IONIA, Mich., Oct. 26 /PRNewswire-FirstCall/ --
-- 2009 third quarter net loss applicable to common stock of $17.8
million
($0.74 per share), with results impacted by:
-- Provision for loan losses of $22.3 million
-- $8.7 million charge to accrue for estimated losses from vehicle
service contract counterparties related to the Company's payment
plan business
-- Loan and collection costs of $3.6 million
-- Loss on other real estate and repossessed assets of $2.0 million
-- Pre-tax, pre-provision core operating earnings remain strong and
improved in 2009 over 2008
-- Net interest margin of 5.15%, which is among the best in the banking
industry
-- Both non-performing loans and non-performing assets declined
sequentially for the second consecutive quarter
-- Capital raising initiatives announced, including deferral of interest
and dividend payments on trust preferred securities and preferred
stock,
and suspension of dividend payments on common stock, all effective as
of
Nov. 1, 2009
-- Company remains "well capitalized" for regulatory purposes
Independent Bank Corporation (Nasdaq: IBCP) reported a third quarter 2009 net
loss applicable to common stock of $17.8 million, or $0.74 per share, versus a
net loss of $5.3 million, or $0.23 per share, in the prior-year period. The
net loss applicable to common stock for the nine months ended Sept. 30, 2009
was $43.7 million, or $1.84 per share, compared to a net loss of $1.6 million,
or $0.07 per share, in the prior-year nine-month period.
Michael M. Magee, President and CEO of Independent Bank Corporation,
commented: "The continued difficult Michigan economic environment had a
significant impact on our financial results, leading to our reported loss for
the quarter. However, we remain encouraged by our pre-tax, pre-provision core
operating earnings, which rose more than 7% when compared with the year-ago
quarter and remains comparable to our results last quarter. Maintaining a
high performance level on core earnings and a strong net interest margin while
continuing to make gains in productivity and cost control should provide us
with the base we need for improved performance as we emerge from the current
economic downturn."
Operating Results
The Company's tax equivalent net interest income totaled $35.8 million during
the third quarter of 2009, an increase of $0.8 million, or 2.2% from the
year-ago period, and a decrease of $0.4 million, or 1.0% from the second
quarter of 2009. The Company's tax equivalent net interest income as a
percent of average interest-earning assets (the "net interest margin") was
5.15% during the third quarter of 2009, compared to 4.76% in the year-ago
period, and 5.21% in the second quarter of 2009. Average interest-earning
assets declined to $2.76 billion in the third quarter of 2009, compared to
$2.93 billion in the year-ago quarter and $2.78 billion in the second quarter
of 2009. This year-over-year decline in average interest-earning assets
primarily reflects a decrease in both investment securities and loans.
Service charges on deposits and VISA check card interchange income totaled
$6.4 million and $1.5 million, respectively, in the third quarter of 2009,
remaining essentially unchanged from the comparable period in 2008.
Securities net gains totaled $0.1 million in the third quarter of 2009, versus
net losses of $6.7 million in the comparable period in 2008. The third
quarter 2009 securities net gains were primarily due to the sale of municipal
securities, while third quarter 2008 securities net losses included a decline
in the fair value of trading securities of $7.7 million and other than
temporary impairment charges of $0.1 million on securities available for sale.
The decline in the fair value of trading securities related principally to the
Company's holdings of Fannie Mae and Freddie Mac preferred stock. Partially
offsetting these losses, the Company generated $1.1 million of gains in 2008
related to the sale of $48.4 million of municipal securities.
Gains on the sale of mortgage loans were $2.3 million in the third quarter of
2009, compared to $1.0 million in the year-ago quarter. The growth in gains
relates primarily to an increase in loan sales and commitments to originate
mortgage loans that are held for sale. This was principally due to a rise in
refinancing activity resulting from generally lower mortgage loan interest
rates in 2009. The increased refinancing volumes also led to a 69.7% increase
in title insurance fees, to $0.5 million, on a year-over-year basis.
