Filed Pursuant to Rule 424(b)(3)
File No. 333-169200
PROSPECTUS SUPPLEMENT NO. 6
TO PROSPECTUS DATED MAY 23, 2012
Common Stock
This Prospectus Supplement No. 6 supplements and amends the prospectus dated May 23, 2012, as amended and supplemented by the Prospectus Supplement No. 1 dated May 30, 2012, the Prospectus Supplement No. 2 dated August 21, 2012, the Prospectus Supplement No. 3 dated October 31, 2012, the Prospectus Supplement No. 4 dated November 13, 2012, and the Prospectus Supplement No. 5 dated December 20, 2012, which we collectively refer to as the Prospectus, which forms part of our Post-Effective Amendment No. 2 to Registration Statement on Form S-1 (Registration Statement No. 333-169200). The Prospectus relates to the disposition from time to time of up to 1,502,468 shares of our common stock that we may issue to Dutchess Opportunity Fund, II, LP ("Dutchess"), pursuant to an Investment Agreement between us and Dutchess, dated July 7, 2010. We are not selling any common stock under the Prospectus or this Prospectus Supplement No. 6, and will not receive any of the proceeds from the sale of shares by the selling stockholder.
We are filing this Prospectus Supplement No. 6 to update, amend and supplement the information included or incorporated by reference in the Prospectus with the information contained in the current reports described below.
This Prospectus Supplement No. 6 includes our two Current Reports on Form 8-K, filed with the Securities and Exchange Commission on January 30, 2013 and January 31, 2013, respectively.
This Prospectus Supplement No. 6 should be read in conjunction with, and may not be delivered or utilized without, the Prospectus, including any amendments or supplements thereto. This Prospectus Supplement No. 6 is qualified by reference to the Prospectus except to the extent that the information in this Prospectus Supplement No. 6 supersedes the information contained in the Prospectus. All references in the Prospectus to "this prospectus" are hereby amended to read "this prospectus (as supplemented and amended)."
Our common stock is listed on the Nasdaq Global Select Market under the symbol "IBCP." As of January 30, 2013, the closing sale price for our common stock on the Nasdaq Global Select Market was $5.48 per share.
Investing in our common stock involves risks. These risks are described under the caption "Risk Factors" beginning on page 7 of the Prospectus, as the same may be updated in prospectus supplements.
The shares of common stock offered are not savings accounts, deposits, or other obligations of any of our bank or non-bank subsidiaries and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.
Neither the Securities and Exchange Commission, any state securities commission, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is January 31, 2013.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: January 25, 2013
INDEPENDENT BANK CORPORATION
(Exact name of registrant as specified in its charter)
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Michigan
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0-7818
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38-2032782
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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230 West Main Street
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48846
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Ionia, Michigan
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(Zip Code)
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(Address of principal executive office)
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Registrant's telephone number,
including area code:
(616) 527-5820
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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o
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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|
o
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On January 25, 2013, the Board of Directors (the "Board") of Independent Bank Corporation (the "Company") authorized a $30,000 increase in the annual base salary of William (Brad) Kessel, effective as of January 1, 2013, in connection with Mr. Kessel's appointment as Chief Executive Officer of the Company. Of that amount, $5,000 will be paid in the form of shares of the Company's common stock. On the same date and effective as of January 1, 2013, the Board approved a 2% annual increase in the base salaries of the Company's other Named Executive Officers, except for Mr. Michael Magee, who transitioned from CEO to Executive Chairman as of January 1, 2013.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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INDEPENDENT BANK CORPORATION
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|||
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(Registrant)
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|||
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Date: January 31, 2013
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/s/ Robert N. Shuster | ||
| By: Robert N. Shuster | |||
| Its: Executive Vice President and | |||
| Chief Financial Officer | |||
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: January 30, 2013
INDEPENDENT BANK CORPORATION
(Exact name of registrant as
specified in its charter)
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Michigan
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0-7818
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38-2032782
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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230 West Main Street Ionia, Michigan
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48846
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(Address of principal executive office)
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(Zip Code)
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Registrant's telephone number,
including area code:
(616) 527-5820
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| o |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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| o |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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| o |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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| o |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02.
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Results of Operations and Financial Condition
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On January 30, 2013, Independent Bank Corporation issued a press release announcing its financial results for the quarter ended December 31, 2012. A copy of the press release is attached as Exhibit 99.1. Attached Exhibit 99.2 contains supplemental data to that press release.
The information in this Form 8-K and the attached Exhibits shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
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Item 9.01.
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Financial Statements and Exhibits
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Exhibits.
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99.1
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Press release dated January 30, 2013.
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99.2
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Supplemental data to the Registrant's press release dated January 30, 2013.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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INDEPENDENT BANK CORPORATION
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|||||
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(Registrant)
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|||||
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Date
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January 30, 2013
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By
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/s/Robert N. Shuster
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||
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Robert N. Shuster, Principal Financial Officer
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|||||
2
Exhibit 99.1
News Release
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Independent Bank Corporation
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230 West Main Street
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Ionia, MI 48846
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616.527.5820
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For Release:
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Immediately
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Contact:
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William B. Kessel, President and CEO, 616.447.3933
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Robert N. Shuster, Chief Financial Officer, 616.522.1765
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INDEPENDENT BANK CORPORATION REPORTS
2012 FOURTH QUARTER AND FULL YEAR RESULTS
IONIA, Mich., Jan. 30, 2012 - Independent Bank Corporation (Nasdaq: IBCP) reported fourth quarter 2012 net income applicable to common stock of $10.8 million, or $0.36 per diluted share, versus a net loss applicable to common stock of $9.8 million, or $1.15 per share, in the prior-year period. For the year ended Dec. 31, 2012, the Company reported net income applicable to common stock of $21.9 million, or $0.80 per diluted share, compared to a net loss applicable to common stock of $24.4 million, or $2.94 per share, in the prior-year period. For periods where the Company is reporting a profit, the diluted earnings per share calculation includes, among other things, the assumed conversion of mandatorily convertible preferred stock using a five-day average price per common share based on the applicable period end.
The Company’s fourth consecutive profitable quarter was highlighted by:
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·
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Completion of the previously announced branch sale with a resulting net gain of $5.4 million.
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·
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Additional improvement in asset quality, with non-performing assets down 15% during the quarter and 37% since the end of 2011.
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·
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A $6.5 million, or 94%, year-over-year decline in the quarterly provision for loan losses.
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·
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Strong mortgage-banking results with a $1.8 million, or 51%, year-over-year increase in quarterly net gains on mortgage loans.
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·
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Regulatory capital ratios that increased significantly and remain substantially above minimum requirements for “well-capitalized” institutions.
