Last10K.com

Independent Bank Corp (IBCP) SEC Filing 10-Q Quarterly report for the period ending Tuesday, March 31, 2020

Independent Bank Corp

CIK: 39311 Ticker: IBCP

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
Stephen A. Erickson, Chief Financial Officer, 616.447.3914

INDEPENDENT BANK CORPORATION REPORTS
2020 FIRST QUARTER RESULTS

GRAND RAPIDS, Mich., Apr. 30, 2020 –
Before summarizing the financial results for the quarter we want to take a moment to recognize that the COVID-19 pandemic has brought significant hardship to many of our customers and communities in so many ways. That is especially true for those who have been infected by the virus and suffered through the health issues that it has caused.  Our thoughts are with those who have been directly impacted, and we extend our appreciation to those who have aided and supported them.

Independent Bank Corporation (NASDAQ: IBCP) continues to respond to the challenges of the current environment. Our response was formulated throughout the month of February as we prepared our infrastructure to allow the majority of our staff to work remotely.  On Mar. 3rd we activated our Business Continuity plan to protect our customers, employees and business.  We will continue to take the necessary steps to serve our communities while doing our part to minimize the spread of COVID-19.  The following is a brief description of our current initiatives:

Customer Safety and Service Levels:  Beginning Mar. 17th we limited our branch lobbies to appointment only and have kept drive through windows open.  With the ability to use drive through service, ATMs or our electronic banking solutions there has been minimal disruption to customers.  In addition, our flexible operating network has allowed us to efficiently redeploy our associates to high volume areas to fulfill customer requests into our call center, requests for consumer and commercial loan payment relief and mortgage financing requests.

Employee Safety:  For employees that need to remain in the branch servicing our customers, in addition to closing the branch lobbies, we have expanded sick and vacation time.  All non-branch employees either have the option, or are required to work remotely.  We currently have approximately 80% of our non-branch staff working remotely every day.  Prospectively, as our markets move out of the “Stay Home, Stay Safe” executive orders, we are installing “customer friendly” plastic shields throughout our delivery network to put both customers and staff at ease.

Loan Forbearances:  We take pride in being supportive of our customers and communities and have forbearance programs in place and available for those experiencing financial difficulty.  Through Apr. 17th, we’ve granted deferrals to 151 commercial customers with $129.3 million in loans, 605 retail customers with $76.6 million in portfolio loans, and 807 customers with $118.5 million within our book of  mortgage loans we service for others.  The forbearance terms are flexible enough to meet the specific needs of each customer, while protecting the safety and soundness of the Bank.

Payroll Protection Program:  Our response, and focus on this vital program, shows our commitment to the communities we serve. We have built an effective process to manage the high volume of applications that we’re receiving.  Customer demand for this program has been extraordinary.  Through Apr. 17th we had received 1,473 applications for $238.2 million in loan requests with 786 applications for $171.8 million accepted by the Small Business Administration (“SBA”) prior to depletion of the initial funding on Apr. 16th.  We anticipate continuing this program as additional funding is allocated to the SBA and becomes available.

1

IBCP reported first quarter 2020 net income of $4.8 million, or $0.21 per diluted share, versus net income of $9.4 million, or $0.39 per diluted share, in the prior-year period.

Significant items impacting comparable first quarter 2020 and 2019 results include the following:


Provision for loan losses of $6.7 million ($0.24 per diluted share, after taxes) in the first quarter of 2020 due in part to the impact of COVID-19 protective measures on unemployment and economic activity as compared to $0.7 million ($0.02 per diluted share, after taxes) in the first quarter of 2019. The provision for loan losses, and the allowance for loan losses, were calculated under our existing incurred methodology. As permitted under section 4014 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, we have chosen to delay the implementation of Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments or “CECL.”  This will be discussed further during our first quarter 2020 earnings conference call.

A change in the fair value due to price of capitalized mortgage loan servicing rights (the “MSR Change”) of a negative $5.9 million ($0.21 per diluted share, after taxes) as compared to a negative MSR Change of $2.2 million ($0.07 per diluted share, after taxes) for the first quarters of 2020 and 2019, respectively.