Mortgage loan servicing generated a loss of $0.5 million in the third quarter
of 2009, versus income of $0.3 million in the year-ago period. This change
was due to an increase in impairment charges ($0.8 million in the third
quarter of 2009 versus $0.3 million in the year-ago quarter) as well as a $0.4
million increase in the amortization of capitalized mortgage loan servicing
rights. The impairment charges primarily reflect lower mortgage loan interest
rates at the end of the third quarter of 2009, resulting in higher estimated
future prepayment rates. Capitalized mortgage loan servicing rights totaled
$14.3 million at Sept. 30, 2009 compared to $12.0 million at Dec. 31, 2008.
The Company services approximately $1.72 billion in mortgage loans for others
on which servicing rights have been capitalized.
Non-interest expenses totaled $43.6 million in the third quarter of 2009,
compared to $30.7 million in the year-ago period. The rise in non-interest
expenses was primarily due to $8.7 million in estimated losses related to
vehicle service contract counterparties at the Company's Mepco Finance
Corporation ("Mepco") business unit and increases in loan and collection
expenses (up $1.6 million), losses on other real estate and repossessed assets
(up $1.5 million) and FDIC insurance (up $1.5 million). The increases in loan
and collection costs and losses on other real estate and repossessed assets
resulted primarily from the elevated level of non-performing assets and lower
residential housing prices.
Third quarter 2009 non-interest expenses include an $8.7 million charge
related to Mepco's business of servicing payment plans for vehicle service
contracts. These payment plans (which are classified as finance receivables
in the Company's Consolidated Statements of Financial Condition) permit a
consumer to purchase a vehicle service contract or product warranty by making
installment payments, generally for a term of 12 to 24 months, to the sellers
of those contracts or product warranties (one of the "counterparties"). Mepco
purchases these payment plans from these counterparties on a recourse basis.
When consumers stop making payments or exercise their right to voluntarily
cancel the contract, the remaining unpaid balance of the payment plan is
recouped by Mepco from the counterparties that sold the vehicle service
contract or product warranty and provided the coverage. Payment defaults and
voluntary cancellations have increased significantly during 2009, reflecting
both weak economic conditions and adverse publicity impacting the vehicle
service contract industry. When counterparties do not honor their contractual
obligations to Mepco to repay advanced funds, we recognize estimated losses.
Mepco vigorously pursues collection (including commencing legal action) of
funds due to it under its various contracts with counterparties. During
September 2009, we identified a counterparty that is experiencing particularly
severe financial difficulties and have accrued for estimated potential losses
related to that relationship.
Compensation and employee benefit costs declined by $0.2 million, or 1.4%, in
the third quarter of 2009 compared to the year-ago period. This decline was
due primarily to the elimination of any accruals for bonuses and the
elimination of any contribution to the employee stock ownership plan. These
compensation cost reductions were partially offset by additional staff added
during 2009 to manage non-performing assets and loan collections.
Pre-Tax, Pre-Provision Core Operating Earnings
The Company is presenting pre-tax, pre-provision core operating earnings in
this release for purposes of additional analysis of operating results.
Pre-tax, pre-provision core operating earnings, as defined by management,
represents the Company's income (loss) excluding: income tax expense
(benefit), the provision for loan losses, securities gains or losses, and any
impairment charges (including goodwill, losses on other real estate or
repossessed assets, and fair-value adjustments) or elevated loan and
collection costs caused by this economic cycle.
The following table reconciles pre-tax, pre-provision core operating earnings
to consolidated net income (loss) presented in accordance with U.S. generally
accepted accounting principles ("GAAP"). Pre-tax, pre-provision core
operating earnings is not a measurement of our financial performance under
GAAP and should not be considered as an alternative to net income (loss) under
GAAP. Pre-tax, pre-provision core operating earnings has limitations as an
analytical tool and should not be considered in isolation or as a substitute
for analysis of our results as reported under GAAP. However, the Company
believes presenting pre-tax, pre-provision core operating earnings provides
investors with the ability to gain a further understanding of its underlying
operating trends separate from the direct effects of any impairment charges,
credit issues, fair value adjustments, securities gains or losses, and
challenges inherent in the real estate downturn and other economic cycle
issues, and displays a consistent core operating earnings trend before the
impact of these challenges. The credit quality section of this release
already isolates the challenges and issues related to the credit quality of
the Company's loan portfolio and the impact on its results as reflected in the
provision for loan losses.
