Independent Bank Corporation (NASDAQ: IBCP) reported third quarter
2023 net income of $17.5 million, or $0.83 per diluted share,
versus net income of $17.3 million, or $0.81 per diluted share, in
the prior-year period. For the nine months ended September 30,
2023, the Company reported net income of $45.3 million, or $2.14
per diluted share, compared to net income of $48.3 million, or
$2.27 per diluted share, in the prior year period.
William B. (“Brad”) Kessel, the President and
Chief Executive Officer of Independent Bank Corporation, commented:
“Our team continued its positive momentum in the third quarter,
achieving strong financial results with solid balance sheet growth,
a stable net interest margin, disciplined expense management, and
healthy asset quality. Capitalizing on the current operating
environment, we gained new banking relationships with clients who
appreciate our value proposition as a commercial bank with robust
treasury management solutions, industry expertise, and client
centric service. This success led to double-digit annualized growth
in loans and deposits. Despite expecting lower loan growth in the
fourth quarter due to seasonality, we have a solid pipeline of
high-quality relationship opportunities.”
Significant items impacting comparable third
quarter 2023 and 2022 results include the following:
- Changes in the fair
value due to price of capitalized mortgage loan servicing rights
(the “MSR Changes”) of $1.6 million ($0.06 per diluted share, after
taxes) for the three-month period ended September 30, 2023, as
compared to $3.2 million ($0.12 per diluted share, after taxes) for
the three-months ended September 30, 2022.
- The provision for
credit losses on loans was an expense of $1.4 million ($0.05 per
diluted share, after taxes) in the third quarter ended
September 30, 2023, as compared to an expense of $3.1 million
($0.12 per diluted share, after taxes) in the third quarter ended
September 30, 2022.
Operating Results
The Company’s net interest income totaled $39.4
million during the third quarter of 2023, a decrease of $0.5
million, or 1.2% from the year-ago period, and an increase of $1.1
million, or 2.8%, from the second quarter of 2023. The Company’s
tax equivalent net interest income as a percent of average
interest-earning assets (the “net interest margin”) was 3.25%
during the third quarter of 2023, compared to 3.49% in the year-ago
period, and 3.26 in the second quarter of 2023. The year-over-year
quarterly decrease in net interest income was due to a decrease in
net interest margin that was partially offset by an increase in
average interest-earning assets. The increase in net interest
income compared to the linked quarter was due to an increase in
average interest-earning assets that partially offset by a decrease
in net interest margin. Average interest-earning assets were $4.89
billion in the third quarter of 2023, compared to $4.61 billion in
the year ago quarter and $4.76 billion in the second quarter of
2023.
For the first nine months of 2023, net interest income totaled
$116.2 million, an increase of $7.3 million, or 6.7% from the first
nine months in 2022. The Company’s net interest margin for the
first nine months of 2023 was 3.28% compared to 3.25% in 2022. The
increase in net interest income for the first nine months of 2023
compared to 2022 reflects this improved margin as well as our
increase in average interest- earning assets.
Non-interest income totaled $15.6 million and
$41.6 million, respectively, for the third quarter and for the
first nine months 2023, compared to $16.9 million and $50.4 million
in the respective comparable prior year periods. These changes were
primarily due to variances in mortgage banking related
revenues.
Net gains on mortgage loans in the third
quarters of 2023 and 2022, were approximately $2.1 million and $2.9
million, respectively. For the first nine months of 2023, net gains
on mortgage loans totaled $5.5 million compared to $4.9 million in
2022. The comparative quarterly decrease in net gains on mortgage
loans was primarily due to a decrease in the volume of mortgage
loans sold that was partially offset by an increase in the gain on
sale margin on mortgage loans sold.
Mortgage loan servicing, net, generated income
of $2.7 million and $4.3 million in the third quarters of 2023 and
2022, respectively. For the first nine months of 2023 and 2022,
mortgage loan servicing, net, generated income of $7.1 million and
$18.1 million, 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 the
magnitude of changes in mortgage loan interest rates and expected
future prepayment levels between periods. Mortgage loan servicing,
net activity is summarized in the following table:
|
Three months ended |
|
Nine months ended |
|
9/30/2023 |
|
9/30/2022 |
|
9/30/2023 |
|
9/30/2022 |
|
(In thousands) |
Mortgage loan servicing,
net: |
|
|
|
|
|
|
|
Revenue, net |
$ |
2,197 |
|
|
$ |
2,190 |
|
|
$ |
6,612 |
|
|
$ |
6,397 |
|
Fair value change due to price |
|
1,556 |
|
|
|
3,203 |
|
|
|
3,364 |
|
|
|
14,775 |
|
Fair value change due to pay-downs |
|
(1,085 |
) |
|
|
(1,110 |
) |
|
|
(2,908 |
) |
|
|
(3,086 |
) |
Total |
$ |
2,668 |
|
|
$ |
4,283 |
|
|
$ |
7,068 |
|
|
$ |
18,086 |
|
Non-interest expenses totaled $32.0 million in
the third quarter of 2023, compared to $32.4 million in the
year-ago period. For the first nine months of 2023, non-interest
expenses totaled $95.2 million versus $96.3 million in 2022.
