GlobeNewswire Inc | Oct 26, 2021 07:59AM EDT

October 26, 2021

GRAND RAPIDS, Mich., Oct. 26, 2021 (GLOBE NEWSWIRE) -- Independent Bank Corporation (NASDAQ: IBCP) reported third quarter 2021 net income of $16.0 million, or $0.73 per diluted share, versus net income of $19.6 million, or $0.89 per diluted share, in the prior-year period. For the nine months ended September 30, 2021, the Company reported net income of $50.4 million, or $2.30 per diluted share, compared to net income of $39.2 million, or $1.76 per diluted share, in the prior-year period.

Highlights for the third quarter of 2021 include:

-- Annualized return on average assets and on average equity of 1.40% and 15.93%, respectively; -- An increase in net interest income of 5.7% over the third quarter of 2020; -- Net gains on mortgage loans of $8.4 million and total mortgage loan origination volume of $453.8 million; -- Net growth in portfolio loans of $69.4 million (or 9.8% annualized); -- Continued strong asset quality metrics as evidenced by $1.5 million in net loan recoveries during the quarter as well as a low level of non-performing loans and non-performing assets; and -- The payment of a 21 cent per share dividend on common stock on August 16, 2021.

Highlights for the first nine months of 2021 include:

-- Increases in net income and diluted earnings per share of 28.6% and 30.7%, respectively; -- Annualized return on average assets and on average equity of 1.53% and 17.32%, respectively; -- Net gains on mortgage loans of $30.3 million and total mortgage loan origination volume of $1.44 billion; -- Net growth in portfolio loans of $150.3 million (or 7.4% annualized); and -- Net growth in deposits of $374.7 million (or 13.8% annualized).

William B. (Brad) Kessel, the President and Chief Executive Officer of Independent Bank Corporation, commented: I continue to be very pleased with the high level of performance by our team generating strong core results for yet another quarter. We continue to execute on our strategies of investing in people and technology. During the third quarter we saw good growth in net interest income, stabilization of our net interest margin and across the board loan growth, net of PPP. Our commercial pipeline is at its highest level in many quarters. Fueling some of this growth was the opening of two new commercial loan production offices, one in Ottawa County and the second in Macomb County. Deposit gathering continues to be robust both via existing customers as well as through the addition of new customers. In addition, mortgage gains continue to be solid and our card strategies are generating good growth in interchange revenue. On the asset quality front, I could not be more pleased, with net recoveries for the quarter, commercial watch credits at 2.4% of the portfolio, and a very low level of past due loans. Following our second quarter whole bank conversion, we are seeing good utilization and growth rates in our ONE Wallet and Treasury ONE platforms. While there are many uncertainties and challenges ahead, we are excited about the momentum we have in our markets and look forward to continuing these trends through the end of 2021 and into 2022.

Significant items impacting comparable quarterly and year to date 2021 and 2020 results include the following:

-- Changes in the fair value due to price of capitalized mortgage loan servicing rights (the MSR Changes) of $0.6 million ($0.02 per diluted share, after taxes) and $2.8 million ($0.10 per diluted share, after taxes) for the three- and nine-months ended September 30, 2021, respectively, as compared to a negative $1.1 million ($0.04 per diluted share, after taxes) and a negative $9.9 million ($0.35 per diluted share, after taxes) for the three- and nine-months ended September 30, 2020, respectively.

Operating Results

The Companys net interest income totaled $33.8 million during the third quarter of 2021, an increase of $1.8 million, or 5.7% from the year-ago period, and up $2.4 million, or 7.7%, from the second quarter of 2021. The Companys tax equivalent net interest income as a percent of average interest-earning assets (the net interest margin) was 3.18% during the third quarter of 2021, compared to 3.31% in the year-ago period, and 3.02% in the second quarter of 2021. The year-over-year quarterly increase in net interest income was due to an increase in average interest-earning assets that was partially offset by a decline in the net interest margin. Average interest-earning assets were $4.30 billion in the third quarter of 2021, compared to $3.89 billion in the year ago quarter and $4.22 billion in the second quarter of 2021.

For the first nine months of 2021, net interest income totaled $95.5 million, an increase of $2.9 million, or 3.1% from the first nine months in 2020. The Companys net interest margin for the first nine months of 2021 was 3.09% compared to 3.42% in 2020. The increase in net interest income for the first nine months of 2021 compared to 2020 was also due to an increase in average interest- earning assets that was partially offset by a decline in the net interest margin.

