Patrick Ervin
About Patrick Ervin
Executive Vice President, Mortgage Banking at Independent Bank Corporation (IBCP). Ervin joined IBCP in August 2016 as Senior Vice President – Mortgage Banking and was promoted to EVP – Mortgage Banking in November 2017, bringing 28 years of mortgage experience and prior leadership roles at Talmer Bank & Trust, TCF Bank, and Standard Federal Bank . Age was 55 as of February 19, 2021 per IBCP’s Form 10-K executive officer table . Company performance context: in 2024, IBCP reported EPS of $3.16 and net income of $66.79M, with cumulative TSR (indexed to $100) of 188.95 vs. 146.80 for its peer group, underscoring pay-for-performance alignment in recent years .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Independent Bank Corporation | Senior Vice President – Mortgage Banking | 2016–2017 | Recruited to lead mortgage banking; promoted to EVP in Nov 2017 . |
| Talmer Bank & Trust | Executive Managing Director, Mortgage Banking & Servicing | 2009–2016 | Led mortgage banking and servicing prior to joining IBCP in Aug 2016 . |
| TCF Bank; Standard Federal Bank | Various mortgage leadership roles | n/a | Earlier mortgage banking roles contributing to 28 years of experience . |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 286,800 | 298,000 | 306,940 |
| Target Bonus % of Salary (NEOs) | 40% (policy) | 40% (policy) | 40% (policy) |
| Actual Annual Cash Bonus ($) | 154,008 | 70,229 | 152,127 |
| All Other Compensation ($) | 53,775 | 52,143 | 51,787 |
Notes:
- IBCP states none of the executive officers has a separate employment agreement; base salaries are set annually considering peer data and performance .
- For 2025, the plan maintains a 40% target bonus for NEOs (CEO at 60%); 2024 also used 40% for NEOs (CEO 50%) .
Performance Compensation
2024 Management Incentive Plan (Company metrics and payout math)
| Metric | Weight | Threshold | Target | Maximum | 2024 Actual | Performance Factor | Payout Ratio |
|---|---|---|---|---|---|---|---|
| EPS (after incentive expense) | 40% | $2.74 | $2.99 | $3.49 | $3.16 | 1.34 | 0.54 |
| Efficiency Ratio | 12% | 60.00% | 59.00% | 56.00% | 60.83% | — | 0.00 |
| Non-Performing Assets / Total Assets | 12% | 0.50% | 0.30% | 0.10% | 0.13% | 1.85 | 0.22 |
| Deposit Balance Growth (ex-brokered) | 16% | 2.50% | 5.00% | 10.00% | 6.33% | 1.27 | 0.20 |
Additional plan design:
- 20% of each NEO’s bonus is based on pre-set individual objectives (not shown in table); company EPS must meet/exceed the minimum gate ($2.61 in 2024; $2.67 in 2025) for plan bonuses .
Long-Term Equity (LTIP) – design and 2024/2025 awards
- Structure: mix of time-based restricted stock (3-year cliff vest) and performance share units (PSUs) earned over 3 years based on equally-weighted relative TSR and relative ROAA vs. a U.S. bank peer set; PSU payout from 0% to 200% of target .
- Hedging/pledging: prohibited for executives; supports alignment .
| Award Year | Award Type | Grant Date | Target Shares | Grant-Date FMV ($) | Grant Price Context | Performance Metrics | Vesting |
|---|---|---|---|---|---|---|---|
| 2024 | PSUs | 02/06/2024 | 2,484 | 66,360 | $23.99 on grant date | Relative TSR (50%) and ROAA (50%); 0–200% payout | Earned at end of 3-year period |
| 2024 | Restricted Stock | 02/06/2024 | 2,484 | 59,591 | $23.99 on grant date | n/a | Cliff vest on 02/06/2027 (3-year) |
| 2025 | PSUs | 2025 (Board approval) | 1,715 | n/a | $36.15 on grant date | Same relative TSR/ROAA; 0–200% payout | Earned at end of 3-year period |
| 2025 | Restricted Stock | 2025 (Board approval) | 1,715 | n/a | $36.15 on grant date | n/a | Cliff vest in 3 years |
PSU earnout schedule (applies to 2024 and 2025 awards):
| Percentile vs Peer Group | TSR Earnout | ROAA Earnout |
|---|---|---|
| ≥90th | 100% | 100% |
| 75th | 75% | 75% |
| 50th | 50% | 50% |
| 25th | 25% | 25% |
| <25th | 0% | 0% |
Option awards/usage:
- IBCP has not granted options since 2013 (except 2018 conversion-related) and has no option grant timing policy; no options were exercised by any NEOs in 2024 .
