• Independent Bank Corporation Reports 2021 Third Quarter Results

    Source: Nasdaq GlobeNewswire / 26 Oct 2021 06:59:01   America/Chicago

    GRAND RAPIDS, Mich., Oct. 26, 2021 (GLOBE NEWSWIRE) -- Independent Bank Corporation (NASDAQ: IBCP) reported third quarter 2021 net income of $16.0 million, or $0.73 per diluted share, versus net income of $19.6 million, or $0.89 per diluted share, in the prior-year period. For the nine months ended September 30, 2021, the Company reported net income of $50.4 million, or $2.30 per diluted share, compared to net income of $39.2 million, or $1.76 per diluted share, in the prior-year period.

    Highlights for the third quarter of 2021 include:

    • Annualized return on average assets and on average equity of 1.40% and 15.93%, respectively;
    • An increase in net interest income of 5.7% over the third quarter of 2020;
    • Net gains on mortgage loans of $8.4 million and total mortgage loan origination volume of $453.8 million;
    • Net growth in portfolio loans of $69.4 million (or 9.8% annualized);
    • Continued strong asset quality metrics as evidenced by $1.5 million in net loan recoveries during the quarter as well as a low level of non-performing loans and non-performing assets; and
    • The payment of a 21 cent per share dividend on common stock on August 16, 2021.

    Highlights for the first nine months of 2021 include:

    • Increases in net income and diluted earnings per share of 28.6% and 30.7%, respectively;
    • Annualized return on average assets and on average equity of 1.53% and 17.32%, respectively;
    • Net gains on mortgage loans of $30.3 million and total mortgage loan origination volume of $1.44 billion;
    • Net growth in portfolio loans of $150.3 million (or 7.4% annualized); and
    • Net growth in deposits of $374.7 million (or 13.8% annualized).

    William B. (“Brad”) Kessel, the President and Chief Executive Officer of Independent Bank Corporation, commented: “I continue to be very pleased with the high level of performance by our team generating strong core results for yet another quarter. We continue to execute on our strategies of investing in people and technology. During the third quarter we saw good growth in net interest income, stabilization of our net interest margin and across the board loan growth, net of PPP. Our commercial pipeline is at its highest level in many quarters. Fueling some of this growth was the opening of two new commercial loan production offices, one in Ottawa County and the second in Macomb County. Deposit gathering continues to be robust both via existing customers as well as through the addition of new customers. In addition, mortgage gains continue to be solid and our card strategies are generating good growth in interchange revenue. On the asset quality front, I could not be more pleased, with net recoveries for the quarter, commercial watch credits at 2.4% of the portfolio, and a very low level of past due loans. Following our second quarter whole bank conversion, we are seeing good utilization and growth rates in our ONE Wallet and Treasury ONE platforms. While there are many uncertainties and challenges ahead, we are excited about the momentum we have in our markets and look forward to continuing these trends through the end of 2021 and into 2022.”

    Significant items impacting comparable quarterly and year to date 2021 and 2020 results include the following:

    • Changes in the fair value due to price of capitalized mortgage loan servicing rights (the “MSR Changes”) of $0.6 million ($0.02 per diluted share, after taxes) and $2.8 million ($0.10 per diluted share, after taxes) for the three- and nine-months ended September 30, 2021, respectively, as compared to a negative $1.1 million ($0.04 per diluted share, after taxes) and a negative $9.9 million ($0.35 per diluted share, after taxes) for the three- and nine-months ended September 30, 2020, respectively.

    Operating Results

    The Company’s net interest income totaled $33.8 million during the third quarter of 2021, an increase of $1.8 million, or 5.7% from the year-ago period, and up $2.4 million, or 7.7%, from the second quarter of 2021. The Company’s tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”) was 3.18% during the third quarter of 2021, compared to 3.31% in the year-ago period, and 3.02% in the second quarter of 2021. The year-over-year quarterly increase in net interest income was due to an increase in average interest-earning assets that was partially offset by a decline in the net interest margin. Average interest-earning assets were $4.30 billion in the third quarter of 2021, compared to $3.89 billion in the year ago quarter and $4.22 billion in the second quarter of 2021.

