Independent Bank Corp. is a state chartered, federally registered bank holding
company headquartered in Rockland, Massachusetts that was incorporated under
Massachusetts law in 1985. The Company is the sole stockholder of Rockland Trust
Company (“Rockland” or the “Bank”), a Massachusetts
trust company chartered in 1907. Rockland is a community-oriented commercial
bank, and the community banking business is the Company’s only reportable
operating segment. The community banking business is managed as a single strategic
unit and derives its revenues from a wide range of banking services, including
lending activities, acceptance of demand, savings, and time deposits, and investment
management.
The Company is currently the sponsor of Independent Capital Trust V, a Delaware
statutory trust, Slades Ferry Statutory Trust I, a Connecticut statutory trust,
Central Bancorp Capital Trust I, a Delaware statutory trust, and Central Bancorp
Statutory Trust II, a Connecticut statutory trust, each of which was formed
to issue trust preferred securities. These statutory trusts are not included
in the Companys consolidated financial statements in accordance with the requirements
of the consolidation topic of the Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”).
Six Massachusetts security corporations, namely Rockland Borrowing Collateral
Securities Corp., Rockland Deposit Collateral Securities Corp., Taunton Avenue
Securities Corp., Goddard Ave Securities Corp., Central Securities Corporation,
and MFLR Securities Corporation. In February 2016 the Bank liquidated Central
Securities Corporation;
Rockland Trust Community Development Corporation, which has two wholly-owned
subsidiaries, Rockland Trust Community Development LLC and Rockland Trust Community
Development Corporation II, and which also serves as the manager of three Limited
Liability Company subsidiaries wholly-owned by the Bank, Rockland Trust Community
Development III LLC, Rockland Trust Community Development IV LLC, and Rockland
Trust Community Development V LLC, which are all qualified as community development
entities under federal New Markets Tax Credit Program criteria;
Rockland MHEF Fund LLC was established as a wholly-owned subsidiary of Rockland
Trust. Massachusetts Housing Equity Fund, Inc. is the third party nonmember
manager of Rockland MHEF Fund LLC which was established to invest in certain
low-income housing tax credit projects;
RTC LIHTC Investments LLC, which was established to invest primarily in Massachusetts
based low-income housing tax credit projects;
Rockland Trust Phoenix LLC, formed for the purpose of holding, maintaining,
and disposing of certain foreclosed properties;
Compass Exchange Advisors LLC, which provides like-kind exchange services pursuant
to section 1031 of the Internal Revenue Code;
Bright Rock Capital Management LLC, which was established to act as a registered
investment advisor under the Investment Advisors Act of 1940;
Mayflower Plaza, LLC, a subsidiary of a bank acquired in 2013, which owned a
small retail plaza in Lakeville, Massachusetts. In February 2016 the Bank liquidated
this entity; and,
PFSB Lenox Street LLC, a subsidiary of a bank acquired in 2015 which owns
a branch location in Norwood, Massachusetts. In February 2016 this entity deeded
the property to the Bank and the Bank then liquidated the entity.
Periodically, Compass Exchange Advisors LLC, a wholly-owned subsidiary of the
Bank, acts as an Exchange Accommodation Titleholder (“EAT”) in connection
with customers like-kind exchanges under Section 1031 of the Internal Revenue
Code. When Compass Exchange Advisors LLC provides EAT services, it establishes
an EAT entity to hold title to property for its customers for up to 180 days
in accordance with Internal Revenue Service guidelines. EAT entities are considered
the property owner solely for federal income tax purposes, and in no other instances,
in order to facilitate a customers like kind exchange. A typical EAT entity
is a Massachusetts corporation whose directors are all Rockland Trust officers
and which has Compass Exchange Advisors LLC as its sole shareholder. The EAT
entity owns all of the membership interest in a LLC which holds title to the
property and is managed by the customer. All financial benefits and burdens
of property ownership are borne by the customer. EAT entities are therefore
not consolidated onto Compass Exchange Advisors LLCs balance sheet in accordance
with requirements of the consolidation topic of the Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”).
The Bank’s gross loan portfolio (loans before allowance for loan losses)
amounted to $5.5 billion on December 31, 2015, or 76.9% of total assets. The
Bank classifies loans as commercial, consumer real estate, or other consumer.
Commercial loans consist of commercial and industrial loans, asset-based loans,
commercial real estate, commercial construction, and small business loans. Commercial
and industrial loans generally consist of loans with credit needs in excess
of $250,000 and revenue in excess of $2.5 million, for working capital and other
business-related purposes and floor plan financing. Asset-based loans consist
primarily of revolving lines of credit but also include term loans. Asset-based
revolving lines of credit are typically structured as committed lines with terms
of three to five years, have variable rates of interest, and are collateralized
by accounts receivable and inventory. Asset based term loans are typically secured
by owner occupied commercial real estate and machinery and equipment. Commercial
real estate loans are comprised of commercial mortgages, including mortgages
for construction purposes that are secured by nonresidential properties, multifamily
properties, or one-to-four family rental properties. Small business loans, including
real estate loans, generally consist of loans to businesses with commercial
credit needs of less than or equal to $250,000 and revenues of less than $2.5
million. Consumer real estate consists of residential mortgages and home equity
loans and lines that are secured primarily by owner-occupied residences and
mortgages for the construction of residential properties. Other consumer loans
are mainly personal loans and automobile loans.
The Bank’s borrowers consist of small-to-medium sized businesses and consumers.
Substantially all of the Bank’s commercial, consumer real estate, and
other consumer loan portfolios consist of loans made to residents of and businesses
located in the Bank’s market area. The majority of the real estate loans
in the Bank’s loan portfolio are secured by properties located within
this market area.
Interest rates charged on loans may be fixed or variable and vary with the degree
of risk, loan term, underwriting and servicing costs, loan amount, and the extent
of other banking relationships maintained with customers. Rates are further
subject to competitive pressures, the current interest rate environment, availability
of funds, and government regulations.
The Bank’s principal earning assets are its loans. Although the Bank judges
its borrowers creditworthiness, the risk of deterioration in borrowers’
abilities to repay their loans in accordance with their existing loan agreements
is inherent in any lending function. Participating as a lender in the credit
market requires a strict underwriting and monitoring process to minimize credit
risk. This process requires substantial analysis of the loan application, an
evaluation of the customer’s capacity to repay according to the loan’s
contractual terms, and an objective determination of the value of the collateral.
The Bank also utilizes the services of an independent third-party to provide
loan review services, which consist of a variety of monitoring techniques performed
after a loan becomes part of the Bank’s portfolio.
The Bank’s Controlled Asset and Consumer Collections departments are responsible
for the management and resolution of nonperforming loans. Nonperforming loans
consist of nonaccrual loans and loans that are more than 90 days past due but
still accruing interest. In the course of resolving nonperforming loans, the
Bank may choose to foreclose on the loan or restructure the contractual terms
of certain loans, by modifying the terms of the loan to fit the ability of the
borrower to repay in line with its current financial status.
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