IBCP - Earnings call transcript Q3 2017 | Independent Bank Corporation

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Operator

Good day and welcome to the Independent Bank Corporation Third Quarter 2017 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation there will be an opportunity to ask questions. [Operator Instructions]. event recorded. this that note is being Please I to Mr. like the conference over turn the will now Brad Kessel. Please ahead go sir.

William Bradford Kessel

company's results. Good Financial morning, and Rob and the Shuster, call Bank Chief Corporation's third thank you joining President for webcast joining Executive Officer Executive to me Kessel, Vice am Officer. Brad I Independent and conference XXXX President quarter is discuss Chief and

release I share by slide call include diluted slide you closing agenda forward-looking press for today's we the begin of remarks. question-and-answer per remarks of our This begin have it in in per $X.XX reported To period. a you or of The net is the and will call to represents statements. a cautionary quarter issued we then responsibility prepared already direct $X.XX is If can at respectively. Before year of access Today and prior increase in to presentation. $X.X regarding it today's XXXX third will follow net net X.X% earnings income and income the the of note This per www.independentbank.com. year-over-year not anyone followed share X.X% today our X or presentation. our income diluted my website share does company's by quarterly $X.X on with versus million million copy a diluted X Independent session

line mortgage expectations. decline results rates, tax quarter with price after our per Excluding the in capitalized very to share of $X.XX servicing our much were in related diluted of our charge a third

ago earning yielding $X.X and the as mix grow a for basis net income loans our increase from XX.X% year earning securities point X quarter of our asset as base well higher NIM to improved or the growth Our in produced quarter. interest over to million to grow efforts both

principally compared for million up For $X.X loan year recoveries quarter. the income credit of $XXX,XXX on and provision for a lower line linked the $XXX,XXX $XX.X gains little than down high-end of sales, million expectations quarter our losses $XX.X on to million expected net quarter non-interest we a basis. is was a lower loan a our of ago due and at of were non-interest we provision slightly in with expense to Well the recorded mortgage

As it or growth of sheet XX.X% loan generated to relates our balance $XXX.X portfolio million annualized. we

continued strong this metrics asset We to report in non-performing quality assets X.X% with down quarter.

and Our favorably XX assets to of points non-performing ratio ago XX basis basis points. XX quarter basis total last at points assets of the quarter's year compares to

a XX% value to combined per $XX.XX per continues XX, the deposit Our the our we strong deposits total common tangible on our recently to up funding asset our dividend or sensitive common increase with trend at The of Reflecting book quarter cash for in year our X.X%. XX.XX%, to interest on opportunity provides X.XX% to grow assets tangible very positively further and year-over-year basis At net growing ratio equity our combination with XXXX balance income. sheet, million XX, XXX tangible a our loan capital November share to announced in effective growth ago. per $X.XX same share the from $XX.XX per share earnings one levels, XXXX. share to stock quarterly grew September

first largest highlights income $X.XX $X.XX XX% nine million in or categories years. represents last diluted net income presentation the of XX.X% XX, or fourth $XX.X net of four of For net in is million Today $XX.X per in for share earnings the each our diluted increase diluted X in of additional share Bank performance $X.X prior Independent year Michigan. on the we reporting the income to per months and September the or or a Slide nine increase months of share. compared significant bank ended are provides headquartered period. per million the XXXX This $X.XX

combination suburban, is markets. branch favorable. of conditions The rural, generally a and network continue in urban Our to these be markets

from unemployment of increase continues XXXX, and Our level X.X% are rate rate more suburban themes to and in strongest. balance a in and commercial The than continues Michigan an of estate shortage positive trend historically ago markets. industrial At August real that below say the Michigan's and August the X.X% witnessing our XXXX come was estate in retail X.X% housing. positive labor be year market of new lines occupancy would X.X%. market office values, of urban to we one low rising a shortage many Michigan the real record of and home I U.S. sheet levels. construction. our commercial West are unemployment growth residential Accordingly a and is evidenced lower also high Common in Southeast times, markets of listing outlook by

