Be Independent | --- | --- | --- | --- | |-------|---------------------|------------------------------|-------| | | | | | | | | | | | | | Independent Bank Corporation | | | | | | | | | Earnings Call | | | | | Second Quarter 2022 | | | | | July 26, 2022 | | | | | | | | | | (NASDAQ: IBCP) | | | 2 Cautionary note regarding forward-looking statements This presentation contains forward-looking statements about Independent Bank Corporation. Statements that are not historical or current facts, including statements ...

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2022 Commission file number 0-7818 INDEPENDENT BANK CORPORATION | (Exact name of registrant as specified in its charter) | | | | --- | --- | --- | | Michigan | | 38-2032782 | | (State or jurisdiction of Incorporation or Organization) | | (I.R.S. Employer Identification Number) | | 4200 East Beltline, Grand Rapids, ...

Financial Data and Key Metrics Changes - Independent Bank Corporation reported a net income of $18 million or $0.84 per diluted share for Q1 2022, down from $22 million or $1 per diluted share in the prior-year period, primarily due to a decrease in non-interest income and an increase in non-interest expense [9] - Net interest income increased by 9% compared to Q1 2021, with a return on average assets of 1.54% and a return on average equity of 19.38% [10][22] - The provision for credit losses recorded a credit of $1.6 million in Q1 2022, compared to a provision credit of $0.5 million in the year-ago quarter [31] Business Line Data and Key Metrics Changes - The commercial segment of the loan portfolio grew by $54 million in Q1 2022, with an annualized growth rate of 21% over the past six months [14][15] - Residential mortgage balances increased by $30.4 million, and the consumer installment loan portfolio grew by $14.6 million [16] - Non-interest income totaled $18.9 million in Q1 2022, down from $26.4 million in the year-ago quarter, primarily due to a decrease in mortgage loan sales volume [26] Market Data and Key Metrics Changes - The unemployment rate in Michigan improved to 4.7%, slightly above the national average of 3.8%, with labor shortages impacting various segments of the economy [12] - Regional average home prices continued to climb, with inventory levels at record lows negatively affecting home sales volume [12] Company Strategy and Development Direction - The company aims to generate a diversified revenue stream through commercial banking, mortgage banking, and consumer banking, with significant investments in talent and technology [8][40] - The company plans to close four additional branch locations, expecting annual cost savings of $1.5 million, reducing the branch network to 58 locations [11] Management's Comments on Operating Environment and Future Outlook - Management noted that the current operating environment presents numerous challenges but also opportunities, expressing optimism about growth momentum in their markets [41] - The company expects strong commercial growth in Q2 2022 based on a solid pipeline, although they remain cautious about potential slowdowns later in the year [62] Other Important Information - The company purchased 59,002 shares at an average cost of $23.46 in Q1 2022 [38] - The effective income tax rate for Q1 2022 was 18.6%, at the lower end of the forecast [37] Q&A Session Summary Question: Dynamics driving mortgage compression quarter-over-quarter - The fair value mark was primarily impacted by a saleable construction portfolio, with longer completion timelines affecting market value [48] Question: Accrual for compensation reflecting potential revenue benefits - The company confirmed that they are accruing at a level that reflects potential revenue benefits from a higher short-term interest rate environment [50] Question: Loan growth performance and outlook for the year - Management indicated strong growth in the first quarter, with a good mix of new and existing customers, but acknowledged the difficulty in predicting the second half of the year [62] Question: Pricing competition on lending and deposit sides - There is significant pricing pressure on lending yields, while deposit competition has not yet intensified [63][64] Question: Updated thoughts on share repurchases for the year - The decision to continue share repurchases will depend on trading levels, growth capital needs, and overall capital levels [57] Question: Impact of fair value market compression on tangible common equity - The company is monitoring the situation closely but does not expect it to significantly impact regulatory capital [71]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2021 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from Commission file number 0-7818 INDEPENDENT BANK CORPORATION (Exact name of Registrant as specified in its charter) Michigan 38-2032782 (State or other jurisdiction of incorpor ...