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William B. (“Brad”) Kessel, the President and Chief Executive Officer of Independent Bank Corporation, commented: “We are very pleased to report our fourth consecutive quarter of profitability in 2012 as well as further progress in improving asset quality, as evidenced by a reduction in our non-performing loans, loan net charge-offs and the provision for loan losses as compared to the year ago quarter. With the completion of the branch sale and the resulting increase in our regulatory capital ratios, our capital initiatives are now centered on strategies to convert the preferred stock owned by the U.S. Treasury into common stock and exit TARP. We are also focused on preserving the potential future use of our net deferred tax asset, which totaled approximately $65.1 million at Dec. 31, 2012 and on which we have established a full valuation allowance. The potential future recovery of this valuation allowance represents a source of capital that would be of substantial value to our shareholders.”
Operating Results
The Company’s net interest income totaled $20.9 million during the fourth quarter of 2012, a decrease of $2.1 million, or 9.1% from the year-ago period, and a decrease of $0.6 million, or 2.7% from the third quarter of 2012. The Company’s net interest income as a percent of average interest-earning assets (the “net interest margin”) was 3.96% during the fourth quarter of 2012, compared to 4.40% in the year-ago period, and 3.92% in the third quarter of 2012. The net interest margin decreased on a year-over-year basis due primarily to a change in asset mix, as higher yielding loans declined and lower yielding interest-bearing cash balances and short-term investments increased. However, in Dec. 2012, lower yielding interest-bearing cash balances and other short-term investments declined primarily due to funding needed for the branch sale. Average interest-earning assets were $2.10 billion in the fourth quarter of 2012 compared to $2.08 billion in the year-ago quarter and $2.18 billion in the third quarter of 2012.
1
For the full year of 2012, net interest income totaled $86.3 million, a decrease of $8.3 million, or 8.8% from 2011. The Company’s net interest margin for the full year of 2012 decreased to 4.01% compared to 4.42% in 2011. The reasons for the decline in net interest income for the full year of 2012 are generally consistent with those described above for the comparative year-over-year quarterly periods.
Service charges on deposits totaled $4.4 million and $17.9 million, respectively, for the fourth quarter and full year of 2012, compared to $4.6 million and $18.3 million, respectively, in the year ago periods. Interchange income totaled $2.1 million and $9.2 million for the fourth quarter and full year of 2012, respectively, compared to $2.3 million and $9.1 million, respectively, in the year ago periods. The year-over-year quarterly declines in 2012 are due primarily to the impact of the branch sale.
Net gains on mortgage loans were $5.3 million in the fourth quarter of 2012, compared to $3.5 million in the year-ago quarter. For the full year of 2012, net gains on mortgage loans totaled $17.3 million compared to $9.3 million in 2011. The increase in net gains relates primarily to a rise in mortgage loan sales volume associated with increased origination volume driven by record low interest rates.
Mortgage loan servicing generated income of $0.9 million in the fourth quarter of 2012 compared to a loss of $0.1 million in the fourth quarter of 2011. This improvement was due to the change in the impairment reserve (a $1.1 million impairment recovery in the fourth quarter of 2012 compared to a $0.2 million impairment charge in the year-ago quarter) that was partially offset by a $0.3 million increase in the amortization of capitalized mortgage loan servicing rights. The recovery of a portion of previously recorded impairment charges in the fourth quarter of 2012 primarily reflects the payoff/refinance of higher interest rate loans as well as a modest increase in interest rates which caused expected future mortgage loan prepayment speeds to slightly decrease. For the full year of 2012 and 2011, mortgage loan servicing generated income of $0.2 million and a loss of $2.0 million, respectively. The full year comparative variance is primarily due to the change in the impairment reserve (a $0.5 million impairment recovery in 2012 compared to a $3.3 million impairment charge in 2011) that was partially offset by a $1.6 million increase in the amortization of capitalized mortgage loan servicing rights. Capitalized mortgage loan servicing rights totaled $11.0 million at Dec. 31, 2012 compared to $11.2 million at Dec. 31, 2011. As of Dec. 31, 2012, the Company serviced approximately $1.75 billion in mortgage loans for others on which servicing rights have been capitalized.
The Company recorded a net gain of $5.4 million on the sale of 21 branches. This transaction closed on December 7, 2012 and resulted in the transfer of approximately $403.1 million of deposits and the sale of approximately $48.0 million of loans. The transaction also resulted in the transfer of $336.1 million of cash to the purchaser of the branches.
Non-interest expenses totaled $29.9 million in the fourth quarter of 2012, compared to $36.7 million in the year-ago period. The quarterly year-over-year decline in non-interest expenses was primarily due to decreases in occupancy costs (down $0.4 million), loan and collection costs (down $0.5 million), legal and professional fees (down $0.6 million), net losses on other real estate and repossessed assets (down $0.8 million), credit card and bank service fees (down $0.3 million), vehicle service contract counterparty contingencies (down $5.5 million) and the provision for loss reimbursement on sold loans (down $0.6 million). These declines were partially offset by a $1.9 million increase in compensation and benefits. For the full year of 2012, non-interest expenses totaled $116.7 million versus $133.9 million in 2011. The categories of non-interest expenses that declined for the full year of 2012 are generally consistent with those described above for the comparative year-over-year quarterly periods. Credit related costs (loan and collection, net losses on other real estate and repossessed assets, and vehicle service contract counterparty contingencies) have declined significantly in 2012, which primarily reflects the overall decrease in the volume of problem credits (non-performing loans and “watch” credits), stabilization in collateral values, and lower expected incurred losses and reduced levels of payment plan receivables. The increase in compensation and benefits primarily reflects expenses associated with reinstating certain employee incentive programs (including the Company’s employee stock ownership plan) that had been suspended or reduced in prior years, and severance costs related to staff reduction initiatives. Excluding the impact of the branch sale, average full time equivalent employee levels declined by 7.5% during 2012 as compared to the prior year period.
Asset Quality
Commenting on asset quality, President and CEO Kessel added: "Our provision for loan losses decreased by $6.5 million, or 93.5%, in the fourth quarter of 2012 compared to the year-ago amount, primarily reflecting a reduction in non-performing loans, a lower level of watch credits, reduced loan net charge-offs, and an overall decline in total loan balances. Since the start of 2012, non-performing loans and commercial loan watch credits have declined by approximately 45% and 33%, respectively. In addition, thirty- to eighty-nine day delinquency rates at Dec. 31, 2012 were 0.97% for commercial loans and 1.40% for mortgage and consumer loans. These delinquency rates continue to be well managed as we strive to further improve asset quality and reduce credit related costs."