The first quarter of 2020 was highlighted by:


Pre-tax, pre-provision income was $12.5 million in the first quarter of 2020 compared to $12.2 million in the first quarter of 2019 ($18.4 million vs $14.4 million excluding the MSR Change for the same respective periods);

Growth in gains on mortgage loans of $5.2 million, or 144.8%, compared to the year ago quarter;

Net growth in total deposits, excluding brokered deposits, of $81.8 million, or 11.6% annualized;

The payment of a 20 cent per share dividend on February 14, 2020.

William B. (“Brad”) Kessel, the President and Chief Executive Officer of Independent Bank Corporation, commented:  “Amidst the extraordinary volatility in interest rates and uncertainty around the economic impact of COVID-19,  we were pleased with our first quarter results. The gains on mortgage loans more than offset the negative MSR Change and our provision for loan losses increased significantly due to the economic environment, while our core operating results were relatively stable.  We will continue to focus on the needs of our customers and communities, while preserving the value of our franchise.”

Operating Results

The Company’s net interest income totaled $30.2 million during the first quarter of 2020, a decrease of $0.05 million, or 0.2% from the year-ago period, and a decrease of $0.5 million, or 1.7%, from the fourth quarter of 2019. The Company’s tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”) was 3.63% during the first quarter of 2020, compared to 3.88% in the year-ago quarter and 3.70% in the fourth quarter of 2019. The year-over-year quarterly decrease in net interest income is due to an increase in average interest-earning assets that was more than offset by a decline in the net interest margin.  Average interest-earning assets were $3.35 billion in the first quarter of 2020 compared to $3.15 billion in the year-ago quarter and $3.32 billion in the fourth quarter of 2019.  The decline in the net interest margin primarily reflects the impact of lower market interest rates.  Accretion of the discount recorded on loans acquired from our acquisition of TCSB Bancorp, Inc. totaled $0.3 million and $0.4 million in the first quarters of 2020 and 2019, respectively.

Non-interest income totaled $11.0 million and $10.0 million in the first quarters of 2020 and 2019, respectively. This increase was  primarily due to changes in mortgage banking related revenues (net gains on mortgage loans partially offset by a decline in mortgage loan servicing, net), as described below.

Net gains on mortgage loans were $8.8 million in the first quarter of 2020, compared to $3.6 million in the year-ago quarter.  Mortgage loan origination volume increased 125.8% to $311.1 million in the first quarter of 2020 compared to $137.8 million in the year ago period reflecting lower market interest rates, which have increased mortgage loan refinance activity.

Mortgage loan servicing, net, generated a loss of $5.3 million and a loss of $1.2 million in the first quarters of 2020 and 2019, respectively. This activity is summarized in the following table:

   
Three Months Ended
 
   
03/31/2020
   
03/31/2019
 
Mortgage loan servicing:
 
(Dollars in thousands)
 
Revenue, net
 
$
1,673
   
$
1,476
 
Fair value change due to price
   
(5,931
)
   
(2,203
)
Fair value change due to pay-downs
   
(1,042
)
   
(488
)
Total
 
$
(5,300
)
 
$
(1,215
)

2

The significant variance in the fair value change due to price relates primarily to the decline in mortgage loan interest rates in the first quarter of 2020.  This decline increased projected prepayment rates for mortgage loans serviced for others, leading to a decrease in fair value due to price.
 
Capitalized mortgage loan servicing rights totaled $14.8 million at Mar. 31, 2020 compared to $19.2 million at Dec. 31, 2019.  As of Mar. 31, 2020, the Company serviced approximately $2.68 billion in mortgage loans for others on which servicing rights have been capitalized.

Non-interest expenses totaled $28.7 million in the first quarter of 2020, compared to $28.0 million in the year-ago period.

The Company recorded an income tax expense of $0.9 million and $2.2 million in the first quarters of 2020 and 2019, respectively.   The decrease in income tax expense is primarily due to lower pre-tax earnings in the first quarter of 2020.

