INDEPENDENT BANK CORP /MI/
For the period ended Jun 30, 2026. Filed Aug 5, 2026.
View on SEC.govAbout this filing
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.
Jun 30, 2026 · Filed Aug 5, 2026
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 2026-03-31; filed 2026-05-06.
0000039311-26-000048
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-05.
0000039311-26-000061
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 151 previous paragraphs and 154 current paragraphs.
83 unchanged; 55 reworded; 13 added; 10 removed; 3 previous and 3 current paragraphs rearranged.
Tables are not compared: 18 previous and 19 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 (13)
Current report
At June 30, 2026, HCB had $591.0 million of total assets, $371.9 million of loans and loans held for sale, $539.9 million of deposits and $47.6 million of shareholders’ equity. HCB reported unaudited net income of $0.99 million in the first six months of 2026. The HCB first six months 2026 results were adversely impacted due to $1.79 million of merger expenses. We expect the Merger to have a significant impact on our third quarter 2026 results because of the inclusion of their operations for the first time that quarter and merger related expenses.
Current report
We recorded net incomeof $35.7 millionand $32.5 million during the six months ended June 30, 2026 and 2025, respectively. The increase in 2026 year-to-date results as compared to 2025 is primarily due to a $6.5 million increase in net interest income, a $2.8 million favorable change in the fair value due to price of capitalized mortgage loan servicing rights and a $1.6 million gain on equity securities at fair value that was partially offset by an $8.1 million increase in non-interest expense.
Current report
For the first six months of 2026, net interest income totaled $94.8 million, an increase of $6.5 million, or 7.3% from 2025. This increase primarily reflects a $157.3 million increase in average interest-earning assets and a 14 basis point increase in our net interest margin.
Current report
(2)Annualized
Current report
The increase in the provision for credit losses expense from the prior year period is primarily due to the commercial portfolios reflecting an increase in specific reserves on certain individually evaluated commercial loan relationships and net loan growth as well asan increase in the reserve on unfunded lending commitments (attributed to an increase in expected loss rates). Partially offsetting these increases was a decrease in net newly allocated losses in the retail loan portfolios reflecting fewer retail loans requiring incremental expected credit loss allocations during the quarter, as well as a five basis point decrease in the adjustment to allocations based on subjective factors. The five basis point reduction in allocations based on subjective factors reflects our annual CECL model recalibration, which resulted in minimal changes to the quantitative estimate and demonstrated continued model maturity. The reduction also reflected our assessment of current economic conditions, portfolio performance, business survey results, stable collateral values and reduced regulatory risk.
Current report
Net gains on mortgage loans totaled $1.7 million and $1.6 million during the second quarters of 2026 and 2025, respectively. For the first six months of 2026 and 2025, net gains on mortgage loans totaled $3.0 million and $3.9 million, respectively.
Current report
Advertising expense increased by $0.3 million and$0.7 million in the second quarter and first six months of 2026, respectively, compared to the same prior year periods due to higher customer acquisition marketing costs as well as higher out-of-home advertising campaigns.
Current report
Loan and collection expense increased by $0.3 million in both the second quarter and first six months of 2026, compared to the same prior year periods due primarily to higher legal fees associated with collection and workout activities.
Current report
Merger related expenses of $0.4 million and $0.7 million in the second quarter and first six months of 2026 reflect legal, professional, regulatory, valuation, and other direct transaction costs associated with the acquisition of HCB Financial Corp.
Current report
Since December 31, 2025, the ACL related to specific loans increased $2.54 million due primarily to additional individually evaluated commercial loan relationships and higher reserves on certain existing individually evaluated commercial loan relationships. Pooled analysis allocations increased primarily due to commercial loan growth and modest changes in portfolio risk characteristics, partially offset by model recalibration and updated economic assumptions that reduced expected losses within certain retail loan portfolios. Additional allocations based on subjective factors decreased as updated model assumptions, portfolio segmentation and current economic inputs were reflected more fully in the quantitative estimate.
