IBCP 10-K & 10-Q changes, risk factors and insider trading
Independent Bank Corp. · Nasdaq · State Commercial Banks · CIK 39311 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our use of artificial intelligence and machine learning technologies may expose us to regulatory, operational, and competitive risks.”
New heading “A significant portion of our deposits are uninsured, which could result in funding pressures and liquidity constraints during times of financial stress.”
New heading “Our concentration in commercial real estate loans exposes us to increased credit risk and regulatory scrutiny.”
New heading “We rely on third-party service providers for critical business functions, which exposes us to operational, cybersecurity, and regulatory risks.”
New heading “An adverse outcome in certain overdraft fee litigation that has been brought against the bank could have a material adverse effect on our results of operations.”
New heading “Emerging digital assets and technologies may disrupt our business and adversely affect our results.”
Largest changes
“We use artificial intelligence ("AI") and machine learning technologies in certain aspects of our operations. While these technologies can provide significant benefits, they also present risks that could adversely affect our business. AI systems may produce inaccurate or biased outputs, which could result in regulatory compliance failures. The use of AI in lending decisions is subject to increasing regulatory scrutiny, particularly with respect to fair lending requirements under the Equal Credit Opportunity Act and the Fair Housing Act. …”see in full comparison
“We are currently a defendant in three putative class action lawsuits challenging aspects of our overdraft and/or insufficient funds fee practices, including allegations that fees were assessed in circumstances where transactions were authorized on a positive balance but later settled against a negative balance and/or that multiple fees were charged on re-presented items. …”see in full comparison
“We rely on third-party service providers for significant components of our business operations, including core data processing systems, payment processing, cybersecurity monitoring, and other critical functions. Our core data processing systems are largely outsourced to third-party providers. This reliance on third parties creates concentration risk, as disruptions to our key service providers' operations, financial condition, or security could directly impact our ability to serve customers and conduct business. …”see in full comparison
“Rapid innovation in financial technology - including stablecoins and other digital assets, distributed ledger technologies, real‑time payment networks, embedded banking, and artificial intelligence - may change how consumers and businesses store value, make payments, access credit, and obtain financial services. …”see in full comparison
“An adverse outcome in certain overdraft fee litigation that has been brought against the bank could have a material adverse effect on our results of operations.”see in full comparison
“A significant portion of our deposits are uninsured, which could result in funding pressures and liquidity constraints during times of financial stress.”see in full comparison
Full comparison: every changed paragraph (19)
Pressures from various global and national macroeconomic events, including heightened inflation, uncertainty regarding future interest rates, foreign currency exchange rate fluctuations, recent adverse weather conditions and natural disasters, ongoing conflict in the Middle East, the continuation of the Russia-Ukraine war, and potential governmental responses to these events have created, and continue to create, significant economic uncertainty and could materially and adversely impact our financial condition and performance. In addition, pursuit of variousnew initiatives announced by the new Trump administration may create some degree of volatility in our customers’ businesses, regulation of the financial services industry, and the markets in which we operate.
Additional regulatory focus on the financial services industry is common in connection with an economic downturn, as the industry experienced following the most recent financial crisis. As a result, the adverse effects on our business relating to any future economic downturn could be exacerbated by additional regulations and regulatory scrutiny that accompanied or followed any such downturn. We can neither predict when or whether future regulatory or legislative reforms will be enacted nor what their contents will be. The impact of any future legislation or regulatory actions on our businesses or operations cannot be determined at this time, and such impact may adversely affect us. It is difficult to predict what impact the new Trump administration will have on these risks. Any actions by the new administration to scale back regulations or regulatory oversight may become subject to judicial or other challenges, which may increase the degree of uncertainty associated with this risk factor.
Our use of artificial intelligence and machine learning technologies may expose us to regulatory, operational, and competitive risks.
We use artificial intelligence ("AI") and machine learning technologies in certain aspects of our operations. While these technologies can provide significant benefits, they also present risks that could adversely affect our business. AI systems may produce inaccurate or biased outputs, which could result in regulatory compliance failures. The use of AI in lending decisions is subject to increasing regulatory scrutiny, particularly with respect to fair lending requirements under the Equal Credit Opportunity Act and the Fair Housing Act. Regulators may challenge the use of AI models that produce results that are based upon potential bias, even if such impacts are unintentional. Additionally, we face competitive pressures from fintech companies and other financial institutions that may be able to deploy AI technologies more aggressively or effectively than we can. Errors or failures in AI systems could result in operational disruptions, financial losses, reputational harm, or regulatory sanctions. As AI technology continues to evolve rapidly, there is significant uncertainty regarding future regulatory requirements and industry standards applicable to the use of AI by financial institutions. The regulatory landscape for AI in banking is still developing, and new regulations or guidance could require us to modify or discontinue certain uses of AI, incur significant compliance costs, or face enforcement actions.
A significant portion of our deposits are uninsured, which could result in funding pressures and liquidity constraints during times of financial stress.
A portion of our deposits exceeds the $250,000 FDIC insurance limit. As of December 31, 2025, our estimated uninsured deposits totaled approximately $1.176 billion, representing approximately 24.8% of our total deposits. Uninsured deposits may be more likely to be withdrawn during times of financial stress, which could result in funding pressures and liquidity constraints. In 2023, the failures of Silicon Valley Bank and Signature Bank highlighted the risks associated with high concentrations of uninsured deposits, as rapid deposit withdrawals contributed to those institutions' failures. We believe our depositor base is relatively diversified, and we take steps to manage uninsured deposit risk, including monitoring deposit concentrations, diversifying funding sources, and maintaining access to contingent liquidity facilities. However, there can be no assurance these measures will be effective in preventing deposit outflows during periods of market stress. A significant loss of deposits could require us to seek alternative funding sources, which may be more expensive or unavailable on acceptable terms, and could adversely affect our liquidity, financial condition, and results of operations.
Our concentration in commercial real estate loans exposes us to increased credit risk and regulatory scrutiny.
As of December 31, 2025, our loans secured by commercial real estate (CRE) totaled approximately $1.055 billion representing approximately 24.7% of our total loan portfolio. The commercial real estate market has experienced increased stress with higher interest rates and changes in tenant demand adversely affecting property values and cash flows in certain segments of the CRE market. Regulatory agencies have increased their scrutiny of CRE lending concentrations, particularly with respect to office properties and other property types experiencing elevated stress. An extended period of stress in the commercial real estate market could result in increased loan delinquencies, higher credit losses, and reduced collateral values, which could adversely affect our financial condition and results of operations. We actively monitor our CRE portfolio and underwriting standards; however, there can be no assurance that these measures will be sufficient to avoid losses.
We rely on third-party service providers for critical business functions, which exposes us to operational, cybersecurity, and regulatory risks.
