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; and
The 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
6/30/2024
Loan 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 Ratios
6/30/2025
12/31/2024
WellCapitalizedMinimum
Tier 1 capital to average total assets
9.79
%
9.58
%
5.00
%
Common equity tier 1 capital to risk-weighted assets
11.90
%
11.74
%
6.50
%
Tier 1 capital to risk-weighted assets
11.90
%
11.74
%
8.00
%
Total capital to risk-weighted assets
13.15
%
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
