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, retiring Chief Financial Officer, 616.522.1765
 
Stephen A. Erickson, incoming Chief Financial Officer, 616.447.3914

INDEPENDENT BANK CORPORATION REPORTS
2019 FOURTH QUARTER AND FULL YEAR RESULTS

GRAND RAPIDS, Mich., Jan. 23, 2020 -
Independent Bank Corporation (NASDAQ: IBCP) reported fourth quarter 2019 net income of $13.9 million, or $0.61 per diluted share, versus net income of $9.9 million, or $0.41 per diluted share, in the prior-year period.  For the year ended Dec. 31, 2019, the Company reported net income of $46.4 million, or $2.00 per diluted share.  This compares to net income of $39.8 million, or $1.68 per diluted share, in 2018.  The increase in 2019 fourth quarter earnings as compared to 2018, primarily reflects an increase in non-interest income and a decrease in the provision for loan losses that was partially offset by increases in non-interest expense and income tax expense. The increase in full year 2019 earnings as compared to 2018, primarily reflects increases in net interest income and non-interest income as well as a decrease in the provision for loan losses that were partially offset by increases in non-interest expense and income tax expense.

Significant items impacting comparable fourth quarter and full year 2019 and 2018 results include the following:


A change in the fair value due to price of capitalized mortgage loan servicing rights (the “MSR Change”) of a positive $0.6 million ($0.02 per diluted share, after taxes) and a negative $6.4 million ($0.22 per diluted share, after taxes) for the fourth quarter and year ended Dec. 31, 2019, respectively, as compared to a negative MSR Change of $2.4 million ($0.08 per diluted share, after taxes) and a positive MSR change of $0.2 million ($0.01 per diluted share, after taxes) for the fourth quarter and year ended Dec. 31, 2018, respectively.

A reduction in non-interest expense of $0.4 million ($0.01 per diluted share, after taxes) and $0.8 million ($0.03 per diluted share, after taxes) for the fourth quarter and year ended Dec. 31, 2019, respectively, related to the Company’s use of its Federal Deposit Insurance Corporation (“FDIC”) Small Bank Assessment Credit (the “Assessment Credit”).  The Company will not have any remaining Assessment Credit to apply against 2020 FDIC deposit insurance expense.

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 $342.8 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 ($0.004 per diluted share, after taxes) and $3.5 million ($0.115 per diluted share, after taxes) for the fourth quarter and year ended Dec. 31, 2018, respectively.

1

The fourth quarter of 2019 was highlighted by:


Annualized return on average assets and return on average equity of 1.56% and 15.92%, respectively (these ratios decrease to 1.47% and 14.97%, respectively, when excluding the after tax impact of the MSR Change and the Assessment Credit);

39.7% and 48.8% increases in net income and diluted earnings per share respectively, over the prior year.

Growth in net gains on mortgage loans of $4.4 million, or 215.3%, compared to the year ago quarter.

Payment of an 18 cent per share dividend on Nov. 15, 2019.

The Company’s full year 2019 results were highlighted by:


Return on average assets and return on average equity of 1.35% and 13.63%, respectively (these ratios increase to 1.48% and 14.94%, respectively, when excluding the after tax impact of the MSR Change and the Assessment Credit);

16.6% and 19.0% increases in net income and diluted earnings per share, respectively, over the prior year.

Growth in net interest income of $9.3 million, or 8.2%.

Total portfolio loan growth of $142.5 million, or 5.5%.

Mortgage loan origination volume topping $1 billion for only the second time in the Company’s history.

A $204.3 million, or 7.7%, increase in total deposits, excluding brokered deposits.

A 9.1% increase in tangible book value per share to $14.08 at Dec. 31, 2019.

William B. (“Brad”) Kessel, the President and Chief Executive Officer of Independent Bank Corporation, commented:  “We are very pleased with our fourth quarter and full year 2019 results. This performance reflects strong mortgage banking revenues, generally favorable asset quality metrics, and continued loan growth. Excluding the after-tax impacts of the MSR Changes, Assessment Credit and the Merger related expenses, net income and diluted earnings per share increased by 9.5% and 16.3%, respectively, in the fourth quarter of 2019 as compared to the prior year.  As we look ahead to 2020 and beyond, we will continue to focus on our key strategic initiatives, including: growth, process improvement, and effective risk management. Reflecting our success and our optimism about the future, we recently announced an 11% increase in our quarterly common stock cash dividend to 20 cents per share, to be paid on Feb. 14, 2020.”

