Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — IPO Roadshow (November 2010)
35 slides from Independent Bank's IPO roadshow presentation, Nov 8, 2010
Slide 1: Follow-on Offering of Common Stock $110,000,000
Independent Bank Corporation Follow-on Offering of Common Stock $110,000,000 November 2010
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: Transaction Overview
Transaction Overview Issuer: Independent Bank Corporation Ticker / Exchange: IBCP / NASDAQ Type of Offering: Follow-on Public Offering Type of Security: Common Stock Transaction Size: $110 million Over-Allotment Option: 15% Use of Proceeds: All or substantially all of the net proceeds from this offe
Slide 4: Executive Summary
Executive Summary
Slide 5: Investment Opportunity
Investment Opportunity The Michigan economy has shown signs of stabilization making now the time to invest in the Michigan banking market Asset quality has turned the corner as demonstrated by improved trends in recent quarters Substantial progress on restructuring the balance sheet and reducing hig
Slide 6: Experienced Management Team
Experienced Management Team Michael M. Magee President & CEO Mr. Magee, age 54, was appointed as our President and Chief Executive Officer effective January 1, 2005. He served as our Chief Operating Officer from April to December, 2004. From 1993 until April 2004, he was the President and Chief Exec
Slide 7: Summary of Capital Plan
Summary of Capital Plan Description Additional Tangible Common Equity Status Timing Exchange of TARP Preferred into Common Stock $70mm Pending Upon Completion of Offering Exchange of Trust Preferred Securities into Common Stock $41mm Completed June 2010 Common Equity Issuance $103mm Pending November
Slide 8: Overview of Independent Bank Corporation
Overview of Independent Bank Corporation Headquartered in Ionia, MI Over 100 offices across Michigan's Lower Peninsula 4th largest bank headquartered in Michigan Single state-chartered bank subsidiary $2.7 billion in total assets $2.4 billion in total deposits 2010 J.D. Power award recipient
Slide 9: Michigan Economy is Showing Signs of Stabilization
Michigan Economy is Showing Signs of Stabilization Michigan Nonfarm Payrolls have continued to stabilize since November 2009. Unemployment rate has fallen to 13.0% as of September 2010 vs. peak of 14.5% in December 2009. The Michigan economy has significantly reduced its reliance on the automotive a
Slide 10: Independent Bank Corporation Core Banking Markets
Independent Bank Corporation Core Banking Markets Core deposits are defined as total deposits less jumbo time deposits. Core loans exclude out of state lending and payment plan receivables. Dollars in millions. Data as of 9/30/10. Northeast West Central Southeast Thumb Bay
Slide 11: Summary Financial Performance
Summary Financial Performance ROAA (%) ROACE (%) Earnings per Share Total Assets ($M)
Slide 12: Credit Quality Continues to Improve
Credit Quality Continues to Improve Nonperforming Assets 1 ($ in millions) 1) Excludes TDRs
Slide 13: Management Projections of Credit
Management Projections of Credit Provision Expense ($ in millions) Net Charge-Offs ( $ in millions) Allowance ($ in millions) Source: Company financials and management forecasts The charts below illustrate the historical and forecasted provision expense, net charge-offs and allowance balance.
Slide 14: Projected Pro Forma Tangible Book Value
Projected Pro Forma Tangible Book Value (1) Reflects the conversion on October 1, 2010 of all of our Series B Convertible Preferred Stock at 75% of par, plus approximately $1.7 million in accrued and unpaid dividends as of September 30, 2010 without a discount to par, at a conversion price of $7.234
Slide 15: Projected Pro Forma Tangible Book Value
Projected Pro Forma Tangible Book Value 1) Projected provision through 12/31/11. 2) Projected Mepco contingency expenses for loan losses from October 1, 2010 through December 31, 2011. 3) Projected PTPP through 12/31/11. Excludes amortization of intangibles. Note: See footnotes on page 14 for additi
Slide 16: Pro Forma Ownership
Pro Forma Ownership Assumes offer price of $1.65 Note: Does not assume exercise of the over-allotment option. Not inclusive of U.S. Treasury anti-dilution adjustments. Includes TARP preferred exchange and $110 million common equity offering. Includes projected Management's projections of PTPP throug
Slide 17: Core Earnings Drivers
Core Earnings Drivers Reduce reliance on higher-cost brokered deposits 0.66% cost of deposits (excluding brokered deposits) Increase net income by reducing the need for excess liquidity $35 million of reverse repos (weighted average cost of 4.42%) mature in Q4'10 Continue to shrink balance sheet by
Slide 18: Pre-Tax, Pre-Provision Earnings Power
Pre-Tax, Pre-Provision Earnings Power Execution of Strategic Plan Positions IBCP to Generate Strong Earnings For the first nine months of 2010, the Company had pre-tax, pre-provision earnings of $7.5 million(1). As the Company deleverages the balance sheet, there will be reduced net interest income.