Michigan Southeast offices Over new Dearborn, Grosse months last loan have the Brighton, our Arbor, Ann market presence Pointe. expanded XX in in and with the we

the Northwest same opened loan in Traverse we During a new City. specifically timeframe office Michigan

office X our These positive with the and have banking gathering professionals mortgage experienced summary a mergers. are opening contains very suburb with offices conditions results Page multiple associated added we good favorable for offices disruption the of bank region. in loans in Independent translated in as entered Bank. origination deposits The loan our of result a deposit into of staffed an marketplace also market and We and a to economic by Ohio Columbus team Akron, Ohio.

a billion municipal of same we deposits total deposits growth some runoff excluding brokered XX% or year year-over-year September deposits seen X.X% page market were since increased XXXX. is at Total on million seen or one cost total as the higher Independent's our have exception X $X.XX $XX.X to each funds. of Michigan billion comprised the We ago transaction accounts. quarter XX. seen have Southeast Michigan and due This CD's. the loan intentional X.XX in principally in our decrease with markets of deposit slight four where of when

deposit in in the public on pressure sector. particularly the some our pricing markets seeing funds front are We limited

Our past see our be quarter. this relatively low X continues credit we surveying unions basis generally cost of deposits points the offering points XX basis When but increase to at did markets rates of The CD X% regional banks highest are the for offerings. which money large market with North group longer-term had several tiered same well charts several now as as rates. of

actively are retain closely so core We as of also effects monitoring the deposit to and our managing rising on limiting base. rates while

to loans page our $X.XX consecutive on seen held quarter sale company. XXXX. XX at growth of As represents billion for the for increased This loan loans XX, September net including -- XXth

XX.X% portfolio generated X.X% by each annualized several net of commercial category. the growth team quarter third grew total organic loans of The $X.X during annualized the in million large For XXXX growth loan with million despite $XXX.X or quarter payoffs. or

very end quarter in size, a mix do ago. quarter. be do in and industry, to between continued same portfolio originations fourth -- comparing the commercial We good growth diverse to this C&I and the in CRE. last new when in and anticipate good granular in one is quarter we The Our anticipate pipeline portfolio year this

$XX.X However, installment several debts we of generated growth consumers, temper and growth this net The annualized. expectation with consumer lenders, or XX% million of payoffs. large loan consideration indirect expected

of annual from financing expect to for production continue occur and QX the seasonal this of see good indirect slowdown XXXX. RV very We We in team. and to our marine for demand QX do XXXX

months to during nine third the XXX team in sold have $XXX XXXX sold quarter for we Year the million of and XXXX originated year. million million as originated million million sold $XXX mortgage first date we originated XXXX. XXX compared Our of $XXX and million to we $XXX when and that

annualized. XX.X% the million For quarter third our mortgage grew we or by portfolio $XXX.X

recent Originally continue two in our and of we As mentioned anticipated we selling of to a thirds third to earnings our conjunction with in production forecasted. mortgage total expansion our higher calls and one originally going than originations portfolio. portfolio percentage mortgage we

XX% Our actual to saleable and XX% mix closer non-saleable. is

more to While a also for market. we we the This share goal versus expansion. the refinances, are plan with larger capturing did the mortgage purchase money a jumbo of was shift

are developments place reach development Non-warrantable currently the are non-warrantable market. seeing to be of of has demand percentage in for condo the we these with eligible a percentage the purposes product All and addition the three loans phase higher the to completion salability in we new yet where for construction types loans. portfolio. of condos associated secondary In

in of today mortgages, portfolio assets second adjustable of million of X strategy somewhat land fixed sensitivity. and putting quarter we which since was of past non-saleable, did million our on the in into portfolio originating most in loans. placed Some asset of than vacant loans rate $XX.X years loans total fixed mortgage and XX XX.X XX, following; rate million the the originations which or the include for XX, year adjustable statistics million construction loans XX.X of loans This loans, X.X more $XXX million loans. rate, has of rate reduced million were

