What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-02-28 compared with 2022-02-28 · 79 added, 249 removed, 212 unchanged (61% of the section changed)

2 unchanged sentences

The Company is the sole stockholder of Rockland Trust Company ("Rockland Trust" or the "Bank"), a Massachusetts trust company chartered in 1907.

Rockland Trust 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 Bank provides a wide range of banking, investment and financial services, operating with over 120 retail branches, as well as a network of commercial and residential lending centers, and investment management offices primarily in Eastern Massachusetts, Worcester County, and Rhode Island.

Rockland Trust also offers a full suite of mobile, online, and telephone banking services.

At December 31, 2022, the Company had total assets of $19.3 billion, total deposits of $15.9 billion, and stockholders’ equity of $2.9 billion.

On November 12, 2021, the Company completed the acquisition of Meridian Bancorp, Inc.

("Meridian"), parent of East Boston Savings Bank.

The transaction qualified as a tax-free reorganization for federal income tax purposes and provided a tax-free exchange to Meridian stockholders with respect to the common stock received in the merger.

For each share of Meridian common stock, Meridian stockholders received 0.2750 shares of the Company's common stock, with cash paid in lieu of fractional shares.

Total consideration of $1.3 billion consisted of 14.3 million shares of the Company's common stock issued, as well as $11.2 million in cash paid for stock option cancellations and in lieu of fractional shares.

The Company is currently the sponsor of Independent Capital Trust V, a Delaware 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 Company's consolidated financial statements in accordance with the requirements of the consolidation topic of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC").

As of December 31, 2021, the Bank had the following corporate subsidiaries, all of which were wholly owned by the Bank and included in the Company’s consolidated financial statements:

At December 31, 2022, Independent Bank Corp.’s consolidated subsidiaries included the Company’s banking subsidiary, Rockland Trust, which is the Company’s only reportable operating segment.

Rockland Trust had the following wholly-owned corporate subsidiaries:

• Six Massachusetts security corporations, namely Rockland Borrowing Collateral Securities Corp., Rockland Deposit Collateral Securities Corp., Taunton Avenue Securities Corp., Goddard Ave Securities Corp., MFLR Securities Corporation, and BH Security 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, established as a wholly-owned subsidiary of Rockland Trust, created with Massachusetts Housing Equity Fund, Inc.

as the third party nonmember manager and established to invest in certain low-income housing tax credit projects;

• RTC LIHTC Investments LLC, established to invest primarily in Massachusetts-based low-income housing tax credit projects;

• RTC LIHTC Investments LLC and Rockland MHEF Fund LLC, 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;

1 unchanged sentence

• Compass Exchange Advisors LLC, which provides like-kind exchange services pursuant to section 1031 of the Internal Revenue Code.

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

Table o f Contents

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 customer's 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 an 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 LLC's balance sheet in accordance with the requirements of the consolidation topic of the ASC.

In addition, the Company is currently the sponsor of Independent Capital Trust V, a Delaware 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 Company's consolidated financial statements.

Market Area and Competition

4 unchanged sentences

Competitive factors considered in attracting and retaining deposits include deposit and investment products and their respective rates of return, brand awareness, liquidity, and risk, among other factors, such as convenient branch locations and hours of operation, personalized customer service, online and mobile access to accounts and automated teller machines.

Amidst the pandemic, the Bank saw a substantial increase in the usage of mobile and remote banking options for both consumers and business owners.

While branch traffic expectedly declined, there was a surge in the Bank’s call center volumes, mobile deposit activity, online banking usage and online account opening.

Customers visiting the branch took advantage of the Bank’s Video Teller services which provide a hybrid approach to banking balancing both the fast-paced transactional nature of ATMs and the personalized experience of interacting with a live banker.

The Bank also introduced Your Banker, a digital tool allowing customers to chat securely with their own dedicated banker from their mobile device or computer.

Commercial and mortgage customers were able to leverage the Bank’s electronic signature tool and new streamlined commercial loan platform.

The Bank’s market area is attractive and entry into the market by financial institutions previously not competing in the market area may continue to occur which could impact the Bank’s growth or profitability.

The Bank’s market area is generally comprised of Eastern Massachusetts, including Greater Boston, North Shore, South Shore, Cape Cod and the Islands, as well as Worcester County and Rhode Island.

The Bank’s market area is generally comprised of Eastern Massachusetts, as well as Worcester County and Rhode Island.

Lending Activities

The Bank’s gross loan portfolio (loans before allowance for credit losses) amounted to $13.9 billion on December 31, 2022, or 72.2% of total assets.

The Bank classifies loans as commercial, consumer real estate, or other consumer.

Commercial loans consist of commercial and industrial loans, commercial real estate, commercial construction, and small business loans.

Commercial and industrial loans generally consist of loans to customers with credit needs in excess of $750,000 and revenue in excess of $2.5 million, and are made for working capital and other business-related purposes.

These loan also consist of floor plan financing as well as asset-based lending.

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 $750,000 and revenues of less than $2.5 million.

Consumer real estate consists of residential mortgages and home equity loans and lines of credit that are secured primarily by owner-occupied residences and mortgages for the construction of residential properties.

Other consumer loans are mainly personal loans.

The Bank’s borrowers consist of small-to-medium sized businesses and consumers.

The Bank’s borrowers consist of small-to-upper middle market 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.

Table o f Contents

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 Special Assets Group 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.

Other Real Estate Owned ("OREO"), when applicable, includes real estate properties which have primarily served as collateral to secure loans that are controlled or owned by the Bank.

