Attached files
| file | filename |
|---|---|
| EX-99.3 - EXHIBIT 99.3 - INDEPENDENT BANK CORP /MI/ | ex99_3.htm |
| EX-99.2 - EXHIBIT 99.2 - INDEPENDENT BANK CORP /MI/ | ex99_2.htm |
| 8-K - 8-K - INDEPENDENT BANK CORP /MI/ | form8k.htm |
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Exhibit 99.1
|
News Release
|
Independent Bank Corporation
|
|
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4200 East Beltline
|
|
|
Grand Rapids, MI 49525
|
|
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616.527.5820
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For Release:
|
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
2018 FIRST QUARTER RESULTS
GRAND RAPIDS, Mich., Apr. 23, 2018 - Independent Bank Corporation (NASDAQ: IBCP) reported first quarter 2018 net income of $9.2 million, or $0.42 per diluted share, versus net income of $6.0 million, or $0.28 per diluted share, in the prior-year period. The first quarter of 2018, included a $1.5 million fair value increase due to price for capitalized mortgage loan servicing rights, $0.2 million in net securities losses and $0.2 million of merger related expenses. Collectively, these items increased net income by $0.9 million, or $0.04 per diluted share. Additionally, the reduction in the federal corporate income tax rate to 21% (that was effective Jan. 1, 2018) increased net income by approximately $0.07 per diluted share compared to the year ago period.
First quarter 2018 highlights include:
| · |
Net income and diluted earnings per share increases of 53.3% and 50.0%, respectively, over 2017;
|
| · |
Year-over-year and sequential quarterly increases in net interest income of $2.5 million and $0.6 million, respectively;
|
| · |
Net growth in total portfolio loans of $52.6 million, or 10.6% annualized;
|
| · |
A $1.6 million, or 15.8%, decline in non-performing assets.
|
William B. (“Brad”) Kessel, the President and Chief Executive Officer of Independent Bank Corporation, commented: “We are pleased to report a solid start to 2018. Strong loan growth, continued reductions in non-performing assets and a lower federal corporate income tax rate helped lead to a 53% increase in our net income. Return on average assets and return on average equity reached 1.34% and 14.04%, respectively. Net interest income and our net interest margin increased on both a sequential and year-over-year quarterly basis. As previously announced, our acquisition of Traverse City State Bank (“TCSB”) was completed on April 1, 2018. We are excited about this addition, and as we look ahead to the remainder of 2018, we are focused on the successful integration of TCSB, capitalizing on growth opportunities across our markets, stable to improving asset quality, and building core deposits.”
Operating Results
The Company’s net interest income totaled $23.9 million during the first quarter of 2018, an increase of $2.5 million, or 11.5%, from the year-ago period, and an increase of $0.6 million, or 2.7% from the fourth quarter of 2017. The Company’s tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”) was 3.71% during the first quarter of 2018 compared to 3.69% in the year ago period, and 3.65% in the fourth quarter of 2017. The year-over-year quarterly increase in net interest income is due to increases in both the net interest margin and in average interest-earning assets. Total average interest-earning assets were $2.61 billion in the first quarter of 2018 compared to $2.37 billion in the year ago quarter and $2.57 billion in the fourth quarter of 2017. Net interest income included net recoveries of interest on non-accrual or previously charged-off loans of $0.18 million in the first quarter of 2018 compared to $0.50 million in the year ago quarter and $0.19 million in the fourth quarter of 2017.
1
Non-interest income totaled $11.5 million and $10.3 million in the first quarters of 2018 and 2017, respectively. This increase is primarily due to an increase in mortgage loan servicing income. The Company adopted Financial Accounting Standards Board Accounting Standards Update 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”) on Jan. 1, 2018, using the modified retrospective approach. Although ASU 2014-09 did not have any impact on Jan. 1, 2018 shareholders’ equity or first quarter 2018 net income, it did result in some classification changes in non-interest income and non-interest expense as compared to the prior year period. Specifically, in the first quarter of 2018, interchange income and interchange expense each increased by $0.3 million and investment and insurance commissions (included in other non-interest income in the Consolidated Statements of Operations) and compensation and employee benefits expense each decreased by $0.2 million, due to classification changes under ASU 2014-09.
