Earnings call transcript: Independent Bank Q2 2025 reports mixed results

Independent Bank Corporation (IBCP) reported its earnings for the second quarter of 2025, revealing a mixed financial performance. The company surpassed earnings per share (EPS) expectations but fell short on revenue forecasts. The stock experienced a decline of 3.69% following the announcement, reflecting investor concerns over the revenue miss. According to InvestingPro analysis, IBCP currently appears undervalued, with a Financial Health Score rated as "GOOD" based on comprehensive metrics including profitability, growth, and cash flow indicators.

Key Takeaways

• Independent Bank’s EPS of $0.81 beat the forecast of $0.79.
• Revenue came in at $54.44 million, below the forecast of $57.11 million.
• Stock price fell by 3.69% in pre-market trading.
• The company is focusing on AI innovations and expanding its commercial banking presence.
• Future guidance suggests steady growth in commercial loans and margin expansion.

Company Performance

Independent Bank’s net income for Q2 2025 was $16.9 million, or $0.81 per diluted share, down from $18.5 million, or $0.88 per share, in the same quarter last year. Despite the decline in net income, the bank demonstrated resilience through strategic initiatives, including the integration of AI technologies and geographic expansion in commercial banking.

Financial Highlights

• Revenue: $54.44 million, down from the forecasted $57.11 million.
• Earnings per share: $0.81, surpassing the forecast of $0.79.
• Total deposits: $4.7 billion.
• Return on average assets: 1.27%.
• Return on average equity: 14.66%.

Earnings vs. Forecast

Independent Bank exceeded EPS expectations with an actual EPS of $0.81, compared to the forecasted $0.79, representing a surprise of 2.53%. However, revenue fell short of expectations, coming in at $54.44 million against a forecast of $57.11 million, marking a revenue surprise of -4.68%.

Market Reaction

Following the earnings release, Independent Bank’s stock price fell by 3.69% in pre-market trading, closing at $34.19. This decline reflects investor apprehension about the revenue shortfall, despite the positive EPS surprise. The stock remains within its 52-week range, with a low of $26.75 and a high of $40.32. Year-to-date, IBCP has shown resilience with a modest decline of 0.29%, while analyst price targets range from $33 to $36, suggesting potential upside from current levels.

Outlook & Guidance

Looking ahead, Independent Bank anticipates low double-digit growth in its commercial loan portfolio and expects margin expansion. The bank is also exploring potential mergers and acquisitions to complement its organic growth strategy. Future EPS forecasts for upcoming quarters suggest steady earnings growth.

Executive Commentary

CEO Brad Kessel emphasized the importance of organic growth, stating, "Organic growth will continue to be the primary driver of our overall growth." He also highlighted the company’s commitment to AI, noting, "We’re using probably several dozen AI use cases around the company."

Risks and Challenges

• Potential rate cuts could impact margin outlook.
• Competitive mortgage loan sale margins may pose challenges.
• Economic uncertainties in key markets could affect future performance.
• Rising deposit costs could pressure profitability.
• Dependence on AI and technology investments carries execution risks.

Q&A

During the earnings call, analysts inquired about the margin outlook and the plateauing of deposit costs. The management expressed confidence in margin expansion despite potential rate cuts and indicated that deposit costs are likely stabilizing. Additionally, questions about the competitive landscape in mortgage loan sales were raised, highlighting the challenges in maintaining profitability in this segment.

Full transcript - Independent Bank Corporation (IBCP) Q2 2025:

Ezra, Call Coordinator, Independent Bank Corporation: Hello, everyone, and welcome to the Independent Bank Corporation Reports twenty twenty five Second Quarter Results. My

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Ezra, Call Coordinator, Independent Bank Corporation: is Ezra, and I will be your coordinator for today. I will now hand over to our host, Brad Kessel, President and CEO, to begin. Please go ahead.

