INDEPENDENT BANK CORP MI
For the period ended Mar 31, 2025. Filed May 7, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 7, 2025
IBCP$36.31-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-05.
0000039311-24-000090
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0000039311-25-000065
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 153 previous paragraphs and 148 current paragraphs.
77 unchanged; 60 reworded; 6 added; 11 removed; 5 previous and 5 current paragraphs rearranged.
Tables are not compared: 19 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
(1) On January 31, 2025 we sold $931.6 million of mortgage loan servicing rights (26.3% of total servicing portfolio) and transferred the servicing on March 3, 2025. This sale represented approximately $13.1 million (27.9%) of the total capitalized mortgage loan servicing right asset. While there remains a customary hold back of final settlement funds of approximately $0.5 million relating to this transaction, we are not aware of any issues that will have a material impact on this final payment. Transaction expenses relating to this sale were approximately $0.3 million and was expensed during the first quarter of 2025.
Current report
As summarized in the table above, the decrease in capitalized mortgage loan servicing rights during the first quarter of 2025 is primarily attributed to the originated mortgage loan servicing rights sale. This transaction was executed in part to reduce the amount of exposure the bank had to rate variances that may impact the mortgage servicing right asset valuation in future periods. With this sale, it is expected mortgage servicing revenue, net will decrease commensurate with amount of servicing sold relative to the same periods in 2024. While the magnitude of fair value adjustments would also be expected to decrease, those adjustments are dependent upon factors that are harder to predict.
Current report
Bank owned life insurance increased by $0.1 million in the first quarter of 2025, compared to the same prior year period due to an increase in crediting rate.
Current report
Non-interest expense increased by $2.1 million to $34.3 million during the three-month period ended March 31, 2025 compared to the same period in 2024.
Current report
Loan and collection increased by $0.3 million in the first quarter of 2025 compared to the same period in 2024 due primarily to higher attorney and other general collection related expenses.
Current report
Other expense increased by $0.5 million in the first quarter of 2025 compared to the same prior year period due primarily to costs related to the capitalized mortgage loan servicing right sale and higher Michigan Corporate Income Tax (due to an increase in taxable base). See “Non-interest income” above.
Removed paragraphs (11)
Previous report
We recorded net incomeof $48.3 million and $45.3 million during the nine months ended September 30, 2024 and 2023, respectively. The increase in 2024 year-to-date results as compared to 2023 is primarily due to an increase in net-interest income and a decrease in the provision for credit losses that were partially offset by increases in non-interest expense and income tax expense and a decrease in non-interest income.
Previous report
For the first nine months of 2024, net interest income totaled $123.4 million, an increase of $7.2 million, or 6.2% from 2023. This increase primarily reflects a $145.3 million, or 3.0% increase in average interest-earning assets and a nine basis point increase in our net interest margin.
Previous report
(2)Annualized
Previous report
Service charges on deposit accounts decreased by $0.2 million and $0.4 million in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023 due primarily to decreases in non-sufficient funds occurrences (and related fees).
Previous report
Gain on equity securities at fair value totaled $2.7 million during the first nine months of 2024. This gain is the consequence of the exchange of our shares of Visa Class B-1 common stock on May 6, 2024 into a combination of Visa Class C common stock and Visa Class B-2 common stock. With the completion of this exchange, we were able to sell our Visa Class C common stock (as it was convertible into publicly traded Visa Class A common stock) while the Visa Class B-2 common stock continues to be held and carried at zero. See note #13 to the Condensed Consolidated Financial Statements.
Previous report
Non-interest expense increased by $0.5 million to $32.6 million and increased by $2.9 million to $98.1 million during the three- and nine-month periods ended September 30, 2024, respectively, compared to the same periods in 2023.
Previous report
Performance-based compensation increased by $0.5 million and $2.4 million in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023. The increases were primarily due to higher expected incentive compensation payout for salaried and hourly employees.
Previous report
Taxes licenses and fees increased by $0.1 million and$0.2 millionin the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023 due primarily to higher Michigan Corporate Income Tax expense as the result of an increase in tax base.
Previous report
Equity Securities at Fair Value
Previous report
On May 6, 2024, we exchanged 12,566 shares of Visa Inc. Class B-1 common stock (all of the Class B-1 shares we owned) for 2,493 shares of Visa Inc. Class C common stock and 6,283 shares of Visa Inc. Class B-2 common stock pursuant to an exchange offer conducted by Visa. With the completion of the exchange, we recorded a gain related to the Class C shares of $2.677 million based on the conversion privilege of those shares and the closing price of the Class A shares on May 3, 2024 (the exchange expiration date) of $268.49 per share. Subsequent to the exchange, we sold all of our Class C shares for net proceeds of $2.685 million. See note #13 to the Condensed Consolidated Financial Statements included within this report for further discussion.
