GRAND RAPIDS, Mich., Sept. 29, 2025 (GLOBE NEWSWIRE) -- Independent Bank Corporation (NASDAQ: IBCP), the holding company of Independent Bank, a Michigan-based community bank, announced that it expects to issue its 2025 third quarter results on Tuesday, October 28, 2025, at approximately 8:00 am ET. The release will be available on the Internet at IndependentBank.com within the “News” section of the “Investor Relations” area of the Company’s website. Brad Kessel, President and CEO, Gavin Mohr, CFO and Joel R ...

GRAND RAPIDS, Mich., Aug. 15, 2025 (GLOBE NEWSWIRE) -- Independent Bank Corporation (NASDAQ: IBCP), the holding company of Independent Bank, announced with great sadness that Michael M. Magee, Jr., current Board member and past Chairman (2013-2024) of the Board of Directors for Independent Bank Corporation and Independent Bank, passed away on August 3, 2025. “The entire Independent Bank community is deeply saddened by Mike’s passing,” said Independent Bank President and CEO, Brad Kessel. “Mike served Indepe ...

Core Points - The Federal Home Loan Bank of Indianapolis awarded Jason Blain the 2025 Community Spirit Award for his contributions to affordable housing and community development in Michigan [1][2] - The Affordable Housing Program (AHP) has provided over $9 billion in subsidies since 1990, impacting more than one million households [5] - In 2025, FHLBank Indianapolis allocated $29.6 million to its competitive AHP [5] Company Contributions - Jason Blain has led investments in eight Affordable Housing Program projects, facilitating approximately $4.5 million in grants [3] - His efforts have resulted in financing for over 500 units of affordable housing [4] - Blain's partnership with community development financial institutions (CDFIs) has enhanced access to low-cost capital through the CDFI Rate Buydown program [3][4] Community Impact - FHLBank Indianapolis will make a $5,000 charitable donation to a nonprofit of Blain's choice, supporting Homes Giving Hope and Dream Team Northern Michigan [6] - The Community Spirit Award has recognized leaders in affordable housing since 2007, highlighting innovative strategies and commitment to community development [2] Organizational Overview - Independent Bank Corporation, the employer of Jason Blain, has total assets of approximately $5.3 billion and operates across Michigan [9] - FHLBank Indianapolis is part of the Federal Home Loan Bank System, focusing on providing low-cost funding to member financial institutions [10]

PART I - Financial Information [Forward-Looking Statements](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines statements expressing current expectations or forecasts, based on assumptions that may prove incorrect, and lists factors that could cause actual results to differ materially - Forward-looking statements are based on assumptions and estimates, and actual results could differ materially due to **various risks**. The company does not undertake to update these statements unless required by law[10](index=10&type=chunk)[11](index=11&type=chunk) - Key risk factors include **economic, market, operational, liquidity, credit, and interest rate risks**, economic conditions in Michigan, assumptions underlying allowance for credit losses, increased competition, ability to achieve loan and deposit growth, interest rate volatility, management team retention, and new legislation[12](index=12&type=chunk) [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Statements%20of%20Financial%20Condition%20June%2030,%202025%20and%20December%2031,%202024) [Condensed Consolidated Statements of Financial Condition](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition%20June%2030,%202025%20and%20December%2031,%202024) Total assets increased by **$80.4 million to $5.419 billion** at June 30, 2025, driven by net loans and cash, while liabilities and shareholders' equity also increased Condensed Consolidated Statements of Financial Condition (Selected Items) | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | **Assets** | | | | | | Cash and Cash Equivalents | $146,159 | $119,882 | $26,277 | 21.92% | | Securities available for sale | $509,511 | $559,182 | $(49,671) | -8.88% | | Securities held to maturity | $329,302 | $339,436 | $(10,134) | -2.98% | | Total Loans | $4,164,367 | $4,038,825 | $125,542 | 3.11% | | Allowance for credit losses | $(61,157) | $(59,379) | $(1,778) | 2.99% | | Net Loans | $4,103,210 | $3,979,446 | $123,764 | 3.11% | | Total Assets | $5,418,519 | $5,338,104 | $80,415 | 1.51% | | **Liabilities** | | | | | | Total Deposits | $4,659,359 | $4,654,088 | $5,271 | 0.11% | | Other borrowings | $102,008 | $45,009 | $56,999 | 126.64% | | Total Liabilities | $4,949,269 | $4,883,418 | $65,851 | 1.35% | | **Shareholders' Equity** | | | | | | Total Shareholders' Equity | $469,250 | $454,686 | $14,564 | 3.20% | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20Three-%20and%20Six-month%20periods%20ended%20June%2030,%202025%20and%202024) Net income decreased for both three-month (**$16.877 million**, down **8.9%**) and six-month (**$32.467 million**, down **5.9%**) periods ended June 30, 2025, primarily due to higher provision for credit losses and lower non-interest income Condensed Consolidated Statements of Operations (Selected Items) | Item | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Total Interest Income | $66,878 | $66,338 | $540 | 0.81% | | Total Interest Expense | $22,263 | $24,992 | $(2,729) | -10.92% | | Net Interest Income | $44,615 | $41,346 | $3,269 | 7.91% | | Provision for credit losses | $1,500 | $19 | $1,481 | 7794.74% | | Total Non-interest Income | $11,325 | $15,172 | $(3,847) | -25.36% | | Total Non-interest Expense | $33,762 | $33,333 | $429 | 1.29% | | Income Before Income Tax | $20,678 | $23,166 | $(2,488) | -10.74% | | Net Income | $16,877 | $18,528 | $(1,651) | -8.91% | | Basic Net Income Per Common Share | $0.81 | $0.89 | $(0.08) | -8.99% | | Diluted Net Income Per Common Share | $0.81 | $0.88 | $(0.07) | -7.95% | Condensed Consolidated Statements of Operations (Selected Items) - Six Months | Item | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Total Interest Income | $133,022 | $131,464 | $1,558 | 1.19% | | Total Interest Expense | $44,722 | $49,921 | $(5,199) | -10.41% | | Net Interest Income | $88,300 | $81,543 | $6,757 | 8.29% | | Provision for credit losses | $2,221 | $763 | $1,458 | 191.09% | | Total Non-interest Income | $21,749 | $27,733 | $(5,984) | -21.58% | | Total Non-interest Expense | $68,024 | $65,526 | $2,498 | 3.81% | | Income Before Income Tax | $39,804 | $42,987 | $(3,183) | -7.40% | | Net Income | $32,467 | $34,519 | $(2,052) | -5.94% | | Basic Net Income Per Common Share | $1.56 | $1.65 | $(0.09) | -5.45% | | Diluted Net Income Per Common Share | $1.54 | $1.64 | $(0.10) | -6.10% | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20Three-%20and%20Six-month%20periods%20ended%20June%2030,%202025%20and%202024) Comprehensive income significantly decreased for both three-month (**$14.073 million**, down **27.2%**) and six-month (**$32.524 million**, down **9.2%**) periods, driven by unrealized losses on available-for-sale securities Condensed Consolidated Statements of Comprehensive Income (Selected Items) | Item | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net income | $16,877 | $18,528 | $(1,651) | -8.91% | | Unrealized gains (losses) on securities available for sale, net of tax | $(3,387) | $891 | $(4,278) | -480.13% | | Unrealized gains (losses) on derivative instruments, net of tax | $583 | $(90) | $673 | -747.78% | | Other comprehensive income (loss) | $(2,804) | $801 | $(3,605) | -450.06% | | Comprehensive income | $14,073 | $19,329 | $(5,256) | -27.19% | Condensed Consolidated Statements of Comprehensive Income (Selected Items) - Six Months | Item | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net income | $32,467 | $34,519 | $(2,052) | -5.94% | | Unrealized gains (losses) on securities available for sale, net of tax | $(1,229) | $2,955 | $(4,184) | -141.60% | | Unrealized gains (losses) on derivative instruments, net of tax | $1,286 | $(1,641) | $2,927 | -178.37% | | Other comprehensive income (loss) | $57 | $1,314 | $(1,257) | -95.66% | | Comprehensive income | $32,524 | $35,833 | $(3,309) | -9.23% | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20Six-month%20periods%20ended%20June%2030,%202025%20and%202024) Net cash from operating activities significantly increased to **$50.668 million**, while investing activities shifted to a **$67.304 million** outflow and financing activities to a **$42.913 million** inflow Condensed Consolidated Statements of Cash Flows (Selected Items) | Item | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net Income | $32,467 | $34,519 | $(2,052) | -5.94% | | Net Cash From Operating Activities | $50,668 | $29,580 | $21,088 | 71.36% | | Net Cash From (Used in) Investing Activities | $(67,304) | $34,545 | $(101,849) | -294.84% | | Net Cash From (Used in) Financing Activities | $42,913 | $(19,558) | $62,471 | -319.42% | | Net Increase in Cash and Cash Equivalents | $26,277 | $44,567 | $(18,290) | -41.04% | | Cash and Cash Equivalents at End of Period | $146,159 | $214,348 | $(68,189) | -31.81% | [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity%20Three-%20and%20Six-month%20periods%20ended%20June%2030,%202025%20and%202024) Total shareholders' equity increased to **$469.250 million** at June 30, 2025, driven by **$32.467 million** net income, partially offset by dividends and stock repurchases Condensed Consolidated Statements of Shareholders' Equity (Selected Items) - Six Months | Item | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | | Balances at January 1 | $454,686 | $404,449 | | Net income | $32,467 | $34,519 | | Cash dividends declared | $(10,836) | $(10,016) | | Repurchase of common stock | $(7,357) | — | | Share based compensation | $1,397 | $1,170 | | Share based compensation withholding obligation | $(1,164) | $(977) | | Other comprehensive income | $57 | $1,314 | | **Balances at June 30** | **$469,250** | **$430,459** | [Notes to Interim Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Statements) [1. Preparation of Financial Statements](index=9&type=section&id=1.%20Preparation%20of%20Financial%20Statements) Interim financial statements are unaudited, prepared under SEC rules and GAAP, and include all necessary adjustments for fair presentation, with critical policies including allowance for credit losses and mortgage loan servicing rights valuation - Interim financial statements are unaudited, prepared under SEC rules and GAAP, and include all necessary adjustments for fair presentation[24](index=24&type=chunk)[25](index=25&type=chunk) - Critical accounting policies involve the determination of the **allowance for credit losses (ACL)** and the valuation of **capitalized mortgage loan servicing rights**[25](index=25&type=chunk) [2. New Accounting Standards](index=9&type=section&id=2.%20New%20Accounting%20Standards) ASU 2023-09 (Income Tax Disclosures) adopted January 1, 2025, had no material impact, and ASU 2024-03 (Expense Disaggregation Disclosures) is not expected to have a material impact - ASU 2023-09 (Income Tax Disclosures) adopted **January 1, 2025**, had **no material impact**[26](index=26&type=chunk) - ASU 2024-03 (Expense Disaggregation Disclosures), effective after **December 15, 2026**, is not expected to have a **material impact**[27](index=27&type=chunk) [3. Securities](index=10&type=section&id=3.