Independent Bank Corporation (NASDAQ: IBCP) reported fourth quarter
2022 net income of $15.1 million, or $0.71 per diluted share,
versus net income of $12.5 million, or $0.58 per diluted share, in
the prior-year period. For the year ended December 31, 2022,
the Company reported net income of $63.4 million, or $2.97 per
diluted share, compared to net income of $62.9 million, or $2.88
per diluted share, in 2021.
William B. (“Brad”) Kessel, the President and Chief Executive
Officer of Independent Bank Corporation, commented: “Our fourth
quarter performance capped a very strong year as our entire
organization executed extremely well despite a macroeconomic
environment with many challenges and uncertainties. This past year
with our successful expansion into new markets and addition of new
banking talent, we were able to generate strong commercial loan
growth and higher net interest income, which enabled us to offset a
significant decline in mortgage banking revenue and deliver a
higher level of earnings in 2022 than we did in 2021. These results
generated a full year return on average assets and return on
average equity of 1.31% and 18.41%, respectively. Importantly, we
have generated significant growth in our loan portfolio while
maintaining sound underwriting criteria, a low level of past dues
and net recoveries credited to our allowance in 2022. We continued
to see positive trends during the fourth quarter including
double-digit annualized growth in our commercial loan portfolio and
further expansion in our net interest margin. Given the health of
our loan portfolio and our high level of liquidity and reserves, we
believe we are well positioned to continue effectively managing
through the challenging economic environment and delivering strong
results for our shareholders as we continue to leverage the
investments we have made in banking talent and technology over the
past several years.”
Significant items impacting comparable 2022 and
2021 results include the following:
- Changes in the fair
value due to price of capitalized mortgage loan servicing rights
(the “MSR Changes”) of $(0.5) million ($(0.02) per diluted
share, after taxes) and $14.3 million ($0.53 per diluted share,
after taxes) for the three-month and full-year ended
December 31, 2022, respectively, as compared to $0.6 million
($0.02 per diluted share, after taxes) and $3.4 million ($0.12 per
diluted share, after taxes) for the three-months and full-year
ended December 31, 2021, respectively.
- The provision for
credit losses was an expense of $1.4 million ($0.05 per diluted
share, after taxes) and $5.3 million ($0.20 per diluted share,
after tax) in the fourth quarter and full year ended December 31,
2022, respectively, as compared to an expense of $0.6 million
($0.02 per diluted share, after taxes) and credit of $1.9 million
($(0.07) per diluted share, after tax) in the fourth quarter and
full year ended December 31, 2021.
- Net gain on
mortgage loans was $1.5 million ($0.06 per diluted share, after
taxes) and $6.4 million ($0.24 per diluted share, after tax) in the
fourth quarter and full year ended December 31, 2022, respectively,
compared to $5.6 million ($0.21 per diluted share, after taxes) and
$35.9 million ($1.30 per diluted share, after tax) in the fourth
quarter and full year ending December 31, 2021.
Operating Results
The Company’s net interest income totaled $40.6
million during the fourth quarter of 2022, an increase of $6.3
million, or 18.4% from the year-ago period, and up $0.7 million, or
1.8%, from the third quarter of 2022. The Company’s tax equivalent
net interest income as a percent of average interest-earning assets
(the “net interest margin”) was 3.52% during the fourth quarter of
2022, compared to 3.13% in the year-ago period, and 3.49% in the
third quarter of 2022. The year-over-year quarterly increase in net
interest income was due to an increase in average interest-earning
assets as well as an increase in the net interest margin. Average
interest-earning assets were $4.64 billion in the fourth quarter of
2022, compared to $4.43 billion in the year ago quarter and $4.61
billion in the third quarter of 2022.
Non-interest income totaled $11.5 million and
$61.9 million, respectively, for the fourth quarter and full year
of 2022, compared to $15.8 million and $76.6 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 fourth
quarters of 2022 and 2021, were approximately $1.5 million and $5.6
million, respectively. For the full year of 2022, net gains on
mortgage loans totaled $6.4 million compared to $35.9 million in
2021. The decrease in net gains on mortgage loans was primarily due
to a decrease in the volume of mortgage loans sold and lower profit
margins on mortgage loan sales.