carefully impact of portfolio and of asset the income. rates monitoring the are change value this potential changes changes market in in our still are net interest our we changes interest future of in However, sensitive in interest equity and -- portfolio on and loans composition

first slowdown adding is the mortgage do fourth in have on we seasonal pipeline composition. addition the some of look and borrowings duration loan the the been portfolio longer In quarter some on quarter our as rolling return as capital Page information X averages on assets and the of for XXXX fourth return XXXX. equity. reflect in to for change we solid, provides The quarter however, well

X.X%. and at common tangible X.XX% We totaled year equity assets Tangible tangible ago. XX, X.XX% range X.X% one equity as between September are common XXXX of compared to targeting to

loan XXXX through of Directors of dividend to the to January under plan and the buy of this authorized company is capital authorized of retain to last new up through plan repurchase plan Our a the is back is year. for plan to year capital the common outstanding payout authorized return the for a plan X% plan. repurchase and terms Board consistent end share of This company its stock. the In repurchase of this growth organic

repurchased During for management's Shuster over on share fourth XXXX. outlook quarter and date in comments not I year the XXXX presentation quarter to the turn of quality, we any a would have At shares. this the credit financials, to few Rob time to our like third and

Robert N. Shuster

during Thanks will net presentation. Brad good at focus our everyone. on our I Brad and so our income in increase XX morning interest am remarks margin. his of page net interest the starting discussed I

the of the by and points. data million in the I X.XX% ago on will quarter during tax various quarterly points in income. on year the detailed the few XXXX. is increase of is second the more of ago in Page interest increase primarily in X.XX% We X.XX% loans the XXXX. lot up Interest up increase a There I analysis in and comments Average provide the $X.XX will very of average loan portfolios to fees second XX from billion third this detailed a moment. $X.XX the $X.XXX interest and XXXX. slide XXXX average due loans summarize billion year income the increased compared an net balance quarter $X.XX $XXX on the more quarter third but yield Brad linked contains earning XXXX quarter interest billion an XX moved this points X assets on key this were of on quarter quarter on topic in quarter from and equivalent of quarter indicated basis to our of to of from importantly third up million to a in in some a basis which sequential As on quarter second have slide. XXXX of in margin details basis a net

that in on to due business in XXXX. by the net third XXXX the income receivables third payment day finally average the One of the bearing of compared interest $XXX,XXX income by second of compared declined quarter And the in $XXX,XXX second quarter You up to The moved by growth other color of plan approximately interest May quarter on this more X average the to growth. to will in interest sequential XXXX. used sale fund of X.XX%. note cost to of follows. weighted quarter bearing X borrowings liabilities savings X.XX% due were yields to little a basis brokered up more basis quarterly points points loan and that and primarily a origination is accounts loan A in interest new basis and renewal moved cost checking from as increased CD's

years. rate and fixed New with variable and average XX% duration XX% loan which X.X originations renewed weighted million $XX interest was of average an weighted The rate commercial was X.XX% estimated rate. was totaled of

and originations loan average a consumer weighted estimated X.XX% New of totaled with X.XX an million weighted of $XX.X average duration years. yield

with The for XX% new adjustable specifically rate. duration an average weighted in XXXX fixed outlook the balance was estimated mentioned of of on to Brad net portfolio that for Finally, years. interest broke our rate loan interest originations presentation. weighted down income later X.XX X.XX% comment rate XX% variable or and the more We'll average

million to Moving XXXX. the the on XX compared ago $XX.X quarter of in in quarter non-interest in the million as totaled $XX.X $XX.X third quarter page income million of second year and to XXXX

change banking variability operations in of release price, year-over-year income. decreases text mortgage loan which component gains mortgage comparative and caused revenue, table our change the Our pay the non-interest loan in value both loan to and servicing include a due with mortgage out earnings downs. due breaks is now its servicing and most fair income of that quarterly net to value into mortgage parts We fair

quarter results third was The $XXX,XXX. being to or core downs view to per change our As negative was due Brad part price not after fair view tax this diluted part as in core on of share being $X.XX $XXX,XXX value pay negative which due results. we the our an a a value basis. fair of as mentioned, We the change