Reworded paragraphs (60)
Previous wording
Introduction. The following section presents additional information to assess the financial condition and results of operations of Independent Bank Corporation (“IBCP”), its wholly-owned bank, Independent Bank (the “Bank”), and their subsidiaries. This section should be read in conjunction with the Condensed Consolidated Financial Statements. We also encourage you to read our 2023 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”). That report includes a list of risk factors that you should consider in connection with any decision to buy or sell our securities.
Current wording
Introduction. The following section presents additional information to assess the financial condition and results of operations of Independent Bank Corporation (“IBCP”), its wholly-owned bank, Independent Bank (the “Bank”), and their subsidiaries. This section should be read in conjunction with the interim Condensed Consolidated Financial Statements. We also encourage you to read our 2024 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”). That report includes a list of risk factors that you should consider in connection with any decision to buy or sell our securities.
Previous wording
Recent Developments. Pressures from various global and national macroeconomic conditions, including heightened inflation, uncertainty regarding future interest rates, foreign currency exchange rate fluctuations, recent adverse weather conditions, the continuation of the Russia-Ukraine and Middle East wars, the pending Presidential and Congressional elections, and potential governmental responses to these events, continue to create significant economic uncertainty. The extent to which these pressures may impact our business, results of operations, asset valuations, financial condition, and customers will depend on future developments, which continue to be highly uncertain and difficult to predict. Material adverse impacts may include all or a combination of valuation impairments on our intangible assets, securities available for sale ("AFS"), securities held to maturity ("HTM"), loans, capitalized mortgage loan servicing rights or deferred tax assets.
Current wording
Recent Developments. Pressures from various global and national macroeconomic conditions, including significant volatility and uncertainty with U.S. and global market conditions, the direct and indirect impacts of potential changes to U.S. trade policies, recessionary concerns, uncertainty regarding future interest rates, foreign currency exchange rate fluctuations, the continuation of the Russia-Ukraine war, ongoing and potentially increasing conflict in the Middle East, and potential governmental responses to these events, continue to create significant economic uncertainty. In addition, pursuit of various initiatives announced by the Trump administration may create some degree of volatility in our customers’ businesses, regulation of the financial services industry, and the markets in which we operate. The extent to which these pressures and other factors may impact our business, results of operations, asset valuations, financial condition, and customers will depend on future developments, which continue to be highly uncertain and difficult to predict. Material adverse impacts may include all or a combination of valuation impairments on our other intangibles, goodwill, securities available for sale ("AFS"), securities held to maturity ("HTM"), loans, capitalized mortgage loan servicing rights or deferred tax assets.
Previous wording
It is against this backdrop that we discuss our results of operations and financial condition for the third quarter of 2024 as compared to earlier periods.
Current wording
It is against this backdrop that we discuss our results of operations and financial condition for the first quarter of 2025 as compared to earlier periods.
Previous wording
Summary. We recorded net income of $13.8 million and $17.5 million during the three months ended September 30, 2024 and 2023, respectively. The decrease in 2024 third quarter results as compared to 2023 is due primarily to a $5.7 unfavorable change in the fair value due to price of capitalized mortgage loan servicing rights that was partially offset by a $2.4 million increase in net interest income.
Current wording
Summary. We recorded net income of $15.6 million and $16.0 million during the three months ended March 31, 2025 and 2024, respectively. The decrease in 2025 first quarter results as compared to 2024 is due primarily to a $2.8 unfavorable change in the fair value due to price of capitalized mortgage loan servicing rights and a $0.9 million increase in costs (recoveries) related to unfunded lending commitments that were partially offset by a $3.5 million increase in net interest income.
Previous wording
Our net interest income totaled $41.9 million during the third quarter of 2024, an increase of $2.4 million, or 6.2% from the year-ago period. This increase primarily reflects a $93.6 million increase in average interest-earning assets and a 14 basis point increase in our tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”).
Current wording
Our net interest income totaled $43.7 million during the first quarter of 2025, an increase of $3.5 million, or 8.7% from the year-ago period. This increase primarily reflects a $167.9 million increase in average interest-earning assets and a 19 basis point increase in our tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”).
Previous wording
The increase in average interest-earning assets in both the three and nine month periods in 2024 as compared to the same periods in 2023 primarily reflects growth in commercial and mortgage loans funded from a decrease in securities available for sale and an increase in deposits.
Current wording
The increase in average interest-earning assets in the first quarter of 2025 as compared to the same period in 2024 primarily reflects growth in commercial and mortgage loans funded from a decrease in securities available for sale and an increase in core deposits.
Previous wording
The increases in our net interest margin during the three and nine month periods in 2024 is attributed to increases in interest income as a percent of average interest-earning assets ("Asset Yield") that were only partially offset by increases in interest expense as a percent of average interest-earning assets ("Cost of Funds"). These increases are primarily attributed to the increases in the federal funds rate since January of 2023. Our Asset Yield has been positively impacted by new loans being originated at higher rates than existing loans being paid off as well as a shift in earning asset mix from generally lower rate investment securities to higher rate loans while our Cost of Funds has been negatively impacted by changes in funding mix (such as shifting from non-interest bearing deposits to interest-bearing deposits and an increase in time deposits) as well as higher deposit pricing sensitivity to the increases in interest rates discussed above. This change in funding mix and pricing is expected to continue to impact our Cost of Funds during the fourth quarter of 2024. See Asset/liability management.