Mortgage loan servicing, net, generated income
of $0.7 million and $1.3 million in the fourth quarters of 2022 and
2021, respectively. For the full year of 2022 and 2021, mortgage
loan servicing, net, generated income of $18.8 million and $5.7
million, respectively. The significant variances in mortgage loan
servicing, net is 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 ended |
|
Twelve months ended |
|
12/31/2022 |
|
12/31/2021 |
|
12/31/2022 |
|
12/31/2021 |
|
(In thousands) |
Mortgage loan servicing,
net: |
|
|
|
|
|
|
|
Revenue, net |
$ |
2,180 |
|
|
$ |
2,044 |
|
|
$ |
8,577 |
|
|
$ |
7,853 |
|
Fair value change due to price |
|
(503 |
) |
|
|
567 |
|
|
|
14,272 |
|
|
|
3,380 |
|
Fair value change due to pay-downs |
|
(990 |
) |
|
|
(1,342 |
) |
|
|
(4,076 |
) |
|
|
(5,488 |
) |
Total |
$ |
687 |
|
|
$ |
1,269 |
|
|
$ |
18,773 |
|
|
$ |
5,745 |
|
Non-interest expenses totaled $32.1 million in
the fourth quarter of 2022, compared to $34.0 million in the
year-ago period. For the full year of 2022, non-interest expenses
totaled $128.3 million versus $131.0 million in 2021. The decrease
in costs related to unfunded lending commitments is attributed to
decreases in both the volume of such commitments and expected loss
rates. The decrease in other expense is attributed to lower fraud
related losses as well as a contract termination cost incurred
during the prior year quarter.
The Company recorded an income tax expense of
$3.5 million and $14.4 million in the fourth quarter and full year
of 2022, respectively. This compares to an income tax expense of
$3.0 million and $14.4 million in the fourth quarter and full year
of 2021, respectively. The changes in income tax expense
principally reflect changes in pre-tax earnings in 2022 relative to
2021.
Asset Quality
A breakdown of non-performing loans(1) by loan type is as
follows:
|
12/31/2022 |
|
12/31/2021 |
|
12/31/2020 |
Loan Type |
(Dollars in thousands) |
Commercial |
$ |
38 |
|
|
$ |
62 |
|
|
$ |
1,440 |
|
Mortgage |
|
4,745 |
|
|
|
4,914 |
|
|
|
6,353 |
|
Installment |
|
598 |
|
|
|
569 |
|
|
|
519 |
|
Sub total |
|
5,381 |
|
|
|
5,545 |
|
|
|
8,312 |
|
Less - government guaranteed loans |
|
1,660 |
|
|
|
435 |
|
|
|
439 |
|
Total non-performing loans |
$ |
3,721 |
|
|
$ |
5,110 |
|
|
$ |
7,873 |
|
Ratio of non-performing loans
to total portfolio loans |
|
0.11 |
% |
|
|
0.18 |
% |
|
|
0.29 |
% |
Ratio of non-performing assets
to total assets |
|
0.08 |
% |
|
|
0.11 |
% |
|
|
0.21 |
% |
Ratio of allowance for credit
losses to total non-performing loans |
|
1409.16 |
% |
|
|
924.70 |
% |
|
|
450.01 |
% |
(1) Excludes loans that are classified as
“troubled debt restructured” that are still performing.
The provision for credit losses was an expense
of $1.4 million and $0.6 million in the fourth quarters of 2022 and
2021, respectively. The provision for credit losses was an expense
of $5.3 million and a credit of $1.9 million in the full year of
2022 and 2021, respectively. The quarterly increase in the
provision for credit losses in 2022 compared to 2021, was primarily
the result of a change in allocation rates due to subjective
factors (prior year allocation rates were decreased while current
year rates increased during each respective quarter). The Company
recorded loan net recoveries of $0.1 million and net charge-offs of
$0.2 million in the fourth quarters of 2022 and 2021, respectively.
At December 31, 2022, the allowance for credit losses totaled
$52.4 million, or 1.51% of total portfolio loans compared to $47.3
million, or 1.63% of total portfolio loans at December 31,
2021.
Balance Sheet, Liquidity and
Capital
Total assets were $5.00 billion at
December 31, 2022, an increase of $295.0 million from
December 31, 2021. Loans, excluding loans held for sale,
were $3.47 billion at December 31, 2022, compared to $2.91
billion at December 31, 2021. Deposits totaled $4.38
billion at December 31, 2022, an increase of $262.0 million
from December 31, 2021. This increase is primarily due to
growth in savings and interest-bearing checking, reciprocal, time
and brokered time deposit account balances that were partially
offset by non-interest bearing deposit account balances.