Due principally to the economic impact of COVID-19, the Federal Reserve has taken a variety of actions to stimulate the economy, including significantly lowering short-term interest rates. These lower interest rates combined with a higher allocation to lower yielding securities available for sale has placed continued pressure on the Companys net interest margin.

In addition, commercial loan balances, interest income and yields have been impacted by Paycheck Protection Program (PPP) lending activity. PPP lending activity is summarized in the following tables:

PPP ? Round 1At or for the three 9/30/2021 6/30/2021 9/30/2020months ended # (000?s) # (000?s) # (000?s)Loans outstanding at 20 $ 1,262 298 $ 42,315 2,117 $ 261,182 period endAverage loans outstanding - 2,699 - 78,747 - 261,543 Cumulative forgiveness 2,085 260,015 1,882 231,715 197 37,223 applications submittedCumulative forgiveness 2,082 259,613 1,870 229,429 - - applications approvedNet fees accreted into - 381 - 981 - 1,321 interest incomeNet unaccreted fees at - - - 381 - 6,494 period endAverage loan yield - 11.51 % - 5.98 % - 3.04 %Note: PPP ? Round 1 loan activity began in the second quarter of 2020.

PPP ? Round 2At or for the three months 9/30/2021 6/30/2021 3/31/2021ended # (000?s) # (000?s) # (000?s)Loans outstanding at period 806 $ 88,888 1,409 $ 129,573 1,250 $ 128,240 endAverage loans outstanding - 110,276 - 133,239 - 72,011 Cumulative forgiveness 831 51,370 166 8,843 - - applications submittedCumulative forgiveness 810 50,535 164 8,828 - - applications approvedNet fees accreted into - 2,249 - 832 - 229 interest incomeNet unaccreted fees at - 3,178 - 5,429 - 5,454 period endAverage loan yield - 9.17 % - 3.50 % - 2.25 %Note: PPP ? Round 2 loan activity began in the first quarter of 2021.

Non-interest income totaled $19.7 million and $60.9 million, respectively, for the third quarter and first nine months of 2021, compared to $27.0 million and $58.4 million in the respective comparable year ago periods. These changes were primarily due to variances in mortgage banking related revenues (net gains on mortgage loans and mortgage loan servicing, net).

Net gains on mortgage loans in the third quarters of 2021 and 2020, were approximately $8.4 million and $20.2 million, respectively. For the first nine months of 2021, net gains on mortgage loans totaled $30.3 million compared to $46.7 million in 2020. The decrease in net gains on mortgage loans was primarily due to lower profit margins on mortgage loan sales, a decrease in the volume of mortgage loans sold and fair value adjustments on the mortgage loan pipeline.

Mortgage loan servicing, net, generated a gain of $1.3 million and a loss of $0.6 million in the third quarters of 2021 and 2020, respectively. For the first nine months of 2021 and 2020, mortgage loan servicing, net, generated income of $4.5 million and a loss of $9.0 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 mortgage loan interest rates and expected future prepayment levels. Mortgage loan servicing, net activity is summarized in the following table:

Three Months Ended Nine Months Ended 9/30/2021 9/30/2020 9/30/2021 9/30/2020Mortgage loan servicing, net: (Dollars in thousands)Revenue, net $ 2,023 $ 1,743 $ 5,809 $ 5,062 Fair value change due to 599 (1,089 ) 2,813 (9,941 )priceFair value change due to (1,351 ) (1,298 ) (4,146 ) (4,087 )pay-downsTotal $ 1,271 $ (644 ) $ 4,476 $ (8,966 )

Net gain on securities available for sale totaled $0.01 million and $1.421 million in third quarter and first nine months of 2021, respectively, compared to zero and $0.253 million in the prior year third quarter and first nine months, respectively. The increase in gain during the first nine months of 2021 was related to the divestiture of a group of mortgage backed securities in the first quarter of 2021.