Although mortgage value and by in fair well value as the competitive a sold the due treasury during in principally increased contracted the decrease to in primary in market fair margin to price. has the primarily XX decrease conditions XXXX. Despite as loan bit negative declined The due as loans the of longer X adjustments. adjustment actually spread third basis margin a quarter XXXX, sales of secondary the loan reflects during sales volume resulting the term loans year declined rates mortgage points the games increasing, mortgage rate

the non-interest in and the third We quarter time to XX year-over-year quarter expense compared This was As $XX.X quarter approximately XXXX. total of equivalent operations. full detailed our XXXX of million $XX.X employees FTE in compensation banking second The page in and totaled XX reflects year on million our the as of $XX.X ago by increase X.X%. million increase mortgage expansion primarily increased in the or benefits. principally

Our continued X.XX consumer in duration XX.X% were an XX of The The five improve stage assets, efficiency funds about third loans of utilized million day decreased XXXX the available Non-performing or loans, Page the estate in assets $XXX,XXX non-performing real portfolio by sale and about overview loan ex-September to data XX, support XX.X% investments decreased XXXX. XXXX of the by XX, the and as quarter. mortgage $XXX,XXX of decreased third third to quarter. second during loan $XX.X growth. at X.XX% to portfolio and portfolio XX% during variable September much were were were less. is estate estimated million in non-performing September to of early X.X% quarter other XX from $XX provides X.XX%. loan in the real fixed our compared of Page delinquencies ratio commercial delinquencies average Total declined rate of XXXX assets the portfolio the and Securities runoff XX total and other quarter about Investment for or and of Approximately non-performing XXXX. years. was XX portion the is on XX, at provides maturities rate delinquencies. years to just

page in onto recorded ago quarter. third in of a to for million loan XX, the as Brad of we provision of $X.XX credit Moving mentioned XXXX $X.XX a quarter year million compared provision losses the

loans at the quality X.XX% in loan million recorded asset across the board on XX including allowance The Page million of loan or losses the in new totaled quarter some provision improved provides metrics $X.X information unclassified quality asset data loan the quarter. was outlined assets. defaults $XX.X Thus for loan end. driver portfolio additional of growth this net just expense of recoveries As and quarter. we third

of current of of the The declined over just to XXXX. a being performing were $XX.X very XX $X.X continues quarter. Page XX, that these loan at XX% loans million September XXXX. million during provides to on TDR and portfolio information quarter $X.X nearly million loans XX% New of defaults in third our This XX, the XXXX. with perform decline portfolio well these September is at

the XXXX. We Overall performance was actual the believe our to loan original outlook. in back for XXXX. quarter better annualized page actual XX growth the our achieved we third XX% nearly of is provided in during we for our compare outlook performance original January that the first nine year card report our We Finally months year than XXXX. that of of the

As slowdown quarter. Brad seasonal the fourth mentioned we expect a in

higher exceed a see originations In portfolio loans by billion of loan mortgage we year-end. percentage to shift salable Despite modest loans. expect will addition a these we to $X changes in anticipate

within basis generally on full interest third about forecast original by of quality compared year. We but XX% original about asset expense of to losses Third quarter rate a the to XXXX during XX% now growth provision quarterly growth rather forecast nearly rate of X%. expect of loan in stable quarter year-over-year XXXX in We for defaults. a asset had of was increase year-over-year net or our loan grew a XX%. income any quarter anticipate the was $XXX,XXX. approximately in our metrics quality We to deterioration loan than this last This caused range the of growth