Gains on mortgage loans were unchanged at $2.6 million in the first quarters of 2018 and 2017, as an increase in mortgage loan sales volume was offset by compression in the profit margin. Mortgage loan origination volume was up 0.6% to $159.0 million in the first quarter of 2018 compared to the year ago period.
Mortgage loan servicing generated income of $2.2 million and $0.8 million in the first quarters of 2018 and 2017, respectively. This activity is summarized in the following table:
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Three Months Ended
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||||||||
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03/31/2018
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03/31/2017
|
|||||||
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Mortgage loan servicing:
|
(Dollars in thousands)
|
|||||||
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Revenue, net
|
$
|
1,192
|
$
|
1,089
|
||||
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Fair value change due to price
|
1,458
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145
|
||||||
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Fair value change due to pay-downs
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(429
|
)
|
(409
|
)
|
||||
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Total
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$
|
2,221
|
$
|
825
|
||||
The significant variance in the fair value change due to price relates primarily to the rise in mortgage loan interest rates in the first quarter of 2018. That increase reduced projected prepayment rates for mortgage loans serviced for others, leading to an increase in fair value.
Non-interest expense totaled $23.9 million in the first quarter of 2018, compared to $23.6 million in the year-ago period, representing an increase of 1.6%.
The Company recorded an income tax expense of $2.0 million and $2.6 million in the first quarters of 2018 and 2017, respectively. Income tax expense represented 18.2% and 30.5% of pre-tax earnings in the first quarters of 2018 and 2017, respectively. The decline in income tax expense is primarily due to a reduction in the statutory federal corporate income tax rate to 21% (from 35%) that became effective on Jan. 1, 2018.
Asset Quality
Commenting on asset quality, President and CEO Kessel added: “We continue to make progress in further improving asset quality, as evidenced by a decline in non-performing assets. In addition, thirty- to eighty-nine day delinquency rates at Mar. 31, 2018 were 0.005% for commercial loans and 0.39% for mortgage and consumer loans. These early stage delinquency rates continue to be well-managed.”
A breakdown of non-performing loans(1) by loan type is as follows:
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Loan Type
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3/31/2018
|
12/31/2017
|
3/31/2017
|
|||||||||
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(Dollars in Thousands)
|
||||||||||||
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Commercial
|
$
|
439
|
$
|
646
|
$
|
1,325
|
||||||
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Consumer/installment
|
605
|
543
|
829
|
|||||||||
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Mortgage
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5,585
|
6,995
|
6,860
|
|||||||||
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Total
|
$
|
6,629
|
$
|
8,184
|
$
|
9,014
|
||||||
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Ratio of non-performing loans to total portfolio loans
|
0.32
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%
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0.41
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%
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0.54
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%
|
||||||
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Ratio of non-performing assets to total assets
|
0.30
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%
|
0.35
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%
|
0.55
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%
|
||||||
|
Ratio of the allowance for loan losses to non-performing loans
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348.03
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%
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275.99
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%
|
222.30
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%
|
||||||
| (1) |
Excludes loans that are classified as “troubled debt restructured” that are still performing.
|
2
Non-performing loans decreased by $1.6 million, or 19.0%, since year-end 2017. The decline in non-performing loans primarily reflects loan charge-offs, pay-offs, negotiated transactions and the migration of loans into other real estate (“ORE”). ORE and repossessed assets totaled $1.6 million at both Mar. 31, 2018 and at Dec. 31, 2017.
