Q4 2023 Independent Bank Corp Earnings Call
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Good morning, and welcome Judy Independent Bank Corporation for both 2023 fourth quarter result.
I'm Karla and I will be your operator for today.
To start our question Q&A. Please press star followed by one on just how to think keypad. If you wish to I think to your question at any point. Please press star followed by two.
I will now hand over to your host Brad Kessel, President and CEO to begin broad. Please go ahead when you're ready.
Okay.
William Bradford Kessel: Good morning, and welcome to today's call. Thank you for joining us for independent Bank Corporation's conference call and webcast to discuss the company's fourth quarter 2023 results.
William Bradford Kessel: I am Brad Kessel, President and Chief Executive Officer, joining me is Kevin Moore, Executive Vice President and Chief Financial Officer, and Joel Ryan Executive Vice President commercial banking.
William Bradford Kessel: Before we begin today's call I would like to direct you to the important information on page two of our presentation specifically the cautionary note regarding forward looking statements.
Kevin K. Reevey: If anyone does not already have a copy of the press release issued by US today, you can access it on our website at independent Bank Dot com.
Kevin Moore: Yes.
Joel Ryan: The agenda for today's call will include prepared remarks, followed by a question and answer session and then closing remarks.
Joel Ryan: Yes.
Joel Ryan: Independent Bank Corp reported fourth quarter 2023, net income of $13 7 million or <unk> 65 per diluted share versus net income of $15 1 million or <unk> 71.
Joel Ryan: Per diluted share in the prior year period.
Joel Ryan: For the year ended December 31, 2023, the company reported net income of $59 $1 million or $2 79 per diluted share <unk>.
Joel Ryan: Compared to net income of $63 4 million or $2 97.
Joel Ryan: Per diluted share for the prior year.
Joel Ryan: Our fourth quarter results capped off another remarkably strong year with our organization performing exceptionally well despite unexpected challenges in the macroeconomic environment for.
Kevin K. Reevey: For the fourth quarter of 2023, Im, particularly pleased with the double digit annualized growth in commercial and our commercial portfolio.
Kevin K. Reevey: Year over year, four 1% growth in our core deposit base.
Kevin K. Reevey: The linked quarter growth in our net interest income and our strong asset quality metrics, which enabled us to release, a small amount of our loan loss reserves.
Joel Ryan: I am also pleased to see our NIM expanding from three 2% to 3% to three.
Joel Ryan: Two 6% on a linked quarter basis.
Joel Ryan: Significantly impacting our quarterly results was the decline in price of the fair value of our capitalized mortgage servicing rights of $3 6 million or <unk> 14 per diluted share after tax for the quarter.
Joel Ryan: Adding back this non cash adjustment our fourth quarter 2024 annualized return on assets was 126% versus 124% for the three months ended December 31 2022.
Kevin K. Reevey: I'm also pleased to see a $1 43, or eight 7% increase in our tangible book value per share for the quarter and $2 92, or 19, 4% increase in tangible book value per share for the full year.
Kevin K. Reevey: During 2023, we continue to make investments in talent and technology, which we believe will enable us to consistently add new clients grow our market share increased profitability and further increase the value of our franchise in 2024 and beyond.
Kevin K. Reevey: Turning to page five overall, our deposit base continues to perform well total deposits at December 31, 2023 for $462 billion.
Kevin K. Reevey: Overall core deposits decreased just $11 3 million during the fourth quarter of 2003, while increased $171 million or four 1% for the full year of 'twenty three.
Kevin K. Reevey: Retail deposits increased for the REIT.
Kevin K. Reevey: Total deposits increased for the quarter, but were down $81 million for the year.
Joel Ryan: Business deposits increased for the quarter and were up $150 million for the year, our public fund deposits decreased for the quarter, but were up $99 million for the year.
Joel Ryan: During both periods, we continue to see a shift in reciprocal and time deposits as customers look for higher FDIC insurance levels and higher interest rates.
Joel Ryan: Yes.
Joel Ryan: We are including in our presentation on page six our historical view of our cost of funds as compared to the fed funds spot rate and the fed effective rate for the quarter. Our total cost of funds increased by 19 basis points to 199%.