Cash and cash equivalents totaled $74.4 million
at December 31, 2022, versus $109.5 million at
December 31, 2021. Securities available for sale (“AFS”)
totaled $779.3 million at December 31, 2022, versus $1.41
billion at December 31, 2021. The decrease in securities AFS
is primarily due to the transfer of $391.6 million of securities
AFS to held to maturity on April 1, 2022.
Accrued income and other assets were $128.9
million at December 31, 2022, an increase of $62.8 million
from December 31, 2021. The increase is primarily due to the
increases in the fair value of certain pay-fixed derivative
instruments due to an increase in interest rates and deferred tax
assets related to unrealized losses on securities available for
sale.
Accrued expenses and other liabilities totaled
$108.0 million at December 31, 2022, versus $80.2 million at
December 31, 2021. The increase is primarily due to a decrease
in the fair value of certain receive-fixed derivative instruments
due to an increase in interest rates and an increase in income
taxes payable.
Total shareholders’ equity was $347.6 million at
December 31, 2022, or 6.95% of total assets compared to $398.5
million or 8.47% at December 31, 2021. Tangible common
equity totaled $316.7 million at December 31, 2022, or $15.04
per share compared to $366.8 million or $17.33 per share at
December 31, 2021. The decrease in shareholder equity as well
as tangible common equity are primarily the result of a decline in
accumulated other comprehensive income (loss) related to unrealized
losses on securities available for sale due to a rise in interest
rates. The Company’s wholly owned subsidiary, Independent Bank,
remains significantly above “well capitalized” for regulatory
purposes with the following ratios:
Regulatory Capital Ratios |
12/31/2022 |
|
12/31/2021 |
|
WellCapitalizedMinimum |
|
|
|
|
|
|
Tier 1 capital to average
total assets |
8.56 |
% |
|
8.57 |
% |
|
5.00 |
% |
Tier 1 common equity to
risk-weighted assets |
10.97 |
% |
|
11.80 |
% |
|
6.50 |
% |
Tier 1 capital to
risk-weighted assets |
10.97 |
% |
|
11.80 |
% |
|
8.00 |
% |
Total capital to risk-weighted
assets |
12.22 |
% |
|
13.05 |
% |
|
10.00 |
% |
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 full year of 2022, the Company
repurchased 181,586 shares at a weighted average price of $22.08
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 Thursday, January 26, 2023.
To participate in the live conference call,
please dial 1-844-200-6205 (Access Code # 132616). 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/209715358.
A playback of the call can be accessed by
dialing 1-866-813-9403 (Access Code # 314361). The replay will
be available through February 2, 2023.
About Independent Bank
Corporation
Independent Bank Corporation (NASDAQ: IBCP) is a
Michigan-based bank holding company with total assets of
approximately $5.0 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 second-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,