Current wording
The increases in our net interest margin during the three month period in 2025 is attributed to a 25 basis point decrease in interest expense as a percent of average interest-earning assets ("Cost of Funds") that was only partially offset by a six basis point decrease in interest income as a percent of average interest-earning assets ("Asset Yield") . These decreases are primarily attributed to the decreases in the federal funds rate since September of 2024. Our Cost of Funds has been positively impacted by deposit pricing sensitivity to the decreases in interest rates discussed above as well as changes in funding mix (such as shifting from generally higher cost brokered deposits and other borrowings to relatively lower cost core deposits). Our Asset Yield has been negatively impacted by lower rates on variable rate loans as well as new loans being originated at lower rates than existing loans being paid off that has been partially offset by a shift in earning asset mix from generally lower rate investment securities to higher rate loans. See Asset/liability management.
Previous wording
Our net interest income is also impacted by our level of non-accrual loans. In the third quarter and first nine months of 2024, non-accrual loans averaged $4.5 million and $4.1 million, respectively. In the third quarter and first nine months of 2023, non-accrual loans averaged $4.4 million and $4.0 million, respectively. In addition, in the third quarter and first nine months of 2024 we had net recoveries of $0.12 million and $0.51 million, respectively of unpaid interest on loans placed on or taken off non-accrual or on loans previously charged-off compared to net recoveries of $0.09 million and $0.47 million, respectively, during the same periods in 2023.
Current wording
Our net interest income is also impacted by our level of non-accrual loans. In the first quarter of 2025, non-accrual loans averaged $6.6 million. In the first quarter of 2024, non-accrual loans averaged $3.9 million. In addition, in the first quarter of 2025 we had net recoveries of $0.11 million of unpaid interest on loans placed on or taken off non-accrual or on loans previously charged-off compared to net recoveries of $0.29 million during the same period in 2024.
Previous wording
Provision for credit losses. The provision for credit losses was an expense of $1.49 million and an expense of $1.35 million for the three months ended September 30, 2024 and 2023, respectively. During the nine-month periods ended September 30, 2024 and 2023, the provision for credit losses was an expense of$2.25 million and a expense of $6.83 million, respectively. The provision reflects our assessment of the allowance for credit losses (the “ACL”) taking into consideration factors such as loan growth, loan mix, levels of non-performing and classified loans, economic conditions and loan net charge-offs. While we use relevant information to recognize losses on loans, additional provisions for related losses may be necessary based on changes in economic conditions, customer circumstances and other credit risk factors. See “Portfolio Loans and asset quality” for a discussion of the various components of the ACL and their impact on the provision for credit losses in 2024.
Current wording
The provision for credit losses on loans in 2025 and 2024 was an expense of $0.72 million and $1.87 million and reflects our assessment of the allowance for credit losses (the “ACL”) on loans taking into consideration factors such as loan growth, loan mix, levels of non-performing and classified loans, economic conditions and loan net charge-offs. While we use relevant information to recognize losses on loans, additional provisions for related losses may be necessary based on changes in economic conditions, customer circumstances and other credit risk factors. See “Portfolio Loans and asset quality” for a discussion of the various components of the ACL and their impact on the provision for credit losses in 2025. The decrease in the provision for credit losses expense from the prior year period is primarily due to a decrease in pooled allocation rates on commercial and retail loans that was partially offset by increases in the adjustment to allocations based on subjective factors (due in part to an increase in economic uncertainty during the first quarter) and specific allocations of the ACL.
Previous wording
The year-to-date provision for credit losses on loans in 2024 compared to 2023, decreased $0.44 million. The provision for credit losses on securities HTM in 2024 and 2023 was an expense (credit) of $(1.15) million and $2.99 million, respectively. The change in provision for credit losses on securities HTM reflects a charge-off in the first quarter of 2023 and a subsequent partial recovery during the first quarter of 2024 of one corporate security (Signature Bank). See “Securities” below and note #3 to the Condensed Consolidated Financial Statements.
Current wording
The provision for credit losses on securities HTM in 2025 and 2024 were credits of $0.003 million and $1.13 million, respectively. The change in provision for credit losses on securities HTM reflects a partial recovery during the first quarter of 2024 of one corporate security (Signature Bank) totaling $1.125 million. See “Securities” below and note #3 to the interim Condensed Consolidated Financial Statements.
Previous wording
Non-interest income. Non-interest income is a significant element in assessing our results of operations. Non-interest income totaled $9.5 million during the third quarter of 2024 compared to $15.6 million in the third quarter of 2023. For the first nine months of 2024, non-interest income totaled $37.2 million compared to $41.6 million for the first nine months of 2023.