    For the first nine months of 2021, net interest income totaled $95.5 million, an increase of $2.9 million, or 3.1% from the first nine months in 2020. The Company’s net interest margin for the first nine months of 2021 was 3.09% compared to 3.42% in 2020. The increase in net interest income for the first nine months of 2021 compared to 2020 was also due to an increase in average interest- earning assets that was partially offset by a decline in the net interest margin.

    Due principally to the economic impact of COVID-19, the Federal Reserve has taken a variety of actions to stimulate the economy, including significantly lowering short-term interest rates. These lower interest rates combined with a higher allocation to lower yielding securities available for sale has placed continued pressure on the Company’s net interest margin.

    In addition, commercial loan balances, interest income and yields have been impacted by Paycheck Protection Program (“PPP”) lending activity. PPP lending activity is summarized in the following tables:

     PPP – Round 1
    At or for the three months ended9/30/20216/30/20219/30/2020
     #(000’s)#(000’s)#(000’s)
    Loans outstanding at period end20$1,262 298$42,315 2,117$261,182 
    Average loans outstanding- 2,699 - 78,747 - 261,543 
    Cumulative forgiveness applications submitted2,085 260,015 1,882 231,715 197 37,223 
    Cumulative forgiveness applications approved2,082 259,613 1,870 229,429 - - 
    Net fees accreted into interest income- 381 - 981 - 1,321 
    Net unaccreted fees at period end- - - 381 - 6,494 
    Average loan yield- 11.51%- 5.98%- 3.04%
    Note: PPP – Round 1 loan activity began in the second quarter of 2020.


     PPP – Round 2
    At or for the three months ended9/30/20216/30/20213/31/2021
     #(000’s)#(000’s)#(000’s)
    Loans outstanding at period end806$88,888 1,409$129,573 1,250$128,240 
    Average loans outstanding- 110,276 - 133,239 - 72,011 
    Cumulative forgiveness applications submitted831 51,370 166 8,843 - - 
    Cumulative forgiveness applications approved810 50,535 164 8,828 - - 
    Net fees accreted into interest income- 2,249 - 832 - 229 
    Net unaccreted fees at period end- 3,178 - 5,429 - 5,454 
    Average loan yield- 9.17%- 3.50%- 2.25%
    Note: PPP – Round 2 loan activity began in the first quarter of 2021.

    Non-interest income totaled $19.7 million and $60.9 million, respectively, for the third quarter and first nine months of 2021, compared to $27.0 million and $58.4 million in the respective comparable year ago periods. These changes were primarily due to variances in mortgage banking related revenues (net gains on mortgage loans and mortgage loan servicing, net).

    Net gains on mortgage loans in the third quarters of 2021 and 2020, were approximately $8.4 million and $20.2 million, respectively. For the first nine months of 2021, net gains on mortgage loans totaled $30.3 million compared to $46.7 million in 2020. The decrease in net gains on mortgage loans was primarily due to lower profit margins on mortgage loan sales, a decrease in the volume of mortgage loans sold and fair value adjustments on the mortgage loan pipeline.

    Mortgage loan servicing, net, generated a gain of $1.3 million and a loss of $0.6 million in the third quarters of 2021 and 2020, respectively. For the first nine months of 2021 and 2020, mortgage loan servicing, net, generated income of $4.5 million and a loss of $9.0 million, respectively. The significant variances in mortgage loan servicing, net are primarily due to changes in the fair value of capitalized mortgage loan servicing rights associated with changes in mortgage loan interest rates and expected future prepayment levels. Mortgage loan servicing, net activity is summarized in the following table:

     Three Months EndedNine Months Ended
     9/30/20219/30/20209/30/20219/30/2020
    Mortgage loan servicing, net:(Dollars in thousands) 
    Revenue, net$2,023 $1,743 $5,809 $5,062 
    Fair value change due to price 599  (1,089) 2,813  (9,941)
    Fair value change due to pay-downs (1,351) (1,298) (4,146) (4,087)
    Total$1,271 $(644)$4,476 $(8,966)

    Net gain on securities available for sale totaled $0.01 million and $1.421 million in third quarter and first nine months of 2021, respectively, compared to zero and $0.253 million in the prior year third quarter and first nine months, respectively. The increase in gain during the first nine months of 2021 was related to the divestiture of a group of mortgage backed securities in the first quarter of 2021.