The provision for loan losses was an expense of $0.3 million and a credit of $0.4 million in the first quarters of 2018 and 2017, respectively. The level of the provision for loan losses in each period reflects the Company’s overall assessment of the allowance for loan losses, taking into consideration factors such as loan mix, levels of non-performing and classified loans and loan net charge-offs. The Company recorded loan net recoveries of $0.2 million [(0.03)% annualized of average loans] in the first quarter of 2018, compared to loan net recoveries of $0.2 million [(0.04)% annualized of average loans] in the first quarter of 2017. At Mar. 31, 2018, the allowance for loan losses totaled $23.1 million, or 1.11% of portfolio loans, compared to $22.6 million, or 1.12% of portfolio loans, at Dec. 31, 2017.
Balance Sheet, Liquidity and Capital
Total assets were $2.79 billion at Mar. 31, 2018, an increase of $3.8 million from Dec. 31, 2017. Loans, excluding loans held for sale, were $2.07 billion at Mar. 31, 2018, compared to $2.02 billion at Dec. 31, 2017. Deposits totaled $2.43 billion at Mar. 31, 2018, an increase of $29.9 million from Dec. 31, 2017. The increase in deposits is primarily due to growth in savings and interest-bearing checking account balances.
Cash and cash equivalents totaled $42.4 million at Mar. 31, 2018, versus $54.7 million at Dec. 31, 2017. Securities available for sale totaled $489.1 million at Mar. 31, 2018, versus $522.9 million at Dec. 31, 2017.
Total shareholders’ equity was $267.9 million at Mar. 31, 2018, or 9.59% of total assets. Tangible common equity totaled $266.4 million at Mar. 31, 2018, or $12.46 per share. The Company’s wholly owned subsidiary, Independent Bank, remains significantly above “well capitalized” for regulatory purposes with the following ratios:
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Regulatory Capital Ratios
|
3/31/2018
|
12/31/2017
|
Well
Capitalized
Minimum
|
|||||||||
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Tier 1 capital to average total assets
|
10.01
|
%
|
9.78
|
%
|
5.00
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%
|
||||||
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Tier 1 common equity to risk-weighted assets
|
13.25
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%
|
12.95
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%
|
6.50
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%
|
||||||
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Tier 1 capital to risk-weighted assets
|
13.25
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%
|
12.95
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%
|
8.00
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%
|
||||||
|
Total capital to risk-weighted assets
|
14.40
|
%
|
14.10
|
%
|
10.00
|
%
|
||||||
Share Repurchase Plan
As previously announced, on Jan. 22, 2018, the Board of Directors of the Company authorized a share repurchase plan. Under the terms of the share repurchase plan, the Company is authorized to buy back up to 5% of its outstanding common stock. The repurchase plan is authorized to last through Dec. 31, 2018. Thus far in 2018, the Company has not repurchased any shares.
Earnings Conference Call
Brad Kessel, President and CEO, and Rob Shuster, CFO, will review the quarterly results in a conference call for investors and analysts beginning at 11:00 am ET on Monday, Apr. 23, 2018.
To participate in the live conference call, please dial 1-866-200-8394. Also the conference call will be accessible through an audio webcast with user-controlled slides via the following URL: https://services.choruscall.com/links/ibcp180423.html.
A playback of the call can be accessed by dialing 1-877-344-7529 (Conference ID # 10117933). The replay will be available through Apr. 30, 2018.
Annual Shareholders Meeting
The Company’s 2018 Annual Meeting of Shareholders is being held at 3:00 pm ET on Tuesday, Apr. 24, 2018. The Company will be conducting its Annual Meeting of Shareholders by means of remote communication via the Internet. To attend the meeting, please log on to the Internet at www.virtualshareholdermeeting.com/IBCP2018. At this site a shareholder will be able to vote electronically and submit questions during the meeting.
About Independent Bank Corporation
Independent Bank Corporation (NASDAQ: IBCP) is a Michigan-based bank holding company with total assets of approximately $2.8 billion. Founded as First National Bank of Ionia in 1864, Independent Bank Corporation operates a branch network 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 insurance. Independent Bank Corporation is committed to providing exceptional personal service and value to its customers, stockholders and the communities it serves.
3
For more information, please visit our Web site at: IndependentBank.com.