Current report
Index
Current report
During the quarter ended June 30, 2026, the Bank reached an agreement in principle to resolve these coordinated actions for $1.85 million, subject to the negotiation, execution, and delivery of definitive settlement documentation and preliminary and final approval by the court. There can be no assurance that definitive settlement documentation will be executed, that the court will approve the proposed settlement on its current or any other terms, or that the proposed settlement will become final and non-appealable. The proposed settlement does not constitute an admission of liability or wrongdoing by the Company or the Bank, and the Company and the Bank continue to deny the allegations. If the proposed settlement is not finalized or approved, we intend to continue to defend the actions vigorously.
Current report
As of June 30, 2026, we had accrued $1.85 million for losses we consider probable and reasonably estimable with respect to these matters, including an additional $0.35 million recorded during the quarter ended June 30, 2026. The accrual is reflected as Litigation Expense in the interim condensed consolidated statement of operations and in accrued expenses and other liabilities in the interim condensed consolidated statements of financial condition. Because of the inherent uncertainty of litigation and the fact that the proposed settlement remains subject to definitive documentation and court approval, it is reasonably possible that our ultimate loss could differ from the amount accrued.
Removed paragraphs (10)
Previous report
Completion of the Merger is subject to certain closing conditions, including (among others) receipt of the requisite approval of HCB's shareholders, receipt of required regulatory approvals, and the absence of any law or order prohibiting completion of the Merger. The Merger Agreement provides certain termination rights for both IBCP and HCB and further provides that, upon termination of the Merger Agreement under certain limited circumstances, HCB will be obligated to pay IBCP a termination fee of approximately $3.25 million. Currently we anticipate the Merger will be effective during the third quarter of 2026. Our 2026 non-interest expenses include $0.3 million of costs incurred through March 31, 2026 related to the Merger.
Previous report
The$0.4 million decrease in the provision for credit losses expense on loans and unfunded lending commitments from the prior year quarter is primarily due to a favorable variance in allocations based on subjective factors (prior year quarter included a four basis point increase while there was no increase in 2026), a decline in specific commercial loan reserves (prior year quarter included several downgrades while the specific allocations were relatively stable in 2026) as well a decrease in reserve on unfunded lending commitments (attributed to a decrease in balances and expected loss rates) that were only partially offset by an increase in retail loan pooled reserves (prior year quarter included certain favorable pooled loss allocation rate changes while pooled allocations were relative stable in 2026).
Previous report
Net gains on mortgage loans totaled $1.3 million and $2.3 million during the first quarters of 2026 and 2025, respectively. The decrease from the prior year three month period is attributed to a lower Loan Sales Margin.
Previous report
Occupancy, net increased by $0.2 million in the first quarter of 2026 compared to the same prior year period due in part to higher snow removal costs, utility costs and higher depreciation expense due to a new location.
Previous report
Litigation expense of $1.5 million is attributed toan accrual established for losses we consider probable as a result of all of our outstanding litigation matters in the aggregate (See “Litigation Matters.”).
Previous report
Advertising increased by $0.3 million in the first quarterof 2026 compared to the same prior year period due in part to retroactive new deposit account opening incentives attributed to accounts opened in a prior period.
Previous report
Merger related expenses of $0.3 million in the first quarter of 2026 relate to our recently announced acquisition of HCB Financial Corp. and primarily include legal related expenses.
Previous report
Since December 31, 2025, the ACL related to specific loans increased $0.30 million due primarily to one commercial loan relationship. The ACL related to pooled analysis allocations and additional allocations based on subjective factors were both relatively stable, increasing (decreasing) $(0.12) million and $0.10 million, respectively from December 31, 2025.