Operating Results

The Company’s net interest income totaled $30.7 million during the fourth quarter of 2019, an increase of $0.04 million, or 0.1% from the year-ago period, and a decrease of $0.2 million, or 0.5%, from the third quarter of 2019. The Company’s tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”) was 3.70% during the fourth quarter of 2019, compared to 3.93% in the year-ago quarter and 3.76% in the third quarter of 2019. The year-over-year quarterly increase in net interest income is due to an increase in average interest-earning assets that was partially offset by a decline in the net interest margin.  Average interest-earning assets were $3.32 billion in the fourth quarter of 2019 compared to $3.12 billion in the year-ago quarter and $3.29 billion in the third quarter of 2019.

For the full-year of 2019, net interest income totaled $122.6 million, an increase of $9.3 million, or 8.2% from 2018.  This increase is due to an increase in average interest-earning assets that was partially offset by a decline in the net interest margin. The Company’s net interest margin for all of 2019 declined to 3.80% compared to 3.88% in 2018.  Full year 2019 and 2018 interest income on loans includes $1.5 million and $1.7 million, respectively, of accretion of the discount recorded on the TCSB loans acquired in the Merger.  Average interest-earning assets totaled $3.24 billion in 2019 compared to $2.94 billion in 2018.

The decline in the net interest margin in 2019 as compared to 2018 primarily reflects the impact of lower market interest rates and a flattening of the yield curve.

Non-interest income totaled $15.6 million and $47.7 million, respectively, for the fourth quarter and full year of 2019, compared to $9.0 million and $44.8 million in the respective comparable year ago periods.  These variances were primarily due to changes in mortgage banking related revenues (net gains on mortgage loans and mortgage loan servicing, net), as described below.

Net gains on mortgage loans were $6.4 million in the fourth quarter of 2019, compared to $2.0 million in the year-ago quarter.  For the full year of 2019, net gains on mortgage loans totaled $20.0 million compared to $10.6 million in 2018. These increases were primarily due to higher mortgage loan origination and sales volumes in 2019 reflecting lower market interest rates, which have increased mortgage loan refinance activity.

2

Mortgage loan servicing, net, generated income of $1.3 million and a loss of $1.5 million in the fourth quarters of 2019 and 2018, respectively. For all of 2019, mortgage loan servicing, net, generated a loss of $3.3 million as compared to income of $3.2 million in 2018. This activity is summarized in the following table:

   
Three Months Ended
   
Year Ended
 
   
12/31/2019
   
12/31/2018
   
12/31/2019
   
12/31/2018
 
Mortgage loan servicing:
 
(Dollars in thousands)
 
Revenue, net
 
$
1,622
   
$
1,506
   
$
6,196
   
$
5,480
 
Fair value change due to price
   
628
     
(2,395
)
   
(6,408
)
   
191
 
Fair value change due to pay-downs
   
(902
)
   
(622
)
   
(3,124
)
   
(2,514
)
Total
 
$
1,348
   
$
(1,511
)
 
$
(3,336
)
 
$
3,157
 
 
Capitalized mortgage loan servicing rights totaled $19.2 million at Dec. 31, 2019 compared to $21.4 million at Dec. 31, 2018.  As of Dec. 31, 2019, the Company serviced approximately $2.58 billion in mortgage loans for others on which servicing rights have been capitalized.

Non-interest expenses totaled $29.3 million in the fourth quarter of 2019, compared to $26.8 million in the year-ago period.  For the full year of 2019, non-interest expenses totaled $111.7 million versus $107.5 million in 2018.  These year-over-year increases in non-interest expense are primarily due to higher compensation, health insurance, data processing and interchange costs as well as lower net gains on other real estate and repossessed assets.  In particular, the fourth quarter 2019 increase in compensation and employee benefits as compared to 2018, in part reflects the Company’s strong financial performance that resulted in an increase in the year-end accrual for incentive compensation.

