Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Debt Investor Presentation (May 2020)
29 slides from Independent Bank's debt investor presentation, May 27, 2020
Slide 1: Fixed Income Investor Presentation First Quarter 2020
Fixed Income Investor PresentationFirst Quarter 2020
Slide 2: Cautionary Note Regarding Forward-looking Statements
Cautionary Note Regarding Forward-looking Statements 2 Statements in this presentation that are not statements of historical fact, including statements that include terms such as ‘‘will,’’ ‘‘may,’’ ‘‘should,’’ ‘‘believe,’’ ‘‘expect,’’ ‘‘forecast,’’ ‘‘anticipate,’’ ‘‘estimate,’’ ‘‘project,’’ ‘‘intend
Slide 3: Preliminary Term Sheet
Preliminary Term Sheet 3 (1) A rating is not a recommendation to buy, sell, or hold securities. Ratings may be subject to revision or withdrawal at any time by the assigning rating organization. Each rating agency has its own methodology for assigning ratings and, accordingly, each rating should be
Slide 4: About Independent
About Independent
Slide 5: Our Management Team
Our Management Team 5 EVP and Chief Risk Officer since 2012Joined the Company in April 2007 as EVP – Commercial Previous experience with Comerica for 25 years EVP – Commercial Lending since 2012Joined the Company in May 2009 as SVP – Credit AdministrationPrevious experience with Comerica for 25 year
Slide 6: Our Franchise
Our Franchise 6 Source: S&P Global Market Intelligence, FactSet and Company documents.Note: Map does not include loan production offices in Columbus, Fairlawn and Toledo, Ohio. Headquartered in Grand Rapids, Michigan68 Branches and 12 LPOs (including 3 in OH)Over 900 FTEs#1 ranked in customer satisf
Slide 7: Key Investment Highlights
Proven & sustainable business model spanning 150+ yearsConservative operating philosophy Consistent profitability with focus on expense controlStrong core earnings generation with ROEs exceeding peerHigh quality balance sheet & strong capital position (10.8% CET1 / 13.4% Total RBC) Low cost, durable
Slide 8: Michigan's Leading Community Bank
Michigan’s Leading Community Bank 8 Source: S&P Global Market Intelligence and Company documents. Map does not include loan production offices. Deposit market share data based on FDIC Summary of Deposits Annual Survey as of June 30, 2019.Note: Loan and deposit balances exclude the loans and deposits
Slide 9: Strategic Initiatives
Strategic Initiatives 9 Improve net interest income via balanced loan growth, disciplined risk adjusted loan pricing and active management of deposit pricing. Innovative and targeted customer acquisition, retention and cross sales strategies leveraging data analytics, inside sales staff, and intra-c
Slide 10: COVID-19 Response: Supporting Employees, Clients & Communities
COVID-19 ResponseSupporting Employees, Clients & Communities 10 Employees Clients & Communities Work from home. Providing the technology, culture, and operational infrastructure for the workforce to work remotely as neededGranting additional sick and vacation timeClosing our branch lobbies, transact
Slide 11: Financial Performance
Financial Performance
Slide 12: Track Record of Consistent Growth & Profitability
Track Record of Consistent Growth & Profitability 12 2019 net income and diluted EPS increased 16.6% and 19.0%, respectively, compared to 2018.2019 dividends increased 20% over 2018.Continued improvements in ROAA and ROAE.2019 mortgage loan originations topped $1 billion for only the second time in
Slide 13: 1Q 2020 Financial Highlights
1Q 2020 Financial Highlights Income StatementPre-tax, pre-provision income was $12.5 million in Q1’20 compared to $12.2 million in Q1’19 ($18.4 million vs $14.4 million excluding the MSR change for the same respective periods).Net income of $4.8 million, or $0.21 per diluted share vs $9.4 million, o
Slide 14: Strong Non-interest Income
Strong Non-interest Income 14 Diverse sources of non-interest income – representing 26.8% of revenue Continued strong performance in service charges on deposits and interchangeMortgage banking: $8.8 million in net gains on mortgage loans in 1Q’20 vs $3.6 million in the year ago quarter$311.1 million
Slide 15: Focus on Operating Expenses
Focus on Operating Expenses 15 Source: Company documents. Non-interest Expense ($M) Highlights Efficiency Ratio (4 quarter rolling avg) Continued focus on expense control and driving positive operating leverage. MSR Change in value due to price of negative $5.9 million reduced mortgage loan servicin