2
A breakdown of non-performing loans(1) by loan type is as follows:
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Loan Type
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12/31/2012
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12/31/2011
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12/31/2010
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|||||||||
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(Dollars in Millions)
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||||||||||||
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Commercial
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$ | 14.8 | $ | 29.3 | $ | 29.6 | ||||||
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Consumer/installment
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2.3 | 3.5 | 4.2 | |||||||||
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Mortgage
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15.7 | 26.2 | 30.9 | |||||||||
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Payment plan receivables(2)
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0.1 | 0.9 | 2.9 | |||||||||
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Total
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$ | 32.9 | $ | 59.9 | $ | 67.6 | ||||||
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Ratio of non-performing loans to total portfolio loans
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2.32 | % | 3.80 | % | 3.73 | % | ||||||
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Ratio of non-performing assets to total assets
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2.92 | % | 4.07 | % | 4.22 | % | ||||||
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Ratio of the allowance for loan losses to non-performing loans
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134.43 | % | 98.33 | % | 100.50 | % | ||||||
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(1)
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Excludes loans that are classified as “troubled debt restructured” that are still performing.
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(2)
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Represents payment plans for which no payments have been received for 90 days or more and for which Mepco has not yet completed the process to charge the applicable counterparty for the balance due. These balances exclude receivables due from Mepco counterparties related to the cancellation of payment plan receivables.
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Non-performing loans have declined by $26.9 million, or 45.0%, since year-end 2011. All categories of non-performing loans declined, but the principal decreases since year-end 2011 were in commercial loans and residential mortgage loans. The decline in non-performing loans primarily reflects loan net charge-offs, pay-offs, negotiated transactions and the migration of loans into ORE during 2012. Non-performing commercial loans have declined by $63.3 million, or 81.1%, since they peaked in 2008. Non-performing retail (residential mortgage and consumer/installment) loans have declined by $41.1 million, or 69.5%, since they peaked in 2009. Other real estate and repossessed assets totaled $26.1 million at Dec. 31, 2012, compared to $34.0 million at Dec. 31, 2011.
The provision for loan losses was $0.4 million and $6.9 million in the fourth quarters of 2012 and 2011, respectively. For the full year of 2012, the provision for loan losses totaled $6.9 million versus $27.9 million in 2011. 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 $4.2 million (1.15% annualized of average loans) in the fourth quarter of 2012, compared to $6.9 million (1.70% annualized of average loans) in the fourth quarter of 2011. Loan net charge-offs were $20.9 million (1.46% of average loans) and $37.0 million (2.20% of average loans) for all of 2012 and 2011, respectively. The full year decline in 2012 loan net charge-offs by category were: commercial loans $9.7 million; mortgage loans $5.0 million; and consumer/installment loans $1.3 million. At Dec. 31, 2012, the allowance for loan losses totaled $44.3 million, or 3.12% of portfolio loans, compared to $58.9 million, or 3.73% of portfolio loans, at Dec. 31, 2011.
Balance Sheet, Liquidity and Capital
Total assets were $2.02 billion at Dec. 31, 2012, a decrease of $283.5 million, or 12.3%, from Dec. 31, 2011. The decline in total assets is due to the impact of the branch sale. Loans, excluding loans held for sale, were $1.42 billion at Dec. 31, 2012, compared to $1.58 billion at Dec. 31, 2011. Deposits totaled $1.78 billion at Dec. 31, 2012, a decrease of $306.6 million from Dec. 31, 2011. Excluding the impact of the branch sale, deposits would have increased by $96.5 million during 2012.
Cash and cash equivalents totaled $179.8 million at Dec. 31, 2012, versus $341.1 million at Dec. 31, 2011. This decrease is due to the impact of the branch sale. Securities available for sale totaled $208.4 million at Dec. 31, 2012, versus $157.4 million at Dec. 31, 2011. This $51.0 million increase is primarily due to the purchase of residential mortgage-backed and U.S. government agency securities during 2012.
3
Total shareholders’ equity was $135.0 million at Dec. 31, 2012, or 6.7% of total assets. Tangible common equity totaled $46.8 million at Dec. 31, 2012, or $5.15 per share. The Company’s wholly owned subsidiary, Independent Bank, remains “well capitalized” for regulatory purposes with the following ratios:
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Regulatory Capital Ratio
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12/31/2012
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12/31/2011
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Well
Capitalized Minimum
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Tier 1 capital to average total assets(1)
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8.26%
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6.77%
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5.00%
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Tier 1 capital to risk-weighted assets
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13.67%
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10.13%
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6.00%
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Total capital to risk-weighted assets
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14.95%
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11.41%
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10.00%
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(1)
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This ratio would be 9.40% at 12/31/12 if based on period end assets rather than average assets.
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About Independent Bank Corporation
Independent Bank Corporation (Nasdaq Symbol: IBCP) is a Michigan-based bank holding company with total assets of approximately $2.0 billion. Founded as First National Bank of Ionia in 1864, Independent Bank Corporation now operates convenient locations 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 has received the “Highest Customer Satisfaction with Retail Banking in the North Central Region” from the J.D. Power and Associates 2012 Retail Banking Satisfaction StudySM. The J.D. Power and Associates study results are based on experiences and perceptions of consumers surveyed January-February, 2012. 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 website at: www.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 operations, products or services, and forecasts of the Company's revenue, earnings or other measures of economic performance, including statements of profitability, estimates of credit quality trends, and statements about the potential value of our deferred tax assets. 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. These forward-looking statements involve assumptions and are subject to substantial risks and uncertainties, such as 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 include the ability of Independent Bank Corporation to meet the objectives of its capital restoration plan, the ability of Independent Bank to remain well-capitalized under federal regulatory standards, the pace of economic recovery within Michigan and beyond, our ability to collect receivables from Mepco Finance Corporation’s counterparties related to cancellations of payment plans, 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.