2021 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
SUBSIDIARIESConsolidated Statements of Financial Condition
|
|
December 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
(unaudited) |
|
|
(In thousands, except shareamounts) |
Assets |
|
|
|
|
Cash and due from banks |
|
$ |
70,180 |
|
|
$ |
51,069 |
|
Interest bearing deposits |
|
|
4,191 |
|
|
|
58,404 |
|
Cash and Cash Equivalents |
|
|
74,371 |
|
|
|
109,473 |
|
Securities available for
sale |
|
|
779,347 |
|
|
|
1,412,830 |
|
Securities held to maturity (fair value of $335,418 at December 31,
2022 and $0 at December 31, 2021) |
|
|
374,818 |
|
|
|
— |
|
Federal Home Loan Bank and
Federal Reserve Bank stock, at cost |
|
|
17,653 |
|
|
|
18,427 |
|
Loans held for sale, carried
at fair value |
|
|
26,518 |
|
|
|
55,470 |
|
Loans held for sale, carried
at lower of cost or fair value |
|
|
20,367 |
|
|
|
34,811 |
|
Loans |
|
|
|
|
Commercial |
|
|
1,466,853 |
|
|
|
1,203,581 |
|
Mortgage |
|
|
1,368,409 |
|
|
|
1,139,659 |
|
Installment |
|
|
630,090 |
|
|
|
561,805 |
|
Total Loans |
|
|
3,465,352 |
|
|
|
2,905,045 |
|
Allowance for credit losses |
|
|
(52,435 |
) |
|
|
(47,252 |
) |
Net Loans |
|
|
3,412,917 |
|
|
|
2,857,793 |
|
Other real estate and
repossessed assets, net |
|
|
455 |
|
|
|
245 |
|
Property and equipment,
net |
|
|
35,893 |
|
|
|
36,404 |
|
Bank-owned life insurance |
|
|
55,204 |
|
|
|
55,279 |
|
Capitalized mortgage loan
servicing rights, carried at fair value |
|
|
42,489 |
|
|
|
26,232 |
|
Other intangibles |
|
|
2,551 |
|
|
|
3,336 |
|
Goodwill |
|
|
28,300 |
|
|
|
28,300 |
|
Accrued income and other
assets |
|
|
128,904 |
|
|
|
66,140 |
|
Total Assets |
|
$ |
4,999,787 |
|
|
$ |
4,704,740 |
|
|
|
|
|
|
Liabilities and Shareholders’
Equity |
|
|
|
|
Deposits |
|
|
|
|
Non-interest bearing |
|
$ |
1,269,759 |
|
|
$ |
1,321,601 |
|
Savings and interest-bearing checking |
|
|
1,973,308 |
|
|
|
1,897,487 |
|
Reciprocal |
|
|
602,575 |
|
|
|
586,626 |
|
Time |
|
|
321,492 |
|
|
|
308,438 |
|
Brokered time |
|
|
211,935 |
|
|
|
2,938 |
|
Total Deposits |
|
|
4,379,069 |
|
|
|
4,117,090 |
|
Other borrowings |
|
|
86,006 |
|
|
|
30,009 |
|
Subordinated debt |
|
|
39,433 |
|
|
|
39,357 |
|
Subordinated debentures |
|
|
39,660 |
|
|
|
39,592 |
|
Accrued expenses and other
liabilities |
|
|
108,023 |
|
|
|
80,208 |
|
Total Liabilities |
|
|
4,652,191 |
|
|
|
4,306,256 |
|
|
|
|
|
|
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: 21,063,971 shares at December 31, 2022 and
21,171,036 shares at December 31, 2021 |
|
|
320,991 |
|
|
|
323,401 |
|
Retained earnings |
|
|
119,368 |
|
|
|
74,582 |
|
Accumulated other comprehensive income (loss) |
|
|
(92,763 |
) |
|
|
501 |
|
Total Shareholders’ Equity |
|
|
347,596 |
|
|
|
398,484 |
|
Total Liabilities and Shareholders’ Equity |
|
$ |
4,999,787 |
|
|
$ |
4,704,740 |
|
INDEPENDENT BANK CORPORATION AND
