Independent Bank Corporation Reports 2025 First Quarter Results

First Quarter Highlights Highlights for the first quarter of 2025 include: Increase in net interest income of $0.8 million (or 1.9% ) over the fourth quarter of 2024;Increase in tangible book value per share of $2.43 (13.2%) from March 31, 2024;Net growth in core deposits of $9.1 million (or 0.8% annualized) from December 31, 2024;Net growth in loans of $33.9 million (or 3.4% annualized) from December 31, 2024; andThe payment of a 26 cent per share dividend on common stock on February 14, 2025. GRAND RAPIDS, Mich., April 24, 2025 (GLOBE NEWSWIRE) -- Independent Bank Corporation (NASDAQ: IBCP) reported first quarter 2025 net income of $15.6 million, or $0.74 per diluted share, versus net income of $16.0 million, or $0.76 per diluted share, in the prior-year period. William B. (“Brad”) Kessel, the President and Chief Executive Officer of Independent Bank Corporation, commented: “I am proud of our team and very pleased to see us continue our positive trends with our first quarter 2025 results. Overall loans increased 3.4% (annualized), while core deposits are up 0.8% (annualized). We were able to generate net interest income growth on both a linked quarter basis and on a year over year quarterly basis and produce four basis points in margin expansion. We believe that our expenses continue to be well managed, and we continue to see improved operational scale from strategic investments we have made in recent years. These fundamentals continue to drive positive growth in tangible book value per share (13.2%) compared to the prior year quarter. Our credit metrics continue to be very good, with a low level of watch credits, 14 basis points of non-performing assets to total assets, and 0.01% net charge-offs for the quarter to average loans annualized. The allowance for credit losses, factoring in the recent market uncertainty, was 1.47% of total loans. We are staying in close contact with our client base during this volatile period and keeping abreast of what they are experiencing and how they are adjusting if needed. Based on a robust commercial loan pipeline, the past record of our core group of professionals and the ongoing strategic initiative to add talented bankers to our team, we continue to be focused on what we can control and optimistic on the long-term future of the IBC franchise.” Significant items impacting comparable first quarter 2025 and 2024 results include the following: Changes in the fair value due to price of capitalized mortgage loan servicing rights (the “MSR Changes”) of $(1.5) million ($(0.06) per diluted share, after taxes) for the three-month period ended March 31, 2025, as compared to $1.3 million ($0.05 per diluted share, after taxes) for the three-months ended March 31, 2024. Operating Results The Company’s net interest income totaled $43.7 million during the first quarter of 2025, an increase of $3.5 million, or 8.7% from the year-ago period, and an increase of $0.8 million, or 1.9%, from the fourth quarter of 2024. The Company’s tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”) was 3.49% during the first quarter of 2025, compared to 3.30% in the year-ago period, and 3.45% in the fourth quarter of 2024. The year-over-year and linked quarterly increase in net interest income was due to an increase in average interest-earning assets and the net interest margin. Average interest-earning assets were $5.08 billion in the first quarter of 2025, compared to $4.91 billion in the year ago quarter and $5.01 billion in the fourth quarter of 2024. Non-interest income totaled $10.4 million for the first quarter of 2025, compared to $12.6 million in the comparable prior year period. This change was primarily due to variances in mortgage banking related revenues. Net gains on mortgage loans in the first quarters of 2025 and 2024 were approximately $2.3 million and $1.4 million, respectively. The comparative quarterly increase in net gains on mortgage loans was primarily due to an increase in both gain on sale margin on mortgage loans sold and an increase in the volume of mortgage loans sold. Mortgage loan servicing, net, generated income (expense) of $(0.6) million and $2.7 million in the first quarters of 2025 and 2024, respectively. The significant variance in mortgage loan servicing, net is primarily due to changes in the fair value of capitalized mortgage loan servicing rights associated with changes in interest rates and the associated expected future prepayment levels and expected float rates as well as a decline in