Disclaimer

You are now leaving the Independent Bank website. Linked web pages are not under the control of Independent Bank, its affiliates or subsidiaries. Be aware the privacy policy of the site to which you are going may differ from that of Independent Bank. Independent Bank provides external links as a convenience and is not responsible for the content or security of any linked web page.

Click “OK” to continue or “Cancel” to go back

Ok Cancel

Disclaimer

You are now leaving the Independent Bank website. Linked web pages are not under the control of Independent Bank, its affiliates or subsidiaries. Be aware the privacy policy of the site to which you are going may differ from that of Independent Bank. Independent Bank provides external links as a convenience and is not responsible for the content or security of any linked web page.

Click “OK” to continue or “Cancel” to go back

Ok Cancel

Disclaimer

Insurance products are not insured by FDIC or any Federal Government Agency; are not a deposit of, or guaranteed by the Bank or any Bank Affiliate; and may lose value. Any insurance required as a condition of the extension of credit by Independent Bank need not be purchased from our Agency but may, without affecting the approval of the application for an extension of credit, be purchased from an agent or insurance company of the customer’s choice

Click “OK” to continue or “Cancel” to go back

Ok Cancel
IR SEARCH

Need Help?
Call Call 800.355.0641

  • Facebook
  • Twitter
  • Linkedin
  • Instagram

Independent Bank Corporation Reports 2018 Third Quarter Results

Company Release - 10/25/2018 7:59 AM ET

GRAND RAPIDS, Mich., Oct. 25, 2018 (GLOBE NEWSWIRE) -- Independent Bank Corporation (NASDAQ: IBCP) reported third quarter 2018 net income of $11.9 million, or $0.49 per diluted share, versus net income of $6.9 million, or $0.32 per diluted share, in the prior-year period.  For the nine months ended Sept. 30, 2018, the Company reported net income of $29.9 million, or $1.27 per diluted share, compared to net income of $18.8 million, or $0.87 per diluted share, in the prior-year period.  The increases in third quarter and year to date 2018 earnings as compared to 2017 primarily reflect increases in net interest income and in non-interest income and a decrease in income tax expense that were partially offset by an increase in non-interest expense.

Significant items impacting comparable quarterly and year to date 2018 and 2017 results include the following:

  • The acquisition of TCSB Bancorp, Inc. (“TCSB”), and its subsidiary, Traverse City State Bank, on Apr. 1, 2018 (referred to as the “Merger” or “TCSB Acquisition”) and the associated data processing systems conversions in June 2018.  The total assets, loans and deposits acquired in the Merger were approximately $343.5 million, $295.8 million (including $1.3 million of loans held for sale) and $287.7 million, respectively.
  • Merger related expenses of $0.1 million ($0.003 per diluted share, after taxes) and $3.4 million ($0.11 per diluted share, after taxes) for the three- and nine-months ended Sept. 30, 2018, respectively.
  • Positive changes in the fair value due to price of capitalized mortgage loan servicing rights of $0.6 million ($0.02 per diluted share, after taxes) and $2.6 million ($0.09 per diluted share, after taxes) for the three- and nine-months ended Sept. 30, 2018, respectively, as compared to negative changes of $0.6 million ($0.02 per diluted share, after taxes) and $1.1 million ($0.03 per diluted share, after taxes) for the three- and nine-months ended Sept. 30, 2017, respectively.
  • The passage of the "Tax Cuts and Jobs Act" which, among other things, reduced the federal corporate income tax rate to 21% (from 35%) effective January 1, 2018.

Third quarter 2018 highlights include:

  • Year-over-year increases in net income and diluted earnings per share of 73.9% and 53.1%, respectively;
  • A year-over-year increase in quarterly net interest income of $6.8 million, or 29.6%;
  • Total portfolio loan net growth of $95.3 million, or 15.3% annualized;
  • Continued strong asset quality metrics; and
  • The payment of a 15 cent per share dividend on common stock on Aug. 15, 2018.

