Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q3 2014 Earnings Presentation
22 slides from Independent Bank's earnings presentation, Oct 27, 2014
Slide 1: Independent Bank Corporation Earnings Conference Call 3rd Quarter 2014
INDEPENDENT BANK CORPORATIONEARNINGS CONFERENCE CALL3RD QUARTER - 2014 October 27, 2014
Slide 2: Cautionary Note Regarding Forward-Looking Statements
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 Indepen
Slide 3: Agenda
Agenda3rd Quarter 2014 Earnings Conference Call 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
Slide 4: Financial Summary
Financial Summary 3Q’14 2Q’14 1Q’14 4Q’13 3Q’13 Diluted EPS(1) $ 0.21 $ 0.26 $ 0.13 $ 0.21 $ 0.17 Net income 4,929 6,052 3,138 4,809 3,505 NI available to common 4,929 6,052 3,138 4,809 10,310 Total assets 2,239,857 2,249,864 2,259,639 2,209,943 2,183,504 Total portfolio loans 1,398,784 1,377,494 1,
Slide 5: Quarterly Financial Highlights
Quarterly Financial Highlights Income Statement Eleventh consecutive profitable quarter.Net income of $4.9 million, or $0.21 per diluted share.Improved asset quality metrics led to $0.6 million credit loan loss provision.Quarterly non-interest expenses reduced by $3.9 million, or 14.8% year-over-yea
Slide 6: Core Banking Markets
Core Banking Markets Significant market presence and opportunity to gain market share in attractive Michigan markets. Michigan’s unemployment rate was 7.4% in August 2014 (1.6% lower than August 2013).Michigan payroll jobs totaled 4.143 million in August 2014 (31K higher than one year earlier).S&P/C
Slide 7: Economic Snapshot – Central West Michigan
Economic Snapshot – Central West Michigan 7 Note: Central West Michigan is made up of the following metropolitan statistical areas: Ann Arbor, Grand Rapids-Wyoming, Kalamazoo-Portage and Lansing-East Lansing.Source of Data: Comerica Regional Economic Update (8/21/14).
Slide 8: Economic Snapshot – Detroit MSA
Economic Snapshot – Detroit MSA 8 Note: Detroit MSA is the Detroit-Warren-Livonia, Michigan metropolitan statistical area.Source of Data: Comerica Regional Economic Update (8/21/14).
Slide 9: Statewide Low Cost Deposit Franchise
Statewide Low Cost Deposit FranchiseFocused on Core Deposit Growth $1.90 billion in total deposits at 9/30/14.Substantially all core funding.$1.50 billion of transaction accounts (79.2% of total deposits).115 deposit relationships over $1 million (representing total deposits of $307 million).Cost of
Slide 10: Diversified Loan Portfolio
Diversified Loan PortfolioFocused on High Quality Growth Two consecutive quarters of net loan growth.$1.42 billion in total loans at 9/30/14 (including $22.8 million of loans held for sale).3Q ‘14 lending results include:Commercial loan growth of $17.8 million, or 10.5% annualized. Line usage at 47.
Slide 11: Net Interest Margin/Income
Net Interest Margin/Income Interest 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 decreased slightly in 3Q’14 vs. 2Q’14 as a 13 BP decrease in the N
Slide 12: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest MarginAnalysis of Linked Quarter Decline Summary3Q’14 net interest income of $18.183 million down $355K from 2Q’14. Most of the linked quarter decline due to $328K decline in interest and fees on loans. Approximately $100K of this decline was due to lower net rec
Slide 13: Non-interest Income
Non-interest Income YTD Non-interest Income Breakout Highlights Diverse sources of non-interest income which totaled $10.5 million in 3Q’14.2014 total YTD non-interest income represents approximately 34.9% of total revenue (net interest income and non-interest income).New debit card brand agreement
Slide 14: Non-interest Expense
Non-interest Expense Non-interest Expense ($ in Millions) Highlights Internal group charged with improving our efficiency ratio to 65% over time through both reduction in non-interest expenses and increased revenues – an incentive compensation target is tied to the efficiency ratio goals.Target for
Slide 15: Investment Securities Portfolio
Investment Securities Portfolio High quality, liquid, diverse portfolio with short duration77% of the portfolio is AAA rated (or backed by the U.S. Government)2.0 year estimated average duration with a weighted average yield of 1.50%Approximately 47% of the portfolio is variable rate Total Investmen
Slide 16: Credit Quality Summary
Credit Quality Summary Non-performing Loans ($ in Millions) 30-89 Days Delinquent ($ in Millions) ORE / ORA ($ in Millions) Non-performing Assets ($ in Millions) Note: Non-performing loans and non-performing assets exclude troubled debt restructurings that are performing. 16
Slide 17: Credit Cost Summary
Credit Cost Summary 17 Provision for Loan Losses Loan Net Charge-Offs Allowance for Loan Losses Note: Dollars all in millions
Slide 18: Classified Assets and New Default Trends
Classified Assets and New Default Trends Total Classified Assets ($ in Millions) Commercial Loan New Defaults ($ in Millions) Total Loan New Defaults ($ in Millions) Retail Loan New Defaults ($ in Millions) 18
Slide 19: Troubled Debt Restructurings (TDRs)
Troubled Debt Restructurings (TDRs)Over 89% of TDRs are Current Working with client base to maximize sustainable performanceThe specific reserves allocated to TDRs totaled $12.4 million at September 30, 2014A majority of our TDRs are performing under their modified terms but remain in TDR status for
Slide 20: Management 2014 Outlook
Management 2014 Outlook(1) Category Outlook Lending Modest growthGoal of low single digit % overall loan growth, primarily supported by mid single digit % growth in commercial loans and low single digit % growth in consumer loans. 3Q’14 Update: Commercial and consumer loan growth of 10.5% and 13.3%
Slide 21: Strategic Initiatives
Strategic Initiatives Balance SheetGenerate quality loan growth with continued focus on commercial and consumer installment lending as well as salable mortgage loans.Remain asset sensitive and positioned to benefit from higher interest rates (short duration investment portfolio, large variable rate
Slide 22: Question and Answer Session, Closing Remarks
Independent Bank Corporation3rd Quarter 2014 Earnings Conference Call Question and Answer SessionClosing RemarksThank you for attending !NASDAQ: IBCPCelebrating our 150th year in 2014 ! 22