Joel Ryan: Through the fourth quarter, the cumulative cycle beta for our cost of funds is 36%.
Joel Ryan: At this time I would like to turn the presentation over to Joel Ryan to share a few comments on the success, we're having in growing our loan portfolio and provide an update on credit metrics.
Joel Ryan: Thanks, Brad and good morning, everyone on page seven we share an update of our $3 $8 billion loan portfolio.
Joel Ryan: Total loans increased by $50 million in the fourth quarter. The strongest segment was commercial lending growing by $54 million. We also realized growth in our mortgage business with that portfolio growing by $10 million for the quarter.
Joel Ryan: Our installment portfolio experienced a $14 million decline predominantly related to seasonality.
Joel Ryan: As noted in the material in each portfolio yield on new production is significantly higher than the respective portfolio yield.
Kevin K. Reevey: We continue to see the return on our strategic investment in the expansion of our commercial banking team.
Joel Ryan: The experienced talent that we've added over the past 24 months has been a strong contributor to our commercial growth.
Joel Ryan: Which on an annualized basis was 13% in the fourth quarter and 2014, 6% for the year.
Joel Ryan: Looking forward based on our strong pipeline and a solid liquidity position, we see continued growth opportunity, while maintaining our disciplined credit standards.
Joel Ryan: Page eight provides additional detail on our commercial loan portfolio.
Kevin K. Reevey: As I pointed out in prior quarters C&I lending continues to be our primary focus representing 68% of the portfolio.
Kevin K. Reevey: Manufacturing continues to be the largest concentration within the C&I segment, comprising approximately 9% or $149 million.
Kevin K. Reevey: The remaining 32% of the portfolio is comprised of investment in real estate.
Kevin K. Reevey: With the largest concentrations being industrial at $157 million or 10, 2% and retail at $136 million or eight 9%.
Kevin K. Reevey: It's worth noting that our exposure to the office segment stands at $93 million or six 1% of our commercial portfolio at quarter end.
Kevin K. Reevey: Our office exposure consists primarily of suburban low rise office space and medical comprises 25% of our overall office exposure.
Kevin K. Reevey: Average loan size is $1 $3 million, which points to the granularity of this particular segment of our portfolio.
For additional insight into our office exposure I refer you to the appendix of this presentation.
Kevin K. Reevey: Page nine provides an overview of key quality excuse me key credit quality metrics at year end.
Kevin K. Reevey: Overall credit quality continues to be excellent totally.
Kevin K. Reevey: Total nonperforming loans were $5 2 million or approximately 10 basis points of total loans at quarter end, which is very similar to 12 months to $31 22.
Kevin K. Reevey: Loans 30 to 89 days delinquent totaled $3 3 million or nine basis points down slightly from the third quarter and in line with 12 months to $31 22 delinquency.
Gavin: At this time I'll turn the presentation over to Gavin for his comments, including the outlook for the remainder of the year.
Gavin Smith: Thanks, Joel and good morning, everyone I am starting at page 10 of our presentation.
And highlights our strong regulatory capital position all capital ratios increased from the linked quarter.
Gavin Smith: Moving onto page 11, net interest income decreased $5 million from the year ago period, our tax equivalent net interest margin was three 6% during the fourth quarter of 2023 compared to 352% in the fourth quarter of 2022 and up three basis points from the third quarter of 2023 <unk>.
Gavin Smith: Interest, earning assets were $4.93 billion in the fourth quarter of 2023 compared to $4 six $4 billion in the year ago quarter and $4 $89 billion.
Joel Ryan: Third quarter of 2023.
Joel Ryan: 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 'twenty three.
Joel Ryan: Net interest margin was positively impacted by two factors an increase in yield on loans and investments was 16 basis points in change in earning asset mix of four basis points. These increases were partially offset by an increase in funding cost.
Joel Ryan: Equivalent to 12 basis points and five basis points that were due to change in the funding mix.
