Independent Bank Corporation Reports 2025 Second Quarter Results

Second Quarter Highlights Highlights for the second quarter of 2025 include: Increase in net interest income of $0.9 million (or 2.1% ) over the first quarter of 2025;Increase in tangible common equity per share of common stock of $0.36 (or 6.9% annualized) from March 31, 2025;Net interest margin expansion of nine basis points compared to March 31, 2025;Net growth in loans of $91.7 million (or 9.0% annualized) from March 31, 2025; andThe payment of a 26 cent per share dividend on common stock on May 15, 2025. GRAND RAPIDS, Mich., July 24, 2025 (GLOBE NEWSWIRE) -- Independent Bank Corporation (NASDAQ: IBCP) reported second quarter 2025 net income of $16.9 million, or $0.81 per diluted share, versus net income of $18.5 million, or $0.88 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 pleased to see us continue our positive trends with our second quarter 2025 results. Overall, loans increased by 9.0% (annualized), while core deposits were down by 1.4% (annualized) due to seasonality. We generated net interest income growth on both a linked quarter basis and a year-over-year quarterly basis, producing nine basis points of margin expansion from the prior quarter. We believe our expenses are well managed, and we continue to see improved operational scale from strategic investments made in recent years. These fundamentals drove positive growth in tangible common equity per share of common stock (10.8%) compared to the prior year quarter, along with very healthy performance returns: a return on average assets of 1.27% and a return on average equity of 14.66%. Despite heightened uncertainty in the markets during the quarter, our credit metrics remain strong, with low levels of watch credits, 16 basis points of non-performing assets to total assets, and 0.02% net charge-offs to average loans of the quarter (annualized). The allowance for credit losses was 1.47% of total loans. Our team has been effective in many areas during the first half of 2025, including business development from the existing customer base and onboarding new relationships which have enhanced the geographic and product line diversification of our business. We continue to succeed in recruiting talented bankers to join the Independent Bank team. During the second quarter, we rolled out several new technologies to make banking easier for both our customers and associates serving our customers. For all these reasons, I am optimistic about our prospects for growth in the balance of 2025 and 2026." Significant items impacting comparable second 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 $(0.2) million ($(0.01) per diluted share, after taxes) for the three-month period ended June 30, 2025, as compared to $0.9 million ($0.03 per diluted share, after taxes) for the three-month period ended June 30, 2024.Gain on equity securities at fair value of $2.7 million ($0.10 per diluted share, after tax) in the second quarter ended June 30, 2024, attributable to the exchange of our Visa Class B-1 common stock. No gain or loss on equity securities at fair value was recorded for the second quarter of 2025. Operating Results The Company’s net interest income totaled $44.6 million during the second quarter of 2025, an increase of $3.3 million, or 7.9% from the year-ago period, and an increase of $0.9 million, or 2.1%, from the first quarter of 2025. The Company’s tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”) was 3.58% during the second quarter of 2025, compared to 3.40% in the year-ago period, and 3.49% in the first quarter of 2025. The year-over-year quarterly increase in net interest income was due to both an increase in average interest-earning assets and the higher net interest margin. The linked quarter increase in net interest income was due to an increase in