Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q4 2024 Earnings Presentation
30 slides from Independent Bank's earnings presentation, Jan 23, 2025
Slide 1: Earnings Call: Fourth Quarter 2024
Earnings Call: Fourth Quarter 2024 January 23, 2025 (NASDAQ: IBCP)
Slide 2: Cautionary note regarding forward-looking statements
Cautionary note regarding forward-looking statements This presentation contains forward-looking statements, which are any statements or information that are not historical facts. These forward-looking statements include statements about our anticipated future revenue and expenses and our future plan
Slide 3: Agenda
• Formal Remarks − William B. (Brad) Kessel President and Chief Executive Officer − Gavin A. Mohr Executive Vice President and Chief Financial Officer − Joel F. Rahn Executive Vice President – Commercial Banking • Question and Answer session • Closing Remarks Note: This presentation is available at
Slide 4: 4Q'24 Overview
4Q'24 Overview • Total loans increased 9.7% annualized while maintaining a disciplined approach to new loan production • New loan production continues to be largely focused on new commercial clients that bring deposits to the bank • Asset quality remained exceptional with NPAs/Total Assets at 0.13%
Slide 5: Low-Cost Deposit Franchise Focused on Core Deposit Growth
$ 4 .3 $ 4 .4 $ 4 .5 $ 4 .5 $ 4 .6 $ 4 .6 $ 4 .6 $ 4 .6 $ 4 .6 $ 4 .7 0 .3 3 % 0 .7 8 % 1 .2 6 % 1 .5 7 % 1 .8 0 % 1 .9 9 % 2 .0 1 % 2 .0 3 % 2 .1 1 % 1 .9 3 % Q 3 '2 2 Q 4 '2 2 Q 1 '2 3 Q 2 '2 3 Q 3 '2 3 Q 4 '2 3 Q 1 '2 4 Q 2 '2 4 Q 3 '2 4 Q 4 '2 4 Total Deposits Cost Of Deposits Non-interest Beari
Slide 6: Historic IBC Cost of Funds
0 .2 5 % 0 .2 7 % 0 .2 7 % 0 .2 8 % 0 .3 3 % 0 .3 6 % 0 .4 2 % 0 .5 1 % 0 .6 0 % 0 .7 3 % 0 .8 2 % 0 .8 5 % 0 .8 5 % 0 .7 4 % 0 .6 3 % 0 .3 0 % 0 .2 3 % 0 .3 9 % 0 .1 4 % 0 .1 2 % 0 .1 1 % 0 .1 0 % 0 .1 0 % 0 .1 2 % 0 .3 3 % 0 .7 9 % 1 .2 5 % 1 .5 7 % 1 .8 0 % 1 .9 9 % 2 .0 1 % 2 .0 2 % 2 .1 0 % 1 .
Slide 7: Diversified Loan Portfolio Focused on High Quality Growth
Commercial 48% Mortgage 37% Installment 14% Held for Sale 0% $ 3 .4 $ 3 .4 $ 3 .5 $ 3 .6 $ 3 .7 $ 3 .8 $ 3 .8 $ 3 .9 $ 3 .9 $ 4 .0 4 .3 9 % 4 .9 0 % 5 .0 7 % 5 .3 6 % 5 .5 3 % 5 .7 3 % 5 .8 0 % 5 .9 3 % 5 .9 6 % 5 .8 3 % 3 Q '2 2 4 Q '2 2 1 Q '2 3 2 Q '2 3 3 Q '2 3 4 Q '2 3 1 Q '2 4 2 Q '2 4 3 Q '2
Slide 8: Concentrations within Commercial Loan Portfolio
9.52% 174 8.74% 160 8.21% 150 7.78% 1425.82% 106 5.35% 98 4.69% 86 3.75% 69 3.12% 57 49 48 191 $1,327MM Manufacturing Construction Retail Health Care and Social Assistance Hotel and Accomodations Real Estate Rental and Leasing Other Services (except Public Administration) Wholesale Transportation Fi
Slide 9: Asset Quality: Non-performing Loans and Past Dues
$8.6 $9.5 $7.9 $5.1 $3.7 $5.2 $3.7 $4.5 $5.1 $6.0 0 .3 % 0 .3 % 0 .3 % 0 .2 % 0 .1 % 0 .1 % 0 .1 % 0 .1 % 0 .1 % 0 .1 % 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8% 0.9% $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 2018 2019 2020 2021 2022 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Non-performing Loans
Slide 10: Strong Capital Position
