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DATE

Thursday, January 22, 2026 at 11:00 a.m. ET

CALL PARTICIPANTS

  • President & CEO — Brad Kessel
  • Executive Vice President, Commercial Banking — Joel Rahn
  • Chief Financial Officer — Gavin Moore

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TAKEAWAYS

  • Net Income -- $18.6 million, or $0.89 per diluted share, compared to $18.5 million, or $0.87 per diluted share, in Q4 2024.
  • Full-Year Net Income -- $68.5 million, or $3.27 per diluted share, compared to $66.8 million, or $3.06 per diluted share in 2024.
  • Net Interest Income -- Increased by $1 million, or 2.2% year over year; up $3.5 million compared to the year-ago period.
  • Net Interest Margin (NIM) -- 3.62%, an increase of eight basis points sequentially and 17 basis points higher than Q4 2024.
  • Return on Average Assets -- 1.35%; Return on Average Equity -- 14.75%.
  • Loan Growth -- $78 million net increase, or 7.4% annualized sequentially; $237 million net full-year increase, or 5.9%.
  • Commercial Portfolio Growth -- $276 million, or 14.2% for the year; $88 million in Q4, or 16% annualized.
  • Deposit Growth (Ex. Brokered) -- Net increase of $57.5 million, or 4.8% annualized, compared to the prior quarter.
  • Total Deposits -- $4.8 billion at period-end, up $107.6 million year over year, with retail, commercial, and municipal portfolios all up.
  • Deposit Mix -- 47% retail, 37% commercial, 16% municipal.
  • Total Cost of Funds -- Decreased 15 basis points sequentially to 1.67%.
  • Tangible Book Value -- Increased 13.3% over the year.
  • Tangible Common Equity Ratio -- 8.65%, within targeted range of 8.5%-9.5%.
  • Dividend -- $0.26 per share paid on November 14, 2025; annual dividend payout ratio of 32%.
  • Share Repurchases -- 407,113 shares repurchased in 2025 for $12.4 million aggregate purchase price.
  • Credit Metrics -- Nonperforming loans totaled $23.1 million (54 bps of loans) versus 48 bps in previous quarter, with $16.5 million tied to one commercial development; past due loans $7.8 million (18 bps), up from 12 bps in previous quarter.
  • Net Charge-Offs -- $1.6 million, or four basis points of average loans for the year, compared to two basis points in 2024.
  • Noninterest Income -- $12.0 million in Q4 versus $19.1 million in the year-ago quarter; included $1.4 million in net gains on mortgage loans and $0.9 million in mortgage servicing net revenue.
  • Mortgage Servicing Rights Sale -- Revenue decline attributed to approximately $931 million of mortgage servicing rights sold in January 2025.
  • Noninterest Expense -- $36.1 million in Q4 versus $37 million in Q4 2024 and $34.1 million in Q3 2025; compensation expense decrease offset by higher salaries and certain project charges.
  • Income Tax Benefit -- $1.8 million benefit from execution of a $22.9 million energy tax credit transfer agreement in Q4; no comparable prior-year benefit.
  • Commercial Loan Pipeline -- Management described commercial loan pipeline as "solid" and comparable to January 2025.
  • 2026 Loan Growth Outlook -- Targeted at 4.5%-5.5% for the year, primarily commercial; mortgage flat, installment loans declining.
  • 2026 Net Interest Income Guidance -- Forecasted growth of 7%-8% versus 2025; net interest margin expansion of 18-23 basis points for the full year.
  • 2026 Noninterest Income Estimate -- Quarterly range of $11.3 million-$12.3 million; full-year expected to grow 3%-4% from 2025.
  • 2026 Noninterest Expense Guidance -- Quarterly range of $36 million-$37 million, with full-year up 5%-6% over 2025; key drivers cited as compensation, benefits, data processing, loan and collections, and occupancy.
  • 2026 Provision for Credit Losses -- Expected to be 20-25 basis points of average portfolio loans.
  • 2026 Effective Tax Rate -- Projected at approximately 17%.
  • 2026 Mortgage Guidance -- Origination volumes expected to decline 6%-7%, with net gain on sale down 14%-16%.
  • Securities Portfolio Runoff -- Forecast for $120 million in runoff in 2026 to fund loan growth.
  • Interest Rate Sensitivity -- Risk position largely unchanged for +/-200 basis point rate changes, with more sensitivity to larger upward or downward moves due to deposit model assumptions after Fed cuts.
  • Share Repurchase Authorization for 2026 -- Board authorized repurchase of up to 5%, but management is not modeling any buybacks in current guidance.

