Independent Bank Corporation Reports 2025 First Quarter Results

First Quarter Highlights

/EIN News/ -- 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; and
• The 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				3/31/2024
Loan 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 Ratios	3/31/2025			12/31/2024			Well Capitalized Minimum
Tier 1 capital to average total assets	9.56	%		9.58	%		5.00	%
Tier 1 common equity to risk-weighted assets	11.93	%		11.74	%		6.50	%
Tier 1 capital to risk-weighted assets	11.93	%		11.74	%		8.00	%
Total capital to risk-weighted assets	13.19	%		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 Statements
This 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 SUBSIDIARIES Consolidated Statements of Financial Condition
		March 31, 2025				December 31, 2024
		(Unaudited)
		(In thousands, except share amounts)
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 SUBSIDIARIES Consolidated 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 SUBSIDIARIES Selected 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 SUBSIDIARIES Selected 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 Measures
Independent 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, 616.447.3933 Gavin A. Mohr, Chief Financial Officer, 616.447.3929