The Company recorded income tax expense of $4.1
million and $10.4 million in the third quarter and first nine
months of 2023, respectively. This compares to an income tax
expense of $4.0 million and $10.9 million in the third quarter and
first nine months of 2022. The changes in income tax expense
principally reflect changes in pre-tax earnings in 2023 relative to
2022.
Asset Quality
A breakdown of non-performing loans by loan type is as
follows:
|
9/30/2023 |
|
12/31/2022 |
|
9/30/2022 |
Loan Type |
(Dollars in thousands) |
Commercial |
$ |
31 |
|
|
|
$ |
38 |
|
|
|
$ |
41 |
|
|
Mortgage |
|
6,137 |
|
|
|
|
4,745 |
|
|
|
|
4,737 |
|
|
Installment |
|
801 |
|
|
|
|
598 |
|
|
|
|
529 |
|
|
Sub total |
|
6,969 |
|
|
|
|
5,381 |
|
|
|
|
5,307 |
|
|
Less - government guaranteed loans |
|
2,254 |
|
|
|
|
1,660 |
|
|
|
|
1,491 |
|
|
Total non-performing loans |
$ |
4,715 |
|
|
|
$ |
3,721 |
|
|
|
$ |
3,816 |
|
|
Ratio of non-performing loans
to total portfolio loans |
|
0.13 |
|
% |
|
|
0.11 |
|
% |
|
|
0.11 |
|
% |
Ratio of non-performing assets
to total assets |
|
0.10 |
|
% |
|
|
0.08 |
|
% |
|
|
0.08 |
|
% |
Ratio of allowance for credit
losses to total non-performing loans |
|
1176.99 |
|
% |
|
|
1409.16 |
|
% |
|
|
1340.20 |
|
% |
The provision for credit losses on loans was an
expense of $1.4 million and $3.1 million in the third quarters of
2023 and 2022, respectively. The provision for credit losses on
loans was an expense of $3.8 million in both the first nine months
of 2023 and 2022. The quarterly change in the provision for credit
losses on loans in 2023 compared to 2022, is primarily the result
of a decrease in pooled loan reserve loss rates on retail loans and
a decline in loan growth. We recorded loan net charge offs
(recoveries) of $(0.18) million and $(0.12) million in the third
quarters of 2023 and 2022, respectively and $0.78 million and
$(0.11) million during the first nine months of 2023 and 2022,
respectively. At September 30, 2023, the allowance for credit
losses for loans totaled $55.5 million, or 1.48% of total portfolio
loans compared to $52.4 million, or 1.51% of total portfolio loans
at December 31, 2022. The year-to-date increase in the
provision for credit losses for securities HTM in 2023 compared to
2022, was the result of a loss incurred on a $3.0 million
subordinated debt security that defaulted during the first
quarter.
Balance Sheet, Capital and
Liquidity
Total assets were $5.20 billion at
September 30, 2023, an increase of $200.2 million from
December 31, 2022. Loans, excluding loans held for sale,
were $3.74 billion at September 30, 2023, compared to $3.47
billion at December 31, 2022. Deposits totaled $4.59
billion at September 30, 2023, an increase of $206.5 million
from December 31, 2022. This increase is primarily due to
growth in reciprocal, time and brokered time deposit account
balances that were partially offset by decreases in non-interest
bearing and in savings and interest-bearing checking deposit
account balances.
Cash and cash equivalents totaled $127.5 million
at September 30, 2023, versus $74.4 million at
December 31, 2022. Securities available for sale (“AFS”)
totaled $684.6 million at September 30, 2023, versus $779.3
million at December 31, 2022.