Joel Ryan: On page 13, we provide details on the institution's interest rate risk position. The comparative simulation analysis of fourth quarter 'twenty three in third quarter 'twenty three calculate the change in net interest income over the next 12 months under five rate scenarios, all scenarios assume a static balance sheet the base rate scenario applies a spot yield curve from the value.
Joel Ryan: <unk> date, the shock scenarios consider immediate permanent parallel rate changes.
Joel Ryan: The decrease in the base rate forecasted net interest income in the fourth quarter or <unk> 23, compared to the third quarter for 'twenty. Three is primarily due to an adverse shift in the funding mix and the change in rates during the quarter, which caused the yield curve to further sensitivity is largely unchanged during the quarter with the exposure to rising rates increasing modestly for.
Joel Ryan: Or longer rate increased larger rate increases currently 33% of the assets reprice in one month and 45, 9% reprice in the next 12 months.
Joel Ryan: Moving on to page 14, noninterest income totaled $9 $1 million in the fourth quarter of 2023 as compared to $11 5 million in the year ago quarter, and $15 6 million in the third quarter of 'twenty three.
Joel Ryan: Fourth quarter 23, net gains on mortgage loans totaled $2 2 million compared to $1 5 million in the fourth quarter of 2002. The increase is primarily due an increase in profit margins and fair value adjustments as well as higher mortgage loan sales volume.
Joel Ryan: Negatively impacting noninterest income was a $2 $4 million loss on mortgage loan servicing net this is comprised of $2 $2 million of revenue.
Joel Ryan: That was more than offset by $3 6 million or <unk> 14 per diluted share after tax decrease in the fair value due to price.
Joel Ryan: $1 million decreased due to pay downs of capitalized mortgage loan servicing rights in the fourth quarter of 'twenty three.
Joel Ryan: As detailed on page 15, our net interest expense totaled $31 $9 million in the fourth quarter of 2023 as compared to $32 1 million in the year ago quarter and $32 million in the third quarter of 2023 performance based compensation decreased $1 $5 million due primarily to lower expected incentive compensation payout.
Joel Ryan: For salaried and hourly employees and a decrease in mortgage lending related to incentives attributed to the decline in mortgage lending compared to fourth quarter 'twenty to data processing cost increased by $2 million from the prior year period, primarily due to core data processors annual asset growth in CPI related cost increases.
Joel Ryan: Lower net mortgage processing related cost deferrals due to lower mortgage loan volume as well as the purchase of a new lending software.
Joel Ryan: <unk> solution.
Joel Ryan: Page 16 is our update for our 2023 outlet outlook to see how our actual performance during the fourth quarter compared to the original outlook that we provided in January of 2023, our outlook estimated loan growth in the low double digits.
Joel Ryan: Loans increased $49 4 million in the fourth quarter of 2023, or five 2% annualized which is below our forecasted range commercial and mortgage had positive growth on installment loans decreased in the fourth quarter of 'twenty three full year 2023 loan growth was $325 5 million or nine 4%, which was slightly.
Joel Ryan: Below our forecasted range of 10% to 12% fourth quarter 2023, net interest income decreased by 5% over 2022, which is lower than our forecast of high single digit growth. The net interest margin was three 6% for the current quarter and 352% for the prior year quarter and up.
Joel Ryan: <unk> three basis points from the linked quarter.
Fourth quarter 'twenty three provision for credit losses was a credit of <unk> $6 million below.
Joel Ryan: Which was below our forecasted range the fourth quarter 'twenty three provision.
Joel Ryan: <unk> expense was primarily expenses credit was primarily the result of a change in allocation rates due to subjective factors and the payoff of one problem credit full year 2023 provision expense was $6 2 million or 0.1 hundred 7% of average total loans.
Joel Ryan: Moving on to page 17, noninterest income totaled $9 1 million in the fourth quarter of 'twenty, three which was below our forecasted range of $11 million to $13 million.
Joel Ryan: Fourth quarter 'twenty, three mortgage loan originations sales and gains totaled 108 million $86 5 million and $2 million, respectively mortgage loan servicing that generated a loss of $2 4 million.