    Non-interest expenses totaled $34.5 million in the third quarter of 2021, compared to $33.6 million in the year-ago period. For the first nine months of 2021, non-interest expenses totaled $97.1 million versus $89.7 million in 2020. These year-over-year increases in non-interest expense are primarily due to increases in compensation and employee benefits (for the year to date period), data processing, interchange, conversion related expenses (for the year to date period) and other expenses (for the quarter to date period). The increase in compensation and employee benefits in 2021 is due to several factors, including, wage increases that were generally effective at the start of the year, an increase in lending personnel, increased overtime primarily associated with a data processing conversion, a higher accrual for incentive compensation (due to higher base for such incentives), higher payroll taxes due to the increase in compensation and higher health care insurance costs (these costs during the first nine months of 2020 were unusually low due to the various COVID related lock-downs). In addition, the third quarter and first nine months of 2021 included $0.3 million and $1.6 million, respectively, of expenses related to the Company’s core data processing conversion (this conversion was completed in May 2021) compared to $0.6 million and $1.0 million, respectively, in the comparable periods in 2020. The first nine months of 2020 also included $0.4 million of expenses (primarily write-downs of fixed assets and leases) related to the closures of nine bank branch offices that were completed in the third quarter of 2020.

    The Company recorded an income tax expense of $3.7 million and $11.5 million in the third quarter and first nine months of 2021, respectively. This compares to an income tax expense of $4.8 million and $9.2 million in the third quarter and first nine months of 2020, respectively. The changes in income tax expense principally reflect changes in pre-tax earnings in 2021 relative to 2020.

    Asset Quality

    A breakdown of loan forbearance totals by loan type is as follows:

    Loan Type9/30/20216/30/2021% change vs. prior quarter
    #$ (000’s)% of portfolio#$ (000's)% of portfolio#$
    Commercial-$        -0.0%-$        -0.0%nonenone
    Mortgage39 5,9010.5%82 12,4161.2%(52.4)%(52.5)%
    Installment7 1090.0%18 3270.1%(61.1)%(66.7)%
    Total46$6,0100.2%100$12,7430.5%(54.0)%(52.8)%
             
    Loans serviced for others64$7,9860.3%150$20,2310.6%(57.3)%(60.5)%
    Note: The % of portfolio is based on the dollar amount of forbearances to the total for the loan portfolio segment.

    A breakdown of non-performing loans(1) by loan type is as follows:

    Loan Type9/30/202112/31/20209/30/2020
     (Dollars in thousands)
    Commercial$        242 $1,440 $        2,487 
    Mortgage 5,160  6,353  7,580 
    Installment 515  519  680 
    Subtotal 5,917  8,312  10,747 
    Less – government guaranteed loans 327  439  510 
    Total non-performing loans$5,590 $7,873 $10,237 
    Ratio of non-performing loans to total portfolio loans 0.19% 0.29% 0.36%
    Ratio of non-performing assets to total assets 0.13% 0.21% 0.28%
    Ratio of the allowance for credit losses to non-performing loans 837.19% 450.01% 349.43%
     
    (1) Excludes loans that are classified as “troubled debt restructured” that are still performing.    

    Non-performing loans decreased $2.3 million from December 31, 2020, as all loan categories have declined, reflecting improving economic conditions and the Company’s collection efforts.

    The provision for credit losses was a credit of $0.7 million and an expense of $1.0 million in the third quarters of 2021 and 2020, respectively. The provision for credit losses was a credit of $2.6 million and an expense of $12.9 million in the first nine months of 2021 and 2020, respectively. The quarterly and year-to-date decreases in the provision for credit losses in 2021 compared to 2020, were primarily the result of a decline in the adjustment to allocations based on subjective factors and an increase in recoveries of loans previously charged off. In particular, the higher year-to-date provision for credit losses in 2020 included a $10.7 million (or 122.1%) increase in the qualitative/subjective portion of the allowance for credit losses. That increase in 2020 principally reflected the unique challenges and prevailing economic uncertainty resulting from the COVID-19 pandemic and the potential impact on the loan portfolio.