Pre-Tax, Pre-Provision Core Operating Earnings
----------------------------------------------
Quarter Ended
9/30/09 6/30/09 9/30/08
------- ------- -------
(in thousands)
Net income (loss) $(16,714) $(5,161) $(5,326)
Income tax expense (benefit) (1,088) (959) (5,723)
Provision for loan losses 22,285 25,593 19,788
Estimated losses vehicle service
contract counterparty risk 8,713 2,215 --
Securities (gains) losses (121) (4,230) 6,711
Impairment charge (recovery)
on mortgage servicing rights 809 (2,965) 348
Losses on other real estate and
repossessed assets 1,958 1,939 425
Elevated loan and collection
costs (1) 2,378 1,977 758
----- ----- ---
Pre-Tax, Pre-Provision Core
Operating Earnings $18,220 $18,409 $16,981
------- ------- -------
(1) Represents the excess amount over a "normalized" level of $1.25
million quarterly.
TARP Capital Purchase Program
On Dec. 12, 2008, the Company issued 72,000 shares of its preferred stock and
3,461,538 warrants to purchase the Company's common stock (at a strike price
of $3.12 per share) to the U.S. Treasury in return for $72.0 million under the
Capital Purchase Program ("CPP"). Of the total proceeds, initially $68.4
million was allocated to the preferred stock and $3.6 million was allocated to
the warrants (included in capital surplus) based on the relative fair value of
each.
In the approximately 290-day period (ending Sept. 30, 2009) since the receipt
of the CPP funds, the Company has made $804.4 million of loans. This loan
volume includes: $241.7 million of commercial loans (of which $122.5 million
were renewals of existing loans), $522.1 million of mortgage loans (of which
$262.5 million were refinances of existing loans) and $40.6 million of
consumer installment loans (excluding finance receivables). Further, the CPP
funds have allowed the Company to continue actively pursuing mortgage loan
modifications and work-outs in lieu of foreclosure for those mortgage loan
customers experiencing financial difficulty.
Asset Quality
Commenting on asset quality, CEO Magee noted: "We are pleased to see positive
progress on asset quality despite the challenges of operating in a very
difficult economy. Although our provision for loan losses remained elevated
in the third quarter, it is important to note that it declined by nearly 13%
from the second quarter, continuing the positive trend we have seen so far in
2009. In addition, our team continues to make strong efforts to manage our
loan portfolio, which has resulted in a decline in our 30-to-89 day
delinquency rates in our commercial and mortgage loan portfolios at the end of
the third quarter. In addition, total non-performing loans and assets both
declined at September 30, 2009 when compared to the end of the first and
second quarters."
A breakdown of non-performing loans by loan type is as follows:
Loan Type 9/30/2009 12/31/2008 9/30/2008
--------- ---------- ---------
(Dollars in Millions)
Commercial $56.8 $78.1 $74.2
Consumer/installment 8.4 4.9 3.9
Mortgage 49.3 38.9 33.9
Finance receivables 3.0 3.4 2.6
--- --- ---
Total $117.5 $125.3 $114.6
------ ------ ------
Ratio of non-performing loans
to total portfolio loans 4.92% 5.09% 4.58%
---- ---- ----
Ratio of non-performing assets
to total assets 5.07% 4.91% 4.29%
---- ---- ----
Ratio of the allowance for loan
losses to non-performing loans 62.75% 46.22% 47.01%
----- ----- -----
Non-performing loans have declined since year-end 2008 as an increase in
non-performing mortgage loans and consumer loans was more than offset by a
decline in non-performing commercial loans. The decline in non-performing
commercial loans is primarily due to net charge-offs and the payoff or other
disposition of non-performing credits during the first nine months of 2009.
Non-performing commercial loans largely reflect real estate-secured credit
delinquencies caused primarily by cash flow difficulties encountered by real
estate developers in Michigan as they confront a significant decline in sales.
Since the end of 2006, the land, land development, and construction
components of the Company's commercial loan portfolio have declined by over
60% and now total $95.3 million at Sept. 30, 2009, representing just 3.2% of
total assets. The elevated level of non-performing residential mortgage loans
is primarily due to a rise in delinquencies and foreclosures reflecting both
weak economic conditions and soft residential real estate values in many parts
of Michigan. Other real estate and repossessed assets totaled $32.9 million
at Sept. 30, 2009, compared to $20.0 million at both Dec. 31, 2008 and Sept.
