Independent Bank (US:IBCP)2025-05-07 17:04Financial Performance - Net income for the first quarter of 2025 was $15.6 million, a decrease from $16.0 million in the same period of 2024, primarily due to a $2.8 million unfavorable change in the fair value of capitalized mortgage loan servicing rights[193] - Net interest income increased by $3.5 million, or 8.7%, to $43.7 million in the first quarter of 2025, driven by a $167.9 million increase in average interest-earning assets[196] - The net interest margin for the first quarter of 2025 was 3.49%, up from 3.30% in the same period of 2024, reflecting a 25 basis point decrease in the cost of funds[203] - Non-interest income totaled $10.4 million in the first quarter of 2025, down from $12.6 million in the first quarter of 2024[207] - The provision for credit losses was $0.72 million for the first quarter of 2025, a decrease from $1.87 million in the same period of 2024, reflecting improved credit quality[205] - Non-interest expense increased by $2.1 million to $34.3 million in Q1 2025 compared to Q1 2024[222] - Income tax expense was $3.5 million in Q1 2025, down from $3.8 million in Q1 2024, reflecting changes in pretax income[229] Loan and Asset Management - Mortgage loans originated increased to $107.8 million in the first quarter of 2025, compared to $94.0 million in the same period of 2024, primarily due to an increase in construction loans[210] - Average non-accrual loans increased to $6.6 million in the first quarter of 2025, compared to $3.9 million in the first quarter of 2024[199] - The total assets of the company as of March 31, 2025, were $5.38 billion, an increase from $5.20 billion as of March 31, 2024[201] - Total loans increased to $4.07 billion as of March 31, 2025, from $4.04 billion at December 31, 2024, with residential first mortgages at $1.30 billion[244] - Non-performing loans rose to $7.1 million, representing 0.17% of portfolio loans, up from 0.15% at year-end 2024[246] - The allowance for credit losses (ACL) on loans increased to $60.0 million at March 31, 2025, from $59.4 million at December 31, 2024, maintaining a ratio of 1.47% of total portfolio loans[251] - Total non-performing assets were $7.5 million as of March 31, 2025, compared to $6.9 million at December 31, 2024[246] Capital and Equity - The average shareholders' equity to average assets ratio decreased to 13.71% in the first quarter of 2025 from 15.95% in the same period of 2024[194] - Common shareholders' equity increased to $467.3 million at March 31, 2025, from $454.7 million at December 31, 2024, primarily due to earnings retention[272] - The company's tangible common equity (TCE) ratio improved to 8.26% at March 31, 2025, from 8.00% at December 31, 2024[272] Deposits and Funding - Deposits totaled $4.63 billion at March 31, 2025, a decrease of $20.2 million from December 31, 2024, due to declines in non-interest bearing and brokered time deposits[234] - Uninsured deposits totaled $1.05 billion, accounting for 23.0% of total deposits as of March 31, 2025, slightly down from 23.3% at year-end 2024[256] - The balance of the top 100 largest depositors was $1.07 billion, representing 23.5% of total deposits, excluding brokered time, as of March 31, 2025[256] - Time deposits maturing within the next 12 months totaled $776.7 million as of March 31, 2025, with a historical trend of renewal by customers[262] - As of March 31, 2025, the company utilized approximately $1.04 billion in wholesale funding, representing 22.1% of total funding[258] Securities and Investments - Securities available for sale decreased in fair value to $529.7 million at March 31, 2025, from $559.2 million at December 31, 2024[238] - Securities held to maturity reported a carrying value of $336.9 million at March 31, 2025, with an unrealized loss of $15.4 million[239] - Securities available for sale generated proceeds of $22.5 million in Q1 2025, down from $37.3 million in Q1 2024, resulting in net losses of $330,000 compared to $269,000 in the prior year[242] Risk Management and Compliance - The company has developed contingency funding plans to address potential liquidity needs arising from adverse changes in financial metrics[264] - The aggregate amount accrued for probable litigation losses is not material, with the maximum estimated additional losses considered to be insignificant[285] - There have been no material changes to critical accounting policies as disclosed in the Annual Report for the year ended December 31, 2024[292] - Disclosure controls and procedures were evaluated as effective as of March 31, 2025[298] - No changes in internal control over financial reporting that materially affected the reporting were noted during the quarter ended March 31, 2025[299] - There have been no material changes to the risk factors disclosed in the Annual Report for the year ended December 31, 2024[301] Other Financial Metrics - The company reported net recoveries of $0.11 million on unpaid interest during the first quarter of 2025, down from $0.29 million in the same period of 2024[199] - Net gains on mortgage loans increased to $2.3 million in Q1 2025 from $1.4 million in Q1 2024, primarily due to an increase in Loan Sales Margin[213] - The Loan Sales Margin, excluding fair value adjustments, rose to 1.91% in Q1 2025 from 1.21% in Q1 2024, attributed to higher primary-to-secondary market pricing spreads[214] - Mortgage loan servicing, net, reported a loss of $0.6 million in Q1 2025 compared to a profit of $2.7 million in Q1 2024, mainly due to changes in fair value of capitalized mortgage loan servicing rights[216] - The balance of capitalized mortgage loan servicing rights decreased to $32.2 million at March 31, 2025, down from $43.6 million at December 31, 2024, following the sale of $931.6 million in mortgage servicing rights[218] - The company entered into interest rate swaps with an aggregate notional amount of $67.4 million in Q1 2025, compared to $29.5 million in Q1 2024, generating fee income of $0.75 million and $0.35 million respectively[259] - The ACL related to specific loans increased by $1.4 million due to one new commercial loan and an increase in an existing reserve during Q1 2025[252]