William B. (“Brad”) Kessel, the President and Chief Executive Officer of Independent Bank Corporation, commented: “We are pleased to report another quarter of solid financial performance.  The favorable impact of the TCSB Acquisition combined with strong loan origination activity led to meaningful loan growth and increased net interest income.  Net income and diluted earnings per share have increased significantly in 2018 as we gained greater operating leverage and efficiency as well as benefitting from a reduced corporate income tax rate.  As we look ahead to the remainder of 2018 and beyond, we are focused on building on the momentum generated in the first nine months of 2018.”

Operating Results

The Company’s net interest income totaled $29.7 million during the third quarter of 2018, an increase of $6.8 million, or 29.6% from the year-ago period, and up $0.7 million, or 2.5%, from the second quarter of 2018.  The Company’s tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”) was 3.91% during the third quarter of 2018, compared to 3.66% in the year-ago period, and 3.93% in the second quarter of 2018.  The year-over-year quarterly increase in net interest income is due to increases in both average interest-earning assets and in the net interest margin.  Average interest-earning assets were $3.04 billion in the third quarter of 2018, compared to $2.52 billion in the year ago quarter and $2.96 billion in the second quarter of 2018.  Third quarter 2018 interest income on loans includes $0.6 million of accretion of the discount recorded on the TCSB loans acquired in the Merger.  The total discount initially recorded on the TCSB loans acquired in the Merger was $6.5 million (or approximately 2.2% of the total TCSB loans acquired in the Merger).

For the first nine months of 2018, net interest income totaled $82.6 million, an increase of $16.7 million, or 25.4% from the first nine months of 2017.  The Company’s net interest margin for the first nine months of 2018 was 3.86% compared to 3.65% in 2017.  Year-to-date 2018 interest income on loans includes $1.2 million of accretion of the discount recorded on the TCSB loans acquired in the Merger. The increase in net interest income for the first nine months of 2018 is due to increases in both average interest-earning assets and in the net interest margin.

Non-interest income totaled $11.8 million and $35.9 million, respectively, for the third quarter and first nine months of 2018, compared to $10.3 million and $31.1 million in the respective comparable year ago periods.  These increases were primarily due to growth in interchange income and mortgage loan servicing, net, as described below.

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 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 third quarter and first nine months of 2018, interchange income and interchange expense each increased by $0.4 million and $1.1 million, respectively, due to classification changes under ASU 2014-09.
                                                                                                                                 
Net gains on mortgage loans were $2.7 million and $3.0 million in the third quarters of 2018 and 2017, respectively.  For the first nine months of 2018, net gains on mortgage loans totaled $8.6 million compared to $8.9 million in 2017.  An increase in mortgage loan sales volume in 2018 was offset by margin compression due principally to competitive factors.

Mortgage loan servicing, net, generated income of $1.2 million and $0.001 million in the third quarters of 2018 and 2017, respectively. For the first nine months of 2018, mortgage loan servicing, net, generated income of $4.7 million as compared to income of $0.7 million in 2017. This activity is summarized in the following table:

               Three Months Ended                         Nine Months Ended
   9/30/20189/30/20179/30/20189/30/2017
Mortgage loan servicing, net: (Dollars in thousands)     
  Revenue, net$  1,410 $    1,091 $    3,974 $    3,253 
  Fair value change due to price   610  (572)   2,586  (1,075)
  Fair value change due to pay-downs (808) (518) (1,892) (1,510)
Total$    1,212 $    1 $    4,668 $    668 

Non-interest expenses totaled $26.7 million in the third quarter of 2018, compared to $22.6 million in the year-ago period.  For the first nine months of 2018, non-interest expenses totaled $80.6 million compared to $68.9 million in 2017.  These year-over-year increases in non-interest expense are primarily due to the TCSB Acquisition (including the aforementioned Merger related expenses) as well as higher performance based compensation and health insurance costs. 

