Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q4 2021 Earnings Presentation
29 slides from Independent Bank's earnings presentation, Jan 27, 2022
Slide 1: Independent Bank Corporation Earnings Call Fourth Quarter 2021
Independent Bank Corporation (IBCP) Earnings CallFourth Quarter 2021January 27, 2022
Slide 2: Cautionary note regarding forward-looking statements
Cautionary note regarding forward-looking statements This presentation contains forward-looking statements about Independent Bank Corporation. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the
Slide 3: Agenda
Agenda Formal Remarks.William B. (Brad) Kessel, President and Chief Executive OfficerGavin A. Mohr, Executive Vice President and Chief Financial OfficerJoel Rahn, Executive Vice President – Commercial Banking Question and Answer session.Closing Remarks.Note: This presentation is available at www.Ind
Slide 4: Historical Quarterly Financial Data
Historical Quarterly Financial Data 4 Quarter Ended, ($M except per share data) 12/31/20 3/31/21 6/30/21 9/30/21 12/31/21 Balance Sheet: Total Assets $4,204 $4,426 $4,461 $4,622 $4,705 Portfolio Loans $2,734 $2,784 $2,815 $2,884 $2,905 Deposits $3,637 $3,859 $3,862 $4,012 $4,117 Tangible Common Equi
Slide 5: 4Q 2021 Financial Highlights
4Q 2021 Financial Highlights Income StatementPre-tax, pre-provision income of $16.1 million compared to $20.6 million in the year ago quarter.Net income of $12.5 million, or $0.58 per diluted share compared to $17.0 million, or $0.77 per diluted share in the year ago quarter.Net interest income of $
Slide 6: Historical Annual Financial Data
Historical Annual Financial Data 6 (1) Excluding the impact of $5.96 million re-measurement of net deferred assets in 2017, net income is $26.44 million, ROA is 1.00% and ROE is 10.10%
Slide 7: Year-to-date 2021 Financial Highlights
Year-to-date 2021 Financial Highlights Income StatementIncreases in net income and diluted earnings per share of 12.0% and 13.8%, respectively, for the full year of 2021 compared to 2020.Annualized return on average assets and on average equity of 1.41% and 16.13%, respectively, for the full year of
Slide 8: Our Michigan Markets
Our Michigan Markets 8 Source: S&P Global Market Intelligence and Company documents. Map does not include loan production offices. Deposit market share data based on FDIC Summary of Deposits Annual Survey as of June 30, 2021.Note: Loan and deposit balances exclude the loans and deposits (such as bro
Slide 9: Select Economic Statistics
Select Economic Statistics 9 Unemployment Trends (%) Total Employees (Thousands) Regional Average Home Sales Price (Thousands) Annualized Home Sales (Thousands) Select Economic Statistics Unemployment rates returning to normal levels Stable prices in key markets Strong job growth continues Reboundin
Slide 10: Low Cost Deposit Franchise Focused on Core Deposit Growth
Low Cost Deposit Franchise Focused on Core Deposit Growth 10 Substantially core funding – $3.82 billion of non-maturity deposit accounts (92.4% of total deposits).Total deposits increased $479.7 million (13.2%) since 12/31/20 with non-interest bearing up $168.2 million, savings and interest- bearing
Slide 11: Digital Transformation
11 11 All functionality within online banking can be done in the new IB ONE Wallet app.Customers can reset their own passwords in the app. Instantly transfer funds to other IB customers. IB Card Controls allows you to turn your debit card on or off, restrict transactions by category or dollar amount
Slide 12: Diversified Loan Portfolio Focused on High Quality Growth Lending
Diversified Loan PortfolioFocused on High Quality Growth 12 Lending Highlights Note: Portfolio loans exclude loans HFS. Portfolio loan changes in 4Q’21:Commercial – decreased $19.2 million (excluding PPP increased $44.6 million). PPP loan balances decreased $63.8 million and totaled $26.4 million at
Slide 13: COVID-19 Programs – Loan Forbearances
COVID-19 Programs – Loan Forbearances 13 Highlights Loan Forbearances The table above reflects the status of loan forbearances. The percent of the loan portfolio is based on loan dollars.Loan Forbearances:Forbearance period is generally three months for mortgage and installment loans and three or si