The Company recorded an income tax expense of $3.3 million and $11.3 million in the fourth quarter and full-year of 2019, respectively.  This compares to an income tax expense of $2.3 million and $9.3 million in the fourth quarter and full-year of 2018, respectively. The increase in income tax expense is primarily due to higher pre-tax earnings in 2019.

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 Dec. 31, 2019 were 0.02% for commercial loans and 0.45% 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
 
12/31/2019
   
12/31/2018
   
12/31/2017
 
   
(Dollars in thousands)
 
Commercial
 
$
1,377
   
$
2,220
   
$
646
 
Consumer/installment
   
805
     
781
     
543
 
Mortgage
   
7,996
     
6,033
     
6,995
 
Total non-accrual loans
   
10,178
     
9,034
     
8,184
 
Less – government guaranteed loans
   
646
     
460
     
255
 
Total non-performing loans
 
$
9,532
   
$
8,574
   
$
7,929
 
Ratio of non-performing loans to total portfolio loans
   
0.35
%
   
0.33
%
   
0.39
%
Ratio of non-performing assets to total assets
   
0.32
%
   
0.29
%
   
0.34
%
Ratio of the allowance for loan losses to non-performing loans
   
274.32
%
   
290.27
%
   
284.87
%


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

Non-performing loans increased $1.0 million from Dec. 31, 2018.  This increase principally reflects an increase in non-performing mortgage loans  partially offset by a decrease in non-performing commercial loans due primarily to pay-downs and transfers to other real estate.  Other real estate and repossessed assets totaled $1.9 million at Dec. 31, 2019, compared to $1.3 million at Dec. 31, 2018.  This increase is primarily due to the addition of a $0.6 million commercial office building located in Grand Rapids during the second quarter of 2019.

The provision for loan losses was a credit of $0.2 million and an expense of $0.6 million in the fourth quarters of 2019 and 2018, respectively.  The provision for loan losses was an expense of $0.8 million and $1.5 million for all of 2019 and 2018, 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 and net charge offs of $0.1 million in the fourth quarters of 2019 and 2018, respectively.  For all of 2019 and 2018, the Company recorded loan net recoveries of $0.4 million and $0.8 million, respectively.  At Dec. 31, 2019, the allowance for loan losses totaled $26.1 million, or 0.96% of portfolio loans (1.01% when excluding the remaining TCSB acquired loan balances), compared to $24.9 million, or 0.96% of portfolio loans, at Dec. 31, 2018.

3

Balance Sheet, Liquidity and Capital

Total assets were $3.56 billion at Dec. 31, 2019, an increase of $211.4 million from Dec. 31, 2018, primarily reflecting growth in securities available for sale and loans.  Loans, excluding loans held for sale, were $2.73 billion at Dec. 31, 2019, compared to $2.58 billion at Dec. 31, 2018.

Deposits totaled $3.04 billion at Dec. 31, 2019, an increase of $123.3 million from Dec. 31, 2018.  The increase in deposits is primarily due to growth in reciprocal deposits that was partially offset by a decline in brokered time deposits.

Cash and cash equivalents totaled $65.3 million at Dec. 31, 2019, versus $70.2 million at Dec. 31, 2018. Securities available for sale totaled $518.4 million at Dec. 31, 2019, compared to $427.9 million at Dec. 31, 2018.

Total shareholders’ equity was $350.2 million at Dec. 31, 2019, or 9.82% of total assets.  Tangible common equity totaled $316.5 million at Dec. 31, 2019, or $14.08 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
 
12/31/2019
   
12/31/2018
   
Well
Capitalized
Minimum
 
Tier 1 capital to average total assets
   
9.49
%
   
9.44
%
   
5.00
%
Tier 1 common equity  to risk-weighted assets
   
11.96
%
   
11.94
%
   
6.50
%
Tier 1 capital to risk-weighted assets
   
11.96
%
   
11.94
%
   
8.00
%
Total capital to risk-weighted assets
   
12.96
%
   
12.94
%
   
10.00
%

Share Repurchase Plan

On Dec. 17, 2019, the Board of Directors of the Company authorized the 2020 share repurchase plan.  Under the terms of the 2020 share repurchase plan, the Company is authorized to buy back up to 1,120,000 shares, or approximately 5%, of its outstanding common stock.    The repurchase plan commenced on Jan. 1, 2020 and, subject to the Board’s authority to amend or suspend the plan, and will last through Dec. 31, 2020.

