What changed in this filing

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Item 1. Business

2024-02-28 compared with 2023-02-28 · 71 added, 52 removed, 239 unchanged (34% of the section changed)

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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;

Security Corporation;

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

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• Bright Rock Capital Management LLC, which was established to act as a registered investment advisor under the Investment Advisors Act of 1940;

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

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

The like-kind exchange services provided in connection with this entity ceased during 2023.

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.

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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.

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, as well as Worcester County and Rhode Island.

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

The Bank’s primary footprint for branch presence and deposit gathering is generally comprised of Eastern Massachusetts and Worcester County.

Lending Activities

The Bank’s gross loan portfolio (loans before allowance for credit losses) amounted to $14.3 billion on December 31, 2023, or 73.8% of total assets.

The Bank’s borrowers consist of small-to-upper middle market sized businesses and consumers.

The Bank’s borrowers primarily 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.

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.

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

Although the Bank analyzes the creditworthiness of its borrowers, the risk of deterioration in the ability of borrowers to repay their loans in accordance with their existing loan agreements is inherent in any lending function.

Loans are approved based upon a hierarchy of authority, predicated upon the size of the loan, quality of collateral and perceived level of risk.

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 $584.2 million at December 31, 2023, which is the Bank’s legal lending limit.

Notwithstanding the foregoing, the Bank has established a more restrictive limit of $190.0 million as of December 31, 2022, which may only be exceeded with the approval of the Board of Directors.

Notwithstanding the foregoing, the Bank has established a more restrictive limit, which may only be exceeded with the approval of the Board of Directors (the "Board").

There were no borrowers whose total indebtedness in aggregate exceeded the Bank’s self-imposed restrictive limit.

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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, letters of credit, and automatic clearinghouse ("ACH") exposure.

Commercial loans may be structured as term loans or as revolving/nonrevolving lines of credit, and include overdraft protection and letters of credit.

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 real estate, retail, office, industrial, warehouse, industrial development bonds and other special purpose properties, such as hotels, motels, nursing homes, restaurants, churches, and recreational facilities.

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

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 30 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.

Construction loans within this category present a degree of risk 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.

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.

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, and recreational facilities.

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

current environment has created additional considerations over office exposure as the development of hybrid work environments may reduce demand for large office spaces and as a result potentially reduce the valuation of collateral to loans within this property type.

Amongst other actions, management is actively monitoring upcoming maturities within this subset of loans.

The following pie chart shows the diversification of the commercial real estate portfolio as of December 31, 2023:

(1) Included in the total commercial real estate portfolio balance is $1.3 billion, or 15.1%, of owner occupied commercial real estate loans.

Select Statistics Regarding the Commercial Real Estate Portfolio

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Commercial real estate nonperforming loans/commercial real estate loans 0.26 %

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

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

Commercial and industrial loans consist of both term loans and revolving or non-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.

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

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

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

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

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The consumer real estate loan portfolio at December 31, 2023 was as follows:

Select Statistics Regarding the Consumer Portfolio

(Dollars in thousands)

Average loan size $ 111

Largest individual consumer loan outstanding $ 5,043

Consumer nonperforming loans/consumer loans 0.31 %

Sources of Funds

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Customers can also transfer funds between Rockland Trust accounts, deposit checks into their account, and identify the nearest branch or ATM directly from their mobile device.

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

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

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.

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The Company and the Bank maintain all capital ratios above the required capital conservation buffer of 2.5%.

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

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.

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The Bank's assessment base is defined as average consolidated total assets minus average tangible equity, adjusted for the impact of the risk category factors.

Additionally, on November 16, 2023, the FDIC Board of Directors approved a final rule to implement a special assessment to recover the loss to the Deposit Insurance Fund ("DIF") associated with protecting uninsured depositors following the closures of three prominent financial institutions in 2023.

The Federal Deposit Insurance Act ("FDI Act") requires the FDIC to take this action in connection with the systemic risk determination announced on March 12, 2023.

The charge is determined by applying the assessment rate to the Bank's assessment base, which is defined as the estimated uninsured deposits exceeding $5 billion at December 31, 2022.

The Company expensed $1.1 million in 2023 as an estimated special assessment, which is expected to be paid over eight quarters beginning in the first quarter of 2024.

Community Reinvestment Act ("CRA") Pursuant to the CRA and similar provisions of Massachusetts law, regulatory authorities review the performance of the Company and the Bank in meeting the credit needs of the communities served by the Bank.

The applicable regulatory authorities consider compliance with this law in connection with applications for, among other things, approval of new branches, branch relocations, the engagement in certain additional financial activities under the GLBA, and acquisitions of banks and bank holding companies.

The applicable regulatory authorities consider compliance with this law in connection with applications for, among other things, approval of new branches, branch relocations, the engagement in certain additional financial activities under the Gramm-Leach-Bliley Act, and acquisitions of banks and bank holding companies.

The FDIC and the Massachusetts Division of Banks have assigned the Bank a CRA rating of "Outstanding" as of the latest examination.

Anti-Money Laundering Act of 2020 The Anti-Money Laundering Act of 2020, enacted on January 1, 2021 as part of the National Defense Authorization Act, does not directly impose new requirements on banks, but requires the U.S.

Treasury to issue National Anti-Money Laundering and Countering the Financing of Terrorism Priorities, and conduct studies and issue regulations that may, over the next few years, significantly alter some of the due diligence, recordkeeping and reporting requirements that the Bank Secrecy Act and Patriot Act impose on banks.

