Indel B
Annual Report 2014

Plain-text annual report

COMMITTED TO STRONG RELATIONSHIPS ’14 ANNUAL REPORT 46692_CV.indd 2 46692_CV.indd 2 3/17/15 9:43 AM 3/17/15 9:43 AM Independent Bank Corp. had approximately $6.4 billion in assets as of December 31, 2014, and is the holding company for Rockland Trust Company, a full-service commercial bank headquartered in Massachusetts. Founded 107 years ago by local business owners as a bank for businesses, Rockland Trust has a long heritage of innovation and customer focus. We launched mobile banking twice: First in 1910 with a Model T Ford and again in 2011 with a digital banking suite of services for mobile devices. Our colleagues are recognized year after year for providing exemplary service and living the promise Where Each Relationship Matters®. ■ 86 Retail Branches as of February 21, 2015 ■ 11 Commercial Lending Centers ■ 5 Investment Management Centers ■ Personal and Business Banking, Commercial Lending, Investment Management, Insurance, Mortgages and Home Equity Lending, and Mobile and Internet Banking ■ Received an “Outstanding” Community Reinvestment Act rating FINANCIAL CONDITION DATA (Dollars in thousands, except per share data) Loans Total assets Total deposits Stockholders’ equity Operating Data Net interest income Noninterest income Noninterest expenses Net income Per Share Data Net income—Diluted Cash dividends declared Operating Ratios As of and for the year ended December 31 2014 2013 2012 2011 2010 $ 4,970,733 $ 4,718,307 $ 4,519,011 $ 3,794,390 $ 3,555,679 6,364,912 5,210,466 640,527 6,099,234 4,986,418 591,540 5,756,985 4,546,677 529,320 4,970,240 3,876,829 469,057 4,695,738 3,627,783 436,472 $ 196,042 69,943 171,838 59,845 $ 182,578 68,009 173,649 50,254 $ 172,799 62,016 159,459 42,627 $ 167,079 52,700 145,713 45,436 $ 163,961 46,906 139,745 40,240 $ $ 2.49 0.96 2.18 0.88 $ $ 1.95 0.84 2.12 0.76 $ 1.90 0.72 Return on average assets Return on average common equity Net interest margin (on a fully tax equivalent basis) Asset Quality Ratios 0.95% 9.66% 3.45% 0.87% 9.09% 3.51% 0.83% 8.66% 3.75% 0.96% 9.93% 3.90% 0.88% 9.46% 3.95% Nonperforming loans as a percent of gross loans 0.55% 0.73% 0.64% 0.76% 0.65% ON THE COVER: Michael Hogan, President and CEO of A.D. Makepeace Company (left), and Paul Vickery, Senior Vice President and Regional Lending Manager for Rockland Trust, on site at Redbrook, a planned community currently under development located on approximately 1,320 acres in South Plymouth, Massachusetts. Rockland Trust has a longstanding relationship with A.D. Makepeace and provided major financing for Redbrook, the 160 year old company’s most significant real estate development to date. 46692_CV.indd 3 46692_CV.indd 3 3/17/15 9:44 AM 3/17/15 9:44 AM Dear Fellow Shareholders, Colleagues, Customers, and Members of Our Community, I’M PLEASED TO TELL YOU THAT 2014 WAS ANOTHER GREAT YEAR FOR OUR COMPANY. OUR FOCUS ON PROVIDING EXEMPLARY SERVICE AND EXECUTING OUR PLAN IN A DISCIPLINED MANNER CONTINUED TO DELIVER SUPERIOR FINANCIAL RESULTS IN A DYNAMIC ECONOMIC, POLITICAL AND REGULATORY ENVIRONMENT. As you will see, we achieved impressive new business momentum, excellent credit quality, good expense control, and the successful integration of Mayflower Bank. At least as importantly, the satisfaction of our customers and engagement of our colleagues ranks among the highest of banks nationwide. Throughout our 107 years in business, Rockland Trust’s vision—“Where Each Relationship Matters”—has been the driving force behind our success in delivering an excellent customer experience. We believe it all begins with a high quality team of happy loyal colleagues who have a passion for serving customers and the drive to make banking easier. This commitment to caring for and respecting our colleagues and customers directly contributed to our outstanding financial performance in 2014: ■ Record operating revenue of $59.9 million, up 8.6% ■ Record operating earnings per share of $2.50, up 4.6% ■ Loan growth of $252.4 million or 5.4% ■ Deposit growth of $224.0 million or 4.5% Our management team is careful not to become complacent about our per- formance, but we are nonetheless gratified when respected third parties acknowl- edge our achievements. ■ Sandler O’Neill, a respected banking analyst, again selected us for their prestigious 2014 Sm-All Stars List, one of only 35 banks nationwide. ■ We were named to Forbes’ list of Best Banks for four consecutive years 2011–2014. ■ Rockland Trust was again named to Boston Globe’s Top Places to Work for the sixth consecutive year (2009–2014), and was the top ranking bank in its category. CHRISTOPHER ODDLEIFSON PRESIDENT AND CHIEF EXECUTIVE OFFICER Operating Earnings Per Share $2.50 $2.39 $2.12 $2.16 2011 2012 2013 2014 2014 Annual Report 1 46692_PR.indd 1 46692_PR.indd 1 3/17/15 