SUMMARY

Management expects commercial loan growth to remain a key driver, with a solid pipeline and ongoing banker additions supporting 2026 targets. The sale of mortgage servicing rights materially reduced mortgage servicing revenue, leading to a lower noninterest income figure compared to the prior year. A new tax credit transfer agreement delivered a one-time $1.8 million benefit to Q4 income tax expense. Near-term deposit funding costs fell, contributing to sequential net interest margin expansion. Share repurchases contributed to capital deployment, but no further buybacks are currently included in the 2026 outlook.

  • Brad Kessel indicated that overall loan growth targets are tempered by expected consumer and mortgage loan declines, with strategic focus on commercial expansion.
  • Gavin Moore stated, "We feel really good about our ability to see that 40% plus beta on the repricing down of deposits," referring to margin expansion from expected rate cuts.
  • The board increased the dividend by over 7.5%, continuing a focus on stable and growing shareholder payouts.
  • Noninterest expense increases in 2026 will principally result from higher personnel and technology-related costs rather than loan volume growth.
  • Leadership signaled ongoing openness to M&A, but characterized acquisitions as nonessential to continued organic growth.
  • Average fixed-rate portfolio cash flow repricing is projected at $105 million per quarter at a $5.50 exit rate, with commercial loan repricings at $220 million for the full year.

INDUSTRY GLOSSARY

  • Net Interest Margin (NIM): The difference between interest income generated and interest paid out, relative to average earning assets, indicating core profitability of a bank's lending and deposit activities.
  • BPS (Basis Points): One hundredth of a percentage point, used to describe changes in interest rates or yields; e.g., 8 bps = 0.08%.
  • Beta (Deposit Beta): The percentage of changes in market interest rates that is passed on to the cost of interest-bearing deposits.
  • CPR (Constant Prepayment Rate): An annualized rate used to estimate the amount of principal from loans and securities that will be prepaid prior to maturity.
  • Energy Tax Credit Transfer Agreement: A financial arrangement enabling the purchase and use of energy-related federal or state tax credits to offset tax liabilities.

Full Conference Call Transcript

I'm pleased to report on our fourth quarter and full year 2025 results as we advance our mission of inspiring financial independence today with tomorrow in mind. Our vision is a future where people approach their finances with confidence, clarity, and the determination to succeed. Our core values of courage, drive, integrity, people focus, and teamwork are the blueprint our employees live by. We strive to be Michigan's most people focused bank. Independent Bank Corporation reported fourth quarter two thousand twenty five net income of $18,600,000 or $0.89 per diluted share, versus net income of $18,500,000 or $0.87 per diluted share in the prior year period.

For the year ended 12/31/2025, the company reported net income of $68,500,000 or $3.27 per diluted share compared to net income of $66,800,000 or $3.06 per diluted share in 2024. Highlights for the '25 include an increase in net interest income of $1,000,000, that's 2.2% over the '24. A net interest margin of 3.62%, that's eight basis points up on a linked quarter basis. A return on average assets and a return on average equity of 1.35% and 14.75% respectively. Net growth in loans of $78,000,000 or 7.4% annualized, from 09/30/2025. Net growth in total deposits less brokered deposits of $57,500,000 or 4.8% annualized.

An increase in tangible common equity ratio to 8.65% and the payment of a $0.26 per share dividend in common stock on 11/14/2025.

Our fourth quarter performance marked the culmination of another remarkable year with our organization excelling on all fundamentals. Over the past year, we increased tangible book value by 13.3% and delivered near record earnings. Meanwhile, our dividend payout ratio was 32% for the year as we continue to recognize the value of returns for our shareholders. During the fourth quarter, we realized continued net interest margin expansion, strong loan growth, and increased non interest income. In addition, our credit quality metrics remain positive with watch credits and non performing assets below historic averages.

In anticipation of continued strong earnings, we repurchased shares and executed a tax credit transfer agreement during the fourth quarter which is expected to reduce tax obligations and enhance earnings per share. Looking ahead to 2026, our confidence is bolstered by a robust commercial loan pipeline and our ongoing strategic initiative to attract and integrate talented bankers into our organization.