SUBSIDIARIESConsolidated Statements of Operations
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
|
December 31, |
|
|
|
September 30, |
|
|
December 31, |
|
|
December 31, |
|
|
|
|
2022 |
|
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
INTEREST INCOME |
|
(In thousands, except per share amounts) |
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
42,093 |
|
|
$ |
37,092 |
|
$ |
30,316 |
|
|
$ |
139,057 |
|
|
$ |
116,644 |
|
|
|
Interest on securities |
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
|
5,845 |
|
|
|
5,329 |
|
|
4,114 |
|
|
|
20,676 |
|
|
|
14,488 |
|
|
|
Tax-exempt |
|
|
2,807 |
|
|
|
2,284 |
|
|
1,577 |
|
|
|
8,391 |
|
|
|
6,102 |
|
|
|
Other investments |
|
|
233 |
|
|
|
220 |
|
|
217 |
|
|
|
884 |
|
|
|
846 |
|
|
|
Total Interest Income |
|
|
50,978 |
|
|
|
44,925 |
|
|
36,224 |
|
|
|
169,008 |
|
|
|
138,080 |
|
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
8,543 |
|
|
|
3,625 |
|
|
977 |
|
|
|
14,151 |
|
|
|
4,465 |
|
|
|
Other borrowings and subordinated debt and debentures |
|
|
1,833 |
|
|
|
1,403 |
|
|
962 |
|
|
|
5,296 |
|
|
|
3,850 |
|
|
|
Total Interest Expense |
|
|
10,376 |
|
|
|
5,028 |
|
|
1,939 |
|
|
|
19,447 |
|
|
|
8,315 |
|
|
|
Net Interest Income |
|
|
40,602 |
|
|
|
39,897 |
|
|
34,285 |
|
|
|
149,561 |
|
|
|
129,765 |
|
|
|
Provision for credit
losses |
|
|
1,390 |
|
|
|
3,145 |
|
|
630 |
|
|
|
5,341 |
|
|
|
(1,928 |
) |
|
|
Net Interest Income After Provision for Credit Losses |
|
|
39,212 |
|
|
|
36,752 |
|
|
33,655 |
|
|
|
144,220 |
|
|
|
131,693 |
|
|
|
NON-INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
Interchange income |
|
|
3,402 |
|
|
|
4,049 |
|
|
3,306 |
|
|
|
13,955 |
|
|
|
14,045 |
|
|
|
Service charges on deposit accounts |
|
|
3,153 |
|
|
|
3,082 |
|
|
2,992 |
|
|
|
12,288 |
|
|
|
10,170 |
|
|
|
Net gains (losses) on assets |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans |
|
|
1,486 |
|
|
|
2,857 |
|
|
5,600 |
|
|
|
6,431 |
|
|
|
35,880 |
|
|
|
Securities available for sale |
|
|
— |
|
|
|
— |
|
|
(10 |
) |
|
|
(275 |
) |
|
|
1,411 |
|
|
|
Mortgage loan servicing, net |
|
|
687 |
|
|
|
4,283 |
|
|
1,269 |
|
|
|
18,773 |
|
|
|
5,745 |
|
|
|
Other |
|
|
2,740 |
|
|
|
2,590 |
|
|
2,614 |
|
|
|
10,737 |
|
|
|
9,392 |
|
|
|
Total Non-interest Income |
|
|
11,468 |
|
|
|
16,861 |
|
|
15,771 |
|
|
|
61,909 |
|
|
|
76,643 |
|
|
|
NON-INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and employee benefits |
|
|
20,394 |
|
|
|
20,601 |
|
|
19,905 |
|
|
|
81,007 |
|
|
|
79,969 |
|
|
|
Data processing |
|
|
2,670 |
|
|
|
2,653 |
|
|
2,851 |
|
|
|
10,183 |
|
|
|
10,823 |
|
|
|
Occupancy, net |
|
|
2,225 |
|
|
|
2,062 |
|
|
2,216 |
|
|
|
8,907 |
|
|
|
8,794 |
|
|
|
Interchange expense |
|
|
1,042 |
|
|
|
927 |
|
|
1,083 |
|
|
|
4,242 |
|
|
|
4,434 |
|
|
|
Furniture, fixtures and equipment |
|
|
933 |
|
|
|
987 |
|
|
1,060 |
|
|
|
4,007 |
|
|
|
4,172 |
|
|
|
Communications |
|
|
629 |
|