We rely on third-party service providers for significant components of our business operations, including core data processing systems, payment processing, cybersecurity monitoring, and other critical functions. Our core data processing systems are largely outsourced to third-party providers. This reliance on third parties creates concentration risk, as disruptions to our key service providers' operations, financial condition, or security could directly impact our ability to serve customers and conduct business. Cybersecurity incidents affecting our third-party vendors could result in unauthorized access to customer data, operational disruptions, and regulatory liability. In addition, our third-party providers may fail to comply with applicable laws and regulations, which could expose us to regulatory sanctions and reputational harm. Contract negotiations with critical vendors may result in unfavorable terms, and we may have limited ability to switch providers without significant cost and operational disruption. Regulatory agencies increasingly scrutinize financial institutions' third-party risk management practices, and we may face increased compliance costs and regulatory expectations in this area. Failure to effectively manage third-party risks could adversely affect our business, financial condition, and results of operations.
Operational difficulties, including failure of technology infrastructure,infrastructure and the increasing occurrence and sophistication of attempts at fraudulent activity, could adversely affect our business and operations.
The financial services industry is also experiencing a rapid increase in the frequency and sophistication of fraudulent attacks, driven by the proliferation of AI-powered tools, deepfake technology, and organized, transnational crime rings. We are subject to evolving, complex threats designed to bypass traditional security controls. Our failure to successfully anticipate or mitigate these evolving schemes could lead to increased financial losses, higher operational costs, regulatory penalties, and significant reputational damage.
The operations of financial institutions such as us are dependent to a large degree on net interest income, which is the difference between interest income from loans and investments and interest expense on deposits and borrowings. Prevailing economic conditions; the trade, fiscal and monetary policies of the federal government, which have the potential to change significantly with the new Trump administration; and the policies of various regulatory agencies all affect market rates of interest and the availability and cost of credit, which in turn significantly affect financial institutions' net interest income. Volatility in interest rates can also result in disintermediation, which is the flow of funds away from financial institutions into direct investments, such as federal government and corporate securities and other investment vehicles, which, because of the absence of federal insurance premiums and reserve requirements, generally pay higher rates of return than financial institutions. Our financial results could be materially adversely impacted by changes in financial market conditions.
Our loan customers may not repay their loans according to their respective terms, and the collateral securing the payment of these loans may be insufficient to cover any losses we may incur. We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. Non-performing loans amounted to $6.0$23.1 million and $5.2$6.0 million at December 31, 2024,2025, and December 31, 2023,2024, respectively. Our allowance for credit losses coverage ratio of non-performing loans was 989.32%274.33% and 1,044.69%989.32% at December 31, 2024,2025, and December 31, 2023,2024, respectively. The decrease in this coverage ratio in 20242025 was primarily due to an increase in commercial non-performing loans that was partially offset by an increase in the allowance for credit losses. In determining the size of the allowance for credit losses, we rely on our experience and our evaluation of current economic conditions. If our assumptions or judgments prove to be incorrect, our current allowance for credit losses may not be sufficient to cover certain credit losses inherent in our loan portfolio, and adjustments may be necessary to account for different economic conditions or adverse developments in our loan portfolio. Material additions to our allowance for credit losses would adversely impact our operating results.
We maintain diversified securities portfolios, which include obligations of the Treasury and government-sponsored agencies as well as securities issued by states and political subdivisions, mortgage-backed securities, corporate securities and asset-backed securities. We seek to limit credit losses in our securities portfolios by principally purchasing highly rated securities (generally rated "AA" or higher by a major debt rating agency) and by conducting due diligence on the issuer. However, gross unrealized losses on securities available for sale and securities held to maturity in our portfolio totaled approximately $62.7$51.4 million and $53.9$39.8 million, respectively as of December 31, 20242025 (compared to approximately $65.2$62.7 million and $55.9,$53.9, respectively as of December 31, 20232024). We believe these unrealized losses are temporary in nature and are expected to be recovered within a reasonable time period as we believe we have the ability to hold the securities to maturity or until such time as the unrealized losses reverse. We evaluate securities available for sale for other impairment related to credit losses at least quarterly and more frequently when economic or market concerns warrant such evaluation. Those evaluations may result in a provision for credit losses recorded in our earnings. We measure expected credit losses on securities held to maturity ("HTM") on a collective basis by major security type with each type sharing similar risk characteristics, and we consider historical credit loss information. We may, in the future, experience losses in our securities portfolios which may result in credit losses that could materially adversely affect our results of operations.
An adverse outcome in certain overdraft fee litigation that has been brought against the bank could have a material adverse effect on our results of operations.
We are currently a defendant in three putative class action lawsuits challenging aspects of our overdraft and/or insufficient funds fee practices, including allegations that fees were assessed in circumstances where transactions were authorized on a positive balance but later settled against a negative balance and/or that multiple fees were charged on re-presented items. For additional information, please see Note 11 – Commitments and Contingent Liabilities in the Notes to Consolidated Financial Statements in our annual report, to be delivered to shareholders in connection with the April 21, 2026 Annual Meeting of Shareholders (filed as exhibit 13 to this report on Form 10-K) for more information. An adverse outcome in any of these matters, through judgment or settlement, could result in monetary damages, restitution, remedial relief requiring changes to our products, disclosures, and systems, and an increase in legal and compliance costs, any of which could be material to our results of operations. Similar lawsuits against other financial institutions nationwide have resulted in substantial settlements, and plaintiffs’ firms continue to actively pursue these claims. Recent public settlements in overdraft-related litigation include payments by multiple institutions, reflecting the potential exposure in this area.
Emerging digital assets and technologies may disrupt our business and adversely affect our results.
Rapid innovation in financial technology - including stablecoins and other digital assets, distributed ledger technologies, real‑time payment networks, embedded banking, and artificial intelligence - may change how consumers and businesses store value, make payments, access credit, and obtain financial services. These innovations could reduce our deposits (e.g., if customers hold value in stablecoins rather than bank accounts), compress or eliminate payment‑related and interchange revenues, and increase competition from non‑bank providers and larger technology firms with greater resources and scale. They may also require significant investments in systems, talent, cybersecurity, vendor oversight, and compliance, and expose us to new operational, fraud, liquidity, Bank Secrecy Act/anti‑money laundering, consumer protection, and third‑party risks. Legal and regulatory frameworks applicable to digital assets and related activities remain uncertain and may evolve rapidly; changes could restrict our ability to participate in or provide services to these markets, or increase our compliance costs and potential liabilities. If we are unable to adapt our products, pricing, and technology in a timely and cost‑effective manner, or if customers migrate to alternative platforms, our growth, funding, net interest margin, fee income, and overall financial condition could be materially and adversely affected.
Management's Discussion & Analysis (MD&A)
The information set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual report, to be delivered to shareholders in connection with the April 21, 2026 Annual Meeting of Shareholders (filed as exhibit 13 to this report on Form 10-K), is incorporated herein by reference.
No wording changes found in this section (only numbers or dates changed in 1 paragraph).
