Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q2 2018 Earnings Presentation
24 slides from Independent Bank's earnings presentation, Jul 26, 2018
Slide 1: Second Quarter Conference Call
\y INDEPENDENT BANK SECOND CONFERENCE CALL July 26, 2018 | Proudly serving our customers since 1864.
Slide 2: Cautionary Note Regarding Forward-Looking Statements
2 Cautionary Note Regarding Forward-Looking Statements This presentation may contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Any statements that are not historical facts, including statements about our expectations, beliefs, plans
Slide 3: Agenda
3 Agenda Formal Remarks.William B. (Brad) Kessel, President and Chief Executive OfficerRobert N. Shuster, Executive Vice President and Chief Financial OfficerQuestion and Answer session.Closing Remarks.Note: This presentation is available at www.IndependentBank.com in the Investor Relations area und
Slide 4: Quarterly Financial Summary
4 Quarterly Financial Summary 2Q’18 1Q’18 4Q’17 3Q’17 2Q’17 Diluted EPS (1) $ 0.36 $ 0.42 $ 0.08 $ 0.32 $ 0.27 Income before taxes $ 10,884 $ 11,199 $ 11,231 $ 10,018 $ 8,594 Net income (1) $ 8,817 $ 9,161 $ 1,711 $ 6,859 $ 5,931 Return on average assets (1) 1.12% 1.34% 0.25% 1.01% 0.92% Return on a
Slide 5: 2Q 2018 Financial Highlights
5 2Q 2018 Financial Highlights Income StatementNet income of $8.8 million, or $0.36 per diluted share. Return on average assets of 1.12% and return on average equity of 10.57%Net interest income of $29.0 million, up $7.5 million, or 34.8%, from the year ago quarter.Merger related expenses of $3.1 mi
Slide 6: YTD Financial Summary
6 YTD Financial Summary 6ME 6/30/18 6ME 6/30/17 6ME 6/30/16 6ME 6/30/15 Net interest income $ 52,916 $ 42,958 $ 39,393 $ 36,792 Income before taxes $ 22,083 $ 17,189 $ 15,106 $ 13,804 Net income $ 17,978 $ 11,905 $ 10,538 $ 9,400 Diluted EPS $ 0.78 $ 0.55 $ 0.48 $ 0.40 Return on average assets, annu
Slide 7: Our Michigan Markets
7 Our Michigan Markets Independent Bank branches – 68 (including 5 former TCSB branches) TCSB branches acquired 4/1/2018. Since 2012, substantial changes have been implemented to streamline and optimize our branch delivery network.Significant market presence and opportunity to gain market share in a
Slide 8: Our Markets – Regional
Our Markets – Regional Region Cities Branches 6/30/18Portfolio Loans(1) % ofLoans(1) 6/30/18Deposits(3) % of Deposits(3) 6/30/17 Portfolio Loans(2) 6/30/17 Deposits(3) East / “Thumb” Bay City / Saginaw 23 $ 392 17% $ 772 32% $ 347 $ 742 West Grand Rapids / Ionia 22 716 30% 699 29% 632 694 Central La
Slide 9: Low Cost Deposit Franchise Focused on Core Deposit Growth
9 Low Cost Deposit Franchise Focused on Core Deposit Growth Deposit Highlights$2.78 billion in total deposits at 6/30/18.Substantially all core funding.$2.12 billion of transaction accounts (76.3% of total deposits).Total deposits increased $87.3 million, or 3.9%, since 6/30/17 (excluding brokered d
Slide 10: Diversified Loan Portfolio Focused on High Quality Growth
Diversified Loan PortfolioFocused on High Quality Growth Lending Highlights17 consecutive quarters of net loan growth.$2.531 billion in total loans at 6/30/18 (including $64.1 million of loans held for sale).2Q 2018 lending results include (growth rates below exclude $294.5 million of portfolio loan
Slide 11: Strong Capital Position Focused on Shareholder Return
11 Strong Capital PositionFocused on Shareholder Return HighlightsPrudent capital management. Target TCE ratio – 8.50% to 9.50%. Priorities are: (A) capital retention to support (1) organic growth and (2) acquisitions; and (B) return of capital through (1) strong and consistent dividend and (2) shar
Slide 12: Net Interest Margin/Income