Non-interest expenses totaled $34.5 million in the third quarter of 2021, compared to $33.6 million in the year-ago period. For the first nine months of 2021, non-interest expenses totaled $97.1 million versus $89.7 million in 2020. These year-over-year increases in non-interest expense are primarily due to increases in compensation and employee benefits (for the year to date period), data processing, interchange, conversion related expenses (for the year to date period) and other expenses (for the quarter to date period). The increase in compensation and employee benefits in 2021 is due to several factors, including, wage increases that were generally effective at the start of the year, an increase in lending personnel, increased overtime primarily associated with a data processing conversion, a higher accrual for incentive compensation (due to higher base for such incentives), higher payroll taxes due to the increase in compensation and higher health care insurance costs (these costs during the first nine months of 2020 were unusually low due to the various COVID related lock-downs). In addition, the third quarter and first nine months of 2021 included $0.3 million and $1.6 million, respectively, of expenses related to the Companys core data processing conversion (this conversion was completed in May 2021) compared to $0.6 million and $1.0 million, respectively, in the comparable periods in 2020. The first nine months of 2020 also included $0.4 million of expenses (primarily write-downs of fixed assets and leases) related to the closures of nine bank branch offices that were completed in the third quarter of 2020.

The Company recorded an income tax expense of $3.7 million and $11.5 million in the third quarter and first nine months of 2021, respectively. This compares to an income tax expense of $4.8 million and $9.2 million in the third quarter and first nine months of 2020, respectively. The changes in income tax expense principally reflect changes in pre-tax earnings in 2021 relative to 2020.

Asset Quality

A breakdown of loan forbearance totals by loan type is as follows:

9/30/2021 6/30/2021 % change vs.Loan Type prior quarter # $ (000?s) % of # $ (000's) % of # $ portfolio portfolioCommercial - $ - 0.0 % - $ - 0.0 % none noneMortgage 39 5,901 0.5 % 82 12,416 1.2 % (52.4 ) (52.5 ) % %Installment 7 109 0.0 % 18 327 0.1 % (61.1 ) (66.7 ) % %Total 46 $ 6,010 0.2 % 100 $ 12,743 0.5 % (54.0 ) (52.8 ) % % Loans ) )serviced for 64 $ 7,986 0.3 % 150 $ 20,231 0.6 % (57.3 % (60.5 %othersNote: The % of portfolio is based on the dollar amount of forbearances to thetotal for the loan portfolio segment.

A breakdown of non-performing loans(1) by loan type is as follows:

Loan Type 9/30/2021 12/31/2020 9/30/2020 (Dollars in thousands)Commercial $ 242 $ 1,440 $ 2,487 Mortgage 5,160 6,353 7,580 Installment 515 519 680 Subtotal 5,917 8,312 10,747 Less ? government guaranteed loans 327 439 510 Total non-performing loans $ 5,590 $ 7,873 $ 10,237 Ratio of non-performing loans to 0.19 % 0.29 % 0.36 %total portfolio loansRatio of non-performing assets to 0.13 % 0.21 % 0.28 %total assetsRatio of the allowance for credit 837.19 % 450.01 % 349.43 %losses to non-performing loans

(1) Excludes loans that are classified as ?troubled debt restructured? that arestill performing.

Non-performing loans decreased $2.3 million from December 31, 2020, as all loan categories have declined, reflecting improving economic conditions and the Companys collection efforts.

The provision for credit losses was a credit of $0.7 million and an expense of $1.0 million in the third quarters of 2021 and 2020, respectively. The provision for credit losses was a credit of $2.6 million and an expense of $12.9 million in the first nine months of 2021 and 2020, respectively. The quarterly and year-to-date decreases in the provision for credit losses in 2021 compared to 2020, were primarily the result of a decline in the adjustment to allocations based on subjective factors and an increase in recoveries of loans previously charged off. In particular, the higher year-to-date provision for credit losses in 2020 included a $10.7 million (or 122.1%) increase in the qualitative/subjective portion of the allowance for credit losses. That increase in 2020 principally reflected the unique challenges and prevailing economic uncertainty resulting from the COVID-19 pandemic and the potential impact on the loan portfolio.

The Company recorded loan net recoveries of $1.5 million and $0.3 million in the third quarters of 2021 and 2020, respectively. For the first nine months of 2021 and 2020, the Company recorded loan net recoveries of $2.2 million and loan net charge-offs of $3.3 million, respectively.

The allowance for credit losses totaled $46.8 million at September 30, 2021 compared to $35.4 million at December 31, 2020. The increase from December 31, 2020 is attributed to the adoption of Financial Accounting Standards Board Accounting Standards Update 2016-13, Financial Instruments Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (CECL) on January 1, 2021. The impact of the adoption of CECL was an increase in the allowance for credit losses of $11.7 million. At September 30, 2021, the allowance for credit losses equaled 1.62% of total portfolio loans (1.68% when excluding PPP loans) under CECL, compared to 1.30% of total portfolio loans (1.38% when excluding PPP loans) at December 31, 2020, under the probable incurred loss methodology.