Origination and Sale of Loans Commercial and industrial, commercial real estate, and construction loan applications are obtained through existing customers, solicitation by Bank personnel, referrals from current or past customers, or walk-in customers.

Small business loan applications are typically originated by the Bank’s retail staff, through a dedicated team of business officers, by referrals from other areas of the Bank, by referrals from current or past customers, or through walk-in customers.

Consumer loan applications primarily result from referrals by real estate brokers, branch referrals, home builders, advertising, direct mail, and existing or walk-in customers who have been made aware of the Bank’s consumer loan services through advertising, direct mail, and other media.

Loans are approved based upon a hierarchy of authority, predicated upon the size of the loan.

Levels within the hierarchy of lending authorities range from individual lenders to the Senior Loan Approval Committee.

Levels within the hierarchy of lending authorities range from individual lenders to the Loan Approval Committee levels.

In accordance with federal and state banking law, the Bank is permitted, with certain exceptions, to make loans and commitments to any one borrower, including related entities, in the aggregate amount of not more than 20% of the Bank’s stockholders’ equity, or $569.7 million at December 31, 2022, which is the Bank’s legal lending limit.

2 unchanged sentences

The Bank’s largest relationship as of December 31, 2022 consisted of 10 loans with an aggregate exposure of $171.0 million.

The Bank’s residential mortgage loans are generally originated in compliance with terms, conditions and documentation which permit the sale of such loans to investors in the secondary market.

Loan sales in the secondary market provide funds for additional lending and other banking activities.

Depending on market conditions, the Bank may sell the servicing of the sold loans for a servicing released premium, simultaneous with the sale of the loan.

For the remainder of the sold loans for which the Company retains the servicing, a mortgage servicing asset is recognized.

As part of its asset/liability management strategy, the Bank may opt to retain certain adjustable rate and fixed rate residential real estate loan originations for its portfolio.

For the year ended December 31, 2021, the Bank originated $1.2 billion in residential real estate loans, of which $411.9 million were retained in its portfolio.

Participation Loans From time to time, the Bank may purchase or sell participating interests in commercial loans to reposition its loan portfolio with the objectives of diversifying credit risk, growing earning assets and/or increasing liquidity.

The Bank’s approach to underwriting and approving participation loans, both purchased and sold, is consistent with its underwriting and approval policies and procedures for non-participated loans originated by the Bank.

For participation loans purchased by the Bank, prior to deciding to purchase a participating interest in the loan, the Bank completes its own credit analysis that is independent of the lead or agent bank’s analysis of the offering.

For loans originated by the Bank where it sells participating interests, the Bank will generally retain the lead servicing position for the loan.

As of December 31, 2021 the unamortized balance of participation loans purchased was $761.4 million, while the sold portion of the unamortized balance of participation loans originated and sold totaled $408.0 million, both inclusive of acquired participation loans from the Meridian acquisition.

Table o f Contents

Loan Portfolio The following table shows the balance of the gross average loan portfolio by category, the percentage of the gross average loan portfolio, and the percentage of total interest income that the loans generated, by category, for the fiscal years indicated:

8 unchanged sentences

Total $ 13,667,358 100.0 % 89.9 % 91.8 % 92.0 %

Commercial Loans Commercial loans consist of commercial and industrial loans,commercial real estate loans, commercial construction loans and small business loans.

Commercial Loans Commercial loans consist of commercial real estate loans, commercial construction loans, commercial and industrial loans, and small business loans (which generally consist of loans to businesses with commercial credit needs of less than or equal to $750,000).

The Bank offers secured and unsecured commercial loans for business purposes.

Commercial loans may be structured as term loans or as revolving/nonrevolving lines of credit, and include overdraft protection, credit cards, and automatic clearinghouse ("ACH") exposure.

These loans may be collateralized by either owner or nonowner-occupied commercial mortgages or other assets.

Table o f Contents

The Company's participation in the Paycheck Protection Program ("PPP") resulted in significant loan fundings within the commercial and industrial category throughout 2020 and the first half of 2021, with total PPP loan originations of approximately $1.2 billion.

As a result of the ongoing loan forgiveness process, outstanding balances of PPP loans declined to $216.2 million at December 31, 2021, which comprised 13.8% of the total commercial and industrial category and are reflected within the various sectors below.

Fee income earned in connection with PPP loan originations is deferred and amortized over the life of the loan.

During the twelve months ended December 31, 2021, the Company amortized into income $26.5 million in PPP fee revenue related to loans forgiven under the program, which were originated in both 2020 and 2021.

The following pie chart shows the diversification of the commercial and industrial portfolio as of December 31, 2021, which also reflects the loans acquired in the acquisition of Meridian:

Select Statistics Regarding the Commercial and Industrial Portfolio

(Dollars in thousands)

Average loan size $ 272

Largest individual commercial and industrial loan outstanding $ 24,212

Commercial and industrial nonperforming loans/commercial and industrial loans 0.22 %

Commercial and industrial term loans generally have a repayment schedule of five years or less and, although the Bank occasionally originates some commercial and industrial term loans with interest rates which float in accordance with a designated index rate, the majority of commercial and industrial term loans have fixed rates of interest and are collateralized by equipment, machinery or other corporate assets.

In addition, the Bank generally obtains personal guarantees from the principal owners of the borrower for its commercial and industrial loans.

At December 31, 2021, there were $764.9 million of term loans in the commercial and industrial loan portfolio.

Collateral for commercial and industrial revolving lines of credit, including asset-based lines and term loans, may consist of accounts receivable, inventory, or both, as well as other business assets.