Asset Quality

A breakdown of non-performing loans(1) by loan type is as follows:

Loan Type
 
3/31/2020
   
12/31/2019
   
3/31/2019
 
   
(Dollars in thousands)
 
Commercial
 
$
9,094
   
$
1,377
   
$
1,705
 
Consumer/installment
   
691
     
805
     
1,028
 
Mortgage
   
7,669
     
7,996
     
6,116
 
Total non-accrual loans
   
17,454
     
10,178
     
8,849
 
Less – government guaranteed loans
   
676
     
646
     
617
 
Total non-performing loans
 
$
16,778
   
$
9,532
   
$
8,232
 
Ratio of non-performing loans to total portfolio loans
   
0.62
%
   
0.35
%
   
0.31
%
Ratio of non-performing assets to total assets
   
0.50
%
   
0.32
%
   
0.28
%
Ratio of the allowance for loan losses to non-performing loans
   
193.68
%
   
274.32
%
   
306.78
%


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

Non-performing loans increased by $7.2 million since year-end 2019 due to an increase in non-performing commercial loans.  The increase in non-performing commercial loans primarily reflects the impact of a specific loan relationship that was in watch credit status at December 31, 2019.  Other real estate and repossessed assets totaled $1.5 million at Mar. 31, 2020 and $1.9 million at Dec. 31, 2019.

The provision for loan losses was an expense of $6.7 million and $0.7 million in the first quarters of 2020 and 2019, respectively.  Included in the first quarter 2020 provision for loan losses is a $4.9 million increase in the qualitative reserve.  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, loan net charge-offs and changes in economic conditions.  The Company recorded loan net charge offs of $0.4 million and $0.3 million in the first quarters of 2020 and 2019, respectively.  At Mar. 31, 2020, the allowance for loan losses totaled $32.5 million, or 1.20% of portfolio loans, compared to $26.1 million, or 0.96% of portfolio loans at Dec. 31, 2019 (1.25% and 1.01% of portfolio loans when excluding the remaining TCSB acquired loan balances for each period, respectively).

Balance Sheet, Liquidity and Capital

Total assets were $3.63 billion at Mar. 31, 2020, an increase of $67.7 million from Dec. 31, 2019, primarily reflecting an increase in securities available for sale partially offset by a decline in loans.  Loans, excluding loans held for sale, were $2.72 billion at Mar. 31, 2020, compared to $2.73 billion at Dec. 31, 2019.  Growth in commercial loans of $14.9 million and installment loans of $7.1 million were more than offset by a decline in mortgage loans of $28.9 million, due primarily to a securitization and a sale of $28.7 million of portfolio mortgage loans during the quarter.

Deposits totaled $3.08 billion at Mar. 31, 2020, an increase of $46.8 million from Dec. 31, 2019.  The increase in deposits is primarily due to growth in demand deposits and reciprocal deposits that were partially offset by a decline in time and brokered time deposits.

Cash and cash equivalents totaled $70.3 million at Mar. 31, 2020, versus $65.3 million at Dec. 31, 2019. Securities available for sale totaled $594.3 million at Mar. 31, 2020, compared to $518.4 million at Dec. 31, 2019.

3

Total shareholders’ equity was $335.6 million at Mar. 31, 2020, or 9.24% of total assets.  Tangible common equity totaled $302.2 million at Mar. 31, 2020, or $13.81 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
 
3/31/2020
   
12/31/2019
   
Well
Capitalized
Minimum
 
Tier 1 capital to average total assets
   
9.31
%
   
9.49
%
   
5.00
%
Tier 1 common equity to risk-weighted assets
   
11.76
%
   
11.96
%
   
6.50
%
Tier 1 capital to risk-weighted assets
   
11.76
%
   
11.96
%
   
8.00
%
Total capital to risk-weighted assets
   
12.98
%
   
12.96
%
   
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 is authorized to last through Dec. 31, 2020.  Thus far in 2020, the Company has repurchased 678,929 shares at a weighted average price of $20.30 per share. Share repurchase activity ceased on March 16, 2020, and is on hold at this time.

Earnings Conference Call

Brad Kessel, President and CEO, and Steve Erickson, 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, Apr. 30, 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/ibcp200430.html

A playback of the call can be accessed by dialing 1-877-344-7529 (Conference ID # 10141797). The replay will be available through May 7, 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.

