AMENDMENT NO. 1 to

 

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Investing in our common stock involves risks.  We encourage you to read and carefully consider this prospectus in its entirety, in particular the risk factors beginning on page 20 as well as other information in any documents we incorporate by reference into this prospectus, for a discussion of factors that you should consider with respect to this offering.

This is a firm commitment underwriting.  The underwriters have the option to purchase up to an additional [●] shares of our common stock at the public offering price, less underwriting discounts and commissions, within 30 days of the date of this prospectus solely to cover over-allotments, if any.

The underwriters expect to deliver the common stock in book-entry form only, through the facilities of The Depository Trust Company, against payment on or about [●], 2013.

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.

Boenning & Scattergood, Inc.

The date of this prospectus is [●], 2013.

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TABLE OF CONTENTS

 

Discussions and statements in this prospectus that are not statements of historical fact, including, without limitation, statements that include terms such as "will," "may," "should," "believe," "expect," "forecast," "anticipate," "estimate," "project," "intend," "likely," "optimistic" and "plan," and statements about future or projected financial and operating results, plans, projections, objectives, expectations, and intentions and other statements that are not historical facts, are forward-looking statements. Forward-looking statements include, but are not limited to, our expected use of the proceeds received from this offering; descriptions of plans and objectives for future operations, products, or services; projections of our future revenue, earnings, or other measures of economic performance; forecasts of credit losses and other asset quality trends; predictions as to our bank's ability to maintain certain regulatory capital standards; our expectation that we will have sufficient cash on hand to meet expected obligations; and descriptions of steps we may take to further improve our capital position. These forward-looking statements express our current expectations, forecasts of future events, or long-term goals and, by their nature, are subject to assumptions, risks, and uncertainties.  Although we believe that the expectations, forecasts, and goals reflected in these forward-looking statements are reasonable, actual results could differ materially for a variety of reasons, including, the risks and uncertainties detailed under "Risk Factors" set forth in this prospectus and the following:

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We file annual, quarterly, and current reports, proxy statements, and other information with the SEC.  The SEC allows us to "incorporate by reference" the information we file with it. This means we can disclose important information to you by referring you to those documents filed separately with the SEC. The information we incorporate by reference is an important part of this prospectus. We incorporate by reference the documents listed below, filed separately with the SEC, except to the extent that any information contained in those documents is deemed "furnished" in accordance with SEC rules:

 

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Annual Report on Form 10-K for the year ended December 31, 2012, filed with the SEC on March 13, 2013;

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Current Reports on Form 8-K filed with the SEC on January 30, 2013; January 31, 2013; April 24, 2013; May 29, 2013, as amended on June 14, 2013; and August 1, 2013; and

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The description of our capital stock contained in our Restated Articles of Incorporation, filed as Exhibit 3.1 to the Registration Statement on Form S-1 of which this prospectus is a part, and in our Amended and Restated Bylaws, filed as Exhibit 3.2 to our Current Report on Form 8-K dated December 8, 2008 (filed with the SEC on December 12, 2008).

Any statement contained in a document that is incorporated by reference will be modified or superseded for all purposes to the extent that a statement contained in this prospectus modifies or is contrary to that previous statement. Any statement so modified or superseded will not be deemed a part of this prospectus except as so modified or superseded.

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Upon request, we will provide to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the reports or documents that have been incorporated by reference in the prospectus contained in the registration statement, but not delivered with the prospectus. You may request a copy of any of these filings at no cost, by writing or telephoning us at the following address or telephone number:

Independent Bank Corporation

230 Main Street

Ionia, Michigan 48846

(616) 527-5820

Any report or document incorporated by reference may be accessed on our website, http://www.independentbank.com.

The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, DC 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC also maintains a site, http://www.sec.gov, where the public may access reports, proxy and information statements, and other information regarding Independent Bank Corporation and other issuers that file electronically with the SEC.

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SUMMARY

 

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On January 29, 2010, we held a special shareholder meeting at which our shareholders approved an increase in the number of shares of common stock we are authorized to issue from 60 million to 500 million.  Our shareholders also gave the required shareholder approval for the conversion of preferred stock held by the Treasury into shares of our common stock and the issuance of shares of our common stock in exchange for our outstanding trust preferred securities.

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On April 16, 2010, we closed an Exchange Agreement with the Treasury pursuant to which the Treasury exchanged $72 million in aggregate liquidation value of our Series A Preferred Stock issued to the Treasury under TARP, plus approximately $2.4 million in accrued but unpaid dividends on such shares, into mandatorily convertible preferred stock (new Series B Convertible Preferred Stock).  As part of this exchange, we also amended and restated the terms of the Warrant issued to the Treasury in December 2008 to purchase 346,154 shares of our common stock in order to adjust the initial exercise price of the Warrant to be equal to the conversion price applicable to the Series B Convertible Preferred Stock.