12 Net Interest Margin/Income HighlightsInterest rate sensitivity profile of the loan and securities portfolios, in combination with a low cost core deposit base, positions us to slightly benefit from a rising interest rate environment.Net interest income increased 21.1% in 2Q’18 vs. 1Q’18 due prima
Slide 13: Net Interest Income and Net Interest Margin Details
13 Net Interest Income and Net Interest Margin Details Summary2Q’18 net interest income of $28.980 million, up $5.044 million from 1Q’18. The linked quarter increase was due to a $6.321 million increase in interest income and fees on loans that was partially offset by a $15K decrease in interest inc
Slide 14: Non-interest Income Highlights
14 Non-interest Income HighlightsDiverse sources of non-interest income which totaled $12.3 million in 2Q’18.2Q’18 total non-interest income represents approximately 29.8% of total revenue (net interest income and non-interest income).Service charges on deposits declined by $0.2 million, or 3.0%, YT
Slide 15: Non-interest Expense Highlights
15 Non-interest Expense HighlightsQ2’18 non-interest expenses totaled $29.8 million (an increase from both 2Q’17 and 1Q’18).Q2’18 compensation and benefits increased by $2.5 million over Q2’17 due primarily to increases in salaries, performance based compensation, payroll taxes and health insurance
Slide 16: Investment Securities Portfolio
16 Investment Securities Portfolio HighlightsHigh quality, liquid, diverse portfolio with relatively short duration.Fair value of $453.1 million(1) at 6/30/18.Net unrealized loss of $5.6 million at 6/30/18.65% of the portfolio is AAA rated (or backed by the U.S. Government).3.09 year estimated avera
Slide 17: Credit Quality Summary
17 Credit Quality Summary Note 1: Non-performing loans and non-performing assets exclude troubled debt restructurings that are performing.Note 2: 12/31/16 30 to 89 days delinquent data excludes $1.63 million of payment plan receivables that were held for sale. Non-performing Assets ($ in Millions) O
Slide 18: Credit Cost Summary
18 Credit Cost Summary Note: Dollars all in millions. Provision for Loan Losses Loan Net Charge-Offs/Recoveries Allowance for Loan Losses
Slide 19: Classified Assets and New Default Trends
19 Classified Assets and New Default Trends Note: Dollars all in millions. Total Classified Assets Commercial Loan New Defaults Total Loan New Defaults Retail Loan New Defaults
Slide 20: Troubled Debt Restructurings (TDRs)
20 Troubled Debt Restructurings (TDRs) TDR HighlightsWorking with client base to maximize sustainable performance.The specific reserves allocated to TDRs totaled $6.3 million at 6/30/18.A majority of our TDRs are performing under their modified terms but remain in TDR status for the life of the loan
Slide 21: Acquisition of TCSB Bancorp, Inc. Status Update
21 Acquisition of TCSB Bancorp, Inc.Status Update Category Comments Loans TCSB total loans on April 1, 2018 were $301.8 million (including $1.3 million of loans held for sale). Non PCI (purchase credit impaired) portfolio loans totaled $297.0 million with an estimated fair value of $291.3 million (a
Slide 22: YTD 2018 Actual Performance vs. Original Outlook
22 YTD 2018 Actual Performance vs. Original Outlook Category Outlook Lending Continued growthIBCP only goal of 15 to 18% overall loan growth in 2018, primarily supported by increases in commercial loans, mortgage loans and consumer loans. Expect much of this growth to occur in the last three quarter
Slide 23: Strategic Initiatives
23 Strategic Initiatives Balance SheetGenerate quality loan growth with continued focus on commercial and consumer installment lending as well as salable and portfolio mortgage loans.Remain slightly asset sensitive and positioned to benefit from higher interest rates (short duration investment portf
Slide 24: Q&A and Closing Remarks
24 Q&A and Closing Remarks Question and Answer SessionClosing RemarksThank you for attending !NASDAQ: IBCP