we'd somewhat expect fourth still loan loan with quarter. provision the a losses However to in positive for see forecasted strong growth,

fair mortgage loan was primarily XXXX our our net due to aforementioned due below on quarter interest value to income servicing. price $XXX,XXX Third forecast decline the capitalized

fourth move loan and expect low any declines to We forecasted up to mortgage absent price. the end value income of fair quarter our to the non-interest capitalized in further range due servicing

end a expense non-interest quarter of below the our range. forecasted bit high was Third

effective XXXX. of as And we XX% the non-interest year. in the We remarks. Brad. tax concludes last finally the my to prepared up our we high-end near I this expense like of to wrap turn to would of That remain back XX% now between an end quarter rate expect call expect income the range and forecasted over

William Bradford Kessel

performance we growth summary of quarter share, and growth XXXX pleased in with metrics. In quality asset Rob. are earnings the Thanks report in continued solid deposits, and third earnings core excellent per loans to for and

ahead we we profitability driving and As growth value, performance with look per earnings, share high on levels. balance quality to focused strong be continue a strength, sheet and

the the open At like questions. for years. to this on last generated would point We to continue now momentum we call up the build few

Operator

Instructions]. [Operator

comes go question with first Please ahead. The Matthew Sandler from Forgotson O'Neill.

Matthew Forgotson

Hi, good morning gentlemen.

William Bradford Kessel

morning. Good

Matthew Forgotson

I level XX% question, a year from up start the a level bright hoping wondering, Wondering guess talk XX% loans percentage my now a if if have about guess ceiling I you a strategic one optimal it for this was that math is could is you alone, we I with as or of mortgage ago. for line by segment? mortgage beyond could and

William Bradford Kessel

that's just had ago portfolio a runoff. sort and two portfolio mortgage minute, years good was an in a a mode, while flat-end did it our few Very the consumer. fact funding, lot in out commercial And for question. excellent really of of portfolios And the back going were mortgage we three Matthew, in the we growth of a

made been the reversed commitment my the mix And business. little a that different and We new out than more year And prepared mortgage -- Elli invested some origination put in now mortgage very so been to anticipated. had portfolio us. mortgage And we than a line strong that several ago mortgage back and of has built we've in we've remarks, production. Mae. the saleable. following in for as we It's that be did really I business years encompassed originally a a And trend with we recruiting seen platform then we've by

it. want we like working it's so Now,

a In better. fact maybe little

the -- internally cap of Now when we cognizant question of talk soft basket putting one amount believe portfolio. sort into of and that a mortgage so commercial sort a we all is in very us. eggs terms sort for gauge our the of of do we and not the to portfolio your what's what We're for optimum or

to closely commercial. watching tracks mortgage we're so the And very category relative how

we then you do to sort operation when are the that. how So just and manage get not of one and secondly down to point that sort that's you shutting of

as to around sell. turn about and talked produce sales And but internally bulk originations can continue something have those so some doing we we

So, Rob hopefully going will we're where of that flavor we let at, been, with a you where of where see and gives I anything of additional. in it and sort you we've jump sort

Robert N. Shuster

is any by loans takeaway want we've guess moving are. loans we commercial about I the significant don't mortgage amount where

programmatic be of as Brad idea made little that made the and move to largely you that and comments up some kind we some keep component of in we've saleable see to now. a sales to change in that addition things some mentioned that my we've the more a programmatic said expect see gives reflect mix for And strategies kind those we line changes. in So an capping of would I of try the bit of bulk the the changes and saleable. consideration where again bit

Matthew Forgotson

sensitivity, great up to give color, where you I thank can us the you you. environment? Rob your XXX in on basis comment That's were point guess asset X:XX at your an snapshot