Brad Kessel, President and Chief Executive Officer, Independent Bank Corporation: Good morning, and welcome to today’s call. Thank you for joining us for Independent Bank Corporation’s conference call and webcast to discuss the company’s second quarter twenty twenty five results. I am Brad Kessel, President and Chief Executive Officer, and joining me is Gavin Moore, EVP and Chief Financial Officer and Joel Ronn, EVP, Commercial Banking. Before we begin today’s call, I would like to direct you to the important information on Page two of our presentation, specifically the cautionary note regarding forward looking statements. If anyone does not already have a copy of press release issued by us today, can access it at the company’s website, independentbank.com.

The agenda for today’s call will include prepared remarks followed by a question and answer session and then closing remarks. I am pleased to report our solid second quarter results as we advance our mission of inspiring financial independence today with tomorrow in mind. Our vision is a future where people approach their finances with confidence, clarity and the determination to succeed. Our core values of courage, drive, integrity, people focused and teamwork are the blueprint our employees live by. We strive to be Michigan’s most people focused bank.

Today, Independent Bank Corporation reported second quarter twenty twenty five net income of $16,900,000 or $0.81 per diluted share versus net income of $18,500,000 or $0.88 per diluted share in the prior year period. Significant items impacting comparable second quarter twenty twenty five and twenty twenty four results include the following: changes in the fair value due to price of capitalized mortgage loan servicing rights was a loss of $200,000 or $01 per diluted share after tax for the three months ending 06/30/2025 as compared to $900,000 or $03 per diluted share after tax gain for the three month period 06/30/2024. Also a gain on equity securities at fair value of $2,700,000 or $0.10 per diluted share after tax in the June, attributable to the exchange of our Visa Class B1 common stock. No gain or loss in equity securities at fair value was recorded in the second quarter of twenty twenty five. I’m very proud of our team and pleased to see us continue our positive trends with our second quarter twenty twenty five results.

Overall loans increased by 9% annualized, while core deposits were down 1.4% annualized due to seasonality. We generated net interest income growth on both a linked quarter basis and a year over year quarterly basis, producing nine basis points of margin expansion from the prior quarter. Our expenses are well managed and we continue to see improved operational scale from strategic investments made in recent years. The fundamentals these fundamentals drove positive growth in tangible common equity per share of common stock 10.8% compared to the prior year quarter, along with very healthy performance returns, a return on average assets of 1.27% and a return on average equity of 14.66%. Despite heightened uncertainty in the markets during the quarter, our credit metrics remained strong with low levels of watch credits, 16 basis points of non performing assets to total assets and two basis points in net charge offs to average loans of the quarter annualized.

The allowance for credit losses was 1.47% of total loans. Our team has been effective in many areas during the first half of twenty twenty five, including business development from the existing customer base and onboarding new relationships, which have enhanced the geographic and product line diversification of our business. We continue to succeed in recruiting talented bankers to join the Independent Bank team. During the second quarter, we rolled out several new technologies to make banking easier for both our customers and associates serving our customers. For all these reasons, I am optimistic about our prospects for growth in for the balance of 2025 and into 2026.

Moving to Page five of our presentation. Total deposits as of 06/30/2025 were 4,700,000,000.0 Overall core deposits decreased $15,700,000 during the second quarter of twenty twenty five. On a linked quarter basis, retail deposits were down $13,800,000 business deposits were up by $60,500,000 and municipal deposits decreased by $64,000,000 Our sales team continues to bring in new relationships well below our wholesale cost of funds. On Page six, we have included in our presentation a historical view of our cost of funds as compared to the Fed funds spot rate and Fed effective rate. For the quarter, our total cost of funds declined by four basis points to 1.76%.

At this time, I’d like to turn the presentation over to Joel Ron to share a few comments on the success we’re having in growing our loan portfolios and provide an update on our credit metrics. Joel?

Joel Ronn, EVP, Commercial Banking, Independent Bank Corporation: Yes. Thanks, Brad, and good morning, everyone. On Page seven, we share an update on loan activity for the quarter. We continued to experience solid loan growth in the second quarter with total loans growing by $91,700,000 or 9% annualized. Commercial loan generation was strong, resulting in $75,800,000 of quarterly growth, 15.3% on an annualized basis.