Moving to Page five of our presentation, deposits totaled $4,800,000,000 at 12/31/2025. An increase of $107,600,000.0 from December 31, 2024. This increase is primarily due to growth in savings and interest bearing checking reciprocal and time balances that were partially offset by decreases in noninterest bearing and brokered time deposits. On a linked quarter basis, business deposits increased by $20,400,000, retail deposits increased by $64,100,000.0 offset by a $28,600,000 decrease in municipal deposits. The deposit base is comprised of 47% retail, 37% commercial, and 16% municipal. All three portfolios are up on a year over year basis.

On Page six, we have included in our presentation a historical view of our cost funds as compared to the Fed fund spot rate and the Fed effective rate. For the quarter, our total cost of funds decreased by 15 basis points to 1.67%. At this time, I'd like to turn the presentation over to Joel Rahn to share a few comments on the success we're having in growing our loan portfolios and provide an update on our credit metrics. Joel?

Joel Rahn: Thank you, Brad, and good morning, everyone. On page seven, we share an update of loan activity for the quarter. We continue to experience solid loan growth in the fourth quarter with total loans growing by $78,000,000 or 7.4% annualized as Brad just referenced. For the year, we increased our loan portfolio $237,000,000 or 5.9%. Our commercial portfolio led the way with $276,000,000 or 14.2% growth. Commercial loan generation continued its strong trend in Q4 with $88,000,000 in quarterly growth or 16% annualized. Our residential mortgage portfolio grew by $7,200,000.0, and our installment loan portfolio decreased $17,000,000 for the quarter. Our strategic investment in commercial banking talent continues to supplement our loan growth.

During the fourth quarter, we added an experienced banker in Metro Detroit, and in total, we have 49 bankers comprising eight commercial loan teams across our statewide footprint. During the year, we added a net of five experienced bankers to the team.

Looking ahead, we believe we will continue low double digit growth of our commercial loan portfolio in 2026. Our pipeline remains solid, it's comparable to January '25. We continue to see market opportunities from regional banks in both talent and customer acquisition. They're seeing steady organic growth from existing customers. Looking at the commercial loan production activity on a year to date basis, mix of C and I lending versus investment real estate was 57% and 43%, respectively. And for our commercial portfolio, our mix is 67% C and I and 33% investment real estate. Page eight provides detail on our commercial loan portfolio concentrations.

There's not been any significant shift in our portfolio over the past year with the portfolio remaining very well diversified. Our largest segment of the C and I category is manufacturing, $183,000,000 or 8.3% of the portfolio. In the investment real estate segment of the portfolio, the largest concentration is industrial at $202,000,000 or 8.8%.

We outlined key credit quality metrics and trends on page nine. We continue to demonstrate strong credit quality. Total nonperforming loans were $23,100,000 or 54 basis points of total loans at quarter end, up slightly from 48 basis points at 09/30. It's worth noting that $16,500,000 of this total is one commercial development exposure that we discussed last quarter. We continue to work through the challenges of this particular project, and are appropriately reserved for any loss exposure. Past due loans totaled $7,800,000 or 18 basis points, up slightly from 12 basis points at 09/30.

It's not reflected on the slide, but worth noting that we realized net charge offs of $1,600,000 or four basis points of average loans for the year. This compares to $900,000 or two basis points in 2024. At this time, I would like to turn the presentation over to Gavin for his comments including the outlook for 2026.

Gavin Moore: Thank you, Joel, and good morning, everyone. I'm going to start on Page 10 of our presentation. Page 10 highlights our strong regulatory capital position. I'd like to note our tangible common equity ratio has moved back into our targeted range of 8.5% to 9.5%. Additionally, 407,113 shares of common stock were repurchased for an aggregate purchase price of $12,400,000.0 in the year 2025. Turning to page 11. Net interest income increased $3,500,000 from the year ago period. Our tax equivalent net interest margin was 3.62% during the 4Q 2025 compared to 3.45% in the 4Q 2024 and up eight basis points from the 3Q 2025.

Average interest earning assets were $5,160,000,000 in the 4Q 2025 compared to $5,010,000,000 in the year ago quarter and $5,160,000,000 in the 3Q 2025.