4
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition
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December 31,
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December 31,
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|||||||
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2012
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2011
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(unaudited)
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||||||||
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Assets
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(In thousands, except share amounts)
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|||||||
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Cash and due from banks
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$ | 55,487 | $ | 62,777 | ||||
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Interest bearing deposits
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124,295 | 278,331 | ||||||
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Cash and Cash Equivalents
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179,782 | 341,108 | ||||||
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Trading securities
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110 | 77 | ||||||
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Securities available for sale
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208,413 | 157,444 | ||||||
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Federal Home Loan Bank and Federal Reserve Bank stock, at cost
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20,838 | 20,828 | ||||||
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Loans held for sale, carried at fair value
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47,487 | 44,801 | ||||||
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Loans held for sale, carried at lower of cost or fair value
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3,292 | - | ||||||
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Loans
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||||||||
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Commercial
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617,258 | 651,155 | ||||||
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Mortgage
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527,340 | 590,876 | ||||||
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Installment
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189,849 | 219,559 | ||||||
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Payment plan receivables
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84,692 | 115,018 | ||||||
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Total Loans
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1,419,139 | 1,576,608 | ||||||
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Allowance for loan losses
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(44,275) | (58,884 | ) | |||||
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Net Loans
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1,374,864 | 1,517,724 | ||||||
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Other real estate and repossessed assets
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26,133 | 34,042 | ||||||
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Property and equipment, net
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47,016 | 62,548 | ||||||
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Bank-owned life insurance
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50,890 | 49,271 | ||||||
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Other intangibles
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3,975 | 7,609 | ||||||
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Capitalized mortgage loan servicing rights
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11,013 | 11,229 | ||||||
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Prepaid FDIC deposit insurance assessment
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9,448 | 12,609 | ||||||
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Vehicle service contract counterparty receivables, net
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18,449 | 29,298 | ||||||
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Accrued income and other assets
|
22,157 | 18,818 | ||||||
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Total Assets
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$ | 2,023,867 | $ | 2,307,406 | ||||
|
Liabilities and Shareholders' Equity
|
||||||||
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Deposits
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||||||||
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Non-interest bearing
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$ | 488,126 | $ | 497,718 | ||||
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Savings and interest-bearing checking
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871,238 | 1,019,603 | ||||||
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Reciprocal
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33,242 | 28,508 | ||||||
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Retail time
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372,340 | 526,525 | ||||||
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Brokered time
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14,591 | 13,771 | ||||||
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Total Deposits
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1,779,537 | 2,086,125 | ||||||
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Other borrowings
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17,625 | 33,387 | ||||||
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Subordinated debentures
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50,175 | 50,175 | ||||||
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Vehicle service contract counterparty payables
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7,725 | 6,633 | ||||||
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Accrued expenses and other liabilities
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33,830 | 28,459 | ||||||
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Total Liabilities
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1,888,892 | 2,204,779 | ||||||
|
Shareholders' Equity
|
||||||||
|
Convertible preferred stock, no par value, 200,000 shares authorized; 74,426 shares issued and outstanding at December 31, 2012 and December 31, 2011; liquidation preference: $85,150 at December 31, 2012 and $81,023 at December 31, 2011
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84,204 | 79,857 | ||||||
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Common stock, no par value, 500,000,000 shares authorized; issued and outstanding: 9,093,732 shares at December 31, 2012 and 8,491,526 shares at December 31, 2011
|
251,237 | 248,950 | ||||||
|
Accumulated deficit
|
(192,408) | (214,259 | ) | |||||
|
Accumulated other comprehensive loss
|
(8,058) | (11,921 | ) | |||||
|
Total Shareholders' Equity
|
134,975 | 102,627 | ||||||
|
Total Liabilities and Shareholders' Equity
|
$ | 2,023,867 | $ | 2,307,406 | ||||
5
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
|
Three Months Ended
|
Twelve Months Ended
|
|||||||||||||||||||
|
December 31,
|
September 30,
|
December 31,
|
December 31,
|
|||||||||||||||||
|
2012
|
2012
|
2011
|
2012
|
2011
|
||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||
|
Interest Income
|
||||||||||||||||||||
|
Interest and fees on loans
|
$ | 22,353 | $ | 23,385 | $ | 25,766 | $ | 93,780 | $ | 110,574 | ||||||||||
|
Interest on securities
|
||||||||||||||||||||
|
Taxable
|