Total shareholders’ equity was $375.0 million at
September 30, 2023, or 7.21% of total assets compared to
$347.6 million or 6.95% at December 31, 2022. Tangible
common equity totaled $344.6 million at September 30, 2023, or
$16.53 per share compared to $316.7 million or $15.04 per share at
December 31, 2022. The increase in shareholder 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 Ratios |
9/30/2023 |
|
12/31/2022 |
|
WellCapitalizedMinimum |
|
|
|
|
|
|
Tier 1 capital to average total assets |
8.71 |
|
% |
|
8.56 |
|
% |
|
5.00 |
|
% |
Tier 1 common equity to
risk-weighted assets |
11.09 |
|
% |
|
10.97 |
|
% |
|
6.50 |
|
% |
Tier 1 capital to
risk-weighted assets |
11.09 |
|
% |
|
10.97 |
|
% |
|
8.00 |
|
% |
Total capital to risk-weighted
assets |
12.34 |
|
% |
|
12.22 |
|
% |
|
10.00 |
|
% |
At September 30, 2023, 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 $989.9 million and $504.0 million,
respectively. We also had approximately $812.3 million in fair
value of unpledged securities AFS and HTM at September 30,
2023 which could be pledged for an estimated additional borrowing
capacity at the FHLB and FRB of approximately $749.4 million.
Share Repurchase Plan
On December 20, 2022, the Board of Directors of
the Company authorized the 2023 share repurchase plan. Under the
terms of the 2023 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, 2023. For the first nine months of 2023, the
Company repurchased 288,401 shares of common stock, for an
aggregate purchase price of $5.0 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 Tuesday, October 24, 2023.
To participate in the live conference call,
please dial 1-833-470-1428 (Access Code # 218288). 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/796177293.
A playback of the call can be accessed by
dialing 1-866-813-9403 (Access Code # 103128). The replay will
be available through October 31, 2023.
About Independent Bank
Corporation
Independent Bank Corporation (NASDAQ: IBCP) is a
Michigan-based bank holding company with total assets of
approximately $5.2 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, 2022 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 |
|
|
September 30, 2023 |
|
December 31, 2022 |
|
(Unaudited) |
|
(In thousands, except shareamounts) |
Assets |
|
|
|
Cash and due from banks |
$ |
58,567 |
|
|
$ |
70,180 |
|
Interest bearing deposits |
|
68,894 |
|
|
|
4,191 |
|
Cash and Cash Equivalents |
|
127,461 |
|
|
|
74,371 |
|
Securities available for
sale |
|
684,641 |
|
|
|
779,347 |
|
Securities held to maturity
(fair value of $309,199 at September 30, 2023 and $335,418 at
December 31, 2022) |
|
358,899 |
|
|
|
374,818 |
|
Federal Home Loan Bank and
Federal Reserve Bank stock, at cost |
|
16,821 |
|
|
|
17,653 |
|
Loans held for sale, carried
at fair value |
|
13,979 |
|
|
|
26,518 |
|
Loans held for sale, carried
at lower of cost or fair value |
|
— |
|
|
|
20,367 |
|
Loans |
|
|
|
Commercial |
|
1,626,122 |
|
|
|
1,466,853 |
|
Mortgage |
|
1,475,908 |
|
|
|
1,368,409 |
|