The Company recorded an income tax expense of $2.9 million and $7.0 million in the third quarter and first nine months of 2018, respectively.  This compares to an income tax expense of $3.2 million and $8.4 million in the third quarter and first nine months of 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, which was partially offset by an increase in income before income tax.

Asset Quality

Commenting on asset quality, President and CEO Kessel added:  “Non-performing loans and assets as well as loan net charge-offs remain at low levels.  In addition, thirty- to eighty-nine day delinquency rates at Sept. 30, 2018 were 0.08% for commercial loans and 0.34% 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:

Loan Type  9/30/201812/31/20179/30/2017
                                            (Dollars in thousands)
Commercial$  2,782 $  646 $  788 
Consumer/installment 756  543  525 
Mortgage 5,805  6,995  7,097 
  Total$  9,343 $8,184 $  8,410 
Ratio of non-performing loans to total portfolio loans 0.36% 0.41% 0.43%
Ratio of non-performing assets to total assets 0.33% 0.35% 0.38%
Ratio of the allowance for loan losses to non-performing loans 261.17%   275.99% 255.39%

(1) Excludes loans that are classified as “troubled debt restructured” that are still performing.

Non-performing loans increased $1.2 million from Dec. 31, 2017.  This increase primarily reflects a rise in non-performing commercial loans.  ORE and repossessed assets totaled $1.4 million at Sept. 30, 2018, compared to $1.6 million at Dec. 31, 2017. 

The provision for loan losses was a credit of $0.1 million compared to an expense of $0.6 million in the third quarters of 2018 and 2017, respectively.  The provision for loan losses was an expense of $0.9 million and $0.8 million in the first nine months 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 growth, loan mix, levels of non-performing and classified loans and loan net charge-offs.  The Company recorded loan net recoveries of $1.0 million and $0.3 million in the third quarters of 2018 and 2017, respectively.  For the first nine months of 2018 and 2017, the Company recorded loan net recoveries of $0.9 million and $0.4 million, respectively.  At Sept. 30, 2018, the allowance for loan losses totaled $24.4 million, or 0.95% of total portfolio loans (1.06% when excluding the TCSB acquired loan balances), compared to $22.6 million, or 1.12% of total portfolio loans, at Dec. 31, 2017.

Balance Sheet, Liquidity and Capital

Total assets were $3.30 billion at Sept. 30, 2018, an increase of $507.8 million from Dec. 31, 2017, primarily reflecting the impact of the TCSB Acquisition as well as loan growth.  Loans, excluding loans held for sale, were $2.56 billion at Sept. 30, 2018, compared to $2.02 billion at Dec. 31, 2017.

Deposits totaled $2.80 billion at Sept. 30, 2018, an increase of $398.1 million from Dec. 31, 2017.  The increase in deposits is primarily due to the TCSB Acquisition and growth in reciprocal deposits and brokered time deposits.

Cash and cash equivalents totaled $53.2 million at Sept. 30, 2018, versus $54.7 million at Dec. 31, 2017. Securities available for sale totaled $437.0 million at Sept. 30, 2018, compared to $522.9 million at Dec. 31, 2017.

In the second quarter of 2018, the Company recorded $29.0 million of goodwill, a core deposit intangible (“CDI”) of $5.8 million and discounts of $6.5 million, $0.4 million and $1.5 million on loans, time deposits and borrowings (including subordinated debentures), respectively, related to the Merger.  These adjustments reflected the preliminary valuation of the assets acquired and liabilities assumed in the Merger.  In the third quarter of 2018, goodwill was reduced by $0.7 million (to $28.3 million) related to the collection of a TCSB acquired loan that had been charged off in full prior to the Merger.  Because of the status of the collection activities related to this loan at the time of the Merger, the Company determined that this transaction was a measurement period adjustment and reduced goodwill accordingly.  The goodwill is being periodically tested for impairment, and the CDI is being amortized over a ten year period ($0.2 million and $0.4 million of amortization for this CDI was recorded in the third quarter and first nine months of 2018, respectively).  The discounts will be accreted based on the lives of the related assets or liabilities.