9:51 AM 3/17/15 9:51 AM EXEMPLARY BUSINESS RESULTS We are fortunate to be located in a geographic area which was relatively mildly affected by the Great Recession, and which has recovered more strongly from it. However, business investment and net new lending is just now beginning to expand, meaning that banks in our region have been chasing the same existing transactions for the past several years. Not surprisingly, this has had the effect of driving down pricing and margins. Despite these headwinds, I am proud of our team for executing our plan and growing our customer base and revenues in a superior manner. Additionally, we see much of our growth coming from satisfied customers referring their friends and colleagues. Our total loans grew by 5.4 percent to $5.0 billion, driven primarily by our Commercial Lending group, which continues to attract more businesses with our team of experienced bankers and robust portfolio of financing capa- bilities. A 9.8 percent increase in the Commercial and Industrial and a 4.4 percent increase in Commercial Real Estate portfolios led to a 6.7 percent growth in total Commercial Loans. Our Retail team continued to leverage our growing branch network and digital banking capabilities to grow consumer and business households, contributing to a 4.5 percent increase in total deposits, and 7.7% improvement in deposit fee income. Further, our investment management business continues to gain momentum with record growth in 2014. Assets under administration increased by 9.4 percent to a record $2.5 billion and revenue from those accounts was up by 16.7 percent to a record $19.6 million. Strong absolute investment performance and solid new business results were the drivers of the investment team’s financial performance. Improved credit quality, efficiency, and capital position further strengthened our solid fundamentals. Nonperform- ing assets decreased 11.3 percent and now represent 0.61% of total assets. Net charge-offs on loans also remained low at 0.18% of average loans. Our efficiency ratio improved to 64.6 percent. In addition, we increased our Tier 1 capital Ratio to 8.8 percent. These provide a stronger platform for sustaining long-term growth by permitting us to invest in our people and capabilities to keep pace with the changing environment around us. Examples of investments made in 2014 include: creation of our Low Income Housing Tax Credit affordable housing program; completely new website and tablet banking; and an exciting new branch prototype in Somerville’s Davis Square. GREATER BOSTON EXPANSION In last year’s letter I talked about our progress in expanding our presence north of Boston into Middlesex County through the acquisition of Central Bank, and south of the City through our acquisition of Mayflower Bank. The suc- cessful unification of those franchises with Rockland Trust introduced us to new markets, made us more efficient, and opened up significant new avenues of growth. I would like to personally thank all our colleagues who worked so hard to make the Mayflower Bank integration relatively seamless for our new customers and colleagues. This is really important work! Many of you have heard me talk about how important Greater Boston is to the future of our Company. Most of New England’s economic growth occurs in this relatively small and dense geographic area. Fulfilling our master plan for Greater Boston took a giant leap this past year with our announcement in August to join forces with Peoples Federal Savings Bank. Peoples Federal will provide our company for the first time with a retail presence in the neigh- borhoods of Boston proper and will also enable us to leverage our investment management and commercial lending office in downtown Boston. Peoples’ eight branches also create a perfect bridge between our legacy South Shore franchise and our more recent Northern franchise. We recently closed and integrated the Peoples Federal transaction and are excited to welcome our new colleagues and customers to Rockland Trust. 2 Independent Bank Corp. 46692_PR.indd 2 46692_PR.indd 2 3/17/15 9:51 AM 3/17/15 9:51 AM STRATEGIC FOCUS An important ingredient for Rockland Trust’s success is our strate- gic discipline and focus. I talked last year about our management realignment to allow us to improve this focus, particularly in the areas of knowledge management and process improvement. Our management team made significant progress in this area in 2014, refining our customer segmentation, gaining customer insight, and enhancing our products and service as a result. All of us are focused on making banking easier for our customers, and we are confident these improvements in our customers’ experience will also accrue financial benefits to the Company. Our Board of Directors led by Donna Abelli has been extremely engaged and