Net Interest Income and Margin
Net interest income rose to $46.4 million in the fourth quarter, up 8.2% from a year earlier and 2.2% from the third quarter, reflecting higher average earning assets and improved asset yields, the bank said.
The net interest margin increased to 3.62%, compared with 3.45% in the same period last year and 3.54% in the previous quarter. For the full year, the margin widened to 3.56% from 3.38% in 2024, as yields on earning assets rose in a higher interest rate environment.
Loans and Deposits
Independent Bank reported $78.0 million in loan growth from Sept. 30, 2025, representing an annualized increase of 7.4%. Total deposits, excluding brokered deposits, increased by $57.1 million, or 4.8% on an annualized basis, over the same period.
The company cited growth in commercial lending activity, while noting continued competition for deposits across the banking sector.
Credit Quality and Capital
Non-performing loans increased to $33.1 million at Dec. 31, 2025, from $7.8 million a year earlier, largely reflecting deterioration in a single commercial relationship, the bank said. Provision for credit losses totaled $6.1 million for the full year, compared with $4.5 million in 2024.
The tangible common equity ratio rose to 8.65%, up from 8.00% at the end of 2024, supported by retained earnings. Return on average assets for the fourth quarter was 1.35%, while return on average equity was 14.75%.
Non-Interest Income
Non-interest income totaled $12.0 million in the fourth quarter and $45.6 million for the full year, declining from the prior year, primarily due to lower mortgage banking revenue and reduced gains on equity securities. Mortgage loan sale gains were $1.4 million in the quarter, compared with $1.7 million a year earlier.
Capital Actions and Outlook
Independent Bank paid a quarterly dividend of $0.26 per share in November and said its board had authorized a stock repurchase program of up to 5% of outstanding shares.
Chief Executive William B. Kessel said the bank ended the year with higher tangible book value and stable earnings, while operating in a competitive funding environment and amid evolving credit conditions. He said the company entered 2026 with a solid commercial loan pipeline and continued focus on credit discipline.
Reasons to Pass on IBCP:
- Non-performing loans quadrupled: Surged to $33.1M from $7.8M year-over-year due to one troubled commercial credit.
- Provisions up 36%: Full-year expense rose to $6.1M from $4.5M, signaling credit deterioration.
- Non-interest income declined: Q4 at $12.0M and full-year $45.6M, hit by lower mortgage gains ($1.4M vs. $1.7M).
- Earnings growth negligible: Q4 up just 1% to $0.89/share; full-year +3% to $3.27/share.
- Deposits trail loans: 4.8% annualized growth vs. 7.4% for loans, exposing funding gap.
- Commercial lending reliance: Growth tied to volatile commercial pipeline amid deposit competition.