2024 vesting/deliveries (supply considerations):
| Type | Shares Vested (2024) | Value Realized ($) |
|---|---|---|
| Restricted Stock | 5,125 | 132,430 |
| Performance Shares (2011–2021 cycle grants earning in 2024 per footnote) | 2,690 | 69,510 |
Equity Ownership & Alignment
Beneficial ownership (as of Feb 21, 2025):
| Holder | Shares Beneficially Owned | % Outstanding |
|---|---|---|
| Patrick J. Ervin | 38,977 | 0.18% |
Ownership policy and alignment features:
- Executive stock ownership guidelines: EVPs must hold ≥2x base salary; unvested RS/RSUs and vested in-the-money options count; PSUs do not count until earned; 5-year phase-in; sales restricted if below guideline .
- Hedging and pledging: prohibited for executives and directors .
Unvested equity as of 12/31/2024 (cliff dates and market values based on $34.83 close):
| Grant | Instrument | Unvested/Unearned Shares | Market/Payout Value ($) | Vest/Measure Date |
|---|---|---|---|---|
| 01/25/2022 | Restricted Stock | 3,117 | 108,565 | 01/25/2025 (3-yr cliff) |
| 01/25/2022 | PSUs (target) | 2,117 | 73,735 | Performance through 01/25/2025 |
| 02/06/2023 | Restricted Stock | 2,503 | 87,179 | 02/06/2026 (3-yr cliff) |
| 02/06/2023 | PSUs (target) | 2,503 | 87,179 | Performance through 02/06/2026 |
| 02/06/2024 | Restricted Stock | 2,484 | 86,518 | 02/06/2027 (3-yr cliff) |
| 02/06/2024 | PSUs (target) | 2,484 | 86,518 | Performance through 02/06/2027 |
Other alignment data:
- Deferred compensation: no Executive Nonqualified Excess Plan deferrals or balances reported for Ervin in 2024 .
- Options: none outstanding for any NEO at year-end 2024 .
Employment Terms
- Employment agreements: none; executive base salaries set annually; 2025 salary adjustments ranged 1–8% (CEO base raised to $644,226; EVP specifics not itemized) .
- Management Continuity Agreements (double-trigger CIC protection): self-renewing 3-year terms; severance if termination occurs within 36 months post-CIC (or within 6 months pre-CIC with qualifying termination); lump sum equal to 18 months to 3 years of salary+bonus plus 18–36 months benefits; subject to Section 280G cap (no tax gross-up disclosed) .
- Estimated CIC payout if terminated on 12/31/2024: $1,395,869 for Ervin; 280G cap reference amount $1,790,614 .
- Clawback: company policy requires recoupment of incentive compensation upon a financial restatement .
- Insider policy: prohibits pledging and hedging of company stock by executives and directors .
Performance & Pay Context (Company-level)
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Income ($) | 56,152,000 | 62,895,000 | 63,351,000 | 59,067,000 | 66,790,000 |
| EPS ($) | 2.53 | 2.88 | 2.97 | 2.79 | 3.16 |
| Cumulative TSR (Index, $100 start) | 85.72 | 115.03 | 119.91 | 136.67 | 188.95 |
| Peer Group Cumulative TSR | 87.20 | 119.74 | 99.06 | 109.02 | 146.80 |
Say-on-pay support:
- 2024 say-on-pay approval: ~96.1% of votes cast supported IBCP’s NEO compensation program .
Compensation governance:
- Compensation Committee (2024): Budden (Chair), Keller, Gulis; independent; engaged Meridian Compensation Partners for 2024 benchmarking vs 21 regional bank peers; committee approved maintaining program design into 2025 .
Investment Implications
- Pay-for-performance and profitability focus: 40% of the annual bonus is tied to EPS (with a minimum EPS gate), with additional weighting on asset quality (non-performing assets) and efficiency ratio, aligning incentives with sustainable profitability and credit quality; 2024 results exceeded EPS and asset quality targets but missed the efficiency ratio target, consistent with the disclosed payout math and Ervin’s above-target cash bonus .
- Multi-year equity and upcoming supply events: Three-year cliff vesting on RS and three-year PSU performance cycles stagger near-term share releases (e.g., Jan 2025, Feb 2026, Feb 2027), which can create episodic insider selling pressure around vesting/settlement dates; no options outstanding reduces option-expiry-driven selling risk .
- Alignment safeguards: Mandatory stock ownership guidelines for EVPs (≥2x salary), prohibition on pledging/hedging, and a restatement clawback policy reduce misalignment and risk-taking incentives; high say-on-pay (96.1%) indicates investor support for the pay model .
- Retention and M&A posture: Double-trigger CIC protection with payouts capped under Section 280G ($1.396M estimated for Ervin) supports retention without shareholder-unfriendly gross-ups; severance scope (18–36 months salary+bonus and benefits) is in-line for regional banks and may stabilize leadership through strategic transactions .
Monitoring list: (1) PSU earnout trajectory vs peer TSR/ROAA cohorts (could amplify equity delivery up to 200% of target), (2) annual vesting calendars for RS/PSUs to anticipate potential selling windows, (3) continued EPS execution vs plan thresholds to sustain bonus eligibility, and (4) any changes to ownership guideline compliance disclosures or insider policy exceptions .