Balance Sheet, Liquidity and Capital

Total assets were $4.62 billion at September 30, 2021, an increase of $418.3 million from December 31, 2020. Loans, excluding loans held for sale, were $2.88 billion at September 30, 2021, compared to $2.73 billion at December 31, 2020. Deposits totaled $4.01 billion at September 30, 2021, an increase of $374.7 million from December 31, 2020. This increase is primarily due to growth in non- interest bearing, savings and interest-bearing checking and reciprocal deposit account balances.

Cash and cash equivalents totaled $125.6 million at September 30, 2021, compared to $118.7 million at December 31, 2020. Securities available for sale totaled $1.35 billion at September 30, 2021, compared to $1.07 billion at December 31, 2020. The significant increase in securities available for sale is due to the deployment of funds generated from the growth in deposits.

Total shareholders equity was $400.0 million at September 30, 2021, or 8.65% of total assets. Tangible common equity totaled $368.2 million at September 30, 2021, or $17.27 per share. The Companys wholly owned subsidiary, Independent Bank, remains significantly above well capitalized for regulatory purposes with the following ratios:

Regulatory Capital Ratios 9/30/ 12/31/ Well Capitalized 2021 2020 Minimum Tier 1 capital to average total assets 8.75 % 8.81 % 5.00 %Tier 1 common equity to risk-weighted 12.14 % 12.81 % 6.50 %assetsTier 1 capital to risk-weighted assets 12.14 % 12.81 % 8.00 %Total capital to risk-weighted assets 13.39 % 14.06 % 10.00 %

Share Repurchase Plan

On December 18, 2020, the Board of Directors of the Company authorized the 2021 share repurchase plan. Under the terms of the 2021 share repurchase plan, the Company is authorized to purchase up to 1,100,000 shares, or approximately 5% of its then outstanding common stock. The repurchase plan is authorized to last through December 31, 2021. For the first nine months of 2021, the Company repurchased 659,350 shares at a weighted average price of $20.89 per share.

Earnings Conference Call

Brad Kessel, President and CEO, Gavin A. Mohr, CFO and Joel Rahn, EVP Commercial Banking will review the quarterly results in a conference call for investors and analysts beginning at 11:00 am ET on Tuesday, October 26, 2021.

To participate in the live conference call, please dial 1-866-200-8394. Also the conference call will be accessible through an audio webcast with user-controlled slides via the following site/URL: https://services.choruscall.com/links/ibcp211026.html.

A playback of the call can be accessed by dialing 1-877-344-7529 (Conference ID # 10160661). The replay will be available through November 2, 2021.

About Independent Bank Corporation

Independent Bank Corporation (NASDAQ: IBCP) is a Michigan-based bank holding company with total assets of approximately $4.6 billion. Founded as First National Bank of Ionia in 1864, Independent Bank Corporation operates a branch network across Michigan's Lower Peninsula through one state-chartered bank subsidiary. This subsidiary (Independent Bank) provides a full range of financial services, including commercial banking, mortgage lending, investments and insurance. Independent Bank Corporation is committed to providing exceptional personal service and value to its customers, stockholders and the communities it serves.

For more information, please visit ourWeb site at: IndependentBank.com.

Forward-Looking Statements

This press release contains forward-looking statements about Independent Bank Corporation. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date hereof. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future plans and prospects of Independent Bank Corporation. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. The COVID-19 pandemic is adversely affecting Independent Bank Corporation, its customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity, and prospects is uncertain. Continued deterioration in general business and economic conditions or turbulence in domestic or global financial markets could adversely affect Independent Bank Corporations revenues and the values of its assets and liabilities, reduce the availability of funding from certain financial institutions, lead to a tightening of credit, and increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices could affect Independent Bank Corporation in substantial and unpredictable ways. Independent Bank Corporations results could also be adversely affected by changes in interest rates; further increases in unemployment rates; deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value of its investment securities; legal and regulatory developments; litigation; increased competition from both banks and non-banks; changes in the level of tariffs and other trade policies of the United States and its global trading partners; changes in customer behavior and preferences; breaches in data security; failures to safeguard personal information; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and managements ability to effectively manage credit risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputation risk.

