INDEPENDENT BANK CORP /MI/ Q4 FY2024 earnings call

• Brad Kessel mentioned Independent Bank Corporation reported fourth quarter 2024 net income of $18.5 million or $0.87 per diluted share, and full year 2024 net income of $66.8 million or $3.16 per diluted share.
• Fourth quarter performance had 10% annualized loan portfolio growth, $1 million increase in net interest income, net interest margin of 3.45%, and outstanding credit metrics.
• Joel Rahn discussed strong loan generation in the quarter, with commercial loan growth and updated credit metrics.
• Gavin Mohr talked about net interest income, net interest margin, non-interest income, non-interest expense, and provided 2025 outlook including loan growth, interest income, net interest margin, provision for credit losses, non-interest income, non-interest expense, and share repurchase authorization.

For the fourth quarter of 2024, the loan portfolio had a notable 10% annualized growth rate, with a 24% annualized growth in the commercial loan portfolio. Total loans grew by $96.5 million or a 9.7% annualized rate, with commercial loan generation at $112.1 million and mortgage growth at $5.3 million, while installment loans declined by $20.9 million. For the year ended December 31, 2024, total loan growth was 7% and core deposit growth was 5%. Total deposits as of December 31, 2024, were $4.7 billion. Overall core deposits decreased $43 million during the fourth quarter of '24, but were up $206 million for the full year. Retail deposits increased by $52 million, business deposits declined by $67 million, and municipal deposits declined by $24 million.

• Anticipate loan growth in the mid-single digit range, targeting full year growth rate of 5% to 6% with growth in commercial and mortgage loans and installment loans declining.
• Forecast interest income growth of 8% to 9% over full year 2024, with net interest margin increasing 20 basis points to 25 basis points in 2025.
• Full year 2025 provision expense for the allowance for credit losses expected to be approximately 0.15% to 0.25% of average portfolio loans.
• Non-interest income estimated to be in the range of $11 million to $12 million in the first and second quarter and $12 million to $13 million in the third and fourth quarter of 2025, total decreasing 14% from 2024.
• Non-interest expense quarterly range of $34.5 million to $35.5 million, total 3% to 4% higher than 2024 actuals.
• Board of Directors authorized share repurchase of approximately 5% for 2025.

• Deposit remix pace continues to slow.
• Competition in deposit pricing within the area.
• Interest rate changes affecting the margin outlook if there are no rate cuts as anticipated.

Q: Brendan Nosal asked about the lending outlook for 2025 and the margin cadence for expansion across the year.

A: Brad Kessel and Joel Rahn discussed continuing to recruit bankers, with momentum to continue, and Gavin Mohr mentioned ratable margin expansion in the 20 basis point to 25 basis point range over 2024.

Q: Damon DelMonte asked about the loan growth profile throughout 2025 and margin with no rate cuts.

A: Joel Rahn said first quarter generally softer but growth comes across evenly, and Gavin Mohr stated a 3 basis point to 5 basis point decline in margin with no cuts.

Q: Adam Kroll asked about fixed rate loans repricing over the next year, funding mid-single digit loan growth, and deposit pricing competition.

A: Gavin Mohr said 35.7% of total assets repriced in one month and 47% in the next 12 months, targeting core deposit growth around 3%, and there's still competition with one-off specials in markets.

Q: Brendan Nosal followed up on margin commentary with no cuts.

A: Gavin Mohr clarified it's a 3 basis point to 5 basis point decline in margin versus the current outlook