INDEPENDENT BANK CORPORATION 
By Return on average equity and return on average assets [based on annualized net income or (loss)] were (8.97)% and (0.66)%, respectively, in the third quarter of 2008, compared to 6.01% and 0.46%, respectively, in the third quarter of 2007.
The net loss for the nine months ended
The year-on-year decrease in third quarter 2008 results was primarily
attributable to securities losses (
Operating Results
The Company's tax equivalent net interest income totaled
Service charges on deposits totaled
Securities losses 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: "Although our provision for loan losses remained elevated, and we continue to be cautious about economic conditions, we did see notable improvements in credit metrics during the current quarter. Commercial loan 30- to 89-day delinquency rates were at the lowest levels since 2005, and our level of commercial loan watch credits declined for the first time in over two years. These improvements reflect, in part, the number of ongoing efforts of our team to proactively identify, assess and resolve potential problem loans."
A breakdown of non-performing loans by loan type is as follows:
Loan Type 9/30/2008 6/30/2008 12/31/2007
(Dollars in Millions)
Commercial $74.2 $74.4 $49.0
Consumer 3.9 3.9 3.4
Mortgage 33.9 30.6 23.1
Finance receivables 2.6 2.5 1.7
Total $114.6 $111.4 $77.2
Ratio of non-performing
loans to total portfolio
loans 4.58% 4.40% 3.07%
Ratio of non-performing
assets to total assets 4.29% 3.82% 2.68%
Ratio of the allowance for
loan losses to non-
performing loans 47.01% 45.87% 58.63%
The increase in non-performing loans since year-end 2007 is due
principally to an increase in non-performing commercial loans, which is
primarily the result of several additional 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
Regulatory Capital Ratio 9/30/2008 12/31/2007 Well Capitalized
Minimum
Tier 1 capital to average
assets (estimate) 7.45% 7.35% 5.00%
Tier 1 capital to risk-weighted
assets (estimate) 9.58% 9.25% 6.00%
Total capital to risk-weighted
assets (estimate) 10.84% 10.50% 10.00%
"We continue to closely monitor the implementation of the recently enacted
plan out of
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 # 423281). The replay
will be available through
In addition, a Power Point presentation associated with the third 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
September 30, December 31,
2008 2007
(unaudited)
Assets (in thousands)
Cash and due from banks $94,316 $79,289
Federal funds sold 250
Cash and cash equivalents 94,566 79,289
Trading securities 5,179
Securities available for sale 241,910 364,194
Federal Home Loan Bank and Federal
Reserve Bank stock, at cost 28,063 21,839
Loans held for sale, carried at
fair value, at September 30, 2008 24,867 33,960
Loans
Commercial 1,012,569 1,066,276
Mortgage 856,875 873,945
Installment 368,651 368,478
Finance receivables 267,307 209,631
Total Loans 2,505,402 2,518,330
Allowance for loan losses (53,898) (45,294)
Net Loans 2,451,504 2,473,036
Property and equipment, net 72,771 73,558
Bank owned life insurance 44,404 42,934
Goodwill 66,754 66,754
Other intangibles 12,948 15,262
Capitalized mortgage loan
servicing rights 16,260 15,780
Accrued income and other assets 79,394 60,910
Total Assets $3,138,620 $3,247,516
Liabilities and Shareholders' Equity
Deposits
Non-interest bearing $310,510 $294,332
Savings and NOW 960,975 987,299
Retail time 687,347 707,419
Brokered time 201,709 516,077
Total Deposits 2,160,541 2,505,127
Federal funds purchased 54,452
Other borrowings 611,646 302,539
Subordinated debentures 92,888 92,888
Financed premiums payable 26,181 16,345
Liabilities of discontinued
operations 34