During the 2019, the Company repurchased 1,204,688 shares at a weighted average purchase price of $21.82 per share (no shares were repurchased in the fourth quarter of 2019).

The Company intends to accomplish the 2020 repurchases through open market transactions, though the Company could execute repurchases through other means, such as privately negotiated transactions.  The timing and amount of any share repurchases will depend on a variety of factors, including, among others, securities law restrictions, the trading price of the Company’s common stock, other regulatory requirements, potential alternative uses for capital, and the Company’s financial performance. The repurchase program does not obligate the Company to acquire any particular amount of common stock, and it may be modified or suspended at any time at the Company’s discretion. The Company expects to fund any repurchases from cash on hand.

Earnings Conference Call

Brad Kessel, President and CEO, Rob Shuster, retiring CFO and Steve Erickson, incoming CFO, will review the quarterly and full-year results in a conference call for investors and analysts beginning at 11:00 am ET on Thursday, Jan. 23, 2020.
 
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 at the following event site/URL:  https://services.choruscall.com/links/ibcp200123.html.

A playback of the call can be accessed by dialing 1-877-344-7529 (Conference ID # 10137087). The replay will be available through Jan. 30, 2020.

About Independent Bank Corporation

Independent Bank Corporation (NASDAQ: IBCP) is a Michigan-based bank holding company with total assets of approximately $3.6 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.
 
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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.
 
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, 2018 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

   
December 31,
 
   
2019
   
2018
 
   
(unaudited)
 
   
(In thousands, except share
amounts)
 
Assets
 
Cash and due from banks
 
$
53,295
   
$
23,350
 
Interest bearing deposits
   
12,009
     
46,894
 
Cash and Cash Equivalents
   
65,304
     
70,244
 
Interest bearing deposits - time
   
350
     
595
 
Equity securities at fair value
   
-
     
393
 
Securities available for sale
   
518,400
     
427,926
 
Federal Home Loan Bank and Federal Reserve Bank stock, at cost
   
18,359
     
18,359
 
Loans held for sale, carried at fair value
   
69,800
     
44,753
 
Loans held for sale, carried at lower of cost or fair value
   
-
     
41,471
 
Loans
               
Commercial
   
1,166,695
     
1,144,481
 
Mortgage
   
1,098,911
     
1,042,890
 
Installment
   
459,417
     
395,149
 
Total Loans
   
2,725,023
     
2,582,520
 
Allowance for loan losses
   
(26,148
)
   
(24,888
)
Net Loans
   
2,698,875
     
2,557,632
 
Other real estate and repossessed assets
   
1,865
     
1,299
 
Property and equipment, net
   
38,411
     
38,777
 
Bank-owned life insurance
   
55,710
     
55,068
 
Deferred tax assets, net
   
2,072
     
5,779
 
Capitalized mortgage loan servicing rights
   
19,171
     
21,400
 
Other intangibles
   
5,326
     
6,415
 
Goodwill
   
28,300
     
28,300
 
Accrued income and other assets
   
42,751
     
34,870
 
Total Assets
 
$
3,564,694
   
$
3,353,281
 
                 
Liabilities and Shareholders’ Equity
 
Deposits
               
Non-interest bearing
 
$
852,076
   
$
879,549
 
Savings and interest-bearing checking
   
1,186,745
     
1,194,865
 
Reciprocal
   
431,027
     
182,072
 
Time
   
376,877
     
385,981
 
Brokered time
   
190,002
     
270,961
 
Total Deposits
   
3,036,727
     
2,913,428
 
Other borrowings
   
88,646
     
25,700
 
Subordinated debentures
   
39,456
     
39,388
 
Accrued expenses and other liabilities
   
49,696
     
35,771
 
Total Liabilities
   
3,214,525
     
3,014,287
 
                 
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: 22,481,643 shares at December 31, 2019 and 23,579,725 shares at December 31, 2018
   
352,344
     
377,372
 
Retained earnings (accumulated deficit)
   
1,611
     
(28,270
)
Accumulated other comprehensive loss
   
(3,786
)
   