Current wording
Non-interest income. Non-interest income is a significant element in assessing our results of operations. Non-interest income totaled $10.4 million during the first quarter of 2025 compared to $12.6 million in the first quarter of 2024.
Previous wording
(1)Mortgage loan salesin the third quarters of 2024 and 2023 include$6.6 million andzero, respectively, of portfolio loan transactions. Mortgage loan sales during the first nine months of 2024 and 2023 include $14.7 million and$41.2 million, respectively, of portfolio loan transactions. These transactions were performed for interest rate risk purposes.
Current wording
(1)Mortgage loan salesin the first quarters of 2025 and 2024 include$8.7 million and$6.8 million, respectively, of portfolio loan transactions. These transactions were performed for interest rate risk purposes.
Previous wording
Mortgage loans originated decreased in 2024 as compared to 2023 due primarily to higher mortgage loan interest rates in 2024 reducing this activity. Mortgage loans sold, excluding portfolio loan sales, were relative unchanged in 2024 as compared to 2023.
Current wording
Mortgage loans originated increased in 2025 as compared to 2024 due primarily to an increase in construction loans. Mortgage loans sold were relative unchanged in 2025 as compared to 2024.
Previous wording
Net gains on mortgage loans totaled $2.2 million and $2.1 million during the third quarters of 2024 and 2023, respectively. For the first nine months of 2024 and 2023, net gains on mortgage loans totaled $4.9 million and $5.5 million, respectively. The decrease from the prior year to date period was primarily due to a decrease in mortgage loans sold.
Current wording
Net gains on mortgage loans totaled $2.3 million and $1.4 million during the first quarters of 2025 and 2024, respectively. The increase from the prior year to date period was primarily due an increase in Loan Sales Margin.
Previous wording
Our Loan Sales Margin is impacted by several factors including competition and the manner in which the loan is sold. Net gains on mortgage loans are also impacted by recording fair value accounting adjustments. Excluding these fair value accounting adjustments, the Loan Sales Margin would have been 1.40% and 2.14% in the third quarters of 2024 and 2023, respectively, and 1.38% and 1.10% for the comparative 2024 and 2023 year-to-date periods, respectively. The decline in the Loan Sales Margin (excluding fair value adjustments) in the third quarter of 2024 was generally due to lower primary-to-secondary market pricing spreads as market interest rates rose in 2024 (relative to 2023) which were impacted by the decrease in salable mortgage loan volumes.
Current wording
Our Loan Sales Margin is impacted by several factors including competition and the manner in which the loan is sold. Net gains on mortgage loans are also impacted by recording fair value accounting adjustments. Excluding these fair value accounting adjustments, the Loan Sales Margin would have been 1.91% and 1.21% in the first quarters of 2025 and 2024, respectively. The increase in the Loan Sales Margin (excluding fair value adjustments) in the first quarter of 2025 was generally due in part to higher primary-to-secondary market pricing spreads relative to the same period last year.
Previous wording
We recorded a net loss of $0.4 million and a net loss of $0.2 million on securities AFS for the first nine months of 2024 and 2023, respectively. We recorded no credit related charges in either 2024 or 2023 on securities AFS. See “Securities” below and note #3 to the Condensed Consolidated Financial Statements.
Current wording
We recorded a net loss of $0.33 million and a net loss of $0.27 million on the sale of securities AFS for the first three months of 2025 and 2024, respectively. We recorded no credit related charges in either 2025 or 2024 on securities AFS. See “Securities” below and note #3 to the interim Condensed Consolidated Financial Statements.
Previous wording
Mortgage loan servicing, net, generated income (expense) of $(3.1) million and $2.7 million in the third quarters of 2024 and 2023, respectively. For the first nine months of 2024 and 2023, mortgage loan servicing, net, generated income of $1.7 million and $7.1 million, respectively. The significant variances in mortgage loan servicing, net are primarily due to changes in the fair value of capitalized mortgage loan servicing rights associated with changes in interest rates and the associated expected future prepayment levels and expected float rates.
Current wording
Mortgage loan servicing, net, generated income (expense) of $(0.6) million and $2.7 million in the first quarters of 2025 and 2024, respectively. The significant variances in mortgage loan servicing, net are primarily due to changes in the fair value of capitalized mortgage loan servicing rights associated with changes in interest rates and the associated expected future prepayment levels and expected float rates as well as a decline in servicing revenue. The decline in servicing revenue is attributed to the sale of approximately $931 million of mortgage servicing rights on January 31, 2025.
Previous wording
At September 30, 2024 we were servicing approximately $3.55 billion in mortgage loans for others on which servicing rights have been capitalized. This servicing portfolio had a weighted average coupon rate of 4.08% and a weighted average service fee of approximately 25.5 basis points. Capitalized mortgage loan servicing rights at September 30, 2024 totaled $40.2 million, representing approximately 113.2 basis points on the related amount of mortgage loans serviced for others.