    The Company recorded loan net recoveries of $1.5 million and $0.3 million in the third quarters of 2021 and 2020, respectively. For the first nine months of 2021 and 2020, the Company recorded loan net recoveries of $2.2 million and loan net charge-offs of $3.3 million, respectively.

    The allowance for credit losses totaled $46.8 million at September 30, 2021 compared to $35.4 million at December 31, 2020. The increase from December 31, 2020 is attributed to the adoption of Financial Accounting Standards Board Accounting Standards Update 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“CECL”) on January 1, 2021. The impact of the adoption of CECL was an increase in the allowance for credit losses of $11.7 million. At September 30, 2021, the allowance for credit losses equaled 1.62% of total portfolio loans (1.68% when excluding PPP loans) under CECL, compared to 1.30% of total portfolio loans (1.38% when excluding PPP loans) at December 31, 2020, under the probable incurred loss methodology.

    Balance Sheet, Liquidity and Capital

    Total assets were $4.62 billion at September 30, 2021, an increase of $418.3 million from December 31, 2020. Loans, excluding loans held for sale, were $2.88 billion at September 30, 2021, compared to $2.73 billion at December 31, 2020. Deposits totaled $4.01 billion at September 30, 2021, an increase of $374.7 million from December 31, 2020. This increase is primarily due to growth in non- interest bearing, savings and interest-bearing checking and reciprocal deposit account balances.

    Cash and cash equivalents totaled $125.6 million at September 30, 2021, compared to $118.7 million at December 31, 2020. Securities available for sale totaled $1.35 billion at September 30, 2021, compared to $1.07 billion at December 31, 2020. The significant increase in securities available for sale is due to the deployment of funds generated from the growth in deposits.

    Total shareholders’ equity was $400.0 million at September 30, 2021, or 8.65% of total assets. Tangible common equity totaled $368.2 million at September 30, 2021, or $17.27 per share. The Company’s wholly owned subsidiary, Independent Bank, remains significantly above “well capitalized” for regulatory purposes with the following ratios:

    Regulatory Capital Ratios9/30/202112/31/2020Well Capitalized Minimum
        
    Tier 1 capital to average total assets8.75%8.81%5.00%
    Tier 1 common equity to risk-weighted assets12.14%12.81%6.50%
    Tier 1 capital to risk-weighted assets12.14%12.81%8.00%
    Total capital to risk-weighted assets13.39%14.06%10.00%

    Share Repurchase Plan

    On December 18, 2020, the Board of Directors of the Company authorized the 2021 share repurchase plan. Under the terms of the 2021 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, 2021. For the first nine months of 2021, the Company repurchased 659,350 shares at a weighted average price of $20.89 per share.

    Earnings Conference Call

    Brad Kessel, President and CEO, Gavin A. 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 26, 2021.

    To participate in the live conference call, please dial 1-866-200-8394. Also the conference call will be accessible through an audio webcast with user-controlled slides via the following site/URL: https://services.choruscall.com/links/ibcp211026.html.

    A playback of the call can be accessed by dialing 1-877-344-7529 (Conference ID # 10160661). The replay will be available through November 2, 2021.

    About Independent Bank Corporation

    Independent Bank Corporation (NASDAQ: IBCP) is a Michigan-based bank holding company with total assets of approximately $4.6 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, 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 press release contains forward-looking statements about Independent Bank Corporation. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date hereof. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future plans and prospects of Independent Bank Corporation. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. The COVID-19 pandemic is adversely affecting Independent Bank Corporation, its customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity, and prospects is uncertain. Continued deterioration in general business and economic conditions or turbulence in domestic or global financial markets could adversely affect Independent Bank Corporation’s revenues and the values of its assets and liabilities, reduce the availability of funding from certain financial institutions, lead to a tightening of credit, and increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices could affect Independent Bank Corporation in substantial and unpredictable ways. Independent Bank Corporation’s results could also be adversely affected by changes in interest rates; further increases in unemployment rates; deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value of its investment securities; legal and regulatory developments; litigation; increased competition from both banks and non-banks; changes in the level of tariffs and other trade policies of the United States and its global trading partners; changes in customer behavior and preferences; breaches in data security; failures to safeguard personal information; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and management’s ability to effectively manage credit risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputation risk.