Slide 16: Stable Net Interest Margin Driven by Low Cost Deposit Base
HighlightsInterest rate sensitivity profile of the loan and securities portfolios, in combination with a low cost core deposit base, positions us as slightly asset sensitive.Net interest income decreased $0.5 million, or 1.7%, in 1Q’20 vs. 4Q’19 due primarily to a seven basis point decline in the ne
Slide 17: Low Cost Deposit Franchise Focused on Core Deposit Growth
Low Cost Deposit Franchise Focused on Core Deposit Growth 17 Substantially core funding – $2.6 billion of non-maturity deposit accounts (83.3% of total deposits)Total deposits increased $81.8 million, or 2.9%, since 12/31/19 (excluding brokered) with non-interest bearing up $22.9 million, interest b
Slide 18: Diversified Loan Portfolio Focused on High Quality Growth Lending
Diversified Loan PortfolioFocused on High Quality Growth 18 Lending Highlights Note: Portfolio loans exclude loans HFS. Figures may not sum due to rounding. Concentration ratios as defined by S&P Global. Portfolio loan changes in 1Q’20Commercial – increased $14.9 million or 5.1% annualizedMortgage –
Slide 19: Diversified and Granular Loan Portfolio
Diversified and Granular Loan Portfolio 19 Percentage concentrations are based on the entire commercial portfolio of $1,182 million. $483M $698M $698 million, or 59% of the commercial loan portfolio is C&I or owner occupied, while $483 million, or 41% is investment real estate. Loans by Industry as
Slide 20: Supporting Our Customers and Communities: COVID-19 Programs
Supporting Our Customers and CommunitiesCOVID-19 Programs as of April 29, 2020 20 Paycheck Protection Program Loan Forbearances $ in thousands. The tables to the left reflect our status in each of these programs through April 29thLoan Forbearances:Forbearance period three months for mortgage and ins
Slide 21: Strong Credit Quality
Strong Credit QualityHighly Disciplined Credit Risk Management 21 Source: S&P Global Market Intelligence and Company documents.Note: Non-performing loans exclude troubled debt restructurings that are performing. Portfolio loans exclude loans HFS. Non-performing Loans ($M) Loan Net Charge-Offs/ Avg.
Slide 22: Significant Reserves: Incurred Loss Model vs CECL
Significant ReservesIncurred Loss Model vs CECL 22 Incurred vs. CECL ($ in Thousands) 3/31 “As If” ACL and percent of loans calculated at midpoint of incremental range with additional $9.0 million at Day 1 and $11.0 million at Q1’20. % Loans 0.96% 1.20% 1.60%(1) “As-if CECL” Illustrative Only Incurr
Slide 23: Ample Sources of Additional Liquidity
Ample Sources of Additional Liquidity Aided by Strong Risk Management 23 Liquidity Sources In addition to deposits, Independent has approximately $1.5 billion of readily available funding sources to meet customer needs through the following sources:Fed fundsFHLB funding Brokered CDsHighly liquid sec
Slide 24: Maintain Adequate Capital Ratios
Maintain Adequate Capital RatiosEfficiently Deployed Capital and Commitment to Capital Retention 24 Source: S&P Global Market Intelligence and Company documents.Note: Company closed acquisition of TCSB Bancorp, Inc. in Q2 ‘18.(1) Pro forma for $45.0 million subordinated debt offering. Assumes 0.0% r
Slide 25: Be Independent
Be Independent >”
Slide 26: Historical Financial Data
Historical Financial Data 26 Excluding the impact of the $5.96 million remeasurement of net deferred tax assets in 2017, net income is $26.440 million, ROA is 1.00%; and ROE is 10.10%.
Slide 27: Markets of Operation
Markets of Operation 27 100% of deposits in Michigan
Slide 28: Kroll Credit Ratings Summary
Kroll Credit Ratings Summary 28 IBCP’s Kroll ratings reflect an overall strong credit profile Source: Kroll Bond Rating AgencyKroll Ratings Scale: https://www.krollbondratings.com/understanding-ratings/methodologies/rating-scales
Slide 29: Historical Interest Coverage
Historical Interest Coverage 29 Source: S&P Global Market Intelligence and Company documents.Note: Assumes $10.0 million of gross proceeds are downstreamed to Independent Bank for illustrative purposes only. Excludes impact of offering expenses. Assumes a $45.0 million transaction with an initial fi
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