Current wording
At March 31, 2025 we were servicing approximately $2.61 billion in mortgage loans for others on which servicing rights have been capitalized. This servicing portfolio had a weighted average coupon rate of 4.35% and a weighted average service fee of approximately 25.7 basis points. Capitalized mortgage loan servicing rights at March 31, 2025 totaled $32.2 million, representing approximately 123.2 basis points on the related amount of mortgage loans serviced for others.
Previous wording
Other income in the table above decreased by $0.1 million and $0.8 million in the third quarter and first nine months of 2024, respectively, compared to the same prior year periods. The decrease in the third quarter of 2024 was primarily due to the prior year including a one time gain on the sale of an office building and a decrease in certain internet banking fees no longer being charged that were partially offset by higher commercial loan swap fees. The decrease from the prior year to date period was primarily due to the prior year including one time gains on the sale of an office building and a purchase credit impaired loan as well as a decrease in certain internet banking fees no longer being charged.
Current wording
Other income in the table above increased by $0.4 million in the first quarter of 2025, compared to the same prior year period. The increase in the first quarter of 2025 was primarily due to higher commercial loan swap fees.
Previous wording
Compensation and employee benefits expenses, in total, increased $0.1 million on a quarterly comparative basis and increased $2.2 million for the first nine months of 2024 compared to the same periods in 2023.
Current wording
Compensation and employee benefits expenses, in total, decreased $0.4 million on a quarterly comparative basis.
Previous wording
Compensation expense increased by $0.2 million and $0.1 million in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023. These comparative increases in 2024 were primarily due to salary increases that were predominantly effective on January 1, 2024 that were only partially offset by a decrease in mortgage lending and other retail personnel.
Current wording
Compensation expense decreased by $0.1 million in the first quarter of 2025 compared to the same period in 2024. This comparative decrease in 2025 were primarily due to an increase in deferred loan origination costs due in part to higher commercial and mortgage loan volume.and a decrease in mortgage lending and other retail personnel that were only partially offset by salary increases that were predominantly effective on January 1, 2025.
Previous wording
Payroll taxes and employee benefits decreased by $0.6 million and $0.3 million in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023. The decreases were primarily due to decreases in employee medical insurance costs and a mortgage loan origination related incentive due to lower loan volumes.
Current wording
Payroll taxes and employee benefits decreased by $0.3 million in the first quarter of 2025, respectively compared to the same period in 2024. The decrease was primarily due to a decrease in employee medical insurance costs.
Previous wording
Data processing expense increased by $0.3 million and $0.9 million in the third quarter and first nine months of 2024, respectively, compared to the same prior year periods due in part to core data processor annual asset growth and CPI related cost increases as well as new solutions implemented during this time frame.
Current wording
Data processing expense increased by $0.5 million in the first quarter of 2025 compared to the same prior year period due in part to core data processor annual asset growth and CPI related cost increases as well as new solutions implemented during this time frame.
Previous wording
Advertising increased by $0.2 million and$0.6 million in the third quarter and first nine months of 2024, respectively, compared to the same prior year periods due primarily to modifications in strategic marketing spend as well as costs related to certain website redesign initiatives.
Current wording
Advertising increased by $0.4 million in the first quarter of 2025 compared to the same prior year period due primarily to the timing of strategic marketing spend relative to the prior year.
Previous wording
Costs (recoveries) related to unfunded lending commitments decreased by $0.3 million and $0.8 million in the third quarter and first nine months of 2024, respectively compared to the same prior year periods. These decreases are due to decreases in the changes to both the balance of lending commitments and the loss rates applied to those lending commitments.
Current wording
Costs (recoveries) related to unfunded lending commitments increased by $0.8 million in the first quarter of 2025 compared to the same prior year period. The increase was primarily due to increases in the changes to both the balance of lending commitments and the loss rates applied to those lending commitments.
Previous wording
Income tax expense. We recorded an income tax expense of $3.5 million and $11.9 million in the third quarter and the first nine months of 2024, respectively. This compares to an income tax expense of $4.1 million and $10.4 million in the third quarter and the first nine months of 2023, respectively. The changes in expense in thethird quarter and first nine months of 2024 compared to the same periods in 2023 are primarily due to changes in pretax income.
Current wording
Income tax expense. We recorded an income tax expense of $3.5 million in the first quarter of 2025. This compares to an income tax expense of $3.8 million in the first quarter of 2024. The change in expense in thefirst quarter of 2025 compared to the same period in 2024 is due in part to changes in pretax income.
Previous wording
Summary. Our total assets decreased by $4.5 million during the first nine months of 2024. Loans, excluding loans held for sale, were $3.94 billion at September 30, 2024, compared to $3.79 billion at December 31, 2023. Commercial loans and mortgage loans each increased while installment loans decreased during the first nine months of 2024. (See “Portfolio Loans and asset quality.”) Securities available for sale and securities held to maturity together totaled $932.3 million at September 30, 2024, a decline of $101.1 million since December 31, 2023.
