Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q2 2024 Earnings Presentation
28 slides from Independent Bank's earnings presentation, Jul 25, 2024
Slide 1: Earnings Call: Second Quarter 2024
Earnings Call: Second Quarter 2024 July 25, 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: 2Q'24 Overview
2Q’24 Overview • Total loans increased 1.2% annualized while maintaining conservative 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. 10%
Slide 5: Low-Cost Deposit Franchise Focused on Core Deposit Growth
Non-interest Bearing 23% Savings and Interest- bearing Checking 42% Reciprocal 20% Time 13% Brokered 3% Low-Cost Deposit Franchise Focused on Core Deposit Growth • Substantial core funding – $3.90 billion of non-maturity deposit accounts (84.6% of total deposits). • Core deposit increase of $53.3 mi
Slide 6: Historic Cost of Funds vs. Federal Funds Rate
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 % 0 500,000 1,000,000 1,500,000
Slide 7: Diversified Loan Portfolio Focused on High Quality Growth
Commercial 45% Mortgage 39% Installment 16% Held for Sale 0% $ 3 .0 $ 3 .3 $ 3 .4 $ 3 .4 $ 3 .5 $ 3 .6 $ 3 .7 $ 3 .8 $ 3 .8 $ 3 .9 3 .8 2 % 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 % Q 1 '2 2 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
Slide 8: Concentrations within Commercial Loan Portfolio
10% $173 8% $140 6% $106 5% $92 8% $132 5% $90 3% $51 3% $58 4% $66 $42 $45 $36 $44 $43 $71 $1,188MM Manufacturing Construction Health Care and Social Assistance Hotel and Accomodations Retail Real Estate Rental and Leasing Transportation Other Services (except Public Administration) Wholesale Profe
Slide 9: Asset Quality: Past Dues and Non-performing Loans
$4.8 $4.4 $7.2 $13.2 $2.3 $3.1 $4.4 $4.9 $3.3 $7.1 $5.3 0 .2 % 0 .2 % 0 .3 % 0 .5 % 0 .1 % 0 .1 % 0 .1 % 0 .1 % 0 .1 % 0 .1 % 0 .1 % 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% $- $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 2017 2018 2019 2020 2021 2022 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 30-89 Days PD 30-89 Days P
Slide 10: Strong Capital Position
13.8 13.6 13.6 13.7 13.9 14.2 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 10.6 10.4 10.4 10.6 10.7 11.1 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 8.9 8.9 8.9 9.0 9.3 9.6 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 6.6 6.7 6.7 7.1 7.4 7.6 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 • Long-term capital Priorities: Capital retentio
Slide 11: Net Interest Margin/Income
$ 3 1 .0 $ 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 Q4'20 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 3.36 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
Slide 12: Net Interest Margin Change and Average Balances
1Q'24 3.30% Change in earning asset mix & increase in loan yield 0.06% Loan Fee Accretion 0.05% Change in funding mix 0.05% Increase in funding costs -0.06% 2Q'24 3.40% 2Q24 1Q24 Change Avg Bal Inc/Exp Yield Avg Bal Inc/Exp Yield Avg Bal Inc/Exp Yield Cash $83,293 $1,134 5.48% $84,182 $1,143 5.46% (
Slide 13: Interest Rate Risk Management
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% -0.34% March 31, 2024 -200 -100 Base-rate 100 200 Net Interest Income $172,500 $172,700 $174,000 $173,300 $171,500 Change from Base -0.86% -0.75% -0.40% -1.