Commercial revolving lines of credit and asset based lines generally are reviewed on an annual basis and usually require either a borrowing base formula or substantial repayment of principal during the course of a year.

The vast majority of these revolving lines of credit have variable rates of interest.

At December 31, 2021, there were $798.4 million of revolving lines of credit in the commercial and industrial loan portfolio.

Additionally, 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.

Table o f Contents

Also included in the commercial and industrial portfolio are dealer floor plan loans which are secured by the automobiles, boats, or other vehicles which constitute the dealer’s inventory.

Upon the sale of a floor plan unit, the proceeds of the sale are applied to reduce the loan balance.

In the event a unit financed under a floor plan line of credit remains in the dealer’s inventory for an extended period, the Bank requires the dealer to pay down the outstanding balance associated with such unit.

Contractors hired by the Bank make unannounced periodic inspections of each dealer to review the condition of the underlying collateral and ensure that each unit that the Company has financed is accounted for.

At December 31, 2021, there were $120.4 million in dealer floor plan loans, all of which have variable rates of interest.

Small business lending caters to all of the banking needs of businesses with commercial credit requirements and revenues typically less than or equal to $750,000 and $2.5 million, respectively, and uses partially automated loan underwriting capabilities.

Additionally, the Company makes use of the Bank’s authority as a preferred lender with the U.S.

Small Business Administration ("SBA").

At December 31, 2021, there were $254.7 million of SBA guaranteed loans in the commercial and industrial and commercial real estate loan categories, the majority of which relates to funded PPP loans during the year, and $4.5 million of SBA guaranteed loans in the small business loan category.

Commercial loans may be structured as term loans or as revolving/nonrevolving lines of credit, and include overdraft protection, letters of credit, and automatic clearinghouse ("ACH") exposure.

Secured loans may be collateralized by either owner or nonowner-occupied commercial mortgages or other assets.

The Bank’s commercial real estate portfolio, inclusive of commercial construction, is the Bank’s largest loan type concentration.

The Bank believes this portfolio is well diversified with loans secured by a variety of property types, such as owner-occupied and nonowner-occupied commercial, retail, office, industrial, warehouse, industrial development bonds and other special purpose properties, such as hotels, motels, nursing homes, restaurants, churches, recreational facilities, marinas, and golf courses.

Commercial real estate also includes loans secured by certain residential-related property types including multi-family apartment buildings, residential development tracts and condominiums.

The following pie chart shows the diversification of the commercial real estate portfolio as of December 31, 2021, which also reflects the loans acquired in the acquisition of Meridian:

Although terms vary, commercial real estate loans typically are underwritten with maturities up to ten years.

These loans generally have amortization periods of 20 to 25 years.

It is the Bank’s practice to obtain personal guarantees from the principals of the borrower on commercial real estate loans and to obtain financial statements at least annually from all commercial and multi-family borrowers.

Commercial real estate lending entails additional risks as compared to residential real estate lending as these loans typically involve larger loan balances to single borrowers or groups of related borrowers.

Construction loans within this category also present a degree of risk may be affected by a variety of factors, such as adverse changes in interest rates and the borrower’s ability to control costs and adhere to time schedules.

Development of commercial real estate projects also may be subject to numerous land use and environmental issues.

The payment experience on nonowner-occupied commercial real estate projects is typically dependent on the successful operation of the real estate project, which can be significantly impacted by supply and demand conditions within the markets for commercial, retail, office, industrial/warehouse and multi-family tenancy.

real estate also includes loans secured by certain residential-related property types including multi-family apartment buildings, residential development tracts and condominiums.

The following pie chart shows the diversification of the commercial real estate portfolio as of December 31, 2022:

Select Statistics Regarding the Commercial Real Estate Portfolio

4 unchanged sentences

Owner occupied commercial real estate loans/commercial real estate loans 11.7 %

Although terms vary, commercial real estate loans typically are underwritten with maturities of five to ten years.

These loans generally have amortization periods of 20 to 25 years, with interest rates that float in accordance with a designated index

Table o f Contents

or that are fixed during the origination process.

Commercial real estate lending entails additional risks as compared to residential real estate lending.

Commercial real estate loans typically involve larger loan balances to single borrowers or groups of related borrowers.

Development of commercial real estate projects also may be subject to numerous land use and environmental issues.

The payment experience on such loans is typically dependent on the successful operation of the real estate project, which can be significantly impacted by supply and demand conditions within the markets for commercial, retail, office, industrial/warehouse and multi-family tenancy.

Also included in the commercial real estate portfolio are industrial developmental bonds.

The Bank owns certain bonds issued by various state agencies, municipalities and nonprofit organizations that it categorizes as loans.

This categorization is made on the basis that another entity (i.e.

the Bank’s customer), not the issuing agency, is responsible for the payment to the Bank of the principal and interest on the debt.

Furthermore, credit underwriting is based solely on the credit of the customer (and guarantors, if any), the banking relationship is with the customer and not the agency, there is no active secondary market for the bonds, and the bonds are not available for sale, but are intended to be held by the Bank until maturity.

Therefore, the Bank believes that such bonds are more appropriately characterized as loans, rather than securities.

At December 31, 2021, the balance of industrial development bonds was $449.5 million.

Construction loans are intended to finance the construction of residential and commercial properties, including loans for the acquisition and development of land or rehabilitation of existing properties.

Nonpermanent construction loans generally have terms of at least six months, but not more than two years.

They usually do not provide for amortization of the loan balance during the construction term.

