2015 ANNUAL REPORT Growing our bank, one relationship at a time Will, Melrose Branch Manager John, North Quincy Branch Manager Nicole, Deposit Operations Friday, Melrose Relationship Banker 48330.indd CV2 48330.indd CV2 3/16/16 1:10 PM 3/16/16 1:10 PM Independent Bank Corp. had approximately $7.2 billion in assets as of December 31, 2015, and is the holding company for Rockland Trust Company, a full- service commercial bank headquartered in Massachusetts. Founded 108 years ago by local business owners as a bank for businesses, Rockland Trust has a long heritage of innovation and customer focus. We build strong and enduring relationships by listening to our customers and providing insights to help them feel confident about their financial decisions. Our colleagues are recognized year after year for providing exemplary service and living the promise Where Each Relationship Matters®. ■ 85 Retail Branches as of December 31, 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 ■ “Outstanding” Community Reinvestment Act rating Financial Condition Data (Dollars in thousands, except per share data) Loans Total Assets Total deposits Stockholders’ equity CAPITAL RATIOS As of and for the year ended December 31 2015 2014 2013 2012 2011 $ 5,547,721 $ 4,970,733 $ 4,718,307 $ 4,519,011 $ 3,794,390 7,210,038 6,364,912 6,099,234 5,756,985 4,970,240 5,990,703 5,210,466 4,986,418 4,546,677 3,876,829 771,463 640,527 591,540 529,320 469,057 Tier 1 leverage capital ratio 9.33% 8.84% 8.64% 8.65% 8.61% OPERATING DATA Net interest income Noninterest income Noninterest expenses Net income PER SHARE DATA Net income—Diluted Cash dividends declared OPERATING RATIOS $ 214,928 $ 196,042 $ 182,578 $ 172,799 $ 167,079 75,888 197,138 64,960 69,943 171,838 59,845 68,009 173,649 50,254 62,016 159,459 42,627 52,700 145,713 45,436 $ $ 2.50 1.04 $ 2.49 0.96 $ 2.18 0.88 $ 1.95 0.84 2.12 0.76 Return on average assets Return on average common equity Net interest margin (on a fully tax equivalent basis) 0.93% 8.79% 3.42% 0.95% 9.66% 3.45% ASSET QUALITY RATIOS Nonperforming loans as a percent of gross loans Nonperforming assets as a percent of total assets 0.50% 0.41% 0.55% 0.61% 0.87% 9.09% 3.51% 0.73% 0.72% 0.83% 8.66% 3.75% 0.64% 0.74% 0.96% 9.93% 3.90% 0.76% 0.75% The selected consolidated financial and other data of the Company set forth above does not purport to be complete and should be read in conjunction with, and is qualified in its entirety by, the more detailed information, including the Consolidated Financial Statements and related notes, appearing in the Company’s Form 10-K. 48330.indd CV3 48330.indd CV3 3/16/16 1:10 PM 3/16/16 1:10 PM Dear Friends, 2015 was an outstanding year for Independent Bank Corp. and Rockland Trust Company: ■ We achieved record-setting operating net income of $71.7 million and record-setting operating earnings per share of $2.76; ■ We paid a cash dividend of $1.04 per share to the owners of Independent Bank Corp. stock; ■ The Boston Globe ranked Rockland Trust the Chris Oddleifson President and Chief Executive Officer number one place to work among all large customers to Rockland Trust. Our collective devotion employers in Massachusetts; to being the bank Where Each Relationship Matters® ■ The Boston Business Journal recognized our charita- translated into outstanding financial performance, ble giving and community support at its 10th satisfied customers, and community service. annual Corporate Citizenship Summit by naming We ended the year on a number of high notes and Rockland Trust a “Partner of the Year” for the entered 2016 with a clear strategic and tactical plan to ongoing devotion of my colleagues to the Cardinal continue our high level of performance. We’re lucky Cushing Centers; and, to be located in a part of the country that rebounded ■ The Human Rights Campaign, America’s largest strongly from the recession, but that also means the LGBT civil rights organization, named us a Best economic resiliency of this region is attractive to other Place to Work for LGBT Equality because in our banks. In a challenging and competitive environment, first year of consideration, we achieved a 100% we continue to focus on sound fundamentals and remain score on HRC’s Corporate Equality Index. true to our strategy of steady, disciplined growth. Our What is