13.6 13.7 13.9 14.2 14.3 14.2 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 10.4 10.6 10.7 11.1 11.2 11.2 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 8.9 9.0 9.3 9.6 9.6 9.9 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 6.7 7.1 7.4 7.6 8.1 8.0 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 • Long-term capital Priorities: Capital retentio
Slide 11: Net Interest Margin/Income
3.12 3.05 3.02 3.18 3.13 3.00 3.26 3.49 3.52 3.33 3.26 3.23 3.26 3.30 3.40 3.37 3.45 0.09 0.08 0.07 0.08 0.08 0.12 0.77 2.18 3.65 4.38 4.99 5.26 5.33 5.33 5.33 5.16 4.66 0.39 0.14 0.12 0.11 0.10 0.10 0.12 0.45 0.92 1.39 1.72 1.93 2.11 2.14 2.16 2.22 2.02 0 1 2 3 4 5 6 Q 4 '2 0 Q 1 '2 1 Q 2 '2 1 Q 3
Slide 12: Average Balances, Income/Expense and Yields
4Q24 3Q24 Change Avg Bal Inc/Exp Yield Avg Bal Inc/Exp Yield Avg Bal Inc/Exp Yield Cash $84,733 $1,019 4.78% $126,039 $1,717 5.42% ($41,306) ($698) -0.64% Investments 928,172 7,977 3.44% 949,849 8,342 3.51% (21,677) (365) -0.08% Commercial loans 1,875,634 31,725 6.73% 1,776,983 31,425 7.04% 98,651 3
Slide 13: Interest Rate Risk Management
December 31, 2024 -200 -100 Base-rate 100 200 Net Interest Income $181,603 $181,769 $182,518 $184,427 $185,494 Change from Base -0.50% -0.41% 1.05% 1.63% September 30, 2024 -200 -100 Base-rate 100 200 Net Interest Income $173,619 $174,007 $176,935 $178,535 $179,388 Change from Base -1.87% -1.65% 0.9
Slide 14: Strong Non-interest Income
Interchange income $3,294 Service Chg Dep $2,976 Gain (Loss)- Mortgage Sale $1,705 Equity Securities at Fair Value $- Gain (Loss)- Securities $(14) Mortgage loan servicing, net $7,761 Investment & insurance commissions $744 Bank owned life insurance $268 Other income $2,387 $ 1 1 .5 $ 1 0 .5 $ 1 5 .
Slide 15: Focus on Improved Efficiency
6 1 .3 % 5 9 .8 % 6 0 .4 % 5 9 .6 % 5 9 .9 % 6 0 .7 % 6 0 .3 % 6 0 .9 % 6 2 .2 % 6 0 .9 % 3 Q '2 2 4 Q '2 2 1 Q '2 3 2 Q '2 3 3 Q '2 3 4 Q '2 3 1 Q '2 4 2 Q '2 4 3 Q '2 4 4 Q '2 4 $ 3 2 .1 $ 3 1 .0 $ 3 2 .2 $ 3 2 .0 $ 3 1 .9 $ 3 2 .2 $ 3 3 .3 $ 3 2 .6 $- $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 Q 4
Slide 16: Outlook for 2024
Outlook for 2024 Outlook for 2024 *as of January, 2024 • IBCP forecast of mid-single digit (approximately 6%-8%) overall loan growth is based on increases in commercial loans and mortgage loans with installment loans remaining flat. Expect much of this growth to occur in the first three quarters of
Slide 17: Outlook for 2024
Outlook for 2024 Outlook for 2024 *as of January, 2024 • IBCP forecasts 2024 quarterly range of $11.5M to $13.0M with the total for the year down 0.5% to 1.0% from 2023 actual of $50.7M • Expect mortgage loan origination volumes in 2024 to increase by approximately 7%, a decline in mortgage loan ser
Slide 18: Outlook for 2025
Outlook for 2025 Outlook for 2025 *as of January, 2025 • IBCP forecast of mid-single digit (approximately 5%-6%) overall loan growth is based on increases in commercial loans (9%-10%) and mortgage loans (2%-3%) with installment loans declining (2%-3%). • This growth forecast also assumes a stable Mi
Slide 19: Outlook for 2025
Outlook for 2025 Outlook for 2025 *as of January, 2025 • Q1/Q2 quarterly 2025 forecasted range of $11.0M to $12.0M and Q3/Q4 forecast of $12.0M to $13M. Full year down 14.0% to 14.5% from 2024 actual of $56.4M • Expect mortgage loan origination volumes and net gain on sale to be similar to 2024. Ass
Slide 20: Strategic Initiatives
