Slide 1: Earnings Call: Third Quarter 2024
Earnings Call: Third Quarter 2024 October 24, 2024 (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: 3Q'24 Overview
3Q'24 Overview • Total loans increased 9.3% 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 0.11%
Slide 5: Low-Cost Deposit Franchise Focused on Core Deposit Growth
$ 4 .3 $ 4 .3 $ 4 .4 $ 4 .5 $ 4 .5 $ 4 .6 $ 4 .6 $ 4 .6 $ 4 .6 $ 4 .6 0 .1 1 % 0 .3 3 % 0 .7 8 % 1 .2 6 % 1 .5 7 % 1 .8 0 % 2 .1 7 % 2 .1 9 % 2 .2 2 % 2 .2 8 % Q 2 '2 2 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 Total Deposits Cost Of Deposits Low-Cost Deposit F
Slide 6: Historic IBC Cost of Funds vs. the Federal Funds Rate
Historic IBC Cost of Funds (excluding sub debt) vs. the Federal Funds Rate (with Deposit Balances) D e p o s it B a la n c e s ( $ i n t h o u s a n d s ) 6 F e d e ra l F u n d s R a te Account Type Cycle Beta Sav & Int-bearing chking 25.0% Reciprocal 57.7% Time 6.8% Total int-bearing Dep (excl bro
Slide 7: Diversified Loan Portfolio Focused on High Quality Growth
Commercial 46% Mortgage 38% Installment 15% Held for Sale 0% $ 3 .3 $ 3 .4 $ 3 .4 $ 3 .5 $ 3 .6 $ 3 .7 $ 3 .8 $ 3 .8 $ 3 .9 $ 3 .9 4 .0 1 % 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 % Q 2 '2 2 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
Slide 8: Concentrations within $1.8B Commercial Loan Portfolio
8.37%, Commercial Industrial, $153 6.74%, Construction, $123 6.02%, Retail, $110 4.70%, Office, $86 2.66%, Multifamily, $49 1.96%, 1-4 Family, $36 1.41%, Land, Vacant Land and Development, $26 1.07%, Special Purpose, $19 9.41% 172 8.16% 149 7.35% 134 5.93% 1085.39% 98 5.37% 98 3.72% 68 3.57% 65 2.71
Slide 9: Asset Quality
$ 8 .6 $ 9 .5 $ 7 .9 $ 5 .1 $ 3 .7 $ 5 .2 $ 5 .2 $ 3 .7 $ 4 .5 $ 5 .1 $1.3 $1.9 $0.8 $0.2 $0.5 $0.4 $0.6 $1.1 $0.9 $0.8 $- $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 2018 2019 2020 2021 2022 Q3'23 Q4'23 1Q'24 2Q'24 3Q'24 Non-performing Loans 90+ Days PD ORE/ORA $4.4 $7.2 $13.2 $2.3 $3.1 $4.9 $3.3 $7.1 $5.3 $4.
Slide 10: Strong Capital Position
13.6 13.6 13.7 13.9 14.2 14.3 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 10.4 10.4 10.6 10.7 11.1 11.2 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 8.9 8.9 9.0 9.3 9.6 9.6 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 6.7 6.7 7.1 7.4 7.6 8.1 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 • Long-term capital Priorities: Capital retentio
Slide 11: Net Interest Margin/Income
$ 3 0 .3 $ 3 1 .4 $ 3 3 .8 $ 3 4 .3 $ 3 3 .0 $ 3 6 .1 $ 3 9 .9 $ 4 0 .6 $ 3 8 .4 $ 3 8 .4 $ 3 9 .4 $ 4 0 .1 $ 4 0 .2 $ 4 1 .3 $ 4 1 .9 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 3.31 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
Slide 12: Linked Quarter Analysis and 3Q'24 NIM Changes
2Q'24 3.40% Increase in loan yield 0.07% Loan Fee Accretion -0.05% Change in asset mix 0.02% Increase in funding costs -0.07% 3Q'24 3.37% 3Q'24 NIM Changes Linked Quarter Average Balances and FTE Rates ($ in thousands) Linked Quarter Analysis 12 3Q24 2Q24 Change Avg Bal Inc/Exp Yield Avg Bal Inc/Exp
Slide 13: Interest Rate Risk Management
September 30, 2024 -200 -100 Base-rate 100 200 Net Interest Income $173,619 $174,007 $176,935 $178,535 $179,338 Change from Base -1.87% -1.65% 0.90% 1.34% June 30, 2024 -200 -100 Base-rate 100 200 Net Interest Income $172,352 $172,324 $173,917 $174,255 $173,319 Change from Base -0.90% -0.92% 0.19% -
Slide 14: Strong Non-interest Income
Interchange income $4,146 Service Chg Dep $3,085 Gain (Loss)- Mortgage Sale $2,177 Equity Securities at Fair Value $(8) Gain (Loss)- Securities $(145) Mortgage loan servicing, net $(3,130) Investment & insurance commissions $882 Bank owned life insurance $197 Other income $2,304 $ 1 6 .9 $ 1 1 .5 $