Installment |
|
639,456 |
|
|
|
630,090 |
|
Total Loans |
|
3,741,486 |
|
|
|
3,465,352 |
|
Allowance for credit losses |
|
(55,495 |
) |
|
|
(52,435 |
) |
Net Loans |
|
3,685,991 |
|
|
|
3,412,917 |
|
Other real estate and
repossessed assets, net |
|
443 |
|
|
|
455 |
|
Property and equipment,
net |
|
35,346 |
|
|
|
35,893 |
|
Bank-owned life insurance |
|
54,631 |
|
|
|
55,204 |
|
Capitalized mortgage loan
servicing rights, carried at fair value |
|
46,057 |
|
|
|
42,489 |
|
Other intangibles |
|
2,141 |
|
|
|
2,551 |
|
Goodwill |
|
28,300 |
|
|
|
28,300 |
|
Accrued income and other
assets |
|
145,308 |
|
|
|
128,904 |
|
Total Assets |
$ |
5,200,018 |
|
|
$ |
4,999,787 |
|
|
|
|
|
Liabilities and Shareholders'
Equity |
|
|
|
Deposits |
|
|
|
Non-interest bearing |
$ |
1,141,641 |
|
|
$ |
1,269,759 |
|
Savings and interest-bearing checking |
|
1,929,947 |
|
|
|
1,973,308 |
|
Reciprocal |
|
799,883 |
|
|
|
602,575 |
|
Time |
|
477,928 |
|
|
|
321,492 |
|
Brokered time |
|
236,213 |
|
|
|
211,935 |
|
Total Deposits |
|
4,585,612 |
|
|
|
4,379,069 |
|
Other borrowings |
|
50,014 |
|
|
|
86,006 |
|
Subordinated debt |
|
39,491 |
|
|
|
39,433 |
|
Subordinated debentures |
|
39,711 |
|
|
|
39,660 |
|
Accrued expenses and other
liabilities |
|
110,192 |
|
|
|
108,023 |
|
Total Liabilities |
|
4,825,020 |
|
|
|
4,652,191 |
|
|
|
|
|
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: 20,850,455 shares at September 30, 2023 and
21,063,971 shares at December 31, 2022 |
|
317,145 |
|
|
|
320,991 |
|
Retained earnings |
|
150,157 |
|
|
|
119,368 |
|
Accumulated other comprehensive loss |
|
(92,304 |
) |
|
|
(92,763 |
) |
Total Shareholders’ Equity |
|
374,998 |
|
|
|
347,596 |
|
Total Liabilities and Shareholders’ Equity |
$ |
5,200,018 |
|
|
$ |
4,999,787 |
|
|
|
|
|
|
|
|
|
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES |
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
|
|
June 30, |
|
|
|
September 30, |
|
|
September 30, |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(Unaudited) |
Interest Income |
(In thousands, except per share amounts) |
Interest and fees on loans |
$ |
51,419 |
|
|
$ |
47,679 |
|
|
$ |
37,092 |
|
|
$ |
143,392 |
|
|
$ |
96,964 |
|
Interest on securities |
|
|
|
|
|
|
|
|
|
Taxable |
|
5,865 |
|
|
|
5,919 |
|
|
|
5,329 |
|
|
|
17,668 |
|
|
|
14,831 |
|
Tax-exempt |
|
3,409 |
|
|
|
3,283 |
|
|
|
2,284 |
|
|
|
9,775 |
|
|
|
5,584 |
|
Other investments |
|
1,739 |
|
|
|
1,067 |
|
|
|
220 |
|
|
|
3,481 |
|
|
|
651 |
|
Total Interest Income |
|
62,432 |
|
|
|
57,948 |
|
|
|
44,925 |
|
|
|
174,316 |
|
|
|
118,030 |
|
Interest Expense |
|
|
|
|
|
|
|
|
|
Deposits |
|
20,743 |
|
|
|
17,461 |
|
|
|
3,625 |
|
|
|
51,964 |
|
|
|
5,608 |
|
Other borrowings and subordinated debt and debentures |
|
2,262 |
|
|
|
2,137 |
|
|
|
1,403 |
|
|
|
6,134 |
|
|
|
3,463 |
|
Total Interest Expense |
|
23,005 |
|
|
|
19,598 |
|
|
|
5,028 |
|
|
|
58,098 |
|
|
|
9,071 |
|
Net Interest Income |
|
39,427 |
|
|
|
38,350 |
|
|
|
39,897 |
|
|
|
116,218 |
|
|
|
108,959 |
|