|
|
723 |
|
|
739 |
|
|
|
2,871 |
|
|
|
3,080 |
|
|
|
Loan and collection |
|
|
679 |
|
|
|
772 |
|
|
819 |
|
|
|
2,657 |
|
|
|
3,172 |
|
|
|
FDIC deposit insurance |
|
|
572 |
|
|
|
591 |
|
|
413 |
|
|
|
2,142 |
|
|
|
1,396 |
|
|
|
Legal and professional |
|
|
588 |
|
|
|
573 |
|
|
534 |
|
|
|
2,133 |
|
|
|
2,068 |
|
|
|
Advertising |
|
|
489 |
|
|
|
345 |
|
|
599 |
|
|
|
2,074 |
|
|
|
1,918 |
|
|
|
Conversion related expense |
|
|
— |
|
|
|
— |
|
|
191 |
|
|
|
50 |
|
|
|
1,827 |
|
|
|
Costs (recoveries) related to unfunded lending commitments |
|
|
(77 |
) |
|
|
382 |
|
|
844 |
|
|
|
599 |
|
|
|
1,207 |
|
|
|
Other |
|
|
1,947 |
|
|
|
1,750 |
|
|
2,700 |
|
|
|
7,469 |
|
|
|
8,163 |
|
|
|
Total Non-interest Expense |
|
|
32,091 |
|
|
|
32,366 |
|
|
33,954 |
|
|
|
128,341 |
|
|
|
131,023 |
|
|
|
Income Before Income Tax |
|
|
18,589 |
|
|
|
21,247 |
|
|
15,472 |
|
|
|
77,788 |
|
|
|
77,313 |
|
|
|
Income tax expense |
|
|
3,503 |
|
|
|
3,950 |
|
|
2,964 |
|
|
|
14,437 |
|
|
|
14,418 |
|
|
|
Net Income |
|
$ |
15,086 |
|
|
$ |
17,297 |
|
$ |
12,508 |
|
|
$ |
63,351 |
|
|
$ |
62,895 |
|
|
|
Net income per common
share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.72 |
|
|
$ |
0.82 |
|
$ |
0.59 |
|
|
$ |
3.00 |
|
|
$ |
2.91 |
|
|
|
Diluted |
|
$ |
0.71 |
|
|
$ |
0.81 |
|
$ |
0.58 |
|
|
$ |
2.97 |
|
|
$ |
2.88 |
|
|
|
INDEPENDENT BANK CORPORATION AND
SUBSIDIARIESSelected Financial Data
|
December 31,2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
(unaudited) |
|
(Dollars in thousands except per share data) |
Three Months
Ended |
|
|
|
|
|
|
|
|
|
Net interest income |
$ |
40,602 |
|
|
$ |
39,897 |
|
|
$ |
36,061 |
|
|
$ |
33,001 |
|
|
$ |
34,285 |
|
Provision for credit losses |
|
1,390 |
|
|
|
3,145 |
|
|
|
2,379 |
|
|
|
(1,573 |
) |
|
|
630 |
|
Non-interest income |
|
11,468 |
|
|
|
16,861 |
|
|
|
14,632 |
|
|
|
18,948 |
|
|
|
15,771 |
|
Non-interest expense |
|
32,091 |
|
|
|
32,366 |
|
|
|
32,434 |
|
|
|
31,450 |
|
|
|
33,954 |
|
Income before income tax |
|
18,589 |
|
|
|
21,247 |
|
|
|
15,880 |
|
|
|
22,072 |
|
|
|
15,472 |
|
Income tax expense |
|
3,503 |
|
|
|
3,950 |
|
|
|
2,879 |
|
|
|
4,105 |
|
|
|
2,964 |
|
Net income |
$ |
15,086 |
|
|
$ |
17,297 |
|
|
$ |
13,001 |
|
|
$ |
17,967 |
|
|
$ |
12,508 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
0.72 |
|
|
$ |
0.82 |
|
|
$ |
0.62 |
|
|
$ |
0.85 |
|
|
$ |
0.59 |
|
Diluted earnings per share |
|
0.71 |
|
|
|
0.81 |
|
|
|
0.61 |
|
|
|
0.84 |
|
|
|
0.58 |
|
Cash dividend per share |
|
0.22 |
|
|
|
0.22 |
|
|
|
0.22 |
|
|
|
0.22 |
|
|
|
0.21 |
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding |
|
21,064,556 |
|
|
|
21,057,673 |
|
|
|
21,070,266 |
|
|
|
21,191,860 |
|
|
|
21,256,367 |
|
Average diluted shares outstanding |
|
21,266,876 |
|
|
|
21,251,933 |
|
|
|
21,266,476 |
|
|
|
21,398,128 |
|
|
|
21,473,963 |
|
|
|
|
|
|
|
|
|
|
|
Performance Ratios |
|
|
|
|
|
|
|
|
|
Return on average assets |
|
1.21 |