The shares of Series B Convertible Preferred Stock are convertible into shares of our common stock.  Subject to the receipt of applicable approvals, the Treasury has the right to convert the Series B Convertible Preferred Stock into our common stock at any time.  We have the right to compel a conversion of the Series B Convertible Preferred Stock into our common stock at any time provided the following conditions are met:

(1)

we receive appropriate approvals from the Federal Reserve;

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(2)

at least $40 million aggregate liquidation amount of our trust preferred securities are exchanged for shares of our common stock;

(3)

we complete new cash equity raises of not less than $100 million on terms acceptable to the Treasury in its sole discretion (other than with respect to the price offered per share); and

(4)

we make any required anti-dilution adjustments to the rate at which the Series B Convertible Preferred Stock is converted into our common stock, to the extent required.

If we were to meet the conditions described above, the Series B Convertible Preferred Stock would be convertible into shares of our common stock, as follows: for each share of Series B Convertible Preferred Stock with a $1,000 liquidation value, a number of shares of common stock equal to $750 (i.e., a 25% discount to par) divided by a conversion price of $7.234, subject to any necessary anti-dilution adjustments.  Unless earlier converted, the Series B Convertible Preferred Stock will convert into shares of our common stock on a mandatory basis on April 16, 2017, subject to the prior receipt of any required regulatory and shareholder approvals.  In that case, the shares of preferred stock will convert based on the full $1,000 liquidation value per share (i.e., there will be no 25% discount to par as there will be for an early conversion by us or the Treasury).

•	On June 23, 2010, we completed the exchange of approximately 5.1 million newly issued shares of our common stock for $41.4 million in aggregate liquidation amount of our outstanding trust preferred securities.

 

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On July 7, 2010, we entered into an equity line facility with Dutchess Opportunity Fund, II, LP as a contingent source of liquidity at the parent company level. Pursuant to this equity line facility, Dutchess committed to purchase up to $15.0 million of our common stock over a 36-month period ending November 1, 2013. We have the right, but no obligation, to draw on this equity line facility from time to time during such 36-month period by selling shares of our common stock to Dutchess at a 5% discount to the market price at the time of the draw.  We have used this equity line facility to raise a total of approximately $4.2 million in net proceeds, which have been used to pay expenses and increase cash on hand at the parent company level.  Assuming the offering described in this prospectus is successful, we do not anticipate making any additional draws on this equity line facility before the November 1, 2013 termination date.

 

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On August 31, 2010, we effected a reverse stock split of our issued and outstanding common stock. Pursuant to this reverse split, each 10 shares of our common stock issued and outstanding immediately prior to the reverse split was converted into 1 share of our common stock. We conducted this reverse split primarily as a means to maintain our share price above $1.00 per share in order to continue to meet Nasdaq listing standards. All share or per share information included in this prospectus has been retroactively restated to reflect the effects of the reverse split.

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On December 7, 2012, we sold 21 branches to another financial institution. The branches sold included 6 branch locations in the Battle Creek, Michigan market area and 15 branch locations in Northeast Michigan. The branch sale resulted in the transfer of approximately $403.1 million of deposits in exchange for our receipt of a deposit premium of approximately $11.5 million. We also sold approximately $48.0 million of loans at a discount of 1.75% and premises and equipment totaling approximately $8.1 million. The branch sale also resulted in our transfer of $336.1 million of cash to the purchaser. We recorded a net gain on the branch sale of approximately $5.4 million in the fourth quarter of 2012.

•	In addition to this sale of 21 branches, since 2011 we have restructured our branch network and improved operating efficiencies through the consolidation or closure of 15 additional branch locations throughout Michigan.

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The second quarter of 2013 was our sixth consecutive quarter of profitability.  We reported second quarter 2013 net income applicable to our common stock of $62.2 million, or $2.64 per diluted share.  These results included an income tax benefit of $57.6 million associated with the reversal of substantially all of our deferred tax asset valuation allowance in June 2013.

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On July 26, 2013, we entered into the Redemption Agreement with the Treasury.  Under the Redemption Agreement, the Treasury has agreed to sell to us all of the Series B Convertible Preferred Stock (including all accrued but unpaid dividends) and the related Warrant for an aggregate purchase price of $81.0 million.  The closing of the purchase and sale contemplated by the Redemption Agreement is conditioned upon our receipt of applicable regulatory approvals and our completion of one or more cash equity raises of $86.0 million or more in gross cash proceeds.  We elected to pursue and enter into the Redemption Agreement, rather than compel the conversion of the Series B Convertible Preferred Stock at the above-referenced discount to par, in order to avoid the issuance of $100 million in equity and the resulting uncertainty as to the future disposition of the common shares that would be held by the Treasury.  As of September 30, 2013, the aggregate of the par value of the Series B Convertible Preferred Stock, the accrued and unpaid dividends on those shares, and the value of the related warrant is estimated to be approximately $90.0 million.

We have also requested the required regulatory approval to complete the transactions described in the Redemption Agreement. See "Capital Plan and This Offering" below for more details.

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East / "Thumb" Region:  We have a substantial branch footprint in the eastern part of the state, which is primarily comprised of rural communities that provide strong core deposits and pricing leverage.  Saginaw, Midland, and Bay counties are included in this region.  The counties of Saginaw and Bay are well-known for their agricultural communities and manufacturing sector and are also home to a growing medical device and technology sector.  Midland County includes the headquarters for Dow Chemical Company.