%20Securities) AFS securities decreased to **$509.511 million** at June 30, 2025, due to unrealized losses, while HTM securities also declined, with no ACL for AFS and minimal for non-U.S. agency HTM Securities Available for Sale (AFS) - Fair Value | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | U.S. agency | $8,647 | $8,159 | $488 | 5.98% | | U.S. agency residential mortgage-backed | $71,796 | $71,137 | $659 | 0.93% | | U.S. agency commercial mortgage-backed | $11,166 | $11,641 | $(475) | -4.08% | | Private label mortgage-backed | $44,929 | $70,035 | $(25,106) | -35.85% | | Other asset backed | $33,917 | $38,516 | $(4,599) | -11.94% | | Obligations of states and political subdivisions | $276,746 | $288,791 | $(12,045) | -4.17% | | Corporate | $61,333 | $69,921 | $(8,588) | -12.28% | | Trust preferred | $977 | $982 | $(5) | -0.51% | | **Total AFS** | **$509,511** | **$559,182** | **$(49,671)** | **-8.88%** | Securities Held to Maturity (HTM) - Carrying Value | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | U.S. agency | $23,283 | $24,150 | $(867) | -3.59% | | U.S. agency residential mortgage-backed | $96,758 | $100,700 | $(3,942) | -3.91% | | U.S. agency commercial mortgage-backed | $3,957 | $4,013 | $(56) | -1.40% | | Private label mortgage backed | $7,324 | $7,350 | $(26) | -0.35% | | Obligations of states and political subdivisions | $152,433 | $156,305 | $(3,872) | -2.48% | | Corporate | $44,591 | $45,964 | $(1,373) | -2.99% | | Trust preferred | $956 | $954 | $2 | 0.21% | | **Total HTM** | **$329,302** | **$339,436** | **$(10,134)** | **-2.98%** | - Gross unrealized losses on AFS securities totaled **$65.940 million** at June 30, 2025, with the majority (over **99%**) in positions of twelve months or more, primarily due to widening credit spreads and/or increased interest rates since acquisition[28](index=28&type=chunk)[30](index=30&type=chunk)[32](index=32&type=chunk) - No allowance for credit losses (ACL) was needed for AFS securities at June 30, 2025, or December 31, 2024. An ACL of **$133 thousand** was recorded for non-U.S. agency HTM securities at June 30, 2025, based on historical credit loss rates[36](index=36&type=chunk)[37](index=37&type=chunk) Allowance for Credit Losses (ACL) on Securities HTM | Category | Balance at June 30, 2025 (in thousands) | Balance at December 31, 2024 (in thousands) | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | | Private Label Mortgage Backed | $1 | $1 | | Obligations of States and Political Subdivisions | $17 | $17 | | Corporate | $111 | $111 | | Trust Preferred | $4 | $3 | | **Total ACL** | **$133** | **$132** | Proceeds from Sale of Securities AFS and Net Gains/Losses | Period | Proceeds (in thousands) | Gains (in thousands) | Losses (in thousands) | Net Losses (in thousands) | | :--------------------------------- | :---------------------- | :------------------- | :-------------------- | :------------------------ | | 6 Months Ended June 30, 2025 | $26,356 | $37 | $356 | $(319) | | 6 Months Ended June 30, 2024 | $37,273 | $14 | $283 | $(269) | [4. Loans](index=18&type=section&id=4.%20Loans) The ACL on loans increased by **$1.778 million to $61.157 million** at June 30, 2025, driven by specific and subjective allocations, while non-performing loans rose to **$8.204 million** - The ACL process uses specific analysis for individual loans, pooled analysis for loans with similar risk characteristics, and additional allocations based on subjective factors[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) Allowance for Credit Losses (ACL) by Portfolio Segment | Segment | Balance at June 30, 2025 (in thousands) | Balance at December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Commercial | $25,890 | $22,872 | $3,018 | 13.19% | | Mortgage | $20,752 | $22,317 | $(1,565) | -7.01% | | Installment | $3,015 | $3,040 | $(25) | -0.82% | | Subjective Allocation | $11,500 | $11,150 | $350 | 3.14% | | **Total ACL** | **$61,157** | **$59,379** | **$1,778** | **2.99%** | Non-performing Loans | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | Commercial | $0 | $49 | $(49) | -100.00% | | Mortgage | $7,371 | $5,210 | $2,161 | 41.48% | | Installment | $833 | $733 | $100 | 13.64% | | **Total Non-performing Loans** | **$8,204** | **$6,002** | **$2,212** | **36.85%** | - During the six months ended June 30, 2025, **two mortgage loans totaling $0.11 million** were modified due to financial difficulty, with none of the modified loans subsequently defaulting[61](index=61&type=chunk)[64](index=64&type=chunk) - Commercial loans are graded on a scale of **1 to 12**, with specific categories for "non-watch," "watch," "substandard accruing," "substandard - non-accrual," "doubtful," and "loss"[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) - The company sold **$15.4 million** of portfolio residential mortgage loans (servicing retained) in the first six months of 2025, recognizing a gain of **$0.30 million**, primarily for asset/liability management purposes[81](index=81&type=chunk) [5. Shareholders' Equity and Earnings Per Common Share](index=34&type=section&id=5.%20Shareholders'%20Equity%20and%20Earnings%20Per%20Common%20Share) A share repurchase plan authorized up to **1,100,000 shares** through December 31, 2025, with **252,276 shares** repurchased for **$7.36 million** in H1 2025, while basic and diluted EPS decreased - A share repurchase plan authorized up to **1,100,000 shares** through **December 31, 2025**[83](index=83&type=chunk) Common Stock Repurchases | Period | Shares Repurchased | Aggregate Purchase Price (in thousands) | | :--------------------------------- | :------------------- | :------------------------------------ | | 3 Months Ended June 30, 2025 | 251,183 | $7,320 | | 6 Months Ended June 30, 2025 | 252,276 | $7,360 | | 6 Months Ended June 30, 2024 | 0 | $0 | Net Income Per Common Share | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | % Change | | :--------------------------------- | :----------------------------- | :----------------------------- | :------- | :--------- | | Basic Net Income Per Common Share | $1.56 | $1.65 | $(0.09) | -5.45% | | Diluted Net Income Per Common Share | $1.54 | $1.64 | $(0.10) | -6.10% | [6. Derivative Financial Instruments](index=35&type=section&id=6.%20Derivative%20Financial%20Instruments) The company uses derivative financial instruments for fair value and cash flow hedging, and non-designated hedging. Total notional amounts were **$422.311 million** for fair value hedges, **$450.000 million** for cash flow hedges, and **$1.279 billion** for non-designated derivatives at June 30, 2025. Asset derivatives decreased to **$34.191 million**, while liability derivatives increased to **$20.754 million** Derivative Financial Instruments - Notional Amount and Fair Value | Designation | Notional Amount (June 30, 2025, in thousands) | Fair Value (June 30, 2025, in thousands) | Notional Amount (Dec 31, 2024, in thousands) | Fair Value (Dec 31, 2024, in thousands) | | :--------------------------------- | :------------------------------------------ | :--------------------------------------- | :------------------------------------------ | :--------------------------------------- | | Fair value hedge | $422,311 | $7,318 | $442,512 | $14,320 | | Cash flow hedge | $450,000 | $5,880 | $400,000 | $3,954 | | No hedge designation | $1,279,862 | $239 | $1,108,683 | $162 | - Fair value hedges are used to protect the fair value of fixed-rate commercial, mortgage, and installment loans, and AFS securities from interest rate fluctuations[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - Cash flow hedges manage variability in future cash flows of commercial loans and short-term funding liabilities, with an estimated **$1.5 million** to be reclassified from AOCL to earnings over the next twelve months[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - Non-designated derivatives include rate-lock mortgage loan commitments and mandatory commitments to sell mortgage loans, exposing the company to interest rate risk recognized in net gains on mortgage loans[97](index=97&type=chunk) Fair Values of Derivative Instruments (Balance Sheet Impact) | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | Asset Derivatives | $34,191 | $37,059 | $(2,868) | -7.74% | | Liability Derivatives | $20,754 | $18,623 | $2,131 | 11.44% | [7. Goodwill and Other Intangibles](index=41&type=section&id=7.%20Goodwill%20and%20Other%20Intangibles) Goodwill remained unchanged at **$28.300 million**, while amortized intangible assets, primarily core deposits, decreased slightly due to amortization, with an estimated remaining amortization of **$1.244 million** through 2028 Intangible Assets, Net of Amortization | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Amortized intangible assets - core deposits | $1,244 | $1,488 | | Unamortized intangible assets - goodwill | $28,300 | $28,300 | Estimated Core Deposits Intangible Amortization | Period | Amount (in thousands) | | :--------------------------------- | :-------------------- | | Six months ending December 31, 2025 | $243 | | 2026 | $460 | | 2027 | $434 | | 2028 | $107 | | **Total** | **$1,244** | [8. Share Based Compensation](index=41&type=section&id=8.%20Share%20Based%20Compensation) Total compensation expense for long-term incentive plans increased to **$1.3 million** for H1 2025. Non-vested restricted stock and PSUs totaled **263,514 shares** with a weighted average grant date fair value of **$27.43**, and **$4.1 million** in unrecognized compensation cost remains - The long-term incentive plan permits grants of up to **0.3 million** additional common shares, and the non-employee director stock purchase plan permits up to **0.1 million** additional shares[107](index=107&type=chunk) Share Based Compensation Expense | Period | Long-term Incentive Plan (in thousands) | Non-employee Director Payments (in thousands) | | :--------------------------------- | :-------------------------------------- | :-------------------------------------------- | | 3 Months Ended June 30, 2025 | $600 | $70 | | 3 Months Ended June 30, 2024 | $500 | $60 | | 6 Months Ended June 30, 2025 | $1,300 | $130 | | 6 Months Ended June 30, 2024 | $1,000 | $130 | - At June 30, 2025, total expected compensation cost for non-vested restricted stock and PSUs not yet recognized was **$4.1 million**, with a weighted-average recognition period of **2.2 years**[111](index=111&type=chunk) Non-Vested Stock and Related Transactions | Item | Number of Shares | Weighted Average Grant Date Fair Value | | :--------------------------------- | :----------------- | :------------------------------------- | | Outstanding at January 1, 2025 | 266,986 | $24.64 | | Granted | 69,383 | $37.17 | | Vested | (69,426) | $27.33 | | Forfeited | (3,429) | $27.47 | | **Outstanding at June 30, 2025** | **263,514** | **$27.43** | [9. Income Tax](index=43&type=section&id=9.%20Income%20Tax) Income tax expense decreased to **$7.3 million** for H1 2025, reflecting changes in pretax income, and the company maintains that realization of substantially all deferred tax assets is more likely than not Income Tax Expense | Period | Income Tax Expense (in thousands) | | :--------------------------------- | :------------------------------ | | 3 Months Ended June 30, 2025 | $3,801 | | 3 Months Ended June 30, 2024 | $4,638 | | 6 Months Ended June 30, 2025 | $7,337 | | 6 Months Ended June 30, 2024 | $8,468 | - The difference between actual and statutory income tax expense is primarily due to tax-exempt interest income, tax-exempt income from life insurance cash surrender value, and differences in stock award/option values[112](index=112&type=chunk) - The company concluded that the realization of substantially all deferred tax assets is more likely than not at June 30, 2025. Gross unrecognized tax benefits were approximately **$0.2 million**, with no significant change expected in 2025[113](index=113&type=chunk)[114](index=114&type=chunk) [10. Regulatory Matters](index=43&type=section&id=10.