% |
|
|
1.40 |
% |
|
|
1.10 |
% |
|
|
1.54 |
% |
|
|
1.07 |
% |
Return on average equity |
|
17.94 |
|
|
|
20.48 |
|
|
|
15.68 |
|
|
|
19.38 |
|
|
|
12.61 |
|
Efficiency ratio (1) |
|
60.82 |
|
|
|
56.26 |
|
|
|
62.50 |
|
|
|
59.62 |
|
|
|
66.68 |
|
|
|
|
|
|
|
|
|
|
|
As a Percent of Average Interest-Earning Assets (1) |
|
|
|
|
|
|
|
|
|
Interest income |
|
4.41 |
% |
|
|
3.92 |
% |
|
|
3.47 |
% |
|
|
3.16 |
% |
|
|
3.30 |
% |
Interest expense |
|
0.89 |
|
|
|
0.43 |
|
|
|
0.21 |
|
|
|
0.16 |
|
|
|
0.17 |
|
Net interest income |
|
3.52 |
|
|
|
3.49 |
|
|
|
3.26 |
|
|
|
3.00 |
|
|
|
3.13 |
|
|
|
|
|
|
|
|
|
|
|
Average Balances |
|
|
|
|
|
|
|
|
|
Loans |
$ |
3,449,944 |
|
|
$ |
3,360,621 |
|
|
$ |
3,145,095 |
|
|
$ |
2,980,098 |
|
|
$ |
2,957,985 |
|
Securities |
|
1,164,809 |
|
|
|
1,226,203 |
|
|
|
1,312,934 |
|
|
|
1,407,225 |
|
|
|
1,367,038 |
|
Total earning assets |
|
4,637,475 |
|
|
|
4,610,307 |
|
|
|
4,493,714 |
|
|
|
4,492,757 |
|
|
|
4,433,400 |
|
Total assets |
|
4,934,859 |
|
|
|
4,884,841 |
|
|
|
4,758,960 |
|
|
|
4,721,205 |
|
|
|
4,654,491 |
|
Deposits |
|
4,350,748 |
|
|
|
4,326,958 |
|
|
|
4,221,047 |
|
|
|
4,158,528 |
|
|
|
4,069,901 |
|
Interest bearing liabilities |
|
3,159,374 |
|
|
|
3,075,210 |
|
|
|
3,005,103 |
|
|
|
2,950,337 |
|
|
|
2,863,057 |
|
Shareholders' equity |
|
333,610 |
|
|
|
335,120 |
|
|
|
332,610 |
|
|
|
376,010 |
|
|
|
393,477 |
|
|
|
|
|
|
|
|
|
|
|
End of
Period |
|
|
|
|
|
|
|
|
|
Capital |
|
|
|
|
|
|
|
|
|
Tangible common equity ratio |
|
6.37 |
% |
|
|
6.15 |
% |
|
|
6.26 |
% |
|
|
6.85 |
% |
|
|
7.85 |
% |
Average equity to average assets |
|
6.76 |
|
|
|
6.86 |
|
|
|
6.99 |
|
|
|
7.96 |
|
|
|
8.45 |
|
Common shareholders' equity per share of common stock |
$ |
16.50 |
|
|
$ |
15.78 |
|
|
$ |
15.73 |
|
|
$ |
16.79 |
|
|
$ |
18.82 |
|
Tangible common equity per share of common stock |
|
15.04 |
|
|
|
14.30 |
|
|
|
14.25 |
|
|
|
15.31 |
|
|
|
17.33 |
|
Total shares outstanding |
|
21,063,971 |
|
|
|
21,063,954 |
|
|
|
21,049,218 |
|
|
|
21,168,230 |
|
|
|
21,171,036 |
|
|
|
|
|
|
|
|
|
|
|
Selected Balances |
|
|
|
|
|
|
|
|
|
Loans |
$ |
3,465,352 |
|
|
$ |
3,409,858 |
|
|
$ |
3,258,850 |
|
|
$ |
3,004,065 |
|
|
$ |
2,905,045 |
|
Securities |
|
1,154,165 |
|
|
|
1,183,701 |
|
|
|
1,241,312 |
|
|
|
1,400,137 |
|
|
|
1,412,830 |
|
Total earning assets |
|
4,688,246 |
|
|
|
4,633,876 |
|
|
|
4,552,185 |
|
|
|
4,514,590 |
|
|
|
4,484,987 |
|
Total assets |
|
4,999,787 |
|
|
|
4,931,377 |
|
|
|
4,826,209 |
|
|
|
4,761,983 |
|
|
|
4,704,740 |
|
Deposits |
|
4,379,069 |
|
|
|
4,327,028 |
|
|
|
4,290,574 |
|
|
|
4,205,498 |
|
|
|
4,117,090 |
|
Interest bearing liabilities |
|
3,274,409 |
|
|
|
3,116,027 |
|
|
|
3,037,278 |
|
|
|
2,996,112 |
|
|
|
2,904,447 |
|
Shareholders' equity |
|
347,596 |
|
|
|
332,308 |
|
|
|
331,134 |
|
|
|
355,449 |
|
|
|
398,484 |
|
(1) Presented on a fully tax equivalent basis
assuming a marginal tax rate of 21%.