Page 12 contains a more detailed analysis of the linked quarter increase in net interest income and the net interest margin. On a linked quarter basis, our fourth quarter '25 net interest margin was positively impacted by two factors. Change in interest bearing liability mix added nine basis points and a decrease in funding cost added 13 basis points. These were offset by a change in earning asset yield and mix of 13 basis points as well as interest charged off on a commercial loan, that was negative one basis point. On page 13, we provide details on the institution's interest rate risk position.

The comparative simulation analysis for the 4Q '25 and 3Q '25 calculates the change in net interest income over the next twelve months under five rate scenarios. All scenarios assume a static balance sheet. The base rate scenario applies the spot yield curve from the valuation date. Shock scenarios consider immediate, permanent, and parallel rate changes. The base case modeled NII is slightly higher during the quarter due to nine basis points of model margin expansion. The NIM benefited from mix shifts in both assets and liabilities. On the asset side, solid commercial loan growth was funded by runoff in overnight liquidity, investments in lower yielding retail loans.

Funding costs benefited from growth in non maturity deposits and a decline in wholesale funding. The NIM further benefited from a reversal of excess liquidity in the 4Q 2025. DNI sensitivity position is largely unchanged for rate changes of plus and minus 200 basis points. The bank has slightly more exposure to larger rate declines minus three and four hundred and larger benefit from larger rate increases plus 300 or 400. The shift in sensitivity for larger rate moves is due to shifts in non-maturity deposit modeling primarily caused by 50 basis points of Fed cuts during the quarter. Currently, 8.3% of assets reprice in one month and 49.2% reprice in the next twelve months.

Moving on to page 14. Non interest income totaled $12,000,000 in the 4Q 2025 compared to $19,100,000 in the year ago quarter and $11,900,000 in the third quarter twenty five. Fourth quarter twenty five net gains on mortgage loans totaled $1,400,000 compared to $1,700,000 in the fourth quarter twenty four. The decrease is due to lower profit margins and lower volume of loan sales. Mortgage loan servicing net was $900,000 in the fourth quarter twenty five compared to $7,800,000.0 in the prior year quarter.

The change due to price was a gain of $200,000 or $0.01 per diluted share after tax in the 4Q 2025, compared to a gain of $6,500,000.0 or $0.24 per diluted share after tax in the year ago quarter. The decline in servicing revenue compared to the prior year quarter is attributed to the sale of approximately $931,000,000 of mortgage servicing rights on 01/31/2025.

As detailed on page 15, noninterest expense totaled $36,100,000 in the fourth quarter twenty five as compared to $37,000,000 in the year ago quarter and $34,100,000 in the 3Q 2025. Compensation expense decreased $300,000.0, primarily due to lower performance based compensation expense, lower medical related costs, and lower payroll tax expense, and higher deferred loan origination costs due to higher commercial loan production. That was partially offset by higher salary expense. Data processing costs decreased by $300,000.0 from the prior year period, primarily due in part to a reimbursement from the core provider for billing overages and other credits received. That was partially offset by smaller increases in several other solutions and onetime charges relating to special projects.

Income tax expense included a $1,800,000 benefit or $0.09 per share resulting from the execution of a tax credit transfer agreement related to the purchase of $22,900,000 of energy tax credits during the three month and full year ended 12/31/2025. That's compared to no such benefit in the prior year.

Gonna move on to page 18. This will summarize our initial outlook for 2026. The first column is loan growth. We anticipate loan growth in the mid single digit range, and are targeting a full year growth rate of 4.5% to 5.5%. We expect to see growth in commercial with mortgage loans remaining flat and in installment loans declining. This outlook assumes a stable Michigan economy. Next is net interest income where we are forecasting growth of seven to 8% over FY 2025.

We expect the net interest margin expansion of five to seven basis points in the first quarter twenty six with successive quarterly increases of three to five basis points, primarily due to decreasing yields on interest bearing liabilities that's partially offset by a decrease in earning asset yields. This forecast assumes 0.25% cuts in March 2026 and August 2026 while long term interest rates increased slightly from year end 2025 levels. A full year 2026 provision expense for allowance for credit losses of approximately 20 to 25 basis points of average portfolio loans would not be unreasonable.