The majority of the Bank’s commercial construction loans have floating rates of interest.

At December 31, 2021, the commercial construction portfolio amounted to $1.2 billion.

Construction loans are generally considered to present a higher degree of risk than permanent real estate loans and may be affected by a variety of factors, such as adverse changes in interest rates and the borrower’s ability to control costs and adhere to time schedules.

Other construction-related risks may include market risk, that is, the risk that "for-sale" or "for-lease" units may not be absorbed by the market within a developer’s anticipated time frame or at a developer’s anticipated price.

When the Company enters into a loan agreement with a borrower on a construction loan, an interest reserve may be included in the amount of the loan commitment to the borrower and it allows the lender to periodically advance loan funds to pay interest charges on the outstanding balance of the loan.

The interest may be capitalized and added to the loan balance.

Management actively tracks and monitors these accounts.

Table o f Contents

Consumer Real Estate Loans The Bank’s consumer real estate loans consist of loans and lines secured by one-to-four family residential properties.

The consumer real estate loan portfolio at December 31, 2021, which also reflects the loans acquired in the acquisition, was as follows:

The Bank originates both fixed-rate and adjustable-rate residential real estate loans.

The Bank will lend up to 97% of the lesser of the appraised value of the residential property securing the loan or the purchase price, and generally requires borrowers to obtain private mortgage insurance when the amount of the loan exceeds 80% of the value of the property.

In certain instances for loans that qualify for the Fannie Mae Home Affordable Refinance Initiative and other similar programs, the Bank will lend up to 105% of the appraised value of the residential property, and such loans are then subsequently sold by the Bank.

The rates of these loans are typically competitive with market rates.

Commercial and industrial loans consist of both term loans and revolving lines of credit.

Term loans generally have a repayment schedule of five years or less and are collateralized by equipment, machinery or other business assets.

In addition, the Bank generally obtains personal guarantees from the principal owners of the borrower for its commercial and industrial loans.

Revolving lines of credit, including asset-based lines, are typically collateralized by accounts receivable, inventory, or both, as well as other business assets.

Commercial revolving lines of credit and asset based lines generally are reviewed on an annual basis and usually require either a borrowing base formula or varying levels of substantial repayment of principal during the course of a year.

Additionally, other commercial term loans are typically secured by owner occupied commercial real estate and/or machinery and equipment.

To limit the risk within this portfolio, the loans are made across a diverse set of industry groups.

The following pie chart shows the diversification of the commercial and industrial portfolio as of December 31, 2022:

Select Statistics Regarding the Commercial and Industrial Portfolio

(Dollars in thousands)

Average loan size (excluding floor plan tranches) $ 410

Largest individual commercial and industrial loan outstanding $ 37,650

Commercial and industrial nonperforming loans/commercial and industrial loans 1.63 %

Consumer Loans The Bank’s consumer portfolio consists of real estate loans comprised of residential mortgages and home equity loans and lines, all secured by one-to-four family residential properties, as well as other consumer loans.

Residential mortgages are offered in amounts based on up to 97% of the lesser of the appraised value of the residential property securing the loan or the purchase price, and generally requires borrowers to obtain private mortgage insurance when the amount of the loan exceeds 80% of the value of the property.

The Bank’s residential real estate loans are generally originated under terms, conditions and documentation which permit sale in the secondary market.

1 unchanged sentence

Independent appraisers assess properties securing all of the Bank’s first mortgage real estate loans, as required by regulatory standards.

Home equity loans and lines may be made as fixed rate term loans or under variable rate revolving lines of credit secured by a first or second mortgage on the borrower’s residence, second home or residential investment properties.

At December 31, 2021, 56.7% of the home equity portfolio was in first lien position and 43.3% of the portfolio was in a subordinate position.

At December 31, 2021, $349.6 million, or 33.6%, of the home equity portfolio was comprised of term loans and $690.0 million, or 66.4%, of the home equity portfolio was comprised of revolving lines of credit.

Home equity loans and lines may be secured by a first or second mortgage on the borrower’s residence, second home or residential investment properties.

The Bank will typically originate home equity loans and lines in an amount up to 80% of the appraised value, hybrid valuation methods or automated valuation methods, reduced for any loans outstanding that are secured by such collateral.

Home equity loans and lines are underwritten in accordance with the Bank’s loan policy, which includes a combination of credit history, loan-to-value ("LTV") ratio, employment history and debt-to-income ratio.

The Bank periodically supplements performance data with current Fair Isaac Corporation ("FICO") and LTV estimates.

Current FICO data is purchased and typically appended to all consumer loans on a quarterly basis.

In addition, automated valuation services and broker opinions of value are used to supplement original value data for the residential and home equity portfolios.

Use of re-score and re-value data enables the Bank to better understand the current credit risk associated with these loans, but is not the only factor relied upon in determining a borrower’s creditworthiness.

See Note 4, "Loans, Allowance for Credit Losses and Credit Quality" within the Notes to the Consolidated Financial Statements included in Item 8 of this Report for more information regarding FICO and LTV estimates.

Table o f Contents

Other Consumer Loans Other consumer loans primarily consist of investment management secured lines of credit, installment loans, credit cards and overdraft protection.

Investment Activities

The Bank’s securities portfolio primarily consists of U.S.

Treasury, U.S.

government agency securities, agency mortgage-backed securities, agency collateralized mortgage obligations, and small business administration pooled securities.

Also included in the Company's security portfolio are trading and equity securities related to certain employee benefit programs.