Robert N. Shuster

durations basis Yes, X.X% other up where But I point make it we is were X.X%. growth against balance about level up example one The on compare significant when in regarding moving XX we XXX liabilities compare a extending up do reflect the of an on moving it so doesn't up think when thing. XX%. things of the static type that and future to base year by made December I September almost this I for sheet comment scenario point a that XX comment still is I we may ago is up and or off we're XXX other we're basis the about

portfolio X.X% in that income appreciate of lot into So again there's And net would kept we've than on I betas expectation sensitive have more actual market because our add at our what slightly that X.X% is and XX% those would that the what the to we're base you the using XXX modest as plus finally changes deposit as we seen in forecast the still we've model interest and compared go in by yet the we've XXX. asset I the assumptions in in deposit sheet the a plus betas. changes balance generally grown been but can forecasts for seem say actual use the rates in

whether what's going I at the far occurred comment be say or hard thus that that predict Now least in would not, to holds forward but would on XXXX.

Matthew Forgotson

then it a just the guess I look will year as the do rate into feel hop you're in be? loan queue, I a in imagine, plus we XXXX what growth, we back XXXX, to on XX% I'd guess growth of XX% so me and is to if from quite off challenging might trying is the get to lastly I revert growth track a growing are rate you of signaling that natural that if more for

Robert N. Shuster

and what as I I on XXXX. is high more through think the you're we single-digit level move XX% spot vision maybe we approaching wouldn't think

starting portfolio going some the or volume to again idea So be be we're bulk think anticipate either will of to I changes going X But see as you mentioned programmatic where we're to if through I XXXX. going gives that we around portfolio highest. be the sales still there that the of earlier potentially as through mortgage components you're going would product. is to that that billion growth the the again And move limiting we

we commercial, don't the we between the keep the Brad necessarily earlier like want sheet the to just we're mentioned mortgage, or where portfolio balance that's get slow than we comprised down would and we production that going growth changed but to so consumer. as So the and as to loan regulation that get want mix rather

Matthew Forgotson

taking my for Thanks questions.

Operator

question Please from Davidson. next Kevin comes from Your D.A. go ahead. Reevey

Kevin Reevey

Good morning gentlemen.

Robert N. Shuster

Good morning.

Kevin Reevey

are more the little sounds sounds you've a perform much become up just similarly seeing first you're on safe as the like sensitive the surrounding not to it Matt's that we we to saw not markets see it say plus your So the rise as follow in should pretty and to -- expect you deposit fact quarter? third in question costs NIM little like that a the given NIM as asset it's

Robert N. Shuster

I we're but less asset is, year Kevin sensitivity little comments went were where one still we the when sensitive ago. over asset couple A than a a

a where we year but sensitive ago. a asset still than So less bit were

interest in creeping yielding reasons, securities, less Secondarily in in anticipate a shift mix net little still bit bit we one up I anticipate least would investment rate the yielding maybe the federal a is least at the continued higher little one more this in month And a with at for and in of year couple perhaps terms next that loans. last secondly funds of a year. lower then margin up a the it's bump

those for So positive generally be would as well. us

remixing the margin bit the of potential forward. of So we rates higher up we earning assets and think push short-term for as would combination a some move that

Kevin Reevey

more That's great along on done couple going and see that into talent to much are fourth additions you should of expect pretty then moving a the hiring or the two front we quarter?

William Bradford Kessel

we out hiring Well, so that to we talent want I it. would side built say mortgage how

there, our mortgage constantly recruiting. on there actually business some that's in is and going commercial yes tweaking Now we're

relationship say bit here. group to standpoint today little the continue where FTE I would we managers So, be. we what we Over to an look commercial have add like a XX side on we'd are to from and that we to want approximately

So Kevin. larger group that of bit a hopefully should a in XXXX, little be

Kevin Reevey

Great, much. you very thank

Operator

The next Please go question Scattergood. ahead. comes Boenning & Beury from with Scott

Scott Beury

Hey, guys. good morning

Robert N. Shuster

Good morning Scott.