30, 2008.
The provision for loan losses was $22.3 million and $19.8 million in the third
quarters of 2009 and 2008, respectively. The level of the provision for loan
losses in each period reflects the Company's overall assessment of the
allowance for loan losses, taking into consideration factors such as loan mix,
levels of non-performing and classified loans, and loan net charge-offs.
Loan net charge-offs were $14.0 million (2.27% annualized of average loans) in
the third quarter of 2009, compared to $17.4 million (2.69% annualized of
average loans) in the third quarter of 2008. The third quarter 2009 loan net
charge-offs were divided among the following categories: commercial loans,
$7.5 million; consumer loans, $1.6 million (including $0.2 million of deposit
overdrafts); and mortgage loans, $4.9 million. The commercial loan and
mortgage loan net charge-offs in the third quarter of 2009 primarily reflect
write-downs to expected liquidation values for real estate or other collateral
securing the loans. At Sept. 30, 2009, the allowance for loan losses totaled
$73.7 million, or 3.09% of portfolio loans, compared to $57.9 million, or
2.35% of portfolio loans, at Dec. 31, 2008.
Balance Sheet, Liquidity and Capital
Total assets were $2.96 billion at Sept. 30, 2009, essentially unchanged from
Dec. 31, 2008. Loans, excluding loans held for sale, were $2.39 billion at
Sept. 30, 2009, compared to $2.46 billion at Dec. 31, 2008. Deposits totaled
$2.49 billion at Sept. 30, 2009, an increase of $419.4 million from Dec. 31,
2008. The growth in deposits primarily reflects increases in savings and
interest-bearing checking accounts and in brokered certificates of deposit.
The Company's liquidity position remains sound, with approximately $854
million of unused borrowing capacity at Sept. 30, 2009.
Stockholders' equity totaled $159.9 million at Sept. 30, 2009, or 5.40% of
total assets. The Company remains "well capitalized" for regulatory purposes
with the following ratios:
Well
Regulatory 9/30/2009 Capitalized
Capital Ratio (estimate) 12/31/2008 9/30/2008 Minimum
-------------- ---------- ---------- --------- ------------
Tier 1 capital
to average
assets 6.99% 8.61% 7.42% 5.00%
Tier 1 capital
to risk-weighted
assets 9.00% 11.04% 9.56% 6.00%
Total capital to
risk-weighted
assets 11.64% 13.05% 11.29% 10.00%
With regard to the outlook for the remainder 2009, CEO Magee concluded: "While
we continue to work through the challenges of the difficult economy in the
markets we serve, we are taking steps to solidify our financial position and
ensure the long-term future success of Independent Bank. The first of these
steps involves the suspension or deferral of the dividends or interest
payments on our common stock, preferred stock and trust preferred securities
effective November 1, 2009. In addition, we intend to convene a special
meeting of shareholders by the end of this year to consider amending our
articles of incorporation to increase the number of authorized shares of
common stock. These actions are expected to provide us with the flexibility
we need to enhance our capital position and work through to the ultimate
recovery in the Michigan economy."
Deferral of Interest and Dividend Payments on Trust Preferred Securities and
Preferred Stock
The Company announced that effective Nov. 1, 2009, it has elected to defer
regularly scheduled quarterly interest payments on its junior subordinated
debentures (the "Debentures") and quarterly dividend payments on its Series A
Preferred Stock (the "Preferred Stock"). The Debentures are owned by IBC
Capital Finance II, III and IV and Midwest Guaranty Trust I (the "Trusts") and
were funded by the Trusts' issuance of trust preferred securities ("Debt
Securities"). The Preferred Stock was issued to the U.S. Treasury under the
TARP CPP. The total estimated annual interest and dividends that would be
payable on the Debentures (and the underlying Debt Securities) and the
Preferred Stock, if not deferred, is approximately $9.0 million based on
current interest rates.