%20Regulatory%20Matters) The Bank maintained "well capitalized" status at June 30, 2025, exceeding all minimum capital ratios, and had positive undivided profits of **$236.3 million** allowing for dividend payments - The Bank is categorized as "**well capitalized**" by regulatory filings at June 30, 2025, exceeding minimum capital requirements and the capital conservation buffer[116](index=116&type=chunk) Regulatory Capital Ratios (Consolidated) | Ratio | June 30, 2025 | December 31, 2024 | Minimum for Adequately Capitalized | Minimum for Well-Capitalized | | :--------------------------------- | :------------ | :---------------- | :--------------------------------- | :--------------------------- | | Total capital to risk-weighted assets | 14.20% | 14.22% | 8.00% | NA | | Tier 1 capital to risk-weighted assets | 12.23% | 12.06% | 6.00% | NA | | Common equity tier 1 capital to risk-weighted assets | 11.36% | 11.17% | 4.50% | NA | | Tier 1 capital to average assets | 10.07% | 9.85% | 4.00% | NA | - The Bank had positive undivided profits of **$236.3 million** at June 30, 2025, allowing for cash dividends to the parent company within regulatory guidelines[115](index=115&type=chunk) [11. Fair Value Disclosures](index=45&type=section&id=11.%20Fair%20Value%20Disclosures) The company measures fair value using a three-level hierarchy, with recurring measurements primarily using Level 2 inputs, and capitalized mortgage loan servicing rights and certain collateral-dependent loans using Level 3 inputs - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs), and **Level 3** (significant unobservable assumptions)[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - Securities AFS, loans held for sale, and derivatives are primarily **Level 2**, while capitalized mortgage loan servicing rights and collateral-dependent loans with specific loss allocations are **Level 3**[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) Assets Measured at Fair Value on a Recurring Basis (June 30, 2025) | Asset | Fair Value (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | | :--------------------------------- | :---------------------- | :--------------------- | :--------------------- | :--------------------- | | Securities available for sale | $509,511 | $0 | $509,511 | $0 | | Loans held for sale | $12,492 | $0 | $12,492 | $0 | | Capitalized mortgage loan servicing rights | $32,053 | $0 | $0 | $32,053 | | Derivatives (Asset) | $34,191 | $0 | $34,191 | $0 | | Derivatives (Liability) | $20,754 | $0 | $20,754 | $0 | Capitalized Mortgage Loan Servicing Rights - Fair Value Changes | Item | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | | Beginning balance | $46,796 | $42,243 | | Total gains (losses) realized and unrealized | $(3,505) | $383 | | Purchases, issuances, settlements, maturities and calls | $1,818 | $1,780 | | Sales | $(12,884) | $0 | | Loss on sale of originated servicing rights | $(172) | $0 | | **Ending balance** | **$32,053** | **$44,406** | - The decrease in capitalized mortgage loan servicing rights is primarily due to the sale of **$931.6 million** of mortgage loan servicing rights (**26.3%** of total servicing portfolio) on **January 31, 2025**, representing approximately **$13.1 million** (**27.9%**) of the asset[138](index=138&type=chunk) [12. Fair Values of Financial Instruments](index=52&type=section&id=12.%20Fair%20Values%20of%20Financial%20Instruments) The company estimates fair values for most financial instruments, many lacking active trading markets, with total recorded book balance for assets at **$5.419 billion** (fair value **$5.376 billion**) and liabilities at **$4.949 billion** (fair value **$4.907 billion**) at June 30, 2025 - Fair value estimates are subjective and based on available data and methodologies, with many financial instruments lacking active trading markets and held to maturity[145](index=145&type=chunk) Estimated Recorded Book Balances and Fair Values (Selected Items) | Item | Recorded Book Balance (June 30, 2025, in thousands) | Fair Value (June 30, 2025, in thousands) | | :--------------------------------- | :------------------------------------------ | :--------------------------------------- | | **Assets** | | | | Cash and due from banks | $74,354 | $74,354 | | Securities available for sale | $509,511 | $509,511 | | Securities held to maturity | $329,302 | $293,658 | | Net loans and loans held for sale | $4,115,702 | $3,946,951 | | Derivative financial instruments | $34,191 | $34,191 | | **Total Assets (selected)** | **$5,063,060** | **$4,858,665** | | **Liabilities** | | | | Deposits with no stated maturity | $3,807,413 | $3,807,413 | | Deposits with stated maturity | $851,946 | $849,694 | | Other borrowings | $102,008 | $101,632 | | Subordinated debt | $39,624 | $40,471 | | Subordinated debentures | $39,830 | $39,585 | | Derivative financial instruments | $20,754 | $20,754 | | **Total Liabilities (selected)** | **$4,861,575** | **$4,859,549** | [13. Contingencies](index=56&type=section&id=13.%20Contingencies) The company faces significant economic uncertainty from global and national macroeconomic conditions, but does not expect a significant impact from litigation matters, and recognized a **$2.677 million** gain on Visa Class C shares in May 2024 - Global and national macroeconomic conditions create significant economic uncertainty and could materially impact business, asset valuations, and financial results[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - The company is involved in various litigation matters but does not expect a significant impact on its financial position or results of operations, with estimated maximum additional losses being insignificant[158](index=158&type=chunk)[159](index=159&type=chunk) - In **May 2024**, the company exchanged Visa Inc. Class B-1 common stock for Class C and B-2 shares, recognizing a **$2.677 million** gain on Class C shares (subsequently sold). Class B-2 shares are carried at **zero** due to limited liquidity and conversion uncertainty, though their current "value" is approximately **$3.3 million**[160](index=160&type=chunk)[161](index=161&type=chunk) - The company believes the likelihood of making payments under the Makewhole Agreement related to the Visa exchange offer is remote[162](index=162&type=chunk)[163](index=163&type=chunk) [14. Accumulated Other Comprehensive Loss ("AOCL")](index=57&type=section&id=14.%20Accumulated%20Other%20Comprehensive%20Loss%20(%22AOCL%22)) Accumulated Other Comprehensive Loss (AOCL) increased to **$(69.887) million** at June 30, 2025, reflecting net current period other comprehensive income of **$0.057 million** for the six months ended June 30, 2025 Changes in Accumulated Other Comprehensive Loss (AOCL) | Item | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | | Balances at beginning of period | $(69,944) | $(72,142) | | Other comprehensive income (loss) before reclassifications | $(933) | $615 | | Amounts reclassified from AOCL | $990 | $699 | | **Net current period other comprehensive income (loss)** | **$57** | **$1,314** | | **Balances at end of period** | **$(69,887)** | **$(70,828)** | - Disproportionate tax effects from AFS securities arose due to OCI tax effects in the presence of a valuation allowance against deferred tax assets and a pretax loss from operations[165](index=165&type=chunk) Reclassifications Out of AOCL (Six Months Ended June 30, 2025) | AOCL Component | Amount Reclassified From AOCL (in thousands) | Affected Line Item in Interim Condensed Consolidated Statements of Operations | | :--------------------------------- | :------------------------------------------- | :-------------------------------------------------------------------------- | | Unrealized losses on securities available for sale | $(253) | Net losses on securities available for sale, Income tax expense | | Unrealized gains (losses) on derivative instruments | $737 | Interest income, Interest expense, Income tax expense | | **Total reclassifications, net of tax** | **$(990)** | | [15. Revenue from Contracts with Customers](index=59&type=section&id=15.%20Revenue%20from%20Contracts%20with%20Customers) The majority of the company's revenue (**88.6%** for H1 2025) is excluded from ASC Topic 606, with material included revenues recognized upon service delivery or over the monthly period - Approximately **88.6%** of total revenues for the six months ended June 30, 2025, are excluded from ASC Topic 606, primarily from financial instruments like interest income, net gains on mortgage loans, and mortgage loan servicing[169](index=169&type=chunk) - Material revenues included in ASC Topic 606 are service charges on deposit accounts, other deposit related income, interchange income, and investment and insurance commissions, recognized upon service delivery or over the monthly period, with no contract assets or liabilities[170](index=170&type=chunk) Revenue from Contracts with Customers (Six Months Ended June 30, 2025) | Category | Amount (in thousands) | | :--------------------------------- | :-------------------- | | Service Charges on Deposit Accounts | $5,795 | | Other Deposit Related Income | $1,345 | | Interchange Income | $6,517 | | Investment and Insurance Commissions | $1,564 | | **Total** | **$15,221** | [16. Leases](index=64&type=section&id=16.%20Leases) The company primarily has operating leases for office facilities, with no finance leases, and total operating lease cost for H1 2025 was **$0.734 million** - The company primarily uses operating leases for office facilities and has elected not to recognize short-term leases (12 months or less) on the balance sheet, with no finance leases existing as of June 30, 2025[182](index=182&type=chunk)[183](index=183&type=chunk) Operating Lease Costs | Cost Component | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | | Operating lease cost | $685 | $695 | | Variable lease cost | $10 | $22 | | Short-term lease cost | $39 | $47 | | **Total** | **$734** | **$764** | Operating Lease Balance Sheet Information | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Lease right of use asset | $6,900 | $5,971 | | Lease liabilities | $7,003 | $6,338 | | Weighted average remaining lease term (years) | 7.10 | 7.07 | | Weighted average discount rate | 4.4% | 3.7% | [17. Segment Reporting](index=66&type=section&id=17.%20Segment%20Reporting) The company operates as a single reportable segment, banking operations, with performance evaluated using consolidated net income, earnings per share, and return on average assets - The company has one reportable segment: banking operations, involving the delivery of loan and deposit products to customers[188](index=188&type=chunk)[189](index=189&type=chunk) - The Chief Operating Decision Maker evaluates segment performance using consolidated net income, earnings per share, and return on average assets, assessing revenue streams and significant expenses for product pricing and return on assets[189](index=189&type=chunk)[190](index=190&type=chunk) Segment Net Income (Six Months Ended June 30) | Segment | 2025 (in thousands) | 2024 (in thousands) | | :--------------------------------- | :------------------ | :------------------ | | Independent Bank | $34,173 | $36,498 | | Other | $(1,659) | $(1,947) | | Eliminations | $(47) | $(32) | | **Total Net Income** | **$32,467** | **$34,519** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=71&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income decreased for both three-month and six-month periods due to prior year Visa gain, unfavorable mortgage loan servicing, and increased credit loss provision, while total assets grew from loan growth and other borrowings increased - Net income for the three months ended June 30, 2025, decreased to **$16.9 million** from **$18.5 million** in 2024, primarily due to a prior year **$2.7 million** gain on Visa Inc. common stock, a **$1.1 million** unfavorable change in mortgage loan servicing rights, and a **$1.5 million** increase in provision for credit losses, partially offset by a **$3.3 million** increase in net interest income[203](index=203&type=chunk) - Net income for the six months ended June 30, 2025, decreased to **$32.5 million** from **$34.5 million** in 2024, primarily due to a **$3.9 million** unfavorable change in mortgage loan servicing rights, the Visa Inc. common stock gain, increased non-interest expense, and higher provision for credit losses, partially offset by increased net interest income and mortgage loan gains[204](index=204&type=chunk) Key Performance Ratios | Ratio | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net income (annualized) to Average assets | 1.27% | 1.44% | 1.22% | 1.34% | | Net income (annualized) to Average shareholders' equity | 14.66% | 17.98% | 14.19% | 16.98% | | Basic Net income per common share | $0.81 | $0.89 | $1.56 | $1.65 | | Diluted Net income per common share | $0.81 | $0.88 | $1.54 | $1.64 | [Introduction](index=71&type=section&id=Introduction) This section provides additional information for assessing financial condition and results, to be read with interim financial statements and the 2024 Form 10-K - The MD&A provides additional information for assessing financial condition and results, to be read in conjunction with interim financial statements and the 2024 Form 10-K[198](index=198&type=chunk) [Overview](index=71&type=section&id=Overview) The company provides banking services primarily in Michigan's Lower Peninsula, with success largely dependent on regional economic conditions - The company's primary operations are banking services in Michigan's Lower Peninsula, with success largely tied to regional economic conditions[199](index=199&type=chunk) [Recent Developments](index=71&type=section&id=Recent%20Developments) The company faces significant economic uncertainty from global and national macroeconomic conditions, which could lead to material adverse impacts on asset valuations and financial condition, though management is cautiously optimistic - Significant economic uncertainty persists due to global and national macroeconomic conditions, including market volatility, U.S. trade policy changes, recessionary concerns, interest rate uncertainty, and geopolitical conflicts[200](index=200&type=chunk) - These pressures could lead to material adverse impacts such as valuation impairments on intangibles, goodwill, securities, loans, mortgage loan servicing rights, or deferred tax assets[200](index=200&type=chunk) - Management is cautiously optimistic about managing the impact of these risks, but a high degree of uncertainty remains regarding future performance[157](index=157&type=chunk) [RESULTS OF OPERATIONS](index=71&type=section&id=RESULTS%20OF%20OPERATIONS) [Summary](index=71&type=section&id=Summary) Net income decreased for both three-month and six-month periods ended June 30, 2025, primarily due to a prior year Visa stock gain, unfavorable mortgage loan servicing, and increased credit loss provision - Net income for Q2 2025 was **$16.9 million** (down from **$18.5 million** in Q2 2024), primarily due to a prior year **$2.7 million** gain on Visa stock, a **$1.1 million** unfavorable change in mortgage loan servicing rights, and a **$1.5 million** increase in provision for credit losses, partially offset by a **$3.3 million** increase in net interest income[203](index=203&type=chunk) - Net income for H1 2025 was **$32.5 million** (down from **$34.5 million** in H1 2024), primarily due to a **$3.9 million** unfavorable change in mortgage loan servicing rights, the Visa stock gain, increased non-interest expense, and higher provision for credit losses, partially offset by increased net interest income and mortgage loan gains[204](index=204&type=chunk) [Net Interest Income](index=72&type=section&id=Net%20interest%20income) Net interest income increased by **$3.3 million** (7.9%) in Q2 2025 and **$6.8 million** (8.3%) in H1 2025, driven by increased average interest-earning assets and an improved net interest margin due to lower Cost of Funds - Net interest income increased by **$3.3 million** (**7.9%**) to **$44.6 million** in Q2 2025 and by **$6.8 million** (**8.3%**) to **$88.3 million** in H1 2025 compared to prior year periods[206](index=206&type=chunk)[207](index=207&type=chunk) - The increase was driven by a **$142.7 million** increase in average interest-earning assets and an **18 basis point** increase in net interest margin for Q2 2025, and a **$155.2 million** increase in average interest-earning assets and a **19 basis point** increase in net interest margin for H1 2025[206](index=206&type=chunk)[207](index=207&type=chunk) - Net interest margin increases are attributed to **28 and 27 basis point decreases** in Cost of Funds for Q2 and H1 2025, respectively, partially offset by **10 and 8 basis point decreases** in Asset Yield, reflecting federal funds rate decreases and shifts in funding mix[209](index=209&type=chunk) Net Interest Margin (FTE) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net interest margin (GAAP) | 3.55% | 3.39% | 3.50% | 3.33% | | Net interest margin (FTE) | 3.58% | 3.40% | 3.54% | 3.35% | - Non-accrual loans averaged **$7.7 million** in Q2 2025 and **$7.2 million** in H1 2025, up from **$4.0 million** and **$3.9 million** in the same periods of 2024, respectively[210](index=210&type=chunk) [Provision for Credit Losses](index=75&type=section&id=Provision%20for%20credit%20losses) The provision for credit losses increased significantly to **$1.50 million** in Q2 2025 and **$2.22 million** in H1 2025, primarily due to higher specific reserves on a commercial real estate loan and increased pooled reserves Provision for Credit Losses | Period | Provision for Credit Losses (in thousands) | | :--------------------------------- | :--------------------------------- | | 3 Months Ended June 30, 2025 | $1,500 | | 3 Months Ended June 30, 2024 | $19 | | 6 Months Ended June 30, 2025 | $2,221 | | 6 Months Ended June 30, 2024 | $763 | - The **$1.48 million** increase in Q2 2025 provision was primarily due to increased specific reserves on a **$15.4 million** commercial real estate loan and higher pooled reserves on commercial and retail loans, partially offset by reduced specific reserves on two commercial and industrial loans[218](index=218&type=chunk) - The **$0.33 million** increase in H1 2025 provision was mainly due to a net increase in specific reserve allocations on commercial and retail loans and a decrease in gross recoveries of previously charged-off loans, partially offset by decreased pooled allocations in the retail loan portfolio[219](index=219&type=chunk) - The provision for credit losses on HTM securities was an expense of **$0.001 million** in H1 2025, compared to a credit of **$(1.127) million** in H1 2024, reflecting a partial recovery of a corporate security (Signature Bank) in Q1 2024[220](index=220&type=chunk) [Non-interest Income](index=75&type=section&id=Non-interest%20income) Non-interest income decreased to **$11.3 million** in Q2 2025 and **$21.7 million** in H1 2025, primarily due to the absence of a prior year Visa stock gain and a significant decrease in mortgage loan servicing, net Non-Interest Income | Item | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Interchange income | $3,390 | $3,401 | $6,517 | $6,552 | | Service charges on deposit accounts | $2,981 | $2,937 | $5,795 | $5,809 | | Net gains on mortgage loans | $1,631 | $1,333 | $3,934 | $2,697 | | Equity securities at fair value | $0 | $2,693 | $0 | $2,693 | | Securities available for sale | $11 | $0 | $(319) | $(269) | | Mortgage loan servicing, net | $490 | $2,091 | $(146) | $4,816 | | Investment and insurance commissions | $810 | $838 | $1,564 | $1,642 | | Bank owned life insurance | $296 | $188 | $593 | $369 | | Other | $1,716 | $1,691 | $3,811 | $3,424 | | **Total non-interest income** | **$11,325** | **$15,172** | **$21,749** | **$27,733** | - Net gains on mortgage loans increased due to higher loan origination and sales volume and an increase in the Loan Sales Margin (**1.71%** in Q2 2025 vs. **1.46%** in Q2 2024; **2.21%** in H1 2025 vs. **1.56%** in H1 2024)[224](index=224&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - The **$2.7 million** gain on equity securities at fair value in Q2 2024 was due to the exchange of Visa Class B-1 common stock into Class C shares, which were subsequently sold, with no such gain occurring in 2025[228](index=228&type=chunk) - Mortgage loan servicing, net, shifted from income of **$2.1 million** in Q2 2024 to **$0.5 million** in Q2 2025, and from income of **$4.8 million** in H1 2024 to an expense of **$(0.1) million** in H1 2025, primarily due to changes in fair value of capitalized mortgage loan servicing rights and a decline in servicing revenue following the sale of **$931.6 million** of servicing rights in January 2025[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk) [Non-interest Expense](index=78&type=section&id=Non-interest%20expense) Non-interest expense increased by **$0.4 million** (1.3%) in Q2 2025 and **$2.5 million** (3.8%) in H1 2025, driven by higher data processing, advertising, and loan and collection expenses, partially offset by lower compensation Non-Interest Expense | Item | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Compensation and employee benefits | $21,123 | $21,251 | $41,506 | $42,021 | | Data processing | $3,847 | $3,257 | $7,576 | $6,512 | | Occupancy, net | $2,046 | $1,886 | $4,269 | $3,960 | | Interchange expense | $1,177 | $1,127 | $2,296 | $2,224 | | Advertising | $833 | $788 | $1,694 | $1,279 | | Furniture, fixtures and equipment | $793 | $948 | $1,678 | $1,902 | | Loan and collection | $744 | $699 | $1,530 | $1,211 | | FDIC deposit insurance | $637 | $695 | $1,348 | $1,477 | | Communications | $470 | $499 | $1,061 | $1,114 | | Legal and professional | $500 | $544 | $979 | $1,030 | | Other | $1,349 | $1,236 | $3,045 | $2,491 | | **Total non-interest expense** | **$33,762** | **$33,333** | **$68,024** | **$65,526** | - Compensation and employee benefits decreased by **$0.5 million** in H1 2025, primarily due to lower performance-based compensation and reduced employee medical insurance costs, partially offset by salary increases[239](index=239&type=chunk)[240](index=240&type=chunk) - Data processing expense increased by **$1.1 million** in H1 2025 due to core data processor annual asset growth, CPI-related cost increases, and new solutions[241](index=241&type=chunk) - Other expense increased by **$0.6 million** in H1 2025, primarily due to costs related to the mortgage loan servicing right sale, higher fraud-related losses, real estate property write-down, and higher Michigan Corporate Income Tax[245](index=245&type=chunk) [Income Tax Expense](index=80&type=section&id=Income%20tax%20expense) Income tax expense decreased to **$3.8 million** in Q2 2025 and **$7.3 million** in H1 2025, reflecting changes in pretax income, with the company assessing that realization of substantially all deferred tax assets is more likely than not Income Tax Expense | Period | Income Tax Expense (in thousands) | | :--------------------------------- | :------------------------------ | | 3 Months Ended June 30, 2025 | $3,801 | | 3 Months Ended June 30, 2024 | $4,638 | | 6 Months Ended June 30, 2025 | $7,337 | | 6 Months Ended June 30, 2024 | $8,468 | - The actual income tax expense differs from the statutory rate due to tax-exempt interest income, tax-exempt income from life insurance cash surrender value, and differences in stock award/option values[247](index=247&type=chunk) - The company maintains that the realization of substantially all deferred tax assets is more likely than not[248](index=248&type=chunk) [FINANCIAL CONDITION](index=80&type=section&id=FINANCIAL%20CONDITION) [Summary](index=80&type=section&id=Summary) Total assets increased by **$80.4 million** to **$5.419 billion** during H1 2025, driven by loan growth, while securities declined, deposits slightly increased, and other borrowings significantly rose - Total assets increased by **$80.4 million** during the first six months of 2025[250](index=250&type=chunk) - Loans (excluding held for sale) increased to **$4.16 billion** at June 30, 2025, from **$4.04 billion** at December 31, 2024, with growth in commercial and mortgage loans offsetting a decrease in installment loans[250](index=250&type=chunk) - Securities available for sale and held to maturity combined declined by **$59.8 million** to **$838.8 million** at June 30, 2025[250](index=250&type=chunk) - Deposits increased by **$5.3 million** to **$4.66 billion** at June 30, 2025, primarily due to increases in reciprocal and brokered time deposits, partially offset by decreases in other