Forward-Looking Statements
This release may contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Any statements that are not historical facts, including statements about our expectations, beliefs, plans, strategies, predictions, forecasts, objectives, or assumptions of future events or performance, may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “expects,” “can,” “could,” “may,” “predicts,” “potential,” “opportunity,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “seeks,” “intends” and similar words or phrases. Accordingly, these statements involve estimates, known and unknown risks, assumptions, and uncertainties that could cause actual strategies, actions, or results to differ materially from those expressed in them, and are not guarantees of timing, future results, events, or performance. Because forward-looking statements are necessarily only estimates of future strategies, actions, or results, based on management’s current expectations, assumptions, and estimates on the date hereof, there can be no assurance that actual strategies, actions or results will not differ materially from expectations. Therefore, readers are cautioned not to place undue reliance on such statements. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in capital and credit markets; the interdependence of financial service companies; changes in regulation or oversight; unfavorable developments concerning credit quality; any future acquisitions or divestitures; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Independent Bank Corporation's customers; the implementation of Independent Bank Corporation's strategies and business models; Independent Bank Corporation's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; operational difficulties, failure of technology infrastructure or information security incidents; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; competitive product and pricing pressures among financial institutions within Independent Bank Corporation's markets; changes in customer behavior; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events; changes in accounting standards and the critical nature of Independent Bank Corporation's accounting policies.
In addition, factors that may cause actual results to differ from expectations regarding the April 1, 2018 acquisition of TCSB Bancorp, Inc. include, but are not limited to, the reaction to the transaction of the companies’ customers, employees and counterparties; customer disintermediation; inflation; expected synergies, cost savings and other financial benefits of the transaction might not be realized within the expected timeframes or might be less than projected; credit and interest rate risks associated with the parties' respective businesses, customers, borrowings, repayment, investment, and deposit practices; general economic conditions, either nationally or in the market areas in which the parties operate or anticipate doing business, are less favorable than expected; new regulatory or legal requirements or obligations; and other risks.
Certain risks and important factors that could affect Independent Bank Corporation's future results are identified in its Annual Report on Form 10-K for the year ended December 31, 2017 and other reports filed with the SEC, including among other things under the heading “Risk Factors” in such Annual Report on Form 10-K. Any forward-looking statement speaks only as of the date on which it is made, and Independent Bank Corporation undertakes no obligation to update any forward-looking statement, whether to reflect events or circumstances, after the date on which the statement is made, to reflect new information or the occurrence of unanticipated events, or otherwise.
