Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q2 2014 Earnings Presentation
19 slides from Independent Bank's earnings presentation, Jul 28, 2014
Slide 1: Independent Bank Corporation Earnings Conference Call 2nd Quarter 2014
INDEPENDENT BANK CORPORATION EARNINGS CONFERENCE CALL 2ND QUARTER - 2014 July 28, 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
Agenda 2d Quarter 2014 Earnings Conference Call = Formal Remarks — William B. (Brad) Kessel, President and Chief Executive Officer — Robert N. Shuster, Executive Vice President and Chief Financial Officer = Question and Answer session = Closing Remarks Note: This presentation is available at www.Ind
Slide 4: Financial Summary
Financial Summary re ee 30'13 reer Diluted EPS) 0.26 0.13 0.21 0.17 2.64 Net income 6,052 3,138 4,809 3,505 63,388 Nlavailableto common 6,052 3,138 4,809 10,310 62,231 Total assets 2,249,864 2,259,639 2,209,943 2,183,504 2,134,674 Total portfolio loans 1,377,494 1,360,512 1,374,570 1,379,983 1,386,0
Slide 5: Quarterly Financial Highlights
Quarterly Financial Highlights Income Statement Tenth consecutive profitable quarter Net income of $6.1 million, or $0.26 per diluted share Netinterest income up slightly ona linked quarter basis Quarterly non-interest expenses reduced by $5.2 million, or 18.7% year-over- year Focus on long-term pro
Slide 6: Core Banking Markets
Core Banking Markets Significant market presence and opportunity to gain marketshare in attractive Michigan markets = Michigan’s unemployment rate was7.5% in June 2014 (1.4% lowerthan June 2013) = Michigan payrolljobs totaled 4.141 million in June 2014 (34K higher than one yearearlier) = $&P/Case-Sh
Slide 7: Statewide Low Cost Deposit Franchise
Statewide Low Cost Deposit Franchise Focused on Core Deposit Growth Deposit Composition - 6/30/14 Deposit Highlights Brokered Time $1.91 billion in total deposits at 6/30/14 — Substantially all core funding er — $1.50 billion of transaction accounts (79% of total deposits) wpe get — Cost of deposits
Slide 8: Diversified Loan Portfolio
Diversified Loan Portfolio Focused on High Quality Growth Loan Composition - 6/30/14 Lending Highlights $1.40 billion in total loans at 6/30/14 (including $23.2 million of loans held for sale) Held for Sale 4 Payment Plan Recsivables oe 2Q 14 lending results include: — Commercialloan growth of $12.2
Slide 9: 2014 Overview
2014 Overview = Commercial Lending = Commercial loan balances up $12.2 million in 20’14 and $19.0 million YTD’14 (6.0% annualized) —vs. mid-single digit target growth rate — Newcommitments of $94 million 1H’14 with $73 million in funded newloans — New business by segment: C&l- $55 million; Income Pr
Slide 10: Net Interest Margin/Income
Net Interest Margin/Income # Net Interest Margin (TE) (%) Highlights 430% 9 4.25% 420% 410% 4.0% 4.00% 3.90% 3.79% 2.80% 3.70% 2.60% 2.50% 2.40% ais" ais ast.” aets arta ate Net Interest Income ($ in Millions) $25.0 si96 S195 $195 S194 $200 sigs 18s sis.0 si0.0 Qri3 "aziz" as13. gets atte gate Note:
Slide 11: Non-interest Income
Interchange ‘Siou 2% Service Charges. ‘on Deposits, $.6u "5% Non-interest Income 11 YTD Non-interest Income Breakout Saleof Securities ‘soa % Mortgage Servicing Non-interest Income Trends sis0 $16.0 sis0 siz0 si0.0 seo seo sho $20 soo Q312 QF12 QI13" 213 Qs13" aes ITs Q214 se on-interest income Note
Slide 12: Non-interest Expense
Non-interest Expense ” Highlights Non-interest Expense ($ in Millions) = Internal group chargedwith improving our efficiency ratio to 65% overtime through both $350 88% reduction in non-interest expenses and increased revenues — an incentive 86% compensation targetis tied to the efficiency s200 f ra
Slide 13: Investment Securities Portfolio
Investment Securities Portfolio Investment Portfolio by Type (06/30/14) Highlights Corporate % = High quality, liquid, diverse portfolio with short duration ‘Agency Mortgage & SoA su Private Label — 77% ofthe portfolio is AAA rated StudentLoan ABS) Muni 40% — 2.0yearestimated average duration witha
Slide 14: Credit Quality Summary
14 Credit Quality Summary Non-performing Loans ($ in Millions) $120 98110 60x s100 50% 37% 38% $80 40% Loree $60 2p 20% D2 20x s40 Bay 158 1K yay HK | box eS $20 $20~ eg $20— 517 |, oy 0 0.0% 20092010 2011 Qe12.Q412 QI12 GzI2 QFIF GeI2 QIT4 GzI4 sm Non pertorming Loans (NFL) NPLs /Total Loans 30-89
Slide 15: Credit Cost Summary
15 Credit Cost Summary Provision for Loan Losses Loan Net Charge-Offs Allowance for Loan Losses $120 sox $90 35% $90 40% 3% 37% 43% 33K 36x $20 $80 $100 3.0% ae 40% $70 $70 aux 3.0% $30 25% 30% $60 $60 Dag P 23K oe 23x $50 2.0% $50 au 7 2.0% 2.0% ey 1% s40 ix 40 1x 10x $30 $30 $20 10% = 10x we s20 $
Slide 16: Classified Assets and New Default Trends
16 Classified Assets and New Default Trends Total Classified Assets ($ in Millions) $250 9 73% 70% ls208 osx s200 a Classified / TCE + ALL sik mm classified ($M) $156 g151 456 $122 30% Cina $150 Ait $92. 25% 22% 20x 20% 20% $50 so 2009 2010 2011 Q212031204720113 Q21302130873Q114 0214 Total Loan New
Slide 17: Troubled Debt Restructurings (TDRs)
s10 $160 si40 $120 $100 seo $60 s40 s20 so Troubled Debt Restructurings (TDRs) aly/ Over 88% of TDRs are Current TDR Highlights TDRs ($ in Millions) $155°¢i33 gras $146 si3e 144 $143 80% $130 sia $122 $118 20092010 2011 Q1'12 Q242 0312 #12 Q1'13 213 O33 O13 aF14 O24 Performing Nonperforming Current
Slide 18: Management 2014 Outlook
Management 2014 Outlook?) Category Lending Netinterest income Provision for loan losses Non-interest income Non-interest expense Income taxes (1) Outlook as of 7/27/14 Outlook Modest growth Goal of low single digit % overall loan growth, primarily supported by mid single digit % growth in commercial
Slide 19: Independent Bank Corporation
Independent Bank Corporation 2d Quarter 2014 Earnings Conference Call Question and Answer Session Closing Remarks Thank you for attending ! NASDAQ: IBCP Celebrating our 150" year in 2014! a9