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| 8-K - RBC CAPITAL MARKETS - INDEPENDENT BANK CORP | rbccapitalmarkets.htm |
RBC Capital Markets
Financial Institutions Conference
March 7, 2017
Robert Cozzone – Chief Financial Officer and Treasurer
Jonathan Nelson – SVP, Rockland Trust
Exhibit 99.1
(2)
Who We Are
• Main Sub: Rockland Trust
• Market: Eastern Massachusetts
• Loans: $6.0 B
• Deposits: $6.4 B
• $AUA: $2.9 B
• Market Cap: $1.8 B
• NASDAQ: INDB
(3)
Key Messages
• Lengthy track record of consistent, solid performance
• Robust loan and core deposit activity
• Growing fee revenue sources, esp. Investment Mgmt.
• Expanding footprint in growth markets
• Tangible book value steadily growing *
• Steadily improving operating efficiency
• Disciplined risk management culture
• Proven integrator of acquired banks
* See appendix A for reconciliation
(4)
Expanding Company Footprint
Rank 2016
1 23.5% 39%
Rank 2016
5 4.9% 18%
Rank 2016
3 12.3% 14%
Rank 2016
6 7.9% 12%
Rank 2016
19 1.2% 10%
Rank 2016
17 0.3% 4%
Rank 2016
2 19.7% 2%
Rank 2016
31 0.3% 1%
Suffolk County
Bristol County
Worcester County
Dukes County (MV)
Middlesex County
Norfolk County
% of
INDB Dep.Share
Barnstable County (Cape Cod)
Market
Plymouth County
Source: SNL Financial; Deposit/Market Share data as of October 20, 2016.
*Pro forma for pending Island Bancorp, Inc. acquisition
*
(5)
Recent Accomplishments
• Four consecutive years of record earnings
• Reached agreement to acquire Island Bancorp, Inc. of
Martha’s Vineyard
• Finalized acquisition of New England Bancorp, Inc. of
Cape Cod
• Capitalizing on expansion moves in vibrant Greater
Boston market
• Growth initiatives – new equipment leasing product, new
N. Quincy branch, expanded digital offerings
• Strong household growth rate
• Consistently high rankings in third party surveys
(6) $55.2
$59.9
$71.7 $80.4
2013 2014 2015 2016
Operating Earnings ($ Mil.)**
Strong Fundamentals Driving Performance
+13% CAGR
Diluted EPS
$2.18 $2.49 $2.50 $2.90
• Robust customer activity
• Core deposits up to 90%
• Fee revenues rising
• Low funding costs
• Low credit loss rates
• TBV steadily growing*
• Solid returns
• Accretive Acquisitions
Diluted EPS
$2.39 $2.50 $2.76 $3.04
* See appendix A for reconciliation
* *See appendix B for reconciliation
$50.3 $59.8
$65.0
$76.6
2013 2014 2015 2016
Net Income ($ Mil.)
+15% CAGR
(7)
Vibrant Commercial Lending Franchise
TOTAL LOANS
$6.0 B
AVG. YIELD: 3.94%
4Q 2016
Comm'l
73%
Resi Mtg
11%
Home Eq
16%
• Long-term CRE/ C&I lender
• Strong name recognition in local markets
• Expanded market presence
• Increased small business focus
• Experienced, knowledgeable lenders
• Growing in sophistication and capacity
• Commercial banker development program
• Disciplined underwriting
(8)
Commercial Real Estate Diversification
*Includes 1-4 Family, Multifamily, Condos and Approved Land
Residential-Related*
31.0%
Commercial Buildings
19.0%
Office Buildings
10.5%
Industrial / Warehouse
9.1%
Hotels / Motels
8.4%
Strip Malls
3.7%
All Other
18.3%
Total Commercial Real Estate Portfolio by Property Type
Balance $3.3B
as of 12/31/16
(9)
C&I Diversification
Retail Trade
20.1%
Real Estate and Rental and
Leasing
17.3%
Wholesale Trade
12.6%
Manufacturing
10.5%
Construction
10.1%
Finance and Insurance
6.4%
Health Care and Social
Assistance
5.9%
Accommodation and Food
Services
3.9%
All Other (11 Sectors)
13.2%
C&I Loan Portfolio Composition
Balance $902.1M
as of 12/31/16
(10)
Low Cost Deposit Base
Demand
Deposits
32%
Money
Market
19%
Savings/Now
39%
CDs
10%
TOTAL DEPOSITS
$6.4 B
AVG. COST: 0.17%
4Q 2016
• Sizable demand deposit
component
• Valuable source of liquidity
• Relationship-based approach
• Excellent household growth
• Expanded digital access
• Growing commercial base
• Reducing higher cost deposits
CORE DEPOSITS: 90%
(11)
6.1
13.5
21.8
2006 2011 2016
Revenues
($ Mil.)