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West Region:  The west region includes our headquarters in Ionia and the Grand Rapids metropolitan statistical area.  Grand Rapids is in Kent County, which has generally experienced lower levels of unemployment as compared to the Michigan state level.  As of June 2013, Kent County had an unemployment rate of 6.9%, compared to 9.4% for the State of Michigan as a whole, on a seasonally unadjusted basis.  Kent County is the home to several major employers, including Meijer, Steelcase, Spectrum Heath, Spartan Stores, Wolverine World Wide, and the world headquarters for Alticor Inc., the parent company of Amway.

•	Central Region:  Our operations throughout the central part of Michigan are primarily located in Lansing and surrounding markets.  Lansing, in Ingham County, is the state capital and home to Michigan State University, which provides the core of a stable employment base.

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Southeast Region:  A smaller portion of our franchise is in southeastern Michigan, primarily in Oakland County, which has attractive demographics. With a population of 1.2 million people, Oakland County had the highest median family income in the state of approximately $85,000 (2010 Census).  While the southeast region currently only accounts for approximately 12% of our deposit base, we believe Oakland County presents a good opportunity for future deposit growth and lending opportunities.

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Unemployment:  While Michigan has had a higher unemployment rate than the United States as a whole, both the unemployment rate and non-farm payrolls have generally showed positive trends since mid-2009.  On a seasonally-adjusted basis, the June 2013 unemployment rate of 8.7% for Michigan compares to 7.6% for the entire United States. Michigan's unemployment rate peaked at 14.2% in August 2009.  A number of our key markets have unemployment rates below the rate for the entire state, including Grand Rapids and Lansing.  Since reaching a bottom in 2009, Michigan total employment has added about 200,000 jobs.

 

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Housing Market:  The Michigan housing market has stabilized.  The March 2013 Michigan Freddie Mac House Price Index was up 16.2% year-over-year as compared to the 6.7% increase of the National index.  The April 2013 S&P/Case-Shiller Detroit Home Price Index was up 20% year-over-year, ranking 5th in the 20-city Index. Existing home sales rose for the second-straight year in 2012 and are following the same trend this year.

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Other Economic Indicators:  The Michigan Economic Activity Index equally weighs nine, seasonally adjusted coincident indicators of real economic activity that reflect activity in the construction, manufacturing, and service sectors as well as job growth and consumer outlays.  The May 2013 index reached a level of 125.2 (2008 = 100), which is up approximately 53.1 points, or 74%, from the index cyclical low of 72.1 in 2009.  The higher index reflects improved labor market conditions, strong vehicle production, and better housing market conditions in the state.

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Further Improve Profitability and Our Efficiency Ratio:  Our executive management team is focused on improving profitability and our efficiency ratio primarily through a reduction of non-interest expenses as well as growth in select categories of non-interest income (primarily revenue related to our mortgage banking operations and payment processing activities, such as debit card transactions).  In addition to reducing credit-related costs, executive management is also concentrating on improving efficiencies to further reduce other costs, including staffing levels, occupancy costs, and data processing expenses.

 

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Increase our Efforts to Strategically Grow Our Loan Portfolio:  Following the completion of this offering, we believe we will be well-positioned to take advantage of opportunities in our markets to serve commercial clients, including by providing more Small Business Administration (SBA) loans and other business loans through our branch network.  We have experienced teams of credit professionals and senior lenders to execute our loan strategy, and we continue to invest in our credit and lending teams, through both hiring experienced commercial lenders and additional underwriting and credit monitoring training of our employees.  In addition, we plan to continue our efforts in retail loan origination, with a focus on originating consumer installment loans and mortgage loans for sale.

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Continued Development of New Offerings, Particularly Technology-Based Products and Services, to Grow Deposit Market Share:  We view long-term core deposit growth as an important objective as core deposits generally provide a more stable and lower cost source of funds. We intend to continue our investment in and improve our online banking, mobile banking and other technology-based services.  Our continued focus on technology, particularly in the context of our established, service-oriented, community banking model, should further strengthen our ability to maintain and grow the core deposit base within our markets.  In addition to these technology-based products and services, we have taken several other steps to build our core deposit base, including the implementation of a direct mail account acquisition program, branch staff sales training, increased sales calling efforts, and an expansion of our treasury management products and services. Historically, the loyalty of our customer base has allowed us to price deposits competitively, contributing to a net interest margin that compares favorably to our peers.

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Focus on Credit Monitoring and Improvement of Asset Quality:  One of our top priorities is to continue to maintain a careful focus on asset quality in order to minimize future credit costs and continue to reduce the level of our non-performing assets.  We have created a centralized special asset group to enable us to more effectively deal with problem credits.  We have developed and implemented best credit practices, including, among other credit initiatives, a comprehensive quarterly watch process, deal-by-deal real estate portfolio review, and independent risk ratings provided by experienced credit officers.  We believe we have a very disciplined and proactive approach in managing and pursuing workouts and other resolutions of non-performing loans.

