Independent Bank Corporation

Hello everyone and welcome to the Independent Bank Corporation reports 2025 first quarter results. My name is Ezra and I will be your coordinator today. If you would like to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I will now hand you over to Brad Kessel, President and CEO to begin. Please go ahead.

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 first quarter 2025 results. I'm Brad Kessel, President and Chief Executive Officer, and joining me is Gavin Moore, EVP 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 this morning, you can access it at the company's website, independentbank.com. The agenda for today's call will include prepared remarks, followed by a question and answer session, and then closing remarks. I am pleased to report on our strong first quarter results as we advance our mission of inspiring financial independence today with tomorrow in mind. Our vision is a future where people approach their finances with confidence, clarity, and the determination to succeed. Our core values of courage, drive, integrity, people-focused, and teamwork are the blueprint our employees live by. We strive to be Michigan's most people-focused bank. Today, Independent Bank Corporation reported first quarter 2025 net income of $15.6 million, or 74 cents per diluted share. versus net income of $16 million or 76 cents per diluted share in the prior year period. I am proud of our team and very pleased to see us continue our positive trends. Overall loans increased 3.4% annualized while core deposits are up 0.8% annualized. We were able to generate net interest income growth on both a linked quarter basis and on a year over a year quarterly basis and produced four basis points in margin expansion. We believe that our expenses continue to be well managed, and we continue to see improved operational scale from strategic investments we have made in recent quarters, recent years. These fundamentals continue to drive positive growth in tangible book value per share, 13.2% compared to the prior year quarter. Our credit metrics continue to be very good with a low level of watch credits, 14 basis points of non-performing assets to total assets, and one basis point in net charge-offs for the quarter to average loans annualized. The allowance for credit losses factoring in recent market uncertainty was 1.47% of total loans. We are staying in close contact with our client base during this volatile period and keeping abreast of what they are experiencing and how they are adjusting if needed. We continue to be focused on what we can control and optimistic on the long-term future of the IDC franchise. Moving to page five of our presentation, total deposits at March 31, 2025 were $4.63 billion. Overall core deposits increased $9.1 million during the first quarter. On a linked quarter basis, retail deposits increased by $34.2 million. Business deposits declined by $44 million. And municipal deposits increased by $18.9 million. Our customer base continues to exhibit a remix out of non-interest bearing and or lower yielding deposit products into our higher yielding product offerings. but the remix pace has slowed. Additionally, our sales team continues to bring in new relationships well below our wholesale cost of funds. On page six, we have included in our presentation 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 decreased by 12 basis points to 1.80%. At this time, I'd like to turn the presentation over to Joel Ron to share a few comments on the success we are having in growing our loan portfolios and provide an update on our credit metrics.

Yeah, thank you, Brad, and good morning, everyone. On page seven, we share an update on the loan activity for the quarter. We had solid loan growth to start the year. As Brad said, total loans grew $34 million, representing a 3.4% annualized rate. Commercial loan generation was strong with $54.8 million of Q1 growth for an 11% annualized rate. Our residential mortgage portfolio realized a slight decline of $3.9 million, while our installment loan portfolio declined $17 million in the first quarter. Our continued strategic investment in commercial banking talent continues to supplement our growth. We added three experienced commercial bankers in the first quarter, bringing our team to 47 bankers across our statewide footprint. As noted in previous quarters, our new loan production in each segment continues to come on at yields well above the respective portfolio yield. Within the commercial loan activity, the mix of C&I lending versus investment real estate for the quarter was 59% and 41% respectively. While our commercial pipeline is solid, It is softer than a year ago, as we're seeing some cautiousness by business owners regarding business expansion. Page 8 provides detail on our commercial loan portfolio. There's not been any significant shift in our portfolio concentrations, with the portfolio remaining very well diversified. Our largest segment of the C&I category is manufacturing at 9.2% of the total portfolio. It's worth noting that within the manufacturing segment is 134 million or 6.7% of our portfolio of automotive industry exposure that we're monitoring closely for any tariff related impact. As Brad noted, credit quality metrics and trends are outlined on page nine and they continue to be excellent. Total non-performing loans were 7.1 million or 17 basis points of total loans at quarter end. up slightly from 15 basis points at year-end 2024. Past due loans totaled 3.9 million or 10 basis points, down slightly from 17 basis points at year-end 2024. It's not reflected on the slide, but it's worth noting that our net charge-offs were $68,000 or one basis point of average loans on an annualized basis for the quarter. At this time, I'd like to turn the presentation over to Gavin for his comments, including the outlook for the remainder of the year.