Moving to page 19. Related non interest income, we estimate a range of $11,300,000.0 to $12,300,000.0 quarterly. We estimate total for the year to increase three to 4% as compared to 2025. We expect mortgage loan origination volumes to decrease six to 7% and net gain on sale to be down 14 to 16% compared to the full year 2025 results. Our outlook for noninterest expense is a quarterly range of $36,000,000 to $37,000,000 with the total for the year five to 6% higher than 2025 actuals. The primary driver is an increase in compensation and employee benefits, data processing, loan and collections, and occupancy.

Our outlook for income taxes is an effective rate of approximately 17% assuming the statutory federal corporate income tax rate does not change during 2026. Lastly, the board of directors authorized share repurchases of approximately 5% in 2026. Currently, we are not modeling any share repurchases in 2026. That concludes my prepared remarks, and I would now like to turn the call back over to Brad.

Brad Kessel: Thanks, Gavin. We've built a strong community bank franchise, which positions us well to effectively manage through a variety of economic environments, and continue delivering strong and consistent results for our shareholders. As we move through 2026, our focus will be continuing to invest in our team, investing in and leveraging our technology while striving to be Michigan's most people focused bank. At this point, we would now like to open up the call for questions.

Operator: We will now begin the question and answer session. As a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. First question comes from the line of Brennan Hawken of Hovde Group. Your line is now open.

Brennan Hawken: Hey, good morning, everybody. Hope you're doing well.

Brad Kessel: Good morning.

Brennan Hawken: Let me just start off here kind of on market outlook here in Michigan. Can you just kick it off by offering your latest thoughts on the opportunity set you're seeing, particularly in Michigan given the M and A dislocation? And I guess if you added five commercial bankers in 2025, like, what would the ambition set look like for banker ads in '26?

Joel Rahn: Well, I'll take it. And Brennan, this is Joel. Good question. I would think in terms of our talent acquisition expectation, it's similar. We'll have some departures with retirements, etcetera, that we have to cover. But I think a net add of four to five bankers this year would be reasonable to expect. And in terms of opportunity in Southeast Michigan, we do think there will be opportunity there. It's just beginning. And so I think there's, you know, typically, the account side window opens first, and it can be some time before the customer feels the impact. But we're watching it closely and feel that it'll be accretive for us.

Brennan Hawken: Okay. Thanks, Joel. Maybe one more for you before I step back. Just on the loan growth outlook for, I guess, 5% at the midpoint, I guess, like, typically, I think of your bank as a high single digit organic grower. So I guess just given the market opportunity you see what's pushing that range down to the mid single digit area? And is there upside if payoffs behave a little more rationally in '26?

Brad Kessel: Brennan, this is Brad. I'll jump in there, and I'd just say that over the last few years, we've actually reshaped the balance sheet. And particularly with the loan portfolios and our strategic emphasis. So of course, we've got the rundown in the investment portfolio, which has been funding our loan growth. But within the loan portfolios, the largest emphasis and where we've been investing in talent has been in Joel's group, that's the commercial banking team. And that has driven what I'd call the outsized growth rate for our company for that line of business. At the same time, we still have a very strong and robust lending talent and teams in the consumer and mortgage banking groups.

Yet we're just putting less on in those categories on our balance sheet. And in fact, we forecast in '26 some shrinkage in the consumer portfolio. And that's not so much coming out of the branch channel. The shrinkage is really coming off of less originations from our indirect lending group. Which is as we've shared in the past, has always two focuses. One is marine, and the second is in RV. And we really have just not seen the same volume that we saw several years ago coming through the RV channel.

The marine is still pretty good, but so when you add that all up, what ends up happening is you have double digit growth in commercial, but the lower level of net growth in mortgage and consumer get us to that somewhere mid single digit overall loan growth projected for 2026. Does that make sense?

Brennan Hawken: Yeah. No. That's a helpful framework to view it through. I guess just I'll sneak in one more on a related topic then. Just given how much of the loan growth has been funded by securities cash flows in the recent past, what is the outlook for that dynamic this year?

Gavin Moore: Yes. So we got about a $120,000,000 of forecasted runoff in securities for 2026. And that will fund loan growth. So we continue to intend to continue to remix that asset mix through next year.

Brennan Hawken: Fantastic. Thank you for taking my questions.

Joel Rahn: Thank you.