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Capitalize on Our Customer Service-Focused, Community Banking Model:  We believe our relationship-based, "know your customer" business model and our customer service culture, known within our organization as the "Eagle Experience," are appealing to customers in our market, particularly customers who value local bankers who understand their needs and have local decision-making authority.  We believe our recognized brand, core franchise, and loyal customer base, as well as our cross-selling sales culture, help to differentiate us from many of our competitors, including larger banks that have reduced their presence or marketing efforts in Michigan, and should position us to further increase our lending and our strong core deposit market share within the communities we serve.

•	Maintain Strong Liquidity Profile:  We maintain a diversified securities portfolio with a strategy of maintaining a strong liquidity profile with a heavy reliance on securities that are generally shorter in duration with high credit standards.

 

Our Competitive Strengths

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Successful Acquisition and Integration History:  Over the past 25 years, we have made 12 acquisitions of depository institutions and branches.  Our management team has a history of successfully integrating these acquisitions and delivering strong operating results.  In 2007, following our most recent acquisition of 10 branches, we consolidated our four charters under Independent Bank to improve operational efficiency, credit and risk management processes, and reduce expenses.  We believe our management team possesses the capabilities and experience to successfully pursue strategic opportunities in the future.

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Well-Positioned for Growth:  We have operated in the Michigan market for over 100 years and are one of the largest banks solely focused on the state of Michigan.  We are positioned in the marketplace as a local community bank that is large enough to provide a wide range of banking services, yet small enough to deliver personalized service to our customer base.  We have strong commercial lending capabilities, including an experienced credit administration team and group of senior lenders.  We believe the completion of this offering will improve our capital position, allowing us to pursue local, high quality commercial lending relationships.

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Proactive Approach to Credit:  We believe the improvements we have made to our credit administration and risk management programs and processes since the second quarter of 2007 allow us to better identify problem areas and respond quickly, decisively, and aggressively.  We implemented industry best practices throughout the life cycle of a loan to include the loan origination, monitoring, and servicing as well as, if necessary, workout stages.

Our Credit Strategy

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We strengthened our credit team through key appointments and experienced hires from larger commercial banks, including a Chief Risk Officer, to oversee the implementation of best credit practices.  We made key additions to our already experienced commercial lending team, including a Chief Commercial Lending Officer, Senior Vice Presidents of Special Assets and Credit Administration, and a new Loan Review Manager. In our retail department, we made key appointments and realigned the critical collection function of two Senior Vice Presidents and two Vice Presidents. We also hired an in-house general counsel to specifically focus on workouts, provide legal guidance to our workout team, and improve our management of legal costs in the workout and other disposition processes.

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We enhanced our training to provide comprehensive and ongoing in-house credit, underwriting, and risk management training programs that leverage our systems and infrastructure.  We also implemented a process to provide ongoing coaching of our lenders in negotiations, customer communication, problem credit resolution, and development of specific action plans.

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We implemented a range of credit initiatives designed to strengthen our credit oversight and risk management function, minimize losses from our legacy portfolio, and reduce the level of our non-performing assets. In addition to the consolidation of our four bank charters, we implemented a new process to increase the coordination between our retail and commercial operations as they relate to underwriting, loan review and oversight, and problem credit resolution.  We also expanded our quality control function that monitors new retail loan originations.  Finally, we have significantly increased our efforts to better monitor and manage concentration risks within our loan portfolio.

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We discontinued our resort lending activities, which involved extending residential mortgage loans secured by fractional interests or by full ownership condo-hotel units in resort properties throughout the U.S.  At June 30, 2013, this portfolio totaled approximately $158.2 million (including accrued interest) of which, $3.8 million, or 2.4%, were 90 days or more past due.

•	Formation of a special assets team of experienced lenders and collection personnel to ensure effective management of the substandard and non-accrual loans;

•	Comprehensive review and enhancement of our portfolio analytics, specifically as they relate to segment reporting, migration analysis, and stress testing;

•	Implementation of independent risk ratings designed to ensure consistent risk measurement;

•	Adherence to a disciplined quarterly watch process to manage high-risk loans;

•	Strengthening of our collateral monitoring process for commercial real estate (CRE), construction loans, and C&I lending, with centralized monitoring and reporting functions;

•	Regular analysis of portfolio migration to establish the appropriate level of general reserves for each loan grade;

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•	Establishment of key vendor relationships with realtors, property managers, and other real estate management service providers to obtain up-to-date market feedback and for assistance in the workout and disposition processes;

•	Regular acquisition and review of new credit bureau scores on our retail portfolios to aid collection efforts and guide retail loss forecasts;

•	Implementation of retail collection initiatives and loss mitigation programs to increase home retention, avoid unnecessary foreclosures, and minimize associated costs; and

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Regular monitoring of the secondary market for potential sale of our non-performing loans, which we will consider as market conditions warrant.  During the second quarter of 2013, we sold $6.5 million of commercial loans ($8.6 million book value, less $2.1 million of reserves), for net proceeds of approximately $6.7 million.  This loan sale included $7.9 million of classified assets, including approximately $2.9 million of non-accrual loans.

