Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q3 2017 Earnings Presentation
23 slides from Independent Bank's earnings presentation, Oct 26, 2017
Slide 1: Third Quarter 2017 Earnings Conference
Earnings CONFERENCE CARRCE (October 3"? Quarter 2017 Proudly serving our customers since
Slide 2: Cautionary Note Regarding Forward-Looking Statements
2 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 Indep
Slide 3: Agenda
3 Agenda 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.com in the Investor Relations area und
Slide 4: Quarterly Financial Summary
4 Quarterly Financial Summary 3Q’17 2Q’17 1Q’17 4Q’16 3Q’16 Diluted EPS $ 0.32 $ 0.27 $ 0.28 $ 0.27 $ 0.30 Income before taxes $ 10,018 $ 8,594 $ 8,595 $ 8,443 $ 9,352 Net income $ 6,859 $ 5,931 $ 5,974 $ 5,855 $ 6,373 Return on average assets 1.01% 0.92% 0.95% 0.91% 1.02% Return on average equity 1
Slide 5: 3Q 2017 Financial Highlights
5 3Q 2017 Financial Highlights Income StatementNet income of $6.9 million, or $0.32 per diluted share. FV decline in MSRs due to price of $0.6 million ($0.4 million after tax, or $0.02 per diluted share). Net interest income of $22.9 million, up $2.9 million, or 14.6%, from the year ago quarter.$0.6
Slide 6: YTD Financial Summary
6 YTD Financial Summary 9ME 9/30/17 9ME 9/30/16 9ME 9/30/15 9ME 9/30/14 Net interest income $ 65,870 $ 59,391 $ 55,633 $ 55,199 Income before taxes $ 27,207 $ 24,458 $ 21,129 $ 19,778 Net income $ 18,764 $ 16,911 $ 14,447 $ 14,119 Diluted EPS $ 0.87 $ 0.78 $ 0.62 $ 0.60 Return on average assets, ann
Slide 7: Our Michigan Markets
7 Our Michigan Markets U.S. Branches: Current Ownership (63) U.S. LPO’s: Current Ownership (12)(Columbus and Fairlawn, Ohio Not Shown) Since 2012, substantial changes have been implemented to streamline and optimize our branch delivery network.Significant market presence and opportunity to gain mark
Slide 8: Our Markets – Regional
Our Markets – Regional Region Cities Branches 09/30/17Portfolio Loans(1) % ofLoans(1) 09/30/17Deposits(3) % of Deposits(3) 09/30/16 Portfolio Loans(2) 09/30/16 Deposits(3) East / “Thumb” Bay City / Saginaw 23 $ 365 20% $ 759 35% $ 318 $ 735 West Grand Rapids / Ionia 22 647 36% 712 33% 547 689 Centra
Slide 9: Low Cost Deposit Franchise Focused on Core Deposit Growth
9 Low Cost Deposit Franchise Focused on Core Deposit Growth Deposit Highlights$2.34 billion in total deposits at 09/30/17.Substantially all core funding.$1.81 billion of transaction accounts (77.1% of total deposits).Total deposits increased $49.2 million, or 2.2%, since 09/30/16 (excluding $87.6 mi
Slide 10: Diversified Loan Portfolio Focused on High Quality Growth
Diversified Loan PortfolioFocused on High Quality Growth Lending Highlights14 consecutive quarters of net loan growth.$1.985 billion in total loans at 09/30/17 (including $47.6 million of loans held for sale).3Q 2017 lending results include:Commercial loan net growth of $8.5 million, or 4.1% annuali
Slide 11: Strong Capital Position Focused on Shareholder Return
11 Strong Capital PositionFocused on Shareholder Return HighlightsPrudent capital management. Target TCE ratio – 9.50% to 10.50% near-term and 8.50% to 9.50% longer-term. Priorities are: (A) capital retention to support (1) organic growth and (2) acquisitions; and (B) return of capital through (1) s
Slide 12: Net Interest Margin/Income
12 Net Interest Margin/Income HighlightsInterest rate sensitivity profile of the loan and securities portfolios, in combination with a low cost core deposit base, positions us to generally benefit from a rising interest rate environment.Net interest income increased 6.6% in 3Q’17 vs. 2Q’17 due prima
Slide 13: Net Interest Income and Net Interest Margin Details
13 Net Interest Income and Net Interest Margin Details Summary3Q’17 net interest income of $22.912 million, up $1.420 million from 2Q’17. The linked quarter increase was due to a $1.882 million increase in interest income and fees on loans. This was partially offset by a $44K decrease in interest in
Slide 14: Non-interest Income Highlights
14 Non-interest Income HighlightsDiverse sources of non-interest income which totaled $10.3 million in 3Q’17.3Q’17 total non-interest income represents approximately 31.0% of total revenue (net interest income and non-interest income).Service charges on deposits have recently stabilized after previo
Slide 15: Non-interest Expense Highlights
15 Non-interest Expense HighlightsQ3’17 non-interest expenses totaled $22.6 million (a decrease from 2Q’17 and a slight increase from 3Q’16).Q3’17 compensation and benefits increased by $0.5 million over Q3’16 due primarily to higher salaries and wages, incentive compensation and payroll taxes. 3Q’1
Slide 16: Investment Securities Portfolio
16 Investment Securities Portfolio HighlightsHigh quality, liquid, diverse portfolio with relatively short duration.60% of the portfolio is AAA rated (or backed by the U.S. Government).2.73 year estimated average duration with a weighted average yield of 2.62% (with TE gross up).Approximately 26% of
Slide 17: Credit Quality Summary
17 Credit Quality Summary Note 1: Non-performing loans and non-performing assets exclude troubled debt restructurings that are performing.Note 2: 3/31/17 and 12/31/16 30 to 89 days delinquent data excludes $1.53 million and $1.63 million, respectively, of payment plan receivables that were held for
Slide 18: Credit Cost Summary
18 Credit Cost Summary Note: Dollars all in millions. Provision for Loan Losses Loan Net Charge-Offs Allowance for Loan Losses
Slide 19: Classified Assets and New Default Trends
19 Classified Assets and New Default Trends Note: Dollars all in millions. Total Classified Assets Commercial Loan New Defaults Total Loan New Defaults Retail Loan New Defaults
Slide 20: Troubled Debt Restructurings (TDRs)
20 Troubled Debt Restructurings (TDRs) TDR HighlightsWorking with client base to maximize sustainable performance.The specific reserves allocated to TDRs totaled $7.0 million at 9/30/17.A majority of our TDRs are performing under their modified terms but remain in TDR status for the life of the loan
Slide 21: 2017 Actual Performance vs. Original Outlook
21 2017 Actual Performance vs. Original Outlook Category Outlook Lending Continued growthGoal of 10 to 11% overall loan growth in 2017, primarily supported by increases in commercial loans, mortgage loans and consumer loans. Expect much of this growth to occur in the last three quarters of 2017. Thi
Slide 22: Strategic Initiatives
22 Strategic Initiatives Balance SheetGenerate quality loan growth with continued focus on commercial and consumer installment lending as well as salable and portfolio mortgage loans.Remain asset sensitive and positioned to benefit from higher interest rates (short duration investment portfolio, lar
Slide 23: Q&A and Closing Remarks
23 Q&A and Closing Remarks Question and Answer SessionClosing RemarksThank you for attending !NASDAQ: IBCP