The majority of these securities are investment grade debt obligations with average lives of five years or less.

government agency securities entail a lesser degree of risk than loans made by the Bank by virtue of the guarantees that back them, require less capital under risk-based capital rules than noninsured or nonguaranteed mortgage loans, are more liquid than individual mortgage loans, and may be used to collateralize borrowings or other obligations of the Bank.

The Bank views its securities portfolio as a source of income and liquidity.

Interest and principal payments generated from securities provide a source of liquidity to fund loans and meet short-term cash needs.

The Bank’s securities portfolio is managed in accordance with the Rockland Trust Company Investment Policy (the "Investment Policy") approved by the Board of Directors.

Two members of the Asset-Liability Committee of the Bank ("ALCO"), one of whom must be the Chief Executive Officer or the Chief Financial Officer, must approve purchases or sales, between meetings.

These purchases are subject to limits on the type, size and quality of all investments, which are specified in the Investment Policy.

The Bank’s ALCO, or its appointee, is required to evaluate any purchase from the standpoint of overall diversification of the portfolio.

At December 31, 2021, the Company's securities totaled $2.7 billion, and generated interest and dividends of 7.3%, 7.5%, and 7.3% of total interest income for the fiscal years ended December 31, 2021, 2020, and 2019, respectively.

The Company assesses it securities portfolio for expected credit losses in accordance with the current expected credit loss ("CECL") methodology, with separate approaches depending upon whether a security is classified as available for sale or held to maturity.

Other consumer loans primarily

consist of investment management secured lines of credit, installment loans and overdraft protection lines.

The consumer real estate loan portfolio at December 31, 2022 was as follows:

Sources of Funds

Deposits At December 31, 2021, total deposits were $16.9 billion.

The Bank's primary sources of funds are derived from deposits and to a lesser extent, borrowings as well as the amortization, prepayment, and maturities of loans and securities.

Deposits obtained through the Bank’s branch banking network have traditionally been the principal source of the Bank’s funds for use in lending and for other general business purposes.

3 unchanged sentences

The Bank believes it has been able to attract and maintain satisfactory levels of deposits based on the level of service it provides to its customers, the convenience of its banking locations, its electronic banking options, and its interest rates, all of which are generally competitive with those of competing financial institutions.

Additionally, the Bank has a municipal banking department that focuses on providing core depository services to local municipalities.

Municipal deposits totaled $1.0 billion as of December 31, 2021.

The Company also participates in the IntraFi Network, allowing the Bank to provide easy access to multi-million dollar Federal Deposit Insurance Corporation ("FDIC") deposit insurance protection on certificate of deposit and money market investments for consumers, businesses and public entities.

This channel allows the Company to seek additional funding in potentially large quantities by attracting deposits from outside the Bank’s core market and amounted to $998.1 million as of December 31, 2021.

In addition, the Company may occasionally raise funds through the use of brokered deposits outside of the IntraFi Network, which totaled $141.6 million at December 31, 2021.

The increase in IntraFi Network deposits and brokered deposits at December 31, 2021 was primarily the result of Meridian acquired balances.

Rockland Trust’s one hundred twenty-three branch locations feature expanded use of video-tellers, and are supplemented by internet and mobile banking services as well as automated teller machine ("ATM") cards and debit cards which may be used to conduct various banking transactions at ATMs maintained at each of the Bank’s full-service offices and twenty-nine additional remote ATM locations.

Rockland Trust’s 124 branch locations feature expanded use of video-tellers, and are supplemented by internet and mobile banking services as well as automated teller machine ("ATM") cards and debit cards which may be used to conduct various banking transactions at ATMs maintained at each of the Bank’s full-service offices and 28 additional remote ATM locations.

The ATM cards and debit cards also allow customers access to a variety of national and international ATM networks.

2 unchanged sentences

Rockland Trust also now offers person-to-person payment capabilities, allowing for simple and secure funds transfers between most banks and credit unions.

Borrowings As of December 31, 2021, total borrowings were $152.4 million.

Borrowings consist of short-term and long-term obligations and may consist of Federal Home Loan Bank ("FHLB") advances, federal funds purchased, and junior subordinated debentures.

Table o f Contents

Rockland Trust is a member of the FHLB of Boston.

The primary reason for FHLB membership is to gain access to a reliable source of wholesale funding, particularly term funding, as a tool to manage liquidity and interest rate risk.

As a member of the FHLB of Boston, the Bank is required to purchase stock in the FHLB.

Accordingly, the Company had invested $11.4 million in FHLB stock and had $25.7 million outstanding in FHLB borrowings with original maturities ranging from 3 months to 20 years at December 31, 2021.

In addition, the Bank had $1.6 billion of borrowing capacity remaining with the FHLB at December 31, 2021, inclusive of a $5.0 million line of credit.

Also included in borrowings at December 31, 2021 were $62.9 million of junior subordinated debentures, which are net of unamortized issuance costs.

Total borrowings also includes $49.8 million of subordinated debt, net of unamortized issuance costs.

These instruments provide long-term funding as well as regulatory capital benefits.

See Note 9, "Borrowings" within the Notes to the Consolidated Financial Statements included in Item 8 of this Report for more information regarding borrowings.

Investment Management

The Rockland Trust Investment Management Group provides investment management and trust services to individuals, institutions, small businesses, and charitable institutions.

Accounts maintained by the Rockland Trust Investment Management Group consist of managed and nonmanaged accounts.

Managed accounts are those for which the Bank is responsible for administration and investment management and/or investment advice, while nonmanaged accounts are those for which the Bank acts solely as a custodian or directed trustee.