(10,108
)
Total Shareholders’ Equity
   
350,169
     
338,994
 
Total Liabilities and Shareholders’ Equity
 
$
3,564,694
   
$
3,353,281
 

6

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations

   
Three Months Ended
   
Twelve Months Ended
 
   
December 31,
   
September 30,
   
December 31,
   
December 31,
 
   
2019
   
2019
   
2018
   
2019
   
2018
 
   
(unaudited)
 
Interest Income
 
(In thousands, except per share amounts)
 
Interest and fees on loans
 
$
33,140
   
$
34,226
   
$
32,838
   
$
133,883
   
$
116,865
 
Interest on securities
                                       
Taxable
   
3,031
     
2,771
     
2,782
     
11,842
     
10,874
 
Tax-exempt
   
325
     
319
     
408
     
1,342
     
1,743
 
Other investments
   
412
     
495
     
393
     
1,861
     
1,291
 
Total Interest Income
   
36,908
     
37,811
     
36,421
     
148,928
     
130,773
 
Interest Expense
                                       
Deposits
   
5,487
     
6,236
     
5,006
     
23,425
     
14,478
 
Other borrowings and subordinated debentures
   
711
     
703
     
746
     
2,922
     
3,013
 
Total Interest Expense
   
6,198
     
6,939
     
5,752
     
26,347
     
17,491
 
Net Interest Income
   
30,710
     
30,872
     
30,669
     
122,581
     
113,282
 
Provision for loan losses
   
(221
)
   
(271
)
   
591
     
824
     
1,503
 
Net Interest Income After Provision for Loan Losses
   
30,931
     
31,143
     
30,078
     
121,757
     
111,779
 
Non-interest Income
                                       
Service charges on deposit accounts
   
2,885
     
2,883
     
3,092
     
11,208
     
12,258
 
Interchange income
   
2,553
     
2,785
     
2,669
     
10,297
     
9,905
 
Net gains on assets
                                       
Mortgage loans
   
6,388
     
5,677
     
2,026
     
19,978
     
10,597
 
Securities
   
3
     
-
     
209
     
307
     
138
 
Mortgage loan servicing, net
   
1,348
     
(1,562
)
   
(1,511
)
   
(3,336
)
   
3,157
 
Other
   
2,420
     
2,492
     
2,466
     
9,282
     
8,760
 
Total Non-interest Income
   
15,597
     
12,275
     
8,951
     
47,736
     
44,815
 
Non-interest Expense
                                       
Compensation and employee benefits
   
18,546
     
16,673
     
15,572
     
67,501
     
62,078
 
Occupancy, net
   
2,216
     
2,161
     
2,245
     
9,013
     
8,912
 
Data processing
   
2,308
     
2,282
     
2,082
     
8,905
     
8,262
 
Furniture, fixtures and equipment
   
1,055
     
1,023
     
1,051
     
4,113
     
4,080
 
Interchange expense
   
883
     
891
     
728
     
3,215
     
2,702
 
Communications
   
728
     
733
     
737
     
2,947
     
2,848
 
Loan and collection
   
709
     
714
     
782
     
2,685
     
2,682
 
Advertising
   
515
     
636
     
577
     
2,450
     
2,155
 
Legal and professional
   
533
     
541
     
528
     
1,814
     
1,839
 
FDIC deposit insurance
   
(38
)
   
13
     
331
     
685
     
1,081
 
Credit card and bank service fees
   
111
     
100
     
104
     
411
     
414
 
Net (gains) losses on other real estate and repossessed assets
   
(63
)
   
52
     
(53
)
   
(90
)
   
(672
)
Merger related expenses
   
-
     
-
     
111
     
-
     
3,465
 
Other
   
1,800
     
2,029
     
2,030
     
8,084
     
7,615
 
Total Non-interest Expense
   
29,303
     
27,848
     
26,825
     
111,733
     
107,461
 
Income Before Income Tax
   
17,225
     
15,570
     
12,204
     
57,760
     
49,133
 
Income tax expense
   
3,346
     
3,125
     
2,268
     
11,325
     
9,294
 
Net Income
 
$
13,879
   
$
12,445
   
$
9,936
   
$
46,435
   
$
39,839
 
Net Income Per Common Share
                                       
Basic
 
$
0.62
   
$
0.55
   
$
0.41
   
$
2.03
   
$
1.70
 
Diluted
 
$
0.61
   
$
0.55
   
$
0.41
   
$
2.00
   
$
1.68
 

7

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Selected Financial Data

   
December 31,
2019
   
September 30,
2019
   
June 30,
2019
   
March 31,
2019
   
December 31,
2018
 
   
(unaudited)
 
