Independent Bank Corp /Mi/ (NASDAQ: IBCP)

Sector: Financial Services Industry: Banks - Regional CIK: 0000039311
Market Cap 681.60 Mn
P/B 1.39
P/E 9.96
P/S 3.06
ROIC (Qtr) 11.70
Div Yield % 3.97
Rev 1y % (Qtr) 10.89
Total Debt (Qtr) 41.85 Mn
Debt/Equity (Qtr) 0.09

About

Independent Bank Corporation (IBCP), a bank holding company, operates primarily in the financial services sector. It conducts its business activities through its subsidiary, Independent Bank, and is subject to regulation by the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Michigan Department of Insurance and Financial Services (DIFS). IBCP's main business activities encompass several segments, including lending, deposit services, investments and securities, and other services. In the lending segment, the company offers...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 85.24M provides robust 2.04x coverage of total debt 41.85M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 5.46B provides 130.54x coverage of total debt 41.85M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 85.24M provides strong 33.35x coverage of stock compensation 2.56M, indicating sustainable incentive practices.
  • Robust free cash flow of 76.83M exceeds capital expenditure of 8.40M by 9.14x, indicating strong organic growth funding capability.
  • Operating cash flow of 85.24M provides strong 4.53x coverage of operating expenses 18.81M, showing operational efficiency.

Bear case

  • Operating cash flow of 85.24M barely covers its investment activities of (162.16M), with a coverage ratio of -0.53, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 85.24M provides thin coverage of dividend payments of (21.23M) with a -4.01 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 76.83M represents just -2.02x of debt issuance (37.99M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of 239.60M provide limited buffer against comprehensive income items of (60.63M), which is -3.95x, indicating elevated exposure to market risks.
  • Operating cash flow of 85.24M is outpaced by equity issuance of (7.76M) (-10.99 ratio), indicating concerning reliance on equity markets for funding operations.

Peer comparison

Companies in the Banks - Regional
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 USB Us Bancorp \De\ 84.44 Bn 12.40 3.25 77.98 Bn
2 PNC Pnc Financial Services Group, Inc. 84.36 Bn 13.61 3.73 62.34 Bn
3 NU Nu Holdings Ltd. 81.47 Bn 32.21 5.79 4.49 Bn
4 NWG NatWest Group plc 66.53 Bn 9.88 3.05 169.04 Bn
5 TFC Truist Financial Corp 64.60 Bn 13.18 3.53 71.11 Bn
6 MTB M&T Bank Corp 32.73 Bn 12.47 3.60 14.99 Bn
7 FITB Fifth Third Bancorp 31.96 Bn 14.15 3.93 18.94 Bn
8 FCNCA First Citizens Bancshares Inc /De/ 28.98 Bn 12.78 3.26 40.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.13 0.14
EV to Cash from Ops. EV/CFO 8.41 7.21
EV to Debt EV to Debt 17.13 5.20
EV to EBIT EV/EBIT 8.56 14.98
EV to EBITDA EV/EBITDA 7.65 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF 9.33 8.87
EV to Market Cap EV to Market Cap 1.05 1.04
EV to Revenue EV/Rev 3.22 -3.76
Price to Book Value [P/B] P/B 1.39 1.17
Price to Earnings [P/E] P/E 9.96 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.22 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 31.00 35.28
Dividend per Basic Share Div per Share (Qtr) 1.04 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 28.03 34.52
Interest Coverage Interest Coverage 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -63.55 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 71.67 15.78
Dividend Growth (1y) % Div 1y % (Qtr) 8.33 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 10.24 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 6.19 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) 7.06 61.46
EBT Growth (1y) % EBT 1y % (Qtr) 7.06 61.37
EPS Growth (1y) % EPS 1y % (Qtr) 10.40 76.34
FCF Growth (1y) % FCF 1y % (Qtr) 31.46 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.05 14.15
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.04 0.04
Cash Payout Ratio Cash Payout (Qtr) 0.23 0.26
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.01
Debt to Equity Ratio Debt/Equity (Qtr) 0.09 0.53
Interest Cover Ratio Interest Cover Ratio 0.00 -0.05
Times Interest Earned Times Interest Earned 0.00 -0.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 42.10 147.97
EBIT Margin % EBIT Margin % (Qtr) 37.57 155.41
EBT Margin % EBT Margin % (Qtr) 37.57 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 30.70 115.63