    Certain risks and important factors that could affect Independent Bank Corporation's future results are identified in its Annual Report on Form 10-K for the year ended December 31, 2020 and other reports filed with the SEC, including among other things under the heading “Risk Factors” in such Annual Report on Form 10-K. Any forward- looking statement speaks only as of the date on which it is made, and Independent Bank Corporation undertakes no obligation to update any forward-looking statement, whether to reflect events or circumstances, after the date on which the statement is made, to reflect new information or the occurrence of unanticipated events, or otherwise.

     
    INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
    Consolidated Statements of Financial Condition
      September 30, December 31,
      2021 2020
      (unaudited)
      (In thousands, except share
      amounts)
    Assets
    Cash and due from banks $49,946  $56,006 
    Interest bearing deposits  75,675   62,699 
    Cash and Cash Equivalents  125,621   118,705 
    Securities available for sale  1,348,378   1,072,159 
    Federal Home Loan Bank and Federal Reserve Bank stock, at cost  18,427   18,427 
    Loans held for sale, carried at fair value  78,731   92,434 
    Loans    
    Commercial  1,222,802   1,242,415 
    Mortgage  1,100,992   1,015,926 
    Installment  560,184   475,337 
    Total Loans  2,883,978   2,733,678 
    Allowance for credit losses (1)  (46,799)  (35,429)
    Net Loans  2,837,179   2,698,249 
    Other real estate and repossessed assets  224   766 
    Property and equipment, net  36,623   36,127 
    Bank-owned life insurance  55,124   55,180 
    Capitalized mortgage loan servicing rights, carried at fair value  24,208   16,904 
    Other intangibles  3,579   4,306 
    Goodwill  28,300   28,300 
    Accrued income and other assets  65,946   62,456 
    Total Assets $4,622,340  $4,204,013 
         
    Liabilities and Shareholders' Equity
    Deposits    
    Non-interest bearing $1,297,096  $1,153,473 
    Savings and interest-bearing checking  1,803,763   1,526,465 
    Reciprocal  596,193   556,185 
    Time  312,085   287,402 
    Brokered time  2,931   113,830 
    Total Deposits  4,012,068   3,637,355 
    Other borrowings  30,007   30,012 
    Subordinated debt  39,338   39,281 
    Subordinated debentures  39,575   39,524 
    Accrued expenses and other liabilities  101,321   68,319 
    Total Liabilities  4,222,309   3,814,491 
         
    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:    
    21,321,092 shares at September 30, 2021 and 21,853,800 shares at December 31, 2020  326,390   339,353 
    Retained earnings  66,543   40,145 
    Accumulated other comprehensive income  7,098   10,024 
    Total Shareholders’ Equity  400,031   389,522 
    Total Liabilities and Shareholders’ Equity $4,622,340  $4,204,013 
         
    (1) Beginning January 1, 2021, calculation is based on CECL methodology. Prior to January 1, 2021, calculation was based on the probable incurred loss methodology.
         


    INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
    Consolidated Statements of Operations
               
