Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q1 2017 Earnings Presentation
23 slides from Independent Bank's earnings presentation, Apr 24, 2017
Slide 1: Earnings Conference Call 1st Quarter 2017
. INDEPENDENT BANK Earnings CONFERENCE m™ CALL Qi (April 24, 2017) 1** Quarter 2017 Proudly serving our customers since 1864
Slide 2: Cautionary Note Regarding Forward-Looking Statements
2 Cautionary Note Regarding Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements of goals, intentions, and expectations as to future trends, plans, events, or results of Indep
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: Financial Summary
4 Financial Summary 1Q’17 4Q’16 3Q’16 2Q’16 1Q’16 Diluted EPS $ 0.28 $ 0.27 $ 0.30 $ 0.30 $ 0.19 Income before taxes $ 8,595 $ 8,443 $ 9,352 $ 9,049 $ 6,057 Net income $ 5,974 $ 5,855 $ 6,373 $ 6,438 $ 4,100 Return on average assets 0.95% 0.91% 1.02% 1.06% 0.68% Return on average equity 9.63% 9.29%
Slide 5: 1Q 2017 Financial Highlights
5 1Q 2017 Financial Highlights Income StatementNet income of $6.0 million, or $0.28 per diluted share, representing increases of 45.7% and 47.4%, respectively over 1Q’16. Net interest income of $21.5 million, up $1.7 million, or 8.6%, from the year ago quarter.$0.4 million credit loan loss provision
Slide 6: Our Michigan Markets
6 Our Michigan Markets U.S. Branches: Current Ownership (63) U.S. LPO’s: Current Ownership (12)(Columbus and Fairlawn, Ohio Not Shown) Since 2012, substantial changes have been implemented to streamline and optimize our branch delivery network.Significant market presence and opportunity to gain mark
Slide 7: Our Markets – Regional
Our Markets – Regional Region Cities Branches 03/31/17Portfolio Loans(1) % ofLoans(1) 03/31/17Deposits(3) % of Deposits(3) 03/31/16 Portfolio Loans(2) 03/31/16 Deposits(3) East / “Thumb” Bay City / Saginaw 23 $ 324 21% $ 747 34% $ 301 $ 727 West Grand Rapids / Ionia 22 590 38% 731 34% 532 689 Centra
Slide 8: Low Cost Deposit Franchise Focused on Core Deposit Growth
8 Low Cost Deposit Franchise Focused on Core Deposit Growth Deposit Highlights$2.26 billion in total deposits at 03/31/17.Substantially all core funding.$1.79 billion of transaction accounts (78.9% of total deposits).Total deposits increased $108.4 million, or 5.0% since 03/31/16.Average deposits pe
Slide 9: Diversified Loan Portfolio Focused on High Quality Growth
Diversified Loan PortfolioFocused on High Quality Growth Lending Highlights12 consecutive quarters of net loan growth.$1.741 billion in total loans at 03/31/17 (including $70.5 million of loans and payment plan receivables held for sale).1Q 2017 lending results include:Commercial loan growth of $11.
Slide 10: Strong Capital Position Focused on Shareholder Return
10 Strong Capital PositionFocused on Shareholder Return HighlightsPrudent capital management. Target TCE ratio – 9.50% to 10.50% near-term and 8.50% to 9.50% longer-term. Priorities are: (A) capital retention to support (1) organic growth and (2) acquisitions; and (B) return of capital through (1) s
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 benefit from a rising interest rate environment.Net interest income increased in 1Q’17 vs. 4Q’16 due primarily to a 24 ba
Slide 12: Net Interest Income and Net Interest Margin Details
12 Net Interest Income and Net Interest Margin Details Summary1Q’17 net interest income of $21.466 million, up $1.216 million from 4Q’16. The linked quarter increase was due to a $1.062 million increase in interest income and fees on loans and a $160K increase in interest income on securities and in
Slide 13: Non-interest Income Highlights
13 Non-interest Income HighlightsDiverse sources of non-interest income which totaled $10.3 million in 1Q’17.1Q’17 total non-interest income represents approximately 32.5% of total revenue (net interest income and non-interest income).Service charges on deposits have recently stabilized after previo
Slide 14: Non-interest Expense Highlights
14 Non-interest Expense HighlightsQ1’17 non-interest expenses totaled $23.6 million (a decrease from 4Q’16 and an increase from 1Q’16).Q1’17 compensation and benefits increased by $2.3 million over Q1’16 due primarily to higher salaries and wages, performance based compensation, payroll taxes and em
Slide 15: Sale of Mepco Finance Corporation
15 Sale of Mepco Finance Corporation Sale Transaction SummarySigned Asset Purchase Agreement (APA) on December 30, 2016 to sell the business and majority of assets of Mepco Finance Corporation (Mepco) to Seabury Asset Management LLC (Seabury). Under the terms of the APA, Seabury is paying net book v
Slide 16: Investment Securities Portfolio Highlights
16 Investment Securities Portfolio HighlightsHigh quality, liquid, diverse portfolio with relatively short duration.60% of the portfolio is AAA rated (or backed by the U.S. Government).2.63 year estimated average duration with a weighted average yield of 2.46% (with TE gross up).Approximately 26% of
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: 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 18: Credit Cost Summary
18 Credit Cost Summary Note: Dollars all in millions. Provision for Loan Losses Loan Net Charge-Offs 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 $7.6 million at 3/31/17.A majority of our TDRs are performing under their modified terms but remain in TDR status for the life of the loan
Slide 21: 2017 Actual Performance vs. Original Outlook
21 2017 Actual Performance vs. Original Outlook Category Outlook Lending Continued growthGoal of 10 to 11% overall loan growth in 2017, primarily supported by increases in commercial loans, mortgage loans and consumer loans. Expect much of this growth to occur in the last three quarters of 2017. Thi
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 asset sensitive and positioned to benefit from higher interest rates (short duration investment portfolio, lar
Slide 23: Q&A and Closing Remarks
23 Q&A and Closing Remarks Question and Answer SessionClosing RemarksThank you for attending !NASDAQ: IBCP