Total shareholders’ equity was $345.2 million at Sept. 30, 2018, or 10.47% of total assets.  Tangible common equity totaled $310.2 million at Sept. 30, 2018, or $12.84 per share.  The Company’s wholly owned subsidiary, Independent Bank, remains significantly above “well capitalized” for regulatory purposes with the following ratios:

Regulatory Capital Ratios9/30/201812/31/2017Well
Capitalized
Minimum
Tier 1 capital to average total assets9.73%9.78%5.00%
Tier 1 common equity to risk-weighted assets12.19%12.95%6.50%
Tier 1 capital to risk-weighted assets12.19%12.95%8.00%
Total capital to risk-weighted assets13.18%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 2018 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 Thursday, Oct. 25, 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 site/URL: https://services.choruscall.com/links/ibcp181025.html.

  

A playback of the call can be accessed by dialing 1-877-344-7529 (Conference ID # 10124591). The replay will be available through Nov. 1, 2018.

About Independent Bank Corporation

Independent Bank Corporation (NASDAQ: IBCP) is a Michigan-based bank holding company with total assets of approximately $3.3 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.

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.

 

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition
  September 30, December 31,
  2018 2017
         
  (unaudited)
  (In thousands, except share
  amounts)
Assets
Cash and due from banks $  35,180  $  36,994 
Interest bearing deposits    17,990     17,744 
Cash and Cash Equivalents    53,170     54,738 
Interest bearing deposits - time    593     2,739 
Equity securities at fair value    285     - 
Trading securities    -     455 
Securities available for sale    436,957     522,925 
Federal Home Loan Bank and Federal Reserve Bank stock, at cost    18,355     15,543 
Loans held for sale, carried at fair value    41,325     39,436 
Loans    
Commercial    1,112,101     853,260 
Mortgage    1,056,482     849,530 
Installment    393,995     316,027 
Total Loans    2,562,578     2,018,817 
Allowance for loan losses    (24,401)    (22,587)
Net Loans    2,538,177     1,996,230 
Other real estate and repossessed assets    1,445     1,643 
Property and equipment, net    39,012     39,149 
Bank-owned life insurance    54,811     54,572 
Deferred tax assets, net    8,449     15,089 
Capitalized mortgage loan servicing rights    23,151     15,699 
Goodwill    28,300   - 
Other intangibles    6,709     1,586 
Accrued income and other assets    46,385     29,551 
Total Assets $  3,297,124  $  2,789,355 
     
Liabilities and Shareholders' Equity
Deposits    
Non-interest bearing $880,932  $768,333 
Savings and interest-bearing checking  1,217,939   1,064,391 
Reciprocal    92,635     50,979 
Time    399,110     374,872 
Brokered time    208,027     141,959 
Total Deposits    2,798,643     2,400,534 
Other borrowings    79,688     54,600 
Subordinated debentures    39,371     35,569 
Accrued expenses and other liabilities    34,218     33,719 
Total Liabilities    2,951,920     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:    
        24,150,341 shares at September 30, 2018 and 21,333,869 shares at December 31, 2017    389,689     324,986 
Accumulated deficit    (34,596)    (54,054)
Accumulated other comprehensive loss    (9,889)    (5,999)
Total Shareholders’ Equity    345,204     264,933 
Total Liabilities and Shareholders’ Equity $  3,297,124  $  2,789,355 
     

 

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
           
  Three Months Ended Nine Months Ended
  September 30, June 30, September 30, September 30,
  2018
 2018
 2017 2018
 2017
                   