deposit categories[251](index=251&type=chunk) [Securities](index=80&type=section&id=Securities) The company maintains diversified AFS and HTM securities portfolios, with unrealized losses on AFS considered temporary and no ACL needed, while an ACL is maintained for HTM securities - The company maintains diversified AFS and HTM securities portfolios, regularly evaluating asset/liability management needs for liquidity and cash flow[252](index=252&type=chunk) - Unrealized losses on AFS securities are considered temporary, and the company has the liquidity and capital to hold these securities to maturity or until recovery, with no ACL needed for AFS securities at June 30, 2025[253](index=253&type=chunk)[256](index=256&type=chunk) - An ACL is maintained for HTM securities based on expected credit losses, with a **$1.1 million** recovery recorded in Q1 2024 for a previously charged-off corporate security (Signature Bank)[257](index=257&type=chunk) Securities Available for Sale (AFS) - Fair Value | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | Total AFS | $509,511 | $559,182 | $(49,671) | -8.88% | Securities Held to Maturity (HTM) - Carrying Value | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | Total HTM | $329,302 | $339,436 | $(10,134) | -2.98% | [Portfolio Loans and Asset Quality](index=82&type=section&id=Portfolio%20Loans%20and%20asset%20quality) Total Portfolio Loans increased to **$4.164 billion** at June 30, 2025, driven by commercial and mortgage loan growth, while non-performing loans increased to **$8.204 million** (0.20%) and ACL on loans rose to **$61.2 million** (1.47%) Portfolio Loans by Type | Loan Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | Real estate | $3,018,812 | $2,712,981 | $305,831 | 11.27% | | Consumer | $564,281 | $579,345 | $(15,064) | -2.60% | | Commercial | $575,825 | $542,742 | $33,083 | 6.10% | | Agricultural | $3,369 | $3,747 | $(378) | -10.09% | | **Total loans** | **$4,164,367** | **$4,038,825** | **$125,542** | **3.11%** | Non-performing Assets | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | Non-accrual loans | $10,453 | $7,792 | $2,661 | 34.15% | | Total non-performing loans | $8,204 | $6,002 | $2,202 | 36.69% | | Other real estate and repossessed assets | $426 | $938 | $(512) | -54.58% | | **Total non-performing assets** | **$8,630** | **$6,940** | **$1,690** | **24.35%** | - Non-performing loans increased to **0.20%** of Portfolio Loans at June 30, 2025, from **0.15%** at December 31, 2024, primarily due to an increase in non-performing mortgage loans[264](index=264&type=chunk) Allocation of Allowance for Credit Losses on Loans | Allocation Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | Specific allocations | $4,606 | $2,300 | $2,306 | 100.26% | | Pooled analysis allocations | $45,051 | $45,929 | $(878) | -1.91% | | Additional allocations based on subjective factors | $11,500 | $11,150 | $350 | 3.14% | | **Total** | **$61,157** | **$59,379** | **$1,778** | **2.99%** | [Deposits and Borrowings](index=84&type=section&id=Deposits%20and%20borrowings) Total deposits increased slightly by **$5.3 million** to **$4.66 billion** at June 30, 2025, driven by brokered and reciprocal time deposits, while other borrowings significantly increased to **$102.0 million** - Total deposits increased by **$5.3 million** to **$4.66 billion** at June 30, 2025, from **$4.65 billion** at December 31, 2024[272](index=272&type=chunk) - The increase in deposits was due to increases in reciprocal and brokered time deposits, offset by decreases in non-interest bearing, savings and interest-bearing checking, and time deposits, with reciprocal deposits totaling **$911.8 million** at June 30, 2025[272](index=272&type=chunk) Uninsured Deposits | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Uninsured deposits | $1,021,672 | $1,059,909 | | Uninsured deposits as a percentage of deposits | 22.5% | 23.3% | - Other borrowings, primarily from FRB and FHLB, increased to **$102.0 million** at June 30, 2025, from **$45.0 million** at December 31, 2024[275](index=275&type=chunk) - Wholesale funding sources (including reciprocal deposits) amounted to approximately **$1.14 billion**, or **23.8%** of total funding, at June 30, 2025, with availability and cost subject to market conditions and confidence in the company's financial health[276](index=276&type=chunk) [Liquidity and Capital Resources](index=85&type=section&id=Liquidity%20and%20capital%20resources) The company maintains strong liquidity with **$1.019 billion** in unused FHLB credit lines and **$484.6 million** from FRB, and total capitalization was **$539.856 million** with common shareholders' equity increasing to **$469.3 million** - Primary liquidity sources include deposits, secured advances from FHLB and FRB, federal funds purchased, other bank borrowing facilities, and access to capital markets (Brokered CDs)[279](index=279&type=chunk) - At June 30, 2025, unused credit lines were approximately **$1.019 billion** (FHLB) and **$484.6 million** (FRB), with **$486.0 million** in unpledged securities providing an estimated **$455.9 million** in additional borrowing capacity[279](index=279&type=chunk) - The company believes it has adequate liquidity at the Bank and sufficient cash at the parent company (**$49.1 million** at June 30, 2025) to meet operating expenses, interest payments, and common stock dividends[283](index=283&type=chunk)[284](index=284&type=chunk) Capitalization | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Subordinated debt | $39,624 | $39,586 | | Subordinated debentures | $39,830 | $39,796 | | Amount qualifying as regulatory capital | $70,606 | $78,572 | | Total shareholders' equity | $469,250 | $454,686 | | **Total capitalization** | **$539,856** | **$533,258** | - The company plans to redeem **$40 million** in floating subordinated notes on **August 31, 2025**, which is not expected to affect its "well-capitalized" status or liquidity[286](index=286&type=chunk) - Common shareholders' equity increased to **$469.3 million** at June 30, 2025, from **$454.7 million** at December 31, 2024, primarily due to earnings retention, with Tangible Common Equity (TCE) at **$439.7 million** and a TCE to tangible assets ratio of **8.16%**[289](index=289&type=chunk) [Asset/Liability Management](index=87&type=section&id=Asset%2Fliability%20management) The company manages interest-rate risk through simulation analyses, monitoring net interest income and MVPE under various rate shifts, with the current profile indicating exposure to rising rates, though MVPE increased due to higher tangible equity and improved asset values - Interest-rate risk is managed through simulation analyses that monitor potential changes in net interest income and market value of portfolio equity (MVPE) under immediate, permanent, and parallel shifts in interest rates[293](index=293&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk) - At June 30, 2025, the interest rate risk profile indicated exposure to rising rates, with MVPE increasing from December 31, 2024, due to higher tangible equity and improved medium to long duration asset values from declining interest rates[295](index=295&type=chunk) - To manage interest rate risk, the company may add longer-term borrowings, utilize derivatives (swaps, caps, floors), and continue to sell fixed-rate jumbo and other portfolio mortgage loans[295](index=295&type=chunk) Market Value of Portfolio Equity (MVPE) Sensitivity | Change in Interest Rates | MVPE (June 30, 2025, in thousands) | % Change | MVPE (Dec 31, 2024, in thousands) | % Change | | :--------------------------------- | :--------------------------------- | :------- | :--------------------------------- | :------- | | 200 basis point rise | $631,500 | (8.11)% | $566,000 | (9.76)% | | 100 basis point rise | $659,900 | (3.97)% | $598,600 | (4.56)% | | Base-rate scenario | $687,200 | — | $627,200 | — | | 100 basis point decline | $708,100 | 3.04% | $650,000 | 3.64% | | 200 basis point decline | $711,700 | 3.57% | $661,300 | 5.44% | [Litigation Matters](index=88&type=section&id=LITIGATION%20MATTERS) The company is involved in various litigation matters, with accrued probable losses deemed not material, and estimated maximum additional losses considered insignificant - The company is involved in various litigation matters, with accrued probable losses deemed not material[303](index=303&type=chunk) - It is reasonably possible to incur additional losses, but the estimated maximum amount of such losses is insignificant, though this estimate may change[303](index=303&type=chunk) - This disclosure excludes collection-related litigation where the possibility of paying damages to opposing parties is remote[304](index=304&type=chunk) [Accounting Standards Update](index=88&type=section&id=Accounting%20standards%20update) This section refers to Note 2 of the interim Condensed Consolidated Financial Statements for details on recently issued accounting pronouncements and their impact - Refer to Note 2 for details on recently issued accounting pronouncements and their impact on the interim condensed consolidated financial statements[305](index=305&type=chunk) [Fair Valuation of Financial Instruments](index=88&type=section&id=Fair%20valuation%20of%20financial%20instruments) The company uses fair value measurements for recording adjustments and disclosures, distinguishing between recurring (e.g., AFS securities, derivatives) and nonrecurring (e.g., loans held for investment) adjustments - Fair value measurements are used for recording adjustments and disclosures, distinguishing between recurring (e.g., equity securities, AFS securities, loans held for sale, derivatives, mortgage loan servicing rights) and nonrecurring (e.g., loans held for investment) adjustments[308](index=308&type=chunk) - Refer to Note 11 for a complete discussion on the use of fair valuation of financial instruments and related measurement techniques[308](index=308&type=chunk) [Critical Accounting Policies](index=89&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) Critical accounting policies, including ACL and capitalized mortgage loan servicing rights, involve significant estimates and judgments, with no material changes since the 2024 Annual Report on Form 10-K - Critical accounting policies, such as the **Allowance for Credit Losses (ACL)** and **capitalized mortgage loan servicing rights**, involve significant estimates and management judgments[310](index=310&type=chunk) - No material changes have occurred to the critical accounting policies since the 2024 Annual Report on Form 10-K[310](index=310&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=90&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section refers to the "Asset/liability management" discussion within Item 2 for disclosures regarding quantitative and qualitative information about market risk - Refer to the "Asset/liability management" section in Item 2 for disclosures on quantitative and qualitative market risk[314](index=314&type=chunk) [Item 4. Controls and Procedures](index=90&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were effective as of **June 30, 2025**, as concluded by the CEO and CFO[316](index=316&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended **June 30, 2025**[317](index=317&type=chunk) PART II - Other Information [Item 1A. Risk Factors](index=91&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2

Core Viewpoint - Independent Bank Corporation reported solid second quarter results for 2025, emphasizing its mission to inspire financial independence and confidence in managing finances [5]. Group 1: Company Overview - The conference call was hosted by William Bradford Kessel, the President and CEO, along with Gavin Mohr, the CFO, and Joel Rahn, the EVP of Commercial Banking [3]. - The agenda included prepared remarks, a question-and-answer session, and closing remarks [4]. Group 2: Financial Performance - The company expressed satisfaction with its second quarter results, indicating progress towards its long-term vision [5].