688 | 655 | 314 | 2,934 | 1,422 | |||||||||||||||
|
Tax-exempt
|
243 | 261 | 288 | 1,044 | 1,219 | |||||||||||||||
|
Other investments
|
430 | 432 | 362 | 1,640 | 1,547 | |||||||||||||||
|
Total Interest Income
|
23,714 | 24,733 | 26,730 | 99,398 | 114,762 | |||||||||||||||
|
Interest Expense
|
||||||||||||||||||||
|
Deposits
|
1,961 | 2,223 | 2,571 | 8,913 | 15,257 | |||||||||||||||
|
Other borrowings
|
879 | 1,059 | 1,198 | 4,230 | 4,936 | |||||||||||||||
|
Total Interest Expense
|
2,840 | 3,282 | 3,769 | 13,143 | 20,193 | |||||||||||||||
|
Net Interest Income
|
20,874 | 21,451 | 22,961 | 86,255 | 94,569 | |||||||||||||||
|
Provision for loan losses
|
449 | 251 | 6,917 | 6,887 | 27,946 | |||||||||||||||
|
Net Interest Income After Provision for Loan Losses
|
20,425 | 21,200 | 16,044 | 79,368 | 66,623 | |||||||||||||||
|
Non-interest Income
|
||||||||||||||||||||
|
Service charges on deposit accounts
|
4,395 | 4,739 | 4,617 | 17,887 | 18,306 | |||||||||||||||
|
Interchange income
|
2,135 | 2,324 | 2,259 | 9,188 | 9,091 | |||||||||||||||
|
Net gains (losses) on assets
|
||||||||||||||||||||
|
Mortgage loans
|
5,282 | 4,602 | 3,509 | 17,323 | 9,262 | |||||||||||||||
|
Securities
|
72 | 301 | (22 | ) | 1,226 | 249 | ||||||||||||||
|
Other than temporary impairment loss on securities
|
||||||||||||||||||||
|
Total impairment loss
|
(7 | ) | (70 | ) | (614 | ) | (339 | ) | (760 | ) | ||||||||||
|
Loss recognized in other comprehensive loss
|
- | - | - | - | - | |||||||||||||||
|
Net impairment loss recognized in earnings
|
(7 | ) | (70 | ) | (614 | ) | (339 | ) | (760 | ) | ||||||||||
|
Mortgage loan servicing
|
882 | (364 | ) | (126 | ) | 166 | (2,011 | ) | ||||||||||||
|
Title insurance fees
|
484 | 482 | 375 | 1,963 | 1,465 | |||||||||||||||
|
(Increase) decrease in fair value of U.S. Treasury warrant
|
(74 | ) | (32 | ) | 112 | (285 | ) | 1,137 | ||||||||||||
|
Net gain on branch sale
|
5,402 | - | - | 5,402 | - | |||||||||||||||
|
Other
|
2,826 | 2,560 | 2,381 | 11,034 | 10,174 | |||||||||||||||
|
Total Non-interest Income
|
21,397 | 14,542 | 12,491 | 63,565 | 46,913 | |||||||||||||||
|
Non-interest Expense
|
||||||||||||||||||||
|
Compensation and employee benefits
|
14,385 | 13,610 | 12,452 | 53,983 | 50,484 | |||||||||||||||
|
Occupancy, net
|
2,416 | 2,482 | 2,768 | 10,104 | 11,183 | |||||||||||||||
|
Loan and collection
|
1,836 | 2,832 | 2,309 | 9,965 | 12,414 | |||||||||||||||
|
Data processing
|
2,049 | 2,024 | 2,113 | 8,009 | 8,208 | |||||||||||||||
|
Furniture, fixtures and equipment
|
1,248 | 1,194 | 1,307 | 5,043 | 5,535 | |||||||||||||||
|
Legal and professional
|
1,058 | 952 | 1,611 | 4,175 | 3,941 | |||||||||||||||
|
FDIC deposit insurance
|
817 | 816 | 735 | 3,306 | 3,507 | |||||||||||||||
|
Communications
|
783 | 785 | 852 | 3,269 | 3,552 | |||||||||||||||
|
Net losses on other real estate and repossessed assets
|
943 | 291 | 1,710 | 2,854 | 5,824 | |||||||||||||||
|
Advertising
|
652 | 647 | 539 | 2,494 | 2,503 | |||||||||||||||
|
Credit card and bank service fees
|
383 | 433 | 727 | 2,091 | 3,656 | |||||||||||||||
|
Interchange expense
|
478 | 468 | 411 | 1,799 | 1,543 | |||||||||||||||
|
Vehicle service contract counterparty contingencies
|
551 | 281 | 6,046 | 1,629 | 11,048 | |||||||||||||||
|
Provision for loss reimbursement on sold loans
|
361 | 193 | 973 | 1,112 | 1,993 | |||||||||||||||
|
Write-down of property and equipment held for sale
|
- | 860 | - | 860 | - | |||||||||||||||
|
Recoveries related to unfunded lending commitments
|
(91 | ) | (538 | ) | (48 | ) | (688 | ) | (36 | ) | ||||||||||
|
Other
|
2,038 | 1,966 | 2,208 | 6,730 | 8,593 | |||||||||||||||
|
Total Non-interest Expense
|
29,907 | 29,296 | 36,713 | 116,735 | 133,948 | |||||||||||||||
|
Income (Loss) Before Income Tax
|
11,915 | 6,446 | (8,178 | ) | 26,198 | (20,412 | ) | |||||||||||||
|
Income tax expense (benefit)
|
- | - | 536 | - | (212 | ) | ||||||||||||||
|
Net Income (Loss)
|
$ | 11,915 | $ | 6,446 | $ | (8,714 | ) | $ | 26,198 | $ | (20,200 | ) | ||||||||
|
Preferred stock dividends and discount accretion
|
1,106 | 1,093 | 1,055 | 4,347 | 4,157 | |||||||||||||||
|
Net Income (Loss) Applicable to Common Stock
|
$ | 10,809 | $ | 5,353 | $ | (9,769 | ) | $ | 21,851 | $ | (24,357 | ) | ||||||||
6
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Selected Financial Data
|
Three Months Ended
|
Twelve Months Ended
|
|||||||||||||||||||
|
December 31,
|
September 30,
|
December 31,
|
December 31,
|
|||||||||||||||||
|
2012
|
2012
|
2011
|
2012
|
2011
|
||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||
|
Per Common Share Data
|
||||||||||||||||||||
|
Net Income (Loss) Per Common Share (A)
|
||||||||||||||||||||
|
Basic (B)
|
$ | 1.21 | $ | .61 | $ | (1.15 | ) | $ | 2.51 | $ | (2.94 | ) | ||||||||
|
Diluted (C)
|
.36 | .16 | (1.15 | ) | .80 | (2.94 | ) | |||||||||||||
|
Cash dividends declared per common share
|
.00 | .00 | .00 | .00 | .00 | |||||||||||||||
|
Selected Ratios (D)
|
||||||||||||||||||||
|
As a Percent of Average Interest-Earning Assets
|
||||||||||||||||||||
|
Interest income
|
4.50 | % | 4.52 | % | 5.12 | % | 4.62 | % | 5.36 | % | ||||||||||
|
Interest expense
|
0.54 | 0.60 | 0.72 | 0.61 | 0.94 | |||||||||||||||
|
Net interest income
|
3.96 | 3.92 | 4.40 | 4.01 | 4.42 | |||||||||||||||
|
Net Income (Loss) to (A)
|
||||||||||||||||||||
|
Average common shareholders’ equity
|
99.01 | % | 62.71 | % | (124.60 | )% | 68.29 | % | (68.44 | )% | ||||||||||
|
Average assets
|
1.87 | 0.89 | (1.68 | ) | 0.92 | (1.02 | ) | |||||||||||||
|
Average Shares
|
||||||||||||||||||||
|
Basic (B)
|
8,921,761 | 8,778,899 | 8,480,507 | 8,709,389 | 8,277,280 | |||||||||||||||
|
Diluted (C)
|
33,301,197 | 39,674,719 | 69,908,107 | 32,885,138 | 69,687,356 | |||||||||||||||
(A) These amounts are calculated using net income (loss) applicable to common stock. For any period in which net income is recorded, dividends on convertible preferred stock are added back in the diluted per share calculation.
(B) Average shares of common stock for basic net income (loss) per common share include shares issued and outstanding during the period and participating share awards.
(C) Average shares of common stock for diluted net income per common share include shares to be issued upon conversion of convertible preferred stock, shares to be issued upon exercise of common stock warrants, shares to be issued upon exercise of stock options, restricted stock units and stock units for a deferred compensation plan for non-employee directors. For any period in which a loss is recorded, the assumed conversion of convertible preferred stock, assumed exercise of common stock warrants, assumed exercise of stock options, restricted stock units and stock units for a deferred compensation plan for non-employee directors would have an anti-dilutive impact on the loss per share and are thus ignored in the diluted per share calculation.
(D) Ratios have been annualized for quarterly periods.
7
Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
|
Non-performing assets(1)
|
||||||||
|
December 31,
|
||||||||
|
2012
|
2011
|
|||||||
|
(Dollars in thousands)
|
||||||||
|
Non-accrual loans
|
$ | 32,929 | $ | 59,309 | ||||
|
Loans 90 days or more past due and still accruing interest
|
7 | 574 | ||||||
|
Total non-performing loans
|
32,936 | 59,883 | ||||||
|
Other real estate and repossessed assets
|
26,133 | 34,042 | ||||||
|
Total non-performing assets
|
$ | 59,069 | $ | 93,925 | ||||
|
As a percent of Portfolio Loans
|
||||||||
|
Non-performing loans
|
2.32 | % | 3.80 | % | ||||
|
Allowance for loan losses
|
3.12 | 3.73 | ||||||
|
Non-performing assets to total assets
|
2.92 | 4.07 | ||||||
|
Allowance for loan losses as a percent of non-performing loans
|
134.43 | 98.33 | ||||||
|
(1)
|
Excludes loans classified as “troubled debt restructured” that are not past due and vehicle service contract counterparty receivables, net.