The terms of the Debentures and trust indentures (the "Indentures") allow for
the Company to defer payment of interest on the Debt Securities at any time or
from time to time for up to 20 consecutive quarters provided no event of
default (as defined in the Indentures) has occurred and is continuing. The
Company is not in default with respect to the Indentures, and the deferral of
interest does not constitute an event of default under the Indentures. While
the Company defers the payment of interest, it will continue to accrue the
interest expense owed at the applicable interest rate. Upon the expiration of
the deferral, all accrued and unpaid interest is due and payable.
So long as any shares of Preferred Stock remain outstanding, unless all
accrued and unpaid dividends for all prior dividend periods have been paid or
are contemporaneously declared and paid in full, (a) no dividend whatsoever
may be paid or declared on the Company's common stock or other junior stock,
other than a dividend payable solely in common stock and other than certain
dividends or distributions of rights in connection with a shareholders' rights
plan; and (b) neither the Company nor its subsidiaries may purchase, redeem or
otherwise acquire for consideration any shares of its common stock or other
junior stock unless the Company has paid in full all accrued dividends on the
Preferred Stock for all prior dividend periods, other than purchases,
redemptions or other acquisitions of the Company's common stock or other
junior stock in connection with the administration of its employee benefit
plans in the ordinary course of business and consistent with past practice;
pursuant to a publicly announced repurchase plan up to the increase in diluted
shares outstanding resulting from the grant, vesting or exercise of
equity-based compensation; any dividends or distributions of rights or junior
stock in connection with any shareholders' rights plan, redemptions or
repurchases of rights pursuant to any shareholders' rights plan; acquisition
of record ownership of common stock or other junior stock or parity stock for
the beneficial ownership of any other person who is not the Company or one of
its subsidiaries, including as trustee or custodian; and the exchange or
conversion of common stock or other junior stock for or into other junior
stock or of parity stock for or into other parity stock or junior stock but
only to the extent that such acquisition is required pursuant to binding
contractual agreements entered into before Dec. 12, 2008 or any subsequent
agreement for the accelerated exercise, settlement or exchange thereof for
common stock.
During the deferral period on the Debentures and Preferred Stock, the Company
may not declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital
stock. Suspension of the common stock dividend will conserve an additional
$1.0 million on an annualized basis. The Company will pay its previously
announced and declared common stock dividend of one cent per share on Oct. 30,
2009 but all future dividends will be suspended so long as interest and
dividend payments on the Debentures and Preferred Stock are being deferred.
Other Capital Raising Initiatives
Like many financial institutions across the United States, the Company has
been impacted by deteriorating economic conditions. The Michigan economy, in
particular, has been and continues to show stress, including such factors as
the highest unemployment rate in the nation and a declining population. As a
result, the Company believes that additional capital may be necessary to
maintain and strengthen its balance sheet to withstand the effects of ongoing
economic stress and uncertainty over the coming months and years.
Consequently, the Company is exploring several initiatives to bolster capital
and strengthen its balance sheet. The Company's intention is to develop and
have ready multiple capital raising alternatives that will ensure that it
continues to exceed the regulatory designation of well-capitalized. The
Company has engaged the investment banking firm of Stifel, Nicolaus & Company,
Incorporated to assist in this strategic process.
In order to maintain these alternatives, the Company will seek shareholder
approval to increase its authorized shares of common stock. Accordingly, the
Company plans to file a preliminary proxy statement announcing a special
shareholders meeting tentatively scheduled for Dec. 18, 2009 in Ionia, Mich.
The Company expects that this proxy statement will include the following
proposals: (i) an amendment to its Articles of Incorporation to increase the
number of authorized common shares from 60 million to 500 million; and (ii) an
underwater stock option exchange program (which will exclude named executive
officers and directors).
Conference Call
Michael M. Magee, President and Chief Executive Officer, Robert N. Shuster,
Chief Financial Officer, Stefanie M. Kimball, Chief Lending Officer, and
William B. Kessel, Chief Operations Officer, will review third quarter 2009
results in a conference call for investors and analysts beginning at 10:00
a.m. ET on Tuesday, Oct. 27, 2009.
To participate in the live conference call, please dial 1-800-860-2442. The
call can also be accessed (listen-only mode) via the "Investor Relations"
section of the Company's Web site at IndependentBank.com. A playback of the
call can be accessed by dialing 1-877-344-7529 (Replay Passcode # 434099).
