Independent Bank Corp. (INDB) Earnings Call Transcript & Summary

Welcome to the 2024 Independent Bank Corp. Annual Meeting of Shareholders. Please note that today's meeting is being recorded. I will now turn the meeting over to the Chair of the Board of Directors of Independent Bank Corp., Donna Abelli. Please go ahead.

Good morning. My name is Donna Abelli. I am the Chair of the Independent Bank Corp. Board of Directors. I welcome you to our Annual Shareholder Meeting and call the meeting to order. I will serve as Chair of today's meeting. The agenda for the meeting and the rules of conduct are available in the virtual meeting site. We ask that you please abide by these rules of conduct. There will be a separate brief management presentation following the conclusion of the formal portion of the annual meeting. Following the management presentation portion of the meeting, we will offer a general question-and-answer session. Shareholders may submit comments or questions at any time during the meeting by clicking on the Q&A icon located on the webcast portal screen. In addition to submitting a question during the webcast annual meeting, shareholders are reminded they are welcome at any time to contact our Investor Relations team with any questions, concerns or comments they may have. Contact information for our Investor Relations team may be located by clicking on the Investor Relations link on the annual meeting webcast portal screen or by accessing the Investor Relations link under the -- About Us category on the Rockland Trust website located at www.rocklandtrust.com. Attending today's virtual meeting, in addition to myself are our other directors, including our 4 director nominees up for reelection. Our directors here today are Michael Hogan, Mary Lentz, Eileen Miskell; John Morrissey; Daniel O'Brien, Jeffrey Tengel, James O’Shanna Morton; Scott Smith, Susan Perry O’Day and Thomas Venables. Also participating in addition to Jeff Tengel, are additional members of our executive leadership team, Chief Financial Officer, Mark Ruggiero; and General Counsel and Secretary, Patricia Natale. James Egan and Garrett Clark representatives from Ernst & Young LLP, our independent auditors, are in attendance at today's meeting as well -- excuse me, as well as Ms. Courtney Carpenter from our stock transfer agent, Computer Investor Services -- Computershare Investor Services. Today's meeting is being hosted by Computershare on their virtual meeting platform, which allows real-time voting during the meeting, which will be included in the final vote tallies. During today's meeting, shareholders have the opportunity to vote their shares until I announce that the polls are closed. Most of you will have already voted online or by telephone or submitted your proxy card, and we thank you for doing so. Shareholders who have already voted do not need to vote again. However, if you have not yet voted your shares or submitted your proxy or if you wish to change your previous vote or submitted proxy, you may do so by clicking the Vote icon and submitting your vote. Computershare has been appointed the inspector of election and vote tabulator for today's meeting. I will now ask Ms. Carpenter to please advise us how many shares are represented here today.

Over 88% of the shares of common stock outstanding as of the record date are represented in person or by proxy at the meeting.

We have a quorum present. There are 3 proposals before the meeting: one, the reelection of 4 Class I directors; two, ratification of the appointment of Ernst & Young as the company's independent registered public accounting firm for 2024; and three, approval on an advisory basis of the compensation of our named executive officers, and we will transact any other business that may properly come before the annual meeting. Does any shareholder wish to comment on any of the proposals? If you are a shareholder, you may comment on any of the proposals or you may ask a question germane to any of the proposals by clicking on the Q&A icon. Your comment or question will be transmitted to us in real time. I will pause to allow shareholders to enter any comments or questions. Please be advised that if a submitted comment or question is not germane to the proposals, we will not respond during this formal portion of the meeting as the rules of conduct for the meeting provide that only comments and questions germane to the proposals will be addressed during the meeting. Questions not germane to the business of the meeting will be responded to during the general Q&A session after the meeting adjourns.

Chair Abelli, we have no comments or questions from any shareholders on any of the proposals.

I will now pause to ensure any shareholder who wishes to vote at the meeting has an opportunity to do so. As a reminder, if you have not yet voted your shares or submitted your proxy or if you wish to change your previous vote or submitted proxy, you may do so by clicking the Vote icon and submitting your vote. [Voting]

I now declare the polls closed and direct the Secretary to cast all of the votes received. The first proposal before the meeting is the reelection of 4 Class I directors. The Board has nominated 4 directors for reelection, namely Donna Abelli, Mary Lentz, John Morrissey and Jeffrey Tengel. Ms. Carpenter, what is the outcome?

Over 91% of shares voting are in favor.

The shareholders have reelected each of the Board nominees. The next proposal is to ratify the appointment of Ernst & Young as our independent public accounting firm for 2024. Ms. Carpenter, what is the outcome?

Over 98% of the shares voting in favor.

The shareholders have ratified the appointment of Ernst & Young. The last proposal is the advisory vote on the compensation of executive officers. Ms. Carpenter, what is the outcome?

Over 94% of the shares voting in favor.

The shareholders have approved on an advisory basis the compensation of our named executive officers. There being no further business, the 2024 Annual Shareholders Meeting is adjourned. That concludes the 2024 Annual Shareholder Meeting. With the formal business meeting concluded, I will now turn the microphone over to our CEO and President, Jeffrey Tengel; and our CFO, Mark Ruggiero, who will collaborate to share some general remarks regarding the company. There will also be opportunity for a general Q&A session following their presentation. Jeff and Mark, over to you.