4
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition
|
March 31,
2018 |
December 31,
2017 |
|||||||
|
(unaudited)
|
||||||||
|
(In thousands, except share
amounts) |
||||||||
|
Assets
|
||||||||
|
Cash and due from banks
|
$
|
29,126
|
$
|
36,994
|
||||
|
Interest bearing deposits
|
13,250
|
17,744
|
||||||
|
Cash and Cash Equivalents
|
42,376
|
54,738
|
||||||
|
Interest bearing deposits - time
|
1,738
|
2,739
|
||||||
|
Equity securities at fair value
|
301
|
-
|
||||||
|
Trading securities
|
-
|
455
|
||||||
|
Securities available for sale
|
489,119
|
522,925
|
||||||
|
Federal Home Loan Bank and Federal Reserve Bank stock, at cost
|
15,543
|
15,543
|
||||||
|
Loans held for sale, carried at fair value
|
34,148
|
39,436
|
||||||
|
Loans
|
||||||||
|
Commercial
|
857,417
|
853,260
|
||||||
|
Mortgage
|
888,910
|
849,530
|
||||||
|
Installment
|
325,108
|
316,027
|
||||||
|
Total Loans
|
2,071,435
|
2,018,817
|
||||||
|
Allowance for loan losses
|
(23,071
|
)
|
(22,587
|
)
|
||||
|
Net Loans
|
2,048,364
|
1,996,230
|
||||||
|
Other real estate and repossessed assets
|
1,647
|
1,643
|
||||||
|
Property and equipment, net
|
38,809
|
39,149
|
||||||
|
Bank-owned life insurance
|
54,353
|
54,572
|
||||||
|
Deferred tax assets, net
|
13,715
|
15,089
|
||||||
|
Capitalized mortgage loan servicing rights
|
17,783
|
15,699
|
||||||
|
Other intangibles
|
1,500
|
1,586
|
||||||
|
Accrued income and other assets
|
33,723
|
29,551
|
||||||
|
Total Assets
|
$
|
2,793,119
|
$
|
2,789,355
|
||||
|
Liabilities and Shareholders' Equity
|
||||||||
|
Deposits
|
||||||||
|
Non-interest bearing
|
$
|
774,046
|
$
|
768,333
|
||||
|
Savings and interest-bearing checking
|
1,100,505
|
1,064,391
|
||||||
|
Reciprocal
|
63,012
|
50,979
|
||||||
|
Time
|
377,663
|
374,872
|
||||||
|
Brokered time
|
115,175
|
141,959
|
||||||
|
Total Deposits
|
2,430,401
|
2,400,534
|
||||||
|
Other borrowings
|
27,847
|
54,600
|
||||||
|
Subordinated debentures
|
35,569
|
35,569
|
||||||
|
Accrued expenses and other liabilities
|
31,385
|
33,719
|
||||||
|
Total Liabilities
|
2,525,202
|
2,524,422
|
||||||
|
Shareholders’ Equity
|
||||||||
|
Preferred stock, no par value, 200,000 shares authorized; none issued or outstanding
|
-
|
-
|
||||||
|
Common stock, no par value, 500,000,000 shares authorized; issued and outstanding: 21,374,816 shares at March 31, 2018 and 21,333,869 shares at December 31, 2017
|
324,517
|
324,986
|
||||||
|
Accumulated deficit
|
(48,098
|
)
|
(54,054
|
)
|
||||
|
Accumulated other comprehensive loss
|
(8,502
|
)
|
(5,999
|
)
|
||||
|
Total Shareholders’ Equity
|
267,917
|
264,933
|
||||||
|
Total Liabilities and Shareholders’ Equity
|
$
|
2,793,119
|
$
|
2,789,355
|
||||
5
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
|
Three Months Ended
|
||||||||||||
|
March 31,
2018 |
December 31,
2017 |
March 31,
2017 |
||||||||||
|
(unaudited)
|
||||||||||||
|
Interest Income
|
(In thousands, except per share amounts)
|
|||||||||||
|
Interest and fees on loans
|
$
|
23,353
|
$
|
22,643
|
$
|
19,858
|
||||||
|
Interest on securities
