Exhibit 99.1


News Release

Independent Bank Corporation
4200 East Beltline
Grand Rapids, MI 49525
616.527.5820

For Release:
Immediately

Contact:
William B. Kessel, President and CEO, 616.447.3933
Robert N. Shuster, Chief Financial Officer, 616.522.1765

INDEPENDENT BANK CORPORATION REPORTS
2018 THIRD QUARTER RESULTS

GRAND RAPIDS, Mich., Oct. 25, 2018 - 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.”

1

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
 
   
9/30/2018
   
9/30/2017
   
9/30/2018
   
9/30/2017
 
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.

2

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
 
9/30/2018
   
12/31/2017
   
9/30/2017
 
   
(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.

3

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 Ratios
 
9/30/2018
   
12/31/2017
   
Well
Capitalized
Minimum
 
                   
Tier 1 capital to average total assets
   
9.73
%
   
9.78
%
   
5.00
%
Tier 1 common equity to risk-weighted assets
   
12.19
%
   
12.95
%
   
6.50
%
Tier 1 capital to risk-weighted assets
   
12.19
%
   
12.95
%
   
8.00
%
Total capital to risk-weighted assets
   
13.18
%
   
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.

4

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.

5

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
 

6

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
 

7

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.

8

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
 
$
3,262,115
   
$
3,198,506
   
$
2,791,619
   
$
2,787,769
   
$
2,751,773
 
                                         
Common equity ratio
   
10.47
%
   
10.42
%
   
9.59
%
   
9.50
%
   
9.72
%
Tangible common equity ratio
   
9.51
%
   
9.41
%
   
9.54
%
   
9.45
%
   
9.67
%
                                         
                                         
Tangible Common Equity per Share of Common Stock:
                                       
                                         
Common shareholders' equity
 
$
345,204
   
$
337,083
   
$
267,917
   
$
264,933
   
$
267,710
 
Tangible common equity
 
$
310,195
   
$
301,067
   
$
266,417
   
$
263,347
   
$
266,037
 
Shares of common stock outstanding (in thousands)
   
24,150
     
24,143
     
21,375
     
21,334
     
21,332
 
                                         
Common shareholders' equity per share of common stock
 
$
14.29
   
$
13.96
   
$
12.53
   
$
12.42
   
$
12.55
 
Tangible common equity per share of common stock
 
$
12.84
   
$
12.47
   
$
12.46
   
$
12.34
   
$
12.47
 

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.


9

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