Accrued expenses and other
liabilities 22,079 35,629
Total Liabilities 2,913,335 3,007,014
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: 23,014,147
shares at September 30, 2008 and
22,647,511 shares at December 31, 2007 22,782 22,601
Capital surplus 196,954 195,302
Retained earnings 16,621 22,770
Accumulated other comprehensive loss (11,072) (171)
Total Shareholders' Equity 225,285 240,502
Total Liabilities and
Shareholders' Equity $3,138,620 $3,247,516
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
2008 2008 2007 2008 2007
(unaudited)
(in thousands)
Interest Income
Interest and
fees on loans $46,427 $46,750 $50,941 $141,303 $151,470
Interest on
securities
Taxable 2,078 2,176 2,308 6,558 7,377
Tax-exempt 1,652 2,099 2,488 5,998 7,623
Other investments 466 362 232 1,185 1,010
Total
Interest
Income 50,623 51,387 55,969 155,044 167,480
Interest Expense
Deposits 9,577 11,191 22,590 36,980 68,376
Other borrowings 7,099 6,975 2,964 20,511 8,581
Total
Interest
Expense 16,676 18,166 25,554 57,491 76,957
Net Interest
Income 33,947 33,221 30,415 97,553 90,523
Provision for loan
losses 19,788 12,352 10,735 43,456 33,767
Net Interest
Income After
Provision
for Loan
Losses 14,159 20,869 19,680 54,097 56,756
Non-interest Income
Service charges on
deposit accounts 6,416 6,164 6,565 18,227 17,833
Net gains (losses)
on assets
Mortgage loans 969 1,141 1,094 3,977 3,413
Securities (6,711) 837 52 (8,037) 259
VISA check card
interchange income 1,468 1,495 1,287 4,334 3,529
Mortgage loan
servicing 340 1,528 633 1,545 1,872
Title insurance fees 307 384 363 1,108 1,207
Other income 2,659 2,588 2,535 7,923 7,859
Total Non-
interest
Income 5,448 14,137 12,529 29,077 35,972
Non-interest Expense
Compensation and
employee benefits 14,023 13,808 13,621 42,015 42,373
Occupancy, net 2,871 2,813 2,521 8,798 7,870
Loan and collection 2,008 2,031 1,285 5,895 3,512
Furniture, fixtures
and equipment 1,662 1,825 1,798 5,304 5,689
Data processing 1,760 1,712 1,753 5,197 5,103
Loss on other real
estate and
repossessed assets 425 1,560 80 2,091 172
Advertising 1,575 1,168 1,472 3,843 3,965
Branch acquisition
and conversion
costs 330
Goodwill impairment 343
Other expenses 6,332 6,274 5,842 18,955 16,782
Total Non-
interest
Expense 30,656 31,191 28,372 92,098 86,139
Income (Loss)
From Continuing
Operations Before
Income Tax (11,049) 3,815 3,837 (8,924) 6,589
Income tax expense
(benefit) (5,723) 469 160 (7,285) (1,088)
Income (Loss)
From
Continuing
Operations (5,326) 3,346 3,677 (1,639) 7,677
Discontinued
operations,
net of tax 48 248
Net Income
(Loss) $(5,326) $3,346 $3,725 $(1,639) $7,925
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Selected Financial Data
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
2008 2008 2007 2008 2007
(unaudited)
Per Share Data
Income (Loss) From
Continuing
Operations
Basic (A) $(.23) $.15 $.16 $(.07) $.34
Diluted (B) (.23) .15 .16 (.07) .34
Net Income (Loss)
Basic (A) $(.23) $.15 $.16 $(.07) $.35
Diluted (B) (.23) .15 .16 (.07) .35
Cash dividends
declared .01 .01 .21 .13 .63
Selected Ratios (annualized)
As a Percent of
Average Interest-
Earning Assets
Tax equivalent
interest income 7.02% 7.15% 7.75% 7.18% 7.73%
Interest expense 2.26 2.47 3.44 2.60 3.46
Tax equivalent net
interest income 4.76 4.68 4.31 4.58 4.27
Income (Loss) From
Continuing Operations
Average equity (8.97)% 5.58% 5.93% (0.91)% 4.05%
Average assets (0.66) 0.42 0.45 (0.07) 0.31
Net Income (Loss) to
Average equity (8.97)% 5.58% 6.01% (0.91)% 4.18%
Average assets (0.66) 0.42 0.46 (0.07) 0.33
Average Shares
Basic (A) 22,777,760 22,767,396 22,586,916 22,728,200 22,665,803
Diluted (B) 22,837,476 22,834,331 22,732,135 22,818,372 22,883,747
(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