Our residential mortgage portfolio grew by $15,600,000 and our installment loan portfolio was up slightly for the quarter. Our continued strategic investment in commercial banking talent continues to supplement our loan growth. We added three experienced commercial bankers in the second quarter, bringing our team to 50 bankers across our statewide footprint. Our staff additions include launching a new LPO in Kalamazoo. We’re very excited to have a commercial presence in that market.

Looking ahead, we believe we will continue low double digit growth of our commercial loan portfolio in the second half of the year based upon a strong pipeline. We continue to see market share opportunities from regional banks and are seeing some uptick in organic growth from our existing customers. As noted in previous quarters, our new loan production in all categories continues to come on at yields well above the respective portfolio yield. Looking at the commercial loan production activity on a year to date basis, the mix of C and I lending versus investment real estate is 5941%, respectively. For our commercial portfolio, our mix is 70% C and I and 30% IRE.

Page eight provides detail on our commercial loan portfolio concentrations. There’s not been any significant shift in our portfolio, and the portfolio continues to be very well diversified. Our largest segment of the C and I category is manufacturing at $184,000,000 or 8.9% of the total portfolio. It’s worth noting that within the manufacturing segment is $157,000,000 of automotive industry exposure that we’re monitoring closely for any tariff related impact. To date, the impact has been nominal.

Key credit quality metrics and trends are outlined on Page nine. Overall, credit quality continues to be excellent, as Brad said. Total nonperforming loans were $8,200,000 or 20 basis points of total loans at quarter end, up slightly from 17 basis points at threethirty one. Past due loans totaled $6,600,000 or 16 basis points, also up slightly from 10 basis points at threethirty one. It’s not reflected on the slide, and Brad mentioned it just a moment ago, but it’s worth noting that our year to date charge offs are $442,000 or two basis points of average loans on an annualized basis.

At this time, I’d like to turn the presentation over to Gavin for his comments, including the outlook for the remainder of the year.

Gavin Moore, EVP and Chief Financial Officer, Independent Bank Corporation: Thanks, Joel, and good morning, everyone. I’m starting on Page 10 of our presentation. Page 10 highlights our strong regulatory capital position. Turning to Page 11. Net interest income increased $3,300,000 from the year ago period.

Our tax equivalent net interest margin was 3.58% during the 2025 compared to 3.4% in the 2024 and up nine basis points from the first quarter of twenty twenty five. Average interest earning assets were $5,040,000,000 in the 2025 compared to $4,890,000,000 in the year ago quarter and $5,080,000,000 in the first quarter of twenty twenty five. Page 12 contains a more detailed analysis of the linked quarter increase in net interest income and the net interest margin. On a linked quarter basis, our second quarter twenty twenty five net interest margin was positively impacted by three factors. A decrease in funding costs contributed three basis points.

Change in earning asset yield and mix contributed six basis points and a loan prepayment fee that contributed one basis point. These were partially offset by a change in funding mix that negatively impacted the margin by one basis point. On page 13, we provide details on the institution’s interest rate risk position. The comparative simulation analysis for second quarter twenty twenty five and first quarter twenty twenty five calculates the change in net interest income over the next twelve months under five rate scenarios. All scenarios assume a static balance sheet.

The base rate scenario applies the spot yield curve from the valuation date. The shock scenario is considered immediate permanent and parallel rate changes. The base case modeled NII is slightly higher during the quarter given earning asset growth and slight margin expansion. Asset yields were augmented by a shift in asset mix with good commercial loan growth, partially funded by runoff of lower yielding investments. Also, continue to reprice higher.

This benefit was partially offset by an adverse shift in funding mix with an increase in wholesale funding to finance earning asset growth and a modest core deposit runoff. The NII sensitivity position shows slightly more exposure to a declining rate environment. Asset repricing increased due to strong growth in variable rate commercial loans and HELOCs. Some of the increase in asset repricing was offset by purchase floors and faster liability repricing given an increase in short duration wholesale funding, currently 37.1% of assets repriced in one month and 49.2% repriced in the next twelve months. Moving on to page 14, non interest income totaled $11,300,000 in the 2025 compared to $15,200,000 in the year ago quarter and $10,400,000 in the first quarter of twenty twenty five.