Current wording
Summary. Our total assets decreased by $9.7 million during the first three months of 2025. Loans, excluding loans held for sale, were $4.07 billion at March 31, 2025, compared to $4.04 billion at December 31, 2024. Commercial loans increased while mortgage loans and installment loans each decreased during the first three months of 2025. (See “Portfolio Loans and asset quality.”) Securities available for sale and securities held to maturity together totaled $866.6 million at March 31, 2025, a decline of $32.0 million since December 31, 2024.
Previous wording
Deposits totaled $4.63 billion at September 30, 2024, an increase of $4.0 million from December 31, 2023. The increase in deposits from December 31, 2023, is due to increases in savings and interest-bearing checking, reciprocal and time deposits that were partially off set by a decrease in non-interest bearing deposits as well as scheduled maturities of brokered time deposits.
Current wording
Deposits totaled $4.63 billion at March 31, 2025, a decrease of $20.2 million from December 31, 2024. The decrease in deposits from December 31, 2024, is due to decreases in non-interest bearing and brokered time deposits that were partially offset by increases in savings and interest-bearing checking, reciprocal and time deposits .
Previous wording
Securities. We maintain diversified securities portfolios, which include obligations of U.S. government-sponsored agencies, securities issued by states and political subdivisions, residential and commercial mortgage-backed securities, asset-backed securities, corporate securities, trust preferred securities and foreign government securities (that are
Current wording
Securities. We maintain diversified securities portfolios, which include obligations of U.S. government-sponsored agencies, securities issued by states and political subdivisions, residential and commercial mortgage-backed securities, asset-backed securities, corporate securities, trust preferred securities and foreign government securities (that are denominated in U.S. dollars). We regularly evaluate asset/liability management needs and attempt to maintain a portfolio structure that provides sufficient liquidity and cash flow.
Previous wording
We believe that the unrealized losses on securities AFS are temporary in nature and are expected to be recovered within a reasonable time period. Based upon our liquidity and capital resources (as explained in more detail below under "Liquidity and capital resources"), we believe that we have the ability and intent to hold securities with unrealized losses to maturity or until such time as the unrealized losses reverse.(See “Asset/liability management.”)
Current wording
We believe that the unrealized losses on securities AFS are temporary in nature and are expected to be recovered within a reasonable time period. Based upon our liquidity and capital resources (as explained in more detail below under "Liquidity and capital resources"), we believe that we have the ability to hold securities with unrealized losses to maturity or until such time as the unrealized losses reverse.(See “Asset/liability management.”)
Previous wording
On April 1, 2022, we transferred certain securities AFS with an amortized cost and unrealized loss at the date of transfer of $418.1 million and $26.5 million, respectively to securities HTM. The transfer was made at fair value, with the unrealized loss becoming part of the purchase discount which will be accreted over the remaining life of the securities. The other comprehensive loss component is separated from the remaining available for sale securities and is accreted over the remaining life of the securities transferred. Based upon our liquidity and capital resources (as explained in more detail below under "Liquidity and capital resources"), we believe that we have the ability and intent to hold these securities until they mature, at which time we would receive full value for these securities.
Current wording
On April 1, 2022, we transferred certain securities AFS with an amortized cost and unrealized loss at the date of transfer of $418.1 million and $26.5 million, respectively to securities HTM. The transfer was made at fair value, with the unrealized loss becoming part of the purchase discount which will be accreted over the remaining life of the securities. The other comprehensive loss component is separated from the remaining available for sale securities and is accreted over the remaining life of the securities transferred. Based upon our liquidity and capital resources (as explained in more detail
Previous wording
Securities AFS in unrealized loss positions are evaluated quarterly for impairment related to credit losses. For securities AFS in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities AFS that do not meet this criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, adverse conditions specifically related to the security and the issuer and the impact of changes in market interest rates on the market value of the security, among other factors. If this assessment indicates that a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an ACL is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income (loss), net of applicable taxes. No ACL for securities AFS was needed at September 30, 2024. The decrease in unrealized losses during the first nine months of 2024 is primarily attributed to lower interest rates, pay downs of security balances, par reversion and the narrowing of certain interest rate spreads. See note #3 to the Condensed Consol idated Financial Statements included within this report for further discussion.
Current wording
Securities AFS in unrealized loss positions are evaluated quarterly for impairment related to credit losses. For securities AFS in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities AFS that do not meet this criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, adverse conditions specifically related to the security and the issuer and the impact of changes in market interest rates on the market value of the security, among other factors. If this assessment indicates that a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an ACL is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income, net of applicable taxes. No ACL for securities AFS was needed at March 31, 2025. See note #3 to the interim Condensed Consol idated Financial Statements included within this report for further discussion.