Certain risks and important factors that could affect Independent Bank Corporation's future results are identified in its Annual Report on Form 10-K for the year ended December 31, 2020 and other reports filed with the SEC, including among other things under the heading Risk Factors in such Annual Report on Form 10-K. Any forward- looking statement speaks only as of the date on which it is made, and Independent Bank Corporation undertakes no obligation to update any forward-looking statement, whether to reflect events or circumstances, after the date on which the statement is made, to reflect new information or the occurrence of unanticipated events, or otherwise.

INDEPENDENT BANK CORPORATION AND SUBSIDIARIESConsolidated Statements of Financial Condition September 30, December 31, 2021 2020 (unaudited) (In thousands, except share amounts)AssetsCash and due from banks $ 49,946 $ 56,006 Interest bearing deposits 75,675 62,699 Cash and Cash Equivalents 125,621 118,705 Securities available for sale 1,348,378 1,072,159 Federal Home Loan Bank and Federal Reserve Bank 18,427 18,427 stock, at costLoans held for sale, carried at fair value 78,731 92,434 Loans Commercial 1,222,802 1,242,415 Mortgage 1,100,992 1,015,926 Installment 560,184 475,337 Total Loans 2,883,978 2,733,678 Allowance for credit losses ^(1) (46,799 ) (35,429 )Net Loans 2,837,179 2,698,249 Other real estate and repossessed assets 224 766 Property and equipment, net 36,623 36,127 Bank-owned life insurance 55,124 55,180 Capitalized mortgage loan servicing rights, 24,208 16,904 carried at fair valueOther intangibles 3,579 4,306 Goodwill 28,300 28,300 Accrued income and other assets 65,946 62,456 Total Assets $ 4,622,340 $ 4,204,013 Liabilities and Shareholders' EquityDeposits Non-interest bearing $ 1,297,096 $ 1,153,473 Savings and interest-bearing checking 1,803,763 1,526,465 Reciprocal 596,193 556,185 Time 312,085 287,402 Brokered time 2,931 113,830 Total Deposits 4,012,068 3,637,355 Other borrowings 30,007 30,012 Subordinated debt 39,338 39,281 Subordinated debentures 39,575 39,524 Accrued expenses and other liabilities 101,321 68,319 Total Liabilities 4,222,309 3,814,491 Shareholders? Equity Preferred stock, no par value, 200,000 shares - - authorized; none issued or outstandingCommon stock, no par value, 500,000,000 shares authorized; issued and outstanding:21,321,092 shares at September 30, 2021 and 326,390 339,353 21,853,800 shares at December 31, 2020Retained earnings 66,543 40,145 Accumulated other comprehensive income 7,098 10,024 Total Shareholders? Equity 400,031 389,522 Total Liabilities and Shareholders? Equity $ 4,622,340 $ 4,204,013 (1) Beginning January 1, 2021, calculation is based on CECL methodology. Priorto January 1, 2021, calculation was basedon the probable incurred lossmethodology.

