GRAND RAPIDS — Independent Bank Corp. recorded lower third-quarter earnings from a year earlier, though year-to-date profits have grown by more than 28 percent.
The Grand Rapids-based Independent Bank (Nasdaq: IBCP) today reported $15.9 million in quarterly net income, or 73 cents per diluted share. That compares to $19.5 million in net income in the third quarter of 2020, or 89 cents per diluted share.
Independent Bank did record lower non-interest income as gains on residential mortgages declined from $20.2 million in the third quarter of 2020 to $8.4 million this year, Chief Financial Officer Gavin Mohr said.
Mortgage loan originations declined from $473.7 million in the second quarter to $453.8 million in the third quarter, and from $536.5 million in the third quarter of 2020 as home refinancings softened. However, Mohr added that “mortgage applications remain solid.”
The quarter included “strong core results” and a commercial lending pipeline that “is at its highest level in many quarters,” largely from the opening of new loan production offices in Holland and Macomb County, President and CEO Brad Kessel told analysts in a conference call today to discuss quarterly results.
Net loans grew by $150.3 million for the third quarter, or an annualized rate of 7.8 percent. The bank had just below $2.9 billion in total loans as of Sept. 30. Deposits grew by $374.7 million in the quarter to a little more than $4 billion for an annualized rate of 13.8 percent.
“While there are many uncertainties and challenges ahead, we’re excited about the momentum we have in our markets and look forward to continuing these trends through the end of 2021 and into 2022,” Kessel said.
Independent Bank has 62 full-service branches in the Lower Peninsula with $4.62 billion in total assets. The bank also has seven loan offices in Michigan and two in Ohio.
Net income for the first nine months of 2021 totaled $50.3 million, or $2.30 per diluted share. That compares to $39.1 million, or $1.76 per diluted share, through three quarters in 2020.
Since the start of 2021, Independent Bank has added 15 people to its commercial lending team, mostly at new loan offices that opened in the third quarter. Kessel called the hirings a “good, long-term investment for Independent Bank and our shareholders as we look to grow market share.”
The bank is not planning to add loan offices, Kessel said. The Holland and Macomb County offices could eventually become full-service bank branches, he added.
“We’re going to try to get the earnings assets and deposit levels up a little bit so we have some momentum before moving to full-serve offices,” he said.
The two loan offices “were locations that we had long desired to be in physically” and generated $30 million in loans in the third quarter, said Joel Rahn, Independent Bank’s executive vice president of commercial lending. The bank opened the locations after hiring “very top talent” in both markets, Rahn said.
“We are getting an immediate lift” from the loan offices, he said.