Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q1 2024 Earnings Presentation
28 slides from Independent Bank's earnings presentation, Apr 25, 2024
Slide 1: Earnings Call: First Quarter 2024
Earnings Call: First Quarter 2024 April 25, 2024 (NASDAQ: IBCP)
Slide 2: Cautionary note regarding forward-looking statements
Cautionary note regarding forward-looking statements This presentation contains forward-looking statements, which are any statements or information that are not historical facts. These forward-looking statements include statements about our anticipated future revenue and expenses and our future plan
Slide 3: Agenda
• Formal Remarks − William B. (Brad) Kessel President and Chief Executive Officer − Gavin A. Mohr Executive Vice President and Chief Financial Officer − Joel F. Rahn Executive Vice President – Commercial Banking • Question and Answer session • Closing Remarks Note: This presentation is available at
Slide 4: 1Q24 Overview
1Q24 Overview • Total loans increased 5.3% annualized while maintaining conservative approach to new loan production • New loan production continues to be largely focused on new commercial clients that bring deposits to the bank • Asset quality remained exceptional with NPAs/Total Assets at 0.09% an
Slide 5: Low-Cost Deposit Franchise Focused on Core Deposit Growth
$ 4 .1 $ 4 .2 $ 4 .3 $ 4 .3 $ 4 .4 $ 4 .5 $ 4 .5 $ 4 .6 $ 4 .6 $ 4 .6 0 .0 9 % 0 .0 7 % 0 .1 1 % 0 .3 3 % 0 .7 8 % 1 .2 6 % 1 .5 7 % 1 .8 0 % 2 .1 7 % 2 .1 9 % Q 4 '2 1 Q 1 '2 2 Q 2 '2 2 Q 3 '2 2 Q 4 '2 2 Q 1 '2 3 Q 2 '2 3 Q 3 '2 3 Q 4 '2 3 Q 1 '2 4 Total Deposits Cost Of Deposits Non-interest Beari
Slide 6: Historic IBC Cost of Funds vs. the Federal Funds Rate
0 .2 7 % 0 .2 7 % 0 .2 8 % 0 .3 3 % 0 .3 6 % 0 .4 2 % 0 .5 1 % 0 .6 0 % 0 .7 3 % 0 .8 2 % 0 .8 5 % 0 .8 5 % 0 .7 4 % 0 .6 3 % 0 .3 0 % 0 .2 3 % 0 .3 9 % 0 .1 4 % 0 .1 2 % 0 .1 1 % 0 .1 0 % 0 .1 0 % 0 .1 2 % 0 .3 3 % 0 .7 9 % 1 .2 5 % 1 .5 7 % 1 .8 0 % 1 .9 9 % 2 .0 1 % 0 500,000 1,000,000 1,500,000
Slide 7: Diversified Loan Portfolio Focused on High Quality Growth
Commercial 45% Mortgage 39% Installment 16% Held for Sale 0% $ 2 .9 $ 3 .0 $ 3 .3 $ 3 .4 $ 3 .4 $ 3 .5 $ 3 .6 $ 3 .7 $ 3 .8 $ 3 .8 4 .0 8 % 3 .8 2 % 4 .0 1 % 4 .3 9 % 4 .9 0 % 5 .0 7 % 5 .3 6 % 5 .5 3 % 5 .7 3 % 5 .8 0 % Q 4 '2 1 Q 1 '2 2 Q 2 '2 2 3 Q '2 2 4 Q '2 2 1 Q '2 3 2 Q '2 3 3 Q '2 3 4 Q '2
Slide 8: Concentrations within $1.7B Commercial Loan Portfolio
10% $174 8% $137 7% $129 7% $119 6% $99 6% $97 3% $53 3% $51 3% $49 $40 $40 $39 $37 $36 $83 $1,181MM Manufacturing Construction Retail Health Care and Social Assistance Hotel and Accomodations Real Estate Rental and Leasing Other Services (except Public Administration) Transportation Wholesale Arts,
Slide 9: Asset Quality
$4.8 $4.4 $7.2 $13.2 $2.3 $3.1 $1.9 $4.4 $4.9 $3.3 $7.1 0.2% 0.2% 0.3% 0.5% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% $- $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 2017 2018 2019 2020 2021 2022 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 30-89 Days PD 30-89 Days PD / Total Loans $1.6 $
