Independent Bank (US:IBCP)2021-05-06 15:45Financial 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]