Second quarter twenty twenty five net gains on mortgage loans totaled $1,600,000 compared to $1,300,000 in the second quarter of twenty twenty four. The increase is due to higher profit margins and higher volume of loan sales. No gain or loss on equity securities at fair value is recorded for the 2025 compared to $2,700,000 gain in the prior year’s quarter due to the exchange of Visa Class B1 common stock. Pausibly impacting non interest income was $500,000 gain on mortgage loan servicing net. This is comprised of $200,000 or $01 per diluted share after tax loss due to change in price, dollars 900,000.0 decrease due to pay downs and a $100,000 loss on sale originated servicing rights, that was offset by $1,600,000 of servicing revenue in the second quarter of twenty twenty five.

The decline in servicing revenue compared to the prior year quarter is attributed to the sale of approximately $931,000,000 of mortgage servicing rights on 01/31/2025. As detailed on page 15, our non interest expense totaled $33,800,000 in the 2025 as compared to $33,300,000 in the year ago quarter and $34,300,000 in the first quarter of twenty twenty five. Compensation expense decreased $100,000 primarily due to lower incentive based compensation expense, lower health benefits related costs and higher deferred loan origination costs due to higher commercial and mortgage loan production. Data processing costs increased by $600,000 from the prior year period, primarily due to core data processor annual asset growth and CPI related cost increases and increases in other software solutions. Page 16 is our update for our 2025 outlook to see how our actual performance during the second quarter compared to the original outlook that we provided in January 2025.

Our outlook estimated loan growth in the mid single digits loans increased $91,700,000 in the 2025 or 9% annualized, which is above our forecasted range. Commercial mortgage and installment loans increased in the second quarter of twenty twenty five. Second quarter twenty twenty five net interest income increased by 7.9% over 2024, which is slightly below our forecast of a high single digit growth. The net interest margin was 3.58% for the current quarter, 3.4% for the prior year quarter and up nine basis points from a linked quarter perspective. The second quarter twenty twenty five provision for credit losses was an expense of $1,500,000 which was within our forecasted range.

Moving on to page 17, non interest income totaled $11,300,000 in the second quarter of twenty twenty five, which was within our forecasted range of 11,000,000 to $12,000,000 in the second quarter. Second quarter twenty twenty five mortgage loan origination sales and gains totaled $147,800,000 $95,400,000 and $1,600,000 respectively. Mortgage loan servicing net generated a gain of $05,000,000 in the second quarter of twenty twenty five, which

Brad Kessel, President and Chief Executive Officer, Independent Bank Corporation: is below our forecasted target. Non interest expense was $33,800,000 in the second quarter, below our forecasted range of $34,500,000 to $35,500,000 Our effective income tax rate was 18.4% in the second quarter of twenty twenty five. Lastly, there were 251,183 shares of common stock repurchased for an aggregate purchase price of $7,300,000 in the second quarter twenty twenty five. That concludes my prepared remarks. And I would like to now turn the call back over to Brad.

Thanks, Gavin. We’ve built a strong community bank franchise, which positions us well to effectively manage through a variety of economic environments and continue delivering strong and consistent results for our shareholders. As we move through the second half of twenty twenty five, our focus will be continuing to invest in our team, leveraging our technology and supporting our communities. At this point, we’d like to open up the call for questions. Ezra?

Ezra, Call Coordinator, Independent Bank Corporation: Thank you very much. Our first question comes from Peter Winter A. Davidson. Peter, your line is now open.

Please go ahead.

: Thanks. Good morning. You guys had really nice strong margin expansion this quarter. And I was just wondering, could you talk about maybe the outlook for the margin in the second half of the year, especially if we get maybe two rate cuts based on the forward curve?

Gavin Moore, EVP and Chief Financial Officer, Independent Bank Corporation: Yes. Peter, I would this is Gavin. Thanks for joining today. So the margin forecast that we provided is we’re still very confident in that we provided in January. The two basis point cuts is factored into that forecast.