4

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, 2019 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
 
   
March 31,
2020
   
December 31,
2019
 
   
(unaudited)
 
   
(In thousands, except share
amounts)
 
Assets
 
Cash and due from banks
 
$
48,753
   
$
53,295
 
Interest bearing deposits
   
21,538
     
12,009
 
Cash and Cash Equivalents
   
70,291
     
65,304
 
Interest bearing deposits - time
   
-
     
350
 
Securities available for sale
   
594,284
     
518,400
 
Federal Home Loan Bank and Federal Reserve Bank stock, at cost
   
18,359
     
18,359
 
Loans held for sale, carried at fair value
   
64,549
     
69,800
 
Loans
               
Commercial
   
1,181,599
     
1,166,695
 
Mortgage
   
1,069,967
     
1,098,911
 
Installment
   
466,549
     
459,417
 
Total Loans
   
2,718,115
     
2,725,023
 
Allowance for loan losses
   
(32,495
)
   
(26,148
)
Net Loans
   
2,685,620
     
2,698,875
 
Other real estate and repossessed assets
   
1,494
     
1,865
 
Property and equipment, net
   
37,776
     
38,411
 
Bank-owned life insurance
   
55,035
     
55,710
 
Deferred tax assets, net
   
4,280
     
2,072
 
Capitalized mortgage loan servicing rights
   
14,829
     
19,171
 
Other intangibles
   
5,071
     
5,326
 
Goodwill
   
28,300
     
28,300
 
Accrued income and other assets
   
52,499
     
42,751
 
Total Assets
 
$
3,632,387
   
$
3,564,694
 
                 
Liabilities and Shareholders’ Equity
 
Deposits
               
Non-interest bearing
 
$
874,935
   
$
852,076
 
Savings and interest-bearing checking
   
1,229,999
     
1,186,745
 
Reciprocal
   
464,574
     
431,027
 
Time
   
359,050
     
376,877
 
Brokered time
   
155,006
     
190,002
 
Total Deposits
   
3,083,564
     
3,036,727
 
Other borrowings
   
101,954
     
88,646
 
Subordinated debentures
   
39,473
     
39,456
 
Accrued expenses and other liabilities
   
71,778
     
49,696
 
Total Liabilities
   
3,296,769
     
3,214,525
 
                 
Shareholders’ Equity
               
Preferred stock, no par value, 200,000 shares authorized; none issued or outstanding
   
-
     
-
 
Common stock, no par value, 500,000,000 shares authorized; issued and outstanding: 21,892,001 shares at March 31, 2020 and 22,481,643 shares at December 31, 2019
   
338,528
     
352,344
 
Retained earnings
   
1,944
     
1,611
 
Accumulated other comprehensive loss
   
(4,854
)
   
(3,786
)
Total Shareholders’ Equity
   
335,618
     
350,169
 
Total Liabilities and Shareholders’ Equity
 
$
3,632,387
   
$
3,564,694
 

6

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
 
Consolidated Statements of Operations
 
                   
   
Three Months Ended
 
   
March 31,
2020
   
December 31,
2019
   
March 31,
2019
 
   
(unaudited)
 
Interest Income
 
(In thousands, except per share amounts)
 
Interest and fees on loans
 
$
31,764
   
$
33,140
   
$
32,681
 
Interest on securities
                       
Taxable
   
3,059
     
3,031
     
3,006
 
Tax-exempt
   
390
     
325
     
374
 
Other investments
   
366
     
412
     
575
 
Total Interest Income
   
35,579
     
36,908
     
36,636
 
Interest Expense
                       
Deposits
   
4,700
     
5,487
     
5,681
 
Other borrowings and subordinated debentures
   
688
     
711
     
712
 
Total Interest Expense
   
5,388
     
6,198
     
6,393
 
Net Interest Income
   
30,191
     
30,710
     
30,243
 
Provision for loan losses
   
6,721
     
(221
)
   
664
 
Net Interest Income After Provision for Loan Losses
   
23,470
     
30,931
     
29,579
 
Non-interest Income
                       
Service charges on deposit accounts
   
2,591
     
2,885
     
2,640
 
Interchange income
   
2,457
     
2,553
     
2,355
 
Net gains on assets
                       
Mortgage loans
   
8,840
     
6,388
     
3,611
 
Securities
   
253
     
3
     
304
 
Mortgage loan servicing, net
   
(5,300
)
   