Financial Data and Key Metrics Changes - Independent Bank Corporation reported Q4 2021 net income of $12.5 million or $0.58 per diluted share, down from $17 million or $0.77 per diluted share in the prior year period [8] - For the full year 2021, net income was $62.9 million or $2.88 per diluted share, compared to $56.2 million or $2.53 per diluted share in 2020, reflecting a 12% increase in net income and a 13.8% increase in diluted earnings per share [10][11] - Net interest income increased by 10.6% in Q4 2021 compared to Q4 2020, with a full year increase of 5% over 2020 [8][36] - The annualized return on average assets and average equity for 2021 were 1.41% and 16.1% respectively [11] Business Line Data and Key Metrics Changes - Net gains on mortgage loans in Q4 2021 were $5.6 million, with total mortgage loan origination volume of $424.6 million [9] - Portfolio loans grew by $21 million or 2.9% annualized in Q4 2021, with a net growth of $171.4 million or 6.3% annualized for the full year [11] - Net growth in deposits for the full year was $479.7 million or 13.2% annualized [12] Market Data and Key Metrics Changes - The unemployment rate in Michigan was reported at 5.9%, above the national average of 3.9%, with labor shortages impacting various segments of the economy [14] - Regional average home sale prices continued to rise, with inventory levels at record lows affecting overall home sales volume [15] Company Strategy and Development Direction - The company is focused on investing in people and technology, with significant investments made in the mortgage banking business and digital transformation [5][48] - The company plans to open a new full-service office in Ottawa County in the first half of 2022, following the success of two loan production offices opened in 2021 [13] - The company anticipates loan growth in the low double-digit range for 2022, targeting a full year growth rate of 10% across all loan categories [42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the commercial pipeline and expects solid commercial loan growth in early 2022 [18] - The company noted that while mortgage refinancing activity has slowed, purchase mortgage volumes remain strong [49] - Management acknowledged competitive pressures in pricing across various markets but emphasized a focus on maintaining fair returns and product quality [76] Other Important Information - The company paid a dividend of $0.21 per share on November 15, 2021, and increased dividends for eight consecutive years [9][51] - The effective income tax rate for Q4 2021 was lower than forecasted, attributed to higher levels of tax-exempt interest income [41] Q&A Session Summary Question: Cost outlook in an inflationary environment - Management explained that the anticipated reduction in expenses is due to lower incentive compensation and reduced overtime related to data processing conversion [54][55] Question: Provisioning needs and reserve coverage - Management indicated that $12.7 million of the reserve is subjective, with some potential to flex the reserve ratio lower as the year progresses [57][58] Question: Margin guidance and non-interest income outlook - Management clarified that margin guidance refers to the reported margin and discussed positive drivers for non-interest income, including growth in interchange income and service charges [60][62] Question: Loan growth outlook and asset class breakdown - Management confirmed a balanced growth forecast across C&I and CRE loans, maintaining a roughly 60/40 split [63] Question: Competitive factors in lending pricing - Management acknowledged competitive pressures in pricing but emphasized a focus on winning business at fair returns [74][76] Question: Deposit growth outlook - Management expects deposit growth to be flat, returning to historical levels rather than the surge seen in recent years [80][81] Question: Impact of digital platform on branch franchise - Management noted that while the branch footprint has been reduced, further optimization may occur as the digital platform grows [82]

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2021 Commission file number 0-7818 INDEPENDENT BANK CORPORATION (Exact name of registrant as specified in its charter) Michigan 38-2032782 (State or jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification Number) 4200 East Beltline, Grand Rapids, Michigan 49525 (Address of principal exec ...

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2021 Commission file number 0-7818 INDEPENDENT BANK CORPORATION (Exact name of registrant as specified in its charter) Michigan 38-2032782 (State or jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification Number) 4200 East Beltline, Grand Rapids, Michigan 49525 (Address of principal executive ...