the secret to our success? Our outstand- consistent focus gives us a competitive advantage as we ing results, reflected in both financial measures and continue to grow our loan portfolios, generate more third-party recognition, derived from the relentless consumer and business deposits, produce healthy fee commitment of my colleagues to our customers and income growth, and maintain superb credit quality. the communities we serve. My colleagues brought Last year, my colleagues grew core deposits by their best to work each day and consistently delivered 16.6% to $5.3 billion at the end of the year. This rep- superior value. The individual efforts of my engaged resented 88.6% of total deposits. Meanwhile our cost coworkers, along with their passion for excellence and of total deposits remained low at 20 basis points. That’s commitment to teamwork, delighted our customers, extraordinary in an intensely competitive market which led many to expand their relationship with like Massachusetts. us and also resulted in our welcoming many new 48330.indd 1 48330.indd 1 3/16/16 1:10 PM 3/16/16 1:10 PM Independent Bank Corp. 1 We also had a strong year in loan growth. Loan Bancshares acquisition quickly and seamlessly, providing originations were excellent across our footprint. Growth us with our first retail presence in the city of Boston. in our commercial loan portfolio was led by commer- Those new bank branches, along with our growing cial construction and commercial real estate. Our investment management and commercial lending Home Equity lending team also had a particularly office in Boston’s financial district, provided our good year as the economy continued to recover. After Company with an attractive platform from which to the record winter storms, consumers returned to invest- offer our services, and our customer base in the city ing in their homes. As a result, our home equity lend- is expanding nicely. ing portfolio increased by 7.4% to $927.8 million at We also continued on our journey to make bank- year end. ing easier, offering better technology and improved Another great story is the growth of our Investment processes. Instant issue debit card capability was installed Management Group. In 2015 IMG grew assets by in all of our branches, eliminating the necessity to 8.4%, reaching more than $2.6 billion in assets under wait 7–10 days to replace cards. In addition, we com- administration. That’s a 70.0% increase in just five pleted the transition of our mortgage loan processing years and nearly 2½ times greater than in 2006. to national lender Embrace Home Loans. This made Our asset quality remained strong in 2015, reflect- it possible for us to offer faster and more efficient ing our well-positioned franchise and the growing service with an expanded product offering—such as power of the Rockland Trust brand. We grew tangible Veterans Affairs and United States Department of book value per share by more than 10%, in spite Agriculture loans. of absorbing an acquisition earlier in the year. Our brand also continued to resonate as our Nonperforming loans decreased to 0.50% of total community image was further enhanced by acknowl- loans and net charge-offs were a remarkable 0.01% edgement from respected third parties. We were recog- of average loans. nized for our leadership in economic development by Looking beyond the numbers, Rockland Trust the National Association of Community Development made considerable strides in a number of other import- Companies, which bestowed on us a Diamond Award ant areas last year that further strengthened us for for being an “Extraordinary Lender Partner in Economic future growth. We assimilated the Peoples Federal Development” for our longtime relationship with the 85 Branch Locations Core Deposits of $5.3 Billion Record Operating Net Income 0f $71.7 Million 2 Independent Bank Corp. 48330.indd 2 48330.indd 2 3/16/16 1:10 PM 3/16/16 1:10 PM South Eastern Economic Development Corporation. I’m so proud of what we’ve accomplished over the The recognition I’m proudest of in 2015, however, last year, and I’m especially proud of our colleagues was our ranking by The Boston Globe as the number for their deep commitment to our communities, cus- one place to work among all large employers in tomers, and each other. Their continued