servicing revenue. The decline in servicing revenue is attributed to the sale of approximately $931 million of mortgage servicing rights on January 31, 2025. Capitalized mortgage loan servicing rights totaled $32.2 million and $46.8 million at March 31, 2025 and December 31, 2024, respectively. The decline during the first quarter was primarily attributed to aforementioned mortgage servicing right sale. This transaction was executed in part to reduce the amount of exposure the bank had to rate variances that may impact the mortgage servicing right asset valuation in future periods. While the magnitude of fair value adjustments would also be expected to decrease, those adjustments are dependent upon factors that are harder to predict. Mortgage loan servicing, net activity is summarized in the following table: Three months ended 3/31/2025 3/31/2024 (In thousands)Mortgage loan servicing, net: Revenue, net$1,882 $2,219 Fair value change due to price (1,533) 1,265 Fair value change due to pay-downs (891) (759)Loss on sale of originated servicing rights (94) — Total$(636) $2,725 Non-interest expenses totaled $34.3 million in the first quarter of 2025, compared to $32.2 million in the year-ago period. The Company recorded income tax expense of $3.5 million in the first quarter of 2025. This compares to an income tax expense of $3.8 million in the first quarter of 2024. The change in income tax expense principally reflects changes in pre-tax earnings in 2025 relative to 2024. Asset Quality A breakdown of non-performing loans by loan type is as follows (1): 3/31/2025 12/31/2024 3/31/2024Loan Type(Dollars in thousands)Commercial$127 $54 $25 Mortgage 8,080 7,005 4,620 Installment 819 733 710 Sub total 9,026 7,792 5,355 Less - government guaranteed loans 1,940 1,790 1,665 Total non-performing loans$7,086 $6,002 $3,690 Ratio of non-performing loans to total portfolio loans 0.17% 0.15% 0.10%Ratio of non-performing assets to total assets 0.14% 0.13% 0.09%Ratio of allowance for credit losses to total non-performing loans 847.23% 989.32% 1526.10% (1) Non performing loans include non-accrual loans and loans 90 days or more past due and still accruing interest. The provision for credit losses was an expense of $0.72 million and $0.74 million in the first quarters of 2025 and 2024, respectively. We recorded loan net charge offs of $0.07 million and $0.22 million in the first quarters of 2025 and 2024, respectively. At March 31, 2025, the allowance for credit losses for loans totaled $60.0 million, or 1.47% of total portfolio loans compared to $59.4 million, or 1.47% of total portfolio loans at December 31, 2024. Balance Sheet, Capital and Liquidity Total assets were $5.33 billion at March 31, 2025, a decrease of $9.7 million from December 31, 2024. Loans, excluding loans held for sale, were $4.07 billion at March 31, 2025, compared to $4.04 billion at December 31, 2024. Deposits totaled $4.63 billion at March 31, 2025, a decrease of $20.2 million from December 31, 2024. This decrease is primarily due to decreases in non-interest bearing deposits and brokered time deposits that were partially offset by increases in savings and interest-bearing checking, reciprocal and time deposits. Cash and cash equivalents totaled $128.1 million at March 31, 2025, versus $119.9 million at December 31, 2024. Securities available for sale (“AFS”) totaled $529.7 million at March 31, 2025, versus $559.2 million at December 31, 2024. Total shareholders’ equity was $467.3 million at March 31, 2025, or 8.77% of total assets compared to $454.7 million or 8.52% at December 31, 2024. Tangible common equity totaled $437.6 million at March 31, 2025, or $20.87 per share compared to $424.9 million or $20.33 per share at December 31, 2024. The increase in shareholder equity as well as tangible common equity are primarily the result of earnings retention and a decrease in accumulated other comprehensive loss. The Company’s wholly owned subsidiary, Independent Bank, remains significantly above “well capitalized” for regulatory purposes with the following ratios: Regulatory Capital Ratios3/31/2025 12/31/2024 WellCapitalizedMinimum Tier 1 capital to average total assets9.56% 9.58% 5.00%Tier 1 common equity to risk-weighted assets11.93% 11.74% 6.50%Tier 1 capital to risk-weighted assets11.93% 11.74% 8.00%Total capital to risk-weighted assets13.19% 12.99% 10.00% At March 31, 2025, in addition to liquidity available from our normal operating, funding, and investing activities, we had unused credit lines with the FHLB and FRB of approximately $1.10 billion and $486.1 million, respectively. We also had approximately $501.0 million in fair value of unpledged securities AFS and HTM at March 31, 2025 which could be pledged for an estimated additional borrowing capacity at the FHLB and FRB of approximately $469.7 million. Share Repurchase Plan On December 17, 2024, the Board of Directors of the Company authorized the 2025 share repurchase plan. Under the terms of the 2025 share repurchase plan, the Company is authorized to purchase up to 1,100,000 shares, or approximately 5% of its then outstanding common stock. The repurchase plan is authorized to last through December 31, 2025. During the three month period ended March 31, 2025, there were 1,093 shares of common stock repurchased, for an aggregate purchase price of $0.03 million. Subsequent to quarter end, from April 3, 2025 through April 22, 2025, there were 249,482 additional shares of common stock repurchased, for an aggregate purchase price of $7.2 million. Earnings Conference Call Brad Kessel, President and CEO, Gavin Mohr, CFO and Joel Rahn, EVP – Commercial Banking will review the quarterly results in a conference call for investors and analysts beginning at 11:00 am ET on Thursday, April 24, 2025. To participate in the live conference call, please dial 1-833-470-1428 (Access Code # 706949). Also, the conference call will be accessible through an audio webcast with user-controlled slides via the following site/URL: https://events.q4inc.com/attendee/106805636. A playback of the call can be accessed by dialing 1-866-813-9403 (Access Code # 746507). The replay will be available through May 1, 2025. About Independent Bank Corporation Independent Bank Corporation (NASDAQ: IBCP) is a Michigan-based bank holding company with total assets of approximately $5.3 billion. Founded as First National Bank of Ionia in 1864, Independent Bank Corporation operates a branch network across Michigan's Lower Peninsula through one state-chartered bank subsidiary. This subsidiary (Independent Bank) provides a full range of financial services, including commercial banking, mortgage lending, consumer banking, investments and insurance. Independent Bank Corporation is committed to providing exceptional personal service and value to its customers, stockholders and the communities it serves. For more information, please visit our Web site at: IndependentBank.com. Forward-Looking StatementsThis 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 plans and prospects. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. For example, deterioration in general business and economic conditions or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding to us, lead to a tightening of credit, and increase stock price volatility. Our results could also be adversely affected by changes in interest rates; increases in unemployment rates; deterioration in the credit quality of our loan portfolios or in the value of the collateral securing those loans; deterioration in the value of our investment securities; legal and regulatory developments; changes in customer behavior and preferences; breaches in data security; and management’s ability to effectively manage the multitude of risks facing our business. Key risk factors that could affect our future results are described in more detail in our Annual Report on Form 10-K for the year ended December 31, 2024 and the other reports we file with the SEC, including under the heading “Risk Factors.” Investors should not place undue reliance on forward-looking statements as a prediction of our future results. Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise. INDEPENDENT BANK CORPORATION AND SUBSIDIARIESConsolidated Statements of Financial Condition March 31,2025 December 31,2024 (Unaudited) (In thousands, except shareamounts)Assets Cash and due from banks $60,566 $56,984 Interest bearing deposits 67,579 62,898 Cash and Cash Equivalents 128,145 119,882 Securities available for sale 529,676 559,182 Securities held to maturity (fair value of $302,579 at March 31, 2025 and $301,860 at December 31, 2024) 336,928 339,436 Federal Home Loan Bank and Federal Reserve Bank stock, at cost 15,587 16,099 Loans held for sale, carried at fair value 9,514 7,643 Loans Commercial 1,992,187 1,937,364 Mortgage 1,512,807 1,516,726 Installment 567,697 584,735 Total Loans 4,072,691 4,038,825 Allowance for credit losses (60,035) (59,379)Net Loans 4,012,656 3,979,446 Other real estate and repossessed assets, net 413 938 Property and equipment, net 37,369 37,492 Bank-owned life insurance 53,721 53,855 Capitalized mortgage