Slide 19: Payment Plan Detail - Mepco
Payment Plan Detail - Mepco Mepco Finance Corporation ("Mepco") is a wholly-owned subsidiary that acquires payment plans for vehicle service contracts from marketers Mepco was forced to take charge-offs after its largest counterparty experienced financial difficulties and ultimately filed for bankru
Slide 20: Deposit Market Share and Funding Profile
Deposit Market Share in Michigan ($ in Millions) Funding Profile - 3Q'10 ($ in Millions) 14% 45% 22% 14% 5% $2.4 billion total deposits $1.98 billion of core deposits (85% of total deposits) Cost of Deposits of 1.12% (0.66% excluding brokered deposits) New capital will allow Company to repay a subst
Slide 21: Diversified Loan Portfolio
Diversified Loan Portfolio Lending Highlights Lending Profile - 3Q'10 ($ in Millions) $1.9 billion loan portfolio IBCP is currently deleveraging its loan portfolios, reducing its total loans approximately $652 million (25%) from its peak Hired Stefanie Kimball from Comerica in 2007 to institute a co
Slide 22: Loan Portfolio Overview
Loan Portfolio Overview Commercial Loan Portfolio Segmentation at 9/30/10 Note: Non-performing loans includes non-accruals and 90+ days past due that are still accruing interest.
Slide 23: Overview of Credit Strategy
Overview of Credit Strategy Solid Credit Infrastructure in Place Seasoned credit team led by executives and senior managers with prior experience at large regional banks Strong credit culture buttressed by comprehensive industry best practices CRE loan types restricted in 2007, de-leveraging strateg
Slide 24: Commercial Loan Portfolio Overview
Commercial Loan Portfolio Overview Commercial Non-Performing Assets Commercial Loans 30-89 Days Delinquent Relatively stable 30-89 days delinquency levels. Seven quarters of declining NPA levels. NPLs declined 62% in Q3 '10 from peak in Q4 '08. NPAs declined 41% over the same time period. Note: Non-
Slide 25: Commercial Loan Portfolio Overview
Commercial Loan Portfolio Overview Text Box Break-down of Income Producing Properties ($000s) $315 M as of 9/30/2010 Well diversified portfolio mix Segment outstanding declined 24% since 2008 Multi-family strongest segment Approximately 1,050 notes with an average remaining balance of $300,000
Slide 26: Commercial Loan Portfolio Overview
Commercial Loan Portfolio Overview Credit Loss Recognition Detail ORE totaled $23.1 million at 9/30/10 with an average write down to 35% of balance at default.
Slide 27: Opportunities for Commercial Lending Growth
Opportunities for Commercial Lending Growth Foundation Well Positioned for Growth Emphasis on relationship lending with a "know your customer", community bank style approach Focusing on high quality, profitable loan segments such as: Middle market and small business lending (including small business
Slide 28: Retail Loan Portfolio Overview
Retail Loan Portfolio Overview Our strategy is to sell the majority of our first mortgage loans into the secondary market and selectively retain in our portfolio adjustable rate mortgage (ARM) products with strong underwriting metrics. Retail servicing: Bank Portfolio of $943 million Loans sold, but
Slide 29: Concentration by State
Concentration by State Portfolio Stratification Retail Loan Portfolio Resort Lending($229 M) is Bulk of Out of State Origination Strategy: Diversify from MI real estate concentration & take advantage of 3rd party relationship; Initiated in 2001 and suspended strategy for new originations in 2008. Cu
Slide 30: Retail Loan Portfolio Overview
Retail Loan Portfolio Overview Retail Non Performing Assets Retail Loans 30-89 Days Delinquent As of Q3'10 total 30 to 89 days past due were $19.4M, down from $23.4M at Q4'09 and $32.8M at the peak of Q4'08. As of Q3'10 total NPLs were $37.8M; down from $56.3M at Q4'09; and down from $59.2M at the p
Slide 31: TDR Overview
TDR Overview Working with client base to make loans affordable 82% of total TDRs are currently performing The specific reserves allocated to troubled debt restructured credits totaled $18.8 million at September 30, 2010, compared to $8.6 million at December 31, 2009 Modification Program Basics: Affo
Slide 32: Retail Loan Portfolio Overview
Retail Loan Portfolio Overview Credit Loss Recognition Detail
Slide 33: Opportunities for Retail Lending Growth
Opportunities for Retail Lending Growth Management believes we have a solid retail platform in place to capitalize on lending and deposit opportunities in Michigan. We have good relationships with our investors, both Fannie Mae and Freddie Mac, as well as several others. We view the FHA paper as att
Slide 34: Long Term Strategy
Long Term Strategy With the new capital, we plan to: Continue our growth of low cost core deposits to generate a healthy net interest margin; Continue our focus on asset quality and reducing non-performing assets; Selectively growing the balance sheet through relationship lending with the ultimate g
Slide 35: Investment Summary
Investment Summary Company has turned the corner in regards to asset quality. Reducing high risk portions of the balance sheet. Rigorously worked to improve credit administration process and underwriting standards. Focused on credit culture and risk management practices. Strong operating efficiencie