Strategic Initiatives • Outside Sales - Relationship banking focus thru consistent calling on prospects and COI’s. • Inside Service/Sales – high retention + high cross sales, collaboration of strategic partners. • Digital Marketing - Leverage data insights, target strategically, elevate brand image,
Slide 21: Question and Answer Session, Closing Remarks
Question and Answer Session Closing Remarks NASDAQ: IBCP Thank you for attending 21
Slide 22: Appendix: Additional Financial Data and Non-GAAP Reconciliations
Appendix Additional Financial Data and Non-GAAP Reconciliations 22
Slide 23: Quarterly Financial Performance
here Year Ended December 31, Quarter Ended, ($M except per share data) 2021 2022 2023 2024 12/31/23 3/31/24 6/30/24 9/30/24 12/31/24 Balance Sheet: Total Assets $4,705 $5,000 $5,264 $5,338 $5,264 $5,231 $5,278 $5,259 $5,338 Portfolio Loans $2,905 $3,465 $3,791 $4,039 $3,791 $3,840 $3,852 $3,942 $4,0
Slide 24: Historic Financial Performance
24 Historic Financial Performance Year Ended December 31, ($M except per share data) 2019 2020 2021 2022 2023 2024 5 Year CAGR Balance Sheet: Total Assets $3,565 $4,204 $4,705 $5,000 $5,264 $5,338 8.4% Portfolio Loans $2,725 $2,734 $2,905 $3,465 $3,791 $4,039 8.2% Deposits $3,037 $3,637 $4,117 $4,37
Slide 25: Sources of Liquidity
Sources of Liquidity 4Q 2024 Current On-balance sheet Excess reserves at the Fed $ 62.9 Unpledged AFS Securities $ 553.2 Total On-balance sheet $ 616.1 On balance sheet liquidity to total deposits 13% Available Sources of Liquidity Unused FHLB & FRB (including BTFP) $ 1,581.3 Borrow capacity on unpl
Slide 26: Granular Deposit Base
$1,934 $1,091 $459 $110 $243 $530 $287 $2,177 $1,621 $746 $110 Consumer Commercial Public Funds Brokered Insured Deposits Uninsured Deposits Granular Deposit Base • Average deposit account balance of approximately $21,905. • Average deposit balance excluding reciprocal deposit of $17,231. • Average
Slide 27: CRE - Office Metrics
41% 59% $6.7 $5.3 $22.1 $48.5 M a tu ri n g 2 0 2 5 M a tu ri n g 2 0 2 6 M a tu ri n g 2 0 2 7 M a tu ri n g 2 0 2 8 & A ft e r $18 $64 CRE – Office Metrics • 19.7% of portfolio is medical office buildings. • 78% of portfolio is in suburban geographies. • 80.5% of CRE – Office mature after 2026. •
Slide 28: Non-GAAP to GAAP Reconciliation
Non-GAAP to GAAP Reconciliation 28 Year Ended December 31, Quarter Ended December 31, September 30, June 30, March 31, December 31, 2024 2023 2022 2021 2024 2024 2024 2024 2023 (Dollars in thousands) Net interest income $166,248 $156,329 $149,561 $129,765 $42,851 $41,854 $41,346 $40,197 $40,111 Non-
Slide 29: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 29 2024 2023 2024 2023 Net Interest Margin, Fully Taxable Equivalent ("FTE") Net interest income 42,851$ 40,111$ 166,248$ 156,329$ Add: taxable equivalent adjustment 389 178 902 900 Net interest income - taxable equivalent 43,240$ 40,289$ 167,150$ 157,22
Slide 30: Reconciliation of Non-GAAP Financial Measures (continued)
Reconciliation of Non-GAAP Financial Measures (continued) 30 December 31, September 30, June 30, March 31, December 31, 2024 2023 2022 2021 2024 2024 2024 2024 2023 Common shareholders' equity 454,686$ 404,449$ 347,596$ 398,484$ 454,686$ 452,369$ 430,459$ 415,570$ 404,449$ Less: Goodwill 28,300 28,3