Independent Bank Corporation

President and CEO to begin. Brad, please go ahead when you're ready.

Good morning and welcome to today's call. Thank you for joining us for Independent Bank Corporation's conference call and webcast to discuss the company's fourth quarter 2023 results. I am Brad Kessel, President and Chief Executive Officer. Joining me is Gavin Moore, Executive Vice President and Chief Financial Officer, and Joel Rahn, Executive Vice President, Commercial Banking. Before we begin today's call, I would like to direct you to the important information on page two of our presentation, specifically the cautionary note regarding forward-looking statements. If anyone does not already have a copy of the press release issued by us today, you can access it on our website at independentbank.com. The agenda for today's call will include prepared remarks, followed by a question and answer session, and then closing remarks. Independent Bank Corporation reported fourth quarter 2023 net income of $13.7 million or $0.65 per diluted share versus net income of $15.1 million or $0.71 per diluted share in the prior year period. For the year ended December 31, 2023, the company reported net income of $59.1 million or $2.79 per diluted share. compared to net income of $63.4 million or $2.97 per diluted share for the prior year. Our fourth quarter results capped off another remarkably strong year, with our organization performing exceptionally well, despite unexpected challenges in the macroeconomic environment. For the fourth quarter of 2023, I'm particularly pleased with the double-digit annualized growth in our commercial portfolio. the year over year 4.1% growth in our core deposit base, the linked quarter growth in our net interest income, and our strong asset quality metrics, which enabled us to release a small amount of our loan loss reserves. I am also pleased to see our NIM expanding from 3.23% to 3.26% on a linked quarter basis. Significantly impacting our quarterly results was the decline in price of the fair value of our capitalized mortgage servicing rights of $3.6 million or 14 cents per diluted share after tax for the quarter. Adding back this non-cash adjustment, our fourth quarter 2024 annualized return on assets is 1.26% versus 1.24% for the three months ended December 31, 2022. I am also pleased to see a $1.43 or 8.7% increase in our tangible book value per share for the quarter, and $2.92 or 19.4% increase in tangible book value per share for the full year. During 2023, we continue to make investments in talent and technology, which we believe will enable us to consistently add new clients, grow our market share, increase profitability, and further increase the value of our franchise. in 2024 and beyond. Turning to page five, overall our deposit base continues to perform well. Total deposits at December 31st, 2023 were $4.62 billion. Overall core deposits decreased just $11.3 million during the fourth quarter of 23, while increase 171 million or 4.1% for the full year of 23. retail deposits increased for the retail deposits increased for the quarter but we're down 81 million dollars for the year business deposits increased for the quarter and we're up 150 million dollars for the year our public fund deposits decreased for the quarter but we're up 99 million for the year during both periods we continue to see a shift in reciprocal and time deposits as customers look for higher FDIC insurance levels and higher interest rates. We have included in our presentation on page six a historical view of our cost of funds as compared to the Fed fund spot rate and the Fed effective rate. For the quarter, our total cost of funds increased by 19 basis points to 1.99%. Through the fourth quarter, the cumulative cycle beta for our cost of funds is 36%. This time, I'd like to turn the presentation over to Joel Rahn to share a few comments on the success we're having in growing our loan portfolios and provide an update on credit metrics.

Thanks, Brad, and good morning, everyone. On page seven, we share an update of our $3.8 billion loan portfolio. Total loans increased by $50 million in the fourth quarter. The strongest segment was commercial lending, growing by $54 million. We also realized growth in our mortgage business with that portfolio growing by $10 million for the quarter. Our installment portfolio experienced a $14 million decline, predominantly related to seasonality. As noted in the material, in each portfolio, yield on new production is significantly higher than the respective portfolio yield. We continue to see the return on our strategic investment in the expansion of our commercial banking team. The experience talent that we've added over the past 24 months has been a strong contributor to our commercial growth, which on an annualized basis was 13% in the fourth quarter and 14.6% for the year. Looking forward, based on a strong pipeline and a solid liquidity position, we see continued growth opportunity while maintaining our disciplined credit standards. Page 8 provides additional detail on our commercial loan portfolio. As I pointed out in prior quarters, CNI lending continues to be our primary focus, representing 68% of the portfolio. Manufacturing continues to be the largest concentration within the CNI segment, comprising approximately 9% or $149 million. The remaining 32% of the portfolio is comprised of investment in real estate, with the largest concentrations being industrial at $157 million, or 10.2%. and retail at $136 million or 8.9%. It's worth noting that our exposure to the office segment stands at $93 million or 6.1% of our commercial portfolio at quarter end. Our office exposure consists primarily of suburban, low-rise office space and medical comprises 25% of our overall office exposure. Average loan size is $1.3 million which points to the granularity of this particular segment of our portfolio. For additional insight into our office exposure, I refer you to the appendix of this presentation. Page nine provides an overview of key quality, excuse me, key credit quality metrics at year end. Overall, credit quality continues to be excellent. Total non-performing loans were $5.2 million, or approximately 10 basis points of total loans at quarter end. which is very similar to 12-31-22. Loans 30 to 89 days delinquent totaled $3.3 million or nine basis points down slightly from the third quarter and in line with 12-31-22 delinquency. At this time, I'll turn the presentation over to Gavin for his comments, including the outlook for the remainder of the year.