Full comparison: every changed paragraph (0)
What changed in the latest 10-Q
Risk Factors
New heading “The integration of HCB and its subsidiary, Highpoint Community Bank, into our operations involves significant risks and uncertainties that could adversely affect our business, financial condition, and results of operations.”
New heading “The loan portfolio acquired from HCB may present credit quality risks that differ from or exceed those reflected in our historical experience.”
New heading “The acquisition of HCB will result in a material increase in goodwill and other intangible assets, which could be subject to impairment.”
New heading “The acquisition of HCB has resulted in an increase in our total consolidated assets to approximately $6.3 billion and may subject us to increased regulatory scrutiny and compliance obligations.”
New heading “We may be exposed to litigation, regulatory, or reputational risks associated with HCB or Highpoint Community Bank that were not fully identified during our due diligence review.”
Removed heading “The Merger may not be consummated, which could have an adverse impact on our business and on the value of our common stock.”
Removed heading “The Merger, including the integration of HCB’s operations with our operations, may be more difficult, costly, or time-consuming than expected, and we may fail to realize the anticipated benefits of the Merger.”
Removed heading “IBCP and HCB will be subject to various uncertainties while the Merger is pending that could adversely affect our financial results or the anticipated benefits of the Merger.”
Removed heading “We expect to incur substantial transaction costs in connection with the Merger.”
Largest changes
“The acquisition of HCB will result in a material increase in goodwill and other intangible assets, which could be subject to impairment.”see in full comparison
“We paid aggregate merger consideration of approximately $74.9 million in a combination of IBCP common stock and cash for all outstanding shares of HCB stock. The excess of the purchase price over the fair value of net assets acquired will be recorded as goodwill and other intangible assets. Goodwill is not amortized but is tested for impairment at least annually and more frequently if events or circumstances indicate that impairment may exist. Intangible assets with definite useful lives, such as core deposit intangibles, are amortized over their estimated useful lives. …”see in full comparison
“We may be exposed to litigation, regulatory, or reputational risks associated with HCB or Highpoint Community Bank that were not fully identified during our due diligence review.”see in full comparison
“The integration of HCB and its subsidiary, Highpoint Community Bank, into our operations involves significant risks and uncertainties that could adversely affect our business, financial condition, and results of operations.”see in full comparison
“The Merger, including the integration of HCB’s operations with our operations, may be more difficult, costly, or time-consuming than expected, and we may fail to realize the anticipated benefits of the Merger.”see in full comparison
“The acquisition of HCB has resulted in an increase in our total consolidated assets to approximately $6.3 billion and may subject us to increased regulatory scrutiny and compliance obligations.”see in full comparison
Full comparison: every changed paragraph (31)
On MarchJuly 18,1, 2026, we announced that Independent Bank Corporation ("IBCP") hadcompleted enteredits intoacquisition a definitive merger agreement (“Merger Agreement”) withof HCB Financial Corp. (“HCB”) pursuant to which IBCP will acquire HCB in a stock and cash transaction (the “Merger”). The following represents material changes in our risk factors from the risk factors set forth in our Annual Report on Form 10-K.10-K, as updated in our Quarterly Report on Form 10-Q for the first quarter of 2026.
The integration of HCB and its subsidiary, Highpoint Community Bank, into our operations involves significant risks and uncertainties that could adversely affect our business, financial condition, and results of operations.
On July 1, 2026, we completed the acquisition of HCB, the holding company for Highpoint Community Bank. We expect to complete the full systems integration of Highpoint Community Bank's operations on November 9, 2026. The successful integration of HCB's operations is subject to a number of risks, including: challenges in consolidating banking operations, technology platforms, and data systems; difficulties in retaining key employees and customers of Highpoint Community Bank; disruption to our ongoing business during the integration process; diversion of management attention and resources from other strategic initiatives; the failure to achieve anticipated cost savings, revenue synergies, or other financial benefits of the acquisition, or the realization of such benefits taking longer than expected; and unanticipated integration costs or liabilities. We estimated cost savings equal to approximately 40% of HCB's operating expenses; however, there can be no assurance that these savings will be realized in the amounts or on the timetable we anticipate. Any failure to manage the integration process effectively or to realize the anticipated benefits of the acquisition could have a material adverse effect on our business, financial condition, and results of operations.
The loan portfolio acquired from HCB may present credit quality risks that differ from or exceed those reflected in our historical experience.
As of June 30, 2026, HCB had total loans and loans held for sale of approximately $371.9 million. We are in the process of completing our preliminary purchase accounting for the acquired loan portfolio, including the determination of acquisition-date fair values and the establishment of an allowance for credit losses under ASC 326 for acquired non-purchased credit deteriorated loans. The acquired portfolio includes commercial and retail loans originated under HCB's underwriting standards, which may differ from our own. To the extent that the acquired loans have credit characteristics, concentrations, or loss rates that differ from our expectations, we could experience higher-than-anticipated credit losses or be required to increase our provision for credit losses, either of which could have a material adverse effect on our results of operations and financial condition. In addition, HCB's loan-to-deposit ratio was approximately 67% as of year-end 2025, and the redeployment of excess liquidity into higher-yielding commercial loans, while consistent with our strategy, carries inherent credit risk.
The acquisition of HCB will result in a material increase in goodwill and other intangible assets, which could be subject to impairment.
We paid aggregate merger consideration of approximately $74.9 million in a combination of IBCP common stock and cash for all outstanding shares of HCB stock. The excess of the purchase price over the fair value of net assets acquired will be recorded as goodwill and other intangible assets. Goodwill is not amortized but is tested for impairment at least annually and more frequently if events or circumstances indicate that impairment may exist. Intangible assets with definite useful lives, such as core deposit intangibles, are amortized over their estimated useful lives. A significant decline in our stock price, deterioration in market conditions, adverse changes in applicable laws or regulations, or any number of other factors could result in an impairment charge, which could have a material adverse effect on our financial condition and results of operations.
The acquisition of HCB has resulted in an increase in our total consolidated assets to approximately $6.3 billion and may subject us to increased regulatory scrutiny and compliance obligations.
The completion of the HCB acquisition has increased our total consolidated assets to approximately $6.3 billion. As our asset size increases, we may be subject to heightened regulatory expectations with respect to enterprise risk management, capital planning, compliance, and consumer protection. Any failure to satisfy evolving regulatory expectations or conditions imposed in connection with regulatory approvals of the merger could result in enforcement actions, additional regulatory requirements, or restrictions on our business activities, any of which could have a material adverse effect on our business, financial condition, and results of operations.
We may be exposed to litigation, regulatory, or reputational risks associated with HCB or Highpoint Community Bank that were not fully identified during our due diligence review.
Although we conducted due diligence in connection with the acquisition, there may be liabilities, legal or regulatory exposures, compliance deficiencies, or reputational risks associated with HCB's business that were not identified or that prove to be more significant than anticipated. Any such liabilities or exposures could result in losses, regulatory sanctions, or harm to our reputation, which could have a material adverse effect on our business, financial condition, and results of operations.