Financial Data and Key Metrics Changes - The company reported a net income of $16.9 million or $0.81 per diluted share for Q2 2025, compared to $18.5 million or $0.88 per diluted share in the prior year period [4] - Net interest income increased by $3.3 million from the year-ago period, with a tax equivalent net interest margin of 3.58% in Q2 2025, up from 3.4% in Q2 2024 [15][16] - The return on average assets was 1.27% and return on average equity was 14.66% [5] Business Line Data and Key Metrics Changes - Overall loans increased by 9% annualized, with commercial loan generation growing by $75.8 million or 15.3% on an annualized basis [5][9] - The residential mortgage portfolio grew by $15.6 million, while the installment loan portfolio saw slight growth [10] - Non-interest income totaled $11.3 million in Q2 2025, down from $15.2 million in the year-ago quarter [20][24] Market Data and Key Metrics Changes - Total deposits as of June 30, 2025, were $4.7 billion, with core deposits decreasing by $15.7 million during the quarter [8] - Retail deposits decreased by $13.8 million, while business deposits increased by $60.5 million [8] - The allowance for credit losses was 1.47% of total loans, with non-performing assets at 16 basis points of total assets [5][13] Company Strategy and Development Direction - The company aims to continue investing in its team, leveraging technology, and supporting communities [26] - There is a focus on organic growth as the primary driver, with interest in acquired growth where it makes sense [47] - The company is optimistic about growth prospects for the remainder of 2025 and into 2026 [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining margin expansion despite potential rate cuts, indicating a stable outlook for the second half of the year [28] - The company noted strong credit quality metrics, with low levels of non-performing loans and charge-offs [5][13] - Management highlighted the resilience of local economies, particularly in West Michigan and Metro Detroit, with strong homebuilding and manufacturing sectors [38][39] Other Important Information - The company repurchased 251,183 shares of common stock for an aggregate purchase price of $7.3 million in Q2 2025 [25] - New technologies, including AI chat functions, were implemented to enhance customer service and operational efficiency [66] Q&A Session Summary Question: Outlook for margin in the second half of the year - Management indicated confidence in the margin forecast, factoring in potential rate cuts [28] Question: Room to lower deposit costs - Management suggested that deposit costs are likely at a plateau, with limited opportunities for further reduction [29] Question: Competitive landscape against credit unions - Management noted no significant changes benefiting them against credit unions, but expressed hope for regulatory relief [30][32] Question: Local economies and long-term opportunities - Management highlighted strong performance in West Michigan and Metro Detroit, with a focus on the automotive sector [36][38] Question: M&A activity and appetite for inorganic growth - Management acknowledged increased M&A activity in Michigan but emphasized organic growth as the primary focus [47] Question: Margin trends and mortgage loan volume - Management noted competitive pressures affecting mortgage loan margins but remained optimistic about future trends [56]

Financial Performance - Net income was $16.9 million, or $0.81 per diluted share[9] - Net interest income increased by $3.3 million year-over-year and $0.9 million compared to the previous quarter[9] - The company generated a ROAA of 1.27% and a ROAE of 14.66%[9] - Net interest margin was 3.58%, up from 3.49% in the linked quarter[9] Balance Sheet & Loan Portfolio - Total deposits increased by $5.3 million (0.2%) since December 31, 2024[12] - Core deposits, excluding time deposits and brokered deposits, constitute 83.9% of total deposits, amounting to $4.54 billion[11, 12] - Total portfolio loans reached $4.2 billion, with commercial loans accounting for 50%, mortgage loans for 37%, and installment loans for 14%[17] - Commercial loans increased by $75.9 million in 2Q'25, with an average new origination yield of 6.81%[21] Asset Quality & Capital - Non-performing assets (NPAs) to total assets stood at 0.16%, and net charge-offs (NCO) were 0.02% of average loans[9] - The loan-to-deposit ratio is 89%[9] - All regulatory capital ratios increased compared to the prior year quarter[9]

Core Viewpoint - Independent Bank (IBCP) reported quarterly earnings of $0.81 per share, exceeding the Zacks Consensus Estimate of $0.78 per share, but down from $0.88 per share a year ago, indicating a mixed performance in earnings despite a positive surprise [1][2] Group 1: Earnings Performance - The quarterly earnings surprise was +3.85%, with the previous quarter also showing a positive surprise of +5.71% [1] - Over the last four quarters, the company has surpassed consensus EPS estimates three times [2] - The current consensus EPS estimate for the upcoming quarter is $0.82, with expected revenues of $57.8 million, and for the current fiscal year, the estimate is $3.15 on revenues of $227.8 million [7] Group 2: Revenue Performance - Independent Bank reported revenues of $55.94 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 0.64% and down from $56.52 million year-over-year [2] - The company has topped consensus revenue estimates only once over the last four quarters [2] Group 3: Stock Performance and Outlook - Independent Bank shares have declined approximately 1.8% since the beginning of the year, contrasting with the S&P 500's gain of 8.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] - The outlook for the industry, particularly the Banks - Midwest sector, is favorable, ranking in the top 29% of over 250 Zacks industries, suggesting potential for outperformance [8]

[Second Quarter 2025 Highlights and Executive Commentary](index=1&type=section&id=Second%20Quarter%202025%20Highlights%20and%20Executive%20Commentary) This section highlights Q2 2025 financial results, CEO commentary, and key strategic achievements [Summary of Key Financial Results](index=1&type=section&id=Summary%20of%20Key%20Financial%20Results) Independent Bank Corporation reported a decrease in net income and diluted earnings per share for the second quarter of 2025 compared to the prior-year period | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | | :------------------ | :------------------- | :------------------- | | Net Income | $16.9 | $18.5 | | Diluted EPS | $0.81 | $0.88 | [CEO Commentary and Strategic Overview](index=1&type=section&id=CEO%20Commentary%20and%20Strategic%20Overview) The CEO highlighted positive trends including annualized loan growth of 9.0%, net interest income growth, and a nine basis point margin expansion. The company maintained strong credit metrics and improved operational scale through strategic investments, driving growth in tangible common equity per share and healthy performance returns - Overall loans increased by **9.0% (annualized)**, while core deposits were down by **1.4% (annualized)** due to seasonality[2](index=2&type=chunk) - Generated net interest income growth on both a linked quarter and year-over-year quarterly basis, producing **nine basis points of margin expansion** from the prior quarter[2](index=2&type=chunk) - Tangible common equity per share of common stock grew by **10.8%** compared to the prior year quarter[2](index=2&type=chunk) Q2 2025 Performance Returns | Metric | Value | | :------------------------- | :------ | | Return on Average Assets | 1.27% | | Return on Average Equity | 14.66% | - 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 (annualized)**[2](index=2&type=chunk) [Specific Second Quarter 2025 Achievements](index=1&type=section&id=Specific%20Second%20Quarter%202025%20Achievements) The company achieved a $0.9 million increase in net interest income over Q1 2025, a $0.36 increase in tangible common equity per share, nine basis points of net interest margin expansion, $91.7 million in net loan growth, and paid a $0.26 per share common stock dividend - Net interest income increased by **$0.9 million (2.1%)** over the first quarter of 2025[3](index=3&type=chunk) - Tangible common equity per share of common stock increased by **$0.36 (6.9% annualized)** from March 31, 2025[3](index=3&type=chunk) - Net interest margin expanded by **nine basis points** compared to March 31, 2025[3](index=3&type=chunk) - Net growth in loans of **$91.7 million (9.0% annualized)** from March 31, 2025[3](index=3&type=chunk) - A dividend of **26 cents per share** on common stock was paid on May 15, 2025[3](index=3&type=chunk) [Operating Results Analysis](index=2&type=section&id=Operating%20Results%20Analysis) This section analyzes Q2 2025 operating results, covering net interest income, non-interest income, expenses, and income tax [Net Interest Income and Margin](index=2&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income increased year-over-year and linked quarter, driven by an increase in average interest-earning assets and a higher net interest margin. The net interest margin expanded to 3.58% in Q2 2025 Net Interest Income and Margin Trends | Metric | Q2 2025 ($ millions) | Q1 2025 ($ millions) | Q2 2024 ($ millions) | | :----------------------------------------- | :------------------- | :------------------- | :------------------- | | Net Interest Income | $44.6 | $43.7 | $41.3 | | YoY Change (Q2 2025 vs Q2 2024) | +$3.3 (7.9%) | | | | QoQ Change (Q2 2025 vs Q1 2025) | +$0.9 (2.1%) | | | | Net Interest Margin (tax equivalent) | 3.58% | 3.49% | 3.40% | | Average Interest-Earning Assets | $5.04 billion | $5.08 billion | $4.89 billion | [Non-Interest Income](index=2&type=section&id=Non-Interest%20Income) Total non-interest income decreased significantly in Q2 2025 compared to the prior year, primarily due to the absence of a gain on equity securities recorded in Q2 2024 and variances in mortgage