Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q2 2016 Earnings Presentation
22 slides from Independent Bank's earnings presentation, Jul 28, 2016
Slide 1: Independent Bank Corporation 2nd Quarter 2016
WV Independent Bank Corporation INDEPENDENT 2 Quarter 2016
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: Financial Summary
4 Financial Summary 2Q’16 1Q’16 4Q’15 3Q’15 2Q’15 Diluted EPS $ 0.30 $ 0.19 $ 0.25 $ 0.22 $ 0.24 Income before taxes $ 9,049 $ 6,057 $ 8,251 $ 7,325 $ 8,243 Net income $ 6,438 $ 4,100 $ 5,570 $ 5,047 $ 5,619 Return on average assets 1.06% 0.68% 0.93% 0.86% 0.98% Return on average equity 10.66% 6.70%
Slide 5: 2Q 2016 Financial Highlights
5 2Q 2016 Financial Highlights Income StatementNet income of $6.4 million, or $0.30 per diluted share, representing increases of 14.6% and 25.0%, respectively over 2Q’15. Net interest income of $19.6 million, up $0.9 million, or 5.0%, from the year ago quarter.$0.7 million credit loan loss provision
Slide 6: Our Michigan Markets
6 Our Michigan Markets Since 2012, substantial changes have been implemented to streamline and optimize our branch delivery network.Significant market presence and opportunity to gain market share in attractive Michigan markets. Michigan’s unemployment rate was 4.6% in June 2016 (0.7% lower than one
Slide 7: Our Markets – Regional
7 Our Markets – Regional Region Cities Branches 6/30/16 Loans(1) % ofLoans(1) 6/30/16Deposits(3) % of Deposits(3) 6/30/15 Loans(2) 6/30/15 Deposits(3) East / “Thumb” Bay City / Saginaw 23 $ 317 22% $ 714 35% $ 305 $ 725 West Grand Rapids / Ionia 22 543 38% 610 30% 479 604 Central Lansing 11 205 15%
Slide 8: Low Cost Deposit Franchise Focused on Core Deposit Growth
8 Low Cost Deposit Franchise Focused on Core Deposit Growth Deposit Highlights$2.13 billion in total deposits at 6/30/16.Substantially all core funding.$1.69 billion of transaction accounts (79.3% of total deposits).Total deposits increased $166.9 million, or 8.5% since 6/30/15.Average deposits per
Slide 9: Diversified Loan Portfolio Focused on High Quality Growth
9 Diversified Loan PortfolioFocused on High Quality Growth Lending HighlightsNine consecutive quarters of net loan growth.$1.61 billion in total loans at 6/30/16 (including $31.7 million of loans held for sale).2Q 2016 lending results include:Adjusted commercial loan growth of $14.4 million, or 7.5%
Slide 10: Strong Capital Position Focused on Shareholder Return
10 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 11: Net Interest Margin/Income
11 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 benefit from a rising interest rate environment.Net interest income decreased in 2Q’16 vs. 1Q’16 due primarily to a decli
Slide 12: Net Interest Income and Net Interest Margin Details
12 Net Interest Income and Net Interest Margin Details Summary2Q’16 net interest income of $19.630 million, down $133K from 1Q’16. The linked quarter decrease was due to a $348K decrease in interest income and fees on loans and a $46K increase in interest expense on deposits and borrowings that was
Slide 13: Non-interest Income Highlights
13 Non-interest Income HighlightsDiverse sources of non-interest income which totaled $9.6 million in 2Q’16.2Q’16 total non-interest income represents approximately 32.8% of total revenue (net interest income and non-interest income).2Q’16 interchange revenue down $0.3 million, or 11.8%, compared to
Slide 14: Non-interest Expense Highlights
14 Non-interest Expense HighlightsQ2’16 non-interest expenses totaled $20.9 million (a decrease from 1Q’16 and from Q2’15).Q2’16 compensation and benefits increased slightly (by $0.2 million) over Q2’15 due to higher medical insurance and employee education (primarily increased sales training) costs
Slide 15: Investment Securities Portfolio
15 Investment Securities Portfolio HighlightsHigh quality, liquid, diverse portfolio with short duration.69% of the portfolio is AAA rated (or backed by the U.S. Government).2.0 year estimated average duration with a weighted average yield of 2.09% (with TE gross up).Approximately 31% of the portfol
Slide 16: Credit Quality Summary
16 Credit Quality Summary Note: Non-performing loans and non-performing assets exclude troubled debt restructurings that are performing. Non-performing Assets ($ in Millions) ORE/ORA ($ in Millions) Non-performing Loans ($ in Millions) 30 to 89 Days Delinquent ($ in Millions)
Slide 17: Credit Cost Summary
17 Credit Cost Summary Note: Dollars all in millions. Provision for Loan Losses Loan Net Charge-Offs Allowance for Loan Losses
Slide 18: Classified Assets and New Default Trends
189 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 19: Troubled Debt Restructurings (TDRs)
19 Troubled Debt Restructurings (TDRs) TDR HighlightsWorking with client base to maximize sustainable performance.The specific reserves allocated to TDRs totaled $10.7 million at 6/30/16.A majority of our TDRs are performing under their modified terms but remain in TDR status for the life of the loa
Slide 20: 2016 Management Outlook
20 2016 Management Outlook Category Outlook Lending Continued growthGoal of high single digit % overall loan growth in 2016, primarily supported by increases in commercial loans, consumer loans and mortgage loans with payment plan receivables relatively stable. Expect much of this growth to occur in
Slide 21: Strategic Initiatives
21 Strategic Initiatives Balance SheetGenerate quality loan growth with continued focus on commercial and consumer installment lending as well as salable mortgage loans. May consider augmenting loan growth with selective in-market whole loan purchases.Remain asset sensitive and positioned to benefit
Slide 22: Q&A and Closing Remarks
22 Q&A and Closing Remarks Question and Answer SessionClosing RemarksThank you for attending !NASDAQ: IBCP