Provision for credit losses |
|
1,350 |
|
|
|
3,317 |
|
|
|
3,145 |
|
|
|
6,827 |
|
|
|
3,951 |
|
Net Interest Income After Provision for Credit Losses |
|
38,077 |
|
|
|
35,033 |
|
|
|
36,752 |
|
|
|
109,391 |
|
|
|
105,008 |
|
Non-interest Income |
|
|
|
|
|
|
|
|
|
Interchange income |
|
4,100 |
|
|
|
3,355 |
|
|
|
4,049 |
|
|
|
10,660 |
|
|
|
10,553 |
|
Service charges on deposit accounts |
|
3,309 |
|
|
|
3,134 |
|
|
|
3,082 |
|
|
|
9,300 |
|
|
|
9,135 |
|
Net gains (losses) on assets |
|
|
|
|
|
|
|
|
|
Mortgage loans |
|
2,099 |
|
|
|
2,120 |
|
|
|
2,857 |
|
|
|
5,475 |
|
|
|
4,945 |
|
Securities available for sale |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(222 |
) |
|
|
(275 |
) |
Mortgage loan servicing, net |
|
2,668 |
|
|
|
3,674 |
|
|
|
4,283 |
|
|
|
7,068 |
|
|
|
18,086 |
|
Other |
|
3,435 |
|
|
|
3,134 |
|
|
|
2,590 |
|
|
|
9,298 |
|
|
|
7,997 |
|
Total Non-interest Income |
|
15,611 |
|
|
|
15,417 |
|
|
|
16,861 |
|
|
|
41,579 |
|
|
|
50,441 |
|
Non-interest Expense |
|
|
|
|
|
|
|
|
|
Compensation and employee benefits |
|
19,975 |
|
|
|
20,602 |
|
|
|
20,601 |
|
|
|
59,916 |
|
|
|
60,613 |
|
Data processing |
|
3,071 |
|
|
|
2,891 |
|
|
|
2,653 |
|
|
|
8,953 |
|
|
|
7,513 |
|
Occupancy, net |
|
1,971 |
|
|
|
1,845 |
|
|
|
2,062 |
|
|
|
5,975 |
|
|
|
6,682 |
|
Interchange expense |
|
1,119 |
|
|
|
1,054 |
|
|
|
927 |
|
|
|
3,222 |
|
|
|
3,200 |
|
Furniture, fixtures and equipment |
|
927 |
|
|
|
929 |
|
|
|
987 |
|
|
|
2,782 |
|
|
|
3,074 |
|
FDIC deposit insurance |
|
677 |
|
|
|
749 |
|
|
|
591 |
|
|
|
2,209 |
|
|
|
1,570 |
|
Communications |
|
568 |
|
|
|
635 |
|
|
|
723 |
|
|
|
1,871 |
|
|
|
2,242 |
|
Loan and collection |
|
520 |
|
|
|
620 |
|
|
|
772 |
|
|
|
1,718 |
|
|
|
1,978 |
|
Legal and professional |
|
543 |
|
|
|
473 |
|
|
|
573 |
|
|
|
1,623 |
|
|
|
1,545 |
|
Advertising |
|
360 |
|
|
|
431 |
|
|
|
345 |
|
|
|
1,286 |
|
|
|
1,585 |
|
Costs (recoveries) related to unfunded lending commitments |
|
451 |
|
|
|
100 |
|
|
|
382 |
|
|
|
76 |
|
|
|
676 |
|
Other |
|
1,854 |
|
|
|
1,919 |
|
|
|
1,750 |
|
|
|
5,610 |
|
|
|
5,572 |
|
Total Non-interest Expense |
|
32,036 |
|
|
|
32,248 |
|
|
|
32,366 |
|
|
|
95,241 |
|
|
|
96,250 |
|
Income Before Income Tax |
|
21,652 |
|
|
|
18,202 |
|
|
|
21,247 |
|
|
|
55,729 |
|
|
|
59,199 |
|
Income tax expense |
|
4,109 |
|
|
|
3,412 |
|
|
|
3,950 |
|
|
|
10,405 |
|
|
|
10,934 |
|
Net Income |
$ |
17,543 |
|
|
$ |
14,790 |
|
|
$ |
17,297 |
|
|
$ |
45,324 |
|
|
$ |
48,265 |
|
Net Income Per Common Share |
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.84 |
|
|
$ |
0.70 |
|
|
$ |
0.82 |
|
|
$ |
2.16 |
|
|
$ |
2.29 |
|
Diluted |
$ |
0.83 |
|
|
$ |
0.70 |
|
|
$ |
0.81 |
|
|
$ |
2.14 |
|
|
$ |
2.27 |
|
|
|
|
|
|
|
|
|
|
|
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES |
Selected Financial Data |
|
|
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30, 2022 |
|
(unaudited) |
|
(Dollars in thousands except per share data) |
Three Months
Ended |
|
|
|
|
|
|
|
|
|
Net interest income |
$ |
39,427 |
|
|
|
$ |