The Bank receives fees dependent upon the level and type of service(s) provided.

For the year ended December 31, 2021, the Investment Management Group generated gross fee revenues of $31.6 million.

Total assets under administration as of December 31, 2021 were $5.7 billion, of which $5.4 billion was related to managed accounts.

The Company also has a subsidiary that is a registered investment advisor, Bright Rock Capital Management, LLC, which provides institutional quality investment management services to both institutional and high net worth clients.

As of December 31, 2021 there were assets under administration of $447.4 million, relating to the Company's registered investment advisor, included in the amounts above.

The administration of trust and fiduciary accounts is monitored by the Trust Committee of the Bank’s Board of Directors.

The Trust Committee has delegated administrative responsibilities to three committees, one for investments, one for administration, and one for operations, all of which are comprised of Investment Management Group officers who meet no less than quarterly.

The Bank has an agreement with LPL Financial ("LPL") and its affiliates and their insurance subsidiary, LPL Insurance Associates, Inc., to offer the sale of mutual fund shares, unit investment trust shares, general securities, fixed and variable annuities and life insurance.

Registered representatives who are both employed by the Bank and licensed and contracted with LPL are onsite to offer these products to the Bank’s customer base.

These same agents are also approved and appointed with various other Broker General Agents for the purposes of processing insurance solutions for clients.

For the year ended December 31, 2021, the retail investments and insurance group generated gross fee revenues of $3.7 million.

The following discussion sets forth certain material elements of the regulatory framework applicable to bank holding companies and their subsidiaries and provides certain specific information relevant to the Company.

6 unchanged sentences

The BHCA also prohibits the Company from, with certain exceptions, acquiring 5% or more of any class of voting shares of any company that is not a bank and from engaging in any business other than banking or managing or controlling banks.

Table o f Contents

Under the BHCA, the Federal Reserve is authorized to approve the ownership by the Company of shares in any company, the activities of which the Federal Reserve has determined to be so closely related to banking or to managing or controlling banks as to be a proper incident thereto.

25 unchanged sentences

The Rules provided for a number of complex deductions from and adjustments to CET1 and its various capital components.

With respect to the Bank, the Rules also revised the "prompt corrective action" regulations pursuant to Section 38 of the Federal Deposit Insurance Act, by:

(i) introducing a CET1 ratio requirement at each capital quality level (other than critically under capitalized), with the required CET1 ratio being 6.5% for well-capitalized status;

(ii) increasing the minimum Tier 1 capital ratio requirement for each category, with the minimum Tier 1 capital ratio for well-capitalized status being 8% (as compared to the previous 6%);

and (iii) requiring a leverage ratio of 5% to be well-capitalized (as compared to the previously required leverage ratio of 3 or 4%).

The Rules did not change the total risk-based capital requirement for any "prompt corrective action" category.

When the capital conservation buffer is fully phased in, the capital ratios applicable to depository institutions under the Rules will exceed the ratios to be considered well-capitalized under the "prompt corrective action" regulations.

The revised minimum capital levels under the Rules are set forth below:

Pursuant to Section 38 of the Federal Deposit Insurance Act, Federal banking agencies are required to take “prompt corrective action” if an insured depository institution fails to meet certain capital adequacy standards.

The following table summarizes the minimum capital levels under the Rules:

Bank Holding Company

5 unchanged sentences

Significantly undercapitalized < 6% or < 4% or < 3% < 3% n/a n/a n/a n/a

Table o f Contents

The Company is currently in compliance with the above-described regulatory capital requirements.

8 unchanged sentences

Bank Secrecy Act The Bank Secrecy Act requires financial institutions to monitor account activity, keep records and file reports that are determined to have a high degree of usefulness in criminal, tax and regulatory matters, and to implement anti-money laundering programs and compliance procedures.

USA Patriot Act of 2001 The Patriot Act strengthens U.S.

USA Patriot Act The Patriot Act strengthens U.S.

law enforcement’s and the intelligence communities’ abilities to work cohesively to combat terrorism on a variety of fronts.

8 unchanged sentences

The Federal Deposit Insurance Act applies Sections 23A and 23B to insured nonmember banks in the same manner and to the same extent as if they were members of the Federal Reserve System.

The Federal Reserve has also issued Regulation W, which codifies prior regulations under Sections 23A and 23B of the Federal Reserve Act and interpretative guidance with respect to affiliate transactions.

The Federal Reserve has also issued Regulation W, which codifies prior regulations under Sections 23A and 23B of the Federal Reserve Act and

interpretative guidance with respect to affiliate transactions.

Regulation W incorporates the exemption from the affiliate transaction rules, but expands the exemption to cover the purchase of any type of loan or extension of credit from an affiliate.

8 unchanged sentences

• a purchase of, or an investment in, securities issued by an affiliate;

Table o f Contents

• a purchase of assets from an affiliate, with some exceptions;

22 unchanged sentences

The Federal Reserve also has rules governing routing and exclusivity that require issuers to offer two unaffiliated networks for routing transactions on each debit or prepaid product.

The Bank became subject to the Durbin Amendment, effective July 1, 2020, as a result of crossing the $10 billion in assets threshold.

On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act ("EGRRCPA")") was signed into law, making certain limited amendments to the Dodd-Frank Act, as well as certain targeted modifications to other post-financial crisis regulations.

While the EGRRCPA eased some regulatory obligations imposed by the Dodd-Frank Act, including the requirement to conduct stress testing if and when the Company exceeds the $10 billion asset threshold, it had minimal impact on the Company’s operations.