Previous report
During the quarter, we recorded an accrual for losses we consider probable as a result of all of our outstanding litigation matters in the aggregate amount of $1.5 million, reflected as Litigation Expense in the interim condensed consolidated statement of operations. However, because of the inherent uncertainty of outcomes from any litigation matter, we believe it is reasonably possible we may incur losses in addition to the amounts we have accrued. At this time, we are unable to provide an estimate of the losses that we believe are reasonably possible in addition to the amounts we have accrued, primarily because we are still conducting diligence on certain underlying factual and legal issues and significant matters remain to be resolved, including class certification of the actions described in the preceding paragraph.
Previous report
The litigation matters described in the preceding paragraph primarily include claims that have been brought against us for damages, but do not include litigation matters where we seek to collect amounts owed to us by third parties (such as litigation initiated to collect delinquent loans). These excluded, collection-related matters may involve claims or counterclaims by the opposing party or parties, but we have excluded such matters from the disclosure contained in the preceding paragraph in all cases where we believe the possibility of us paying damages to any opposing party is remote.
Reworded paragraphs (55)
Previous wording
Recent Developments. Pressures from various global and national macroeconomic conditions, including significant volatility and uncertainty in U.S. and global market conditions, inflationary pressures, recessionary concerns, uncertainty regarding future interest rates, energy and other commodity price volatility, foreign currency exchange rate fluctuations, the continuation of the Russia-Ukraine war, ongoing conflict in the Middle East, and actual or potential changes in fiscal, trade, regulatory, and monetary policy, continue to create economic uncertainty for our customers, the markets in which we operate, and the financial services industry. 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.
Current wording
Recent Developments. Macroeconomic and market conditions, including interest-rate volatility, inflationary pressures, recessionary concerns, uncertainty regarding fiscal, trade, regulatory and monetary policy, geopolitical conflicts in the Middle East and elsewhere, volatility in energy and commodity prices, competition for deposits and funding, and conditions affecting customer confidence, continue to create economic uncertainty for our customers, the markets in which we operate and the financial services industry. 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. Potential adverse effects may include reduced loan demand, changes in deposit levels or costs, pressure on liquidity and net interest margin, increased borrower delinquencies or defaults, lower collateral values, increased provision for credit losses or allowance for credit losses, and changes in the valuation or recoverability of goodwill, other intangible assets, securities available for sale ("AFS"), securities held to maturity ("HTM"), capitalized mortgage loan servicing rights or deferred tax assets.
Previous wording
On March 18, 2026, we entered into a definitive merger agreement with HCB Financial Corp. ("HCB") (the "Merger Agreement") providing for a business combination of Independent Bank Corporation ("IBCP") and HCB. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, HCB will be merged with and into IBCP, with IBCP as the surviving corporation (the "Merger"). In addition, IBCP intends to consolidate Highpoint Community Bank, HCB's wholly-owned subsidiary bank, with and into Independent Bank (with Independent Bank as the surviving institution).
Current wording
On March 18, 2026, we entered into a definitive merger agreement with HCB Financial Corp. ("HCB") (the "Merger Agreement") providing for a business combination of Independent Bank Corporation ("IBCP") and HCB. On July 1, 2026, HCB was merged with and into IBCP, with IBCP as the surviving corporation (the "Merger"). As a result of the Merger, Highpoint Community Bank became a wholly-owned subsidiary of IBCP as of July 1, 2026. IBCP intends to consolidate Highpoint Community Bank with and into Independent Bank (with Independent Bank as the surviving institution) during the fourth quarter of 2026.
Previous wording
Subject to the terms and conditions of the Merger Agreement, we will pay aggregate Merger consideration of approximately $70.2 million in IBCP common stock and cash for all of the shares of HCB common stock issued and outstanding immediately before the effective time of the Merger. The Merger consideration is subject to adjustment in certain limited circumstances, as set forth in the Merger Agreement.
Current wording
We paid aggregate Merger consideration of approximately $74.9 million, consisting of 1.59 million shares of IBCP common stock and $17.5 million in cash, for all of the shares of HCB common stock issued and outstanding immediately before the effective time of the Merger.
