Independent Bank (IBCP) Earnings Transcript

Core Insights - Independent Bank Corporation reported a net income of $18.6 million or $0.89 per diluted share for Q4 2025, a slight increase from $18.5 million or $0.87 per diluted share in the same period last year [2] - The company achieved a net growth in loans of $78 million or 7.4% annualized and a net growth in total deposits of $57.5 million or 4.8% annualized [1][5] - The tangible common equity ratio increased to 8.65%, and a dividend of $0.26 per share was declared [1] Financial Performance - For the full year 2025, net income reached $68.5 million or $3.27 per diluted share, compared to $66.8 million or $3.16 per diluted share in 2024 [2] - Net interest income increased by $1 million or 2.2% over 2025, with a net interest margin of 3.62%, up eight basis points from the previous quarter [2][13] - The company reported a return on average assets of 1.35% and a return on average equity of 14.75% [2] Loan and Deposit Growth - Total loans grew by $237 million or 5.9% for the year, with the commercial portfolio leading at $276 million or 14.2% growth [8] - Deposits totaled $4.8 billion at year-end 2025, an increase of $107.6 million from December 31, 2024, driven by growth in savings and interest-bearing checking accounts [5][6] - The deposit base composition was 47% retail, 37% commercial, and 16% municipal, all showing year-over-year growth [6] Credit Quality - Total nonperforming loans were $23.1 million or 54 basis points of total loans, slightly up from 48 basis points at the end of the previous quarter [11] - Past due loans totaled $7.8 million or 18 basis points, also up from 12 basis points [11] - The company reported net charge-offs of $1.6 million or four basis points of average loans for the year, compared to $900,000 or two basis points in 2024 [11] Strategic Outlook - The company anticipates loan growth in the mid-single-digit range for 2026, targeting a full-year growth rate of 4.5% to 5.5% [21] - Net interest income is forecasted to grow by 7% to 8% over 2025, with net interest margin expansion expected in the first quarter of 2026 [21] - Noninterest income is estimated to increase by 3% to 4% compared to 2025, with mortgage loan origination volumes expected to decrease by 6% to 7% [22] Capital Management - The tangible common equity ratio has returned to the targeted range of 8.5% to 9.5%, and the company repurchased 407,113 shares of common stock for $12.4 million in 2025 [13] - The board authorized share repurchases of approximately 5% in 2026, although no repurchases are currently modeled for that year [23] - The company remains open to M&A opportunities, particularly in the Michigan market, while emphasizing organic growth strategies [36][37]