Operator: Thank you. One moment for our next question. Question comes from the line of Damon DelMonte of KBW. Your line is now open.

Damon DelMonte: Hey. Good morning, Hope everybody's doing well today, and thanks for taking my questions here. First one, just on the margin and the guidance provided around that. Gavin, just wondering if you could kind of walk through the cadence again for kind of what you expect here in the first quarter and then the forthcoming quarters after that? And then what were some of the drivers behind the optimism for a rising margin?

Gavin Moore: Yeah. So, we're looking at five to seven basis points of expansion in Q1, and then Q2, '3, and four, we're forecasting three to five basis points of expansion each quarter. And that gets you to the overall forecast of, you know, 18 to 23 basis points on a year over year, full year basis. What's going on there is a couple things. One, just the benefit of we have two rate cuts in the forecast of March and August. We feel really good about our ability to see that 40% plus beta on the repricing down of deposits. The yield curve shape right now in terms of the forward yield curve is beneficial.

The five to seven point of the curve is actually drifting a little bit higher. So we're creating we're getting some more slope in that respect. And then also, it's the continued repricing of below market assets as we go into 2026. Does that make sense, Damon?

Damon DelMonte: It does. Yep. I appreciate that color. And then kind of just broader on capital management, just kinda given where capital levels are and you do have a buyback in place, just kinda wondering, I know it's not in your guidance and your forecast, but just kinda wondering what your appetite is for buybacks? And then also, you know, how do you view the M and A landscape right now? Are there any interest in trying to pursue a merger with another company? So just kinda curious on your thoughts around that.

Gavin Moore: I'll start with capital and then hand it over to Brad. I would just say that we're really excited about the capital build and outlook for the organization. And that provides us with a tremendous amount of flexibility, and that's really what we're focused on. Obviously, the dividend is very important. We just announced a significant increase of over seven and a half percent. The board approved and we wanna continue to have a stable and growing dividend. But with that capital build, it's going to allow us the flexibility to do share repurchase when we think the price makes sense. So I just really am excited about the capital position today. Brad?

Brad Kessel: Yeah. Very good, Gavin. And in regards to the M and A and M and A in the Michigan market, of course, you've got the Fifth Third Comerica which well, that's not directly impacting us. Indirectly, as it goes back to Joel's remarks, we think there's an opportunity for talent and customer acquisition. Across the state, today, we have 80 plus or minus Independent Michigan based community banks. I think we'll see consolidation at a similar pace to what we've seen historically in Michigan. And that's probably somewhere between 4-6%. Who they are, I'm not sure. Our appetite, we would be very interested depending on the specifics.

And so that would include sort of strategically or geographically, how does it fit the footprint, the overall size, you know, and not wanting to maybe well, wanna be cognizant of all the other good work we've got going on organically. So I think the culture, obviously, would be very important. The metrics need to work in it. We need to materially add to EPS and at the same time, we're very respectful of not wanting to dilute our existing shareholders. So I would just step back and just say M and A for Independent is, it could very well happen but is not a requirement for us to continue the success that we've experienced historically over the years.

Damon DelMonte: Great. That's excellent color. I appreciate that. That's all that I had. Thank you very much.

Gavin Moore: Thanks, Damon.

Operator: One moment for next question. And our next question comes from the line Nathan Race of Piper Sandler. Your line is now open.

Nathan Race: Hey, guys. Good morning. Thanks for taking the questions. Gavin, just going back to the margin discussion, could you update us just in terms of how much cash flow you have coming off the bond portfolio each quarter and what the magnitude of or the amount of loans that you have that are repricing higher and what that amount looks like in terms of that yield pickup?

Gavin Moore: Yeah. Give me one sec. So the bonds, the run rate for 2026 is a $120,000,000. And that's I think it's fair you could model that as pro forma or split it up equally per quarter. On the loan side...

Nathan Race: Maybe to ask another question while you dig that up, Gavin. Brad, just thinking, you know, more holistically about the balance sheet composition. Just curious what the appetite is to maybe trade some of your excess capital. And, obviously, you guys are gonna be building capital at pretty strong clips just given the profitability profile. But just what the appetite is, maybe trade some regulatory capital to maybe reposition the securities book, whether it's on the AFS or HTM side of things?