   
(Dollars in thousands except per share data)
 
Three Months Ended
                             
Net interest income
 
$
30,710
   
$
30,872
   
$
30,756
   
$
30,243
   
$
30,669
 
Provision for loan losses
   
(221
)
   
(271
)
   
652
     
664
     
591
 
Non-interest income
   
15,597
     
12,275
     
9,905
     
9,959
     
8,951
 
Non-interest expense
   
29,303
     
27,848
     
26,592
     
27,990
     
26,825
 
Income before income tax
   
17,225
     
15,570
     
13,417
     
11,548
     
12,204
 
Income tax expense
   
3,346
     
3,125
     
2,687
     
2,167
     
2,268
 
Net income
 
$
13,879
   
$
12,445
   
$
10,730
   
$
9,381
   
$
9,936
 
                                         
Basic earnings per share
 
$
0.62
   
$
0.55
   
$
0.47
   
$
0.40
   
$
0.41
 
Diluted earnings per share
   
0.61
     
0.55
     
0.46
     
0.39
     
0.41
 
Cash dividend per share
   
0.18
     
0.18
     
0.18
     
0.18
     
0.15
 
                                         
Average shares outstanding
   
22,481,551
     
22,486,041
     
23,035,526
     
23,588,313
     
23,988,810
 
Average diluted shares outstanding
   
22,776,908
     
22,769,572
     
23,313,346
     
23,884,744
     
24,339,782
 
                                         
Performance Ratios
                                       
Return on average assets
   
1.56
%
   
1.42
%
   
1.27
%
   
1.13
%
   
1.18
%
Return on average common equity
   
15.92
     
14.64
     
12.72
     
11.14
     
11.43
 
Efficiency ratio (1)
   
62.56
     
63.76
     
64.57
     
69.27
     
67.11
 
                                         
As a Percent of Average Interest-Earning Assets (1)
                                 