Joel Ryan: Fourth quarter 'twenty, three full year 'twenty three quarterly average of $13 4 million, which is above our original forecast noninterest expense was $31 9 million in the fourth quarter below our forecasted range.
Joel Ryan: <unk> 32 to $33 5 million to.
Joel Ryan: The 2023 quarterly average of $31 8 million was below our original forecasted range as well.
Joel Ryan: Our effective income tax rate of $19 eight for the full year 2023 was higher than our forecast in the fourth quarter.
Joel Ryan: We did realize a $6 million of accrual.
Joel Ryan: <unk> expense that related to.
Joel Ryan: Cruel catch up related to federal tax withholdings.
Joel Ryan: <unk> per share.
Joel Ryan: Lastly, 10200 shares were repurchased in the fourth quarter of 2023, and an average share price of $19 eight a.
Joel Ryan: Year to date 298601 shares have been repurchased at an average share price of $17 22.
Joel Ryan: Turning to page 18, this will summarize our initial outlook for 2024.
Joel Ryan: The first column as loan growth, we anticipate loan growth in the mid to high single digit range and are targeting full year growth rate of 6% to 8%.
Joel Ryan: We expect to see growth in commercial and mortgage loans with installment loans remaining flat.
This outlook also assumes a stable Michigan economy.
Joel Ryan: Next is net interest income, where we were forecasting a growth rate of 6% to 8% over full year 2024.
Joel Ryan: We expect the net interest margin to increase 10% to 15 basis points in 2024 compared to full year 2023, primarily due to increasing yields on earning assets.
Joel Ryan: This forecast assumes 25 basis point cut in May June August and October.
Joel Ryan: So if the fed funds target rate, while long term interest rates declined slightly from year end 2023 levels are.
Joel Ryan: Our full year 2020 for provision expense for the allowance for credit losses of approximately 15 to 25 basis points of average portfolio loans would not be unreasonable.
Joel Ryan: Moving to page 19 really to noninterest income, we estimate a quarterly range of $11 5 million to $13 million was the total for the year flat as compared to 2023, we expect mortgage loan origination volumes to increase by 7% in 2024.
Joel Ryan: Our outlook for noninterest expense as a quarterly range of $32 5 million to $33 5 million with total for the year, 335% to 425% above the 2023 actuals primary drivers an increase in compensation and employee benefits data processing loan and collections and.
Joel Ryan: Rising.
Joel Ryan: Our outlook for income tax is an effective rate of approximately 20% assuming the statutory federal corporate income tax rate does not change during 2024.
Kevin K. Reevey: Lastly, the board of directors authorized share repurchases of approximately 5% in 2024. Currently we are not modeling any share repurchases in the 2024 period that concludes my prepared remarks, and I would like to now turn the call back over to Brad. Thanks, Kevin These strong results, which our company has been delivering quarter over quarter.
Kevin K. Reevey: Year after year for some time is directly attributable to our talented team their focus on personalized service investing in our communities and making banking easier.
Kevin K. Reevey: We've built a strong franchise, which positions us well to effectively manage through a variety of economic environments and continued delivering strong and consistent results for our shareholders for.
For 2024 or 168th year of serving the communities of Michigan, our focus will be continuing to invest in our team.
Brad: Leveraging our technology and supporting our communities.
Brad: In doing so we will continue the rotation of our earning assets out of lower yielding investments into higher yielding loans.
Gavin Smith: With the strong value proposition offered as a leading commercial community bank. We believe we can continue to grow our deposit base, while managing our cost of funds and controlling our noninterest expenses. Accordingly, we are excited about the opportunities we have to grow the business.
Gavin Smith: At this point in time, we'd like to open up the call for questions.
Gavin Smith: Thank you.
Gavin Smith: You'd like to ask a question you may do so my question is Paul one by one on your telephone.
Gavin Smith: Thank you Paul.
Gavin Smith: When preparing for your question. Please ensure your device with Amit your Blakeney and Mr. Amit Your question. Please crystal.
Gavin Smith: We will now take our first question.
Gavin Smith: Alright, great.
Eric: That's great Eric Your line is now open. Please go ahead.