38,350 |
|
|
|
$ |
38,441 |
|
|
|
$ |
40,602 |
|
|
|
$ |
39,897 |
|
|
Provision for credit losses |
|
1,350 |
|
|
|
|
3,317 |
|
|
|
|
2,160 |
|
|
|
|
1,390 |
|
|
|
|
3,145 |
|
|
Non-interest income |
|
15,611 |
|
|
|
|
15,417 |
|
|
|
|
10,551 |
|
|
|
|
11,468 |
|
|
|
|
16,861 |
|
|
Non-interest expense |
|
32,036 |
|
|
|
|
32,248 |
|
|
|
|
30,957 |
|
|
|
|
32,091 |
|
|
|
|
32,366 |
|
|
Income before income tax |
|
21,652 |
|
|
|
|
18,202 |
|
|
|
|
15,875 |
|
|
|
|
18,589 |
|
|
|
|
21,247 |
|
|
Income tax expense |
|
4,109 |
|
|
|
|
3,412 |
|
|
|
|
2,884 |
|
|
|
|
3,503 |
|
|
|
|
3,950 |
|
|
Net income |
$ |
17,543 |
|
|
|
$ |
14,790 |
|
|
|
$ |
12,991 |
|
|
|
$ |
15,086 |
|
|
|
$ |
17,297 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
0.84 |
|
|
|
$ |
0.70 |
|
|
|
$ |
0.62 |
|
|
|
$ |
0.72 |
|
|
|
$ |
0.82 |
|
|
Diluted earnings per share |
|
0.83 |
|
|
|
|
0.70 |
|
|
|
|
0.61 |
|
|
|
|
0.71 |
|
|
|
|
0.81 |
|
|
Cash dividend per share |
|
0.23 |
|
|
|
|
0.23 |
|
|
|
|
0.23 |
|
|
|
|
0.22 |
|
|
|
|
0.22 |
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding |
|
20,922,431 |
|
|
|
|
21,040,349 |
|
|
|
|
21,103,831 |
|
|
|
|
21,064,556 |
|
|
|
|
21,057,673 |
|
|
Average diluted shares outstanding |
|
21,114,445 |
|
|
|
|
21,222,535 |
|
|
|
|
21,296,980 |
|
|
|
|
21,266,876 |
|
|
|
|
21,251,933 |
|
|
|
|
|
|
|
|
|
|
|
|
Performance Ratios |
|
|
|
|
|
|
|
|
|
Return on average assets |
|
1.34 |
|
% |
|
|
1.18 |
|
% |
|
|
1.06 |
|
% |
|
|
1.21 |
|
% |
|
|
1.40 |
|
% |
Return on average equity |
|
18.68 |
|
|
|
|
16.29 |
|
|
|
|
14.77 |
|
|
|
|
17.94 |
|
|
|
|
20.48 |
|
|
Efficiency ratio (1) |
|
57.52 |
|
|
|
|
59.26 |
|
|
|
|
62.07 |
|
|
|
|
60.82 |
|
|
|
|
56.26 |
|
|
|
|
|
|
|
|
|
|
|
|
As a Percent of Average Interest-Earning Assets (1) |
|
|
|
|
|
|
|
|
|
Interest income |
|
5.12 |
|
% |
|
|
4.91 |
|
% |
|
|
4.67 |
|
% |
|
|
4.41 |
|
% |
|
|
3.92 |
|
% |
Interest expense |
|
1.87 |
|
|
|
|
1.65 |
|
|
|
|
1.34 |
|
|
|
|
0.89 |
|
|
|
|
0.43 |
|
|
Net interest income |
|
3.25 |
|
|
|
|
3.26 |
|
|
|
|
3.33 |
|
|
|
|
3.52 |
|
|
|
|
3.49 |
|
|
|
|
|
|
|
|
|
|
|
|
Average Balances |
|
|
|
|
|
|
|
|
|
Loans |
$ |
3,694,534 |
|
|
|
$ |
3,567,920 |
|
|
|
$ |
3,494,169 |
|
|
|
$ |
3,449,944 |
|
|
|
$ |
3,360,621 |
|
|
Securities |
|
1,071,211 |
|
|
|
|
1,111,670 |
|
|
|
|
1,146,075 |
|
|
|
|
1,164,809 |
|
|
|
|
1,226,203 |
|
|
Total earning assets |
|
4,892,208 |
|
|
|
|
4,763,295 |
|
|
|
|
4,696,786 |
|
|
|
|
4,637,475 |
|
|
|
|
4,610,307 |
|
|
Total assets |
|
5,192,114 |
|
|
|
|
5,044,746 |
|
|
|
|
4,988,440 |
|
|
|
|
4,934,859 |
|
|
|
|
4,884,841 |
|
|
Deposits |
|
4,577,796 |
|
|
|
|
4,447,843 |
|
|
|
|
4,417,106 |
|
|
|
|
4,350,748 |
|
|
|
|
4,326,958 |
|
|
Interest bearing liabilities |
|
3,554,179 |
|
|
|
|
3,415,621 |
|
|
|
|
3,304,868 |
|
|
|
|
3,159,374 |
|
|
|
|
3,075,210 |
|
|
Shareholders' equity |
|
372,667 |
|
|
|
|
364,143 |
|
|
|
|
356,720 |
|
|
|
|
333,610 |
|
|
|
|
335,120 |
|
|
(1) Presented on a fully tax equivalent basis
assuming a marginal tax rate of 21%.