loan servicing rights, carried at fair value 32,171 46,796 Other intangibles 1,366 1,488 Goodwill 28,300 28,300 Accrued income and other assets 142,582 147,547 Total Assets $5,328,428 $5,338,104 Liabilities and Shareholders' Equity Deposits Non-interest bearing $989,928 $1,013,647 Savings and interest-bearing checking 2,017,800 1,995,314 Reciprocal 910,526 907,031 Time 635,172 628,285 Brokered time 80,505 109,811 Total Deposits 4,633,931 4,654,088 Other borrowings 45,014 45,009 Subordinated debt 39,605 39,586 Subordinated debentures 39,813 39,796 Accrued expenses and other liabilities 102,788 104,939 Total Liabilities 4,861,151 4,883,418 Shareholders’ Equity Preferred stock, no par value, 200,000 shares authorized; none issued or outstanding — — Common stock, no par value, 500,000,000 shares authorized; issued and outstanding: 20,970,115 shares at March 31, 2025 and 20,895,714 shares at December 31, 2024 318,365 318,777 Retained earnings 215,995 205,853 Accumulated other comprehensive loss (67,083) (69,944)Total Shareholders’ Equity 467,277 454,686 Total Liabilities and Shareholders’ Equity $5,328,428 $5,338,104 INDEPENDENT BANK CORPORATION AND SUBSIDIARIESConsolidated Statements of Operations Three Months Ended March 31,2025 December 31,2024 March 31,2024 (Unaudited)Interest Income (In thousands, except per share amounts)Interest and fees on loans $57,768 $58,346 $55,043 Interest on securities Taxable 4,036 4,417 5,251 Tax-exempt 2,770 2,905 3,391 Other investments 1,570 1,310 1,441 Total Interest Income 66,144 66,978 65,126 Interest Expense Deposits 20,955 22,546 22,810 Other borrowings and subordinated debt and debentures 1,504 1,581 2,119 Total Interest Expense 22,459 24,127 24,929 Net Interest Income 43,685 42,851 40,197 Provision for credit losses 721 2,217 744 Net Interest Income After Provision for Credit Losses 42,964 40,634 39,453 Non-interest Income Interchange income 3,127 3,294 3,151 Service charges on deposit accounts 2,814 2,976 2,872 Net gains (losses) on assets Mortgage loans 2,303 1,705 1,364 Securities available for sale (330) (14) (269)Mortgage loan servicing, net (636) 7,761 2,725 Other 3,146 3,399 2,718 Total Non-interest Income 10,424 19,121 12,561 Non-interest Expense Compensation and employee benefits 20,383 22,886 20,770 Data processing 3,729 3,688 3,255 Occupancy, net 2,223 1,953 2,074 Interchange expense 1,119 1,131 1,097 Furniture, fixtures and equipment 885 928 954 Advertising 861 1,198 491 Loan and collection 786 606 512 FDIC deposit insurance 711 729 782 Communications 591 462 615 Legal and professional 479 849 486 Costs (recoveries) related to unfunded lending commitments 196 303 (652)Other 2,299 2,254 1,809 Total Non-interest Expense 34,262 36,987 32,193 Income Before Income Tax 19,126 22,768 19,821 Income tax expense 3,536 4,307 3,830 Net Income $15,590 $18,461 $15,991 Net Income Per Common Share Basic $0.74 $0.88 $0.77 Diluted $0.74 $0.87 $0.76 INDEPENDENT BANK CORPORATION AND SUBSIDIARIESSelected Financial Data March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024 (unaudited) (Dollars in thousands except per share data)Three Months Ended Net interest income$43,685 $42,851 $41,854 $41,346 $40,197 Provision for credit losses 721 2,217 1,488 19 744 Non-interest income 10,424 19,121 9,508 15,172 12,561 Non-interest expense 34,262 36,987 32,583 33,333 32,193 Income before income tax 19,126 22,768 17,291 23,166 19,821 Income tax expense 3,536 4,307 3,481 4,638 3,830 Net income$15,590 $18,461 $13,810 $18,528 $15,991 Basic earnings per share$0.74 $0.88 $0.66 $0.89 $0.77 Diluted earnings per share 0.74 0.87 0.65 0.88 0.76 Cash dividend per share 0.26 0.24 0.24 0.24 0.24 Average shares outstanding 20,943,094 20,893,820 20,896,019 20,901,741 20,877,067 Average diluted shares outstanding 21,150,550 21,122,096 21,115,273 21,105,387 21,079,607 Performance Ratios Return on average assets 1.18% 1.39% 1.04% 1.44% 1.24%Return on average equity 13.71 16.31 12.54 17.98 15.95 Efficiency ratio (1) 62.20 59.09 62.82 61.49 60.26 As a Percent of Average Interest-Earning Assets (1) Interest income 5.28% 5.37% 5.48% 5.45% 5.34%Interest expense 1.79 1.92 2.11 2.05 2.04 Net interest income 3.49 3.45 3.37 3.40 3.30 Average Balances Loans$4,060,941 $3,994,661 $3,909,954 $3,849,199 $3,810,526 Securities 883,676 912,073 933,750 944,435 999,140 Total earning assets 5,078,596 5,007,566 4,985,842 4,893,367 4,910,669 Total assets 5,378,022 5,300,368 5,275,623 5,181,317 5,201,452 Deposits 4,715,331 4,655,091 4,616,119 4,531,917 4,561,645 Interest bearing liabilities 3,799,852 3,717,483 3,689,684 