INDEPENDENT BANK CORPORATION AND SUBSIDIARIESConsolidated Statements of Operations Three Months Ended Nine Months Ended September June 30, September September 30, 30, 30, 2021 2021 2020 2021 2020 (unaudited)Interest (In thousands, except per share amounts)IncomeInterest and $ 30,132 $ 28,091 $ 30,393 $ 86,328 $ 92,020 fees on loansInterest onsecurities available forsaleTaxable 3,922 3,656 3,450 10,374 9,356 Tax-exempt 1,597 1,544 954 4,525 2,137 Other 204 208 237 629 854 investmentsTotal Interest 35,855 33,499 35,034 101,856 104,367 IncomeInterest ExpenseDeposits 1,090 1,142 2,062 3,488 9,150 Otherborrowings andsubordinated 962 964 1,006 2,888 2,598 debt anddebenturesTotal Interest 2,052 2,106 3,068 6,376 11,748 ExpenseNet Interest 33,803 31,393 31,966 95,480 92,619 IncomeProvision forcredit losses (659 ) (1,425 ) 975 (2,558 ) 12,884 ^(1)Net InterestIncome After 34,462 32,818 30,991 98,038 79,735 Provision forCredit LossesNon-interest IncomeInterchange 4,237 3,453 3,428 10,739 8,411 incomeServicecharges on 2,944 2,318 2,085 7,178 6,299 depositaccountsNet gains on assetsMortgage loans 8,361 9,091 20,205 30,280 46,687 Securitiesavailable for 5 - - 1,421 253 saleMortgage loan 1,271 (1,962 ) (644 ) 4,476 (8,966 )servicing, netOther 2,877 1,871 1,937 6,778 5,698 TotalNon-interest 19,695 14,771 27,011 60,872 58,382 IncomeNon-interest ExpenseCompensationand employee 21,659 19,883 21,954 60,064 54,742 benefitsData 3,022 2,576 2,215 7,972 6,160 processingOccupancy, net 2,082 2,153 2,199 6,578 6,818 Interchange 1,202 1,201 831 3,351 2,416 expenseFurniture,fixtures and 1,075 1,034 999 3,112 3,125 equipmentLoan and 735 859 768 2,353 2,329 collectionCommunications 683 777 806 2,341 2,409 Conversionrelated 275 1,143 643 1,636 1,045 expensesLegal and 513 522 566 1,534 1,427 professionalAdvertising 666 164 589 1,319 1,636 FDIC deposit 346 307 411 983 1,211 insuranceCorrespondentbank service 77 115 101 292 294 feesBranch closure - - - - 417 costsNet (gains)losses onother real (28 ) 6 46 (202 ) 146 estate andrepossessedassetsOther 2,205 1,796 1,513 5,736 5,531 TotalNon-interest 34,512 32,536 33,641 97,069 89,706 ExpenseIncomeBefore Income 19,645 15,053 24,361 61,841 48,411 TaxIncome tax 3,683 2,665 4,777 11,454 9,245 expenseNet Income $ 15,962 $ 12,388 $ 19,584 $ 50,387 $ 39,166 Net Income Per Common ShareBasic $ 0.74 $ 0.57 $ 0.90 $ 2.32 $ 1.78 Diluted $ 0.73 $ 0.56 $ 0.89 $ 2.30 $ 1.76 (1) Beginning January 1, 2021, calculation is based on CECL methodology. Priorto January 1, 2021, calculation was basedon the probable incurred lossmethodology.

INDEPENDENT BANK CORPORATION AND SUBSIDIARIESSelected Financial Data September 30, June 30, March 31, December 31, September 30, 2021 2021 2021 2020 2020 (unaudited) (Dollars in thousands except per share data)Three Months EndedNet interest $ 33,803 $ 31,393 $ 30,284 $ 30,993 $ 31,966 incomeProvision forcredit losses ^ (659 ) (1,425 ) (474 ) (421 ) 975 (1)Non-interest 19,695 14,771 26,406 22,363 27,011 incomeNon-interest 34,512 32,536 30,021 32,707 33,641 expenseIncome before 19,645 15,053 27,143 21,070 24,361 income taxIncome tax 3,683 2,665 5,106 4,084 4,777 expenseNet income $ 15,962 $ 12,388 $ 22,037 $ 16,986 $ 19,584 Basic earnings $ 0.74 $ 0.57 $ 1.01 $ 0.78 $ 0.90 per shareDilutedearnings per 0.73 0.56 1.00 0.77 0.89 shareCash dividend 0.21 0.21 0.21 0.20 0.20 per share Average shares 21,515,669 21,749,654 21,825,937 21,866,326 21,881,562 outstandingAverage dilutedshares 21,726,346 21,966,829 22,058,503 22,112,829 22,114,692 outstanding Performance RatiosReturn on 1.40 % 1.12 % 2.10 % 1.61 % 1.90 %average assetsReturn on 15.93 12.78 23.51 17.82 21.36 average equityEfficiency 63.47 69.24 53.48 60.59 56.36 ratio ^(2) As a Percent of Average Interest-Earning Assets^ (2)Interest income 3.37 % 3.22 % 3.27 % 3.57 % 3.62 %Interest 0.19 0.20 0.22 0.45 0.31 expenseNet interest 3.18 3.02 3.05 3.12 3.31 income Average BalancesLoans $ 2,903,700 $ 2,859,544 $ 2,834,012 $ 2,876,795 $ 2,925,872 Securitiesavailable for 1,317,382 1,274,556 1,093,618 1,009,578 891,975 saleTotal earning 4,296,662 4,223,570 4,047,952 3,984,080 3,887,455 assetsTotal assets 4,513,774 4,434,760 4,254,294 4,195,546 4,102,318 Deposits 3,934,937 3,879,715 3,698,811 3,632,758 3,559,070 Interestbearing 2,740,444 2,674,425 2,589,102 2,574,306 2,532,481 liabilitiesShareholders' 397,542 388,780 380,111 379,232 364,714 equity End of Period Capital Tangible common 8.02 % 8.21 % 8.08 % 8.56 % 8.23 %equity ratioAverage equityto average 8.81 8.77 8.93 9.04 8.89 assetsCommon shareholders' equity per shareof common stock $ 18.76 $ 18.30 $ 17.79 $ 17.82 $ 17.05 Tangible commonequity per shareof common stock 17.27 16.82 16.30 16.33 15.55 Total shares 21,321,092 21,632,912 21,773,734 21,853,800 21,885,368 outstanding Selected BalancesLoans $ 2,883,978 $ 2,814,559 $ 2,784,224 $ 2,733,678 $ 2,855,479 Securitiesavailable for 1,348,378 1,330,660 1,247,280 1,072,159 985,050 saleTotal earning 4,405,189 4,246,410 4,209,017 3,979,397 3,962,824 assetsTotal assets 4,622,340 4,461,272 4,426,440 4,204,013 4,168,944 Deposits 4,012,068 3,862,466 3,858,575 3,637,355 3,597,745 Interestbearing 2,784,554 2,633,747 2,626,280 2,553,418 2,515,185 liabilitiesShareholders' 400,031 395,974 387,329 389,522 373,092 equity (1) Beginning January 1, 2021, calculation is based on CECL methodology. Priorto January 1, 2021, calculation was basedon the probable incurred lossmethodology.(2) Presented on a fully tax equivalent basis assuming a marginal tax rate of21%.