|
|
Troubled debt restructurings (“TDR”)
|
||||||||||||
|
December 31, 2012
|
||||||||||||
|
Commercial
|
Retail
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||
|
Performing TDR’s
|
$ | 40,753 | $ | 85,977 | $ | 126,730 | ||||||
|
Non-performing TDR’s (1)
|
7,756 | 9,177 | (2) | 16,933 | ||||||||
|
Total
|
$ | 48,509 | $ | 95,154 | $ | 143,663 | ||||||
|
December 31, 2011
|
||||||||||||
|
Commercial
|
Retail
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||
|
Performing TDR’s
|
$ | 29,799 | $ | 86,770 | $ | 116,569 | ||||||
|
Non-performing TDR’s (1)
|
14,567 | 14,081 | (2) | 28,648 | ||||||||
|
Total
|
$ | 44,366 | $ | 100,851 | $ | 145,217 | ||||||
|
(1)
|
Included in non-performing assets table above.
|
|
(2)
|
Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis.
|
1
|
Allowance for loan losses
|
Twelve months ended
|
|||||||||||||||
|
December 31,
|
||||||||||||||||
|
2012
|
2011
|
|||||||||||||||
|
Unfunded
|
Unfunded
|
|||||||||||||||
|
Loans
|
Commitments
|
Loans
|
Commitments
|
|||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||
|
Balance at beginning of period
|
$ | 58,884 | $ | 1,286 | $ | 67,915 | $ | 1,322 | ||||||||
|
Additions (deduction)
|
||||||||||||||||
|
Provision for loan losses
|
6,887 | - | 27,946 | - | ||||||||||||
|
Recoveries credited to allowance
|
6,522 | - | 4,747 | - | ||||||||||||
|
Loans charged against the allowance
|
(27,408 | ) | - | (41,724 | ) | - | ||||||||||
|
Reclassification to loans held for sale
|
(610 | ) | - | - | - | |||||||||||
|
Additions (deductions) included in non-interest expense
|
- | (688 | ) | - | (36 | ) | ||||||||||
|
Balance at end of period
|
$ | 44,275 | $ | 598 | $ | 58,884 | $ | 1,286 | ||||||||
|
Net loans charged against the allowance to average Portfolio Loans
|
1.46 | % | 2.20 | % | ||||||||||||
Alternative Sources of Funds
|
December 31,
|
||||||||||||||||||
|
2012
|
2011
|
|||||||||||||||||
|
Average
|
Average
|
|||||||||||||||||
|
Amount
|
Maturity
|
Rate
|
Amount
|
Maturity
|
Rate
|
|||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
|
Brokered CDs(1)
|
$ | 14,591 |
0.6 years
|
1.70 | % | $ | 13,771 |
1.2 years
|
3.15 | % | ||||||||
|
Fixed-rate FHLB advances
|
17,622 |
4.5 years
|
6.38 | 30,384 |
3.3 years
|
3.99 | ||||||||||||
|
Variable-rate FHLB advances(1)
|
- | 3,000 |
2.3 years
|
0.51 | ||||||||||||||
|
Total
|
$ | 32,213 |
2.7 years
|
4.26 | % | $ | 47,155 |
2.6 years
|
3.52 | % | ||||||||
|
(1)
|
Certain of these items have had their average maturity and rate altered through the use of derivative instruments, such as pay-fixed interest-rate swaps.
|
|
Capitalization
|
||||||||
|
December 31,
|
||||||||
|
2012
|
2011
|
|||||||
|
(In thousands)
|
||||||||
|
Subordinated debentures
|
$ | 50,175 | $ | 50,175 | ||||
|
Amount not qualifying as regulatory capital
|
(1,507 | ) | (1,507 | ) | ||||
|
Amount qualifying as regulatory capital
|
48,668 | 48,668 | ||||||
|
Shareholders’ equity
|
||||||||
|
Convertible preferred stock
|
84,204 | 79,857 | ||||||
|
Common stock
|
251,237 | 248,950 | ||||||
|
Accumulated deficit
|
(192,408 | ) | (214,259 | ) | ||||
|
Accumulated other comprehensive loss
|
(8,058 | ) | (11,921 | ) | ||||
|
Total shareholders’ equity
|
134,975 | 102,627 | ||||||
|
Total capitalization
|
$ | 183,643 | $ | 151,295 | ||||
2
|
Non-Interest Income
|
||||||||||||||||||||
|
Three months ended
|
Twelve months ended
|
|||||||||||||||||||
|
December 31,
|
September 30,
|
December 31,
|
December 31,
|
|||||||||||||||||
|
2012
|
2012
|
2011
|
2012
|
2011
|
||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||
|
Service charges on deposit accounts
|
$ | 4,395 | $ | 4,739 | $ | 4,617 | $ | 17,887 | $ | 18,306 | ||||||||||
|
Interchange income
|
2,135 | 2,324 | 2,259 | 9,188 | 9,091 | |||||||||||||||
|
Net gains (losses) on assets
|
||||||||||||||||||||
|
Mortgage loans
|
5,282 | 4,602 | 3,509 | 17,323 | 9,262 | |||||||||||||||
|
Securities
|
72 | 301 | (22 | ) | 1,226 | 249 | ||||||||||||||
|
Other than temporary impairment loss on securities
|
||||||||||||||||||||
|
Total impairment loss
|
(7 | ) | (70 | ) | (614 | ) | (339 | ) | (760 | ) | ||||||||||
|
Loss recognized in other comprehensive income
|
- | - | - | - | - | |||||||||||||||
|
Net impairment loss recognized in earnings
|
(7 | ) | (70 | ) | (614 | ) | (339 | ) | (760 | ) | ||||||||||
|
Mortgage loan servicing
|
882 | (364 | ) | (126 | ) | 166 | (2,011 | ) | ||||||||||||
|
Investment and insurance commissions
|
560 | 491 | 437 | 2,146 | 2,050 | |||||||||||||||
|
Bank owned life insurance
|
401 | 398 | 493 | 1,622 | 1,878 | |||||||||||||||
|
Title insurance fees
|
484 | 482 | 375 | 1,963 | 1,465 | |||||||||||||||
|
(Increase) decrease in fair value of U.S.Treasury warrant
|
(74 | ) | (32 | ) | 112 | (285 | ) | 1,137 | ||||||||||||
|
Net gain on branch sale
|
5,402 | - | - | 5,402 | - | |||||||||||||||
|
Other
|
1,865 | 1,671 | 1,451 | 7,266 | 6,246 | |||||||||||||||
|
Total non-interest income
|
$ | 21,397 | $ | 14,542 | $ | 12,491 | $ | 63,565 | $ | 46,913 | ||||||||||
|
Capitalized Mortgage Loan Servicing Rights
|
||||||||||||||||
|
Three months ended
December 31,
|
Twelve months ended
December 31,
|
|||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
(In thousands)
|
||||||||||||||||
|
Balance at beginning of period
|
$ | 10,205 | $ | 11,549 | $ | 11,229 | $ | 14,661 | ||||||||
|
Originated servicing rights capitalized
|
1,058 | 899 | 4,006 | 2,967 | ||||||||||||
|
Amortization
|
(1,328 | ) | (1,054 | ) | (4,679 | ) | (3,065 | ) | ||||||||
|
Change in valuation allowance
|
1,078 | (165 | ) | 457 | (3,334 | ) | ||||||||||
|
Balance at end of period
