Independent Bank Corporation

Hello, everyone, and welcome to the Independent Bank Corporation Report 2025 Third Quarter Results. My name is Ezra, and I will be your coordinator today. If you would like to ask a question, press star followed by one on your telephone keypad. If you change your mind, press star followed by two. We will be taking questions at the end of the presentation. 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 third quarter 2025 results. I am Brad Kessel, President and Chief Executive Officer. Joining me this morning is Gavin Moore, EDP and Chief Financial Officer, and Joel Rahn, Executive Vice President and Head of our 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, it can be accessed at our 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 third 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 a 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 third quarter 2025 net income of $17.5 million or 84 cents per diluted share versus net income of $13.8 million or 65 cents per diluted share in the prior year period. I am proud of our team's performance and pleased to report continued momentum for most of our key metrics. Loan balances grew at an annualized rate of 3.2% and total deposits less brokered time deposits increased by 13% annualized. We achieved growth in our net interest income both sequentially and year-over-year. In fact, this is the ninth consecutive quarter we have increased our net interest income. Our net interest margin displayed a small decline on a length quarter basis, primarily due to the acceleration of unamortized issuance costs on sub-debt we redeemed in the third quarter. I will characterize the NIM as stable when adjusting for this event. Expense management remains a strength as reflected in our third quarter efficiency ratio of 58.86%, which demonstrates the effectiveness of our recent investments. These solid fundamentals supported a 10.2% year-over-year increase in tangible common equity per share and strong returns, including a return on average assets of 1.27% and a return on average equity of 14.57% for the quarter. Despite market uncertainty, our credit quality remains strong with watch credits at low levels. Non-performing assets increased from 0.16% of total assets to 0.38% on a quarter-over-quarter basis, primarily as a result of one commercial relationship where the borrower is experiencing financial difficulties. Our annualized net charge-offs continue at historically low levels, four basis points through the first three quarters of 2025. The allowance for credit also stands at 1.49% of total loans. I am optimistic we'll finish 2025 strong and I'm excited about our prospects to grow our customer base and earnings in 2026. Moving to page five of our presentation, total deposits as of September 30th, 2025 were now $4.9 billion. Overall core deposits increased $148.2 million during the third quarter of 2025. On a linked quarter basis, business deposits increased by 67.5 million. Municipal deposits increased by 82.5 million. These were offset by a small decrease in retail deposits. The deposit base today is comprised of 46% retail, 37% commercial, and 17% municipal. All three portfolios are up on a year-over-year basis. 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 increased by just six basis points to 1.82%. At this time, I would like to turn the presentation over to Joel Rahn to share a few comments on the success we were having in growing our loan portfolios and provide an update on our credit metrics.

Well, thanks, Brad, and good morning, everyone. On page seven, we share an update of the loan activity for the quarter. We had another solid quarter of commercial loan growth with that portfolio increasing $57 million. Total loans grew 33.9 million as both the mortgage and consumer loan portfolios contracted in the quarter. This is attributable to seasonality as well as disciplined underwriting. Year-to-date, we've grown the commercial loan portfolio $188 million, representing 12.9% annualized growth. Our ongoing strategic investment in commercial banking talent continues to supplement our growth. We added three experienced commercial bankers in the third quarter, bringing our team to 50 bankers across our statewide footprint. As noted in previous quarters, our new loan production in each segment continues to come on at yields above the respective portfolio yield. Within the commercial loan activity, the mix of C&I lending versus investment real estate for the quarter was 58% and 42% respectively. Looking ahead, our commercial pipeline remains robust, so we expect strong loan origination in the fourth quarter. 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. CNI lending continues to be our primary focus, and as noted on the graph, that category comprises 70% of our overall commercial portfolio at 930. Our largest segment of the CNI category is retail, which includes a variety of truck equipment and marine dealerships and is performing well. Another significant CNI category is manufacturing, which contains 142 million, or 6.7% of the portfolio, of automotive industry exposure that we continue to monitor closely for any tariff-related impact. Key credit quality metrics and trends are outlined on page 9. Overall credit quality continues to be very good, as Brad alluded to a moment ago. Total non-performing loans were 20.4 million, or 48 basis points of total loans at quarter end, up from 20 basis points at 630. This is primarily due to one investment real estate commercial relationship as Brad said that is in workout. Past due loans total 5.1 million or 12 basis points down slightly from 16 basis points at 630. It's not reflected on this slide, but worth noting that our net charge offs are $1.2 million year to date or four basis points on an annualized basis. 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.