I would share that given the current positioning for the balance sheet, the cut of a quarter to 50 basis points does not have a significant impact in the margin, one or one or two basis points

: Okay. That’s helpful. You guys also have done a nice job matching deposit costs lower. Do you still see room to lower deposit costs absent if there are no rate cuts? And if so, kind of what are some of the drivers?

Gavin Moore, EVP and Chief Financial Officer, Independent Bank Corporation: I think that right now where we’re at in the deposit costs, we’re probably seeing a plateau, Peter. The longer we stay or the longer they hold flat and as asset growth continues, you can kind of feel the pressure build. If I look at where we’re currently seeing our CDs reprice and where we’re issuing new, those are at the same level. So I don’t see, if we stay here, a lot of opportunity to reprice down from here.

: Got it. And then, Brad, if I can ask just a question. Treasury Secretary, Scott Besson, he seems very focused on bank regulation, trying to kind of level the playing field for the commercial banks. So the question is, have you seen anything that benefits you from a competitive standpoint against credit unions?

Brad Kessel, President and Chief Executive Officer, Independent Bank Corporation: That’s a Peter, that’s a great question. No. Not not with specifically credit unions. I I do think that since the change in the administration, there were quite a few rules that were under review, including, like, CRA, Dodd Frank section ten seventy one, small business data collection, and so on. And those have sort of been paused or set aside.

So that’s significant for banks, for community banks because it would have been, I think, costly to move forward as those regulations were being proposed. And then saying on top of that, I think we are still looking for further relief and excited to see Fed Governor Mickey Bowman, who’s, I think, a friend of community banks in her role in charge of the compliance side. So I think there’s still more to come. But again, back to your original question that fair and equitable playing field with the non banks, there’s been no change.

: Okay. Thanks, Brad. That’s helpful.

Ezra, Call Coordinator, Independent Bank Corporation: Our next question comes from Brendan Mosul with Hovde Group. Brendan, your line is now open. Please go ahead.

Brendan Mosul, Analyst, Hovde Group: Hey, good morning, Hope you’re doing well. Maybe just starting off here, I’m kind of curious at a top level walking through your local economies. Can you just kind of take us through your markets region by region and where you’re seeing pockets of strength and where, when you look at the footprint now, you see the biggest long term opportunity? Thanks.

Joel Ronn, EVP, Commercial Banking, Independent Bank Corporation: Yes. Brendan, this is Joel. So I would just focus on the two largest MSAs in our footprint, and that’s West Michigan and then the Metro Detroit market. And and they’re both very similar in many respects. So the manufacturing base is is pretty much the same.

And there’s there’s certainly diversity to it, but it’s still heavily automotive dependent. And that’s why earlier in my comments, I specifically commented on automotive. We have a relatively small exposure to the automotive industry from a supply base, and they’re holding up very well. We were really concerned when things first were announced back in early April, what does this mean? And maybe you could argue that all the full impact hasn’t been felt yet.

So we and that’s a point that has credibility. So we just continue to stay really close. But so far, I think our economy has held up very well. I like to tell people, if I don’t read the news headlines, I’d tell you, just based on customer feedback, the economy is fine. Homebuilding is still pretty strong, especially in West Michigan.

And like I said, manufacturing is holding up okay. And then in our Northern Michigan offices, there’s a lot of it’s a very strong tourist economy, and the consumers are still spending money. So that’s just some kind of high level thoughts to your question.

Brendan Mosul, Analyst, Hovde Group: Thank you, Joel. That’s super helpful color. Maybe moving on just to the competitive landscape. I’m just kind of curious how it’s evolved over the past couple of months. I’m certainly hearing that some larger regional, they’re stepping back into certain asset classes like commercial real estate.

So just kind of wondering how that’s been impacting you and how you’re seeing that on the ground.

Joel Ronn, EVP, Commercial Banking, Independent Bank Corporation: Yes. I guess I’ll take that one as well, and Brad can chime in. But yes, it really hasn’t changed. A lot of our market share lift still comes from the larger banks. We as a community bank, we sell very well against the larger bank.