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The following tables set forth selected consolidated financial data for us at and for each of the years in the five-year period ended December 31, 2012 and at and for the six-month periods ended June 30, 2013 and 2012.

The selected financial data as of and for the years ended December 31, 2012, 2011, and 2010, has been derived from our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012.  The selected financial data as of and for the years ended December 31, 2009 and 2008 has been derived from our audited financial statements included in our Annual Report on Form 10‑K for the year ended December 31, 2009.

The selected financial data as of and for the six months ended June 30, 2013 and 2012 has been derived from our unaudited interim financial statements included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013. In the opinion of our management, these financial statements reflect all necessary adjustments for a fair presentation of the data for those periods. Historical results are not necessarily indicative of future results and the results for the six months ended June 30, 2013 are not necessarily indicative of our expected results for the full year ending December 31, 2013 or any other period.

You should read this information in conjunction with our consolidated financial statements and related notes, from which this information is derived.  See "Incorporation of Certain Information by Reference" above.

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The following table presents computations of certain financial measures related to "tangible common equity" and "Tier 1 common equity." The tangible common equity ratio has become a focus of some investors, and we believe this ratio may assist investors in analyzing our capital position absent the effects of intangible assets and preferred stock. Traditionally, the Federal Reserve and other banking regulators have assessed a bank's capital adequacy based on Tier 1 capital, the calculation of which is codified in federal banking regulations. More recently, the banking regulators have also supplemented their assessment of the capital adequacy of a bank based on a variation of Tier 1 capital, known as Tier 1 common equity. Because tangible common equity and Tier 1 common equity are not formally defined by generally accepted accounting principles (GAAP) or codified in the federal banking regulations, these measures are considered to be non-GAAP financial measures. Because analysts and banking regulators may assess our capital adequacy using tangible common equity and Tier 1 common equity, we believe it is useful to provide investors the ability to assess our capital adequacy on these same bases.

Tier 1 common equity is often expressed as a percentage of net risk-weighted assets. Under the risk-based capital framework, a bank's balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to one of four broad risk categories. The aggregated dollar amount in each category is then multiplied by the risk weight assigned to that category. The resulting weighted values from each of the four categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator of certain risk-based capital ratios. Tier 1 capital is then divided by this denominator (net risk-weighted assets) to determine the Tier 1 capital ratio. Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity. Tier 1 common equity is also divided by net risk-weighted assets to determine the Tier 1 common equity ratio. The amounts disclosed as net risk-weighted assets are calculated consistent with banking regulatory requirements.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. To mitigate these limitations, we have procedures in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components and to ensure that our capital performance is properly reflected to facilitate period-to-period comparisons. Although these non-GAAP financial measures are frequently used by investors in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.

  

The following table provides reconciliations of the following:

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USE OF PROCEEDS

Our estimated net proceeds from this offering are approximately $81.1 million, or approximately $93.4 million if the underwriters exercise their over-allotment option in full, after deducting the underwriting discounts and commissions and other estimated expenses of this offering.

     

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The following table sets forth our capitalization and selected capital ratios as of June 30, 2013, reflecting the following three scenarios:

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CAPITAL PLAN AND THIS OFFERING

We are conducting the offering described in this prospectus as part of the more comprehensive Capital Plan adopted by our board of directors and described below.  The primary objective of our Capital Plan was to enable our bank to achieve and thereafter maintain the minimum capital ratios established by its board pursuant to resolutions adopted in December 2009.  As of June 30, 2013, our bank met both of these minimum capital ratios.  However, another objective of our Capital Plan is to complete this offering and cause the redemption of the Series B Convertible Preferred Stock and related Warrant currently held by the Treasury.

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Anticipated Return of Capital from Independent Bank to Independent Bank Corporation

We do not currently have sufficient cash on hand at our holding company to pay the accrued but unpaid dividends on our outstanding trust preferred securities, which amounted to approximately $7.7 million at June 30, 2013 and will total approximately $8.3 million at September 30, 2013.  In order to fund such payment, we need our subsidiary bank to return capital previously contributed by our holding company to our holding company, which requires prior regulatory approval.  We have recently requested regulatory approval to allow our subsidiary bank to return $7.5 million of capital to our holding company to allow us to pay the accrued but unpaid dividends on our outstanding trust preferred securities.  We currently expect to receive this approval, as well as the approval that would allow us to pay those dividends (as described above), prior to completing the offering described in this prospectus.

 

    

On July 26, 2013, we entered into the Redemption Agreement with the Treasury. Under the Redemption Agreement, the Treasury has agreed to sell to us all of the Series B Convertible Preferred Stock (including all accrued but unpaid dividends) and the related Warrant for an aggregate purchase price of $81.0 million. The closing of the purchase and sale contemplated by the Redemption Agreement is conditioned upon our receipt of applicable regulatory approvals and our completion of one or more cash equity raises of $86.0 million or more in gross proceeds. This offering is intended to satisfy the condition in the Redemption Agreement that we complete new cash equity raises of not less than $86.0 million and to provide a source of funding for the purchase and sale contemplated by the Redemption Agreement. After completion of this offering, we expect all conditions to be met except for our receipt of regulatory approval to cause such redemption. Assuming we are able to receive such regulatory approval following our completion of this offering, we intend to close on the purchase and sale contemplated by the Redemption Agreement as soon as possible after paying in full all accrued but unpaid dividends and distributions on our subordinated debentures (and the related trust preferred securities) in accordance with their governing documents.