loyalty is Massachusetts. This was our seventh consecutive year vital to our success. We also sincerely appreciate on the “Great Places to Work” list, and I’m grateful our customers’ and shareholders’ continued faith in to my colleagues for rating our Company so highly. our Company. Our 2015 accomplishments would not have been We’re confident in our long-term strategy and are possible without the guidance of our Board of Directors. poised to pursue the opportunities in front of us. We Last year we further strengthened our Board by appoint- thank you—our shareholders, communities, customers, ing Maurice H. Sullivan, Jr. and Frederick Taw as friends, and colleagues—for your continued support. Directors. Maurice and Fred have a long history of community service in the Greater Boston area and their knowledge of that market will provide us with valuable insight. As we enter 2016 we’ll continue to face many challenges, including an unsettled global economy, increased regulation, and continued technological change. Every day our team of over 1,000 dedicated employees do everything they can to ensure we pro- vide the best customer experience possible. We believe that achieving superior performance over time begins with having the right people on the team and giving them the tools and training they need to thrive. I’m confident that we have the right people in place to deliver on our promises. Chris Oddleifson President and Chief Executive Officer Independent Bank Corp. Rockland Trust Company Assets Under Administration of $2.7 Billion Record Operating Earnings Per Share $2.76 48330.indd 3 48330.indd 3 3/16/16 1:10 PM 3/16/16 1:10 PM Independent Bank Corp. 3 2015 Accomplishments RANKED #1 AMONG THE LARGEST EMPLOYERS IN MASSACHUSETTS. Named to Boston Globe’s Top Places to Work List for seven consecutive years (2009–2015). NAMED A BEST PLACE TO WORK FOR LGBT EQUALITY BY THE HUMAN RIGHTS CAMPAIGN. ONE OF A SMALL GROUP OF COMPANIES NATIONWIDE EARNING A SCORE OF 100%. Named a Top Charitable Contributor by the Boston Business Journal. Also selected as a Partner of the Year— only one of six companies to receive the honor. RECEIVED NATIONAL ASSOCIATION OF DEVELOPMENT COMPANIES (NADCO) DIAMOND AWARD FOR EXTRAORDINARY LENDER PARTNER IN ECONOMIC DEVELOPMENT. IN GREENWICH ASSOCIATES 2015 COMMERCIAL BANKING STUDY, 70% OF OUR BUSINESS CUSTOMERS RATED OUR SERVICE AS EXCELLENT— ON AVERAGE 1.5 TIMES HIGHER THAN THE RATING RECEIVED BY OUR LARGEST COMPETITORS. Community Impact In 2015 Rockland Trust and its affiliated foundations donated $2.2 million in aggregate grants. The grants included 14 scholarships to high school seniors in the Bank’s service area. Through RockCorp, the Company’s community outreach program, our employees volunteered more than 5,000 hours of their time to local organizations. 4 Independent Bank Corp. 48330.indd 4 3/16/16 1:10 PM Corporate Information BOARD OF DIRECTORS CORPORATE OFFICERS Donna L. Abelli Chair William P. Bissonnette Christopher Oddleifson President and Chief Executive Officer Robert D. Cozzone Chief Financial Officer and Treasurer Ray G. Fuerschbach Director of Human Resources Barry H. Jensen Chief Information Officer Kevin J. Jones Eileen C. Miskell John J. Morrissey Daniel F. O’Brien Christopher Oddleifson Carl Ribeiro John H. Spurr, Jr. Maurice H. Sullivan, Jr. Frederick Taw Brian S. Tedeschi Thomas R. Venables Jane L. Lundquist Executive Vice President, Director of Consumer and Small Business Banking Mark Ruggiero Senior Vice President, Controller, and Principal Accounting Officer Jennifer M. Marino Chief Marketing Officer Gerard F. Nadeau Executive Vice President Commercial Banking Kathryn T. Robson Senior Vice President and Chief Internal Auditor Edward H. Seksay General Counsel and Secretary David B. Smith, CFA Senior Vice President and Chief Investment Officer Expansion into Boston SUCCESSFUL CONVERSION OF PEOPLES FEDERAL SAVINGS TO ROCKLAND TRUST 48330.indd 5 3/16/16 1:10 PM Invest in your most important asset—customer relationships. — CHRIS ODDLEIFSON Rockland Trust Nancy, Executive Administration Rick, Commercial Loan Officer Doug, Investment Management Group Lauren, Human Resources W B Independent Bank Corp. 288 Union Street Rockland, MA 02370 (781) 878-6100 48330.indd CV1 48330.indd CV1 3/16/16 1:10 PM 3/16/16 1:10 PM