Scott Beury

year, and guys, look you behind kind it in of what far more discussed some hired far the you're biggest little the so So you it set of is was that I this share the those at though the addition of so markets? outside seeing I looking mean Southeast guess as trajectory activity of mortgage I the seen you're the than but a some that when driver this know is previous you've lenders in say would portfolio other to year at out you're you is seeing, this what growth Grand that Rapids obviously questions the we than of growth it

Robert N. Shuster

urban it's clearly more into share I moving markets. some Yeah, think it's and

loan So and the deck -- regional in portfolio you've could I -- have got page the there's there's XX we in so, you on market million Ohio. total a X slide see think in the slide a

Ohio very loan very staff Columbus, in those and and of Ohio support offices a we producing production loan Akron, up opened outside we with offices are officers lot that's and brought aboard. good So strong offices of that

we as at office bit capturing and all market Ann in in a Southeast in we're up addition because Dearborn, portfolio. expanded Pointe. Arbor, And there Brighton, in So we expanded Brad Troy, we in quite we share opened our then those weren't more saleable markets Grosse and mentioned, Michigan both

So again more capturing people we're and there. adding and market you're location share

bit physically change we haven’t good for as So, added Rapids Grand We are Traverse up added example. a we footprint here. in a pretty markets here. there probably in had then not here City but And added of other we've a big certain and

it's really that's anticipated. us market little much we been capture the stronger we more that. have doing and It's said addition bit offices a driver. of as primary been pretty So probably the anticipated Brad to And and than that people allowed that's share what

been income the the so portfolio a been something also consumer portfolio And we been interest and fueled but and mortgage very has feel too. portfolio by the that's by growth net beneficial. it's The commercial strong to degree very

Scott Beury

has kind what branch Columbus those for service say of let's the whether these kind does thank to you, do timeline you curious example? about, you when some become full have if idea to look like think ties color. at like about new that of Rob locations, you newer so that That was for markets, of longer-term something something in how newer any these capacity that's some other, of great else look LPO's the a I and

Robert N. Shuster

offices where I would very well opened say see where new say loan this, good the Yeah, we've of growth. would we indications are I the

lender we our people. Brighton in so commercial to And example do as a addition an there mortgage have

to originations through process, base. on working the to hard underlying say and I cross would selling continue growing the we we're are deposit So, grow going that

not are we longer-term starting learn we it And So we would talented out gets would some branches. be them, to like are. from And of find these scratch. in the other the we people these who piece, service us markets, I say full

ahead that no, won't Columbus imagine the And but so, service of I'm Ohio probably will regarding be sites say to not would branch I full probably be going some these site. of Michigan it a

Scott Beury

I stated releasing think say model what through way you that of and to credit of of obviously positive XX% that looking the of just and could it and provision provision kind build is for where lot to is part now But us -- a in growth assuming that you Hardest are have trended, us do get expense. all feel organic for helpful. very build XXXX, could stands line reserves you've look expect but necessarily that's anything like now the you to you guess is the that help of need a at terms XXXX now? great, rate, kind a going reserve I Great, the

Robert N. Shuster

was Yeah terms certainly in build I it think of dollars.

Scott Beury

yes. Oh, yes, Speakers] [Multiple

Robert N. Shuster

model Yeah, loss position. the it's mortgage bit example than part loan than and probability commercial it I I loans in tell model the we when for it's utilize I little at default or we and have Similarly whether from could model you scores mean consumer and and loans is expected see lower mean using of collateral X.XX% the and we that given drifting the less it's consumer for a it out whether given loans. the we have X.XX%. I loss well less is and mortgage is for a originations default credits portfolio could of installment reason for migration content that X.XX% FICO then loans loans.