|
||||||||||||
|
Taxable
|
2,635
|
2,628
|
2,754
|
|||||||||
|
Tax-exempt
|
479
|
522
|
455
|
|||||||||
|
Other investments
|
330
|
233
|
312
|
|||||||||
|
Total Interest Income
|
26,797
|
26,026
|
23,379
|
|||||||||
|
Interest Expense
|
||||||||||||
|
Deposits
|
2,287
|
2,021
|
1,443
|
|||||||||
|
Other borrowings and subordinated debentures
|
574
|
689
|
470
|
|||||||||
|
Total Interest Expense
|
2,861
|
2,710
|
1,913
|
|||||||||
|
Net Interest Income
|
23,936
|
23,316
|
21,466
|
|||||||||
|
Provision for loan losses
|
315
|
393
|
(359
|
)
|
||||||||
|
Net Interest Income After Provision for Loan Losses
|
23,621
|
22,923
|
21,825
|
|||||||||
|
Non-interest Income
|
||||||||||||
|
Service charges on deposit accounts
|
2,905
|
3,208
|
3,009
|
|||||||||
|
Interchange income
|
2,246
|
2,154
|
1,922
|
|||||||||
|
Net gains (losses) on assets
|
||||||||||||
|
Mortgage loans
|
2,571
|
2,876
|
2,571
|
|||||||||
|
Securities
|
(173
|
)
|
198
|
27
|
||||||||
|
Mortgage loan servicing, net
|
2,221
|
979
|
825
|
|||||||||
|
Other
|
1,755
|
2,029
|
1,985
|
|||||||||
|
Total Non-interest Income
|
11,525
|
11,444
|
10,339
|
|||||||||
|
Non-Interest Expense
|
||||||||||||
|
Compensation and employee benefits
|
14,280
|
13,985
|
14,147
|
|||||||||
|
Occupancy, net
|
2,264
|
2,070
|
2,142
|
|||||||||
|
Data processing
|
1,878
|
1,987
|
1,937
|
|||||||||
|
Furniture, fixtures and equipment
|
967
|
927
|
977
|
|||||||||
|
Communications
|
680
|
638
|
683
|
|||||||||
|
Loan and collection
|
677
|
666
|
413
|
|||||||||
|
Interchange expense
|
598
|
287
|
283
|
|||||||||
|
Advertising
|
441
|
354
|
506
|
|||||||||
|
Legal and professional
|
378
|
516
|
437
|
|||||||||
|
FDIC deposit insurance
|
230
|
286
|
198
|
|||||||||
|
Merger related expenses
|
174
|
284
|
-
|
|||||||||
|
Credit card and bank service fees
|
96
|
97
|
191
|
|||||||||
|
Net (gains) losses on other real estate and repossessed assets
|
(290
|
)
|
(738
|
)
|
11
|
|||||||
|
Other
|
1,574
|
1,777
|
1,644
|
|||||||||
|
Total Non-interest Expense
|
23,947
|
23,136
|
23,569
|
|||||||||
|
Income Before Income Tax
|
11,199
|
11,231
|
8,595
|
|||||||||
|
Income tax expense
|
2,038
|
9,520
|
2,621
|
|||||||||
|
Net Income
|
$
|
9,161
|
$
|
1,711
|
$
|
5,974
|
||||||
|
Net Income Per Common Share
|
||||||||||||
|
Basic
|
$
|
0.43
|
$
|
0.08
|
$
|
0.28
|
||||||
|
Diluted
|
$
|
0.42
|
$
|
0.08
|
$
|
0.28
|
||||||
6
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Selected Financial Data
|
March 31,
2018 |
December 31,
2017 |
September 30,
2017 |
June 30,
2017 |
March 31,
2017 |
||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||
|
(Dollars in thousands except per share data)
|
||||||||||||||||||||
|
Three Months Ended
|
||||||||||||||||||||
|
Net interest income
|
$
|
23,936
|
$
|
23,316
|
$
|
22,912
|
$
|
21,492
|
$
|
21,466
|
||||||||||
|
Provision for loan losses
|
315
|
393
|
582
|
583
|
(359
|
)
|
||||||||||||||
|
Non-interest income
|
11,525
|
11,444
|
10,304
|
10,446
|
10,339
|
|||||||||||||||
|
Non-interest expense
|
23,947
|
23,136
|
22,616
|
22,761
|
23,569
|
|||||||||||||||
|
Income before income tax
|
11,199
|
11,231
|
10,018
|
8,594
|
8,595
|
|||||||||||||||
|
Income tax expense
|
2,038
|
9,520
|
3,159
|
2,663
|
2,621
|
|||||||||||||||
|
Net income
|
$
|
9,161
|
$
|
1,711
|
$
|
6,859
|
$
|
5,931
|
$
|
5,974
|
||||||||||
|
Basic earnings per share
|
$
|
0.43
|
$
|
0.08
|
$
|
0.32
|
$
|