The Anti-Money Laundering Act of 2020 also contains provisions that promote increased information-sharing and use of technology and increases penalties for violations of the Bank Secrecy Act and includes whistleblower incentives, both of which could increase the prospect of regulatory enforcement.

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.

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Regulation W Transactions between a bank and its "affiliates" are quantitatively and qualitatively restricted under the Federal Reserve Act.

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 FDI 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.

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.

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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.

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.

Consumer Protection Regulations As a financial institution with more than $10 billion in assets, the Bank is supervised by the Consumer Financial Protection Bureau (“CFPB”) for consumer protection purposes.

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Rockland Trust has been named one of the Boston Globe’s Top Places to Work for 15 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.

In addition to the Boston 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, 2023, Rockland Trust employed 1,787 total colleagues, 772 of whom are officers of the Bank.

Approximately 63% of the Company's workforce was comprised of women and approximately 21% was

comprised of professionals of color.

Of the Company's officers, 44% are women and 13% are professionals of color.

Rockland Trust's senior leadership is made up of 19% of women and 8% professionals of color, while our executive leadership team is 46% women and 8% professionals of color.

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

The Company's largest business units, in terms of total headcount, include Retail, Commercial, and Operations employing 43.3%, 16.8% and 8.1% of colleagues, respectively.

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

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

Rockland Trust’s average full time equivalent was 1,721, as of December 31, 2023.

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.

Colleagues are provided with competitive compensation, a comprehensive benefits package and an environment that supports a healthy work-life balance.

Benefits include Medical, Dental and Vision Insurance, Long-Term Disability Insurance, Life Insurance, 401(k) Voluntary Savings Plan, Additional Defined Contribution Retirement Savings Plan, Paid Time Off, Illness/Personal Time, Paid Parental Leave, Childcare Assistance, Wellness Program RockFit, AFLAC, Pet Insurance, and more.

Through utilizing effective listening and feedback tools to monitor colleague sentiments around the work experience, the Company is nationally recognized for being a top work place in areas such as employee appreciation, professional development, compensation and benefits, and work-life flexibility.

Additionally, according to a recent internal survey, 83% of colleagues would recommend working at Rockland Trust.

Benefits include medical, dental and vision insurance, long-term disability insurance, life insurance, a 401(k) voluntary savings plan, an additional defined contribution retirement savings plan, paid time off, illness/personal time, paid parental leave, childcare assistance, wellness program RockFit, supplemental insurance, pet insurance, and more.

Colleagues are also offered a full suite of learning and development programs designed to support professional growth and career advancement.

Formal colleague development programs include the Rising Stars Development Program (for entry-level colleague career advancement), Commercial Lender Development Program, and the Management Development Program.

Formal colleague development programs include the Rising Stars Development Program (for entry-level colleague career advancement), the Commercial Lender Development Program, and the Branch Management Development Program.

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

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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.

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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 encouraged to recognize each other's excellent internal and external customer service through a peer recognition, “You Make a Difference” award, of which 3,512 awards were earned in 2023.

Managers are also provided the opportunity to recognize colleagues privately, through “Kudos” awards.

In order to celebrate the academic achievements of colleagues, an

annual celebration is hosted by the Company's Chief Executive Officer when they receive a degree or certification.

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

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.

Community Outreach In 2023, the affiliated charitable foundation of Rockland Trust, Rockland Trust Charitable Foundation Inc., donated over $2.4 million to 340 nonprofit organizations throughout the Company’s footprint.

In total, the Bank and our affiliated Foundations contributed over $4.2 million to 944 local nonprofit and community organizations.

In addition, Rockland Trust employees volunteered over 17,500 service hours in our communities in 2023.

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 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.

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

The Company is committed to respecting all colleagues as individuals and to be courteous and considerate to each colleague.

There has been an established diversity and inclusion program at the Company for over 18 years, which continues to grow and evolve.

All Rockland Trust new hires are assigned a Diversity and Inclusion unconscious bias training which promotes a dialogue around creating a more inclusive culture by discussing how micro inequities and unconscious bias play a role in colleague relationships and how we lead.

In 2023, Rockland Trust hosted Dignified Banking for the second year, a training program for trainers, human resource leaders, branch managers and other retail staff, which focuses on how we can appropriately develop products and services that better serve the Company's diverse customer base.

Also in 2023, the Company piloted a new training called "Inclusive Leadership", which teaches managers and leaders new ways to engage, involve, respect, and value the diverse perspectives and contributions of all team members.

Additionally, colleagues have access to enroll in two diversity learning paths:

the “Diversity, Equity and Inclusion Learning Path” and the “LQBTQ+ Learning Path,” which both aim to educate our workforce on the diverse ways their colleagues, customers, and communities identify to promote greater awareness and understanding.

Rockland Trust works to ensure colleagues have an opportunity to be heard, valued and engaged.

Rockland Trust offers three Employee Resource Groups ("ERGs"):

Inclusion Network, Women of Action, and Pride Alliance.

Rockland Trust offers four Employee Resource Groups ("ERGs"):

Inclusion Network, EmpowHer Alliance, Pride Alliance, and The Money Circle.

These voluntary, employee-led groups join together to provide opportunities for colleagues to get involved in making the Company's workforce and communities more inclusive and equitable.

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

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 New England.

In 2022, seven colleagues participated in The Partnership.

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.

Established in 2004, the Company continues to support the 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 from various backgrounds.

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

Available Information

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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