Eric Smith: Thank you and good morning, everyone I wanted to start with their providers and on the net interest margin and the outlook for 2024, you mentioned an expectation for a 10 to 15 basis point increase and I'm wondering if.
Eric Smith: That increase is likely to be relatively consistent.
Eric Smith: And so throughout the year or are there other factors that perhaps that potential fed fund cuts that would cause increases to be more and more varied from quarter to quarter.
Eric Smith: Yes so.
Eric Smith: To answer the first part of your question Eric.
Eric Smith: It is.
Eric Smith: Fairly smooth increase over the year.
Eric Smith: I did we did highlight that we do have.
Eric Smith: The fed rate cuts built into that assumption so.
Eric Smith: Should they.
Eric Smith: Deviate from from what we anticipate that that could have a impact.
Eric Smith: I would say generally though.
Eric Smith: No.
Eric Smith: We are seeing we are expecting the expansion assuming that our deposit trends remained stable.
Eric Smith: Really driven by the repricing of the assets into higher yielding.
Eric Smith: Into higher yielding rate so.
Eric Smith: That's where the real driver there.
Eric Smith: Thanks I appreciate the color there and then next curious if you could just talk a little bit about your use of brokered deposits at this point your loan to deposit ratio is still.
Very strong and just given your focus on adding new commercial customers that come along with deposits. It doesn't seem like you necessarily need to use them, but I'm wondering if it's just so that you kind of stay active in the market and I realize it's still again kind of a small percentage of your total deposits at this point.
Eric Smith: Yes, so we use <unk>.
Joel Ryan: Broker or FHL being a wholesale and we take a look at what's most economical at the time based on.
Joel Ryan: The.
Joel Ryan: The funding.
Joel Ryan: Need it's been very short term.
Joel Ryan: The funding we have been doing.
Joel Ryan: At the end of the quarter or the end of the year here. We did do we did carry a little more cash just to position the balance sheet.
Joel Ryan: In preparation of some maturing brokered.
Joel Ryan: So that's why you see the cash balances a little higher at year end, but yes, we will we'll use brokered as needed.
Joel Ryan: Short term.
Funding gaps.
Joel Ryan: Turning next to loan growth.
Joel Ryan: You outlined the expectations for growth in the year I'm wondering if you could provide just a little bit of commentary in terms of what the pipeline looks like today and in the mix, particularly in terms of if theres any industries that are.
Joel Ryan: More heavily represented or youre seeing better risk adjusted opportunities today.
Joel Ryan: Yes, hi.
Joe: Eric This is Joe.
In terms of our commercial pipeline.
Joe: It's very comparable to yes, there is some seasonality to it so I have to compare kind of point to point I look back at last.
Joe: Year end and were very comparable to how we started 2023 as we move into now 2024.
Joe: And <unk>.
Joe: Most of our opportunity I would say, it's pretty diversified we're seeing still opportunity and with our manufacturing customer.
Joe: Customer base, there are equipment acquisition and that sort of thing going on we've.
Joe: We've had good success with.
Joe: With medical related growth with medical practices.
Joe: That's been an area of.
Joe: Of growth for us and we've got some good opportunities coming up there and then.
Joe: A lot of what I would refer to as market share.
Joe: Opportunity for us as we continue to win business from the.
Joe: The large regional banks.
Joe: And then last one for me just curious as you look at your.
Joe: Technology profile and offerings.
Joe: To you about the commercial and retail customers.
Joe: <unk>.
Joe: New initiatives or investments that you're planning for this year.
Joe: So Eric as you recall may recall in May of 'twenty, one we did a whole bank.
Core conversion.
Joe: We're.
Joe: <unk>.
Joe: It took.
Joe: Quite a few quarters after that to really.
Joe: Absorb that and so today here in the first quarter 'twenty four we feel very good about our technology stack, we think it's a very attractive.
Joe: Stack.
Joe: <unk>.
Joe: <unk>.
Joe: And provides us significant flexibility.
Joe: We do have.
Joe: Additional.
Joe: Solutions that are planned to plug in 'twenty, four and 'twenty five.
Joe: And we'll do that but the major lift for our company.