The Merger may not be consummated, which could have an adverse impact on our business and on the value of our common stock.
We expect the Merger to close during the third quarter of 2026, but the Merger is subject to a number of closing conditions, many of which are beyond our control. If these conditions are not satisfied or waived, the Merger will not be completed. Certain of the conditions that remain to be satisfied include (without limitation):
•approval by HCB shareholders of the Merger Agreement and the Merger;
•receipt of required regulatory approvals, including the approval of the Federal Reserve and the Michigan Department of Insurance and Financial Services;
•continued accuracy of the representations and warranties made by the parties in the Merger Agreement;
•performance by each party of its respective obligations under the Merger Agreement;
•absence of any injunction, order, or decree restraining, enjoining or otherwise prohibiting the Merger; and
•absence of any material adverse change in the financial condition, business, or results of operations of IBCP and HCB.
Additionally, we may become subject to litigation related to the Merger. As a result, the Merger may not close on the timeline we currently expect, or at all. Failure to complete the Merger or any delays in completing the Merger on the terms and timing we currently expect could have an adverse impact on our future business and results of operations due to several factors, including (without limitation):
•having to pay significant transaction costs without realizing any of the anticipated benefits of completing the Merger;
•failing to pursue other beneficial opportunities due to the focus of our management on the Merger, without realizing any of the anticipated benefits of completing the Merger; and
•declines in our share price to the extent that the current market prices reflect an assumption by the market that the Merger will be completed
The Merger, including the integration of HCB’s operations with our operations, may be more difficult, costly, or time-consuming than expected, and we may fail to realize the anticipated benefits of the Merger.
The success of the Merger will depend on, among other things, our ability to integrate HCB and the operations of its subsidiary bank, Highpoint Community Bank, into our business in a manner that achieves the anticipated benefits of the Merger. If we are not able to successfully achieve these objectives, the anticipated benefits of the Merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost savings and anticipated benefits of the Merger could be less than anticipated, and integration may result in additional unforeseen expenses.
There is a significant degree of difficulty inherent in the process of integrating an acquisition, including challenges consolidating certain operations and functions; challenges integrating technologies, procedures, and policies; and difficulties in retaining key personnel. The integration may involve delays or additional and unforeseen expenses. The integration process and other disruptions resulting from the Merger may also disrupt our ongoing business. Any failure to successfully or cost-effectively integrate HCB following the closing of the Merger, if it occurs, on a timely basis could have an adverse effect on the revenues, expenses, and operating results of the combined company following the completion of the Merger, which may adversely affect the value of the common stock of the combined company following the completion of the Merger.
IBCP and HCB will be subject to various uncertainties while the Merger is pending that could adversely affect our financial results or the anticipated benefits of the Merger.
Uncertainty about the effect of the Merger on counterparties to contracts, employees, customers, and other parties may have an adverse effect on us or the anticipated benefits of the Merger. These uncertainties could cause contract counterparties, customers, and others who deal with us or HCB to seek to change existing business relationships and may impact our and HCB’s ability to attract, retain, and motivate key personnel until the Merger is completed and for a period of time thereafter.
The pursuit of the Merger and the preparation for the integration of the two companies may place a significant burden on our management and internal resources. This could affect our financial results prior to and/or following the completion of the Merger and could limit us from making other changes to our business prior to completion of the Merger or termination of the Merger Agreement.
We expect to incur substantial transaction costs in connection with the Merger.
We expect to incur a significant amount of non-recurring expenses in connection with the Merger, including investment banking, legal, accounting, consulting, and other expenses. In general, these expenses are payable by us whether or not the Merger is completed. Additional unanticipated costs may be incurred following consummation of the Merger in the course of integrating HCB’s businesses into our business. We cannot be certain the elimination of duplicative costs or the realization of other efficiencies related to the integration of the two businesses will offset the transaction and integration costs in the near term, or at all.
Management's Discussion & Analysis (MD&A)
Largest changes
Recent Developments.see in full comparisonPressures from various globalMacroeconomic andnational macroeconomicmarket conditions, includingsignificantinterest-ratevolatility and uncertainty in U.S. and global market conditions,volatility, inflationary pressures, recessionary concerns, uncertainty regardingfuturefiscal,interesttrade,rates, energyregulatory andothermonetarycommoditypolicy,pricegeopoliticalvolatility, foreign currency exchange rate fluctuations, the continuation of the Russia-Ukraine war, ongoing conflictconflicts in the MiddleEast,East andactualelsewhere,or potential changesvolatility infiscal, trade, regulatory,energy andmonetarycommoditypolicy,prices, competition for deposits and funding, and conditions affecting customer confidence, continue to create economic uncertainty for our customers, the markets in which weoperate,operate and the financial services industry. The extent to which these pressures and other factors may impact our business, results of operations, asset valuations, financial condition, and customers will depend on future developments, which continue to be highly uncertain and difficult to predict.MaterialPotential adverseimpactseffects may includeallreduced loan demand, changes in deposit levels oracosts,combinationpressure on liquidity and net interest margin, increased borrower delinquencies or defaults, lower collateral values, increased provision for credit losses or allowance for credit losses, and changes in the valuation or recoverability ofvaluation impairments on ourgoodwill, otherintangibles,intangiblegoodwill,assets, securities available for sale ("AFS"), securities held to maturity ("HTM"),loans,capitalized mortgage loan servicing rights or deferred tax assets.