the net interest margin that was partially offset by a decrease in average interest-earning assets. Average interest-earning assets were $5.04 billion in the second quarter of 2025, compared to $4.89 billion in the year ago quarter and $5.08 billion in the first quarter of 2025. Non-interest income totaled $11.3 million for the second quarter of 2025, compared to $15.2 million in the comparable prior year period. This change was primarily due to a gain on equity securities at fair value of $2.7 million in the prior year quarter as well as variances in mortgage banking related revenues. Net gains on mortgage loans in the second quarters of 2025 and 2024 were approximately $1.6 million and $1.3 million, respectively. The comparative quarterly increase in net gains on mortgage loans was 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 of $0.5 million and $2.1 million in the second 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 $32.1 million and $46.8 million at June 30, 2025 and December 31, 2024, respectively. The decline during the first half of 2025 was primarily attributed to the 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 Six months ended 6/30/2025 6/30/2024 6/30/2025 6/30/2024 (In thousands)Mortgage loan servicing, net: Revenue, net$1,649 $2,214 $3,531 $4,433 Fair value change due to price (219) 911 (1,752) 2,176 Fair value change due to pay-downs (862) (1,034) (1,753) (1,793)Loss on sale of originated servicing rights$(78) $— (172) — Total$490 $2,091 $(146) $4,816 Non-interest expenses totaled $33.8 million in the second quarter of 2025, compared to $33.3 million in the year-ago period. The Company recorded income tax expense of $3.8 million in the second quarter of 2025. This compares to an income tax expense of $4.6 million in the second quarter of 2024. The change in income tax expense principally reflects changes in pre-tax earnings in 2025 relative to 2024. Asset Quality A breakdown of non-performing loans by loan type is as follows (1): 6/30/2025 12/31/2024 6/30/2024Loan Type(Dollars in thousands)Commercial$— $54 $312 Mortgage 9,620 7,005 4,819 Installment 833 733 843 Sub total 10,453 7,792 5,974 Less - government guaranteed loans 2,249 1,790 1,489 Total non-performing loans$8,204 $6,002 $4,485 Ratio of non-performing loans to total portfolio loans 0.20% 0.15% 0.12%Ratio of non-performing assets to total assets 0.16% 0.13% 0.10%Ratio of allowance for credit losses to total non-performing loans 745.45% 989.32% 1253.98% (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 $1.50 million and $0.02 million in the second quarters of 2025 and 2024, respectively. We recorded loan net charge offs of $0.37 million and $0.09 million in the second quarters of 2025 and 2024, respectively. At June 30, 2025, the allowance for credit losses for loans totaled $61.2 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 $5.42 billion at June 30, 2025, an increase of $80.4 million from December 31, 2024. Loans, excluding loans held for sale, were $4.16 billion at June 30, 2025, compared to $4.04 billion at December 31, 2024. Deposits totaled $4.66 billion at June 30, 2025, an increase of $5.3 million from December 31, 2024. This increase is primarily due to increases in reciprocal and brokered time deposits that were partially offset by decreases in non-interest bearing, savings and interest-bearing checking and time deposits. Cash and cash equivalents totaled $146.2 million at June 30, 2025, versus $119.9 million at December 31, 2024. Securities available for sale (“AFS”) totaled $509.5 million at June 30, 2025, versus $559.2 million at December 31, 2024. Total shareholders’ equity was $469.3 million at June 30, 2025, or 8.66% of total assets compared to $454.7 million or 8.52% at December 31, 2024. Tangible common equity totaled $439.7 million at June 30, 2025, or $21.23 per