Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q1 2021 Earnings Presentation
27 slides from Independent Bank's earnings presentation, Apr 27, 2021
Slide 1: Independent Bank Corporation (IBCP) Earnings Call First Quarter 2021
Independent Bank Corporation (IBCP) Earnings CallFirst Quarter 2021April 27, 2021
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 OfficerGavin A. Mohr, 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 under the
Slide 4: COVID-19 Response: Supporting Employees, Clients & Communities
COVID-19 ResponseSupporting Employees, Clients & Communities 4 Employees Clients & Communities Work from home. Providing the technology, culture, and operational infrastructure for the workforce to work remotely as needed.Granting additional sick and vacation time. Complying with applicable Michigan
Slide 5: Historical Financial Data
Historical Financial Data 5 Year Ended December 31, Quarter Ended, ($M except per share data) 2017 2018 2019 2020 3/31/20 6/30/20 9/30/20 12/31/20 3/31/21 Balance Sheet: Total Assets $2,789 $3,353 $3,565 $4,204 $3,632 $4,043 $4,169 $4,204 $4,426 Portfolio Loans $2,019 $2,583 $2,725 $2,734 $2,718 $2,
Slide 6: 1Q 2021 Financial Highlights
1Q 2021 Financial Highlights Income StatementPre-tax, pre-provision income was $26.7 million in the first quarter of 2021 compared to $12.5 million in the first quarter of 2020.Net income of $22.0 million, or $1.00 per diluted share compared to $4.8 million, or $0.21 per diluted share for the year a
Slide 7: Our Michigan Markets
Our Michigan Markets 7 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, 2020.Note: Loan and deposit balances exclude the loans and deposits (such as bro
Slide 8: Select Economic Statistics
Select Economic Statistics 8 Unemployment Trends (%) Total Employees (Thousands) Regional Average Home Sales Price (Thousands) Annualized Home Sales (Thousands) Elevated unemployment rates due to COVID-19 As of Feb ‘21 Stable prices in key markets Strong job growth prior to COVID-19 Slowing Michigan
Slide 9: Low Cost Deposit Franchise Focused on Core Deposit Growth
Low Cost Deposit Franchise Focused on Core Deposit Growth 9 Substantially core funding – $3.6 billion of non-maturity deposit accounts (92.8% of total deposits).Total deposits increased $221.2 million (6.1%) since 12/31/20 with non-interest bearing up $148.4 million, savings and interest- bearing ch
Slide 10: Diversified Loan Portfolio
Diversified Loan PortfolioFocused on High Quality Growth 10 Lending Highlights Note: Portfolio loans exclude loans HFS. Portfolio loan changes in 1Q’21:Commercial – increased $58.8 million. PPP loan balances increased $64.4 million and totaled $234.2 million at March 31, 2021.Mortgage – decreased $1
Slide 11: COVID-19 Programs – Loan Forbearances
COVID-19 Programs – Loan Forbearances 11 Highlights Loan Forbearances The table above reflects the status of loan forbearances for the last four quarters. The percent of the loan portfolio is based on loan dollars.Loan Forbearances:Forbearance period is generally three months for mortgage and instal
Slide 12: COVID-19 Programs – Paycheck Protection Program (PPP)
COVID-19 Programs – Paycheck Protection Program (“PPP”) 12 Highlights PPP Loan Portfolio The table above reflects the status of PPP loans as of December 31, and March 31, 2021 for Round 1 and Round 2 respectively.Paycheck Protection Program:Forgiveness applications began to be submitted to the SBA i
Slide 13: Commercial Loan Portfolio Concentrations
Loans by Industry as a % of Total Commercial Loans ($ in millions)C&I and Owner Occupied Real Estate = 67.8% of Commercial Loan Portfolio Investor RE by Collateral Type as a % of Total Commercial Loans ($ in millions)Investment Real Estate = 32.2% of the Commercial Loan Portfolio 13 Commercial Loan
Slide 14: Investment Securities Portfolio
Investment Securities Portfolio 14 Highlights High quality, liquid, diverse portfolio with relatively short duration.Fair value of $1.25 billion, an increase of $175.4 million in 1Q’21.Net unrealized gain of $7.9 million, representing 0.64% of amortized cost.Portfolio ratings: 72% AAA rated (or back
Slide 15: Strong Capital Position
Strong Capital Position 15 Source: S&P Global Market Intelligence and Company documents.Note: Company closed acquisition of TCSB Bancorp, Inc. in Q2 ‘18. TCE / TA (%) Leverage Ratio (%) CET1 Ratio (%) Total RBC Ratio (%) IBCP Target 8.50% - 9.50 % Capital retention to support (i) organic growth and
Slide 16: 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 as slightly asset sensitive.Net interest income decreased $0.7 million, or 2.3%, in 1Q’21 vs. 4Q’20 due primarily to a $3.0 million decrease in interest i
Slide 17: Linked Quarter Analysis
Linked Quarter Analysis 17 1Q’21 NIM Changes Linked Quarter Average Balances and FTE Rates Yield on average interest-earning assets declined 30 basis points.Yield on PPP round 1 loans decreased 48 basis points due to a decline in fee accretion. Commercial loan yields net of PPP declined 34 basis poi
Slide 18: Strong Non-interest Income
Strong Non-interest Income 18 Diverse sources of non-interest income – representing 46.6% of operating revenue in 1Q’21.1Q’21 interchange income of $3.0 million compared to $2.5 million in the prior year quarter. This increase is due to an increase in transaction volume. COVID-19 has adversely impac
Slide 19: Focus on Improved Efficiency
Focus on Improved Efficiency 19 Source: Company documents. Non-interest Expense ($M) Highlights Efficiency Ratio (4 quarter rolling average) Continued focus on expense control and driving positive operating leverage. Compensation and employee benefits expense of $18.5 million compared to $16.5 in th
Slide 20: 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 21: 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 21
Slide 22: Troubled Debt Restructurings (TDRs)
Troubled Debt Restructurings (TDRs) TDR HighlightsWorking with client base to maximize sustainable performance.The specific reserves allocated to TDRs totaled $4.6 million at 3/31/21.A majority of our TDRs are performing under their modified terms but remain in TDR status for the life of the loan.93
Slide 23: Credit Cost Summary
Note: Dollars all in millions. Provision for Credit Losses Loan Net Charge-Offs/Recoveries Allowance for Credit Losses Credit Cost Summary 23
Slide 24: Adoption of CECL
Adoption of CECL 24 Adopted CECL on January 1, 2021 as allowed under the CARES Act extension. CECL day 1 adjustment to the ACL of $11.7 million which was within our disclosed range of $10.5 million to $12.5.Reserve for unfunded lending commitments increased $1.5 million.Retained earnings decreased $
Slide 25: 2021 Outlook Update
2021 Outlook Update Category Outlook Lending Continued growthLoan payoffs related to the Paycheck Protection Program will make loan growth challenging in 2021. IBCP goal of low (1%) single digit overall loan growth (5% - 7% excluding PPP impact), primarily supported by increases in commercial loans,
Slide 26: Strategic Initiatives
Strategic Initiatives 26 Serve consumers and businesses in our markets in an inclusive way with straight forward marketing and outreach efforts and fostering relationships and strong customer engagement.Improve net interest income via balanced loan growth, disciplined risk adjusted loan pricing and
Slide 27: Q&A and Closing Remarks
Q&A and Closing Remarks Question and Answer SessionClosing RemarksThank you for attending!NASDAQ: IBCP 27