Previous wording
It is against this backdrop that we discuss our results of operations and financial condition for the first quarter of 2026 as compared to earlier periods.
Current wording
It is against this backdrop that we discuss our results of operations and financial condition for the second quarter of 2026 as compared to earlier periods.
Previous wording
Summary. We recorded net income of $16.9 million and $15.6 million during the three months ended March 31, 2026 and 2025, respectively. The increase in 2026 first quarter results as compared to 2025 is due primarily to a $3.2 million increase in net interest income and a $2.5 million favorable change in the fair value due to price of capitalized mortgage loan servicing rights that were partially offset by a $4.0 million increase in non-interest expense.
Current wording
Summary. We recorded net income of $18.8 million and $16.9 million during the three months ended June 30, 2026 and 2025, respectively. The increase in 2026 second quarter results as compared to 2025 is due primarily to a $3.3 million increase in net interest income, a $1.8 million favorable change in the fair value due to price of capitalized mortgage loan servicing rights and a $1.6 million gain on equity securities at fair value that were partially offset by a $4.0 million increase in non-interest expense and a $1.2 million increase in the provision for credit losses.
Previous wording
Our net interest income totaled $46.9 million during the first quarter of 2026, an increase of $3.2 million, or 7.3% from the year-ago period. This increase primarily reflects a $130.8 million increase in average interest-earning assets and a 16 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 $47.9 million during the second quarter of 2026, an increase of $3.3 million, or 7.4% from the year-ago period. This increase primarily reflects a $183.6 million increase in average interest-earning assets and a 13 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 for the first quarter of 2026 as compared to the same period in 2025 primarily reflects growth in commercial loans funded from decreases in interest bearing cash deposits, installment loans and securities available for sale and held to maturity as well as an increase in deposits.
Current wording
The increase in average interest-earning assets in both the three and six month periods of 2026 as compared to the same period in 2025 primarily reflects growth in commercial loans funded from decreases in interest bearing cash deposits, installment loans and securities available for sale and held to maturity as well as an increase in deposits.
Previous wording
The increase in our net interest margin during the three month period in 2026 is attributed to a 29 basis point decrease in interest expense as a percent of average interest-earning assets ("Cost of Funds") that was only partially offset by a 13 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 January of 2025 as the average federal funds rate was 75 basis points lower during the first quarter of 2026 as compared to the first quarter of 2025. Our Cost of Funds has been positively impacted by deposit pricing sensitivity to the decreases in interest rates discussed above as well as a favorable shift in mix with growth in lower cost non-maturity deposits and runoff in wholesale funding and subordinated debentures. Our Asset Yield has been negatively impacted by lower rates on variable rate earning assets. However, this impact has been partially offset by the origination of new fixed rate loans at rates higher than those in our current portfolio, as well as a shift in earning asset mix from generally lower rate investment securities, consumer loans and overnight liquidity to higher rate loans. See Asset/liability management.
Current wording
The increase in our net interest margin during the three and six month period in 2026 is attributed to 28 basis point decreases in interest expense as a percent of average interest-earning assets ("Cost of Funds") that were only partially offset by 15 and 14 basis point decreases, respectively 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 January of 2025 as the average federal funds rate was 75 basis points lower during the first quarter of 2026 as compared to the first quarter of 2025. Our Cost of Funds has been positively impacted by deposit pricing sensitivity to the decreases in interest rates discussed above as well as a favorable shift in mix with growth in lower cost non-maturity deposits and runoff in wholesale funding and subordinated debt. Our Asset Yield has been negatively impacted by lower rates on variable rate earning assets. However, this impact has been partially offset by the origination of new fixed rate loans at rates higher than those in our current portfolio, as well as a shift in earning asset mix from generally lower rate investment securities, consumer loans and overnight liquidity 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 first quarter of 2026, non-accrual loans averaged $36.0 million. In the first quarter of 2025, non-accrual loans averaged $6.6 million. The increase in non accrual balances primarily relates to one commercial loan credit relationship. In addition, in the first quarter of 2026 we had net charge-offs of $0.1 million of unpaid interest on loans placed on or taken off non-accrual or on loans previously charged-off compared to net recoveries of $0.1 million during the same period in 2025.