share compared to $424.9 million or $20.33 per share at December 31, 2024. The increase in shareholders’ equity as well as tangible common equity are primarily the result of earnings retention. The Company’s wholly owned subsidiary, Independent Bank, remains significantly above “well capitalized” for regulatory purposes with the following ratios: Regulatory Capital Ratios6/30/2025 12/31/2024 WellCapitalizedMinimum Tier 1 capital to average total assets9.79% 9.58% 5.00%Common equity tier 1 capital to risk-weighted assets11.90% 11.74% 6.50%Tier 1 capital to risk-weighted assets11.90% 11.74% 8.00%Total capital to risk-weighted assets13.15% 12.99% 10.00% At June 30, 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 $1.02 billion and $484.6 million, respectively. We also had approximately $486.0 million in fair value of unpledged securities AFS and HTM at June 30, 2025 which could be pledged for an estimated additional borrowing capacity at the FHLB and FRB of approximately $455.9 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 six month period ended June 30, 2025, there were 252,276 shares of common stock repurchased, for an aggregate purchase price of $7.36 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, July 24, 2025. To participate in the live conference call, please dial 1-833-470-1428 (Access Code # 493553). 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/394984135. A playback of the call can be accessed by dialing 1-866-813-9403 (Access Code # 372693). The replay will be available through July 31, 2025. About Independent Bank Corporation Independent Bank Corporation (NASDAQ: IBCP) is a Michigan-based bank holding company with total assets of approximately $5.4 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 June 30, 2025 December 31, 2024 (Unaudited) (In thousands, except shareamounts)Assets Cash and due from banks $74,354 $56,984 Interest bearing deposits 71,805 62,898 Cash and Cash Equivalents 146,159 119,882 Securities available for sale 509,511 559,182 Securities held to maturity (fair value of $293,658 at June 30, 2025 and $301,860 at December 31, 2024) 329,302 339,436 Federal Home Loan Bank and Federal Reserve Bank stock, at cost 18,102 16,099 Loans held for sale, carried at fair value 12,492 7,643 Loans Commercial 2,068,081 1,937,364 Mortgage 1,528,360 1,516,726 Installment 567,926 584,735 Total Loans 4,164,367 4,038,825 Allowance for credit losses (61,157) (59,379)Net Loans 4,103,210 3,979,446 Other real estate and repossessed assets, net 426 938 Property and equipment, net 38,409 37,492 Bank-owned life insurance 53,587 53,855 Capitalized mortgage loan servicing rights, carried at fair value 32,053 46,796 Other intangibles 1,244 1,488 Goodwill 28,300 28,300 Accrued income and other assets 145,724 147,547 Total Assets $5,418,519 $5,338,104 Liabilities and Shareholders' Equity Deposits Non-interest bearing $1,007,976 $1,013,647 Savings and interest-bearing checking 1,989,941 1,995,314 Reciprocal 911,814 907,031 Time 627,986 628,285 Brokered time 121,642 109,811 Total Deposits 4,659,359 4,654,088 Other borrowings 102,008 45,009 Subordinated debt 39,624 39,586 Subordinated debentures 39,830 39,796 Accrued expenses and other liabilities 108,448 104,939 Total Liabilities 4,949,269 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: 20,715,650 shares at June 30, 2025 and 20,895,714 shares at December 31, 2024 311,653 318,777 Retained earnings 227,484 205,853 Accumulated other comprehensive loss (69,887) (69,944)Total Shareholders’ Equity 469,250 454,686 Total Liabilities and Shareholders’ Equity $5,418,519 $5,338,104 INDEPENDENT BANK CORPORATION AND SUBSIDIARIESConsolidated Statements of Operations Three Months Ended Six Months Ended June 30, June 30, 2025 March 31, 2025 June 30, 2024 2025 2024 (Unaudited)Interest Income (In thousands, except per share