Thank you, Donna. I'm Jeff Tengel, President and CEO of Independent Bank Corp. Thank you for attending our 2024 Annual Meeting of Shareholders. I will share some thoughts on my first full year at the company. Before I do so, I would like to thank the members of our Board of Directors for their service. The positive and powerful collaboration between the Board of Directors and the management team strengthens us as a company, and I am grateful for their guidance and stewardship. Now for a few reflections on 2023. As I mentioned in my annual report letter, that to truly get to know an organization, you must experience it in a multitude of environments. Last year, we encountered several industry-wide challenges. Throughout the year, we faced an uncooperative rate environment with a persistent inverted yield curve compressing our interest margins. It was a year in which I learned a lot about the resilience of Rockland Trust and my teammates. With every challenge that came our way, my colleagues remain focused on our North Star, the connections we build with our customers, community members and one another. Our shared vision to be the bank where each relationship matters inspired us to provide stability to our customers by going above and beyond to provide exceptional customer service. In 2023, in recognition of those efforts, we received a Greenwich Excellence Award for industry-leading customer satisfaction for our commercial relationships, and we ranked in the top 2 in New England according to J.D. Power for retail banking customer satisfaction, witnessing firsthand how our colleagues remain focused on relationships in the face of so many distractions illustrated the power of purpose. That level of engagement and dedication is only possible when colleagues feel cared for, valued and respected. That is why we were particularly proud to be recognized for the 15th year in a row by The Boston Globe as a top place to work in 2023. When our colleagues find deep meaning in the work we do, everything else falls into place. Customers reward us with new business, we make a bigger difference in our community, and we unlock more potential as an organization. That resiliency and purpose that is inherent in our culture, combined with our strong balance sheet and a commitment to creating long-term value is the winning combination that has carried the bank through various credit and economic cycles over the last century and will carry us forward. I am incredibly humbled to lead this organization. Thank you for all of your interest, loyalty and continued confidence in Rockland Trust, who we are and what we do well. At this time, I would like to turn the microphone over to Mark Ruggiero, our company's Chief Financial Officer.

Thank you, Jeff, and good morning. I'm excited to take you through a few slides to provide an update on the company's overall financial position. The material will be a high-level view of our recent financial results as well as some qualitative input into how we are thinking about the current environment and future financial implications. To first summarize some key high-level data points, I point to Slide 6, indicating that as of December 31, 2023, we had $19.3 billion in total assets, $14.3 billion in total loans, $14.9 billion in total deposits and within our wealth management business, we had approximately $6.5 billion in assets under administration, which as a reminder, are not reflected on the company's balance sheet. And lastly, based on our current value, our market capitalization is approximately $2.2 billion. Moving to Slide 7. We provide a 4-year trend over some of our major financial performance metrics, along with some of the key drivers behind those longer-term results. In summary, we continue to highlight solid core activity across all major business lines with an overall business model that focuses on appropriate growth reflective of economic conditions, prioritization of growing our strong core deposit funding source, conservative credit underwriting, diversification of our fee businesses and prudent expense and capital management. As Jeff alluded to, while we believe this recipe provides for appropriate long-term earnings growth, we recognize other variables will impact year-over-year results. As reflected on the slide, earnings per share grew nicely from 2020 -- from 2020 levels to 2023, while the earnings compression, specifically in 2023 versus 2022 is indicative of the current environment factors that are highlighted here. And as a result of the decline in earnings, you can see the slight drop in return on average assets and return on tangible common equity in 2023 to 1.24% and 12.78%, respectively. One of the main focal points in this environment and one of the key drivers of the earnings compression is the normalization of asset quality trends from historic low points. So we thought it was important to provide an update on some of the key metrics around asset quality. Slide 8 provides 2023 quarterly detail over a number of key metrics related to asset quality. In summary, though provision for loan loss is higher in 2023 versus 2022, driving a portion of the earnings decline that I just referenced, we are pleased with our ability to keep overall nonperforming asset levels well contained with charge-off and provision levels being driven by -- primarily by one-off loan issues within our commercial loan portfolio and not indicative of a broader or more widespread problem. As we stated on our most recent quarterly earnings call, we will continue to diligently work through any credit issues in a thoughtful and methodical manner. Serving as a mitigant to elevated risk in this challenging environment, we have a very strong capital position, as noted on Slide 9. Our consistent and sustainable earnings results have allowed for a nice steady increase in our common dividend, an ability to take advantage of share repurchase programs when deemed appropriate and all while growing both book and tangible book value per share over time. We continue to operate with one of the highest levels of capital amongst our peer group, which gives us great flexibility for strategic initiatives moving forward. And in the spirit of moving forward, we can close out with some insight into our near-term priorities as noted on Slide 10. Though I won't touch upon every bullet noted here on the slide, you can see our top priorities align with the core value proposition that Jeff and I have highlighted today. We will continue to grow, but grow prudently, being patient with what the economy gives us in focusing on relationships in both our legacy footprint as well as our less penetrated growth markets. We will continue to manage our balance sheet to ensure we are within risk parameters, understanding fully the elevated risks associated with liquidity and interest rate management in this environment. We are mindful of expenses and ensuring that we look to run this business efficiently. However, we want to stress this does not mean that we will not invest in technology to further advance our ability to make banking easier for customers and our employees. It simply means we will continue to prioritize long-term value investment and look to ensure our day-to-day operations are running smoothly and efficiently. And lastly, all this must be accomplished while operating with strong corporate governance. The issues that our industry has faced over the last year are not necessarily new risks to the banking industry, but it stresses that proper risk management and governance is fundamental to the success of any bank. And with that, we thank you for your continued support of Independent Bank Corp., and we look forward to 2024.

Thank you, Jeff and Mark. We will now proceed with the general Q&A session. [Operator Instructions]

Chair Abelli, there are no questions at this time.

I thank each of you for taking the time to join us today and for participating in our 2024 Annual Meeting.

This concludes our annual meeting. You may now disconnect.