Current wording
Our net interest income is also impacted by our level of non-accrual loans. In the second quarter and first six months of 2026, non-accrual loans averaged $39.4 million and $37.7 million, respectively. In the second quarter and first six months of 2025, non-accrual loans averaged $7.7 million and $7.2 million, respectively. In addition, in the second quarter and first six months of 2026 we had net recoveries of $0.16 million and $0.02 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 $0.11 million and $0.22 million, respectively, during the same periods in 2025.
Previous wording
Provision for credit losses. The provision for credit losses was an expense of $0.36 million and $0.72 million for the three months ended March 31, 2026 and 2025, respectively.
Current wording
Provision for credit losses. The provision for credit losses was an expense of $2.7 million and an expense of $1.5 million for the three months ended June 30, 2026 and 2025, respectively. During the six-month periods ended June 30, 2026 and 2025, the provision for credit losses was an expense of $3.1 million and an expense of $2.2 million, respectively.
Previous wording
The provision for credit losses on loans 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 related to loans and their impact on the provision for credit losses in 2026. In general, we use a similar methodology for the provision for credit losses on unfunded lending commitments.
Current wording
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 2026.
Previous wording
The year to date provision for credit losses on securities HTM in 2026 and 2025 was a credit of zero and $0.003 million, respectively. See Note #3.
Current wording
The year to date provision for credit losses on securities HTM in 2026 and 2025 was zero and $0.001 million, respectively. See Note #3.
Previous wording
Non-interest income. Non-interest income is a significant element in assessing our results of operations. Non-interest income totaled $12.0 million during the first quarter of 2026 compared to $10.4 million in the first quarter of 2025.
Current wording
Non-interest income. Non-interest income is a significant element in assessing our results of operations. Non-interest income totaled $15.3 million during the second quarter of 2026 compared to $11.3 million in the second quarter of 2025. For the first six months of 2026, non-interest income totaled $27.4 million compared to $21.7 million for the first six months of 2025.
Previous wording
(1)Mortgage loan salesin the first quarters of 2026 and 2025 include $1.4 million and$8.7 million, respectively, of portfolio loan transactions. These transactions were performed for interest rate risk purposes.
Current wording
(1)Mortgage loan salesin the second quarters of 2026 and 2025 include $1.6 million and$6.7 million, respectively, of portfolio loan transactions. Mortgage loan sales during the firstsix months of 2026 and 2025 include $3.1 million and$15.4 million, respectively, of portfolio loan transactions. These transactions were performed for interest rate risk purposes.
Previous wording
(2) Net gains on mortgage loans in thefirst quarters of 2026 and 2025 include net gains of$0.03 million and$0.22 million, respectively, from portfolio loan transactions.
Current wording
(2) Net gains on mortgage loans in thesecond quarters of 2026 and 2025 include net gains of$0.05 million and$0.08 million, respectively, from portfolio loan transactions. Net gains during the firstsix months of 2026 and 2025 were $0.1 million and$0.3 million, respectively.
Previous wording
The increase in mortgage loans originated during the first three months of 2026 as compared to 2025 was primarily driven by higher refinance activity as mortgage rates declined through early 2026.
Current wording
Mortgage loans originated during the second quarter of 2026 were relatively unchanged from the same period last year. The increase in mortgage loans originated for the year to date period ended June 30 2026 as compared to 2025 was primarily driven by higher refinance activity during the first quarter of 2026 as mortgage rates declined through early 2026.