     

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Current Prohibitions on Our Payment of Dividends

In March 2013, our board of directors adopted resolutions prohibiting us from paying any dividends on our common stock without the prior written approval of the Federal Reserve and the Michigan Department of Insurance and Financial Services ("DIFS").  These resolutions were adopted in conjunction with the termination of a Memorandum of Understanding entered into between the respective boards of directors of our holding company and our bank, the Federal Reserve, and the Michigan DIFS.  The March 2013 resolutions also prohibit us from rescinding or materially modifying these resolutions without notice to the Federal Reserve and the Michigan DIFS.

Moreover, our primary source for dividends are dividends payable to us by our bank.  The board of directors of our bank adopted similar resolutions in March 2013 that prohibit our bank from paying any dividends to us without the prior written approval of the Federal Reserve and the Michigan DIFS.

  

In addition, as a result of our election to defer regularly scheduled quarterly payments on our outstanding trust preferred securities and our outstanding shares of Series B Convertible Preferred Stock, we are currently prohibited from paying any cash dividends on shares of our common stock. We may not pay any cash dividends on our common stock until all accrued but unpaid dividends and distributions on such senior securities have been paid in full. As described under "Capital Plan and This Offering" above, we anticipate paying in full all accrued but unpaid dividends and distributions on our subordinated debentures (and the related trust preferred securities) after completion of the offering described in this prospectus in accordance with their governing documents and then redeeming all outstanding shares of Series B Convertible Preferred Stock (including accrued but unpaid dividends thereon) and the related Warrant using the proceeds from this offering. As a result, we expect the restrictions noted in this paragraph to lapse following completion of this offering and our use of the proceeds from this offering in the manner described above. The dividend restrictions contained in our and our bank's board resolutions, described above, will remain in effect following this offering until such time as we receive approval to modify or rescind them.

  

Other Restrictions
 

In addition, the Federal Reserve requires bank holding companies like us to act as a source of financial strength to their subsidiary banks. Accordingly, we are required to inform and consult with the Federal Reserve before paying dividends that could raise safety and soundness concerns.  See "Business–Supervision and Regulation" in our Annual Report on Form 10-K for more information.

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Our common stock is currently listed on the Nasdaq Global Select Market under the symbol "IBCP."  As of August 7, 2013, we had 9,493,399 shares of our common stock outstanding, which were held by approximately 2,200 shareholders of record.  The following table sets forth, for the periods indicated, the high and low closing sales prices per share and the cash dividends declared per share of our common stock.

On August 16, 2013, the closing sales price of our common stock on the Nasdaq Global Select Market was $7.94 per share.

There are restrictions that currently materially limit our ability to pay dividends on our common stock and that may continue to materially limit future payment of dividends on our common stock.  Please see "Dividend Policy" above.

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The following section is a summary and does not describe every aspect of our capital stock. In particular, we urge you to read our articles of incorporation and bylaws because they describe the rights of holders of our common stock. Our articles of incorporation and bylaws are exhibits to the registration statement filed with the SEC of which this prospectus is a part.

Our authorized capital stock consists of 500,000,000 shares of common stock and 200,000 shares of preferred stock (described below). As of August 7, 2013, there were 9,493,399 shares of common stock and 74,426 shares of preferred stock outstanding.

All of the outstanding shares of our common stock are fully paid and non-assessable. Subject to the prior rights of the holders of shares of preferred stock that may be issued and outstanding, the holders of common stock are entitled to receive:

We do not currently pay any cash dividends on our common stock and are currently prohibited from doing so.  See "Dividend Policy" above for information regarding these prohibitions and other restrictions that materially limit our ability to pay dividends on our common stock.

In addition, as a bank holding company, our ability to pay dividends on our common stock is affected by the ability of our bank to pay dividends to us under applicable laws, rules and regulations. The ability of our bank, as well as us, to pay dividends in the future currently is, and could be further, influenced by bank regulatory requirements and capital guidelines.  See "Dividend Policy" above for more information.

Each holder of our common stock is entitled to one vote for each share held of record on all matters presented to a vote at a shareholders meeting, including the election of directors. Holders of our common stock have no cumulative voting rights or preemptive rights to purchase or subscribe for any additional shares of our common stock or other securities, and there are no conversion rights or redemption or sinking fund provisions with respect to our common stock. Our common stock is currently listed on the Nasdaq Global Select Market under the symbol "IBCP."

