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| 8-K - KBW INVESTOR PRESENTATION - INDEPENDENT BANK CORP | kbwinvestorpresentationfeb.htm |
Keefe, Bruyette & Woods, Inc.
Winter Financial Services Symposium
February 8, 2018
Christopher Oddleifson – Chief Executive Officer
Robert Cozzone – Chief Financial Officer & EVP Consumer
and Business Banking
Exhibit 99.1
(2)
Who We Are
•Main Sub: Rockland Trust
• Market: Eastern Massachusetts
• Loans: $6.4B
• Deposits: $6.7B
• $AUA: $3.5B
• Market Cap: $1.9B
• 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
• Deep, experienced management team
* See appendix A for reconciliation
(4)
Expanding Company Footprint
Source: SNL Financial; Deposit/Market Share data as of June 30, 2017
Market Share
% of
INDB Dep.
Plymouth County
Rank 2017
1 22.9% 39%
Norfolk County
Rank 2017
5 5 4.8% 19%
Barnstable County (Cape Cod)
Rank 2017
4 11.2% 13%
Bristol County
Rank 2017
6 7.8% 12%
Middlesex County
Rank 2017
19 1.1% 10%
Suffolk County
Rank 2017
18 0.3% 4%
Dukes County (MV)
Rank 2017
3 16.0% 2%
Worcester County
Rank 2017
30 0.3% 1%
(5)
Recent Accomplishments
• Five consecutive years of record operating earnings**
• Finalized acquisition of Island Bancorp, Inc. of Martha's
Vineyard
• Capitalizing on expansion moves in vibrant Greater
Boston market
• Growth initiatives – new commercial products, new
revitalized branches, expanded digital offerings, senior
talent adds, esp. Commercial Lending and Investment
Management
• Strong household growth rate
• #1 in customer service in New England (J.D. Power)
**See appendix B for reconciliation
(6)
Strong Fundamentals Driving Performance
• Robust customer activity
• Core deposits at 90%
• Fee revenues rising
• Low funding costs
• Low credit loss rates
• TBV steadily growing*
• Operating ROA at 1.2%
• Accretive acquisitions
* See appendix A for reconciliation
**See appendix B for reconciliation
+13% CAGR
+15% CAGR
(7)
Vibrant Commercial Lending Franchise
• Long-term CRE/C&I lender
• Increased small business focus
• Strong name recognition in local markets
• Expanded market presence
• New loans generated: $1B+ in '17
• Added senior leaders from competitors
• Growing in sophistication and capacity
• Commercial banker development program
• Disciplined underwriting
Total Loans
$6.4B
Avg. Yield: 4.20%
4Q 2017
(8)
Commercial Diversification
$3.5B as of 12/31/2017 $889M as of 12/31/2017
*Includes 1-4 Family, multifamily, Condos and Approved Land
**Non-Owner Occupied Commercial Real Estate divided by Total Capital
(9)
Low Cost Deposit Base
• Sizable demand deposit component
• Valuable source of liquidity
• Relationship-based approach
• Expanded digital access
• Growing commercial base
Total Deposits $6.7B
4Q 2017
(10)
Investment Management :
Transformed Into High Growth Business
• Successful business model
• Growing source of fee revenues
• Strong feeder business from
Bank
• Expanding investment center locations
• Adding experienced professionals
• Cross-sell opportunity in acquired bank
markets
CAGR
+109%
CAGR+11
2%
(11)
Asset Quality: Well Managed
• Disciplined underwriter
• Low loss rates
• High average FICOs and low
average LTVs in consumer book
bps
bps
1bps
1bps
(12)
Strong Capital Position
* See appendix A for reconciliation
• Strong internal capital generation
• No storehousing of excess capital
• No external equity raising
• No dividend cuts
(13)
Well-Positioned for Rising Rates:
Prudent Balance Sheet Management
(14)
Sustaining Business Momentum
Business Line
• 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
• Capitalize on Strong Market Demographics
• Continue Strong Branch/Commercial Referrals
• Expand COI Relationships
• Continue Aggressive H.E. Marketing
• Scalable Resi Mortgage Origination Platform
Focal Points
(15)
Optimizing Retail Delivery Network