816
1,651
2,919
2006 2011 2016
AUAs
($ Mil.)
Investment Management :
Transformed Into High Growth Business
+258% +257%
• Successful business model
• Growing source of fee revenues
• Strong feeder business from Bank
• Expanding investment center locations
• Cross-sell opportunity in acquired bank markets
• Adding experienced professionals
(12)
Well-Positioned for Rising Rates:
Prudent Balance Sheet Management
-10%
-5%
0%
5%
10%
15%
20%
25%
Year 0 Year 1 Year 2
%
In
cr
ease
o
n
N
et
In
te
re
st
In
co
m
e
Interest Rate Sensitivity
Down 100
Up 200
Up 400
Flat Up 200
(13)
Asset Quality: Well Managed
$34.7
$27.5 $27.7
$57.4
2013 2014 2015 2016
NPLs
($ Mil.)
NPL/Loan %
0.73% 0.55% 0.50% 0.96%
Peers 0.64%*
* Source: FFIEC Peer Group 2; $3-10 Billion in Assets, September 30, 2016
Incl. 90 days + overdue
$8.8 $8.5
$0.8
$0.3
2013 2014 2015 2016
Net Chargeoffs
($ Mil.)
customer
fraud
Loss Rate
19bp 18bp 1bp 1bp
Peers 10bp*
(14)
Strong Capital Position (period end)
$17.18
$19.18
$21.29
$23.45
2013 2014 2015 3Q16
Tangible Book Value*
+34%
* See appendix A for reconciliation
$24.85
$26.69
$29.40 $32.02
2013 2014 2015 3Q16
Book Value Per Share
+25%
• Strong internal capital generation
• No storehousing of excess capital
• No external equity raising
• No dividend cuts
(15)
Attentive to Shareholder Returns
$0.88 $0.96
$1.04
$1.16
2013 2014 2015 2016
Cash Dividends Declared Per Share
(16)
Sustaining Business Momentum
Business Line
• Expand Market Presence/Recruit Seasoned Lenders
• Grow Client Base
• Expand Specialty Products, e.g. ABL, Leasing
• Lender Development Programs
Commercial
• Continue to Drive Household Growth
• Expand Digital Offerings
• Optimize Branch Network
Retail Delivery
• Capitalize on Strong Market Demographics
• Continue Strong Branch/Commercial Referrals
• Expand COI Relationships
Investment Management
• Continue Aggressive H.E. Marketing
• Scalable Resi Mortgage Origination Platform
Consumer Lending
Focal Points
(17)
Expanded Presence in Vibrant Greater Boston
Long-Term Commercial Lender in Greater Boston
Central Bancorp
$357MM Deposits
10 Branches – Nov. 2012
Investment Management
and Commercial Lending
Center
October 2013
Peoples Federal
Bancshares
$432MM Deposits
8 Branches – Feb. 2015
(18)
Island Bancorp Acquisition
Edgartown National Bank
• Profitable, well-managed community bank
• Provides first retail presence on M.V.
• Excellent complement to growing Cape Cod presence
• Financially attractive
• $0.03 - $0.04 EPS accretion expected in 2018
• Neutral to TBV
• Modest, low-risk deal
• Asset size: $194MM
• Transaction value: $24.5MM
• Expected to close in 2Q ‘17
INDB: A Proven Integrator
(19)
Building Franchise Value
Disciplined Acquisitions
Deal Value: $84.5MM
2% Core Dep. Premium*
Benjamin
Franklin Bancorp
Apr ‘09
$994mm Assets
$701mm Deposits
11 Branches
Deal Value: $52.0MM
8% Core Dep. Premium*
Central
Bancorp
Nov ‘12
$537mm Assets
$357mm Deposits
10 Branches
Deal Value: $40.3MM
8% Core Dep. Premium*
Mayflower
Bancorp
Nov’13
$243mm Assets
$219mm Deposits
8 Branches
$276 mm Assets
$176mm Deposits
Net 1 Branch
Deal Value: $41.7MM
12% Core Dep. Premium*
All Acquisitions Immediately Accretive
*Incl. CDs <$100k
Deal metrics based on closing price and actual acquired assets
New England Bancorp
Nov ‘16
Deal Value: $102.2 MM
17% Core Dep. Premium*
Slade’s Ferry
Bancorp
Mar ‘08
$630mm Assets
$411mm Deposits
9 Branches
Peoples Federal
Bancshares
Feb ’15
$640 mm Assets
$432mm Deposits
8 Branches
Deal Value: $141.8MM
10% Core Dep. Premium*
Island Bancorp
Q2 ‘17 (est.)