“During the quarter, we recorded an accrual for losses we consider probable as a result of all of our outstanding litigation matters in the aggregate amount of $1.5 million, reflected as Litigation Expense in the interim condensed consolidated statement of operations. However, because of the inherent uncertainty of outcomes from any litigation matter, we believe it is reasonably possible we may incur losses in addition to the amounts we have accrued. …”see in full comparison
“The $0.4 million decrease in the provision for credit losses expense on loans and unfunded lending commitments from the prior year quarter is primarily due to a favorable variance in allocations based on subjective factors (prior year quarter included a four basis point increase while there was no increase in 2026), a decline in specific commercial loan reserves (prior year quarter included several downgrades while the specific allocations were relatively stable in 2026) as well a decrease in reserve on unfunded lending commitments (attributed to a decrease in balances and expected loss …”see in full comparison
“As of June 30, 2026, we had accrued $1.85 million for losses we consider probable and reasonably estimable with respect to these matters, including an additional $0.35 million recorded during the quarter ended June 30, 2026. The accrual is reflected as Litigation Expense in the interim condensed consolidated statement of operations and in accrued expenses and other liabilities in the interim condensed consolidated statements of financial condition. …”see in full comparison
“The litigation matters described in the preceding paragraph primarily include claims that have been brought against us for damages, but do not include litigation matters where we seek to collect amounts owed to us by third parties (such as litigation initiated to collect delinquent loans). These excluded, collection-related matters may involve claims or counterclaims by the opposing party or parties, but we have excluded such matters from the disclosure contained in the preceding paragraph in all cases where we believe the possibility of us paying damages to any opposing party is remote.”see in full comparison
“Other expense decreased by $0.3 million in the first three months of 2026, due primarily to the prior year period including costs related to the capitalized mortgage loan servicing right sale (see “Non-interest income” above) and the prior year period also including costs related to unfunded lending commitments that were partially offset by a write-down of a small business investment company.”see in full comparison
Full comparison: every changed paragraph (78)
Recent Developments. Pressures from various globalMacroeconomic and national macroeconomicmarket conditions, including significantinterest-rate volatility and uncertainty in U.S. and global market conditions,volatility, inflationary pressures, recessionary concerns, uncertainty regarding futurefiscal, interesttrade, rates, energyregulatory and othermonetary commoditypolicy, pricegeopolitical volatility, foreign currency exchange rate fluctuations, the continuation of the Russia-Ukraine war, ongoing conflictconflicts in the Middle East,East and actualelsewhere, or potential changesvolatility in fiscal, trade, regulatory,energy and monetarycommodity policy,prices, competition for deposits and funding, and conditions affecting customer confidence, continue to create economic uncertainty for our customers, the markets in which we operate,operate and the financial services industry. The extent to which these pressures and other factors may impact our business, results of operations, asset valuations, financial condition, and customers will depend on future developments, which continue to be highly uncertain and difficult to predict. MaterialPotential adverse impactseffects may include allreduced loan demand, changes in deposit levels or acosts, combinationpressure on liquidity and net interest margin, increased borrower delinquencies or defaults, lower collateral values, increased provision for credit losses or allowance for credit losses, and changes in the valuation or recoverability of valuation impairments on ourgoodwill, other intangibles,intangible goodwill,assets, securities available for sale ("AFS"), securities held to maturity ("HTM"), loans, capitalized mortgage loan servicing rights or deferred tax assets.
On March 18, 2026, we entered into a definitive merger agreement with HCB Financial Corp. ("HCB") (the "Merger Agreement") providing for a business combination of Independent Bank Corporation ("IBCP") and HCB. TheOn MergerJuly Agreement1, provides that, upon the terms and subject to the conditions set forth in the Merger Agreement,2026, HCB will bewas merged with and into IBCP, with IBCP as the surviving corporation (the "Merger"). InAs addition,a result of the Merger, Highpoint Community Bank became a wholly-owned subsidiary of IBCP as of July 1, 2026. IBCP intends to consolidate Highpoint Community Bank, HCB's wholly-owned subsidiary bank,Bank with and into Independent Bank (with Independent Bank as the surviving institution). during the fourth quarter of 2026.
SubjectWe to the terms and conditions of the Merger Agreement, we will paypaid aggregate Merger consideration of approximately $70.2$74.9 million, consisting of 1.59 million inshares of IBCP common stock and cash$17.5 million in cash, for all of the shares of HCB common stock issued and outstanding immediately before the effective time of the Merger. The Merger consideration is subject to adjustment in certain limited circumstances, as set forth in the Merger Agreement.
At June 30, 2026, HCB had $591.0 million of total assets, $371.9 million of loans and loans held for sale, $539.9 million of deposits and $47.6 million of shareholders’ equity. HCB reported unaudited net income of $0.99 million in the first six months of 2026. The HCB first six months 2026 results were adversely impacted due to $1.79 million of merger expenses. We expect the Merger to have a significant impact on our third quarter 2026 results because of the inclusion of their operations for the first time that quarter and merger related expenses.
Completion of the Merger is subject to certain closing conditions, including (among others) receipt of the requisite approval of HCB's shareholders, receipt of required regulatory approvals, and the absence of any law or order prohibiting completion of the Merger. The Merger Agreement provides certain termination rights for both IBCP and HCB and further provides that, upon termination of the Merger Agreement under certain limited circumstances, HCB will be obligated to pay IBCP a termination fee of approximately $3.25 million. Currently we anticipate the Merger will be effective during the third quarter of 2026. Our 2026 non-interest expenses include $0.3 million of costs incurred through March 31, 2026 related to the Merger.
It is against this backdrop that we discuss our results of operations and financial condition for the firstsecond quarter of 2026 as compared to earlier periods.
Summary. We recorded net income of $16.9$18.8 million and $15.6$16.9 million during the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase in 2026 firstsecond quarter results as compared to 2025 is due primarily to a $3.2$3.3 million increase in net interest income andincome, a $2.5$1.8 million favorable change in the fair value due to price of capitalized mortgage loan servicing rights and a $1.6 million gain on equity securities at fair value that were partially offset by a $4.0 million increase in non-interest expense.expense and a $1.2 million increase in the provision for credit losses.
We recorded net income of $35.7 million and $32.5 million during the six months ended June 30, 2026 and 2025, respectively. The increase in 2026 year-to-date results as compared to 2025 is primarily due to a $6.5 million increase in net interest income, a $2.8 million favorable change in the fair value due to price of capitalized mortgage loan servicing rights and a $1.6 million gain on equity securities at fair value that was partially offset by an $8.1 million increase in non-interest expense.
Our net interest income totaled $46.9$47.9 million during the firstsecond quarter of 2026, an increase of $3.2$3.3 million, or 7.3%7.4% from the year-ago period. This increase primarily reflects a $130.8$183.6 million increase in average interest-earning assets and a 1613 basis point increase in our tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”).
For the first six months of 2026, net interest income totaled $94.8 million, an increase of $6.5 million, or 7.3% from 2025. This increase primarily reflects a $157.3 million increase in average interest-earning assets and a 14 basis point increase in our net interest margin.
The increase in average interest-earning assets forin both the firstthree quarterand six month periods of 2026 as compared to the same period in 2025 primarily reflects growth in commercial loans funded from decreases in interest bearing cash deposits, installment loans and securities available for sale and held to maturity as well as an increase in deposits.
The increase in our net interest margin during the three and six month period in 2026 is attributed to a 2928 basis point decreasedecreases in interest expense as a percent of average interest-earning assets ("Cost of Funds") that waswere only partially offset by a15 13and 14 basis point decreasedecreases, respectively in interest income as a percent of average interest-earning assets ("Asset Yield"). These decreases are primarily attributed to the decreases in the federal funds rate since January of 2025 as the average federal funds rate was 75 basis points lower during the first quarter of 2026 as compared to the first quarter of 2025. Our Cost of Funds has been positively impacted by deposit pricing sensitivity to the decreases in interest rates discussed above as well as a favorable shift in mix with growth in lower cost non-maturity deposits and runoff in wholesale funding and subordinated debentures.debt. Our Asset Yield has been negatively impacted by lower rates on variable rate earning assets. However, this impact has been partially offset by the origination of new fixed rate loans at rates higher than those in our current portfolio, as well as a shift in earning asset mix from generally lower rate investment securities, consumer loans and overnight liquidity to higher rate loans. See Asset/liability management.