And so that hasn’t changed. Interestingly, we’re seeing some opportunity. I agree with your comment that the large banks have they’re very, very careful and maybe just not interested at all in commercial real estate right now. And that’s not just the obvious office segment. That’s just kind of any commercial real estate.

So we have continued to put good investment real estate in our portfolio. We keep it in balance. As I mentioned earlier, we like our mix of 70% C and I and 30% investment real estate overall in our portfolio, but we continue to write deals. I was going to say the one interesting thing, Brendan, is we’ve actually seen deal opportunity coming off of CMBS maturities and especially like in the medical office space. We pick our spots.

But medical office, we’ve had good success with rewriting deals that are coming off of CMBS because that market is not as robust and not as aggressive as it once was. So yes, a variety of places. But overall, the mix or the where our opportunities are coming from really hasn’t shifted much.

Brad Kessel, President and Chief Executive Officer, Independent Bank Corporation: Yeah. Joel, I I think that was excellent. I would just add, I mean, we were out on a on a call with a prospect last week whereby sort of that dollar size between 10,000,000 and $20,000,000 which I’d say is sort of a sweet spot for us, was considered too small by the entity’s incumbent bank. And so that is a terrific opportunity for us. So we’re in a good spot.

Great question, Brendan.

Brendan Mosul, Analyst, Hovde Group: No, that’s really great color. So thank you. I’m going sneak one more in here. Maybe just turning to capital M and A activity. It certainly feels like deals have picked up not only across the country, but in the Midwest specifically.

So just kind of curious how you’re viewing the M and A landscape at the moment, whether you’re seeing signs of pickup in activity on your end and just updated thoughts on your own appetite for any inorganic opportunities right now? Well,

Brad Kessel, President and Chief Executive Officer, Independent Bank Corporation: think that we’ve seen several very nice deals here in Michigan this year. And so there’s definitely, activity going on, and there’s discussions being held. And here in Michigan, we have plus or minus about 80 chartered banks still left. And so for independent, I would say that, and this is not new, organic growth will continue to be the primary driver of our overall growth. But we would be interested in acquired growth where it makes sense.

And so the where it makes sense gets down to you know, obviously, it starts with culture, and there’s size, and there’s geography, and and there’s also, you know, price. And and so I’m hopeful that as we move forward, we’ll be able to complement the organic growth with some intelligent acquired growth too.

Brendan Mosul, Analyst, Hovde Group: Fantastic Brad. All right. Thank you for taking my questions this morning.

Ezra, Call Coordinator, Independent Bank Corporation: Our next question comes from Adam Paul with Piper Sandler. Adam, your line is now open. Please go ahead.

Adam Kroll, Analyst, Piper Sandler: Hi, good morning. This is Adam Kroll on for Nathan Race, and thanks for taking my questions.

Gavin Moore, EVP and Chief Financial Officer, Independent Bank Corporation: Morning.

Adam Kroll, Analyst, Piper Sandler: Yeah. So, maybe just a question for Gavin going back to the margin. If the Fed were to remain on hold through the remainder of the year, do you think the margin can just grind higher with new loans still coming on at a higher rate than the portfolio yield? And maybe could you remind us how much cash flow is coming off the bond book and maybe in terms of what your fixed rate loan repricing looks like over the next couple of quarters?

Gavin Moore, EVP and Chief Financial Officer, Independent Bank Corporation: Yes. So to answer your first question, yes. I do believe that I’m confident that if rates stay where they’re at, we would continue to grind higher in the margin barring any type of disruption in the funding market. We have a in the next twelve months, we have about 110,000,000 of securities forecasted to reprice. And the, I’m just looking here on your I have your question here on the the fixed rate, loans repricing.

Give me one second. Hold up. In the next I don’t have it broken down by quarter, Adam, but I can tell you in the next twelve months, we have fixed rate loans repricing at 121,000,000 with an exit rate of $6.15 in total.

Adam Kroll, Analyst, Piper Sandler: Okay. That’s that’s super helpful. And then maybe switching to fees. You had really solid mortgage loan volume during the quarter. And obviously, the loan sale margin saw a drop with all the rate volatility during the quarter.

