• Net Income: $13.8 million or $0.65 per diluted share for Q3 2024, compared to $17.5 million or $0.83 per diluted share in Q3 2023.
• Loan Growth: Total loans increased by 9.3% annualized, with a $90 million increase in Q3 2024.
• Core Deposits: Increased by 8.9% annualized, with a $100 million increase during Q3 2024.
• Total Deposits: $4.6 billion as of September 30, 2024.
• Net Interest Income: Increased by $2.4 million from the year-ago period.
• Net Interest Margin: 3.37% in Q3 2024, compared to 3.23% in Q3 2023.
• Nonperforming Loans: $5.1 million, approximately 13 basis points of total loans at quarter end.
• Noninterest Income: $9.5 million in Q3 2024, compared to $15.6 million in Q3 2023.
• Noninterest Expense: $32.6 million in Q3 2024, compared to $32 million in Q3 2023.
• Effective Income Tax Rate: 20.1% for Q3 2024.

• Warning! GuruFocus has detected 7 Warning Sign with IBCP.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Independent Bank Corp (Ionia MI) (NASDAQ:IBCP) reported a strong 9.3% annualized growth in overall loans for the third quarter of 2024.
• Core deposits increased by 8.9% annualized, with significant growth in municipal deposits.
• The company achieved a 22% increase in tangible book value per share compared to the prior year quarter.
• Credit metrics remain excellent, with nonperforming assets near historic lows.
• The commercial loan portfolio yield is high at 6.78%, indicating strong profitability from this segment.

Negative Points

• Net income for the third quarter of 2024 decreased to $13.8 million from $17.5 million in the prior year period.
• Retail deposits declined by $20.3 million on a linked-quarter basis.
• Noninterest income fell to $9.5 million from $15.6 million in the year-ago quarter.
• The company experienced a $3.1 million loss on mortgage loan servicing net.
• The provision for credit losses was an expense of $1.5 million, indicating potential concerns about future loan performance.

Q & A Highlights

Q: Can you provide insights on the mortgage gain on sale fees and expectations for the future? A: Gavin Mohr, CFO, noted that margins are stable, but there might be headwinds in production due to seasonality and limited supply. President and CEO William Kessel added that customer expectations around mortgage rates have shifted, impacting application levels.

Q: How is the balance sheet positioned for potential Fed rate reductions, and what impact might this have on margins? A: Gavin Mohr, CFO, expects margin expansion due to asset repricing and some ability to reprice liabilities. The base model margin is anticipated to be higher than current levels, indicating potential for margin growth.

Q: Can you discuss loan demand and pipelines, and whether there's potential for increased demand post-election? A: Joel Rahn, Executive President and Head of Commercial Banking, stated that the commercial pipeline is solid, with growth expected in the fourth quarter and early 2025. There might be pent-up demand from business owners waiting for election outcomes, but it's hard to gauge.

Q: What is the outlook for hiring new bankers given market dislocation? A: Joel Rahn mentioned ongoing efforts to add talent, with recent additions in Southeast and Northern Michigan. The strategy is to continue hiring where good talent is available, which has been beneficial in the long run.

Q: Have deposit costs peaked, and what is the competitive landscape for deposit pricing? A: William Kessel believes deposit costs have peaked following recent Fed moves, though competition remains aggressive. The bank's pricing strategy focuses on customer care and managing wholesale borrowing costs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.