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 1.47% and 1.91% in the first quarters of 2026 and 2025,
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 1.30% and 1.59% in the second quarters of 2026 and 2025, respectively and 1.37% and 1.73% in the first six months of 2026 and 2025, respectively. The contraction of the Loan Sales Margin during both periods of 2026 was primarily due to competitive pressure which had a negative impact on our pricing margins.
Previous wording
We recorded a net loss of $0.03 million and $0.33 million on the sale of securities AFS for the first three months of 2026 and 2025, respectively. We recorded no credit related charges in either 2026 or 2025 on securities AFS. See “Securities” below and note #3 to the interim Condensed Consolidated Financial Statements.
Current wording
We recorded a net loss of $0.12 million and $0.32 million on the sale of securities AFS for the first six months of 2026 and 2025, respectively. We recorded no credit related charges in either 2026 or 2025 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 $1.6 million and $(0.6) million in the first quarters of 2026 and 2025, respectively. The significant variance in mortgage loan servicing, net is 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 revenue, net in the table below is attributed to the sale of approximately $931 million of mortgage servicing rights on January 31, 2025.
Current wording
Mortgage loan servicing, net, generated income of $2.5 million and $0.5 million in the second quarters of 2026 and 2025, respectively. For the first six months of 2026 and 2025, mortgage loan servicing, net, generated income (expense) of $4.1 million and $(0.1) 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.
Previous wording
(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 (41.5%) of the total capitalized mortgage loan servicing right asset. While there remains a customary hold back of final settlement funds of approximately $0.1 million relating to this transaction, we are not aware of any issues that will have a material impact on this final payment. We expect to receive this payment in the second quarter, 2026. Transaction expenses relating to this sale were approximately $0.2 million and was expensed during the first quarter of 2025.
Current wording
(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. Transaction expenses relating to this sale were approximately $0.2 million and were expensed in 2025.
Previous wording
At March 31, 2026 we were servicing approximately $2.60 billion in mortgage loans for others on which servicing rights have been capitalized. This servicing portfolio had a weighted average coupon rate of 4.54% and a weighted average service fee of approximately 25.6 basis points. Capitalized mortgage loan servicing rights at March 31, 2026 totaled $32.2 million, representing approximately 124.1 basis points on the related amount of mortgage loans serviced for others.
Current wording
At June 30, 2026, we were servicing approximately $2.59 billion in mortgage loans for others on which servicing rights have been capitalized. This servicing portfolio had a weighted average coupon rate of 4.58% and a weighted average service fee of approximately 25.6 basis points. Capitalized mortgage loan servicing rights at June 30, 2026 totaled $33.9 million, representing approximately 131.1 basis points on the related amount of mortgage loans serviced for others.
Previous wording
Other income in the table above decreased by $0.3 million in the first quarter of 2026, as compared to the same prior year period primarily due to lower commercial loan swap fees.
Current wording
Other income in the table above increased (decreased) by $0.1 million and $(0.2) million in the second quarter and first six months of 2026, respectively, compared to the same prior year periods. The increase in the second quarter of 2026 was primarily due to higher commercial loan swap fees. The decrease from the prior year to date period was primarily due to lower commercial swap fees and declines in check and ATM income.
Previous wording
Non-interest expense increased by $4.0 million to $38.3 million during the three-month period ended March 31, 2026, compared to the same period in 2025.
Current wording
Non-interest expense increased by $4.0 million to $37.8 million and increased by $8.1 million to $76.1 million during the three- and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025.
Previous wording
Compensation and employee benefits expenses, in total, increased $1.4 million on a quarterly comparative basis.
Current wording
Compensation and employee benefits expenses, in total, increased $1.4 million on a quarterly comparative basis and increased $2.9 million for the first six months of 2026 compared to the same periods in 2025.
Previous wording
Compensation expense increased by $0.9 million in the first quarter of 2026 compared to the same period in 2025. The comparative increase in 2026 was primarily due to salary increases that were predominantly effective on January 1, 2026, higher severance costs and additional commercial lending and support staff that were partially offset by a decrease in mortgage lending and other retail personnel.