Previous wording
expected to be collected. Securities HTM are charged off against the ACL when deemed uncollectible. Adjustments to the ACL are reported in our Condensed Consolidated Statements of Operations in provision for credit loss. We measure expected credit losses on securities HTM on a collective basis by major security type with each type sharing similar risk characteristics. With regard to U.S. Government-sponsored agency and mortgage-backed securities (residential and commercial), all these securities are issued by a U.S. government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities. With regard to obligations of states and political subdivisions, private label-mortgage-backed, corporate and trust preferred securities HTM, we consider (1) issuer bond ratings, (2) long-term historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. During the first quarter of 2023, one corporate security (Signature Bank) defaulted resulting in a $3.0 million provision for credit losses and a corresponding full charge-off. Subsequent to this security's charge-off, a portion of its fair value had recovered and was subsequently sold during the first quarter of 2024 for $1.1 million during which period we recorded that amount as a recovery to the ACL. See note #3 to the Condensed Consolidated Financial Statements included within this report for further discussion.
Current wording
For securities HTM an ACL is maintained at a level which represents our best estimate of expected credit losses. This ACL is a contra asset valuation account that is deducted from the carrying amount of securities HTM to present the net amount expected to be collected. Securities HTM are charged off against the ACL when deemed uncollectible. Adjustments to the ACL are reported in our interim Condensed Consolidated Statements of Operations in provision for credit loss. We measure expected credit losses on securities HTM on a collective basis by major security type with each type sharing similar risk characteristics. With regard to U.S. Government-sponsored agency and mortgage-backed securities (residential and commercial), all these securities are issued by a U.S. government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities. With regard to obligations of states and political subdivisions, private label-mortgage-backed, corporate and trust preferred securities HTM, we consider (1) issuer bond ratings, (2) long-term historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. During the first quarter of 2023, one corporate security (Signature Bank) defaulted resulting in a full charge-off. Subsequent to this security's charge-off, a portion of its fair value had recovered and was subsequently sold during the first quarter of 2024 for $1.1 million during which period we recorded that amount as a recovery to the ACL. See note #3 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.
Previous wording
We generally retain loans that may be profitably funded within established risk parameters. (See “Asset/liability management.”) As a result, we may hold adjustable-rate and fixed rate jumbo mortgage loans as Portfolio Loans, while 15- and 30-year fixed-rate conforming mortgage loans are generally sold to mitigate exposure to changes in interest rates. (See “Non-interest income.”) The growth in mortgage loans during the first nine months of 2024 has primarily been attributed to the origination of adjustable-rate mortgage loans and advances on adjustable rate construction mortgage loans and home equity lines of credit. (See “Asset/liability management.”).
Current wording
We generally retain loans that may be profitably funded within established risk parameters. (See “Asset/liability management.”) As a result, we may hold adjustable-rate conventional and fixed rate jumbo mortgage loans as Portfolio Loans, while 15- and 30-year fixed-rate non-jumbo mortgage loans are generally sold to mitigate exposure to changes in interest rates. (See “Non-interest income and “Asset/liability management.”).
Previous wording
Non-performing loans have declined modestly as a percent of Portfolio Loans since year-end 2023, reflecting our ongoing collection efforts. Our collection and resolution efforts have generally resulted in a positive trend in non-performing loans.
Current wording
Non-performing loans have increased modestly as a percent of Portfolio Loans since year-end 2024, reflecting a modest increase in non-performing mortgage loans.
Previous wording
Other real estate and repossessed assets totaled $0.78 million and $0.57 million at September 30, 2024, and December 31, 2023, respectively.
Current wording
Other real estate and repossessed assets totaled $0.41 million and $0.94 million at March 31, 2025, and December 31, 2024, respectively.
Previous wording
Some loans will not be repaid in full. Therefore, an ACL on loans is maintained at a level which represents our best estimate of expected credit losses. Our ACL on loans is comprised of three principal elements: (i) specific analysis of individual loans identified during the review of the loan portfolio, (ii) pooled analysis of loans with similar risk characteristics based on historical experience, adjusted for current conditions, reasonable and supportable forecasts, and expected prepayments, and (iii) additional allowances based on subjective factors, including local and general economic business factors and trends, portfolio concentrations and changes in the size and/or the general terms of the loan portfolios. See note #4 to the Condensed Consolidated Financial Statements included within this report for further discussion on the ACL on loans.
Current wording
Some loans will not be repaid in full. Therefore, an ACL on loans is maintained at a level which represents our best estimate of expected credit losses. Our ACL on loans is comprised of three principal elements: (i) specific analysis of individual loans identified during the review of the loan portfolio, (ii) pooled analysis of loans with similar risk characteristics based on historical experience, adjusted for current conditions, reasonable and supportable forecasts, and expected prepayments, and (iii) additional allowances based on subjective factors, including local and general economic business factors and trends, portfolio concentrations and changes in the size and/or the general terms of the loan portfolios. See note #4 to the interim Condensed Consolidated Financial Statements included within this report for further discussion on the ACL on loans.
