Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q1 2022 Earnings Presentation
25 slides from Independent Bank's earnings presentation, Apr 26, 2022
Slide 1: Independent Bank Corporation Earnings Call First Quarter 2022
Independent Bank Corporation Earnings Call First Quarter 2022 April 26, 2022 (NASDAQ: IBCP)
Slide 2: Cautionary note regarding forward-looking statements
Cautionary note regarding forward-looking statements This presentation contains forward-looking statements about Independent Bank Corporation. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the
Slide 3: Agenda
Agenda Formal Remarks. William B. (Brad) Kessel, President and Chief Executive Officer Gavin A. Mohr, Executive Vice President and Chief Financial Officer Joel Rahn, Executive Vice President – Commercial Banking Question and Answer session. Closing Remarks. Note: This presentation is available at ww
Slide 4: Historical Quarterly Financial Data
Historical Quarterly Financial Data 4
Slide 5: 1Q 2022 Financial Highlights
1Q 2022 Financial Highlights Income Statement Pre-tax, pre-provision income of $20.5 million compared to $26.7 million in the year ago quarter. Net income of $18.0 million, or $0.84 per diluted share compared to $22.0 million, or $1.00 per diluted share in the year ago quarter. Net interest income o
Slide 6: Our Michigan Markets
Our Michigan Markets 6 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, 2021. Note: Loan and deposit balances exclude the loans and deposits (such as br
Slide 7: Select Economic Statistics
Select Economic Statistics 7 Unemployment Trends (%) Total Employees (Thousands) Regional Average Home Sales Price (Thousands) Annualized Home Sales (Thousands) Select Economic Statistics Unemployment rates returning to normal levels Stable prices in key markets Strong job growth continues Reboundin
Slide 8: Low Cost Deposit Franchise Focused on Core Deposit Growth
Low Cost Deposit Franchise Focused on Core Deposit Growth 8 Substantially core funding – $3.90 billion of non-maturity deposit accounts (92.7% of total deposits). Total deposits increased $88.4 million (8.7%) since 12/31/21 with non-interest bearing down $3.2 million, savings and interest- bearing c
Slide 9: Digital Transformation
9 9 All functionality within online banking can be done in the new IB ONE Wallet app. Customers can reset their own passwords in the app. Instantly transfer funds to other IB customers. IB Card Controls allows you to turn your debit card on or off, restrict transactions by category or dollar amount,
Slide 10: Diversified Loan Portfolio Focused on High Quality Growth
Diversified Loan PortfolioFocused on High Quality Growth 10 Lending Highlights Note: Portfolio loans exclude loans HFS. Portfolio loan changes in 1Q’22: Commercial – increased $54.0 million (excluding PPP increased $74.5 million). PPP loan balances decreased $20.4 million and totaled $5.9 million at
Slide 11: Commercial Loan Portfolio Concentrations
Loans by Industry as a % of Total Commercial Loans ($ in millions) Investor RE by Collateral Type as a % of Total Commercial Loans ($ in millions) 11 Commercial Loan Portfolio Concentrations 11 Note: $811 million, or 64.5% of the commercial loan portfolio is C&I or owner occupied, while $446 million
Slide 12: Investment Securities Portfolio
Investment Securities Portfolio 12 Highlights High quality, liquid, diverse portfolio with moderate duration. $148.9 million of municipal bonds have been hedged with swaps. Net unrealized loss of $61.5 million, representing 4.2% of amortized cost net of swaps. Portfolio ratings: 53% AAA rated (or ba
Slide 13: Strong Capital Position
Strong Capital Position 13 TCE / TA (%) Leverage Ratio (%) CET1 Ratio (%) Total RBC Ratio (%) Capital retention to support (i) organic growth and (ii) acquisitions; and Return of capital through (i) strong and consistent dividend and (ii) share repurchases Long-Term Capital Priorities: Strong Capita
Slide 14: Net Interest Margin/Income
Highlights Interest 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 $1.3 million in 1Q’22 vs. 4Q’21 due primarily to a $1.8 million decrease in interest income re
Slide 15: Linked Quarter Analysis
Linked Quarter Analysis 15 1Q’22 NIM Changes Linked Quarter Average Balances and FTE Rates
Slide 16: Interest Rate Risk Management
Base-rate is a static balance sheet applying the spot yield curve from the valuation date. Stable core funding base. Transaction accounts fund 44.6% of assets and other non-maturity deposits fund another 24.5% of assets. Limited wholesale funding of just 2.4% of assets. 17.0% of assets reprice in 1
Slide 17: Strong Non-interest Income
Strong Non-interest Income 17 Diverse sources of non-interest income, representing 35.3% of operating revenue in 1Q’22. 1Q’22 interchange income of $3.1 million compared to $3.0 million in the prior year quarter. This increase was primarily due to an increase in transaction volume. Mortgage banking:
Slide 18: Focus on Improved Efficiency
Focus on Improved Efficiency 18 Source: Company documents. Non-interest Expense ($M) Highlights Efficiency Ratio (4 quarter rolling average) 1Q’22 efficiency ratio of 59.6%. Compensation and employee benefits expense of $20.1 million compared to $18.5 in the prior year quarter. Compensation (salarie
Slide 19: Credit Quality Summary
Credit Quality Summary Note 1: Non-performing loans and non-performing assets exclude troubled debt restructurings that are performing. Note 2: 12/31/16 30 to 89 days delinquent data excludes $1.63 million of payment plan receivables that were held for sale. Non-performing Assets ($ in Millions) ORE
Slide 20: Classified Assets and New Default Trends
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 20
Slide 21: Troubled Debt Restructurings (TDRs)
Troubled Debt Restructurings (TDRs) TDR Highlights Working with client base to maximize sustainable performance. The specific reserves allocated to TDRs totaled $599m 3/31/22. A majority of our TDRs are performing under their modified terms but remain in TDR status for the life of the loan. 96.5% of
Slide 22: Credit Cost Summary
Note: Dollars all in millions. Provision for Credit Losses Loan Net Charge-Offs/Recoveries Allowance for Credit Losses Credit Cost Summary 22
Slide 23: 2022 Outlook Update
2022 Outlook Update Category Outlook Lending Continued growth IBCP goal of low double digit (approximately 10%) overall loan growth is based on increases in commercial loans, mortgage loans and consumer loans. Expect much of this growth to occur in the last three quarters of 2022. This growth foreca
Slide 24: Strategic Initiatives
Strategic Initiatives 24 Serve consumers and businesses in our Markets in an inclusive way to include straight forward marketing, improved brand awareness and enhanced outreach efforts that foster strong customer relationships and engagement. Improve net interest income via balanced loan growth, dis
Slide 25: Q&A and Closing Remarks
Q&A and Closing Remarks Question and Answer Session Closing Remarks Thank you for attending! NASDAQ: IBCP 25