provided valuable guidance and insight this past year. In 2014, we had notable departures. Robert Sullivan, Richard Anderson, and Richard Sgarzi each retired after many years of dedicated service. We also bid a sad farewell to long-time Director Benjamin A. Gilmore, II, due to illness. Ben joined our Board in 1989 and served with distinction for more than 20 years. He provided outstanding leadership throughout his tenure, including Chairman for the last several years of our Compensation Committee, and will be missed by all who knew him. I couldn’t be more proud of what our team has achieved this past year. We have a spirit of cooperation and commitment to do what is right for the customer that is rare in our industry today. I want to again thank my colleagues for going above and beyond to make banking easier for our customers. I would also like to thank our customers and shareholders for their continued vote of confidence. We endeavor to build even stronger relation- ships with each of you in the coming year. Warmly, Chris Oddleifson President and Chief Executive Officer Independent Bank Corp. Rockland Trust Company OUR COVERAGE 10/2014 E S S E X BOSTON $5 BILLION TOTAL DEPOSITS IN 2014 “ Our fundamentals continued to lead the way, reflecting our well-positioned franchise and the growing power of the Rockland Trust brand. ” 8.6% INCREASE IN OPERATING NET INCOME 46692_PR.indd 3 46692_PR.indd 3 3/17/15 9:51 AM 3/17/15 9:51 AM 2014 Annual Report 3 A Year of Achievements RANKED 4TH BEST OVERALL AMONG THE LARGEST EMPLOYERS IN MASSACHUSETTS. TOP RANKING BANK IN OUR CATEGORY. NAMED TO BOSTON GLOBE’S TOP PLACES TO WORK LIST FOR SIX CONSECUTIVE YEARS (2009–2014). WE WERE NAMED TO FORBES’ LIST OF BEST BANKS FOR FOUR CONSECUTIVE YEARS 2011–2014. #1 COMMERCIAL LENDER IN MASSACHUSETTS BY BANKER & TRADESMAN 2014. NAMED TO SANDLER O’NEILL’S 2014 SM-ALL STARS LIST OF TOP PERFORMING SMALLCAP BANKS AND THRIFTS IN THE COUNTRY NAMED TO THE GLOBE 100 THE BEST OF MASSACHUSETTS BUSINESSES FOR EIGHT CONSECUTIVE YEARS: 2006–2013. We believe Rockland Trust is the most valuable independent franchise in its market. –Baird, 10/17/14 “ ” COMMUNITY IMPACT NAMED A 2014 TOP CHARITABLE CONTRIBUTOR BY THE BOSTON BUSINESS JOURNAL. HONORED AT THE BBJ’S ANNUAL CORPORATE CITIZENSHIP SUMMIT. Our 1,060 employees receive two paid days off per year to volun- teer to nonprofit organizations through RockCORP, the Company’s employee volunteer group. In 2014 our employees gave back to the community by volunteering more than 6,000 hours of their time to local organizations. Through our chari table giving pro- grams we focus on improving the quality of life in our neighbor- hoods and donated more than $600,000 to community programs and organizations in 2014. For more information, visit: https://www.rocklandtrust.com/community 4 Independent Bank Corp. 46692_PR.indd 4 46692_PR.indd 4 3/17/15 9:51 AM 3/17/15 9:51 AM Corporate Information BOARD OF DIRECTORS Donna L. Abelli Chair William P. Bissonnette Kevin J. Jones Eileen C. Miskell John J. Morrissey Christopher Oddleifson President and Chief Executive Officer Daniel F. O’Brien Carl Ribiero John H. Spurr Jr. Maurice H. Sullivan, Jr. Brian S. Tedeschi Thomas R. Venables CORPORATE OFFICERS Christopher Oddleifson President and Chief Executive Officer Edward Seksay General Counsel and Secretary Robert Cozzone Chief Financial Officer and Treasurer Mark Ruggiero Senior Vice President, Controller, and Principal Accounting Officer Gerard Nadeau Executive Vice President Commercial Banking Jane Lundquist Executive Vice President, Director of Retail Delivery, Business Banking and Home Equity Lending Edward Jankowski Director of Residential Lending and Compliance Barry Jensen Chief Information Officer Ray Fuerschbach Director of Human Resources Mark Gibson Chief Marketing Officer David B. Smith, CFA Senior Vice President and Chief Investment Officer Kathryn T. Robson Senior Vice President and Chief Internal Auditor m o c . s r o n n o c - n a r r u c . w w w / . c n I , s r o n n o C & n a r r u C y b n g i s e D t r o p e R l a u n n A Rockland Trust’s Davis Square branch in Somerville, MA experienced a transformational renovation in 2014. Somerville has among the highest concentration of Millennials in the U.S., and the exciting facility rep- resents the bank’s latest thinking from an advice- based sales and service standpoint as well as digital marketing and branch design. 46692_CV.indd 4 46692_CV.indd 4 3/17/15 9:44 AM 3/17/15 9:44 AM INDEPENDENT BANK CORP. 288 UNION STREET ROCKLAND, MA 02370 (781) 878-6100 The full Annual Report and Form 10-K can be viewed on our website by going to https://www.rocklandtrust.com/about-us and clicking on Investor Relations 46692_CV.indd 1 46692_CV.indd 1 3/17/15 9:43 AM 3/17/15 9:43 AM 

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