Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q3 2021 Earnings Presentation
27 slides from Independent Bank's earnings presentation, Oct 26, 2021
Slide 1: Independent Bank Corporation (IBCP) Earnings Call Third Quarter 2021
Independent Bank Corporation (IBCP) Earnings CallThird Quarter 2021October 26, 2021
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 Financial Data
Historical Financial Data 4 (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 5: 3Q 2021 Financial Highlights
3Q 2021 Financial Highlights Income StatementPre-tax, pre-provision income of $19.0 million compared to $25.3 million in the year ago quarter.Net income of $16.0 million, or $0.73 per diluted share compared to $19.6 million, or $0.89 per diluted share in the year ago quarter.Net interest income of $
Slide 6: Year-to-date 2021 Financial Highlights
Year-to-date 2021 Financial Highlights Income StatementIncreases in net income and diluted earnings per share of 28.6% and 30.7%, respectively, for the first nine months of 2021 compared to 2020.Annualized return on average assets and on average equity of 1.53% and 17.32%, respectively, for the firs
Slide 7: Our Michigan Markets
Our Michigan Markets 7 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 8: Select Economic Statistics
Select Economic Statistics 8 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 9: Low Cost Deposit Franchise Focused on Core Deposit Growth
Low Cost Deposit Franchise Focused on Core Deposit Growth 9 Substantially core funding – $3.71 billion of non-maturity deposit accounts (91.3% of total deposits).Total deposits increased $374.7 million (13.8%) since 12/31/20 with non-interest bearing up $143.6 million, savings and interest- bearing
Slide 10: Digital Transformation
10 10 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 11: Diversified Loan Portfolio Focused on High Quality Growth Lending
Diversified Loan PortfolioFocused on High Quality Growth 11 Lending Highlights Note: Portfolio loans exclude loans HFS. Portfolio loan changes in 3Q’21:Commercial – decreased $21.7 million. PPP loan balances decreased $81.7 million and totaled $90.2 million at September 30, 2021.Mortgage – increased
Slide 12: COVID-19 Programs – Loan Forbearances
COVID-19 Programs – Loan Forbearances 12 Highlights Loan Forbearances The table above reflects the status of loan forbearances. The percent of the loan portfolio is based on loan dollars.Loan Forbearances:Forbearance period is generally three months for mortgage and installment loans and three or si
Slide 13: COVID-19 Programs – Paycheck Protection Program (PPP)
COVID-19 Programs – Paycheck Protection Program (“PPP”) 13 PPP Loan Portfolio PPP – Round 1 Description 9/30/2021 6/31/2021 9/30/2020 # ($ in 000’s) # ($ in 000’s) # ($ in 000’s) Loans outstanding at quarter-end 20 $ 1,262 298 $ 42,315 2,117 $261,182 Average loans outstanding for the quarter n/a 2,6
Slide 14: Commercial Loan Portfolio Concentrations
Loans by Industry as a % of Total Commercial Loans ($ in millions) Investor RE by Collateral Type as a % of Total Commercial Loans ($ in millions) 14 Commercial Loan Portfolio Concentrations 14 Note: $769 million, or 62.9% of the commercial loan portfolio is C&I or owner occupied, while $454 million
Slide 15: Investment Securities Portfolio
Investment Securities Portfolio 15 Highlights High quality, liquid, diverse portfolio with relatively short duration.Fair value of $1.35 billion, an increase of $17.9 million in 3Q’21.Net unrealized gain of $16.3 million, representing 1.23% of amortized cost.Portfolio ratings: 53% AAA rated (or back
Slide 16: Strong Capital Position
Strong Capital Position 16 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 17: 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 $2.4 million, or 7.7%, in 3Q’21 vs. 2Q’21 due primarily to a $73.1 million increase in average i
Slide 18: Linked Quarter Analysis
Linked Quarter Analysis 18 3Q’21 NIM Changes Linked Quarter Average Balances and FTE Rates
Slide 19: Strong Non-interest Income
Strong Non-interest Income 19 Diverse sources of non-interest income, representing 36.8% of operating revenue in 3Q’21.3Q’21 interchange income of $4.2 million compared to $3.4 million in the prior year quarter. This increase was primarily due to an increase in transaction volume and a new switch co
Slide 20: Focus on Improved Efficiency
Focus on Improved Efficiency 20 Source: Company documents. Non-interest Expense ($M) Highlights Efficiency Ratio (4 quarter rolling average) Compensation and employee benefits expense of $21.7 million compared to $22.0 in the prior year quarter. Compensation (salaries and wages) increased $1.2 milli
Slide 21: 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 22: 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 22
Slide 23: Troubled Debt Restructurings (TDRs)
Troubled Debt Restructurings (TDRs) TDR HighlightsWorking with client base to maximize sustainable performance.The specific reserves allocated to TDRs totaled $3.7 million at 9/30/21.A majority of our TDRs are performing under their modified terms but remain in TDR status for the life of the loan.96
Slide 24: Credit Cost Summary
Note: Dollars all in millions. Provision for Credit Losses Loan Net Charge-Offs/Recoveries Allowance for Credit Losses Credit Cost Summary 24
Slide 25: 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 26: Strategic Initiatives
Strategic Initiatives 26 Serve consumers and businesses in our markets in an inclusive way with straight forward marketing and outreach efforts and fostering relationships and strong customer engagement.Improve net interest income via balanced loan growth, disciplined risk adjusted loan pricing and
Slide 27: Q&A and Closing Remarks
Q&A and Closing Remarks Question and Answer SessionClosing RemarksThank you for attending!NASDAQ: IBCP 27