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The federal Bank Holding Company Act generally would prohibit any company that is not engaged in banking activities and activities that are permissible for a bank holding company or a financial holding company from acquiring control of us. Control is generally defined as ownership of 25% or more of the voting stock or other exercise of a controlling influence. In addition, any existing bank holding company would require the prior approval of the Federal Reserve before acquiring 5% or more of our voting stock.  In addition, the federal Change in Bank Control Act prohibits a person or group of persons from acquiring "control" of a bank holding company unless the Federal Reserve has been notified and has not objected to the transaction. Under a rebuttable presumption established by the Federal Reserve, the acquisition of 10% or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Exchange Act, such as us, would, under the circumstances set forth in the presumption, constitute acquisition of control of the bank holding company.  See "Business–Supervision and Regulation" in our Annual Report on Form 10-K for more information.

Certain Other Limitations

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Our authorized capital stock includes 200,000 shares of preferred stock, no par value per share. Our board of directors is authorized to issue preferred stock in one or more series, to fix the number of shares in each series, and to determine the designations and preferences, limitations, and relative rights of each series, including dividend rates, terms of redemption, liquidation amounts, sinking fund requirements, and conversion rights, all without any vote or other action on the part of our shareholders. This power is limited by applicable laws or regulations and may be delegated to a committee of our board of directors.

On April 16, 2010, we issued 74,426 shares of Series B Fixed Rate Cumulative Mandatorily Convertible Preferred Stock (the "Series B Convertible Preferred Stock") to the Treasury pursuant to the terms of an Exchange Agreement we entered into with the Treasury on April 2, 2010 (the "Exchange Agreement").  Under the Exchange Agreement, the Treasury accepted the shares of Series B Convertible Preferred Stock in exchange for the entire $72 million in aggregate liquidation value of the shares of Series A Preferred Stock we issued to the Treasury under its Capital Purchase Program, plus the value of all accrued and unpaid dividends on such shares of Series A Preferred Stock (approximately $2.4 million).  The shares of Series B Convertible Preferred Stock have an aggregate liquidation preference equal to $74,426,000, plus accrued but unpaid dividends (which totaled $12,866,000 as of June 30, 2013).

  

With the exception of being convertible into shares of our common stock, the terms of the Series B Convertible Preferred Stock are substantially similar to the terms of the Series A Preferred Stock that were exchanged.  The Series B Convertible Preferred Stock qualifies as Tier 1 regulatory capital, subject to limitations, and pays cumulative dividends quarterly at a rate of 5% per annum through February 14, 2014, and 9% per annum thereafter. The Series B Convertible Preferred Stock is non-voting, other than class voting rights on certain matters that could adversely affect such shares. In addition, the Series B Convertible Preferred Stock contains a provision that automatically increases the size of our board of directors by two persons and allows the Treasury to fill the two new director positions at such time that the dividends payable on the Series B Convertible Preferred Stock have not been paid for an aggregate of six quarterly dividend periods or more, whether or not consecutive.  These two directors would be elected annually and serve until all accrued and unpaid dividends on the Series B Convertible Preferred Stock have been paid. Because we have deferred dividends on the Series B Convertible Preferred Stock for at least six quarterly dividend periods, the Treasury currently has the right to elect two directors to our board.  At this time, in lieu of electing such directors, the Treasury requested us to allow (and we agreed) an observer to attend our Board of Directors meetings beginning in the third quarter of 2011.  The Treasury continues to retain the right to elect two directors as described above.

The Treasury (and any subsequent holder of the shares) has the right to convert the Series B Convertible Preferred Stock into our common stock at any time, subject to the receipt of any applicable approvals.  We have the right to compel a conversion of the Series B Convertible Preferred Stock into our common stock if the following conditions are met:

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On June 23, 2010, we completed the exchange of an aggregate of 5,109,125 newly issued shares of our common stock for $41.4 million in aggregate liquidation amount of our outstanding trust preferred securities.  As a result, we have satisfied the condition to our ability to compel a conversion of the Series B Convertible Preferred Stock that at least $40 million aggregate liquidation amount of our trust preferred securities are exchanged for shares of our common stock.

If converted by the Treasury (or any subsequent holder) or by us pursuant to either of the above-described conversion rights, each share of Series B Convertible Preferred Stock (liquidation amount of $1,000 per share) will convert into a number of shares of our common stock equal to a fraction, the numerator of which is $750 and the denominator of which is $7.234, referred to as the "conversion rate," provided that such conversion rate will be subject to certain anti-dilution adjustments.

  

The conversion rate is subject to anti-dilution adjustments that may result in a greater number of shares being issued to the holder of the Series B Convertible Preferred Stock.  Specifically, the conversion rate is subject to adjustment in the event of any of the following:

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Unless earlier converted by the Treasury (or any subsequent holder) or by us as described above, the Series B Convertible Preferred Stock will convert into shares of our common stock on a mandatory basis on April 16, 2017, the seventh anniversary of the date of issuance.  In any such mandatory conversion, each share of Series B Convertible Preferred Stock (liquidation amount of $1,000 per share) will convert into a number of shares of our common stock equal to a fraction, the numerator of which is $1,000 and the denominator of which is the market price of the Company's common stock at the time of such mandatory conversion (as such market price is determined pursuant to the terms of the Series B Convertible Preferred Stock).

