Independent Bank Corporation · NASDAQ:IBCP
Independent Bank — Q3 2016 Earnings Presentation
22 slides from Independent Bank's earnings presentation, October 2016
Slide 1: Independent Bank Corporation
Independent Bank Corporation INDEPENDENT BANK
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: Agenda
Agenda Formal Remarks. – William B. (Brad) Kessel, President and Chief Executive Officer – Robert N. Shuster, Executive Vice President and Chief Financial Officer Question and Answer session. Closing Remarks. Note: This presentation is available at www.IndependentBank.com in the Investor Relat
Slide 4: Financial Summary
Financial Summary 3Q’16 2Q’16 1Q’16 4Q’15 3Q’15 Diluted EPS $ 0.30 $ 0.30 $ 0.19 $ 0.25 $ 0.22 Income before taxes $ 9,352 $ 9,049 $ 6,057 $ 8,251 $ 7,325 Net income $ 6,373 $ 6,438 $ 4,100 $ 5,570 $ 5,047 Return on average assets 1.02% 1.06% 0.68% 0.93% 0.86% Return on average equity 10.20% 10.66%
Slide 5: 3Q 2016 Financial Highlights
3Q 2016 Financial Highlights Income Statement • Net income of $6.4 million, or $0.30 per diluted share, representing increases of 26.3% and 36.4%, respectively over 3Q’15. • Net interest income of $20.0 million, up $1.2 million, or 6.1%, from the year ago quarter. • $0.2 million credit loan loss pro
Slide 6: Our Michigan Markets
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 September 2016 (0.5% lowe
Slide 7: Our Markets – Regional
Our Markets – Regional 9/30/16 % of 9/30/16 % of 9/30/15 9/30/15 Region Cities Branches Loans(1) Loans(1) Deposits(3) Deposits(3) Loans(2) Deposits(3) East / “Thumb” Bay City / Saginaw 23 $ 318 22% $ 735 35% $ 312 $ 711 West Grand Rapids / Ionia 22 547 38% 689 33% 492 639 Central Lansing 11 207 15%
Slide 8: Low Cost Deposit Franchise
Low Cost Deposit Franchise Focused on Core Deposit Growth Deposit Composition – 9/30/16 Deposit Highlights $2.21 billion in total deposits at 9/30/16. − Substantially all core funding. − $1.74 billion of transaction Non-interest Bearing 33% accounts (79.0% of total deposits). Time 19% Total depo
Slide 9: Diversified Loan Portfolio
Diversified Loan Portfolio Focused on High Quality Growth Loan Composition – 9/30/16 Lending Highlights Ten consecutive quarters of net loan growth. Held for Sale 2% $1.65 billion in total loans at 9/30/16 (including Payment Plan Receivables $38.0 million of loans held for sale). 2% Commercial
Slide 10: Strong Capital Position
Strong Capital Position Focused on Shareholder Return Highlights ROA, ROE and TCE Ratio Prudent capital management. Target TCE ratio – 9.50% to 10.50% near-term and 8.50% to 9.50% 12.00% longer-term. Priorities are: (A) capital retention to support (1) organic growth and (2) acquisitions; 10.48% 1
Slide 11: Net Interest Margin/Income
Net Interest Margin/Income Net Interest Margin (TE)(%) Highlights 4.00% 3.80% Interest rate sensitivity profile of the loan and securities portfolios, in combination 3.60% 3.58% with a low cost core deposit base, 3.56% 3.62% 3.61% 3.52% positions us to benefit from a rising 3.51% interest rate env
Slide 12: Net Interest Income and Net Interest Margin Details
Net Interest Income and Net Interest Margin Details Analysis of Linked Quarter Increase Summary – 3Q’16 net interest income of $19.998 million, up $368K from 2Q’16. – The linked quarter increase was due to a $389K increase in interest income and fees on loans and an $89K increase in interest incom
Slide 13: Non-interest Income
Non-interest Income 2016 YTD Non-interest Income Breakout Highlights Sale of Loans Diverse sources of non-interest income $7.7M 27% which totaled $11.7 million in 3Q’16. Interchange Sale of Securities $5.8M 20% $0.3M 3Q’16 total non-interest income represents 1% approximately 36.9% of total reve
Slide 14: Non-interest Expense
Non-interest Expense Non-interest Expense ($ in Millions) Highlights $25.0 95% Q3’16 non-interest expenses totaled $22.5 million (an $22.9 $22.8 $22.5 increase from 2Q’16 and from Q3’15). $22.2 $21.9 $22.0 $21.6 $20.9 90% Q3’16 compensation and benefits increased by $1.0 $20.0 million over Q3’15
Slide 15: Investment Securities Portfolio
Investment Securities Portfolio Investment Portfolio by Type (9/30/16) Highlights High quality, liquid, diverse portfolio with Agency MBS, short duration. CMO & CMBS − 66% of the portfolio is AAA rated (or Corporate 31% 9% backed by the U.S. Government). Private Label − 2.1 year estimated average
Slide 16: Credit Quality Summary
Credit Quality Summary Non-performing Loans ($ in Millions) ORE/ORA ($ in Millions) $80.0 3.7% 3.8% 4.0% $45.0 $67.6 $39.4 $70.0 3.5% $40.0 $59.9 $34.0 $60.0 3.0% $35.0 2.3% $50.0 2.5% $30.0 $26.1 $40.0 $32.9 2.0% $25.0 1.3% $30.0 1.1% 1.1% 1.5% $18.3 $20.0 $17.9 0.7% 0.7% 0.7% 0.7% $20.0 $15.2 $15.
Slide 17: Credit Cost Summary
Credit Cost Summary Provision for Loan Losses Loan Net Charge-Offs Allowance for Loan Losses $30.0 2.0% $40.0 2.50% 1.7% $70 4.0% 2.20% 3.7% $35.0 $25.0 3.5% 2.00% $60 1.5% 3.1% $30.0 $20.0 3.0% $50 $25.0 1.50% $15.0 1.39% $27.9 1.0% 2.5% 2.4% $20.0 $40 $37.0 $10.0 1.00% 2.0% 0.5% 1.8% $15.0 0.5% $3
Slide 18: Classified Assets and New Default Trends
Classified Assets and New Default Trends Total Classified Assets Commercial Loan New Defaults $120 50.0% $40.0 $105 Classified ($M) $34.1 45.0% $35.0 $100 Classified / TCE + ALL 40.0% $30.0 45% 35.0% $80 $25.0 30.0% $59 $20.0 $60 25.0% $42 $40 20.0% $15.0 $11.7 $37 $10.1 $40 $9.7 20% $29 $29 $28 15.
Slide 19: Troubled Debt Restructurings (TDRs)
Troubled Debt Restructurings (TDRs) 90% of TDRs are Current TDRs ($ in Millions) TDR Highlights $160 95% Working with client base to maximize sustainable performance. $145 $144 92% $138 91% The specific reserves allocated to TDRs totaled $10.1 $140 90% 91% 89% 90% million at 9/30/16. 90% 89% $12
Slide 20: 2016 Management Outlook
2016 Management Outlook Category Outlook Lending Continued growth Goal 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 t
Slide 21: Strategic Initiatives
Strategic Initiatives Balance Sheet – Generate quality loan growth with continued focus on commercial and consumer installment lending as well as salable and portfolio mortgage loans. May consider augmenting loan growth with selective in-market whole loan purchases, depending on rate of accelerati
Slide 22: Q&A and Closing Remarks
Q&A and Closing Remarks Question and Answer Session Closing Remarks Thank you for attending ! NASDAQ: IBCP 22