Table o f Contents

specified regulated entities, with at least $1 billion in total assets such as the Company and the Bank, that encourage inappropriate risks by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity.

In May 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act ("EGRRCPA") was signed into law, making certain limited amendments to the Dodd-Frank Act, as well as certain targeted modifications to other post-financial crisis regulations.

While the EGRRCPA eased some regulatory obligations imposed by the Dodd-Frank Act, including the requirement to conduct stress testing, it had minimal impact on the Company’s operations.

Incentive Compensation The Dodd-Frank Act required the federal bank regulatory agencies and the U.S Securities and Exchange Commission ("SEC") to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities, with at least $1 billion in total assets such as the Company and the Bank, that encourage inappropriate risks by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity.

In June 2010, the Federal Reserve, OCC and FDIC issued comprehensive final guidance on incentive compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking.

7 unchanged sentences

Collins Amendment The Collins Amendment includes provisions which are intended to subject bank holding companies to the same capital requirements as bank subsidiaries and to eliminate, or significantly reduce, the use of hybrid capital instruments, especially trust preferred securities, as regulatory capital.

Accordingly, under the Collins Amendment, trust preferred securities are generally excluded from regulatory capital, however bank holding companies with consolidated assets of less than $15 billion as December 31, 2009 have been able to include these instruments in Tier 1 capital, but no such securities issued after the Collins Amendment was put in place will be included in regulatory capital.

Accordingly, under the Collins Amendment, trust preferred securities are generally excluded from regulatory capital;

however, bank holding companies with consolidated assets of less than $15 billion as of December 31, 2009 have been able to include these instruments in Tier 1 capital, but no such securities issued after the Collins Amendment was put in place in 2010 are permitted to be included in regulatory capital.

Additionally, if any bank holding company exceeds the $15 billion threshold as a result of an acquisition, subsequent to December 31, 2016, then these hybrid capital instruments are phased out of Tier 1 capital and generally included within Tier 2 capital, prospectively.

1 unchanged sentence

The CFPB’s regulation of the Bank is focused on risks to consumers and compliance with the federal consumer financial laws and includes regular examinations of the Bank.

The CFPB, along with the Department of Justice and bank regulatory authorities also seek to enforce discriminatory lending laws.

The CFPB, along with the Department of Justice and bank regulatory authorities, also seeks to enforce discriminatory lending laws.

In such actions, the CFPB and others have used a disparate impact analysis, which measures discriminatory results without regard to intent.

9 unchanged sentences

• Regulation CC, which relates to the availability of deposit funds to consumers;

Table o f Contents

• The Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;

6 unchanged sentences

At Rockland Trust, Where Each Relationship Matters ® , management is fully committed to creating a respectful and inclusive environment where everyone is given the chance to succeed.

Rockland Trust has been named one of the Boston Globe’s Top Places to Work for 13 years running and has continued to be the top rated financial institution in the Company's category since 2015.

In addition to the Company's regional recognition, Rockland Trust was also nationally recognized for its culture.

Rockland Trust received three cultural excellence awards from Energage granted to institutions that score in the top decile nationally in each of the following three categories:

"Employee Value Proposition" for delivering on the expectations colleagues have at the time of hiring;

"Formal Training" for providing the training colleagues want for their careers;

and "Top Managers," for having managers that support colleagues growth and development, care about their concerns, and strive to make their jobs easier.

Finally, Rockland Trust was also recognized nationally as a "Top Place to Work" in the United States by Energage in 2021.

Rockland Trust has also been recognized as a "Best Place to Work" for LGBTQ Equality, scoring 100% on the Human Rights Campaign’s Corporate Equality Index since 2016.

Rockland Trust has been named one of the Boston Globe’s Top Places to Work for 14 years running and has continued to be the top rated Bank in its size category since 2015.

In addition to the Globe's ranking, Rockland Trust has been recognized as a "Best Place to Work" for LGBTQ Equality, scoring 100% on the Human Rights Campaign’s Corporate Equality Index since 2016.

Demographic s As of December 31, 2022, Rockland Trust employed 1,739 total colleagues, 719 of whom are officers of the Bank.

The Company's largest business units, in terms of total headcount, include Retail, Commercial, and Operations employing 43.5%, 16.3% and 7.3% of colleagues, respectively.

Other business units include Audit, Executive, Executive Administration, Finance, Human Resources, Investment Management Group (IMG), Information Technology, Marketing, Mortgage, Retail, and Risk.

Rockland Trust’s average Full Time Equivalent (FTE) was 1,604, as of December 31, 2021.

Table o f Contents

Further, as depicted in the graph below, the workforce is comprised of colleagues of the following generations:

Other business units include Audit, Executive, Executive Administration, Finance, Human Resources, Investment Management Group, Information Technology, Marketing, Mortgage, and Risk.

Rockland Trust’s average full time equivalent was 1,666, as of December 31, 2022.

As depicted in the graph below, the workforce is comprised of colleagues of the following generations:

Colleague Engagement Rockland Trust is committed to a culture of inclusion, respect, teamwork, and employee engagement.

4 unchanged sentences

Colleagues are also invited to participate in the Company's Online Learning Platform and in-house training opportunities.

Many of the Company's training and development programs are based on Gestalt based leadership principles, developed by the Gestalt International Study Center.

Rockland Trust also offers Tuition Reimbursement through Cambridge College and other colleges and universities.

The Company also offers a robust Summer Internship program, typically hiring 10-15 summer interns across the Bank each year.