 

At the time any shares of Series B Convertible Preferred Stock are converted into our common stock, we will be required to pay all accrued and unpaid dividends on the shares being converted in cash or, at our option, in shares of our common stock at the same conversion rate as is applicable to the conversion of the Series B Convertible Preferred Stock.

The maximum number of shares of our common stock that may be issued upon conversion of all Series B Convertible Preferred Stock (including any accrued dividends) is 14.4 million, unless we receive shareholder approval to issue a greater number of shares.

As part of the terms of the Exchange Agreement, we also amended and restated the terms of the Warrant, dated December 12, 2008, issued to the Treasury to purchase 346,154 shares of our common stock.  The amended and restated Warrant issued upon the closing of the Exchange Agreement adjusted the exercise price of the Warrant to be the same as the conversion rate applicable to the Series B Convertible Preferred Stock described above.

  

As a result of the transactions contemplated by the Exchange Agreement, all outstanding shares of Series A Preferred Stock were surrendered in exchange for the Series B Convertible Preferred Stock.  As a result, our only series of preferred stock issued and outstanding is our Series B Convertible Preferred Stock.

On July 26, 2013, we entered into the Redemption Agreement with the Treasury.  Under the Redemption Agreement, the Treasury has agreed to sell to us all of the Series B Convertible Preferred Stock (including all accrued but unpaid dividends) and the related Warrant for an aggregate purchase price of $81.0 million.  The closing of the purchase and sale contemplated by the Redemption Agreement is conditioned upon our receipt of applicable regulatory approvals and our completion of one or more cash equity raises of $86.0 million or more in gross proceeds.  In lieu of pursuing the conversion of the Series B Convertible Preferred Stock into shares of our common stock, this offering is intended to allow us to cause the redemption of the Series B Convertible Preferred Stock (including accrued and unpaid dividends) and the related Warrant pursuant to the Redemption Agreement.

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$86,000,000

PROSPECTUS

Keefe, Bruyette & Woods

                                                   A Stifel Company

Neither we nor any of the underwriters have authorized anyone to provide information different from that contained in this prospectus. When you make a decision whether to invest in our common stock, you should not rely upon any information other than the information that is in this prospectus. Neither the delivery of this prospectus nor the sale of common stock means that the information in this prospectus is current after the date of this prospectus. This prospectus is not an offer to sell or solicitation of an offer to buy these shares of common stock in any circumstances under which the offer or solicitation in unlawful.

Michigan Business Corporation Act

The Company is organized under the Michigan Business Corporation Act (the "MBCA") which, in general, empowers Michigan corporations to indemnify a person who was or is a party or is threatened to be made a party to a threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal, other than an action by or in the right of the corporation, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, partner, trustee, employee or agent of another enterprise, against expenses, including attorney's fees, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred in connection therewith if the person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation or its shareholders and, with respect to a criminal action or proceeding, if the person had no reasonable cause to believe his or her conduct was unlawful.

IBC's Articles of Incorporation and Bylaws

The Company's Restated Articles of Incorporation, as amended, provide, among other things, for the indemnification of directors and officers and authorize the Board of Directors to indemnify other persons in addition to the officers and directors. Directors and officers are indemnified against any actual or threatened civil, criminal, administrative, or investigative action, suit, or proceeding in which the director or officer is a witness or which is brought against such officer or director while serving at the request of the Company.

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Insurance

For the undertaking with respect to indemnification, see Item 17 below.

On July 7, 2010 we executed an Investment Agreement and Registration Rights Agreement with Dutchess Opportunity Fund, II, LP ("Dutchess") for the sale of shares of our common stock. These agreements serve to establish an equity line facility as a contingent source of liquidity at the parent company level. Pursuant to the Investment Agreement, Dutchess committed to purchase up to $15.0 million of our common stock over a 36-month period ending November 1, 2013. We have the right, but no obligation, to draw on this equity line facility from time to time during such 36-month period by selling shares of our common stock to Dutchess. The sales price is at a 5% discount to the market price of our common stock at the time of the draw (as such market price is determined pursuant to the terms of the Investment Agreement).

Through the date of this prospectus, we have sold a total of 1.40 million shares (0.17 million shares during 2013, 0.45 million shares during 2012, 0.43 million shares during 2011 and 0.35 million shares during 2010) of our common stock to Dutchess under this equity line for total net proceeds of approximately $4.2 million. The Company issued the shares of common stock to Dutchess under the Investment Agreement pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended, due to the fact that the offering of the shares was made on a private basis to a single purchaser and in accordance with written guidance of the SEC's Division of Corporation Finance pertaining to equity line facility transactions.  At the present time, we have shareholder approval to sell approximately 2.6 million additional shares under this equity line.  However, if the offering described in this prospectus is successful, we do not expect to sell any additional shares under this equity line.

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Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Securities Act") may be permitted to directors, officers and controlling persons of the registrant pursuant to the indemnification provisions described herein, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information.

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Amendment No. 1 to the Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Ionia, State of Michigan, on August 19, 2013.

Independent Bank Corporation

(Registrant)