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES |
Selected Financial Data (continued) |
|
|
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30, 2022 |
|
(unaudited) |
|
(Dollars in thousands except per share data) |
End of
Period |
|
|
|
|
|
|
|
|
|
Capital |
|
|
|
|
|
|
|
|
|
Tangible common equity ratio |
|
6.67 |
|
% |
|
|
6.75 |
|
% |
|
|
6.60 |
|
% |
|
|
6.37 |
|
% |
|
|
6.15 |
|
% |
Tangible common equity ratio excluding accumulated other
comprehensive loss |
|
8.20 |
|
|
|
|
8.09 |
|
|
|
|
7.95 |
|
|
|
|
7.98 |
|
|
|
|
7.86 |
|
|
Average equity to average assets |
|
7.18 |
|
|
|
|
7.22 |
|
|
|
|
7.15 |
|
|
|
|
6.76 |
|
|
|
|
6.86 |
|
|
Total capital to risk-weighted assets (2) |
|
13.58 |
|
|
|
|
13.66 |
|
|
|
|
13.80 |
|
|
|
|
13.62 |
|
|
|
|
13.58 |
|
|
Tier 1 capital to risk-weighted assets (2) |
|
11.36 |
|
|
|
|
11.42 |
|
|
|
|
11.53 |
|
|
|
|
11.36 |
|
|
|
|
11.29 |
|
|
Common equity tier 1 capital to risk-weighted assets (2) |
|
10.44 |
|
|
|
|
10.46 |
|
|
|
|
10.55 |
|
|
|
|
10.38 |
|
|
|
|
10.29 |
|
|
Tier 1 capital to average assets (2) |
|
8.93 |
|
|
|
|
8.97 |
|
|
|
|
8.92 |
|
|
|
|
8.86 |
|
|
|
|
8.77 |
|
|
Common shareholders' equity per share of common stock |
$ |
17.99 |
|
|
|
$ |
17.91 |
|
|
|
$ |
17.40 |
|
|
|
$ |
16.50 |
|
|
|
$ |
15.78 |
|
|
Tangible common equity per share of common stock |
|
16.53 |
|
|
|
|
16.45 |
|
|
|
|
15.94 |
|
|
|
|
15.04 |
|
|
|
|
14.30 |
|
|
Total shares outstanding |
|
20,850,455 |
|
|
|
|
20,943,694 |
|
|
|
|
21,138,303 |
|
|
|
|
21,063,971 |
|
|
|
|
21,063,954 |
|
|
|
|
|
|
|
|
|
|
|
|
Selected Balances |
|
|
|
|
|
|
|
|
|
Loans |
$ |
3,741,486 |
|
|
|
$ |
3,631,114 |
|
|
|
$ |
3,509,809 |
|
|
|
$ |
3,465,352 |
|
|
|
$ |
3,409,858 |
|
|
Securities |
|
1,043,540 |
|
|
|
|
1,092,703 |
|
|
|
|
1,137,103 |
|
|
|
|
1,154,165 |
|
|
|
|
1,183,701 |
|
|
Total earning assets |
|
4,884,720 |
|
|
|
|
4,830,185 |
|
|
|
|
4,860,696 |
|
|
|
|
4,688,246 |
|
|
|
|
4,633,876 |
|
|
Total assets |
|
5,200,018 |
|
|
|
|
5,135,564 |
|
|
|
|
5,138,934 |
|
|
|
|
4,999,787 |
|
|
|
|
4,931,377 |
|
|
Deposits |
|
4,585,612 |
|
|
|
|
4,487,636 |
|
|
|
|
4,544,749 |
|
|
|
|
4,379,069 |
|
|
|
|
4,327,028 |
|
|
Interest bearing liabilities |
|
3,573,187 |
|
|
|
|
3,501,280 |
|
|
|
|
3,481,511 |
|
|
|
|
3,274,409 |
|
|
|
|
3,116,027 |
|
|
Shareholders' equity |
|
374,998 |
|
|
|
|
375,162 |
|
|
|
|
367,714 |
|
|
|
|
347,596 |
|
|
|
|
332,308 |
|
|
(2) September 30, 2023 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 September 30, |
|
Nine Months Ended September 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
(Dollars in thousands) |
Net Interest Margin,
Fully Taxable Equivalent ("FTE") |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
$ |
39,427 |
|
|
|
$ |
39,897 |
|
|
|
$ |
116,218 |
|
|
|
$ |
108,959 |
|
|
Add: taxable equivalent adjustment |
|
422 |
|
|
|
|
462 |
|
|
|
|
1,284 |
|
|
|
|
1,425 |
|
|
Net interest income - taxable
equivalent |
$ |
39,849 |
|
|
|
$ |
40,359 |
|
|
|
$ |
117,502 |
|
|
|
$ |
110,384 |
|
|
Net interest margin
(GAAP) (1) |
|
3.21 |
|
% |
|
|
3.45 |
|
% |
|
|
3.25 |
|
% |
|
|
3.21 |
|
% |
Net interest margin
(FTE) (1) |
|
3.25 |
|
% |
|
|
3.49 |
|
% |
|
|
3.28 |
|
% |
|
|
3.25 |
|
% |
(1) Annualized.