Reconciliation of Non-GAAP Financial MeasuresIndependent Bank Corporation

Independent Bank Corporation believes non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate the adequacy of common equity and performance trends. Tangible common equity is used by the Company to measure the quality of capital.

Reconciliation ofNon-GAAP Financial Measures Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 (Dollars in thousands) Net InterestMargin, Fully TaxableEquivalent ("FTE") Net interest $ 33,803 $ 31,966 $ 95,480 $ 92,619 incomeAdd: taxableequivalent 492 258 1,374 602 adjustmentNet interestincome - taxable $ 34,295 $ 32,224 $ 96,854 $ 93,221 equivalentNet interest 3.13 % 3.28 % 3.04 % 3.40 %margin (GAAP) ^(1)Net interest 3.18 % 3.31 % 3.09 % 3.42 %margin (FTE) ^(1) (1) Annualized.

Tangible Common Equity Ratio September 30, June 30, March 31, December 31, September 30, 2021 2021 2021 2020 2020 (Dollars in thousands)Commonshareholders' $ 400,031 $ 395,974 $ 387,329 $ 389,522 $ 373,092 equityLess: Goodwill 28,300 28,300 28,300 28,300 28,300 Other 3,579 3,821 4,063 4,306 4,561 intangiblesTangible common $ 368,152 $ 363,853 $ 354,966 $ 356,916 $ 340,231 equity Total assets $ 4,622,340 $ 4,461,272 $ 4,426,440 $ 4,204,013 $ 4,168,944 Less: Goodwill 28,300 28,300 28,300 28,300 28,300 Other 3,579 3,821 4,063 4,306 4,561 intangiblesTangible assets $ 4,590,461 $ 4,429,151 $ 4,394,077 $ 4,171,407 $ 4,136,083 Common equity 8.65 % 8.88 % 8.75 % 9.27 % 8.95 %ratioTangible common 8.02 % 8.21 % 8.08 % 8.56 % 8.23 %equity ratio Tangible Common Equity per Share of Common Stock: Commonshareholders' $ 400,031 $ 395,974 $ 387,329 $ 389,522 $ 373,092 equityTangible common $ 368,152 $ 363,853 $ 354,966 $ 356,916 $ 340,231 equityShares of common stockoutstanding (in 21,321 21,633 21,774 21,854 21,885 thousands) Commonshareholders' equity pershareof common stock $ 18.76 $ 18.30 $ 17.79 $ 17.82 $ 17.05 Tangible commonequity per shareof common stock $ 17.27 $ 16.82 $ 16.30 $ 16.33 $ 15.55

The tangible common equity ratio removes the effect of goodwill and other intangible assets from capital and total assets. Tangible common equity per share of common stock removes the effect of goodwill and other intangible assets from common shareholders equity per share of common stock.

Contact: William B. Kessel, President and CEO, 616.447.3933 Gavin A. Mohr, Chief Financial Officer, 616.447.3929