amounts)Interest and fees on loans $59,535 $57,768 $56,786 $117,303 $111,829 Interest on securities Taxable 3,796 4,036 4,713 7,832 9,964 Tax-exempt 2,773 2,770 3,400 5,543 6,791 Other investments 774 1,570 1,439 2,344 2,880 Total Interest Income 66,878 66,144 66,338 133,022 131,464 Interest Expense Deposits 20,462 20,955 22,876 41,417 45,686 Other borrowings and subordinated debt and debentures 1,801 1,504 2,116 3,305 4,235 Total Interest Expense 22,263 22,459 24,992 44,722 49,921 Net Interest Income 44,615 43,685 41,346 88,300 81,543 Provision for credit losses 1,500 721 19 2,221 763 Net Interest Income After Provision for Credit Losses 43,115 42,964 41,327 86,079 80,780 Non-interest Income Interchange income 3,390 3,127 3,401 6,517 6,552 Service charges on deposit accounts 2,981 2,814 2,937 5,795 5,809 Net gains (losses) on assets Mortgage loans 1,631 2,303 1,333 3,934 2,697 Equity securities at fair value — — 2,693 — 2,693 Securities available for sale 11 (330) — (319) (269)Mortgage loan servicing, net 490 (636) 2,091 (146) 4,816 Other 2,822 3,146 2,717 5,968 5,435 Total Non-interest Income 11,325 10,424 15,172 21,749 27,733 Non-interest Expense Compensation and employee benefits 21,123 20,383 21,251 41,506 42,021 Data processing 3,847 3,729 3,257 7,576 6,512 Occupancy, net 2,046 2,223 1,886 4,269 3,960 Interchange expense 1,177 1,119 1,127 2,296 2,224 Advertising 833 861 788 1,694 1,279 Furniture, fixtures and equipment 793 885 948 1,678 1,902 Loan and collection 744 786 699 1,530 1,211 FDIC deposit insurance 637 711 695 1,348 1,477 Communications 470 591 499 1,061 1,114 Legal and professional 500 479 544 979 1,030 Costs (recoveries) related to unfunded lending commitments (389) 196 (137) (193) (789)Other 1,981 2,299 1,776 4,280 3,585 Total Non-interest Expense 33,762 34,262 33,333 68,024 65,526 Income Before Income Tax 20,678 19,126 23,166 39,804 42,987 Income tax expense 3,801 3,536 4,638 7,337 8,468 Net Income $16,877 $15,590 $18,528 $32,467 $34,519 Net Income Per Common Share Basic $0.81 $0.74 $0.89 $1.56 $1.65 Diluted $0.81 $0.74 $0.88 $1.54 $1.64 INDEPENDENT BANK CORPORATION AND SUBSIDIARIESSelected Financial Data June 30,2025 March 31,2025 December 31,2024 September 30,2024 June 30,2024 (unaudited) (Dollars in thousands except per share data)Three Months Ended Net interest income$44,615 $43,685 $42,851 $41,854 $41,346 Provision for credit losses 1,500 721 2,217 1,488 19 Non-interest income 11,325 10,424 19,121 9,508 15,172 Non-interest expense 33,762 34,262 36,987 32,583 33,333 Income before income tax 20,678 19,126 22,768 17,291 23,166 Income tax expense 3,801 3,536 4,307 3,481 4,638 Net income$16,877 $15,590 $18,461 $13,810 $18,528 Basic earnings per share$0.81 $0.74 $0.88 $0.66 $0.89 Diluted earnings per share 0.81 0.74 0.87 0.65 0.88 Cash dividend per share 0.26 0.26 0.24 0.24 0.24 Average shares outstanding 20,749,925 20,943,094 20,893,820 20,896,019 20,901,741 Average diluted shares outstanding 20,945,522 21,150,550 21,122,096 21,115,273 21,105,387 Performance Ratios Return on average assets 1.27% 1.18% 1.39% 1.04% 1.44%Return on average equity 14.66 13.71 16.31 12.54 17.98 Efficiency ratio (1) 59.67 62.20 59.09 62.82 61.49 As a Percent of Average Interest-Earning Assets (1) Interest income 5.35% 5.28% 5.37% 5.48% 5.45%Interest expense 1.77 1.79 1.92 2.11 2.05 Net interest income 3.58 3.49 3.45 3.37 3.40 Average Balances Loans$4,128,771 $4,060,941 $3,994,661 $3,909,954 $3,849,199 Securities 846,052 883,676 912,073 933,750 944,435 Total earning assets 5,036,090 5,078,596 5,007,566 4,985,842 4,893,367 Total assets 5,324,959 5,378,022 5,300,368 5,275,623 5,181,317 Deposits 4,646,639 4,715,331 4,655,091 4,616,119 4,531,917 Interest bearing liabilities 3,763,477 3,799,852 3,717,483 3,689,684 3,611,972 Shareholders' equity 461,720 461,291 450,214 438,077 414,549 (1) Presented on a fully