Interest income
   
4.44
%
   
4.60
%
   
4.73
%
   
4.70
%
   
4.66
%
Interest expense
   
0.74
     
0.84
     
0.86
     
0.82
     
0.73
 
Net interest income
   
3.70
     
3.76
     
3.87
     
3.88
     
3.93
 
                                         
Average Balances
                                       
Loans
 
$
2,776,037
   
$
2,786,544
   
$
2,699,648
   
$
2,621,871
   
$
2,627,614
 
Securities available for sale
   
488,016
     
423,255
     
441,523
     
446,734
     
433,903
 
Total earning assets
   
3,320,828
     
3,285,081
     
3,191,264
     
3,152,177
     
3,121,640
 
Total assets
   
3,529,744
     
3,483,296
     
3,388,398
     
3,357,003
     
3,327,002
 
Deposits
   
3,040,099
     
3,023,334
     
2,929,885
     
2,909,096
     
2,873,889
 
Interest bearing liabilities
   
2,251,928
     
2,219,133
     
2,155,660
     
2,115,549
     
2,058,720
 
Shareholders’ equity
   
345,910
     
337,162
     
338,254
     
341,592
     
344,779
 
                                         
End of Period
                                       
Capital
                                       
Tangible common equity ratio
   
8.96
%
   
8.71
%
   
8.72
%
   
9.26
%
   
9.17
%
Average equity to average assets
   
9.80
     
9.68
     
9.98
     
10.18
     
10.36
 
Tangible common equity per share of common stock
 
$
14.08
   
$
13.63
   
$
13.19
   
$
13.17
   
$
12.90
 
Total shares outstanding
   
22,481,643
     
22,480,748
     
22,498,776
     
23,560,179
     
23,579,725
 
                                         
Selected Balances
                                       
Loans
 
$
2,725,023
   
$
2,722,446
   
$
2,706,526
   
$
2,618,795
   
$
2,582,520
 
Securities available for sale
   
518,400
     
439,592
     
430,305
     
461,531
     
427,926
 
Total earning assets
   
3,343,941
     
3,348,631
     
3,239,247
     
3,180,655
     
3,162,911
 
Total assets
   
3,564,694
     
3,550,837
     
3,438,302
     
3,383,606
     
3,353,281
 
Deposits
   
3,036,727
     
3,052,312
     
2,978,885
     
2,934,225
     
2,913,428
 
Interest bearing liabilities
   
2,312,753
     
2,272,587
     
2,194,970
     
2,141,083
     
2,098,967
 
Shareholders’ equity
   
350,169
     
340,245
     
330,846
     
344,726
     
338,994
 

(1)
Presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.

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
December 31,
   
Twelve Months Ended
December 31,
 
   
2019
   
2018
   
2019
   
2018
 
   
(Dollars in thousands)
 
Net Interest Margin, Fully Taxable Equivalent (“FTE”)
                       
                         
Net interest income
 
$
30,710
   
$
30,669
   
$
122,581
   
$
113,282
 
Add:  taxable equivalent adjustment
   
104
     
126
     
423
     
510
 
Net interest income - taxable equivalent
 
$
30,814
   
$
30,795
   
$
123,004
   
$
113,792
 
Net interest margin (GAAP) (1)
   
3.68
%
   
3.91
%
   
3.79
%
   
3.85
%
Net interest margin (FTE) (1)
   
3.70
%
   
3.93
%
   
3.80
%
   
3.88
%

(1)
Annualized for three months ended December 31, 2019 and 2018.

Tangible Common Equity Ratio
                             
   
December 31,
2019
   
September 30,
2019
   
June 30,
2019
   
March 31,
2019
   
December 31,
2018
 
   
(Dollars in thousands)
 
Common shareholders’ equity
 
$
350,169
   
$
340,245
   
$
330,846
   
$
344,726
   
$
338,994
 
Less:
                                       
Goodwill
   
28,300
     
28,300
     
28,300
     
28,300
     
28,300
 
Other intangibles
   
5,326
     
5,598
     
5,870
     
6,143
     
6,415
 
Tangible common equity
 
$
316,543
   
$
306,347
   
$
296,676
   
$
310,283
   
$
304,279
 
                                         
Total assets
 
$
3,564,694
   
$
3,550,837
   
$
3,438,302
   
$
3,383,606
   
$
3,353,281
 
Less:
                                       
Goodwill
   
28,300
     
28,300
     
28,300
     
28,300
     
28,300
 
Other intangibles
   
5,326
     
5,598
     
5,870
     
6,143
     
6,415
 
Tangible assets
 
$
3,531,068
   
$
3,516,939
   
$
3,404,132
   
$
3,349,163
   
$
3,318,566
 
                                         
Common equity ratio
   
9.82
%
   
9.58
%
   
9.62
%
   
10.19
%
   
10.11
%
Tangible common equity ratio
   
8.96
%
   
8.71
%
   
8.72
%
   
9.26
%
   
9.17
%
                                         
Tangible Common Equity per Share of Common Stock:
                                 
                                         
Common shareholders’ equity
 
$
350,169
   
$
340,245
   
$
330,846
   
$
344,726
   
$
338,994
 
Tangible common equity
 
$
316,543
   
$
306,347
   
$
296,676
   
$
310,283
   
$
304,279
 
Shares of common stock outstanding (in thousands)
   
22,482
     
22,481
     
22,499
     
23,560
     
23,580
 
                                         
Common shareholders’ equity per share of common stock
 
$
15.58
   
$
15.13
   
$
14.70
   
$
14.63
   
$
14.38
 
Tangible common equity per share of common stock
 
$
14.08
   
$
13.63
   
$
13.19
   
$
13.17
   
$
12.90
 

The tangible common equity ratio removes the effect of goodwill and other intangible assets from capital and total assets.  Tangible common equity per share of common stock removes the effect of goodwill and other intangible assets from common shareholders’ equity per share of common stock.


9


The following information was filed by Independent Bank Corp (IBCP) on Thursday, January 23, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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