3,611,972 3,627,446 Shareholders' equity 461,291 450,214 438,077 414,549 403,225 (1) Presented on a fully tax equivalent basis assuming a marginal tax rate of 21%. INDEPENDENT BANK CORPORATION AND SUBSIDIARIESSelected Financial Data (continued) March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024 (unaudited) (Dollars in thousands except per share data)End of Period Capital Tangible common equity ratio 8.26% 8.00% 8.08% 7.63% 7.41%Tangible common equity ratio excluding accumulated other comprehensive loss 9.31 9.10 8.99 8.76 8.57 Average equity to average assets 8.58 8.49 8.30 8.00 7.75 Total capital to risk-weighted assets (2) 14.51 14.22 14.25 14.21 13.85 Tier 1 capital to risk-weighted assets (2) 12.34 12.06 12.06 12.01 11.65 Common equity tier 1 capital to risk-weighted assets (2) 11.46 11.17 11.16 11.09 10.73 Tier 1 capital to average assets (2) 9.88 9.85 9.63 9.59 9.29 Common shareholders' equity per share of common stock$22.28 $21.76 $21.65 $20.60 $19.88 Tangible common equity per share of common stock 20.87 20.33 20.22 19.16 18.44 Total shares outstanding 20,970,115 20,895,714 20,893,800 20,899,358 20,903,677 Selected Balances Loans$4,072,691 $4,038,825 $3,942,287 $3,851,889 $3,839,965 Securities 866,604 898,618 932,312 936,194 963,577 Total earning assets 5,031,975 5,024,083 4,964,784 4,979,555 4,949,496 Total assets 5,328,428 5,338,104 5,259,268 5,277,500 5,231,255 Deposits 4,633,931 4,654,088 4,626,875 4,614,328 4,582,414 Interest bearing liabilities 3,768,435 3,764,832 3,682,482 3,694,025 3,677,060 Shareholders' equity 467,277 454,686 452,369 430,459 415,570 (2) March 31, 2025 are Preliminary. Reconciliation of Non-GAAP Financial MeasuresIndependent Bank Corporation Independent Bank Corporation believes non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate the adequacy of common equity and performance trends. Tangible common equity is used by the Company to measure the quality of capital. Reconciliation of Non-GAAP Financial Measures Three Months Ended March 31, 2025 2024 (Dollars in thousands)Net Interest Margin, Fully Taxable Equivalent ("FTE") Net interest income$43,685 $40,197 Add: taxable equivalent adjustment 452 180 Net interest income - taxable equivalent$44,137 $40,377 Net interest margin (GAAP) (1) 3.46% 3.28%Net interest margin (FTE) (1) 3.49% 3.30% (1) Annualized. Tangible Common Equity Ratio March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024 (Dollars in thousands)Common shareholders' equity$467,277 $454,686 $452,369 $430,459 $415,570 Less: Goodwill 28,300 28,300 28,300 28,300 28,300 Other intangibles 1,366 1,488 1,617 1,746 1,875 Tangible common equity 437,611 424,898 422,452 400,413 385,395 Addition: Accumulated other comprehensive loss for regulatory purposes 61,285 64,146 52,454 65,030 65,831 Tangible common equity excluding accumulated other comprehensive loss adjustments$498,896 $489,044 $474,906 $465,443 $451,226 Total assets$5,328,428 $5,338,104 $5,259,268 $5,277,500 $5,231,255 Less: Goodwill 28,300 28,300 28,300 28,300 28,300 Other intangibles 1,366 1,488 1,617 1,746 1,875 Tangible assets 5,298,762 5,308,316 5,229,351 5,247,454 5,201,080 Addition: Net unrealized losses on available for sale securities and derivatives, net of tax 61,285 64,146 52,454 65,030 65,831 Tangible assets excluding accumulated other comprehensive loss adjustments$5,360,047 $5,372,462 $5,281,805 $5,312,484 $5,266,911 Common equity ratio 8.77% 8.52% 8.60% 8.16% 7.94%Tangible common equity ratio 8.26% 8.00% 8.08% 7.63% 7.41%Tangible common equity ratio excluding accumulated other comprehensive loss 9.31% 9.10% 8.99% 8.76% 8.57% Tangible Common Equity per Share of Common Stock: Common shareholders' equity$467,277 $454,686 $452,369 $430,459 $415,570 Tangible common equity$437,611 $424,898 $422,452 $400,413 $385,395 Shares of common stock outstanding (in thousands) 20,970 20,896 20,894 20,899 20,904 Common shareholders' equity per share of common stock$22.28 $21.76 $21.65 $20.60 $19.88 Tangible common equity per share of common stock$20.87 $20.33 $20.22 $19.16 $18.44 The tangible common equity ratio removes the effect of goodwill and other intangible assets from capital and total assets. Tangible common equity per share of common stock removes the effect of goodwill and other intangible assets from common shareholders’ equity per share of common stock. Contact:William B. Kessel, President and CEO, 616.447.3933Gavin A. Mohr, Chief Financial Officer, 616.447.3929

Independent Bank Corporation Reports 2025 First Quarter Results

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