Previous wording
The ACL increased $2.8 million to $57.4 million at September 30, 2024 from $54.7 million at December 31, 2023, and was equal to 1.46% and 1.44% of total Portfolio Loans at September 30, 2024, and December 31, 2023, respectively.
Current wording
The ACL increased $0.7 million to $60.0 million at March 31, 2025 from $59.4 million at December 31, 2024, and was equal to 1.47% and 1.47% of total Portfolio Loans at March 31, 2025, and December 31, 2024, respectively.
Previous wording
Since December 31, 2023, the ACL related to specific loans increased $1.2 million due primarily to one commercial loan addition during the first quarter of 2024. The ACL related to pooled analysis of loans and subjective factors increased $1.1 million and $0.5 million, respectively due primarily to loan growth.
Current wording
Since December 31, 2024, the ACL related to specific loans increased $1.4 million due primarily to one commercial loan addition and an increase to one existing commercial loan reserve during the first quarter of 2025. The ACL related to pooled analysis of loans decreased $2.4 million due primarily to a refinement in prepayment assumptions on mortgage loans.that included a breakdown between fixed and variable rate loans. The ACL related to subjective factors increased $1.7 million due primarily to an increase in economic uncertainty during the first quarter of 2025.
Previous wording
Deposits totaled $4.63 billion and $4.62 billion at September 30, 2024, and December 31, 2023, respectively. The increase in deposits is primarily due to increases in savings and interest-bearing checking, reciprocal and time deposits that were partially off set by a decrease in non-interest bearing deposits as well as scheduled maturities of brokered time deposits. Reciprocal deposits totaled$995.5 million and$832.0 million at September 30, 2024 and December 31, 2023, respectively. These deposits represent demand, money market and time deposits from our customers that have been placed through IntraFi Network. This service allows our customers to access multi-million dollar FDIC deposit insurance on deposit balances greater than the standard FDIC insurance maximum.
Current wording
Deposits totaled $4.63 billion and $4.65 billion at March 31, 2025, and December 31, 2024, respectively. The decrease in deposits is primarily due to decreases in non-interest bearing and brokered time deposits that were partially offset by increases in savings and interest-bearing checking, reciprocal and time deposits. Reciprocal deposits totaled$910.5 million and$907.0 million at March 31, 2025 and December 31, 2024, respectively. These deposits represent demand, money market and time deposits from our customers that have been placed through IntraFi Network. This service allows our customers to access multi-million dollar FDIC deposit insurance on deposit balances greater than the standard FDIC insurance maximum.
Showing the first 40 of 60 pairs. Open the source sections for the rest.
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Current report — wording carried from elsewhere
Provision for credit losses. The provision for credit losses was an expense of $0.72 million and an expense of $0.74 million for the three months ended March 31, 2025 and 2024, respectively.
Current report — wording carried from elsewhere
below under "Liquidity and capital resources"), we believe that we have the ability and intent to hold these securities until they mature, at which time we expect to receive full value for these securities.
Current report — wording carried from elsewhere
At March 31, 2025, we had $776.7 million of time deposits that mature in the next 12 months. Historically, a majority of these maturing time deposits are renewed by our customers. Additionally, $3.81 billion of our deposits at March 31, 2025,
Current report — wording carried from elsewhere
The FRB has issued rules regarding trust preferred securities as a component of the Tier 1 capital of bank holding companies. The aggregate amount of trust preferred securities (and certain other capital elements) are limited to 25 percent
Current report — wording carried from elsewhere
Fair valuation of financial instruments. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820 - “Fair Value Measurements and Disclosures” (“FASB ASC Topic 820”) defines fair
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Previous report — wording carried elsewhere
Average Balances and Tax Equivalent Rates
Previous report — wording carried elsewhere
(1)Interest on tax-exempt loans and securities available for sale is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.
Previous report — wording carried elsewhere
denominated in U.S. dollars). We regularly evaluate asset/liability management needs and attempt to maintain a portfolio structure that provides sufficient liquidity and cash flow.
Previous report — wording carried elsewhere
For securities HTM an ACL is maintained at a level which represents our best estimate of expected credit losses. This ACL is a contra asset valuation account that is deducted from the carrying amount of securities HTM to present the net amount
Previous report — wording carried elsewhere
We employ simulation analyses to monitor our interest-rate risk profile and evaluate potential changes in our net interest income and market value of portfolio equity that result from changes in interest rates. The purpose of these simulations is to identify sources of interest-rate risk. The simulations do not anticipate any actions that we might initiate in response to changes in interest rates and, accordingly, the simulations do not provide a reliable forecast of anticipated results. The simulations arepredicated on immediate, permanent and parallel shifts in interest rates and generally assume that current loan and deposit pricing relationships remain constant. The simulations further incorporate assumptions relating to changes in customer behavior, including changes in prepayment rates on certain assets and liabilities. At September 30, 2024, our interest rate risk profile as measured by our longer term interest rate risk measure based on changes in economic value