Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q1 2018 Earnings Presentation
23 slides from Independent Bank's earnings presentation, Apr 23, 2018
Slide 1: First Quarter Earnings Conference Call (April 23, 2018)
\e INDEPENDENT BANK FIRST Earnings CONFERENCE CA (April 23, 2018) Proudly serving 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 1Q’18 4Q’17 3Q’17 2Q’17 1Q’17 Diluted EPS (1) $ 0.42 $ 0.08 $ 0.32 $ 0.27 $ 0.28 Income before taxes $ 11,199 $ 11,231 $ 10,018 $ 8,594 $ 8,595 Net income (1) $ 9,161 $ 1,711 $ 6,859 $ 5,931 $ 5,974 Return on average assets (1) 1.34% 0.25% 1.01% 0.92% 0.95% Return on av
Slide 5: 1Q 2018 Financial Highlights
5 1Q 2018 Financial Highlights Income StatementNet income of $9.2 million, or $0.42 per diluted share. Return on average assets of 1.34% and return on average equity of 14.04%Net interest income of $23.9 million, up $2.5 million, or 11.5%, from the year ago quarter.$0.3 million loan loss provision e
Slide 6: Our Michigan Markets
6 Our Michigan Markets Independent Bank branches – 63 (68 with TCSB) TCSB branches - 5 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 attractive Michigan markets.Acquisit
Slide 7: Our Markets – Regional
Our Markets – Regional Region Cities Branches 3/31/18Portfolio Loans(1) % ofLoans(1) 3/31/18Deposits(3) % of Deposits(3) 3/31/17 Portfolio Loans(2) 3/31/17 Deposits(3) East / “Thumb” Bay City / Saginaw 23 $ 360 19% $ 773 35% $ 324 $ 747 West Grand Rapids / Ionia 22 688 35% 740 34% 590 731 Central La
Slide 8: Low Cost Deposit Franchise Focused on Core Deposit Growth
8 Low Cost Deposit Franchise Focused on Core Deposit Growth Deposit Highlights$2.43 billion in total deposits at 3/31/18.Substantially all core funding.$1.89 billion of transaction accounts (77.8% of total deposits).Total deposits increased $52.2 million, or 2.3%, since 3/31/17 (excluding $115.2 mil
Slide 9: Diversified Loan Portfolio Focused on High Quality Growth
Diversified Loan PortfolioFocused on High Quality Growth Lending Highlights16 consecutive quarters of net loan growth.$2.106 billion in total loans at 3/31/18 (including $34.1 million of loans held for sale).1Q 2018 lending results include:Commercial loans net growth of $4.2 million, or 2.0% annuali
Slide 10: Strong Capital Position Focused on Shareholder Return
10 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 11: Net Interest Margin/Income
11 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 2.7% in 1Q’18 vs. 4Q’17 due primar
Slide 12: Net Interest Income and Net Interest Margin Details
12 Net Interest Income and Net Interest Margin Details Summary1Q’18 net interest income of $23.936 million, up $620K from 4Q’17. The linked quarter increase was due to a $710K increase in interest income and fees on loans and a $61K increase in interest income on securities and investments. This was
Slide 13: Non-interest Income Highlights
13 Non-interest Income HighlightsDiverse sources of non-interest income which totaled $11.5 million in 1Q’18.1Q’18 total non-interest income represents approximately 32.5% of total revenue (net interest income and non-interest income).Service charges on deposits declined by $0.1 million, or 3.5%, YT
Slide 14: Non-interest Expense Highlights
14 Non-interest Expense HighlightsQ1’18 non-interest expenses totaled $23.9 million (an increase from both 1Q’17 and 4Q’17).Q1’18 compensation and benefits increased by $0.1 million over Q1’17 due primarily to an increase in performance based compensation. In 1Q’18, approximately $0.3 million was pa
Slide 15: Investment Securities Portfolio
15 Investment Securities Portfolio HighlightsHigh quality, liquid, diverse portfolio with relatively short duration.Fair value of $490.9 million(1) at 3/31/18.Net unrealized loss of $4.4 million at 3/31/18.64% of the portfolio is AAA rated (or backed by the U.S. Government).2.93 year estimated avera
Slide 16: Credit Quality Summary
16 Credit Quality Summary Note 1: Non-performing loans and non-performing assets exclude troubled debt restructurings that are performing.Note 2: 3/31/17 and 12/31/16 30 to 89 days delinquent data excludes $1.53 million and $1.63 million, respectively, of payment plan receivables that were held for
Slide 17: Credit Cost Summary
17 Credit Cost Summary Note: Dollars all in millions. Provision for Loan Losses Loan Net Charge-Offs/Recoveries Allowance for Loan Losses
Slide 18: Classified Assets and New Default Trends
18 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 19: Troubled Debt Restructurings (TDRs)
19 Troubled Debt Restructurings (TDRs) TDR HighlightsWorking with client base to maximize sustainable performance.The specific reserves allocated to TDRs totaled $6.3 million at 3/31/18.A majority of our TDRs are performing under their modified terms but remain in TDR status for the life of the loan
Slide 20: Acquisition of TCSB Bancorp, Inc. Status Update
20 Acquisition of TCSB Bancorp, Inc.Status Update Category Comments Lending TCSB total loans were $301.8 million at 3/31/18 compared to $291.5 million at 12/31/17, representing 1Q’18 growth of $10.3 million, or 14.3% annualized. Deposits TCSB total deposits were $288.1 million at 3/31/18 compared to
Slide 21: YTD 2018 Actual Performance vs. Original Outlook
21 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 22: Strategic Initiatives
22 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 23: Q&A and Closing Remarks
23 Q&A and Closing Remarks Question and Answer SessionClosing RemarksThank you for attending !NASDAQ: IBCP