Tangible Common Equity Ratio
|
September 30,2023 |
|
June 30, 2023 |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
(Dollars in thousands) |
Common shareholders' equity |
$ |
374,998 |
|
|
|
$ |
375,162 |
|
|
|
$ |
367,714 |
|
|
|
$ |
347,596 |
|
|
|
$ |
332,308 |
|
|
Less: |
|
|
|
|
|
|
|
|
|
Goodwill |
|
28,300 |
|
|
|
|
28,300 |
|
|
|
|
28,300 |
|
|
|
|
28,300 |
|
|
|
|
28,300 |
|
|
Other intangibles |
|
2,141 |
|
|
|
|
2,278 |
|
|
|
|
2,415 |
|
|
|
|
2,551 |
|
|
|
|
2,697 |
|
|
Tangible common equity |
|
344,557 |
|
|
|
|
344,584 |
|
|
|
|
336,999 |
|
|
|
|
316,745 |
|
|
|
|
301,311 |
|
|
Addition: |
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss for regulatory purposes |
|
86,507 |
|
|
|
|
74,712 |
|
|
|
|
75,013 |
|
|
|
|
86,966 |
|
|
|
|
91,248 |
|
|
Tangible common equity
excluding other comprehensive loss adjustments |
$ |
431,064 |
|
|
|
$ |
419,296 |
|
|
|
$ |
412,012 |
|
|
|
$ |
403,711 |
|
|
|
$ |
392,559 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
5,200,018 |
|
|
|
$ |
5,135,564 |
|
|
|
$ |
5,138,934 |
|
|
|
$ |
4,999,787 |
|
|
|
$ |
4,931,377 |
|
|
Less: |
|
|
|
|
|
|
|
|
|
Goodwill |
|
28,300 |
|
|
|
|
28,300 |
|
|
|
|
28,300 |
|
|
|
|
28,300 |
|
|
|
|
28,300 |
|
|
Other intangibles |
|
2,141 |
|
|
|
|
2,278 |
|
|
|
|
2,415 |
|
|
|
|
2,551 |
|
|
|
|
2,697 |
|
|
Tangible assets |
|
5,169,577 |
|
|
|
|
5,104,986 |
|
|
|
|
5,108,219 |
|
|
|
|
4,968,936 |
|
|
|
|
4,900,380 |
|
|
Addition: |
|
|
|
|
|
|
|
|
|
Net unrealized losses on available for sale securities and
derivatives, net of tax |
|
86,507 |
|
|
|
|
74,712 |
|
|
|
|
75,013 |
|
|
|
|
86,966 |
|
|
|
|
91,248 |
|
|
Tangible assets excluding
other comprehensive loss adjustments |
$ |
5,256,084 |
|
|
|
$ |
5,179,698 |
|
|
|
$ |
5,183,232 |
|
|
|
$ |
5,055,902 |
|
|
|
$ |
4,991,628 |
|
|
|
|
|
|
|
|
|
|
|
|
Common equity ratio |
|
7.21 |
|
% |
|
|
7.31 |
|
% |
|
|
7.16 |
|
% |
|
|
6.95 |
|
% |
|
|
6.74 |
|
% |
Tangible common equity
ratio |
|
6.67 |
|
% |
|
|
6.75 |
|
% |
|
|
6.60 |
|
% |
|
|
6.37 |
|
% |
|
|
6.15 |
|
% |
Tangible common equity ratio
excluding other comprehensive loss |
|
8.20 |
|
% |
|
|
8.09 |
|
% |
|
|
7.95 |
|
% |
|
|
7.98 |
|
% |
|
|
7.86 |
|
% |
|
|
|
|
|
|
|
|
|
|
Tangible
Common Equity per Share of Common Stock: |
|
|
|
|
|
|
|
|
|
|
Common shareholders'
equity |
$ |
374,998 |
|
|
|
$ |
375,162 |
|
|
|
$ |
367,714 |
|
|
|
$ |
347,596 |
|
|
|
$ |
332,308 |
|
|
Tangible common equity |
$ |
344,557 |
|
|
|
$ |
344,584 |
|
|
|
$ |
336,999 |
|
|
|
$ |
316,745 |
|
|
|
$ |
301,311 |
|
|
Shares of common stock
outstanding (in thousands) |
|
20,850 |
|
|
|
|
20,944 |
|
|
|
|
21,138 |
|
|
|
|
21,064 |
|
|
|
|
21,064 |
|
|
|
|
|
|
|
|
|
|
|
|
Common shareholders' equity
per share of common stock |
$ |
17.99 |
|
|
|
$ |
17.91 |
|
|
|
$ |
17.40 |
|
|
|
$ |
16.50 |
|
|
|
$ |
15.78 |
|
|
Tangible common equity per
share of common stock |
$ |
16.53 |
|
|
|
$ |
16.45 |
|
|
|
$ |
15.94 |
|
|
|
$ |
15.04 |
|
|
|
$ |
14.30 |
|
|
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 (NASDAQ:IBCP)
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