Slide 10: Strong Capital Position
13.6 13.8 13.6 13.6 13.7 13.9 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 10.4 10.6 10.4 10.4 10.6 10.7 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 8.9 8.9 8.9 8.9 9.0 9.3 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 6.4 6.6 6.7 6.7 7.1 7.4 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 • Long-term capital Priorities: Capital retentio
Slide 11: Net Interest Margin/Income
$ 3 2 .0 $ 3 1 .0 $ 3 0 .3 $ 3 1 .4 $ 3 3 .8 $ 3 4 .3 $ 3 3 .0 $ 3 6 .1 $ 3 9 .9 $ 4 0 .6 $ 3 8 .4 $ 3 8 .4 $ 3 9 .4 $ 4 0 .1 $ 4 0 .2 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 3.63 3.36 3.31 3.12 3.05 3.02 3.18 3.13 3.00 3.26 3.49 3.52 3.33 3.26 3.23
Slide 12: Net interest margin change and average balances
Q4'23 3.26% Change in earning asset mix 0.03% Increase in loan and investment yield 0.02% Change in funding mix 0.04% Increase in funding costs -0.05% Q1'24 3.30% 1Q24 4Q23 Change Avg Bal Inc/Exp Yield Avg Bal Inc/Exp Yield Avg Bal Inc/Exp Yield Cash $84,182 $1,143 5.46% $119,884 $1,647 5.45% ($35,7
Slide 13: Interest Rate Risk Management
March 31, 2024 -200 -100 Base-rate 100 200 Net Interest Income $172,500 $172,700 $174,000 $173,300 $171,500 Change from Base -0.86% -0.75% -0.40% -1.44% December 31, 2023 -200 -100 Base-rate 100 200 Net Interest Income $167,800 $169,000 $169,500 $168,300 $166,000 Change from Base -1.00% -0.29% -0.71
Slide 14: Strong Non-interest Income
$ 1 8 .9 $ 1 4 .6 $ 1 6 .9 $ 1 1 .5 $ 1 0 .5 $ 1 5 .4 $ 1 5 .6 $ 9 .1 $ 1 2 .6 3 5 .4 % 2 7 .6 % 2 7 .3 % 1 8 .4 % 1 6 .4 % 1 8 .4 % 2 0 .0 % 1 2 .2 % 1 9 .3 % -5.0 5.0 15.0 25.0 35.0 45.0 55.0 $- $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 Q 1 '2 2 Q 2 '2 2 Q 3 '2 2 Q 4 '2 2 Q 1 '2 3 Q 2 '2 3 Q
Slide 15: Focus on Improved Efficiency
6 4 .8 % 6 3 .1 % 6 1 .3 % 5 9 .8 % 6 0 .4 % 5 9 .6 % 5 9 .9 % 6 0 .7 % 6 0 .3 % 1 Q '2 2 2 Q '2 2 3 Q '2 2 4 Q '2 2 1 Q '2 3 2 Q '2 3 3 Q '2 3 4 Q '2 3 1 Q '2 4 $ 3 1 .5 $ 3 2 .4 $ 3 2 .4 $ 3 2 .1 $ 3 1 .0 $ 3 2 .2 $ 3 2 .0 $ 3 1 .9 $ 3 2 .2 $- $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 Q 1 '2 2 Q 2
Slide 16: Outlook for 2024
Outlook for 2024 Outlook for 2024 *as of January, 2024 • IBCP forecast of mid-single digit (approximately 6%-8%) overall loan growth is based on increases in commercial loans and mortgage loans with installment loans remaining flat. Expect much of this growth to occur in the first three quarters of
Slide 17: Outlook for 2024
Outlook for 2024 Outlook for 2024 *as of January, 2024 • IBCP forecasts 2024 quarterly range of $11.5M to $13.0M with the total for the year down 0.5% to 1.0% from 2023 actual of $50.7M • Expect mortgage loan origination volumes in 2024 to increase by approximately 7%, a decline in mortgage loan ser
Slide 18: Strategic Initiatives
Strategic Initiatives • Outside Sales - Relationship banking focus thru consistent calling on prospects and COI’s. • Inside Service/Sales – high retention + high cross sales, collaboration of strategic partners. • Digital Marketing - Leverage data insights, target strategically, elevate brand image,