Slide 15: Focus on Improved Efficiency
$ 3 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 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 Compensation and Benefits Loan and Collection Occupancy Data Processing FDIC Insurance Other F
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 $50.7M • Expect mortgage loan origination volumes in 2024 to increase by approximately 7%, a decline in mortgage loan ser
Slide 18: Strategic Initiatives
Strategic Initiatives • Outside Sales - Relationship banking focus thru consistent calling on prospects and COI’s. • Inside Service/Sales – high retention + high cross sales, collaboration of strategic partners. • Digital Marketing - Leverage data insights, target strategically, elevate brand image,
Slide 19: Question and Answer Session, Closing Remarks
Question and Answer Session Closing Remarks NASDAQ: IBCP Thank you for attending 19
Slide 20: Appendix: Additional Financial Data and Non-GAAP Reconciliations
Appendix Additional Financial Data and Non-GAAP Reconciliations 20
Slide 21: Historical Financial Data
Historical Financial Data 21 here Year Ended December 31, Quarter Ended, ($M except per share data) 2020 2021 2022 2023 9/30/23 12/31/23 3/31/24 6/30/24 9/30/24 Balance Sheet: Total Assets $4,204 $4,705 $5,000 $5,264 $5,200 $5,264 $5,231 $5,278 $5,259 Portfolio Loans $2,734 $2,905 $3,465 $3,791 $3,7
Slide 22: Annual Financial Data 2018-2023
Year Ended December 31, ($M except per share data) 2018 2019 2020 2021 2022 2023 5 Year CAGR Balance Sheet: Total Assets $3,353 $3,565 $4,204 $4,705 $5,000 $5,264 9.4% Portfolio Loans $2,583 $2,725 $2,734 $2,905 $3,465 $3,791 8.0% Deposits $2,913 $3,037 $3,637 $4,117 $4,379 $4,623 9.7% Tangible Comm
Slide 23: Sources of Liquidity
Sources of Liquidity 3Q 2024 Current On-balance sheet Excess reserves at the Fed $ 60.1 Unpledged AFS Securities $ 576.5 Total On-balance sheet $ 636.6 On balance sheet liquidity to total deposits 14% Available Sources of Liquidity Unused FHLB & FRB (including BTFP) $ 1,583.0 Borrow capacity on unpl
Slide 24: Granular Deposit Base
$1,900 $1,148 $482 $40 $224 $544 $289 $2,124 $1,692 $771 $40 Consumer Commercial Public Funds Brokered Insured Deposits Uninsured Deposits $ 3 ,5 8 0 $ 3 ,5 7 0 $ 3 ,5 7 5 $ 3 ,6 6 1 $ 3 ,6 0 5 $ 3 ,6 3 6 $ 3 ,5 7 0 $965 $918 $1,011 $962 $977 $978 $1,057 $4,545 $4,488 $4,586 $4,623 $4,582 $4,614 $4,
Slide 25: CRE - Office Metrics
21% 79% $3.7 $4.0 $9.0 $69.1 M a tu ri n g 2 0 2 4 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 & A ft e r $19 $66 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. • A
Slide 26: Non-GAAP to GAAP Reconciliation
Non-GAAP to GAAP Reconciliation 26 September 30, June 30, March 31, December 31, September 30, 2023 2022 2021 2020 2024 2024 2024 2023 2023 Net interest income $156,329 $149,561 $129,765 $123,612 $41,854 $41,346 $40,197 $40,111 $39,427 Non-interest income 50,676 61,909 76,643 80,745 9,508 15,172 12,
Slide 27: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 27 2024 2023 2024 2023 Net Interest Margin, Fully Taxable Equivalent ("FTE") Net interest income 41,854$ 39,427$ 123,397$ 116,218$ Add: taxable equivalent adjustment 158 202 513 722 Net interest income - taxable equivalent 42,012$ 39,629$ 123,910$ 116,94
Slide 28: Reconciliation of Non-GAAP Financial Measures (continued)
Reconciliation of Non-GAAP Financial Measures (continued) 28 Tangible Common Equity Ratio September 30, June 30, March 31, December 31, September 30, 2023 2022 2021 2020 2024 2024 2024 2023 2023 Common shareholders' equity 404,449$ 347,596$ 398,484$ 389,522$ 452,369$ 430,459$ 415,570$ 404,449$ 374,9