In the past twelve months we have:
• Utilized specialized analytics software/location model
• Shifted branch distribution
• Closed/consolidated 1
• Opened 1 (Newton - Jan. 2018)
• Relocated 1
• Redesigned 1
• Added 4 locations from Island Bancorp acquisition
• Added 3 off-site ATMs
• Converted all debit cards to EMV ready
(16)
Expanded Presence in Vibrant 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
Long-Term Commercial Lender in Greater Boston
(17)
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: $200MM
• Transaction value: $29MM
• Closed in May ‗17 - strong new business generation
INDB: A Proven Integrator
(18)
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
May '17
$194 mm Assets
$171mm Deposits
Net 4 Branches
Deal Value: $29MM
9% Core Dep. Premium*
(19)
Major Opportunities in Acquired Bank Markets:
Capitalizing on Rockland Trust Brand
Acquired
Bank
Customer
Bases
Investment Management
• $3.5 billion AUA
• Wealth/Institutional
• Strong referral network
Commercial Banking
• Sophisticated products
• Extended capacity
• In-depth market
knowledge
Retail/Customer
• Award-winning customer service
• Electronic/mobile banking
• Competitive home equity products
(20)
INDB Investments Merits
• High quality franchise in attractive markets
• Consistent, strong financial performance
• 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
(21)
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:
2014 2015 2016 2017
(Dollars in thousands, except share and per share data)
Tangible common equity
Stockholders' equity (GAAP) $ 640,527 $ 771,463 $ 864,690 $ 943,809 (a)
Less: Goodwill and other intangibles 180,306 212,909 231,374 241,147
Tangible common equity 460,221 558,554 633,316 702,662 (b)
Tangible assets
Assets (GAAP) 6,364,318 7,209,469 7,709,375 8,082,029 (c)
Less: Goodwill and other intangibles 180,306 212,909 231,374 241,147
Tangible assets 6,184,012 6,996,560 7,478,001 7,840,882 (d)
Common shares 23,998,738 26,236,352 27,005,813 27,450,190 (e)
Common equity to assets ratio (GAAP) 10.06 % 10.70 % 11.22 % 11.68 % (a/c)
Tangible common equity to tangible assets ratio
(Non-GAAP)
7.44 % 7.98 % 8.47 % 8.96 % (b/d)
Book Value per share (GAAP) $ 26.69 $ 29.40 $ 32.02 $ 34.38 (a/e)
Tangible book value per share (Non-GAAP) $ 19.18 $ 21.29 $ 23.45 $ 25.60 (b/e)
(22)
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:
2014 2015 2016 YTD 2017
(Dollars in thousands, except per share data)
Net income available to common
shareholders (GAAP) $ 59,845 $ 2.49 $ 64,960 $ 2.50 $ 76,648 $ 2.90 $ 87,204 $ 3.19
Non-GAAP adjustments
Noninterest income components
Gain on life insurance benefits (tax
exempt) (1,964 ) (0.08 ) — — — — — —
Gain on sale of fixed income
securities (121 ) (0.01 ) (798 ) (0.03 ) — — — —
Noninterest expense components
Impairment on acquired facilities 524 0.02 109 — — — — —
Loss on extinguishment of debt — — 122 — 437 0.02 — —
Loss on sale of fixed income securities 21 — — — — — — —
Loss on termination of derivatives 1,122 0.05 1,124 0.04 — — — —
Merger and acquisition expenses 1,339 0.06 10,501 0.41 5,455 0.20 3,393 0.12
Total impact of noncore items 921 0.04 11,058 0.42 5,892 0.22 3,393 0.12
Less - net tax benefit associated
with noncore items (1) (866 ) (0.03 ) (4,285 ) (0.16 ) (2,163 ) (0.08 ) (1,241 ) (0.05 )
2017 Tax Act: revaluation of net
deferrred tax assets — — — — — — 1,895 $ 0.07
2017 Tax Act: revaluation of
LIHTC investments — — — — — — 466 $ 0.02
Total tax impact (866 ) (0.03 ) $ (4,285 ) $ (0.16 ) $ (2,163 ) $ (0.08 ) 1,120 $ 0.04
Net operating earnings (Non-
GAAP) $ 59,900 $ 2.50 $ 71,733 $ 2.76 $ 80,377 $ 3.04 $ 91,717 $ 3.35
(23)
NASDAQ Ticker: INDB
www.rocklandtrust.com
Robert Cozzone – CFO & EVP Consumer and Business Banking
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.