1,348
     
(1,215
)
Other
   
2,163
     
2,420
     
2,264
 
Total Non-interest Income
   
11,004
     
15,597
     
9,959
 
Non-interest Expense
                       
Compensation and employee benefits
   
16,509
     
18,546
     
16,351
 
Occupancy, net
   
2,460
     
2,216
     
2,505
 
Data processing
   
2,355
     
2,308
     
2,144
 
Furniture, fixtures and equipment
   
1,036
     
1,055
     
1,029
 
Interchange expense
   
859
     
883
     
688
 
Loan and collection
   
805
     
709
     
634
 
Communications
   
803
     
728
     
769
 
Advertising
   
683
     
515
     
672
 
Legal and professional
   
393
     
533
     
369
 
FDIC deposit insurance
   
370
     
(38
)
   
368
 
Net (gains) losses on other real estate and repossessed assets
   
109
     
(63
)
   
119
 
Credit card and bank service fees
   
99
     
111
     
103
 
Other
   
2,238
     
1,800
     
2,239
 
Total Non-interest Expense
   
28,719
     
29,303
     
27,990
 
Income Before Income Tax
   
5,755
     
17,225
     
11,548
 
Income tax expense
   
945
     
3,346
     
2,167
 
Net Income
 
$
4,810
   
$
13,879
   
$
9,381
 
Net Income Per Common Share
                       
Basic
 
$
0.22
   
$
0.62
   
$
0.40
 
Diluted
 
$
0.21
   
$
0.61
   
$
0.39
 

7

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
 
Selected Financial Data
 
                               
   
March 31,
2020
   
December 31,
2019
   
September 30,
2019
   
June 30,
2019
   
March 31,
2019
 
   
(unaudited)
 
   
(Dollars in thousands except per share data)
 
Three Months Ended
                             
Net interest income
 
$
30,191
   
$
30,710
   
$
30,872
   
$
30,756
   
$
30,243
 
Provision for loan losses
   
6,721
     
(221
)
   
(271
)
   
652
     
664
 
Non-interest income
   
11,004
     
15,597
     
12,275
     
9,905
     
9,959
 
Non-interest expense
   
28,719
     
29,303
     
27,848
     
26,592
     
27,990
 
Income before income tax
   
5,755
     
17,225
     
15,570
     
13,417
     
11,548
 
Income tax expense
   
945
     
3,346
     
3,125
     
2,687
     
2,167
 
Net income
 
$
4,810
   
$
13,879
   
$
12,445
   
$
10,730
   
$
9,381
 
                                         
Basic earnings per share
 
$
0.22
   
$
0.62
   
$
0.55
   
$
0.47
   
$
0.40
 
Diluted earnings per share
   
0.21
     
0.61
     
0.55
     
0.46
     
0.39
 
Cash dividend per share
   
0.20
     
0.18
     
0.18
     
0.18
     
0.18
 
                                         
Average shares outstanding
   
22,271,412
     
22,481,551
     
22,486,041
     
23,035,526
     
23,588,313
 
Average diluted shares outstanding
   
22,529,370
     
22,776,908
     
22,769,572
     
23,313,346
     
23,884,744
 
                                         
Performance Ratios
                                       
Return on average assets
   
0.54
%
   
1.56
%
   
1.42
%
   
1.27
%
   
1.13
%
Return on average common equity
   
5.54
     
15.92
     
14.64
     
12.72
     
11.14
 
Efficiency ratio (1)
   
69.32
     
62.56
     
63.76
     
64.57
     
69.27
 
                                         
As a Percent of Average Interest-Earning Assets (1)
                                 