But I was just wondering if you have any visibility on how you see mortgage trending so far this quarter?

Gavin Moore, EVP and Chief Financial Officer, Independent Bank Corporation: Yeah. The gain on sale margin was, did come in lower than what we had anticipated. A couple of things going on there. One, just the competitiveness of the market continues to be very, very competitive. And and so we rates were not or the gains were not as high as what we thought they would be there.

There’s also some nuance going on in in certain sectors of the saleable market where we were the industry was paying a much higher premium into the secondary to the GSE specifically. That premium has pulled back pretty significantly. We didn’t see that coming out of our control. So that that’s had an impact as well. And then we also annually go through a review of the cost of origination.

So that was higher this year, and so that pulled down the margin as well. So there’s a number of moving pieces there. But I would share on the main driver is just the competitiveness of the mortgage space today.

Adam Kroll, Analyst, Piper Sandler: Got it. I really appreciate that and thanks for taking my questions.

Gavin Moore, EVP and Chief Financial Officer, Independent Bank Corporation: Thank you.

Ezra, Call Coordinator, Independent Bank Corporation: Our next question comes from Damon DelMonte with KBW. Damon, your line is now open. Please go ahead.

Matt Rank, Analyst, KBW: Hey, everybody. It’s Matt Rank filling in for Damon. Hope everybody’s doing okay. My first question is just a follow-up to the capital management. As you guys look for that inorganic opportunity, do you think you’ll still be active with buybacks?

Or should we expect you guys to kind of put those on pause in the meantime?

Gavin Moore, EVP and Chief Financial Officer, Independent Bank Corporation: Yes. This is Gavin, Matt. We evaluate it daily. As we’ve explained in the past, we do model the buybacks like we would M and A opportunity. And we believe it needs to be at a price range that has a reasonable earn back for our shareholders.

The current range is outside or the current price is outside of that kind of that range of earn back that we’re comfortable with. That being said, as we continue to go forward and build capital, we reserve the right to change those parameters. But I would say here in more of the short term, if the stock continues to trade in the current ranges, the buybacks will be limited.

Matt Rank, Analyst, KBW: Okay. Great. And then, last one for me. You guys mentioned you implemented some new technologies to help customers and associates. Just kinda curious what those technologies are and if you have any other planned investments coming up.

Brad Kessel, President and Chief Executive Officer, Independent Bank Corporation: Yeah. That that’s a great question. So in the second quarter, we put in sort of a AI chat function on our website and within the banking platform that’s getting a lot of use from our customer base. That’s essentially customers being able to maybe more quickly get answers to their questions. We’re using probably several dozen AI use cases around the company that is helping our staff maybe more quickly respond to customers when we’ve got them, say, on the line within our call center.

We are leveraging some AI use cases to identify next best product opportunities with our customers. We’ve also leveraged technology just in terms of maybe in the loan processing underwriting area that to significantly reduce time. So those are a handful, but really excited about sort of where we’ve been, where we’re at and even where

Gavin Moore, EVP and Chief Financial Officer, Independent Bank Corporation: we

Brad Kessel, President and Chief Executive Officer, Independent Bank Corporation: can go continuing to leverage our technology.

Matt Rank, Analyst, KBW: Okay. Great. That’s all for me. Thank you.

Ezra, Call Coordinator, Independent Bank Corporation: Thank you very much. We currently have no more questions. So I will hand back over to Brad for any closing remarks.

Brad Kessel, President and Chief Executive Officer, Independent Bank Corporation: Thanks, Ezra. In closing, I’d like to thank our Board of Directors and our senior management for their support and leadership. I also want to thank all our associates that continue to be so proud of the job being done by each member of our team. Each team member in his or her own way continues to do their part toward our common goal of guiding our customers to be independent. Finally, I would like to thank each of you for your interest in Independent Bank Corporation and for joining us on today’s call.

Have a great day.

Ezra, Call Coordinator, Independent Bank Corporation: Thank you very much, Brad, and thank you to all our speakers on today’s call. We appreciate everyone for joining. You may now disconnect your lines.

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