$194 mm Assets
$171mm Deposits
Net 4 Branches
Deal Value: $24.5MM
6% Core Dep. Premium*
(20)
Major Opportunities in Acquired Bank Markets:
Capitalizing on Rockland Trust Brand
Investment
Management
Commercial
Banking
Retail/
Consumer
• $2.9 billion AUA
• Wealth/Institutional
• Strong referral network
• Sophisticated products
• Expanded capacity
• In depth market knowledge
• Award winning customer service
• Electronic/mobile banking
• Competitive home equity products
Acquired Bank Customer Bases
(21)
Optimizing Retail Delivery Network
In the past twelve months we have:
• Acquired specialized analytics software/location model
• Shifted branch distribution
• Closed/consolidated 4
• Opened 1
• Redesigned 3
• Contracted ATM site in downtown Boston
• Implemented in-branch transaction balancing
• Transitioned to instant-issue debit cards
• Introduced SecurLOCK feature for misplaced cards
• Implemented Apple, Android and Samsung Pay
• Allowed for electronic scans of customer identification
(22)
INDB Investment Merits
• High quality franchise in attractive markets
• Strong organic business volumes
• Growing brand recognition
• Operating platform that can be leveraged further
• Capitalizing on in-market consolidation opportunities
• Diligent stewards of shareholder capital
• Grounded management team
• Positioned to grow, build, and acquire to drive long-term value
creation
(23)
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 measure, for the dates indicated:
2013 2014 2015 2016
(Dollars in thousands, except share and per share data)
Tangible common equity
Stockholders' equity (GAAP) $ 591,540 $ 640,527 $ 771,463 $ 864,690 (a)
Less: Goodwill and other intangibles 182,642 180,306 212,909 231,374
Tangible common equity 408,898 460,221 558,554 633,316 (b)
Tangible assets
Assets (GAAP) 6,098,869 6,364,318 7,209,469 7,709,375 (c)
Less: Goodwill and other intangibles 182,642 180,306 212,909 231,374
Tangible assets 5,916,227 6,184,012 6,996,560 7,478,001 (d)
Common shares 23,805,984 23,998,738 26,236,352 27,005,813 (e)
Common equity to assets ratio (GAAP) 9.70 % 10.06 % 10.70 % 11.22 % (a/c)
Tangible common equity to tangible assets
ratio (Non-GAAP)
6.91 % 7.44 % 7.98 % 8.47 % (b/d)
Book Value per share (GAAP) $ 24.85 $ 26.69 $ 29.40 $ 32.02 (a/e)
Tangible book value per share (Non-GAAP) $ 17.18 $ 19.18 $ 21.29 $ 23.45 (b/e)
(24)
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:
2013 2014 2015 2016
(Dollars in thousands, except per share data)
Net income available to common
shareholders (GAAP) $ 50,254 $ 2.18 $ 59,845 $ 2.49 $ 64,960 $ 2.50 $ 76,648 $ 2.90
Non-GAAP adjustments
Noninterest income components
Gain on extinguishment of debt (763 ) (0.03 ) — — — — — —
Gain on life insurance benefits (tax
exempt) (227 ) (0.01 ) (1,964 ) (0.08 ) — — — —
Gain on sale of fixed income
securities (258 ) (0.01 ) (121 ) (0.01 ) (798 ) (0.03 ) — —
Noninterest expense components
Impairment on acquired facilities — — 524 0.02 109 — — —
Loss on extinguishment of debt — — — — 122 0.01 437 0.02
Loss on sale of fixed income
securities — — 21 — 1,124 0.04 — —
Loss on termination of derivatives — — 1,122 0.05 — — — —
Merger and acquisition expenses 8,685 0.35 1,339 0.06 10,501 0.40 5,455 0.20
Severance 325 0.01 — — — — — —
Total impact of noncore items 7,762 0.31 921 0.04 11,058 0.42 5,892 0.22
Net tax benefit associated with
noncore items (2,837 ) (0.10 ) (866 ) (0.03 ) (4,285 ) (0.16 ) (2,163 ) (0.08 )
Net operating earnings (Non-
GAAP) $ 55,179 $ 2.39 $ 59,900 $ 2.50 $ 71,733 $ 2.76 $ 80,377 $ 3.04
(25)
NASDAQ Ticker: INDB
www.rocklandtrust.com
Robert Cozzone – CFO & Treasurer
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 results to differ
materially from those currently anticipated due to a number of factors, which include, but are not
limited to, factors discussed in documents filed by the Company with the Securities and Exchange
Commission from time to time.