Brad Kessel: You know, that's a good question Nathan. And we revisit that strategy regularly. Historically, we've sort of nibbled at selective investment sales and, generally where we can earn it back within a reasonable time frame. But we've had the book. It's running off. And I'm not sure you're really gonna see Independent needing to accelerate that, taking losses, and I just that's not really in the strategy at this point.

Nathan Race: Okay. I appreciate that. Maybe one more from me. Just in terms of what you're seeing or expecting from a charge off perspective, I appreciate the provision guide, and charge offs have been really well behaved over the last several quarters now. But just any thoughts maybe, Joel, in terms of any normalized expectations around charge off range going forward?

Joel Rahn: Yeah. I think we see it being very similar to the past few years. We really don't see any big change in that profile. And I can't recall, Gavin, if in your guidance, if you had any specific range there.

Gavin Moore: Well, we said the provisioning would be 20 to 25 basis points. And that provision's gonna be a function of more loan growth than anything.

Brad Kessel: But I think the charge off history, recent history has been really, really well. And I think probably it is unrealistic to expect that indefinitely. The charge offs really today have been in the consumer loan portfolio. And the biggest driver has been quite frankly, due to a customer passing away and then getting the collateral back in and then disposing of it. But I think somewhere in our recent history, maybe a little bit higher, could be modeled on a go forward basis.

Joel Rahn: Agree with that.

Gavin Moore: Nathan, I have the details for your question on cash flow repricing. Average quarterly for 2026 is gonna be about $105,000,000 at an exit rate on average of $5.50 at current speeds, CPRs.

Nathan Race: And that's the commercial book or just overall, Gavin?

Gavin Moore: That fully... I mean, that's the entirety of our fixed rate portfolio. So that includes mortgage. Commercial is going to run about for the year, it's about $220,000,000. My totals were off. Let me... total commercial is around $220,000,000 for the year.

Nathan Race: Okay, quite substantial then. Yeah. That's all I had. I appreciate all the color, guys. Thank you.

Joel Rahn: Thanks, Nathan.

Operator: Thank you. One moment for our next question. And our next question comes from the line of John Rodis of Janney. Your line is now open.

John Rodis: Hey, good morning guys. Gavin, just following up on the securities portfolio. You said runoff of roughly $120,000,000. Does that all... I mean, are you looking to reinvest any into the securities portfolio at this time? Or I think looking at my prior notes, I think you said sort of targeting securities portfolio, you know, 12 to 15% of assets. Is that still sort of the thought process?

Gavin Moore: That is, John. And I don't think we'll get through 2026 without doing any securities purchases.

John Rodis: Okay. But if you look... I know 2027's a long way away, but could you maybe hit a bottom then, I guess?

Gavin Moore: Yeah. I anticipate in 2027, within 2027, we'll start to reinvest. 12 to 14% of total assets is still a target for us in terms of triggering investment purchases. So that's still the strategy there, John.

Brad Kessel: Yeah. Okay.

John Rodis: Thanks, Brad. Brad, maybe just a follow-up on the M and A question. You guys talked about through the normal course of business sort of adding a handful of bankers each year. I mean, would you be open to picking up a team of lenders or anything like that? I know it gets a little bit tougher when you add teams as far as culture and stuff like that, but what are your thoughts?

Brad Kessel: Yeah. I mean, that has not been the pattern historically. But I would say we'd be open to that. Joel, what are your thoughts on that?

Joel Rahn: Yeah. Certainly open to it. That doesn't happen very often. It's fairly rare. And we've just had really good success in just going after one banker at a time. And so I would expect that's where the majority of our ads will continue to come.

Brad Kessel: Sort of one banker at a time and then building a team.

Joel Rahn: Correct. Yeah.

John Rodis: Okay. Thanks, guys. You're sort of breaking up a little bit, but I think I get the picture. Thank you.

Brad Kessel: Thanks, John.

Operator: I'm showing no further questions at this time. I'll now turn it back to Brad Kessel for closing remarks.

Brad Kessel: In closing, I would like to thank our Board of Directors and our senior management for their support and leadership. I also want to thank all our associates. I continue to be so proud of the job being done by each member of our team. Each team member in his or her own way continues to do their part toward our common goal of guiding customers to be independent. Finally, I would like to thank each of you for your interest in Independent Bank Corporation and for joining us on today's call. Have a great day.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.