INDEPENDENT BANK CORPORATION 
By Return on average equity and return on average assets (based on net income from continuing operations) were 5.58% and 0.42%, respectively, in the second quarter of 2008, compared to 0.17% and 0.01%, respectively, in the second quarter of 2007.
For the six months ended
The year-on-year increase in second quarter 2008 income from continuing operations was primarily attributable to increases in net interest income, securities gains and mortgage loan servicing income as well as a decline in the provision for loan losses. These changes were partially offset by higher non-interest expenses and income taxes.
Operating Results
The Company's tax equivalent net interest income totaled
Service charges on deposits totaled
Securities gains totaled
Gains on the sale of mortgage loans were
Mortgage loan servicing income was
Non-interest expense totaled
Asset Quality
Commenting on asset quality, CEO Magee stated: "While we remain cautious about economic conditions, we were pleased with the slowing rate of growth in non-performing loans and watch credits in the current quarter, as well as the improvement in commercial loan delinquency rates. These improvements reflect, in part, the ongoing efforts of our team to proactively identify and assess potential problem loans."
A breakdown of non-performing loans by loan type is as follows:
Loan Type 6/30/2008 3/31/2008 12/31/2007
(Dollars in Millions)
Commercial $74.4 $72.1 $49.0
Consumer 3.9 3.4 3.4
Mortgage 30.6 24.8 23.1
Finance receivables 2.5 1.9 1.7
Total $111.4 $102.2 $77.2
Ratio of non-performing
loans to total
portfolio loans 4.34% 4.03% 3.03%
Ratio of non-performing
assets to total assets 3.78% 3.53% 2.65%
Ratio of the allowance
for loan losses to
non-performing loans 45.81% 48.84% 58.63%
The increase in non-performing loans since year-end 2007 is due
principally to an increase in non-performing commercial loans, which primarily
reflect the addition of several credits with real estate developers becoming
past due in 2008. These delinquencies largely reflect cash flow difficulties
encountered by many real estate developers in
The provision for loan losses was
Balance Sheet
Total assets were
Stockholders' equity totaled
Magee concluded: "Like so many other Midwest-based community banks, we have continued to confront some of the most challenging industry conditions in recent memory. While the current economic outlook is not expected to improve significantly in the near term, we believe our process and operating discipline will enable our Company to improve shareholder value over the long run. We remain firmly committed to containing costs, improving credit quality, and upholding the fundamentals of community banking."
Conference Call
To participate in the live conference call, please dial 1-800-860-2442.
The call can also be accessed (listen-only mode) via the Company's website at
www.ibcp.com in the "Investor Relations" section. A playback of the call can
be accessed by dialing 1-877-344-7529 (Replay Passcode # 420264). The replay
will be available through
In addition, a Power Point presentation associated with the second quarter
2008 conference call will be available on the Company's website at
www.ibcp.com in the "Investor Relations" section under the "Presentations" tab
beginning on
About Independent Bank Corporation
Independent Bank Corporation (NASDAQ: IBCP) is a
Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "expect," "believe," "intend," "estimate," "project," "may" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are predicated on management's beliefs and assumptions based on information known to Independent Bank Corporation's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Independent Bank Corporation's management for future or past operations, products or services, and forecasts of the Company's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, and estimates of credit quality trends. Such statements reflect the view of Independent Bank Corporation's management as of this date with respect to future events and are not guarantees of future performance, involve assumptions and are subject to substantial risks and uncertainties, such as the changes in Independent Bank Corporation's plans, objectives, expectations and intentions. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, the Company's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in interest rates, changes in the accounting treatment of any particular item, the results of regulatory examinations, changes in industries where the Company has a concentration of loans, changes in the level of fee income, changes in general economic conditions and related credit and market conditions, and the impact of regulatory responses to any of the foregoing. Forward-looking statements speak only as of the date they are made. Independent Bank Corporation does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Independent Bank Corporation claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition
June 30, December 31,
2008 2007
(unaudited)
Assets (in thousands)
Cash and due from banks $ 69,441 $ 79,289
Trading securities 12,963
Securities available for sale 308,757 364,194
Federal Home Loan Bank and Federal Reserve Bank
stock, at cost 28,063 21,839
Loans held for sale, carried at fair value, at