Our net interest income is also impacted by our level of non-accrual loans. In the second quarter and first quartersix months of 2026, non-accrual loans averaged $36.0$39.4 million.million and $37.7 million, respectively. In the second quarter and first quartersix months of 2025, non-accrual loans averaged $6.6$7.7 million.million Theand increase$7.2 inmillion, non accrual balances primarily relates to one commercial loan credit relationship.respectively. In addition, in the second quarter and first quartersix months of 2026 we had net charge-offsrecoveries of $0.1$0.16 million and $0.02 million, respectively of unpaid interest on loans placed on or taken off non-accrual or on loans previously charged-off compared to net recoveries of $0.1$0.11 million and $0.22 million, respectively, during the same periodperiods in 2025.
(1)Interest on tax-exempt loans and securities available for sale is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.
(2)Annualized
Provision for credit losses. The provision for credit losses was an expense of $0.36$2.7 million and $0.72an expense of $1.5 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. During the six-month periods ended June 30, 2026 and 2025, the provision for credit losses was an expense of $3.1 million and an expense of $2.2 million, respectively.
The provision for credit losses on loans reflects our assessment of the allowance for credit losses (the “ACL”) on loans taking into consideration factors such as loan growth, loan mix, levels of non-performing and classified loans, economic conditions and loan net charge-offs. While we use relevant information to recognize losses on loans, additional provisions for related losses may be necessary based on changes in economic conditions, customer circumstances and other credit risk factors. See “Portfolio Loans and asset quality” for a discussion of the various components of the ACL related to loans and their impact on the provision for credit losses in 2026. In general, we use a similar methodology for the provision for credit losses on unfunded lending commitments.
The increase in the provision for credit losses expense from the prior year period is primarily due to the commercial portfolios reflecting an increase in specific reserves on certain individually evaluated commercial loan relationships and net loan growth as well as an increase in the reserve on unfunded lending commitments (attributed to an increase in expected loss rates). Partially offsetting these increases was a decrease in net newly allocated losses in the retail loan portfolios reflecting fewer retail loans requiring incremental expected credit loss allocations during the quarter, as well as a five basis point decrease in the adjustment to allocations based on subjective factors. The five basis point reduction in allocations based on subjective factors reflects our annual CECL model recalibration, which resulted in minimal changes to the quantitative estimate and demonstrated continued model maturity. The reduction also reflected our assessment of current economic conditions, portfolio performance, business survey results, stable collateral values and reduced regulatory risk.
The $0.4 million decrease in the provision for credit losses expense on loans and unfunded lending commitments from the prior year quarter is primarily due to a favorable variance in allocations based on subjective factors (prior year quarter included a four basis point increase while there was no increase in 2026), a decline in specific commercial loan reserves (prior year quarter included several downgrades while the specific allocations were relatively stable in 2026) as well a decrease in reserve on unfunded lending commitments (attributed to a decrease in balances and expected loss rates) that were only partially offset by an increase in retail loan pooled reserves (prior year quarter included certain favorable pooled loss allocation rate changes while pooled allocations were relative stable in 2026).
The year to date provision for credit losses on securities HTM in 2026 and 2025 was a credit of zero and $0.003$0.001 million, respectively. See Note #3.
Non-interest income. Non-interest income is a significant element in assessing our results of operations. Non-interest income totaled $12.0$15.3 million during the firstsecond quarter of 2026 compared to $10.4$11.3 million in the firstsecond quarter of 2025. For the first six months of 2026, non-interest income totaled $27.4 million compared to $21.7 million for the first six months of 2025.
(1) Mortgage loan sales in the firstsecond quarters of 2026 and 2025 include $1.4$1.6 million and $8.7$6.7 million, respectively, of portfolio loan transactions. Mortgage loan sales during the first six months of 2026 and 2025 include $3.1 million and $15.4 million, respectively, of portfolio loan transactions. These transactions were performed for interest rate risk purposes.
(2) Net gains on mortgage loans in the firstsecond quarters of 2026 and 2025 include net gains of $0.03$0.05 million and $0.22$0.08 million, respectively, from portfolio loan transactions. Net gains during the first six months of 2026 and 2025 were $0.1 million and $0.3 million, respectively.
Mortgage loans originated during the second quarter of 2026 were relatively unchanged from the same period last year. The increase in mortgage loans originated duringfor the firstyear threeto monthsdate ofperiod ended June 30 2026 as compared to 2025 was primarily driven by higher refinance activity during the first quarter of 2026 as mortgage rates declined through early 2026.
Net gains on mortgage loans totaled $1.3$1.7 million and $2.3$1.6 million during the firstsecond quarters of 2026 and 2025, respectively. The decrease fromFor the priorfirst yearsix threemonths monthof period2026 isand attributed2025, tonet agains loweron Loanmortgage Salesloans Margin.totaled $3.0 million and $3.9 million, respectively.
Our Loan Sales Margin is impacted by several factors including competition and the manner in which the loan is sold. Net gains on mortgage loans are also impacted by recording fair value accounting adjustments. Excluding these fair value accounting adjustments, the Loan Sales Margin would have been 1.47%1.30% and 1.91%1.59% in the second quarters of 2026 and 2025, respectively and 1.37% and 1.73% in the first quarterssix months of 2026 and 2025, respectively. The contraction of the Loan Sales Margin during theboth first quarterperiods of 2026 was primarily due to competitive pressure which had a negative impact on our pricing margins.
We recorded a net loss of $0.03$0.12 million and $0.33$0.32 million on the sale of securities AFS for the first threesix months of 2026 and 2025, respectively. We recorded no credit related charges in either 2026 or 2025 on securities AFS. See “Securities” below and note #3 to the interim Condensed Consolidated Financial Statements.
Mortgage loan servicing, net, generated income of $2.5 million and $0.5 million in the second quarters of 2026 and 2025, respectively. For the first six months of 2026 and 2025, mortgage loan servicing, net, generated income (expense) of $1.6$4.1 million and $(0.60.1) million in the first quarters of 2026 and 2025,million, respectively. The significant variancevariances in mortgage loan servicing, net isare primarily due to changes in the fair value of capitalized mortgage loan servicing rights associated with changes in interest rates and the associated expected future prepayment levels and expected float rates as well as a decline in servicing revenue. The decline in revenue, net in the table below is attributed to the sale of approximately $931 million of mortgage servicing rights on January 31, 2025.rates.