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 December 31, |
|
Twelve Months Ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
(Dollars in thousands) |
Net Interest Margin,
Fully Taxable Equivalent ("FTE") |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
$ |
40,602 |
|
|
$ |
34,285 |
|
|
$ |
149,561 |
|
|
$ |
129,765 |
|
Add: taxable equivalent adjustment |
|
453 |
|
|
|
492 |
|
|
|
1,878 |
|
|
|
1,866 |
|
Net interest income - taxable
equivalent |
$ |
41,055 |
|
|
$ |
34,777 |
|
|
$ |
151,439 |
|
|
$ |
131,631 |
|
Net interest margin
(GAAP) (1) |
|
3.48 |
% |
|
|
3.08 |
% |
|
|
3.28 |
% |
|
|
3.06 |
% |
Net interest margin
(FTE) (1) |
|
3.52 |
% |
|
|
3.13 |
% |
|
|
3.32 |
% |
|
|
3.10 |
% |
(1) Annualized.
Tangible Common Equity Ratio
|
December 31,2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
(Dollars in thousands) |
Common shareholders'
equity |
$ |
347,596 |
|
|
$ |
332,308 |
|
|
$ |
331,134 |
|
|
$ |
355,449 |
|
|
$ |
398,484 |
|
Less: |
|
|
|
|
|
|
|
|
|
Goodwill |
|
28,300 |
|
|
|
28,300 |
|
|
|
28,300 |
|
|
|
28,300 |
|
|
|
28,300 |
|
Other intangibles |
|
2,551 |
|
|
|
2,697 |
|
|
|
2,871 |
|
|
|
3,104 |
|
|
|
3,336 |
|
Tangible common equity |
$ |
316,745 |
|
|
$ |
301,311 |
|
|
$ |
299,963 |
|
|
$ |
324,045 |
|
|
$ |
366,848 |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
4,999,787 |
|
|
$ |
4,931,377 |
|
|
$ |
4,826,209 |
|
|
$ |
4,761,983 |
|
|
$ |
4,704,740 |
|
Less: |
|
|
|
|
|
|
|
|
|
Goodwill |
|
28,300 |
|
|
|
28,300 |
|
|
|
28,300 |
|
|
|
28,300 |
|
|
|
28,300 |
|
Other intangibles |
|
2,551 |
|
|
|
2,697 |
|
|
|
2,871 |
|
|
|
3,104 |
|
|
|
3,336 |
|
Tangible assets |
$ |
4,968,936 |
|
|
$ |
4,900,380 |
|
|
$ |
4,795,038 |
|
|
$ |
4,730,579 |
|
|
$ |
4,673,104 |
|
|
|
|
|
|
|
|
|
|
|
Common equity ratio |
|
6.95 |
% |
|
|
6.74 |
% |
|
|
6.86 |
% |
|
|
7.46 |
% |
|
|
8.47 |
% |
Tangible common equity
ratio |
|
6.37 |
% |
|
|
6.15 |
% |
|
|
6.26 |
% |
|
|
6.85 |
% |
|
|
7.85 |
% |
|
|
|
|
|
|
|
|
|
|
Tangible
Common Equity per Share of Common Stock: |
|
|
|
|
|
|
|
|
|
|
Common shareholders'
equity |
$ |
347,596 |
|
|
$ |
332,308 |
|
|
$ |
331,134 |
|
|
$ |
355,449 |
|
|
$ |
398,484 |
|
Tangible common equity |
$ |
316,745 |
|
|
$ |
301,311 |
|
|
$ |
299,963 |
|
|
$ |
324,045 |
|
|
$ |
366,848 |
|
Shares of common stock
outstanding (in thousands) |
|
21,064 |
|
|
|
21,064 |
|
|
|
21,049 |
|
|
|
21,168 |
|
|
|
21,171 |
|
|
|
|
|
|
|
|
|
|
|
Common shareholders' equity
per share of common stock |
$ |
16.50 |
|
|
$ |
15.78 |
|
|
$ |
15.73 |
|
|
$ |
16.79 |
|
|
$ |
18.82 |
|
Tangible common equity per
share of common stock |
$ |
15.04 |
|
|
$ |
14.30 |
|
|
$ |
14.25 |
|
|
$ |
15.31 |
|
|
$ |
17.33 |
|
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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