Financial Performance - Q2 2021 - Independent Bank Corporation's pre-tax, pre-provision income was $13.6 million, compared to $23.5 million in the year-ago quarter[8] - Net income reached $12.4 million, or $0.56 per diluted share, down from $14.8 million, or $0.67 per diluted share in the same quarter last year[8] - Net interest income increased to $31.4 million, compared to $30.5 million in the year-ago quarter[8] Financial Performance - Year-to-Date 2021 - Net income and diluted earnings per share increased by 75.8% and 77.3%, respectively, for the first six months of 2021 compared to 2020[12] - The annualized return on average assets and on average equity was 1.60% and 18.06%, respectively, for the first six months of 2021[12] Balance Sheet & Capital - Total deposits grew by $3.9 million[6] - Total portfolio loans increased by $30.3 million[7] - Securities available for sale increased by $83.4 million[10] Loan Portfolio - PPP loan balances decreased by $62.3 million in Q2 2021[28] - Mortgage loan originations amounted to $473.7 million[9, 53] - Mortgage loans sold totaled $306.8 million with $9.1 million in net gains, compared to $17.6 million in the year-ago quarter[9] Deposits - Core deposits represent 92% of total deposits, amounting to $3.9 billion[23] - Total deposits increased by $225.1 million (6.2%) since December 31, 2020[24] COVID-19 Loan Forbearances - Total loan forbearances were $12.743 million, representing 0.5% of the portfolio as of June 30, 2021, a decrease from $299.157 million (10.4%) on June 30, 2020[29] COVID-19 PPP Loans - Loans outstanding at quarter-end were $42.315 million for PPP Round 1 and $129.573 million for PPP Round 2 as of June 30, 2021[32]

Financial Performance - Net income for the first quarter of 2021 was $22.0 million, a significant increase from $4.8 million in the same period of 2020[220] - Net interest income totaled $30.3 million in Q1 2021, reflecting a slight increase of $0.1 million or 0.3% from the previous year[223] - Non-interest income surged to $26.4 million in Q1 2021, compared to $11.0 million in Q1 2020, driven by net gains on mortgage loan sales[233] - The provision for credit losses was a credit of $0.5 million in Q1 2021, a substantial improvement from an expense of $6.7 million in Q1 2020[232] - Non-interest expense rose to $30.0 million in Q1 2021, up by $1.3 million compared to Q1 2020[247] - Income tax expense was $5.1 million in Q1 2021, compared to $1.0 million in Q1 2020[262] Asset and Loan Growth - Average interest-earning assets increased by $697.0 million, primarily due to a substantial rise in deposits[224] - Total assets increased by $222.4 million during Q1 2021, with loans (excluding loans held for sale) reaching $2.78 billion[266] - Total loans increased from $2,733,678 thousand on December 31, 2020, to $2,784,224 thousand on March 31, 2021, representing a growth of approximately 1.9%[281] - Mortgage loans originated increased to $509,003 thousand in Q1 2021 from $311,078 thousand in Q1 2020, reflecting a growth of 63.7%[237] - Mortgage loans sold rose to $377,418 thousand in Q1 2021 compared to $262,260 thousand in Q1 2020, marking a 43.9% increase[237] Credit Quality and Risk Management - Non-accrual loans averaged $7.6 million in Q1 2021, a decrease from $11.1 million in Q1 2020[226] - Non-performing loans decreased from $7,873 thousand on December 31, 2020, to $7,089 thousand on March 31, 2021, a reduction of about 10%[283] - The allowance for credit losses (ACL) as a percentage of non-performing loans increased from 450.01% on December 31, 2020, to 659.54% on March 31, 2021, indicating a more conservative approach to credit risk management[283] - The company may need to increase its allowance for credit losses due to potential increases in loan delinquencies and defaults related to COVID-19[347] - The ongoing COVID-19 pandemic has resulted in significant disruptions and increased economic uncertainty, potentially leading to increases in loan delinquencies and credit losses[345] Deposits and Funding - Deposits totaled $3.86 billion at March 31, 2021, an increase of $221.2 million from December 31, 2020[266] - Total deposits increased to $3.86 billion at March 31, 2021, up from $3.64 billion at December 31, 2020, primarily due to growth in non-interest bearing deposits and savings[300] - Reciprocal deposits rose to $608.7 million at March 31, 2021, compared to $556.2 million at December 31, 2020, driven by an automated sweep product introduced in mid-2018[300] - The use of wholesale funding sources amounted to approximately $641.6 million, or 16.5% of total funding, as of March 31, 2021[303] Shareholder Equity and Dividends - Common shareholders' equity decreased to $387.3 million at March 31, 2021, from $389.5 million at December 31, 2020, mainly due to a $10.3 million reduction related to CECL adoption[317] - The quarterly cash dividend on common stock was $0.21 per share in Q1 2021, compared to $0.20 per share in Q1 2020, with a target payout ratio between 30% and 50% of net income[320] - The company repurchased 180,667 shares at a weighted average price of $19.93 per share during the first three months of 2021, as part of a plan to buy back up to 1,100,000 shares[319] Interest Rate Risk - A 200 basis point rise in interest rates would result in a market value of portfolio equity increase to $526,600 thousand, representing a 1.37% change, and a net interest income increase to $134,700 thousand, representing a 4.66% change[326] - A 100 basis point decline in interest rates would lead to a market value of portfolio equity decrease to $460,200 thousand, representing an 11.41% change, and a net interest income decrease to $122,800 thousand, representing a 4.58% change[326] - The company has established parameters for interest-rate risk and regularly monitors this risk, reporting at least quarterly to the board of directors[323] COVID-19 Impact and Response - The ongoing COVID-19 pandemic has resulted in significant disruptions and increased economic uncertainty, potentially affecting the company's financial condition[345] - The company has modified business practices due to COVID-19, with approximately 38% of employees working remotely[349] - The company initiated forbearance programs for retail and commercial customers, with a total of 143 loans amounting to $15,800 thousand under COVID-19 accommodations as of March 31, 2021[280] - The company is participating in the PPP, which has undergone multiple funding rounds totaling $349 billion initially and an additional $594 billion in subsequent legislation[351] Share Issuance and Repurchase - During the first quarter of 2021, the company issued 374 shares of common stock to non-employee directors and 4,692 shares to a trust for deferred distribution, representing aggregate fees of $0.09 million[357] - The company repurchased a total of 263,087 shares of common stock at an average price of $20.02 per share during the three months ended March 31, 2021[358] - The company has authorized 1,100,000 shares for repurchase under its publicly announced plan, with 919,333 shares remaining as of March 31, 2021[358]