(1) On January 31, 2025 we sold $931.6 million of mortgage loan servicing rights (26.3% of total servicing portfolio) and transferred the servicing on March 3, 2025. This sale represented approximately $13.1 million (41.5%27.9%) of the total capitalized mortgage loan servicing right asset. While there remains a customary hold back of final settlement funds of approximately $0.1 million relating to this transaction, we are not aware of any issues that will have a material impact on this final payment. We expect to receive this payment in the second quarter, 2026. Transaction expenses relating to this sale were approximately $0.2 million and waswere expensed during the first quarter ofin 2025.
At MarchJune 31,30, 20262026, we were servicing approximately $2.60$2.59 billion in mortgage loans for others on which servicing rights have been capitalized. This servicing portfolio had a weighted average coupon rate of 4.54%4.58% and a weighted average service fee of approximately 25.6 basis points. Capitalized mortgage loan servicing rights at MarchJune 31,30, 2026 totaled $32.2$33.9 million, representing approximately 124.1131.1 basis points on the related amount of mortgage loans serviced for others.
Other income in the table above increased (decreased) by $0.3$0.1 million and $(0.2) million in the second quarter and first quartersix months of 2026, asrespectively, compared to the same prior year periods. The increase in the second quarter of 2026 was primarily due to higher commercial loan swap fees. The decrease from the prior year to date period was primarily due to lower commercial loan swap fees.fees and declines in check and ATM income.
Non-interest expense increased by $4.0 million to $38.3$37.8 million and increased by $8.1 million to $76.1 million during the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared to the same periodperiods in 2025.
Compensation and employee benefits expenses, in total, increased $1.4 million on a quarterly comparative basis.basis and increased $2.9 million for the first six months of 2026 compared to the same periods in 2025.
Compensation expense increased by $0.9$0.6 million and $1.6 million in the firstsecond quarter and first six months of 20262026, respectively, compared to the same periodperiods in 2025. TheThese comparative increaseincreases in 2026 waswere primarily due to salary increases that were predominantly effective on January 1, 2026, higher severance costs (year to date period only) and additional commercial lending and support staff that were partially offset by a decrease in mortgage lending and other retail personnel.
Performance-based compensation increased by $0.2$0.4 million and $0.6 million in the firstsecond quarter and first six months of 20262026, respectively, compared to the same periodperiods in 2025. The increase is due in part to anboth increasehigher inexpected incentive compensation payout for salaried and hourly employees and long term incentiveshare expense.based incentives.
Payroll taxes and employee benefits increased by $0.3$0.4 million and $0.7 million in the firstsecond quarter and first six months of 20262026, respectively, compared to the same periodperiods in 2025, due primarily to increases in employee medical insurance costs and retirement costs.
Data processing expense increased by $0.2$0.3 million and $0.5 million in the firstsecond quarter and first six months of 20262026, respectively, compared to the same prior year periodperiods due in part to core data processor annual asset growth and CPI related cost increases as well as new solutions implemented during this time frame.
Occupancy, net increased by $0.2 million in the first quarter of 2026 compared to the same prior year period due in part to higher snow removal costs, utility costs and higher depreciation expense due to a new location.
Litigation expense of $1.5 million is attributed to an accrual established for losses we consider probable as a result of all of our outstanding litigation matters in the aggregate (See “Litigation Matters.”).
Advertising expense increased by $0.3 million and $0.7 million in the firstsecond quarter and first six months of 20262026, respectively, compared to the same prior year periodperiods due in part to retroactivehigher newcustomer depositacquisition accountmarketing openingcosts incentivesas attributedwell toas accountshigher openedout-of-home inadvertising a prior period.campaigns.
Loan and collection expense increased by $0.3 million in both the second quarter and first six months of 2026, compared to the same prior year periods due primarily to higher legal fees associated with collection and workout activities.
Merger related expenses of $0.3$0.4 million and $0.7 million in the second quarter and first quartersix months of 2026 relatereflect tolegal, ourprofessional, recentlyregulatory, announcedvaluation, and other direct transaction costs associated with the acquisition of HCB Financial Corp. and primarily include legal related expenses.
Other expense increased by $0.4 million and $0.1 million in the second quarter and first six months of 2026. The increase during the second quarter was due primarily to the prior year period including recoveries related to unfunded lending commitments and higher Michigan Corporate Income Tax (due to an increase in taxable base) while these increases were partially offset by costs related to the capitalized mortgage loan servicing right sale (six month period - see “Non-interest income” above).
Other expense decreased by $0.3 million in the first three months of 2026, due primarily to the prior year period including costs related to the capitalized mortgage loan servicing right sale (see “Non-interest income” above) and the prior year period also including costs related to unfunded lending commitments that were partially offset by a write-down of a small business investment company.
Income tax expense. We recorded an income tax expense of $3.4$3.9 million and $7.3 million in the firstsecond quarter and the first six months of 2026.2026, respectively. This compares to an income tax expense of $3.5$3.8 million and $7.3 million in the firstsecond quarter and the first six months of 2025.2025, respectively. The changechanges in expense for the first threesix months of 2026 compared to the same period in 2025 is primarily due to changes in pretax income thatas werewell partially offset byas an increase in certain energy tax credits.credits recognized during 2026.
Our actual income tax expense is different than the amount computed by applying our statutory income tax rate to our income before income tax primarily due to tax-exempt interest income, tax-exempt income from the increase in the cash surrender value on life insurance, and differences in the value of stock awards that vest and stock options that are exercised as compared to the initial fair values that were expensed and certain low income housing, solar and energy tax credits.expensed.
We assess whether a valuation allowance should be established against our deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. The ultimate realization of this asset is primarily based on generating future income. We concluded at MarchJune 31,30, 2026 and 2025 and at December 31, 2025, that the realization of substantially all of our deferred tax assets continues to be more likely than not.
Summary. Our total assets increased by $51.8$158.1 million during the first threesix months of 2026. Loans, excluding loans held for sale, were $4.31$4.41 billion at MarchJune 31,30, 2026, compared to $4.28 billion at December 31, 2025. Commercial loans increased whileand mortgage loans andincreased while installment loans decreased during the first threesix months of 2026. (See “Portfolio Loans and asset quality.”) Securities available for sale and securities held to maturity together totaled $783.3$781.5 million at MarchJune 31,30, 2026, a decline of $22.1$23.9 million since December 31, 2025.
Deposits totaled $4.88$4.86 billion at MarchJune 31,30, 2026, an increase of $119.0$100.5 million from December 31, 2025. The increase in deposits from December 31, 2025, is due to increases in non-interest bearing, savings and interest-bearing checking, reciprocal,checking and brokered timereciprocal deposits that were partially offset by decreasesa decrease in non-interest bearing andbrokered time deposits.
On April 1, 2022, we transferred certain securities AFS with an amortized cost and unrealized loss at the date of transfer of $418.1 million and $26.5 million, respectively to securities HTM. The transfer was made at fair value, with the unrealized loss becoming part of the purchase discount which will be accreted over the remaining life of the securities. The other comprehensive loss component is separated from the remaining available for sale securities and is accreted over the remaining life of the securities transferred. Based upon our liquidity and capital resources (as explained in more detail below under "Liquidity and capital resources"), we believe that we have the ability and intent to hold these securities until they mature, at which time we expect to receive fullall valueof the remaining amortized cost basis for these securities.