Slide 19: Question and Answer Session, Closing Remarks
Question and Answer Session Closing Remarks NASDAQ: IBCP Thank you for attending 19
Slide 20: Appendix: Additional Financial Data and Non-GAAP Reconciliations
Appendix Additional Financial Data and Non-GAAP Reconciliations 20
Slide 21: Quarterly financial summary
here Year Ended December 31, Quarter Ended, ($M except per share data) 2020 2021 2022 2023 3/31/23 6/30/23 9/30/23 12/31/23 3/31/24 Balance Sheet: Total Assets $4,204 $4,705 $5,000 $5,264 $5,139 $5,136 $5,200 $5,264 $5,231 Portfolio Loans $2,734 $2,905 $3,465 $3,791 $3,510 $3,631 $3,741 $3,791 $3,84
Slide 22: Annual financial summary 2018-2023
Year Ended December 31, ($M except per share data) 2018 2019 2020 2021 2022 2023 5 Year CAGR Balance Sheet: Total Assets $3,353 $3,565 $4,204 $4,705 $5,000 $5,264 9.4% Portfolio Loans $2,583 $2,725 $2,734 $2,905 $3,465 $3,791 8.0% Deposits $2,913 $3,037 $3,637 $4,117 $4,379 $4,623 9.7% Tangible Comm
Slide 23: Strong Liquidity Position
Note: Portfolio loans exclude loans HFS. Liquidity / Uninsured Deposits Strong Liquidity Position • Significant liquidity position to manage the current environment. • Total available liquidity significantly exceeds (238%) estimated uninsured deposit balances. • Attractive loan to deposit ratio of 8
Slide 24: Granular Deposit Base
$1,946 $1,010 $500 $236 $223 $520 $234 $2,169 $1,530 $734 $149 Consumer Commercial Public Funds Brokered Insured Deposits Uninsured Deposits $ 3 ,3 0 0 $ 3 ,4 0 3 $ 3 ,5 8 0 $ 3 ,5 7 0 $ 3 ,5 7 5 $ 3 ,6 6 1 $ 3 ,6 0 5 $ 1 ,0 2 7 $ 9 7 6 $ 9 6 5 $ 9 1 8 $ 1 ,0 1 1 $ 9 6 2 $ 9 7 7 $4,327 $4,379 $4,545
Slide 25: CRE – Office Metrics
$19 $70 22% 78% CRE – Office Metrics • 24.5% of portfolio is medical office buildings. • 79% of portfolio is in suburban geographies. • 77.1% of CRE – Office mature after 2026. • Average loan size of $1.2 million. Maturing Exposure (millions) CRE - Office Fixed vs. Variable Geographic Location (mill
Slide 26: Non-GAAP to GAAP Reconciliation
Non-GAAP to GAAP Reconciliation 26 Reconciliation of Non-GAAP Financial Measures Adjusted Income Statement Results (non-GAAP) March 31, December 31, September 30, June 30, March 31, 2023 2022 2021 2020 2024 2023 2023 2023 2023 (Dollars in thousands) Net interest income $156,329 $149,561 $129,765 $12
Slide 27: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 27 Reconciliation of Non-GAAP Financial Measures 2024 2023 Net Interest Margin, Fully Taxable Equivalent ("FTE") Net interest income $40,197 $38,441 Add: taxable equivalent adjustment 180 288 Net interest income - taxable equivalent $40,377 $38,729 Net i
Slide 28: Reconciliation of Non-GAAP Financial Measures (continued)
Reconciliation of Non-GAAP Financial Measures (continued) 28 Reconciliation of Non-GAAP Financial Measures (continued) Independent Bank Corporation Tangible Common Equity Ratio March 31, December 31, September 30, June 30, March 31, 2023 2022 2021 2020 2024 2023 2023 2023 2023 Common shareholders' e