Slide 14: COVID-19 Programs – Paycheck Protection Program
COVID-19 Programs – Paycheck Protection Program (“PPP”) 14 PPP Loan Portfolio PPP – Round 1 Description 12/31/2021 9/30/2021 6/31/2021 # ($ in 000’s) # ($ in 000’s) # ($ in 000’s) Loans outstanding at quarter-end 6 $ 197 20 $ 1,262 298 $ 42,315 Average loans outstanding for the quarter n/a 774 n/a 1
Slide 15: Commercial Loan Portfolio Concentrations
Loans by Industry as a % of Total Commercial Loans ($ in millions) Investor RE by Collateral Type as a % of Total Commercial Loans ($ in millions) 15 Commercial Loan Portfolio Concentrations 15 Note: $757 million, or 62.9% of the commercial loan portfolio is C&I or owner occupied, while $446 million
Slide 16: Investment Securities Portfolio Highlights
Investment Securities Portfolio 16 Highlights High quality, liquid, diverse portfolio with relatively short duration.Fair value of $1.41 billion, an increase of $64.2 million in 4Q’21.Net unrealized gain of $3.6 million, representing 0.25% of amortized cost.Portfolio ratings: 53% AAA rated (or backe
Slide 17: Strong Capital Position
Strong Capital Position 17 TCE / TA (%) Leverage Ratio (%) CET1 Ratio (%) Total RBC Ratio (%) IBCP Target 8.50% - 9.50 % Capital retention to support (i) organic growth and (ii) acquisitions; and Return of capital through (i) strong and consistent dividend and (ii) share repurchases Long-Term Capita
Slide 18: 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 as slightly asset sensitive.Net interest income increased $0.5 million, or 1.4%, in 4Q’21 vs. 3Q’21 due primarily to a $136.7 million increase in average
Slide 19: Linked Quarter Analysis
Linked Quarter Analysis 19 4Q’21 NIM Changes Linked Quarter Average Balances and FTE Rates
Slide 20: Strong Non-interest Income
Strong Non-interest Income 20 Diverse sources of non-interest income, representing 30.3% of operating revenue in 4Q’21.4Q’21 interchange income of $3.3 million compared to $2.8 million in the prior year quarter. This increase was primarily due to an increase in transaction volume and a new switch co
Slide 21: Focus on Improved Efficiency
Focus on Improved Efficiency 21 Source: Company documents. Non-interest Expense ($M) Highlights Efficiency Ratio (4 quarter rolling average) Compensation and employee benefits expense of $19.9 million compared to $20.0 in the prior year quarter. Compensation (salaries and wages) increased $0.6 milli
Slide 22: Credit Quality Summary
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) ORE/
Slide 23: Classified Assets and New Default Trends
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 23
Slide 24: Troubled Debt Restructurings (TDRs)
Troubled Debt Restructurings (TDRs) TDR HighlightsWorking with client base to maximize sustainable performance.The specific reserves allocated to TDRs totaled $720m 12/31/21.A majority of our TDRs are performing under their modified terms but remain in TDR status for the life of the loan.96.4% of TD
Slide 25: Credit Cost Summary
Note: Dollars all in millions. Provision for Credit Losses Loan Net Charge-Offs/Recoveries Allowance for Credit Losses Credit Cost Summary 25
Slide 26: 2021 Outlook Update
2021 Outlook Update Category Outlook Lending Continued growthLoan payoffs related to the Paycheck Protection Program will make loan growth challenging in 2021. The goal of low (1%) single digit overall portfolio loan growth (5% - 7% excluding PPP impact), is based on increases in commercial loans (e
Slide 27: 2022 Outlook
2022 Outlook Category Outlook Lending Continued growthIBCP goal of low double digit (approximately 10%) overall loan growth is based on increases in commercial loans, mortgage loans and consumer loans. Expect much of this growth to occur in the last three quarters of 2022. This growth forecast also
Slide 28: Strategic Initiatives
Strategic Initiatives 28 Serve consumers and businesses in our Markets in an inclusive way to include straight forward marketing, improved brand awareness and enhanced outreach efforts that foster strong customer relationships and engagement.Improve net interest income via balanced loan growth, disc
Slide 29: Q&A and Closing Remarks
Q&A and Closing Remarks Question and Answer SessionClosing RemarksThank you for attending!NASDAQ: IBCP 29