity 6.3% Re
Slide 13: Financial Performance - Strong Fundamentals
Financial Performance - Strong Fundamentals Longer Term Trends Net Income ($Mil)* $165.2 +38% CAGR $6 • Robust loan/deposit $150.0 $121.6 $5 originations $125.0 $5.03 $100.0 $87.2 • Strong core deposit base $4.40 $86.5 $4 $75.0 $2.59 • Low funding costs $3 • Powerful mortgage platform $50.0 $3.19 $2
Slide 14: Low Cost Deposit Base
Low Cost Deposit Base Total Deposits $10.9B • Sizable demand deposit component 3Q 2020 CDs • Record new checking account openings 10% in 3Q Demand Deposits 34% • <1% of HH's are CD only Savings/Now • Valuable source of liquidity 36% • Relationship-based approach Money Market 20% • Expanded digital a
Slide 15: Investment Management: Transformed Into High Growth Business
Investment Management: Transformed Into High Growth Business Longer Term Trends AUAs • Successful business model ($ Bil.) CAGR+10% • Growing source of fee revenues $4.6 $4.5 • Strong feeder business from Bank $3.5 $3.6 • Expanding investment center locations 2017 2018 2019 3Q20 • Adding experienced
Slide 16: Strong Capital Position
Strong Capital Position • Strong internal capital generation Cash Dividends Declared Per Share $2.00 $1.76 • History of healthy dividend increases $1.52 $1.38 $1.50 $1.28 • TBV rising even with multiple acquisitions $1.00 $0.50 • No storehousing of excess capital $0.00 2017 2018 2019 YTD20 • Complet
Slide 17: 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 18: Major Opportunities in Acquired Bank Markets
Major Opportunities in Acquired Bank Markets: Capitalizing on Rockland Trust Brand Investment Commercial Banking Management • Sophisticated products • $4.5 billion AUA • Expanded capacity • Wealth/Institutional • In-depth market • Strong referral knowledge network Acquired Bank Customer Bases (18) R
Slide 19: 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, Floorplan • Increased Lending Capacity • Continue to Drive Household Growth • Expand Digital Offerings • Expedite New Account Openings •
Slide 20: 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 Accretive • Growing brand recognition • Leverageable operating platform • Capita
Slide 21: 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 22: 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 YTD20 (Dollars in thou
Slide 23: Appendix C: Current Expected Credit Loss (CECL)
Appendix C: Current Expected Credit Loss ("CECL") September 30 June 30 March 31 January 1 December 31 2020 2020 2020 2020 2019 Incurred Loss CECL Methodology Methodology (Dollars in thousands) Commercial and industrial $ 28,219 $ 25,662 $ 21,649 $ 15,659 $ 17,594 Commercial real estate 39,386 36,956
Slide 24: NASDAQ Ticker: INDB
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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