|
$ | 11,013 | $ | 11,229 | $ | 11,013 | $ | 11,229 | ||||||||
|
Valuation allowance at end of period
|
$ | 6,087 | $ | 6,544 | $ | 6,087 | $ | 6,544 | ||||||||
Mortgage Loan Activity
|
Three months ended
|
Twelve months ended
|
|||||||||||||||||||
|
December 31,
|
September 30,
|
December 31,
|
December 31,
|
|||||||||||||||||
|
2012
|
2012
|
2011
|
2012
|
2011
|
||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
|
Mortgage loans originated
|
$ | 153,821 | $ | 135,263 | $ | 139,351 | $ | 538,717 | $ | 399,062 | ||||||||||
|
Mortgage loans sold
|
143,138 | 128,196 | 117,643 | 510,488 | 383,493 | |||||||||||||||
|
Mortgage loans sold with servicing rights released
|
23,459 | 21,942 | 21,017 | 83,296 | 81,196 | |||||||||||||||
|
Net gains on the sale of mortgage loans
|
5,282 | 4,602 | 3,509 | 17,323 | 9,262 | |||||||||||||||
|
Net gains as a percent of mortgage loans sold (“Loan Sales Margin”)
|
3.69 | % | 3.59 | % | 2.98 | % | 3.39 | % | 2.42 | % | ||||||||||
|
Fair value adjustments included in the Loan Sales Margin
|
(0.15 | ) | 0.29 | 0.29 | 0.28 | (0.01 | ) | |||||||||||||
3
|
Non-Interest Expense
|
||||||||||||||||||||
|
Three months ended
|
Twelve months ended
|
|||||||||||||||||||
|
December 31,
|
September 30,
|
December 31,
|
December 31,
|
|||||||||||||||||
|
2012
|
2012
|
2011
|
2012
|
2011
|
||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||
|
Compensation
|
$ | 9,804 | $ | 9,702 | $ | 9,845 | $ | 39,002 | $ | 39,835 | ||||||||||
|
Performance-based compensation
|
2,140 | 1,712 | 677 | 5,672 | 1,449 | |||||||||||||||
|
Payroll taxes and employee benefits
|
2,441 | 2,196 | 1,930 | 9,309 | 9,200 | |||||||||||||||
|
Compensation and employee benefits
|
14,385 | 13,610 | 12,452 | 53,983 | 50,484 | |||||||||||||||
|
Occupancy, net
|
2,416 | 2,482 | 2,768 | 10,104 | 11,183 | |||||||||||||||
|
Loan and collection
|
1,836 | 2,832 | 2,309 | 9,965 | 12,414 | |||||||||||||||
|
Data processing
|
2,049 | 2,024 | 2,113 | 8,009 | 8,208 | |||||||||||||||
|
Furniture, fixtures and equipment
|
1,248 | 1,194 | 1,307 | 5,043 | 5,535 | |||||||||||||||
|
Legal and professional fees
|
1,058 | 952 | 1,611 | 4,175 | 3,941 | |||||||||||||||
|
FDIC deposit insurance
|
817 | 816 | 735 | 3,306 | 3,507 | |||||||||||||||
|
Communications
|
783 | 785 | 852 | 3,269 | 3,552 | |||||||||||||||
|
Net losses on other real estate and repossessed assets
|
943 | 291 | 1,710 | 2,854 | 5,824 | |||||||||||||||
|
Advertising
|
652 | 647 | 539 | 2,494 | 2,503 | |||||||||||||||
|
Credit card and bank service fees
|
383 | 433 | 727 | 2,091 | 3,656 | |||||||||||||||
|
Interchange expense
|
478 | 468 | 411 | 1,799 | 1,543 | |||||||||||||||
|
Vehicle service contract counterparty contingencies
|
551 | 281 | 6,046 | 1,629 | 11,048 | |||||||||||||||
|
Supplies
|
248 | 299 | 401 | 1,281 | 1,571 | |||||||||||||||
|
Provision for loss reimbursement on sold loans
|
361 | 193 | 973 | 1,112 | 1,993 | |||||||||||||||
|
Amortization of intangible assets
|
249 | 272 | 342 | 1,065 | 1,371 | |||||||||||||||
|
Write-down of property and equipment held for sale
|
- | 860 | - | 860 | - | |||||||||||||||
|
Recoveries related to unfunded lending commitments
|
(91 | ) | (538 | ) | (48 | ) | (688 | ) | (36 | ) | ||||||||||
|
Other
|
1,541 | 1,395 | 1,465 | 4,384 | 5,651 | |||||||||||||||
|
Total non-interest expense
|
$ | 29,907 | $ | 29,296 | $ | 36,713 | $ | 116,735 | $ | 133,948 | ||||||||||
4
|
Average Balances and Rates
|
||||||||||||||||||||||||
|
Three Months Ended
|
||||||||||||||||||||||||
|
December 31,
|
||||||||||||||||||||||||
|
2012
|
2011
|
|||||||||||||||||||||||
|
Average
|
Average
|
|||||||||||||||||||||||
|
Balance
|
Interest | Rate(3) |
Balance
|
Interest
|
Rate(3)
|
|||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
|
Assets (1)
|
||||||||||||||||||||||||
|
Taxable loans
|
$ | 1,503,104 | $ | 22,285 | 5.90 | % | $ | 1,632,445 | $ | 25,688 | 6.26 | % | ||||||||||||
|
Tax-exempt loans (2)
|
6,432 | 68 | 4.21 | 7,378 | 78 | 4.19 | ||||||||||||||||||
|
Taxable securities
|
201,790 | 688 | 1.36 | 95,859 | 314 | 1.30 | ||||||||||||||||||
|
Tax-exempt securities (2)
|
24,766 | 243 | 3.90 | 28,214 | 288 | 4.05 | ||||||||||||||||||
|
Cash – interest bearing
|
345,904 | 220 | 0.25 | 292,658 | 187 | 0.25 | ||||||||||||||||||
|
Other investments
|
20,696 | 210 | 4.04 | 20,893 | 175 | 3.32 | ||||||||||||||||||
|
Interest Earning Assets
|
2,102,692 | 23,714 | 4.50 | 2,077,447 | 26,730 | 5.12 | ||||||||||||||||||
|
Cash and due from banks
|
51,863 | 54,944 | ||||||||||||||||||||||
|
Other assets, net
|
150,592 | 180,769 | ||||||||||||||||||||||
|
Total Assets
|
$ | 2,305,147 | $ | 2,313,160 | ||||||||||||||||||||
|
Liabilities
|
||||||||||||||||||||||||
|
Savings and interest-bearing checking
|
$ | 1,030,245 | 378 | 0.15 | $ | 1,008,884 | 458 | 0.18 | ||||||||||||||||
|
Time deposits
|
514,696 | 1,583 | 1.22 | 567,629 | 2,113 | 1.48 | ||||||||||||||||||
|
Other borrowings
|
67,850 | 879 | 5.15 | 85,586 | 1,198 | 5.55 | ||||||||||||||||||
|
Interest Bearing Liabilities
|
1,612,791 | 2,840 | 0.70 | 1,662,099 | 3,769 | 0.90 | ||||||||||||||||||
|
Non-interest bearing deposits
|
521,874 | 499,325 | ||||||||||||||||||||||
|
Other liabilities
|
43,363 | 41,254 | ||||||||||||||||||||||
|
Shareholders’ equity
|
127,119 | 110,482 | ||||||||||||||||||||||
|
Total liabilities and shareholders’ equity
|
$ | 2,305,147 | $ | 2,313,160 | ||||||||||||||||||||
|
Net Interest Income
|
$ | 20,874 | $ | 22,961 | ||||||||||||||||||||
|
Net Interest Income as a Percent of Average Interest Earning Assets
|
3.96 | % | 4.40 | % | ||||||||||||||||||||
|
(1)
|
All domestic.