Securities AFS in unrealized loss positions are evaluated quarterly for impairment related to credit losses. For securities AFS in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities AFS that do not meet this criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, adverse conditions specifically related to the security and the issuer and the impact of changes in market interest rates on the market value of the security, among other factors. If this assessment indicates that a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an ACL is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income (loss), net of applicable taxes. No ACL for securities AFS was needed at MarchJune 31,30, 2026 and December 31, 2025. The increasedecrease in unrealized losses during the first threesix months of 2026 is primarily attributedreflects the outperformance of obligations of states and political subdivisions relative to anU.S. increaseTreasury securities, resulting in interestfavorable rateschanges sincein Decemberfair 31,value, 2025partially asoffset wellby asmodest adeclines generalin wideningthe fair value of creditcertain spreadsagency duringresidential themortgage-backed thisand period.corporate securities. See note #3 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.
For securities HTM an ACL is maintained at a level which represents our best estimate of expected credit losses. This ACL is a contra asset valuation account that is deducted from the carrying amount of securities HTM to present the net amount expected to be collected. Securities HTM are charged off against the ACL when deemed uncollectible. Adjustments to the ACL are reported in our interim Condensed Consolidated Statements of Operations in provision for credit loss.losses. We measure expected credit losses on securities HTM on a collective basis by major security type with each type sharing similar risk characteristics. With regard to U.S. Government-sponsored agency and mortgage-backed securities (residential and commercial), all these securities are issued by a U.S. government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities. With regard to obligations of states and political subdivisions, private label-mortgage-backed, corporate and trust preferred securities HTM, we consider (1) issuer bond ratings, (2) long-term historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. See note #3 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.
Non-performing loans have increased as a percent of Portfolio Loans since year-end 2025, primarily due to the addition of onethree commercial real estate loanrelationships during the first quartersix months of 2026. See note #4.
Other real estate and repossessed assets totaled $0.77$0.71 million and $0.90 million at MarchJune 31,30, 2026, and December 31, 2025, respectively.
The ACL increased $0.3$2.2 million to $63.7$65.7 million at MarchJune 31,30, 2026 from $63.4 million at December 31, 2025, and was equal to 1.49% and 1.48% of total Portfolio Loans at bothJune March 31,30, 2026 and December 31, 2025.2025, respectively.
Since December 31, 2025, the ACL related to specific loans increased $2.54 million due primarily to additional individually evaluated commercial loan relationships and higher reserves on certain existing individually evaluated commercial loan relationships. Pooled analysis allocations increased primarily due to commercial loan growth and modest changes in portfolio risk characteristics, partially offset by model recalibration and updated economic assumptions that reduced expected losses within certain retail loan portfolios. Additional allocations based on subjective factors decreased as updated model assumptions, portfolio segmentation and current economic inputs were reflected more fully in the quantitative estimate.
Since December 31, 2025, the ACL related to specific loans increased $0.30 million due primarily to one commercial loan relationship. The ACL related to pooled analysis allocations and additional allocations based on subjective factors were both relatively stable, increasing (decreasing) $(0.12) million and $0.10 million, respectively from December 31, 2025.
Deposits totaled $4.88$4.86 billion and $4.76 billion at MarchJune 31,30, 2026, and December 31, 2025, respectively. The increase in balances during the first threesix months of 2026 is due to increases in non-interest bearing, savings and interest-bearing checking, reciprocal,checking and brokered timereciprocal deposits that were partially offset by decreasesa decrease in non-interest bearing andbrokered time deposits. Reciprocal deposits totaled $1.029$1.025 billion and $974.9 million at MarchJune 31,30, 2026 and December 31, 2025, respectively. These deposits represent demand, money market and time deposits from our customers that have been placed through IntraFi Network. This service allows our customers to access multi-million dollar FDIC deposit insurance on deposit balances greater than the standard FDIC insurance maximum.
(1) These amounts exclude intercompany related deposits of $47.6$45.7 million and $47.0 million at MarchJune 31,30, 2026 and December 31, 2025, respectively. Uninsured deposits reported in our Call Report at MarchJune 31,30, 2026 and December 31, 2025 totaled $1.201$1.202 billion and $1.223 billion, respectively.
Other borrowings, comprised primarily of FHLB borrowings, totaled $27.0$127.0 million and $77.0 million at MarchJune 31,30, 2026, and December 31, 2025, respectively.
IBCP insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 5 filings (5 insiders, 5 trade dates, 6,689 shares, about $240.8K). Net open-market shares: -6,689 (purchases minus sales); net value about -$240.8K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-01 | Boer William J |
Grant/award | 292 | $35.24 | $10.3K |
| 2026-09-15 | Kessel William B |
Open-market sale | 600 | $37.36 | $22.4K |
| 2026-09-15 | Kessel William B |
Open-market sale | 195 | $37.19 | $7.3K |
| 2026-09-15 | Kessel William B |
Open-market sale | 100 | $37.38 | $3.7K |
| 2026-09-15 | Kessel William B |
Open-market sale | 100 | $37.10 | $3.7K |
| 2026-09-15 | Kessel William B |
Open-market sale | 405 | $37.30 | $15.1K |
| 2026-09-15 | Kessel William B |
Open-market sale | 106 | $37.25 | $3.9K |
| 2026-09-15 | Kessel William B |
Open-market sale | 100 | $37.41 | $3.7K |
| 2026-09-15 | Kessel William B |
Open-market sale | 200 | $37.18 | $7.4K |
| 2026-09-15 | Kessel William B |
Open-market sale | 194 | $37.17 | $7.2K |
| 2026-08-19 | Kreter Kristopher |
Open-market sale | 300 | $37.11 | $11.1K |
| 2026-08-10 | Twarozynski James J |
Open-market sale | 489 | $37.67 | $18.4K |
| 2026-07-01 | Boer William J |
Grant/award | 285 | $36.07 | $10.3K |
| 2026-06-09 | Ervin Patrick J |
Open-market sale | 242 | $35.41 | $8.6K |
| 2026-06-09 | Ervin Patrick J |
Open-market sale | 76 | $35.40 | $2.7K |
| 2026-06-09 | Ervin Patrick J |
Open-market sale | 780 | $35.42 | $27.6K |
| 2026-06-09 | Ervin Patrick J |
Open-market sale | 2 | $35.44 | $71 |
| 2026-06-09 | Ervin Patrick J |
Open-market sale | 1,400 | $35.39 | $49.5K |
| 2026-05-29 | Kimball Stefanie M |
Open-market sale | 1,400 | $34.42 | $48.2K |
Well-known investors holding IBCP (13F)
None of the 59 investors we track reported a position in their latest 13F.