  (unaudited)
Interest Income (In thousands, except per share amounts)
Interest and fees on loans $  31,000  $  29,674  $  21,831 $  84,027  $  61,638
Interest on securities          
Taxable    2,737     2,720   2,765    8,092     8,300
Tax-exempt    412     444   512    1,335     1,478
Other investments    303     265   263    898     867
Total Interest Income    34,452   33,103   25,371    94,352   72,283
Interest Expense          
Deposits    3,976     3,209   1,833    9,472     4,754
Other borrowings and subordinated debentures    779     914   626    2,267     1,659
Total Interest Expense    4,755   4,123   2,459    11,739   6,413
Net Interest Income    29,697   28,980   22,912    82,613   65,870
Provision for loan losses    (53)  650   582    912     806
Net Interest Income After Provision for Loan Losses    29,750   28,330   22,330    81,701   65,064
Non-interest Income          
Service charges on deposit accounts    3,166     3,095   3,281    9,166     9,465
Interchange income    2,486     2,504   1,942    7,236     5,869
Net gains (losses) on assets          
Mortgage loans    2,745     3,255   2,971    8,571     8,886
Securities    93     9   69    (71)    62
Mortgage loan servicing, net    1,212     1,235   1    4,668     668
Other    2,134     2,217   2,040    6,294     6,139
Total Non-interest Income  11,836   12,315   10,304  35,864   31,089
Non-interest Expense          
Compensation and employee benefits    16,169     15,869   13,577    46,506   41,104
Occupancy, net    2,233     2,170   1,970    6,667   6,032
Data processing    2,051     2,251   1,796    6,180   5,670
Merger related expenses    98     3,082     10    3,354     10
Furniture, fixtures and equipment    1,043     1,019   961    3,029   2,943
Communications    727     704   685    2,111   2,046
Interchange expense    715     661   294    1,974     869
Loan and collection    531     692   481    1,900     1,564
Advertising    594     543   526    1,578   1,551
Legal and professional    477     456   540    1,311   1,366
FDIC deposit insurance    270     250   208    750   608
Credit card and bank service fees    108     106   105    310   432
Net (gains) losses on other real estate and          
   repossessed assets    (325)    (4)  30    (619)  132
Other    2,049     1,962   1,433    5,585   4,619
Total Non-interest Expense    26,740   29,761   22,616    80,636   68,946
Income Before Income Tax    14,846   10,884   10,018    36,929   27,207
Income tax expense    2,921   2,067   3,159    7,026     8,443
Net Income $  11,925  $  8,817  $  6,859 $  29,903  $  18,764
Net Income Per Common Share          
Basic $  0.49  $  0.37  $  0.32 $  1.29  $  0.88
Diluted $  0.49  $  0.36  $  0.32 $  1.27  $  0.87
           

 

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES 
Selected Financial Data 
            
 September 30, June 30, March 31, December 31, September 30,  
 2018 2018 2018 2017 2017  
                  
 (unaudited)  
 (Dollars in thousands except per share data)  
Three Months Ended           
Net interest income$  29,697  $  28,980 $  23,936 $  23,316 $  22,912  
Provision for loan losses   (53)    650    315    393    582  
Non-interest income   11,836     12,315    11,713    11,444    10,304  
Non-interest expense   26,740     29,761    24,135    23,136    22,616  
Income before income tax   14,846     10,884    11,199    11,231    10,018  
Income tax expense   2,921     2,067    2,038    9,520    3,159  
Net income$  11,925  $  8,817 $  9,161 $  1,711 $  6,859  
            
Basic earnings per share$  0.49  $  0.37 $  0.43 $  0.08 $  0.32  
Diluted earnings per share   0.49     0.36    0.42    0.08    0.32  
Cash dividend per share   0.15     0.15    0.15    0.12    0.10  
            
Average shares outstanding   24,148,768     24,109,322    21,364,708    21,332,053    21,334,247  
Average diluted shares outstanding   24,514,814     24,509,963    21,674,375    21,661,133    21,651,963  
            