|
|
(2)
|
Interest on tax-exempt loans and securities is not presented on a fully tax equivalent basis due to the current net operating loss carryforward position and the deferred tax asset valuation allowance.
|
|
(3)
|
Annualized.
|
5
|
Average Balances and Rates
|
||||||||||||||||||||||||
|
Twelve Months Ended
|
||||||||||||||||||||||||
|
December 31,
|
||||||||||||||||||||||||
|
2012
|
2011
|
|||||||||||||||||||||||
|
Average
|
Average
|
|||||||||||||||||||||||
|
Balance
|
Interest
|
Rate
|
Balance
|
Interest
|
Rate(3)
|
|||||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||
|
Assets (1)
|
||||||||||||||||||||||||
|
Taxable loans
|
$ | 1,543,592 | $ | 93,494 | 6.06 | % | $ | 1,704,057 | $ | 110,242 | 6.47 | % | ||||||||||||
|
Tax-exempt loans (2)
|
6,864 | 286 | 4.17 | 7,891 | 332 | 4.21 | ||||||||||||||||||
|
Taxable securities
|
216,355 | 2,934 | 1.36 | 62,315 | 1,422 | 2.28 | ||||||||||||||||||
|
Tax-exempt securities (2)
|
26,111 | 1,044 | 4.00 | 29,615 | 1,219 | 4.12 | ||||||||||||||||||
|
Cash – interest bearing
|
337,311 | 858 | 0.25 | 312,576 | 792 | 0.25 | ||||||||||||||||||
|
Other investments
|
20,645 | 782 | 3.79 | 22,084 | 755 | 3.42 | ||||||||||||||||||
|
Interest Earning Assets
|
2,150,878 | 99,398 | 4.62 | 2,138,538 | 114,762 | 5.36 | ||||||||||||||||||
|
Cash and due from banks
|
53,926 | 53,098 | ||||||||||||||||||||||
|
Other assets, net
|
159,925 | 188,583 | ||||||||||||||||||||||
|
Total Assets
|
$ | 2,364,729 | $ | 2,380,219 | ||||||||||||||||||||
|
Liabilities
|
||||||||||||||||||||||||
|
Savings and interest-bearing checking
|
$ | 1,060,882 | 1,830 | 0.17 | $ | 1,006,305 | 2,263 | 0.22 | ||||||||||||||||
|
Time deposits
|
552,903 | 7,083 | 1.28 | 656,944 | 12,994 | 1.98 | ||||||||||||||||||
|
Other borrowings
|
72,240 | 4,230 | 5.86 | 92,879 | 4,936 | 5.31 | ||||||||||||||||||
|
Interest Bearing Liabilities
|
1,686,025 | 13,143 | 0.78 | 1,756,128 | 20,193 | 1.15 | ||||||||||||||||||
|
Non-interest bearing deposits
|
523,926 | 467,305 | ||||||||||||||||||||||
|
Other liabilities
|
40,719 | 43,378 | ||||||||||||||||||||||
|
Shareholders’ equity
|
114,059 | 113,408 | ||||||||||||||||||||||
|
Total liabilities and shareholders’ equity
|
$ | 2,364,729 | $ | 2,380,219 | ||||||||||||||||||||
|
Net Interest Income
|
$ | 86,255 | $ | 94,569 | ||||||||||||||||||||
|
Net Interest Income as a Percent of Average Interest Earning Assets
|
4.01 | % | 4.42 | % | ||||||||||||||||||||
|
(1)
|
All domestic.
|
|
(2)
|
Interest on tax-exempt loans and securities is not presented on a fully tax equivalent basis due to the current net operating loss carryforward position and the deferred tax asset valuation allowance.
|
6
|
Commercial Loan Portfolio Analysis as of December 31, 2012
|
||||||||||||||||||||
|
Total Commercial Loans
|
||||||||||||||||||||
|
Watch Credits
|
Percent of Loan
|
|||||||||||||||||||
|
Loan Category
|
All Loans
|
Performing
|
Non- performing
|
Total
|
Category in Watch Credit
|
|||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
|
Land
|
$ | 13,515 | $ | 1,524 | $ | 2,448 | $ | 3,972 | 29.4 | % | ||||||||||
|
Land Development
|
14,301 | 4,075 | 1,453 | 5,528 | 38.7 | |||||||||||||||
|
Construction
|
15,339 | 798 | 160 | 958 | 6.2 | |||||||||||||||
|
Income Producing
|
222,200 | 33,532 | 5,611 | 39,143 | 17.6 | |||||||||||||||
|
Owner Occupied
|
215,549 | 26,617 | 4,554 | 31,171 | 14.5 | |||||||||||||||
|
Total Commercial Real Estate Loans (1)
|
$ | 480,904 | $ | 66,546 | 14,226 | $ | 80,772 | 16.8 | ||||||||||||
|
Other Commercial Loans(1)
|
$ | 136,413 | $ | 13,496 | 526 | $ | 14,022 | 10.3 | ||||||||||||
|
Total non-performing commercial loans
|
$ | 14,752 | ||||||||||||||||||
|
(1)
|
The total of these two categories is different than the December 31, 2012, Consolidated Statement of Financial Condition due primarily to loans in process.
|
7