Interest income
   
4.28
%
   
4.44
%
   
4.60
%
   
4.73
%
   
4.70
%
Interest expense
   
0.65
     
0.74
     
0.84
     
0.86
     
0.82
 
Net interest income
   
3.63
     
3.70
     
3.76
     
3.87
     
3.88
 
                                         
Average Balances
                                       
Loans
 
$
2,766,770
   
$
2,776,037
   
$
2,786,544
   
$
2,699,648
   
$
2,621,871
 
Securities available for sale
   
527,395
     
488,016
     
423,255
     
441,523
     
446,734
 
Total earning assets
   
3,350,948
     
3,320,828
     
3,285,081
     
3,191,264
     
3,152,177
 
Total assets
   
3,565,829
     
3,529,744
     
3,483,296
     
3,388,398
     
3,357,003
 
Deposits
   
3,066,298
     
3,040,099
     
3,023,334
     
2,929,885
     
2,909,096
 
Interest bearing liabilities
   
2,309,995
     
2,251,928
     
2,219,133
     
2,155,660
     
2,115,549
 
Shareholders’ equity
   
348,963
     
345,910
     
337,162
     
338,254
     
341,592
 
                                         
End of Period
                                       
Capital
                                       
Tangible common equity ratio
   
8.40
%
   
8.96
%
   
8.71
%
   
8.72
%
   
9.26
%
Average equity to average assets
   
9.79
     
9.80
     
9.68
     
9.98
     
10.18
 
Tangible common equity per share of common stock
 
$
13.81
   
$
14.08
   
$
13.63
   
$
13.19
   
$
13.17
 
Total shares outstanding
   
21,892,001
     
22,481,643
     
22,480,748
     
22,498,776
     
23,560,179
 
                                         
Selected Balances
                                       
Loans
 
$
2,718,115
   
$
2,725,023
   
$
2,722,446
   
$
2,706,526
   
$
2,618,795
 
Securities available for sale
   
594,284
     
518,400
     
439,592
     
430,305
     
461,531
 
Total earning assets
   
3,416,845
     
3,343,941
     
3,348,631
     
3,239,247
     
3,180,655
 
Total assets
   
3,632,387
     
3,564,694
     
3,550,837
     
3,438,302
     
3,383,606
 
Deposits
   
3,083,564
     
3,036,727
     
3,052,312
     
2,978,885
     
2,934,225
 
Interest bearing liabilities
   
2,350,056
     
2,312,753
     
2,272,587
     
2,194,970
     
2,141,083
 
Shareholders’ equity
   
335,618
     
350,169
     
340,245
     
330,846
     
344,726
 

(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
March 31,
 
   
2020
   
2019
 
   
(Dollars in thousands)
 
Net Interest Margin, Fully Taxable Equivalent (“FTE”)
           
             
Net interest income
 
$
30,191
   
$
30,243
 
Add:  taxable equivalent adjustment
   
121
     
117
 
Net interest income - taxable equivalent
 
$
30,312
   
$
30,360
 
Net interest margin (GAAP) (1)
   
3.61
%
   
3.86
%
Net interest margin (FTE) (1)
   
3.63
%
   
3.88
%
                 
Adjusted Net Income before tax
               
                 
Income before income tax
 
$
5,755
   
$
11,548
 
Provision for loan losses
   
6,721
     
644
 
Pre-tax, pre-provision income
 
$
12,476
   
$
12,192
 

(1)
Annualized.

9

Reconciliation of Non-GAAP Financial Measures (continued)
Independent Bank Corporation

Tangible Common Equity Ratio
                             
   
March 31,
2020
   
December 31,
2019
   
September 30,
2019
   
June 30,
2019
   
March 31,
2019
 
   
(Dollars in thousands)
 
Common shareholders’ equity
 
$
335,618
   
$
350,169
   
$
340,245
   
$
330,846
   
$
344,726
 
Less:
                                       
Goodwill
   
28,300
     
28,300
     
28,300
     
28,300
     
28,300
 
Other intangibles
   
5,071
     
5,326
     
5,598
     
5,870
     
6,143
 
Tangible common equity
 
$
302,247
   
$
316,543
   
$
306,347
   
$
296,676
   
$
310,283
 
                                         
Total assets
 
$
3,632,387
   
$
3,564,694
   
$
3,550,837
   
$
3,438,302
   
$
3,383,606
 
Less:
                                       