      Three Months Ended Nine Months Ended
      September 30, June 30, September 30, September 30,
      2021 2021 2020 2021 2020
      (unaudited)
    Interest Income (In thousands, except per share amounts)
    Interest and fees on loans $30,132  $28,091  $30,393  $86,328  $92,020 
    Interest on securities available for sale          
    Taxable  3,922   3,656   3,450   10,374   9,356 
    Tax-exempt  1,597   1,544   954   4,525   2,137 
    Other investments  204   208   237   629   854 
    Total Interest Income  35,855   33,499   35,034   101,856   104,367 
    Interest Expense          
    Deposits  1,090   1,142   2,062   3,488   9,150 
    Other borrowings and subordinated debt and debentures  962   964   1,006   2,888   2,598 
    Total Interest Expense  2,052   2,106   3,068   6,376   11,748 
    Net Interest Income  33,803   31,393   31,966   95,480   92,619 
    Provision for credit losses (1)  (659)  (1,425)  975   (2,558)  12,884 
    Net Interest Income After Provision for Credit Losses  34,462   32,818   30,991   98,038   79,735 
    Non-interest Income          
    Interchange income  4,237   3,453   3,428   10,739   8,411 
    Service charges on deposit accounts  2,944   2,318   2,085   7,178   6,299 
    Net gains on assets          
    Mortgage loans  8,361   9,091   20,205   30,280   46,687 
    Securities available for sale  5   -   -   1,421   253 
    Mortgage loan servicing, net  1,271   (1,962)  (644)  4,476   (8,966)
    Other  2,877   1,871   1,937   6,778   5,698 
    Total Non-interest Income  19,695   14,771   27,011   60,872   58,382 
    Non-interest Expense          
    Compensation and employee benefits  21,659   19,883   21,954   60,064   54,742 
    Data processing  3,022   2,576   2,215   7,972   6,160 
    Occupancy, net  2,082   2,153   2,199   6,578   6,818 
    Interchange expense  1,202   1,201   831   3,351   2,416 
    Furniture, fixtures and equipment  1,075   1,034   999   3,112   3,125 
    Loan and collection  735   859   768   2,353   2,329 
    Communications  683   777   806   2,341   2,409 
    Conversion related expenses  275   1,143   643   1,636   1,045 
    Legal and professional  513   522   566   1,534   1,427 
    Advertising  666   164   589   1,319   1,636 
    FDIC deposit insurance  346   307   411   983   1,211 
    Correspondent bank service fees  77   115   101   292   294 
    Branch closure costs  -   -   -   -   417 
    Net (gains) losses on other real estate and repossessed assets  (28)  6   46   (202)  146 
    Other  2,205   1,796   1,513   5,736   5,531 
    Total Non-interest Expense  34,512   32,536   33,641   97,069   89,706 
     Income Before Income Tax  19,645   15,053   24,361   61,841   48,411 
    Income tax expense  3,683   2,665   4,777   11,454   9,245 
     Net Income $15,962  $12,388  $19,584  $50,387  $39,166 
    Net Income Per Common Share          
    Basic $0.74  $0.57  $0.90  $2.32  $1.78 
    Diluted $0.73  $0.56  $0.89  $2.30  $1.76 
               
    (1) Beginning January 1, 2021, calculation is based on CECL methodology. Prior to January 1, 2021, calculation was based on the probable incurred loss methodology.
               


    INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
    Selected Financial Data
              
     September 30, June 30, March 31, December 31, September 30,
     2021 2021 2021 2020 2020
     (unaudited)
     (Dollars in thousands except per share data)
    Three Months Ended          
    Net interest income$33,803  $31,393  $30,284  $30,993  $31,966 
    Provision for credit losses (1) (659)  (1,425)  (474)  (421)  975 
    Non-interest income 19,695   14,771   26,406   22,363   27,011 
    Non-interest expense 34,512   32,536   30,021   32,707   33,641 
    Income before income tax 19,645   15,053   27,143   21,070   24,361 
    Income tax expense 3,683   2,665   5,106   4,084   4,777 
    Net income$15,962  $12,388  $22,037  $16,986  $19,584 
               
    Basic earnings per share$0.74  $0.57  $1.01  $0.78  $0.90 
    Diluted earnings per share 0.73   0.56   1.00   0.77   0.89 
    Cash dividend per share 0.21   0.21   0.21   0.20   0.20 
               
    Average shares outstanding 21,515,669   21,749,654   21,825,937   21,866,326   21,881,562 
    Average diluted shares outstanding 21,726,346   21,966,829   22,058,503   22,112,829   22,114,692 
               
    Performance Ratios          
    Return on average assets 1.40 % 1.12 % 2.10 % 1.61 % 1.90%
    Return on average equity 15.93   12.78   23.51   17.82   21.36 
    Efficiency ratio (2) 63.47   69.24   53.48   60.59   56.36 
               
    As a Percent of Average Interest-Earning Assets (2)         
    Interest income 3.37 % 3.22 % 3.27 % 3.57 % 3.62%
    Interest expense 0.19   0.20   0.22   0.45   0.31 
    Net interest income 3.18   3.02   3.05   3.12   3.31 
               