Slide 14: Strong Non-interest Income
Interchange income $3,401 Service Chg Dep $2,937 Gain (Loss)- Mortgage Sale $1,333 Equity Securities at Fair Value $2,693 Gain (Loss)- Securities $- Mortgage loan servicing, net $2,091 Investment & insurance commissions $838 Bank owned life insurance $188 Other income $1,691 $ 1 4 .6 $ 1 6 .9 $ 1 1
Slide 15: Focus on Improved Efficiency
$ 3 2 .4 $ 3 2 .4 $ 3 2 .1 $ 3 1 .0 $ 3 2 .2 $ 3 2 .0 $ 3 1 .9 $ 3 2 .2 $ 3 3 .3 $- $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 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 Compensation and Benefits Loan and Collection Occupancy Data Processing FDIC Insurance Other 6
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 $50.7M • Expect mortgage loan origination volumes in 2024 to increase by approximately 7%, a decline in mortgage loan ser
Slide 18: Strategic Initiatives
Strategic Initiatives • Outside Sales - Relationship banking focus thru consistent calling on prospects and COI’s. • Inside Service/Sales – high retention + high cross sales, collaboration of strategic partners. • Digital Marketing - Leverage data insights, target strategically, elevate brand image,
Slide 19: Question and Answer Session, Closing Remarks
Question and Answer Session Closing Remarks NASDAQ: IBCP Thank you for attending 19
Slide 20: Appendix: Additional Financial Data and Non-GAAP Reconciliations
Appendix Additional Financial Data and Non-GAAP Reconciliations 20
Slide 21: Quarterly Financial Summary
here Year Ended December 31, Quarter Ended, ($M except per share data) 2020 2021 2022 2023 6/30/23 9/30/23 12/31/23 3/31/24 6/30/24 Balance Sheet: Total Assets $4,204 $4,705 $5,000 $5,264 $5,136 $5,200 $5,264 $5,231 $5,278 Portfolio Loans $2,734 $2,905 $3,465 $3,791 $3,631 $3,741 $3,791 $3,840 $3,85
Slide 22: Annual Financial Summary and 5 Year CAGR
Year Ended December 31, ($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 2Q 2024 Current On-balance sheet Excess reserves at the Fed $ 159.4 Unpledged AFS Securities $ 579.5 Total On-balance sheet $ 738.9 On balance sheet liquidity to total deposits 16% Available Sources of Liquidity Unused FHLB & FRB (including BTFP) $ 1,439.1 Borrow capacity on unp
Slide 24: Granular Deposit Base
$1,924 $1,127 $458 $127 $222 $549 $207 $2,146 $1,676 $665 $127 Consumer Commercial Public Funds Brokered Insured Deposits Uninsured Deposits $ 3 ,4 0 3 $ 3 ,5 8 0 $ 3 ,5 7 0 $ 3 ,5 7 5 $ 3 ,6 6 1 $ 3 ,6 0 5 $ 3 ,6 3 6 $976 $965 $918 $1,011 $962 $977 $978 $4,379 $4,545 $4,488 $4,586 $4,623 $4,582 $4,
Slide 25: CRE - Office Metrics
21% 79% $4.6 $4.1 $9.1 $66.6 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 • 17.0% of portfolio is medical office buildings. • 78% of portfolio is in suburban geographies. • 78.9% of CRE – Office mature after 2026. • A
Slide 26: Non-GAAP to GAAP Reconciliation
Non-GAAP to GAAP Reconciliation 26 June 30, March 31, December 31, September 30, June 30, 2023 2022 2021 2020 2024 2024 2023 2023 2023 Net interest income $156,329 $149,561 $129,765 $123,612 $41,346 $40,197 $40,111 $39,427 $38,350 Non-interest income 50,676 61,909 76,643 80,745 15,172 12,561 9,097 1
Slide 27: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 27 Reconciliation of Non-GAAP Financial Measures 2024 2023 2024 2023 Net Interest Margin, Fully Taxable Equivalent ("FTE") Net interest income 41,346$ 38,350$ 81,543$ 76,791$ Add: taxable equivalent adjustment 175 232 355 520 Net interest income - taxabl
Slide 28: Reconciliation of Non-GAAP Financial Measures (continued)
Reconciliation of Non-GAAP Financial Measures (continued) 28 Tangible Common Equity Ratio June 30, March 31, December 31, September 30, June 30, 2023 2022 2021 2020 2024 2024 2023 2023 2023 Common shareholders' equity 404,449$ 347,596$ 398,484$ 389,522$ 430,459$ 415,570$ 404,449$ 374,998$ 375,162$ L