Many of the Company's training and development programs are built on Gestalt-based leadership principles, developed by the Gestalt International Study Center.

Rockland Trust also offers Tuition Reimbursement through Cambridge College Global and other colleges and universities.

In addition, the Company also offers a robust summer internship program, typically hiring 10-15 summer interns across the Bank each year.

Rockland Trust encourages colleagues to continually seek ways to learn and grow.

The Company's Performance Management and Feedback System allows managers to formally recognize colleagues’ achievements and identify goals and areas for improvement.

In addition to this annual feedback, colleagues are recognized in many other ways periodically.

Colleagues are encouraged to recognize each other's excellent internal and external customer service through a peer recognition, “You Make a Difference” award.

Managers are also provided the opportunity to recognize colleagues privately, through “Kudos”, which have proven to be especially helpful for remote teams.

In order to celebrate the academic achievements of colleagues, an annual recognition luncheon is hosted by the Chief Executive Officer, Christopher Oddleifson, when they receive a degree or certification.

In addition to this annual feedback, colleagues are also periodically spotlighted in many other ways.

Colleagues are encouraged to recognize each other's excellent internal and external customer service through a peer recognition, “You Make a Difference” award, and managers are also provided the opportunity to recognize colleagues privately, through “Kudos”.

In order to celebrate the academic achievements of colleagues, an annual recognition luncheon is hosted by the Company's Chief Executive Officer when they receive a degree or certification.

The Company recognizes colleagues that find ways to make work easier and more efficient with our "Transforming Organizational Process" award.

Colleagues are also recognized for extraordinary efforts through annual “Shining Star” awards and other awards at the annual all employee meeting.

Community Outreach Rockland Trust is committed to strengthening the communities in which it operates and where its stakeholders work and live, and build enduring relationships.

To help the Company accomplish its commitment to the communities it serves, colleagues are offered two paid volunteer days per year through the Company's community outreach program, RockCorp.

In 2021, the affiliated charitable foundations of Rockland Trust (Rockland Trust Charitable Foundation, Rockland Trust – Blue Hills Charitable Foundation and Rockland Trust-East Boston Savings Bank Charitable Foundation) donated over $2.4 million to 390 nonprofit organizations throughout the Company’s footprint.

This total includes over $200,000 granted to 45 nonprofit organizations to support internal and/or external Diversity, Equity and Inclusion (DEI) activities.

Table o f Contents

Community Outreach In 2022, the affiliated charitable foundations of Rockland Trust, including Rockland Trust Charitable Foundation Inc., Rockland Trust – Blue Hills Charitable Foundation, and Rockland Trust-East Boston Savings Bank Charitable Foundation Inc.

(collectively, the "Foundations") donated over $1.9 million to 318 nonprofit organizations throughout the Company’s footprint.

In total, the Bank and these affiliated Foundations gave over $3.2 million to 761 local nonprofit and community organizations.

Commitment to Diversity, Equity and Inclusion At Rockland Trust, management believes each relationship matters, and that statement goes far beyond the Company's customers.

Rockland Trust has an inclusive workforce that enables the Company to better perform for its customers and the diverse communities in which it operates.

There has been an established diversity and inclusion program for over seventeen years, which continues to grow and evolve.

Rockland Trust has an inclusive workforce that enables the

Company to better perform for its customers and the diverse communities in which it operates.

There has been an established diversity and inclusion program for over 17 years, which continues to grow and evolve.

As of December 31, 2022, approximately 64% of the Company's workforce was comprised of women and approximately 21% was comprised of professionals of color.

4 unchanged sentences

In addition to the efforts described above, there are many other ways the Company promotes diversity and inclusion among its workforce.

The Diversity and Inclusion Council was formed in 2004 and is comprised of Executive and Senior Leaders from all business units, with a purpose to develop strategic priorities through collaboration with the ERGs and business units to execute these priorities.

In 2004, the Company formed a Diversity and Inclusion Council, which is comprised of Executive and Senior Leaders from all business units, with a purpose to develop strategic priorities through collaboration with the ERGs and business units to execute these priorities.

Rockland Trust also partners with diverse organizations to support diverse recruitment efforts and provide professional development opportunities for professionals of color.

For example, each year Rockland Trust invites colleagues to participate in The Partnership, a third party organization that offers leadership development programs for racially and ethnically diverse professionals throughout the New England area.

For example, each year Rockland Trust invites colleagues to participate in The Partnership, a third-party organization that offers leadership development programs for racially and ethnically diverse professionals throughout New England.

In 2022, seven colleagues participated in The Partnership.

The Company launched a specialized development program, Strategies and Tactics for Emerging Professionals (STEP), in April 2021 to address the factors that can help advance the careers of professionals of color.

At the conclusion of the program, 75% of participants had a three year career plan compared to 21% at the start of the program.

Additionally, 100% of participants said the program increased their trust, commitment, and loyalty to the organization.

Participants will be tracked to monitor their career progression.

Since 2008, more than 30 professionals of color have taken part in this offering and many have received promotions into higher responsibility roles.

The Company launched a specialized development program, Strategies and Tactics for Emerging Professionals, in April 2021 to address the factors that can help advance the careers of professionals of color.

Since the conclusion of the first cohort, 63% of participants have been promoted, many more than once, and one participant has been promoted to an officer-level role.

Future cohorts will be launched and the Company looks forward to the continued success and development of participants in this program.

Available Information

6 unchanged sentences

(The Company has included its web address and the SEC website address only as inactive textual references and does not intend them to be active links to the Company's website or the SEC website.)

Table o f Contents

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business