June 30, 2008 26,188 33,960
Loans
Commercial 1,060,216 1,066,276
Mortgage 861,886 873,945
Installment 366,786 368,478
Finance receivables 276,535 238,197
Total Loans 2,565,423 2,546,896
Allowance for loan losses (51,104) (45,294)
Net Loans 2,514,319 2,501,602
Property and equipment, net 72,413 73,558
Bank owned life insurance 43,897 42,934
Goodwill 66,754 66,754
Other intangibles 13,708 15,262
Capitalized mortgage loan servicing rights 16,551 15,780
Accrued income and other assets 65,981 60,910
Total Assets $ 3,239,035 $ 3,276,082
Liabilities and Shareholders' Equity
Deposits
Non-interest bearing $ 306,506 $ 294,332
Savings and NOW 978,894 987,299
Retail time 682,199 707,419
Brokered time 112,539 516,077
Total Deposits 2,080,138 2,505,127
Federal funds purchased 40,671 54,452
Other borrowings 702,059 302,539
Subordinated debentures 92,888 92,888
Financed premiums payable 53,931 44,911
Liabilities of discontinued operations 34
Accrued expenses and other liabilities 31,078 35,629
Total Liabilities 3,000,765 3,035,580
Shareholders' Equity
Preferred stock, no par value-200,000 shares
authorized; none outstanding
Common stock, $1.00 par value-40,000,000
shares authorized; issued and outstanding:
23,014,262 shares at June 30, 2008 and
22,647,511 shares at December 31, 2007 22,773 22,601
Capital surplus 196,819 195,302
Retained earnings 22,178 22,770
Accumulated other comprehensive income (loss) (3,500) (171)
Total Shareholders' Equity 238,270 240,502
Total Liabilities and Shareholders' Equity $ 3,239,035 $ 3,276,082
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2008 2008 2007 2008 2007
(unaudited)
(in thousands)
Interest Income
Interest and
fees on loans $46,750 $48,126 $50,576 $94,876 $100,529
Interest on
securities
Taxable 2,176 2,304 2,592 4,480 5,069
Tax-exempt 2,099 2,247 2,535 4,346 5,135
Other investments 362 357 464 719 778
Total Interest
Income 51,387 53,034 56,167 104,421 111,511
Interest Expense
Deposits 11,191 16,212 23,378 27,403 45,786
Other borrowings 6,975 6,437 2,313 13,412 5,617
Total Interest
Expense 18,166 22,649 25,691 40,815 51,403
Net Interest
Income 33,221 30,385 30,476 63,606 60,108
Provision for
loan losses 12,352 11,316 14,893 23,668 23,032
Net Interest
Income After
Provision for
Loan Losses 20,869 19,069 15,583 39,938 37,076
Non-interest Income
Service charges
on deposit
accounts 6,164 5,647 6,380 11,811 11,268
Net gains (losses)
on assets
Mortgage loans 1,141 1,867 1,238 3,008 2,319
Securities 837 (2,163) 128 (1,326) 207
VISA check card
interchange
income 1,495 1,371 1,292 2,866 2,242
Mortgage loan
servicing 1,528 (323) 712 1,205 1,239
Title insurance
fees 384 417 430 801 844
Other income 2,588 2,676 2,593 5,264 5,324
Total
Non-interest
Income 14,137 9,492 12,773 23,629 23,443
Non-interest Expense
Compensation and
employee benefits 13,808 14,184 14,784 27,992 28,752
Occupancy, net 2,813 3,114 2,735 5,927 5,349
Loan and
collection 2,031 1,856 1,221 3,887 2,227
Furniture, fixtures
and equipment 1,825 1,817 1,991 3,642 3,891
Data processing 1,712 1,725 1,912 3,437 3,350
Loss on other real
estate and
repossessed assets 1,560 106 68 1,666 92
Advertising 1,168 1,100 1,341 2,268 2,493
Branch acquisition
and conversion
costs (92) 330
Goodwill impairment 343
Other expenses 6,274 6,349 5,841 12,623 10,940
Total
Non-interest
Expense 31,191 30,251 29,801 61,442 57,767
Income (Loss)
From Continuing
Operations
Before Income
Tax 3,815 (1,690) (1,445) 2,125 2,752
Income tax expense
(benefit) 469 (2,031) (1,553) (1,562) (1,248)
Income From
Continuing
Operations 3,346 341 108 3,687 4,000
Discontinued
operations,
net of tax (151) 200
Net Income
(Loss) $3,346 $341 $(43) $3,687 $4,200
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Selected Financial Data
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2008 2008 2007 2008 2007
(unaudited)
Per Share Data
Income From Continuing
Operations
Basic (A) $ .15 $ .02 $ .00 $ .16 $ .18
Diluted (B) .15 .01 .00 .16 .17
Net Income (Loss)
Basic (A) $ .15 $ .02 $ .00 $ .16 $ .18
Diluted (B) .15 .01 .00 .16 .18
Cash dividends declared .01 .11 .21 .12 .42
Selected Ratios (annualized)
As a Percent of Average
Interest-Earning Assets
Tax equivalent interest
income 7.15% 7.37% 7.70% 7.26% 7.72%
Interest expense 2.47 3.07 3.43 2.77 3.47
Tax equivalent net
interest income 4.68 4.30 4.27 4.49 4.25
Income From Continuing
Operations
Average equity 5.58% 0.56% 0.17% 3.07% 3.14%
Average assets 0.42 0.04 0.01 0.23 0.25
Net Income (Loss) to
Average equity 5.58% 0.56% (0.07)% 3.07% 3.30%
Average assets 0.42 0.04 (0.01) 0.23 0.26
Average Shares
Basic (A) 22,767,396 22,638,898 22,584,535 22,703,147 22,705,901
Diluted (B) 22,834,331 22,768,219 22,801,194 22,806,178 22,973,356
(A) Average shares of common stock for basic net income per share include shares issued and outstanding during the period.
(B) Average shares of common stock for diluted net income per share include shares to be issued upon exercise of stock options, stock units for deferred compensation plan for non-employee directors and unvested restricted shares. For any period in which a loss is recorded, the assumed exercise of stock options and stock units for deferred compensation plan for non-employee directors would have an anti-dilutive impact on the loss per share and thus are ignored in the diluted per share calculation.
SOURCE Independent Bank Corporation