0.28
|
$
|
0.28
|
||||||||||
|
Diluted earnings per share
|
0.42
|
0.08
|
0.32
|
0.27
|
0.28
|
|||||||||||||||
|
Cash dividend per share
|
0.15
|
0.12
|
0.10
|
0.10
|
0.10
|
|||||||||||||||
|
Average shares outstanding
|
21,364,708
|
21,332,053
|
21,334,247
|
21,331,363
|
21,308,396
|
|||||||||||||||
|
Average diluted shares outstanding
|
21,674,375
|
21,661,133
|
21,651,963
|
21,646,941
|
21,638,768
|
|||||||||||||||
|
Performance Ratios
|
||||||||||||||||||||
|
Return on average assets
|
1.34
|
%
|
0.25
|
%
|
1.01
|
%
|
0.92
|
%
|
0.95
|
%
|
||||||||||
|
Return on average common equity
|
14.04
|
2.51
|
10.27
|
9.15
|
9.63
|
|||||||||||||||
|
Efficiency ratio (1)
|
66.72
|
66.14
|
67.38
|
70.29
|
73.29
|
|||||||||||||||
|
As a Percent of Average Interest-Earning Assets (1)
|
||||||||||||||||||||
|
Interest income
|
4.15
|
%
|
4.07
|
%
|
4.05
|
%
|
3.94
|
%
|
4.02
|
%
|
||||||||||
|
Interest expense
|
0.44
|
0.42
|
0.39
|
0.34
|
0.33
|
|||||||||||||||
|
Net interest income
|
3.71
|
3.65
|
3.66
|
3.60
|
3.69
|
|||||||||||||||
|
Average Balances
|
||||||||||||||||||||
|
Loans
|
$
|
2,062,847
|
$
|
2,006,207
|
$
|
1,911,635
|
$
|
1,782,953
|
$
|
1,690,003
|
||||||||||
|
Securities available for sale
|
500,599
|
532,202
|
565,546
|
592,594
|
599,451
|
|||||||||||||||
|
Total earning assets
|
2,611,890
|
2,574,779
|
2,522,060
|
2,423,283
|
2,371,705
|
|||||||||||||||
|
Total assets
|
2,776,986
|
2,742,761
|
2,697,362
|
2,598,605
|
2,559,487
|
|||||||||||||||
|
Deposits
|
2,417,906
|
2,340,593
|
2,315,806
|
2,239,605
|
2,233,853
|
|||||||||||||||
|
Interest bearing liabilities
|
1,724,153
|
1,680,917
|
1,664,734
|
1,595,984
|
1,574,306
|
|||||||||||||||
|
Shareholders' equity
|
264,584
|
270,099
|
265,074
|
260,095
|
251,566
|
|||||||||||||||
|
End of Period
|
||||||||||||||||||||
|
Capital
|
||||||||||||||||||||
|
Tangible common equity ratio
|
9.54
|
%
|
9.45
|
%
|
9.67
|
%
|
9.79
|
%
|
9.78
|
%
|
||||||||||
|
Average equity to average assets
|
9.53
|
9.85
|
9.83
|
10.01
|
9.83
|
|||||||||||||||
|
Tangible common equity per share of common stock
|
$
|
12.46
|
$
|
12.34
|
$
|
12.47
|
$
|
12.22
|
$
|
11.89
|
||||||||||
|
Total shares outstanding
|
21,374,816
|
21,333,869
|
21,332,317
|
21,334,740
|
21,327,796
|
|||||||||||||||
|
Selected Balances
|
||||||||||||||||||||
|
Loans
|
$
|
2,071,435
|
$
|
2,018,817
|
$
|
1,937,094
|
$
|
1,811,677
|
$
|
1,670,747
|
||||||||||
|
Securities available for sale
|
489,119
|
522,925
|
548,865
|
583,725
|
608,964
|
|||||||||||||||
|
Total earning assets
|
2,625,534
|
2,617,204
|
2,568,554
|
2,486,518
|
2,411,369
|
|||||||||||||||
|
Total assets
|
2,793,119
|
2,789,355
|
2,753,446
|
2,665,367
|
2,596,482
|
|||||||||||||||
|
Deposits
|
2,430,401
|
2,400,534
|
2,343,761
|
2,246,219
|
2,263,059
|
|||||||||||||||
|
Interest bearing liabilities
|
1,719,771
|
1,722,370
|
1,701,624
|
1,646,599
|
1,597,417
|
|||||||||||||||
|
Shareholders' equity
|
267,917
|
264,933
|
267,710
|
262,453
|
255,475
|
|||||||||||||||
|
(1)
|
Presented on a fully tax equivalent basis assuming a marginal tax rate of 21% in 2018 and 35% in 2017.
|
7
Reconciliation of Non-GAAP Financial Measures
Independent Bank Corporation
Independent Bank Corporation believes non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate the adequacy of common equity and performance trends. Tangible common equity is used by the Company to measure the quality of capital.