The replay will be available through Nov. 4, 2009.
In addition, a Power Point presentation associated with the third quarter 2009
conference call will be available on the Company's Web site at
IndependentBank.com in the "Investor Relations" section under the
"Presentations" tab beginning on Monday, Oct. 26, 2009.
About Independent Bank Corporation
Independent Bank Corporation (Nasdaq: IBCP) is a Michigan-based bank holding
company with total assets of approximately $3 billion. Founded as Third
National Bank of Ionia in 1864, Independent Bank Corporation now operates over
100 offices across Michigan's Lower Peninsula through one state-chartered bank
subsidiary. This subsidiary (Independent Bank) provides a full range of
financial services, including commercial banking, mortgage lending,
investments and title services. Independent Bank Corporation is committed to
providing exceptional personal service and value to its customers,
stockholders and the communities it serves.
For more information, please visit our Web site at: IndependentBank.com
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,
2009 2008
---- ----
(unaudited)
----------
Assets (in thousands)
Cash and due from banks $182,405 $57,705
Trading securities 90 1,929
Securities available for sale 184,004 215,412
Federal Home Loan Bank and Federal
Reserve Bank stock, at cost 27,855 28,063
Loans held for sale, carried at fair value 23,980 27,603
Loans
Commercial 863,556 976,391
Mortgage 770,297 839,496
Installment 318,185 356,806
Finance receivables 435,191 286,836
------- -------
Total Loans 2,387,229 2,459,529
Allowance for loan losses (73,710) (57,900)
------- -------
Net Loans 2,313,519 2,401,629
Other real estate and repossessed assets 32,923 19,998
Property and equipment, net 73,355 73,318
Bank owned life insurance 46,041 44,896
Goodwill 16,734 16,734
Other intangibles 10,783 12,190
Capitalized mortgage loan servicing
rights 14,334 11,966
Accrued income and other assets 37,605 44,802
------ ------
Total Assets $2,963,628 $2,956,245
========== ==========
Liabilities and Shareholders' Equity
Deposits
Non-interest bearing $316,281 $308,041
Savings and NOW 1,085,557 907,187
Retail time 554,475 668,968
Brokered time 529,521 182,283
------- -------
Total Deposits 2,485,834 2,066,479
Federal funds purchased 750
Other borrowings 162,341 541,986
Subordinated debentures 92,888 92,888
Financed premiums payable 30,159 26,636
Accrued expenses and other liabilities 32,465 32,629
------ ------
Total Liabilities 2,803,687 2,761,368
--------- ---------
Shareholders' Equity
Preferred stock, Series A, no par value,
$1,000 liquidation preference per
share-200,000 shares authorized; 72,000
shares issued and outstanding at
September 30, 2009 and December 31, 2008 68,982 68,456
Common stock, $1.00 par value-60,000,000
shares authorized; issued and
outstanding: 24,029,125 shares at
September 30, 2009 and 23,013,980
shares at December 31, 2008 23,832 22,791
Capital surplus 201,360 200,687
Retained earnings (accumulated deficit) (118,268) (73,849)
Accumulated other comprehensive loss (15,965) (23,208)
------- -------
Total Shareholders' Equity 159,941 194,877
------- -------
Total Liabilities and Shareholders'
Equity $2,963,628 $2,956,245
========== ==========
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
(unaudited)
----------
(in thousands)
Interest Income
Interest
and fees
on loans $45,290 $45,224 $46,427 $134,915 $141,303
Interest on
securities
Taxable 1,475 1,705 2,078 4,913 6,558
Tax-exempt 841 976 1,652 2,924 5,998
Other
investments 299 239 466 862 1,185
--- --- --- --- -----
Total
Interest
Income 47,905 48,144 50,623 143,614 155,044
------ ------ ------ ------- -------
Interest Expense
Deposits 9,109 8,811 9,577 26,468 36,980
