GRAND RAPIDS — Independent Bank Corp.’s earnings declined in the second quarter from the prior year, largely because of lower non-interest income and higher non-interest expenses.
The Grand Rapids-based Independent Bank today reported nearly $12.4 million in net income for the April-to-June period, or 56 cents per diluted share. That compares to $14.7 million, or 67 cents per diluted share, in the second quarter of 2020.
Non-interest income generated by transaction fees declined from $20.4 million last year to $14.8 million for the quarter, “primarily due to variances in mortgage banking related revenues” such as “net gains on mortgage loans and mortgage loan servicing,” Independent Bank said in today’s earnings report.
Despite the lower earnings, President and CEO Brad Kessel was “pleased to report continued strong financial performance.” Kessel cited quarterly growth in assets, a net $30.3 million increase in portfolio loans from the second quarter of 2020, continued strong mortgage loan originations of $473.7 million, and “exceptional” asset quality.
“Economic activity and business conditions have improved in our markets,” Kessel said in a statement. “As we look ahead to the balance of 2021 and beyond, we are mindful that although economic conditions have improved, challenges from the pandemic remain. However, we are confident of our continued ability to effectively respond to these challenges and remain optimistic about our future.”
Independent Bank’s quarterly non-interest expenses increased from $27.3 million a year ago to $32.5 million, which the earnings release attributed primarily to higher compensation and employee benefits and converting a data processing system.
Increases in compensation and employee benefits during 2021 has been “due to several factors, including, wage increases that were generally effective at the start of the year, increased overtime primarily associated with a data processing conversion, a higher accrual for incentive compensation, higher payroll taxes from increased compensation and higher health care insurance costs,” the bank said. Converting the data processing center cost $1.1 million in the quarter.
Independent Bank’s net income for the first six months of 2021 totaled $34.4 million, or $1.56 per diluted share. That compares to $19.5 million, or 88 cents per diluted share, in the first half of 2020.
The bank has 62 offices in the Lower Peninsula with $4.46 billion in total assets and total deposits of $3.86 billion at the end of the second quarter.