Current wording
Compensation expense increased by $0.6 million and $1.6 million in the second quarter and first six months of 2026, respectively, compared to the same periods in 2025. These comparative increases in 2026 were primarily due to salary increases that were predominantly effective on January 1, 2026, higher severance costs (year to date period only) and additional commercial lending and support staff that were partially offset by a decrease in mortgage lending and other retail personnel.
Previous wording
Performance-based compensation increased by $0.2 million in the first quarter of 2026 compared to the same period in 2025. The increase is due in part to an increase in long term incentive expense.
Current wording
Performance-based compensation increased by $0.4 million and $0.6 million in the second quarter and first six months of 2026, respectively, compared to the same periods in 2025. The increase is due in part to both higher expected incentive compensation payout for salaried and hourly employees and long term share based incentives.
Previous wording
Payroll taxes and employee benefits increased by $0.3 million in the first quarter of 2026 compared to the same period in 2025, due primarily to increases in employee medical insurance costs and retirement costs.
Current wording
Payroll taxes and employee benefits increased by $0.4 million and $0.7 million in the second quarter and first six months of 2026, respectively, compared to the same periods in 2025, due primarily to increases in employee medical insurance costs and retirement costs.
Previous wording
Data processing expense increased by $0.2 million in the first quarter of 2026 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.
Current wording
Data processing expense increased by $0.3 million and $0.5 million in the second quarter and first six months of 2026, 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.
Previous wording
Other expense decreased by $0.3 million in the first three months of 2026, due primarily to the prior year period including costs related to the capitalized mortgage loan servicing right sale (see “Non-interest income” above) and the prior year period also including costs related to unfunded lending commitments that were partially offset by a write-down of a small business investment company.
Current wording
Other expense increased by $0.4 million and $0.1 million in the second quarter and first six months of 2026. The increase during the second quarter was due primarily to the prior year period including recoveries related to unfunded lending commitments and higher Michigan Corporate Income Tax (due to an increase in taxable base) while these increases were partially offset by costs related to the capitalized mortgage loan servicing right sale (six month period - see “Non-interest income” above).
Previous wording
Income tax expense. We recorded an income tax expense of $3.4 million in the first quarter of 2026. This compares to an income tax expense of $3.5 million in the first quarter of 2025. The change in expense for the first three months of 2026 compared to the same period in 2025 is primarily due to changes in pretax income that were partially offset by an increase in certain energy tax credits.
Current wording
Income tax expense. We recorded an income tax expense of $3.9 million and $7.3 million in the second quarter and the first six months of 2026, respectively. This compares to an income tax expense of $3.8 million and $7.3 million in the second quarter and the first six months of 2025, respectively. The changes in expense for the first six months of 2026 compared to the same period in 2025 is primarily due to changes in pretax income as well as an increase in certain tax credits recognized during 2026.
Previous wording
Our actual income tax expense is different than the amount computed by applying our statutory income tax rate to our income before income tax primarily due to tax-exempt interest income, tax-exempt income from the increase in the cash surrender value on life insurance, differences in the value of stock awards that vest and stock options that are exercised as compared to the initial fair values that were expensed and certain low income housing, solar and energy tax credits.
Current wording
Our actual income tax expense is different than the amount computed by applying our statutory income tax rate to our income before income tax primarily due to tax-exempt interest income, tax-exempt income from the increase in the cash surrender value on life insurance, and differences in the value of stock awards that vest and stock options that are exercised as compared to the initial fair values that were expensed.
Previous wording
Summary. Our total assets increased by $51.8 million during the first three months of 2026. Loans, excluding loans held for sale, were $4.31 billion at March 31, 2026, compared to $4.28 billion at December 31, 2025. Commercial loans increased while mortgage loans and installment loans decreased during the first three months of 2026. (See “Portfolio Loans and asset quality.”) Securities available for sale and securities held to maturity together totaled $783.3 million at March 31, 2026, a decline of $22.1 million since December 31, 2025.