Other
borrowings 3,537 3,814 7,099 12,021 20,511
----- ----- ----- ------ ------
Total
Interest
Expense 12,646 12,625 16,676 38,489 57,491
------ ------ ------ ------ ------
Net
Interest
Income 35,259 35,519 33,947 105,125 97,553
Provision for
loan losses 22,285 25,593 19,788 77,916 43,456
------ ------ ------ ------ ------
Net
Interest
Income
After
Provision
for Loan
Losses 12,974 9,926 14,159 27,209 54,097
------ ----- ------ ------ ------
Non-interest
Income
Service
charges on
deposit
accounts 6,384 6,321 6,416 18,212 18,227
Net gains
(losses) on
assets
Mortgage
loans 2,257 3,262 969 8,800 3,977
Securities 121 4,230 (6,711) 3,770 (8,037)
VISA check
card
interchange
income 1,480 1,500 1,468 4,395 4,334
Mortgage loan
servicing (496) 2,349 340 1,011 1,545
Title insurance
fees 521 732 307 1,862 1,108
Other income 2,514 2,617 2,659 7,320 7,923
----- ----- ----- ----- -----
Total Non-
interest
Income 12,781 21,011 5,448 45,370 29,077
------ ------ ----- ------ ------
Non-interest
Expense
Compensation
and employee
benefits 13,823 13,328 14,023 39,728 42,015
Vehicle
service
contract
counterparty
risk 8,713 2,215 11,728
Loan and
collection 3,628 3,227 2,008 10,893 5,895
Occupancy,
net 2,602 2,560 2,871 8,210 8,798
Data
processing 2,146 2,010 1,760 6,252 5,197
Deposit
insurance 1,729 2,755 275 5,670 1,526
Furniture,
fixtures and
equipment 1,727 1,848 1,662 5,424 5,304
Loss on other
real estate
and
repossessed
assets 1,958 1,939 425 5,158 2,091
Credit card
and bank
service fees 1,722 1,668 1,273 4,854 3,493
Advertising 1,335 1,421 1,575 4,198 3,843
Other expenses 4,174 4,086 4,784 12,690 13,936
----- ----- ----- ------ ------
Total Non-
interest
Expense 43,557 37,057 30,656 114,805 92,098
------ ------ ------ ------- ------
Income
(Loss)
Before
Income
Tax (17,802) (6,120) (11,049) (42,226) (8,924)
Income tax
expense
(benefit) (1,088) (959) (5,723) (1,754) (7,285)
------ ---- ------ ------ ------
Net Income
(Loss) $(16,714) $(5,161) $(5,326) $(40,472) $(1,639)
======== ======= ======= ======== =======
Preferred
dividends 1,075 1,075 3,225
----- ----- -----
Net Income
(Loss)
Applicable
to
Common
Stock $(17,789) $(6,236) $(5,326) $(43,697) $(1,639)
======== ======= ======= ======== =======
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Selected Financial Data
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
(unaudited)
----------
Per Common
Share Data (A)
Net Income
(Loss) Per
Common Share
Basic (B) $(.74) $(.26) $(.23) $(1.84) $(.07)
Diluted (C) (.74) (.26) (.23) (1.84) (.07)
Cash dividends
declared .01 .01 .01 .03 .13
Selected Ratios
(annualized) (A)
As a Percent
of Average
Interest-
Earning Assets
Tax equivalent
interest
income 6.97% 7.04% 7.02% 7.03% 7.18%
Interest
expense 1.82 1.83 2.26 1.86 2.60
Tax equivalent
net interest
income 5.15 5.21 4.76 5.17 4.58
Net Income
(Loss) to
Average
common
equity (67.40)% (22.98)% (8.97)% (51.44)% (0.91)%
Average
assets (2.37) (0.83) (0.66) (1.96) (0.07)
Average
Shares
Basic
(B) 24,029,540 24,029,942 23,014,263 23,811,195 22,974,685
Diluted
(C) 24,102,489 24,102,482 23,073,979 23,880,695 23,049,469
(A) For the three- and nine-month periods ended September 30, 2009 and
the three-month period ended June 30, 2009, these amounts are
calculated using net loss applicable to common stock.
(B) Average shares of common stock for basic net income per share include
shares issued and outstanding during the period and participating
share awards.
(C) Average shares of common stock for diluted net income per share
include shares to be issued upon exercise of stock options and stock
units for deferred compensation plan for non-employee directors.
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
Robert Shuster, Chief Financial Officer, +1-616-522-1765