    Average Balances          
    Loans$2,903,700  $2,859,544  $2,834,012  $2,876,795  $2,925,872 
    Securities available for sale 1,317,382   1,274,556   1,093,618   1,009,578   891,975 
    Total earning assets 4,296,662   4,223,570   4,047,952   3,984,080   3,887,455 
    Total assets 4,513,774   4,434,760   4,254,294   4,195,546   4,102,318 
    Deposits 3,934,937   3,879,715   3,698,811   3,632,758   3,559,070 
    Interest bearing liabilities 2,740,444   2,674,425   2,589,102   2,574,306   2,532,481 
    Shareholders' equity 397,542   388,780   380,111   379,232   364,714 
               
    End of Period          
    Capital          
    Tangible common equity ratio 8.02 % 8.21 % 8.08 % 8.56 % 8.23%
    Average equity to average assets 8.81   8.77   8.93   9.04   8.89 
    Common shareholders' equity per share         
    of common stock$18.76  $18.30  $17.79  $17.82  $17.05 
    Tangible common equity per share          
    of common stock 17.27   16.82   16.30   16.33   15.55 
    Total shares outstanding 21,321,092   21,632,912   21,773,734   21,853,800   21,885,368 
               
    Selected Balances          
    Loans$2,883,978  $2,814,559  $2,784,224  $2,733,678  $2,855,479 
    Securities available for sale 1,348,378   1,330,660   1,247,280   1,072,159   985,050 
    Total earning assets 4,405,189   4,246,410   4,209,017   3,979,397   3,962,824 
    Total assets 4,622,340   4,461,272   4,426,440   4,204,013   4,168,944 
    Deposits 4,012,068   3,862,466   3,858,575   3,637,355   3,597,745 
    Interest bearing liabilities 2,784,554   2,633,747   2,626,280   2,553,418   2,515,185 
    Shareholders' equity 400,031   395,974   387,329   389,522   373,092 
               
    (1) Beginning January 1, 2021, calculation is based on CECL methodology. Prior to January 1, 2021, calculation was based on the probable incurred loss methodology.
    (2) Presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.     
          

    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 Nine Months Ended
     September 30, September 30,
     2021 2020 2021 2020
     (Dollars in thousands)   
    Net Interest Margin, Fully Taxable       
    Equivalent ("FTE")       
            
    Net interest income$33,803  $31,966  $95,480  $92,619 
    Add: taxable equivalent adjustment 492   258   1,374   602 
    Net interest income - taxable equivalent$34,295  $32,224  $96,854  $93,221 
    Net interest margin (GAAP) (1) 3.13%  3.28%  3.04%  3.40%
    Net interest margin (FTE) (1) 3.18%  3.31%  3.09%  3.42%
            
    (1) Annualized.


    Tangible Common Equity Ratio         
     September 30, June 30, March 31, December 31, September 30,
     2021 2021 2021 2020 2020
     (Dollars in thousands)
    Common shareholders' equity$400,031  $395,974  $387,329  $389,522  $373,092 
    Less:         
    Goodwill 28,300   28,300   28,300   28,300   28,300 
    Other intangibles 3,579   3,821   4,063   4,306   4,561 
    Tangible common equity$368,152  $363,853  $354,966  $356,916  $340,231 
              
    Total assets$4,622,340  $4,461,272  $4,426,440  $4,204,013  $4,168,944 
    Less:         
    Goodwill 28,300   28,300   28,300   28,300   28,300 
    Other intangibles 3,579   3,821   4,063   4,306   4,561 
    Tangible assets$4,590,461  $4,429,151  $4,394,077  $4,171,407  $4,136,083 
              
    Common equity ratio 8.65%  8.88%  8.75%  9.27%  8.95%
    Tangible common equity ratio 8.02%  8.21%  8.08%  8.56%  8.23%
              
    Tangible Common Equity per Share of Common Stock:      
              
    Common shareholders' equity$400,031  $395,974  $387,329  $389,522  $373,092 
    Tangible common equity$368,152  $363,853  $354,966  $356,916  $340,231 
    Shares of common stock         
    outstanding (in thousands) 21,321   21,633   21,774   21,854   21,885 
              
    Common shareholders' equity per share         
    of common stock$18.76  $18.30  $17.79  $17.82  $17.05 
    Tangible common equity per share         
    of common stock$17.27  $16.82  $16.30  $16.33  $15.55 
              

    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

     


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