Joe: As done in 'twenty one.
Joe: Thanks, so much for taking my questions today.
Joe: Thanks sure. Thanks.
Joe: Thank you.
Joe: Our next question comes.
Joe: From Damon Delmonte from <unk>.
Joe: Your line is now open. Please go ahead.
Joe: Hey, good morning, guys hope everybody's doing well today.
Joe: Just a question on deposits.
Joe: The rotation between noninterest bearing and interest bearing continues here.
Joe: <unk> was the decrease this quarter was that is there seasonality in that number or was that just.
Joe: Continued trend from what we've seen earlier in the year.
Joe: Yeah. So.
Joe: There is some seasonality there, but we are seeing that.
That trend that we've seen since.
Joe: March <unk>.
Joe: <unk>, although we it is.
Joe: Slowing so.
Joe: Yes.
Joe: Is that the trend has continued.
And so right now I think noninterest bearing around 23, 23% of total deposits do you feel like you've kind of reached a floor there.
Joe: Do you think there's still more room for that to remix slower.
Joe: So our 24 <unk>.
Joe: <unk> forecast.
Joe: <unk> is showing that fairly stable, maybe down another percent or two.
Joe: But we think we're coming to we're optimistic we're coming to a place of stability there.
Joe: So.
Joel Ryan: Hopefully the hopefully we're right.
Joel Ryan: Got it Okay and then on the margin I appreciate the commentary in the prepared remarks, and then the commentary around.
Eric Smith: Eric's question.
Joel Ryan: Earlier.
Joel Ryan: If we don't have four rate cuts like you guys are forecasting and let's say we get to.
Joel Ryan: Is it is the impact kind of linear like we could just instead of it being 10 to 15 basis points, maybe it's closer to.
Eric Smith: Six to eight or eight to 10 basis points.
Eric Smith: Yes, it's not it's not linear in that manner.
Eric Smith: We ran it without <unk>.
Eric Smith: We looked at it multiple ways, but.
Eric Smith: Interestingly the balance sheets currently configured and what we're anticipating to happen.
Joel Ryan: With deposits and loan growth next year.
Eric Smith: Plus.
Eric Smith: Unchanged.
Eric Smith: Marginally better, but just marginally so.
Eric Smith: Yes, it's not linear.
Eric Smith: Got it okay. So so the the.
Eric Smith: The benefit to the margin is not truly dependent on rates being cut its more of I think you noted.
Eric Smith: Continued loan growth.
Eric Smith: Right and the Remixing of the earning asset.
Eric Smith: Yes, Thats right David.
David: So like all most of our peers time is our friend here. So we got 140 plus million dollars of securities coming off next year.
David: Sub three 5%.
David: We're going to redeploy.
David: In the 7% range. So that's really the big driver.
David: If deposits.
David: The deposit remix we really missed that.
David: As we all are aware it could be.
David: A material headwind.
David: Got it okay, great. That's all I had thank you.
David: Thank you.
David: Thank you we will now take our next question.
David: D Cohen from D. A Davidson your line is now open. Please go ahead.
David: Thanks, Good morning.
D Cohen: Wondering could you talk about maybe borrower sentiment today versus 90 days ago, and secondly would you expect that loan growth would pick up more in the second half of the year, if the fed cuts rates.
D Cohen: On the commercial side.
D Cohen: Yes, I would say it did did borrower sentiment is.
D Cohen: Pretty stable.
As I talked to our customers are who smiths are significant customers.
D Cohen: I think most of them I would characterize their outlook for 'twenty four is much the same at 23.
D Cohen: Most businesses are our doing.
D Cohen: Well I wouldn't say, great, but doing well.
D Cohen: Automotive strike Fortunately was resolved before it really inflicted a lot of pain on the supply base.
D Cohen: So I think the outlook is pretty stable and.
D Cohen: I do think that if we get to the second half of the year and rates do start to come down that could provide some some lift to things like commercial construction and future future project planning.
D Cohen: Would be my take on it.
D Cohen: Got it.
D Cohen: And then.
D Cohen: Just the credit quality.