banking related revenues Total Non-Interest Income | Period | Amount ($ millions) | | :------ | :------------------ | | Q2 2025 | $11.3 | | Q2 2024 | $15.2 | - The change was primarily due to a **$2.7 million gain on equity securities at fair value** in the prior year quarter, which was not present in Q2 2025[5](index=5&type=chunk)[8](index=8&type=chunk) [Net Gains on Mortgage Loans](index=2&type=section&id=Net%20Gains%20on%20Mortgage%20Loans) Net gains on mortgage loans increased in Q2 2025 compared to Q2 2024, driven by both an increase in gain on sale margin and higher volume of mortgage loans sold Net Gains on Mortgage Loans | Period | Amount ($ millions) | | :------ | :------------------ | | Q2 2025 | ~$1.6 | | Q2 2024 | ~$1.3 | [Mortgage Loan Servicing, Net](index=2&type=section&id=Mortgage%20Loan%20Servicing%2C%20Net) Mortgage loan servicing, net, saw a significant decrease in income in Q2 2025 compared to Q2 2024, primarily due to changes in the fair value of capitalized mortgage loan servicing rights (MSRs) and a decline in servicing revenue following the sale of approximately $931 million of MSRs in January 2025 Mortgage Loan Servicing, Net Income | Period | Amount ($ millions) | | :------ | :------------------ | | Q2 2025 | $0.5 | | Q2 2024 | $2.1 | - The variance is primarily due to changes in the fair value of capitalized MSRs and a decline in servicing revenue attributed to the **sale of approximately $931 million of MSRs** on January 31, 2025[7](index=7&type=chunk) Mortgage Loan Servicing, Net Activity (in thousands) | Metric | Three months ended 6/30/2025 ($ thousands) | Three months ended 6/30/2024 ($ thousands) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | | Revenue, net | $1,649 | $2,214 | | Fair value change due to price | $(219) | $911 | | Fair value change due to pay-downs | $(862) | $(1,034) | | Loss on sale of originated servicing rights | $(78) | — | | Total | $490 | $2,091 | [Non-Interest Expense](index=3&type=section&id=Non-Interest%20Expense) Total non-interest expenses remained relatively stable, with a slight increase in Q2 2025 compared to the prior-year period Total Non-Interest Expense | Period | Amount ($ millions) | | :------ | :------------------ | | Q2 2025 | $33.8 | | Q2 2024 | $33.3 | [Income Tax Expense](index=3&type=section&id=Income%20Tax%20Expense) Income tax expense decreased in Q2 2025 compared to Q2 2024, reflecting changes in pre-tax earnings Income Tax Expense | Period | Amount ($ millions) | | :------ | :------------------ | | Q2 2025 | $3.8 | | Q2 2024 | $4.6 | [Asset Quality](index=3&type=section&id=Asset%20Quality) The company's asset quality metrics show an increase in non-performing loans and a higher provision for credit losses in Q2 2025 compared to the prior year, while the allowance for credit losses remained stable as a percentage of total portfolio loans Non-Performing Loans by Type (in thousands) | Loan Type | 6/30/2025 ($ thousands) | 12/31/2024 ($ thousands) | 6/30/2024 ($ thousands) | | :------------------------ | :---------------------- | :----------------------- | :---------------------- | | Commercial | $— | $54 | $312 | | Mortgage | $9,620 | $7,005 | $4,819 | | Installment | $833 | $733 | $843 | | Total Non-Performing Loans | $8,204 | $6,002 | $4,485 | Asset Quality Ratios | Ratio | 6/30/2025 | 12/31/2024 | 6/30/2024 | | :---------------------------------------- | :-------- | :--------- | :-------- | | Non-performing loans to total portfolio loans | 0.20% | 0.15% | 0.12% | | Non-performing assets to total assets | 0.16% | 0.13% | 0.10% | | Allowance for credit losses to total non-performing loans | 745.45% | 989.32% | 1253.98% | Credit Loss Metrics | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | | :------------------------------ | :------------------- | :------------------- | | Provision for credit losses | $1.50 | $0.02 | | Loan net charge-offs | $0.37 | $0.09 | | Allowance for credit losses (period end) | $61.2 (1.47% of total loans) | N/A (1.47% of total loans at 12/31/2024) | [Balance Sheet, Capital and Liquidity](index=3&type=section&id=Balance%20Sheet%2C%20Capital%20and%20Liquidity) Total assets increased to $5.42 billion at June 30, 2025, driven by growth in loans. Deposits saw a slight increase, primarily from reciprocal and brokered time deposits offsetting decreases in other deposit categories. Shareholders' equity and tangible common equity also increased, mainly due to earnings retention. The bank remains significantly above 'well capitalized' regulatory minimums and maintains substantial liquidity Key Balance Sheet Items (in millions) | Metric | 6/30/2025 ($ millions) | 12/31/2024 ($ millions) | | :-------------------------- | :--------------------- | :---------------------- | | Total Assets | $5,418.5 | $5,338.1 | | Loans (excluding HFS) | $4,164.4 | $4,038.8 | | Deposits | $4,659.4 | $4,654.1 | | Cash and Cash Equivalents | $146.2 | $119.9 | | Securities Available for Sale | $509.5 | $559.2 | | Total Shareholders' Equity | $469.3 | $454.7 | | Tangible Common Equity | $439.7 | $424.9 | - The increase in deposits is primarily due to increases in reciprocal and brokered time deposits, partially offset by decreases in non-interest bearing, savings, interest-bearing checking, and time deposits[14](index=14&type=chunk) Regulatory Capital Ratios | Regulatory Capital Ratios | 6/30/2025 | 12/31/2024 | Well Capitalized Minimum | | :---------------------------------- | :-------- | :--------- | :----------------------- | | 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% | - The company had unused credit lines with the FHLB and FRB of approximately **$1.02 billion** and **$484.6 million**, respectively, at June 30, 2025[16](index=16&type=chunk) - Approximately **$486.0 million in fair value of unpledged securities AFS and HTM** were available, which could be pledged for an estimated additional borrowing capacity of **$455.9 million**[16](index=16&type=chunk) [Share Repurchase Plan](index=5&type=section&id=Share%20Repurchase%20Plan) The Board of Directors authorized a 2025 share repurchase plan to buy back up to 1,100,000 shares (approximately 5% of outstanding common stock) through December 31, 2025. During the first half of 2025, 252,276 shares were repurchased for an aggregate price of $7.36 million - The 2025 share repurchase plan authorizes the company to purchase up to **1,100,000 shares**, or approximately **5% of its then outstanding common stock**, through December 31, 2025[17](index=17&type=chunk) - During the six months ended June 30, 2025, **252,276 shares of common stock** were repurchased for an aggregate purchase price of **$7.36 million**[17](index=17&type=chunk) [Company Information and Forward-Looking Statements](index=5&type=section&id=Company%20Information%20and%20Forward-Looking%20Statements) This section details the earnings call, company overview, and forward-looking statements disclaimer [Earnings Conference Call Details](index=5&type=section&id=Earnings%20Conference%20Call%20Details) Independent Bank Corporation scheduled an earnings conference call for investors and analysts on Thursday, July 24, 2025, at 11:00 am ET to review quarterly results, with dial-in and webcast options available - A conference call for investors and analysts was scheduled for **Thursday, July 24, 2025, at 11:00 am ET**[18](index=18&type=chunk) - Participants can join via dial-in (1-833-470-1428, Access Code 493553) or an audio webcast (https://events.q4inc.com/attendee/394984135)[18](index=18&type=chunk) - A replay of the call is accessible by dialing 1-866-813-9403 (Access Code 372693) through **July 31, 2025**[19](index=19&type=chunk) [About Independent Bank Corporation](index=5&type=section&id=About%20Independent%20Bank%20Corporation) Independent Bank Corporation (NASDAQ: IBCP) is a Michigan-based bank holding company with approximately $5.4 billion in total assets. Founded in 1864, it operates a branch network across Michigan's Lower Peninsula, offering a full range of financial services including commercial, mortgage, consumer banking, investments, and insurance - Independent Bank Corporation (NASDAQ: IBCP) is a Michigan-based bank holding company with total assets of approximately **$5.4 billion**[20](index=20&type=chunk) - Founded as First National Bank of Ionia in **1864**, it operates a branch network across Michigan's Lower Peninsula through its subsidiary, Independent Bank[20](index=20&type=chunk) - The subsidiary provides a full range of financial services, including commercial banking, mortgage lending, consumer banking, investments, and insurance[20](index=20&type=chunk) [Forward-Looking Statements Disclaimer](index=5&type=section&id=Forward-Looking%20Statements%20Disclaimer) The report contains forward-looking statements regarding future revenue, expenses, plans, and prospects, which are subject to inherent risks and uncertainties. Factors such as economic conditions, interest rates, credit quality, regulatory changes, and data security could cause actual results to differ materially. Investors are cautioned not to place undue reliance on these statements, and the company undertakes no obligation to update them - This presentation contains forward-looking statements about anticipated future revenue, expenses, plans, and prospects, which are not historical facts[22](index=22&type=chunk) - These statements involve inherent risks and uncertainties, and important factors such as economic conditions, interest rates, credit quality, regulatory developments, and data security could cause actual results to differ materially[23](index=23&type=chunk)[24](index=24&type=chunk) - Investors should not place undue reliance on forward-looking statements, and the company undertakes no obligation to update them[24](index=24&type=chunk)[25](index=25&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) This section presents the consolidated balance sheet and income statement for the reported periods [Consolidated Statements of Financial