coming levels. you're adding in are allowance credits that new at lower those So

cycle. term in things some going now well, done to and hey, we've say things there's right are try know great Now you change be but looking really to long a

our a hey, be we or little there think a could because in some in longer risk. are estate it's we trends commercial retail whether have more there that we're multifamily to there component example term bit for saying ALLL whether in it's out So real that added relates

in We've So good. to have We've loss new because looking reserve some so very added defaults. in more content we're here. mean we at more add it's just loan current going been had I difficult year. our subjective net to capture because you're very little when everything had this recoveries far so it's

very early We have had delinquencies. low stage

So enough. few make looking to do things we're forward to kind we're trying sure a of

not I going dollars to bunch. a bit all the but summarize guess may that the of drift So I percent go a when down whole are up,

would ALLL. summary walk say on to the kind that's with So away the of I

Scott Beury

I that's Yeah that's all nice very helpful. what looking and Yeah, I is That for. now is thank have perfect, you. guys, was that for quarter

Operator

with ahead. KBW. Please go question comes next Damon from Your DelMonte

Damon DelMonte

is Hey, good guys, morning how going today. it

William Bradford Kessel

Thank Damon. good Very you.

Damon DelMonte

hear. growth more opportunities that first M&A M&A? to a guys and than business using discussion lot no a good the there's your for much means channels during need given are you this at of obviously, that really on organic adequate feel thought to as question, plan just to Good the do look the through phenomenal To you my been or to has support and color call. to meet organic growth Have you guys

William Bradford Kessel

And Well makes sense and/or and loan M&A year-after-year capital with and dividend, consistent capital to know, priorities is complimentary talk Damon, loan with a we solid where quarter-after-quarter, about we repurchase also share that sense. it about and you is the starting it growth talk organic organic growth capital. our makes great where for And question usage.

us it's rule that but and learning primary I that to about growing about in performance -- and try for along good I when first so time. Independent our now our say the position matter feel and I out opportunities very people So in this, not are independent we very wouldn't would come ourselves as matter

anything and add. So, you have Rob do to

Robert N. Shuster

earnings to say us the enough grow only there's Yeah, have continue like levers Damon, feel is need to for any I to I don't a would think for clip. M&A good thing at we

in something do it's strategically I dependent still probably I if to think if compelling. it public great a think on our have would anyone our to it's world the we're Brad runway fit size footprint. as in we look take an our so came And that very that opportunity was at want and a up company in and particularly at said -- a not

Damon DelMonte

Got back quarter's margin is we're go margin. call would sure to you know of quarter I'm like or is that for in X.XX% you, to get the there about components higher had but is helpful. dynamics late if had this kind starting this some And on you is of solid some a next talking margin and jumped just commentary point number? and okay. out you I margin the That this not anything there in the that the the that But the to the quarter that covered I then in of expect given of

Robert N. Shuster

were probably mean interest impact slide recoveries I thing have second quarter. Yeah, a we of the on, something you it was what deck, is and never XX page there the versus predict is the bit of that is of kind only could that up they the on

So it couple yield. basis did of add points a to

those fourth recoveries. going days quarter number have a So X.XX% any you there like know I that's same the by mean the say mean I but that is from recoveries any difference in absent it interest is I I not significant going on mean mean nothing the quarter the one you don't or only we're of and the quarter-to-quarter the by interest changes days that to said that to is again back out but just was next really degree even piece in have piece so be impact could that unusual. higher. I other

Damon DelMonte

Okay, perfect.

thank you Okay, already, much. and else has answered very everything been asked

William Bradford Kessel

Thanks Damon.

Operator

like conference for question-and-answer concludes session. Thanks. to turn Kessel back over remarks. the to closing Brad our would any I This

William Bradford Kessel

great would and each on for in Independent call. to like thank I Corporation joining wish of your Bank us for We today's interest day. you everybody a

Operator

Thank today's presentation. now concluded. has you attending conference for The

you. You may now Thank disconnect.

Independent Bank (IBCP) 28 Oct 172017 Q3 Earnings call transcript