Independent Bank (US:IBCP)2022-10-25 17:44Financial Data and Key Metrics Changes - The company reported Q3 2022 net income of $17.3 million, or $0.81 per diluted share, compared to $16 million, or $0.73 per diluted share in the prior year, representing increases of 8.4% in net income and 11% in diluted earnings per share [4] - For the nine months ended September 30, 2022, net income was $48.3 million, or $2.27 per diluted share, compared to $50.4 million, or $2.30 per diluted share in the prior year [7] - The annualized return on average assets and return on average equity for Q3 2022 were 1.40% and 20.48%, respectively [4] Business Line Data and Key Metrics Changes - The company experienced a $3.8 million growth in net interest income and a 23 basis point expansion in net interest margin on a linked quarter basis [5] - The total loan portfolio grew by $151 million in Q3 2022, with the commercial portfolio increasing by $79 million, reflecting a 22.7% annualized growth rate for the first nine months of the year [12] - The mortgage portfolio increased by $71 million during Q3 2022, while consumer installment lending saw a modest increase of $1.3 million [13] Market Data and Key Metrics Changes - Total deposits increased by 3.4% during Q3 2022, totaling $4.3 billion, an increase of $209.9 million from the start of the year [9] - The company noted a strong municipal segment that continues to have significant cash levels and funds coming in from the federal government, contributing to deposit growth [40] Company Strategy and Development Direction - The company aims to rotate its earning and asset mix from lower-yielding investments to higher-yielding loans while growing its deposit base and managing costs [35] - The focus remains on capitalizing on business investments in Michigan, particularly in the electric vehicle and clean energy sectors, which are driving job growth and business formation [6][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth prospects due to significant investments in Michigan's electric vehicle and clean energy industries [45] - Despite concerns about a potential economic slowdown, the company continues to see healthy economic conditions and loan demand in Michigan [36] Other Important Information - Non-interest income totaled $16.9 million in Q3 2022, down from $19.7 million in the year-ago quarter, primarily due to decreased mortgage loan sales volume [24] - The effective income tax rate for Q3 2022 was 18.6%, at the lower end of the forecast [32] Q&A Session Summary Question: Trends in deposit balances given the current rate environment - Management noted continued success in growing the deposit base but acknowledged increasing competition [39] Question: Areas of the loan book being monitored closely - Management indicated a focus on maintaining a granular portfolio and mentioned tempering back on certain segments, particularly in the RV segment [46] Question: Expectations for non-interest expenses and budget for 2023 - Management expressed confidence in staying within the targeted range for non-interest expenses while acknowledging inflation pressures [52] Question: Capital allocation and share repurchases - The focus remains on loan growth, with no share buybacks in Q3 2022 as capital is preserved for growth opportunities [53]