Current wording
Summary. Our total assets increased by $158.1 million during the first six months of 2026. Loans, excluding loans held for sale, were $4.41 billion at June 30, 2026, compared to $4.28 billion at December 31, 2025. Commercial loans and mortgage loans increased while installment loans decreased during the first six months of 2026. (See “Portfolio Loans and asset quality.”) Securities available for sale and securities held to maturity together totaled $781.5 million at June 30, 2026, a decline of $23.9 million since December 31, 2025.
Previous wording
Deposits totaled $4.88 billion at March 31, 2026, an increase of $119.0 million from December 31, 2025. The increase in deposits from December 31, 2025, is due to increases in savings and interest-bearing checking, reciprocal, and brokered time deposits that were partially offset by decreases in non-interest bearing and time deposits.
Current wording
Deposits totaled $4.86 billion at June 30, 2026, an increase of $100.5 million from December 31, 2025. The increase in deposits from December 31, 2025, is due to increases in non-interest bearing, savings and interest-bearing checking and reciprocal deposits that were partially offset by a decrease in brokered 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 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.
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
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
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 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 all of the remaining amortized cost basis for these securities.
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 comprehen sive income (loss), net of applicable taxes. No ACL for securities AFS was needed at March 31, 2026 and December 31, 2025. The increase in unrealized losses during the first three months of 2026 is primarily attributed to an increase in interest rates since December 31, 2025 as well as a general widening of credit spreads during the this period. See note #3 to the interim Condensed Consolidated 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 comprehen sive income (loss), net of applicable taxes. No ACL for securities AFS was needed at June 30, 2026 and December 31, 2025. The decrease in unrealized losses during the first six months of 2026 primarily reflects the outperformance of obligations of states and political subdivisions relative to U.S. Treasury securities, resulting in favorable changes in fair value, partially offset by modest declines in the fair value of certain agency residential mortgage-backed and corporate securities. See note #3 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.
Previous 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. See note #3 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.
Current wording
ACL are reported in our interim Condensed Consolidated Statements of Operations in provision for credit losses. 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) 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. See note #3 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.
Previous wording
Non-performing loans have increased as a percent of Portfolio Loans since year-end 2025, primarily due to the addition of one commercial real estate loan during the first quarter of 2026. See note #4.
Current wording
Non-performing loans have increased as a percent of Portfolio Loans since year-end 2025, primarily due to the addition of three commercial relationships during the first six months of 2026. See note #4.
Previous wording
Other real estate and repossessed assets totaled $0.77 million and $0.90 million at March 31, 2026, and December 31, 2025, respectively.
Current wording
Other real estate and repossessed assets totaled $0.71 million and $0.90 million at June 30, 2026, and December 31, 2025, respectively.
Previous wording
The ACL increased $0.3 million to $63.7 million at March 31, 2026 from $63.4 million at December 31, 2025, and was equal to 1.48% of total Portfolio Loans at both March 31, 2026 and December 31, 2025.
Current wording
The ACL increased $2.2 million to $65.7 million at June 30, 2026 from $63.4 million at December 31, 2025, and was equal to 1.49% and 1.48% of total Portfolio Loans at June 30, 2026 and December 31, 2025, respectively.
Showing the first 40 of 55 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from 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%.
Current report — wording carried from 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.
Current report — wording carried from 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 expected to be collected. Securities HTM are charged off against the ACL when deemed uncollectible. Adjustments to the
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
respectively. The contraction of the Loan Sales Margin during the first quarter of 2026 was primarily due to competitive pressure which had a negative impact on our pricing margins.
Previous report — wording carried 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.
Previous report — wording carried elsewhere
At March 31, 2026, we had $791.0 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, $4.05 billion of our deposits at March 31, 2026,