UPDATE 2-Oppenheimer ups Independent Bank; shares rise

(Recasts; adds details, share movement, analysts' comments)

By Adheesha Sarkar

BANGALORE, June 27 (Reuters) - Oppenheimer upgraded Independent Bank Corp (IBCP.O: Quote, Profile, Research, Stock Buzz) to "perform" from "underperform," saying that two dividend cuts this year will help the bank holding company maintain its capital levels.

Shares of the company rose as much as 40 percent in morning trade but pared the gains later in the session.

"The company's decision to reduce the dividend twice this year should provide more capital cushion during these volatile times, and we are not assuming any capital raise in our estimates," Oppenheimer analyst Terry McEvoy said in a note to clients.

On Thursday, the Ionia, Michigan-based company slashed its quarterly dividend by 91 percent to 1 cent a share. In March, it had reduced its dividend by about 50 percent to 11 cents per share.

Independent Bank also said that it currently does not expect to raise additional capital through any type of equity offering.

"The dividend cuts along with shrink in the balance sheet will enable the company not to raise additional capital, which is positive for the shareholders," McEvoy said by phone.

The analyst said it views the stock as "a speculative investment" and fairly priced as it is down 57 percent year-to-date compared with a 19 percent decline in the Nasdaq bank index.