Financial Data and Key Metrics Changes - Independent Bank Corporation reported a net income of $22 million or $1 per diluted share for Q1 2021, a significant increase from $4.8 million or $0.21 per diluted share in the prior year period, representing increases of 358% and 376% respectively [8][9] - Return on average assets and return on average equity were reported at 2.10% and 23.51% respectively [9] - Non-interest income totaled $26.4 million in Q1 2021, compared to $11 million in the year-ago quarter, driven by strong mortgage banking revenues [27][38] Business Line Data and Key Metrics Changes - The mortgage banking team generated net gains of $12.8 million, up 45.1% over 2020, with a record mortgage loan origination volume of $509 million for the quarter [10][27] - Non-interest expense totaled $30 million in Q1 2021, an increase from $28.7 million in the year-ago quarter, but a decrease from $32.7 million in the previous quarter [30] Market Data and Key Metrics Changes - The unemployment rate in Michigan improved to 5.2%, although still over 279,000 employed workers below pre-COVID levels [12] - Regional average home sale prices continued to climb, with inventory levels at record lows negatively impacting overall home sales volume [12] Company Strategy and Development Direction - The company is focused on diversified and balanced growth, process improvement, cost controls, talent management, and an enterprise-wide risk management framework [6] - A significant digital transformation initiative is underway, including a new core data processing agreement with Fiserv, aimed at enhancing customer experience and operational efficiency [41][44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to normalcy despite challenges posed by the COVID-19 pandemic, highlighting strong financial performance and effective business continuity plans [7][14] - The company anticipates loan growth in the low single-digits, with expectations for contributions from commercial, mortgage, and consumer sectors [61] Other Important Information - The company adopted CECL on January 1, 2021, resulting in an $11.7 million increase in the allowance for credit losses [11][34] - A quarterly cash dividend of $0.21 per share was declared, marking a 5% increase over 2020 [11][21] Q&A Session Summary Question: Thoughts on recent M&A activity in the market - Management noted that M&A activity creates opportunities to add customers and talent, and the company has historically taken advantage of market disruptions [51] Question: Impact of margin changes and one-time benefits - Management clarified that the 16 basis points benefit from accelerated amortization of loss on derivatives is a one-time adjustment and will not recur [52][55] Question: Expectations for loan growth contributions - Management indicated that loan growth is expected to be evenly distributed across commercial, mortgage, and consumer sectors, with a focus on commercial demand as the economy stabilizes [61][64] Question: Anticipated P&L impact from system conversion - Management discussed potential cost savings from new technology and improved operational efficiency, but noted it is difficult to quantify the exact impact on revenue and expenses at this time [68][70]