Performance Ratios           
Return on average assets   1.46%    1.12%   1.34%   0.25%   1.01% 
Return on average common equity   13.83     10.57    14.04    2.51    10.27  
Efficiency ratio (1)   63.63     71.14    66.72    66.14    67.38  
            
As a Percent of Average Interest-Earning Assets (1)          
Interest income   4.53%    4.49%   4.15%   4.07%   4.05% 
Interest expense   0.62     0.56    0.44    0.42    0.39  
Net interest income   3.91     3.93    3.71    3.65    3.66  
            
Average Balances           
Loans$  2,550,302  $  2,449,056 $  2,062,847 $  2,006,207 $  1,911,635  
Securities available for sale   442,949     470,427    500,599    532,202    565,546  
Total earning assets   3,038,221     2,963,982    2,611,890    2,574,779    2,522,060  
Total assets   3,247,603     3,168,196    2,776,986    2,742,761    2,697,362  
Deposits   2,789,969     2,701,362    2,417,906    2,340,593    2,315,806  
Interest bearing liabilities   1,986,905     1,946,287    1,724,153    1,680,917    1,664,734  
Shareholders' equity   341,998     334,626    264,584    270,099    265,074  
            
End of Period           
Capital           
Tangible common equity ratio   9.51%    9.41%   9.54%   9.45%   9.67%
Average equity to average assets   10.53     10.56    9.53    9.85    9.83  
Tangible common equity per share           
   of common stock$  12.84  $  12.47 $  12.46 $  12.34 $  12.47  
Total shares outstanding   24,150,341     24,143,044    21,374,816    21,333,869    21,332,317  
            
Selected Balances           
Loans$  2,562,578  $  2,467,317 $  2,071,435 $  2,018,817 $  1,937,094  
Securities available for sale   436,957     450,593    489,119    522,925    548,865  
Total earning assets   3,078,083     3,023,454    2,625,534    2,617,204    2,568,554  
Total assets   3,297,124     3,234,522    2,793,119    2,789,355    2,753,446  
Deposits   2,798,643     2,780,516    2,430,401    2,400,534    2,343,761  
Interest bearing liabilities   2,036,770     1,988,495    1,719,771    1,722,370    1,701,624  
Shareholders' equity   345,204     337,083    267,917    264,933    267,710  
            
(1)  Presented on a fully tax equivalent basis assuming a marginal tax rate of 21% in 2018 and 35% in 2017.    
     

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 Nine Months Ended
 September 30, September 30,
  2018   2017   2018   2017 
                
 (Dollars in thousands)
 Net Interest Margin, Fully Taxable        
     Equivalent ("FTE")        
        
Net interest income$  29,697  $  22,912  $  82,613  $  65,870 
 Add:  taxable equivalent adjustment    123     288     384     837 
Net interest income - taxable equivalent$  29,820  $  23,200  $  82,997  $  66,707 
Net interest margin (GAAP) (1) 3.88%  3.60%  3.84%  3.61%
Net interest margin (FTE) (1) 3.91%  3.66%  3.86%  3.65%
 
(1) Annualized    

 

  
          
 Tangible Common Equity Ratio          
 September 30, June 30, March 31, December 31, September 30,
 2018 2018 2017 2017 2017
                    
 (Dollars in thousands)
Common shareholders' equity$  345,204  $  337,083  $  267,917  $  264,933  $  267,710 
Less:         
Goodwill   28,300     29,012     -     -     - 
Other intangibles 6,709   7,004   1,500   1,586   1,673 
Tangible common equity$  310,195  $  301,067  $  266,417  $  263,347  $  266,037 
          
Total assets$  3,297,124  $  3,234,522  $  2,793,119  $  2,789,355  $  2,753,446 
Less:         
Goodwill   28,300     29,012   -   -   - 
Other intangibles   6,709     7,004     1,500     1,586     1,673 
Tangible assets$