tax equivalent basis assuming a marginal tax rate of 21%. INDEPENDENT BANK CORPORATION AND SUBSIDIARIESSelected Financial Data (continued) June 30,2025 March 31,2025 December 31,2024 September 30,2024 June 30,2024 (unaudited) (Dollars in thousands except per share data)End of Period Capital Tangible common equity ratio 8.16% 8.26% 8.00% 8.08% 7.63%Tangible common equity ratio excluding accumulated other comprehensive loss 9.24 9.31 9.10 8.99 8.76 Average equity to average assets 8.67 8.58 8.49 8.30 8.00 Total capital to risk-weighted assets (2) 14.20 14.51 14.22 14.25 14.21 Tier 1 capital to risk-weighted assets (2) 12.23 12.34 12.06 12.06 12.01 Common equity tier 1 capital to risk-weighted assets (2) 11.36 11.45 11.17 11.16 11.09 Tier 1 capital to average assets (2) 10.07 9.89 9.85 9.63 9.59 Common shareholders' equity per share of common stock$22.65 $22.28 $21.76 $21.65 $20.60 Tangible common equity per share of common stock 21.23 20.87 20.33 20.22 19.16 Total shares outstanding 20,715,650 20,970,115 20,895,714 20,893,800 20,899,358 Selected Balances Loans$4,164,367 $4,072,691 $4,038,825 $3,942,287 $3,851,889 Securities 838,813 866,604 898,618 932,312 936,194 Total earning assets 5,105,579 5,031,975 5,024,083 4,964,784 4,979,555 Total assets 5,418,519 5,328,428 5,338,104 5,259,268 5,277,500 Deposits 4,659,359 4,633,931 4,654,088 4,626,875 4,614,328 Interest bearing liabilities 3,832,845 3,768,435 3,764,832 3,682,482 3,694,025 Shareholders' equity 469,250 467,277 454,686 452,369 430,459 (2) June 30, 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 June 30, Six Months Ended June 30, 2025 2024 2025 2024 (Dollars in thousands)Net Interest Margin, Fully Taxable Equivalent ("FTE") Net interest income$44,615 $41,346 $88,300 $81,543 Add: taxable equivalent adjustment 444 175 896 355 Net interest income - taxable equivalent$45,059 $41,521 $89,196 $81,898 Net interest margin (GAAP) (1) 3.55% 3.39% 3.50% 3.33%Net interest margin (FTE) (1) 3.58% 3.40% 3.54% 3.35% (1) Annualized. Tangible Common Equity Ratio June 30,2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 (Dollars in thousands)Common shareholders' equity$469,250 $467,277 $454,686 $452,369 $430,459 Less: Goodwill 28,300 28,300 28,300 28,300 28,300 Other intangibles 1,244 1,366 1,488 1,617 1,746 Tangible common equity 439,706 437,611 424,898 422,452 400,413 Addition: Accumulated other comprehensive loss for regulatory purposes 64,089 61,285 64,146 52,454 65,030 Tangible common equity excluding accumulated other comprehensive loss adjustments$503,795 $498,896 $489,044 $474,906 $465,443 Total assets$5,418,519 $5,328,428 $5,338,104 $5,259,268 $5,277,500 Less: Goodwill 28,300 28,300 28,300 28,300 28,300 Other intangibles 1,244 1,366 1,488 1,617 1,746 Tangible assets 5,388,975 5,298,762 5,308,316 5,229,351 5,247,454 Addition: Net unrealized losses on available for sale securities and derivatives, net of tax 64,089 61,285 64,146 52,454 65,030 Tangible assets excluding accumulated other comprehensive loss adjustments$5,453,064 $5,360,047 $5,372,462 $5,281,805 $5,312,484 Common equity ratio 8.66% 8.77% 8.52% 8.60% 8.16%Tangible common equity ratio 8.16% 8.26% 8.00% 8.08% 7.63%Tangible common equity ratio excluding accumulated other comprehensive loss 9.24% 9.31% 9.10% 8.99% 8.76% Tangible Common Equity per Share of Common Stock: Common shareholders' equity$469,250 $467,277 $454,686 $452,369 $430,459 Tangible common equity$439,706 $437,611 $424,898 $422,452 $400,413 Shares of common stock outstanding (in thousands) 20,716 20,970 20,896 20,894 20,899 Common shareholders' equity per share of common stock$22.65 $22.28 $21.76 $21.65 $20.60 Tangible common equity per share of common stock$21.23 $20.87 $20.33 $20.22 $19.16 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 Second Quarter Results

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