Reconciliation of Non-GAAP Financial Measures
|
Three Months Ended
March 31, |
||||||||
|
2018
|
2017
|
|||||||
|
(Dollars in thousands)
|
||||||||
|
Net Interest Margin, Fully Taxable Equivalent ("FTE")
|
||||||||
|
Net interest income
|
$
|
23,936
|
$
|
21,466
|
||||
|
Add: taxable equivalent adjustment
|
128
|
261
|
||||||
|
Net interest income - taxable equivalent
|
$
|
24,064
|
$
|
21,727
|
||||
|
Net interest margin (GAAP) (1)
|
3.69
|
%
|
3.67
|
%
|
||||
|
Net interest margin (FTE) (1)
|
3.71
|
%
|
3.69
|
%
|
||||
|
(1)
|
Annualized
|
|
Tangible Common Equity Ratio
|
||||||||||||||||||||
|
March 31,
2018 |
December 31,
2017 |
September 30,
2017 |
June 30,
2017 |
March 31,
2017 |
||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
|
Common shareholders' equity
|
$
|
267,917
|
$
|
264,933
|
$
|
267,710
|
$
|
262,453
|
$
|
255,475
|
||||||||||
|
Less:
|
||||||||||||||||||||
|
Goodwill
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Other intangible assets
|
1,500
|
1,586
|
1,673
|
1,759
|
1,845
|
|||||||||||||||
|
Tangible common equity
|
$
|
266,417
|
$
|
263,347
|
$
|
266,037
|
$
|
260,694
|
$
|
253,630
|
||||||||||
|
Total assets
|
$
|
2,793,119
|
$
|
2,789,355
|
$
|
2,753,446
|
$
|
2,665,367
|
$
|
2,596,482
|
||||||||||
|
Less:
|
||||||||||||||||||||
|
Goodwill
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Other intangible assets
|
1,500
|
1,586
|
1,673
|
1,759
|
1,845
|
|||||||||||||||
|
Tangible assets
|
$
|
2,791,619
|
$
|
2,787,769
|
$
|
2,751,773
|
$
|
2,663,608
|
$
|
2,594,637
|
||||||||||
|
Common equity ratio
|
9.59
|
%
|
9.50
|
%
|
9.72
|
%
|
9.85
|
%
|
9.84
|
%
|
||||||||||
|
Tangible common equity ratio
|
9.54
|
%
|
9.45
|
%
|
9.67
|
%
|
9.79
|
%
|
9.78
|
%
|
||||||||||
|
Tangible Common Equity per Share of Common Stock:
|
||||||||||||||||||||
|
Common shareholders' equity
|
$
|
267,917
|
$
|
264,933
|
$
|
267,710
|
$
|
262,453
|
$
|
255,475
|
||||||||||
|
Tangible common equity
|
$
|
266,417
|
$
|
263,347
|
$
|
266,037
|
$
|
260,694
|
$
|
253,630
|
||||||||||
|
Shares of common stock outstanding (in thousands)
|
21,375
|
21,334
|
21,332
|
21,335
|
21,328
|
|||||||||||||||
|
Common shareholders' equity per share of common stock
|
$
|
12.53
|
$
|
12.42
|
$
|
12.55
|
$
|
12.30
|
$
|
11.98
|
||||||||||
|
Tangible common equity per share of common stock
|
$
|
12.46
|
$
|
12.34
|
$
|
12.47
|
$
|
12.22
|
$
|
11.89
|
||||||||||
The tangible common equity ratio removes the effect of intangible assets from capital and total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders’ equity per share of common stock.
8