Condition](index=7&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) The consolidated balance sheet shows an increase in total assets and loans from December 31, 2024, to June 30, 2025. Deposits also slightly increased, while securities available for sale decreased. Shareholders' equity grew during the period Consolidated Statements of Financial Condition (in thousands) | Item | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :----------------------------------------- | :-------------------------- | :------------------------------ | | **Assets:** | | | | Cash and Cash Equivalents | $146,159 | $119,882 | | Securities available for sale | $509,511 | $559,182 | | Total Loans | $4,164,367 | $4,038,825 | | Allowance for credit losses | $(61,157) | $(59,379) | | Net Loans | $4,103,210 | $3,979,446 | | Capitalized mortgage loan servicing rights | $32,053 | $46,796 | | Total Assets | $5,418,519 | $5,338,104 | | **Liabilities:** | | | | Total Deposits | $4,659,359 | $4,654,088 | | Other borrowings | $102,008 | $45,009 | | Total Liabilities | $4,949,269 | $4,883,418 | | **Shareholders' Equity:** | | | | Total Shareholders' Equity | $469,250 | $454,686 | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated income statement shows an increase in net interest income for Q2 2025 compared to Q2 2024, but a decrease in net income due to lower non-interest income (primarily from the absence of a gain on equity securities) and a higher provision for credit losses Consolidated Statements of Operations (in thousands, except per share amounts) | Item | Three Months Ended June 30, 2025 ($ thousands) | Three Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Total Interest Income | $66,878 | $66,338 | $133,022 | $131,464 | | Total Interest Expense | $22,263 | $24,992 | $44,722 | $49,921 | | Net Interest Income | $44,615 | $41,346 | $88,300 | $81,543 | | Provision for credit losses | $1,500 | $19 | $2,221 | $763 | | Total Non-interest Income | $11,325 | $15,172 | $21,749 | $27,733 | | Total Non-interest Expense | $33,762 | $33,333 | $68,024 | $65,526 | | Income Before Income Tax | $20,678 | $23,166 | $39,804 | $42,987 | | Income tax expense | $3,801 | $4,638 | $7,337 | $8,468 | | Net Income | $16,877 | $18,528 | $32,467 | $34,519 | | Diluted Net Income Per Common Share | $0.81 | $0.88 | $1.54 | $1.64 | [Selected Financial Data](index=9&type=section&id=Selected%20Financial%20Data) The selected financial data provides a quarterly overview of key performance indicators, including net interest income, net income, EPS, dividends, and various ratios. It also details average and end-of-period balances for loans, securities, total assets, deposits, and capital metrics, illustrating trends over the past five quarters Quarterly Income Statement Highlights (in thousands, except per share data) | Metric | June 30, 2025 ($ thousands) | March 31, 2025 ($ thousands) | December 31, 2024 ($ thousands) | September 30, 2024 ($ thousands) | June 30, 2024 ($ thousands) | | :---------------------- | :-------------------------- | :--------------------------- | :------------------------------ | :------------------------------- | :-------------------------- | | Net interest income | $44,615 | $43,685 | $42,851 | $41,854 | $41,346 | | Provision for credit losses | $1,500 | $721 | $2,217 | $1,488 | $19 | | Non-interest income | $11,325 | $10,424 | $19,121 | $9,508 | $15,172 | | Non-interest expense | $33,762 | $34,262 | $36,987 | $32,583 | $33,333 | | Net income | $16,877 | $15,590 | $18,461 | $13,810 | $18,528 | | Diluted earnings per share | $0.81 | $0.74 | $0.87 | $0.65 | $0.88 | | Cash dividend per share | $0.26 | $0.26 | $0.24 | $0.24 | $0.24 | Performance Ratios | Ratio | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Return on average assets | 1.27% | 1.18% | 1.39% | 1.04% | 1.44% | | Return on average equity | 14.66% | 13.71% | 16.31% | 12.54% | 17.98% | | Efficiency ratio | 59.67% | 62.20% | 59.09% | 62.82% | 61.49% | | Net interest income (FTE) | 3.58% | 3.49% | 3.45% | 3.37% | 3.40% | End of Period Selected Balances (in thousands) | Item | June 30, 2025 ($ thousands) | March 31, 2025 ($ thousands) | December 31, 2024 ($ thousands) | September 30, 2024 ($ thousands) | June 30, 2024 ($ thousands) | | :------------------------ | :-------------------------- | :--------------------------- | :------------------------------ | :------------------------------- | :-------------------------- | | Loans | $4,164,367 | $4,072,691 | $4,038,825 | $3,942,287 | $3,851,889 | | Total assets | $5,418,519 | $5,328,428 | $5,338,104 | $5,259,268 | $5,277,500 | | Deposits | $4,659,359 | $4,633,931 | $4,654,088 | $4,626,875 | $4,614,328 | | Shareholders' equity | $469,250 | $467,277 | $454,686 | $452,369 | $430,459 | | Tangible common equity per share of common stock | $21.23 | $20.87 | $20.33 | $20.22 | $19.16 | [Reconciliation of Non-GAAP Financial Measures](index=11&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section reconciles non-GAAP financial measures, such as FTE net interest margin and tangible common equity [Net Interest Margin, Fully Taxable Equivalent ("FTE")](index=11&type=section&id=Net%20Interest%20Margin%2C%20Fully%20Taxable%20Equivalent%20%28%22FTE%22%29) The reconciliation adjusts GAAP net interest income to a fully taxable equivalent basis, showing an FTE net interest margin of 3.58% for Q2 2025, an increase from 3.40% in Q2 2024 Net Interest Margin, Fully Taxable Equivalent (in thousands) | Metric | Three Months Ended June 30, 2025 ($ thousands) | Three Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net interest income | $44,615 | $41,346 | $88,300 | $81,543 | | Add: taxable equivalent adjustment | $444 | $175 | $896 | $355 | | Net interest income - taxable equivalent | $45,059 | $41,521 | $89,196 | $81,898 | | Net interest margin (GAAP) | 3.55% | 3.39% | 3.50% | 3.33% | | Net interest margin (FTE) | 3.58% | 3.40% | 3.54% | 3.35% | [Tangible Common Equity Ratio](index=12&type=section&id=Tangible%20Common%20Equity%20Ratio) The tangible common equity ratio, a non-GAAP measure, removes the effect of goodwill and other intangible assets from capital and total assets to provide a clearer view of capital quality. At June 30, 2025, the tangible common equity ratio was 8.16%, showing an increase from 8.00% at December 31, 2024 Tangible Common Equity Reconciliation (in thousands) | Item | June 30, 2025 ($ thousands) | March 31, 2025 ($ thousands) | December 31, 2024 ($ thousands) | September 30, 2024 ($ thousands) | June 30, 2024 ($ thousands) | | :----------------------------------------- | :-------------------------- | :--------------------------- | :------------------------------ | :------------------------------- | :-------------------------- | | Common shareholders' equity | $469,250 | $467,277 | $454,686 | $452,369 | $430,459 | | Less: Goodwill | $28,300 | $28,300 | $28,300 | $28,300 | $28,300 | | Less: Other intangibles | $1,244 | $1,366 | $1,488 | $1,617 | $1,746 | | Tangible common equity | $439,706 | $437,611 | $424,898 | $422,452 | $400,413 | | Total assets | $5,418,519 | $5,328,428 | $5,338,104 | $5,259,268 | $5,277,500 | | Less: Goodwill | $28,300 | $28,300 | $28,300 | $28,300 | $28,300 | | Less: Other intangibles | $1,244 | $1,366 | $1,488 | $1,617 | $1,746 | | Tangible assets | $5,388,975 | $5,298,762 | $5,308,316 | $5,229,351 | $5,247,454 | | Tangible common equity ratio | 8.16% | 8.26% | 8.00% | 8.08% | 7.63% | | Tangible common equity per share of common stock | $21.23 | $20.87 | $20.33 | $20.22 | $19.16 |

Core Points - Independent Bank Corporation reported a net income of $16.9 million, or $0.81 per diluted share, for the second quarter of 2025, a decrease from $18.5 million, or $0.88 per diluted share, in the same period last year [1][2][30] - The company experienced a 9.0% annualized increase in loans, while core deposits decreased by 1.4% due to seasonality [2][4] - Net interest income rose to $44.6 million, marking a 7.9% increase year-over-year and a 2.1% increase from the previous quarter [3][30] - The net interest margin improved to 3.58%, up from 3.40% in the prior year [3][32] - Non-interest income decreased to $11.3 million from $15.2 million in the prior year, primarily due to a lack of gains on equity securities [6][30] - The provision for credit losses was $1.5 million, compared to $0.02 million in the same quarter last year [13][30] - Total assets increased to $5.42 billion, with loans at $4.16 billion and deposits at $4.66 billion [14][15][30] - The company maintained strong credit metrics, with non-performing assets at 0.16% of total assets and a low net charge-off rate of 0.02% [11][13] - Shareholders' equity rose to $469.3 million, representing 8.66% of total assets, with tangible common equity at $21.23 per share [16][30] - The company authorized a share repurchase plan for up to 1,100,000 shares, with 252,276 shares repurchased for $7.36 million during the first half of 2025 [18][30] Financial Performance - Net interest income for the second quarter of 2025 was $44.6 million, an increase of $3.3 million from the previous year [3][30] - Non-interest expenses totaled $33.8 million, slightly up from $33.3 million in the prior year [9][30] - The company recorded a net income of $16.9 million for the quarter, reflecting a decrease from the previous year's $18.5 million [1][30] - The efficiency ratio improved to 59.67% from 62.20% in the previous quarter [32] Asset Quality - Total non-performing loans amounted to $8.2 million, with a ratio of non-performing loans to total portfolio loans at 0.20% [11][30] - The allowance for credit losses was 1.47% of total loans, indicating strong coverage for potential losses [13][30] Capital and Liquidity - The company reported total shareholders' equity of $469.3 million, with a tangible common equity ratio of 8.16% [16][30] - Independent Bank remains significantly above "well capitalized" standards for regulatory purposes [17][30] - The company had unused credit lines of approximately $1.02 billion with the FHLB and $484.6 million with the FRB [17][30]