D Cohen: Net charge offs have really been excellent.
D Cohen: Is there much left in terms of recoveries and I'm, just wondering what a more normalized level of net charge offs looks like.
D Cohen: Yes, that's a great question.
D Cohen: Have been successful.
D Cohen: Year over year, and producing some level of recoveries.
D Cohen: I think we've.
<unk>.
D Cohen: The melt that pretty good.
D Cohen: There is still a.
D Cohen: Our portfolio, that's being worked they are probably more lumpy.
D Cohen: And smaller and so we feel really good about.
D Cohen: Overall credit quality in each of the loan portfolios.
D Cohen: When I look back on 'twenty three I think.
D Cohen: Our early problem loan identification and then managing.
D Cohen: Those situations.
Joel Ryan: Either to health or <unk>.
Joel Ryan: Somewhere else.
It has been really good so.
Joel Ryan: Credit quality continues to be a real strength for independents.
Joel Ryan: And just what would you think.
Joel Ryan: More normalized net charge offs.
Joel Ryan: It is.
Joel Ryan: For you guys.
Joel Ryan: Yes.
Joel Ryan: I would.
Joel Ryan: Probably.
Joel Ryan: Turn it to something near the provision range that we gave in the prepared remarks.
Joel Ryan: So that 15% to 25 basis points say, the middle of the range 20 basis points.
Joel Ryan: For a net number as.
Joel Ryan: Is sort of how we model it.
Got it great. Thanks for taking my questions.
Joel Ryan: Sure. Thank you. Thank you.
Joel Ryan: Thank you as a reminder, if you'd like to ask a question. Please press star followed by one on kind of thank you Pat.
Joel Ryan: I'll now take our next question from Joe <unk> from Janney. John Your line is now open. Please go ahead.
Joel Ryan: Good morning, guys.
Speaker Change: Greg maybe just to spread.
Speaker Change: Brad maybe just a big picture question for you you've got the buyback approved you increase the dividend, but in the guidance. You said you don't at least right now youre not modeling repurchases. So maybe your thoughts on other capital use M&A.
Speaker Change:
Brad: Like in the current environment or is it more sort of focused internally.
Brad: As you guys have been doing.
Brad: Yes.
Brad: John.
Brad: Great question and.
Brad: First off.
Brad: I am really pleased with the.
Brad: Improved TCE levels that we've seen year over year.
Brad: And over a very challenging period with a lot of uncertainty.
Brad: We've continued to stay focused on the long run and hence you saw us with some pretty material levels of buyback.
Brad: In 2003.
Brad: When maybe others werent doing that.
Brad: And so.
Brad: The dividend.
Brad: It is an important.
Brad: Part to our story and to have increased that again for the 10th 11th consecutive year.
Brad: Here in January.
Brad: It was important for us so we want to continue that trend.
Brad: And.
Brad: Ultimately its a function of excess excess capital our first.
Brad: Priority will be to support that growth and you heard a little bit about what we think on on the organic growth side of it now having said all that.
Brad: Also believes that.
Brad: And I talked about our investments in technology I think we.
Brad: Have a lot of strengths as an institution.
Brad: From our people to our technology to the markets that we operate in and and.
Brad: So on the M&A front.
Brad: We are very open to somebody that has an interest in partnering with a strong organization like independent so.
Brad: That debt is also there are.
Brad: Our last acquisition was in 2018 and.
Brad: Up in the traverse city market.
Brad: As just proved to be better than even we expected so.
Some acquisitive growth would be welcome but are.
Brad: Long term strategy is not dependent on it.
Speaker Change: Yep Yep makes sense, Brad Thank you.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thank you we have no further questions with that I'll hand back to.
Speaker Change: Brad Kessel for final remarks.
William Bradford Kessel: In closing I'd like to thank our board of directors and our senior management for their support and leadership I also want to thank all of our associates 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 a common goal of guiding our customers to be.
Independent finally, I'd 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.
William Bradford Kessel: Okay.
William Bradford Kessel: This concludes today's call. Thank you for your participation you may now disconnect your lines.
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William Bradford Kessel: This concludes.