Goodwill
   
28,300
     
28,300
     
28,300
     
28,300
     
28,300
 
Other intangibles
   
5,071
     
5,326
     
5,598
     
5,870
     
6,143
 
Tangible assets
 
$
3,599,016
   
$
3,531,068
   
$
3,516,939
   
$
3,404,132
   
$
3,349,163
 
                                         
Common equity ratio
   
9.24
%
   
9.82
%
   
9.58
%
   
9.62
%
   
10.19
%
Tangible common equity ratio
   
8.40
%
   
8.96
%
   
8.71
%
   
8.72
%
   
9.26
%
                                         
Tangible Common Equity per Share of Common Stock:
                                 
                                         
Common shareholders’ equity
 
$
335,618
   
$
350,169
   
$
340,245
   
$
330,846
   
$
344,726
 
Tangible common equity
 
$
302,247
   
$
316,543
   
$
306,347
   
$
296,676
   
$
310,283
 
Shares of common stock outstanding (in thousands)
   
21,892
     
22,482
     
22,481
     
22,499
     
23,560
 
                                         
Common shareholders’ equity per share of common stock
 
$
15.33
   
$
15.58
   
$
15.13
   
$
14.70
   
$
14.63
 
Tangible common equity per share of common stock
 
$
13.81
   
$
14.08
   
$
13.63
   
$
13.19
   
$
13.17
 

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.


10


The following information was filed by Independent Bank Corp (IBCP) on Thursday, April 30, 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Independent Bank Corp's 10-Q Quarterly Report:

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Document And Entity Information
Condensed Consolidated Statements Of Cash Flows (Unaudited)
Condensed Consolidated Statements Of Comprehensive Income (Unaudited)
Condensed Consolidated Statements Of Financial Condition (Unaudited)
Condensed Consolidated Statements Of Financial Condition (Unaudited) (Parenthetical)
Condensed Consolidated Statements Of Operations (Unaudited)
Condensed Consolidated Statements Of Shareholders' Equity (Unaudited)
Condensed Consolidated Statements Of Shareholders' Equity (Unaudited) (Parenthetical)
Accumulated Other Comprehensive Loss ("Aocl")
Accumulated Other Comprehensive Loss ("Aocl") (Tables)
Accumulated Other Comprehensive Loss ("Aocl"), Reclassification Out Of Each Components (Details)
Accumulated Other Comprehensive Loss ("Aocl"), Summary Of Changes (Details)
Contingencies
Contingencies (Details)
Derivative Financial Instruments
Derivative Financial Instruments (Details)
Derivative Financial Instruments (Tables)
Derivative Financial Instruments, Effect On Statement Of Operations (Details)
Fair Value Disclosures
Fair Value Disclosures (Tables)
Fair Value Disclosures, Changes In Fair Value For Financial Assets (Details)
Fair Value Disclosures, Difference Between Aggregate Fair Value And Aggregate Remaining Contractual Principal (Details)
Fair Value Disclosures, Quantitative Information About Level 3 (Details)
Fair Value Disclosures, Reconciliation For All Assets Measured At Fair Value On A Recurring Basis Using Significant Unobservable Inputs (Level 3) (Details)
Fair Value Disclosures, Significant Assumptions (Details)
Fair Values Of Financial Instruments
Fair Values Of Financial Instruments (Details)
Fair Values Of Financial Instruments (Tables)
Goodwill And Other Intangibles
Goodwill And Other Intangibles (Details)
Goodwill And Other Intangibles (Tables)
Income Tax
Income Tax (Details)
Leases
Leases (Details)
Leases (Tables)
Loans
Loans (Tables)
Loans, Aging Analysis Of Loans By Class (Details)
Loans, Allowance For Loan Losses (Details)
Loans, Credit Scores By Loan Class, Mortgage And Installment Segments (Details)
Loans, Impaired Financing Receivables (Details)
Loans, Loan Ratings By Loan Class, Commercial (Details)
Loans, Non-Tdr Loan Modifications And Paycheck Protection Program ("Ppp") Due To Covid-19 (Details)
Loans, Purchase Credit Impaired ("Pci") Loans (Details)
Loans, Receivables Past Due (Details)
Loans, Troubled Debt Restructurings (Details)
New Accounting Standards
New Accounting Standards (Details)
New Accounting Standards (Policies)
Preparation Of Financial Statements
Regulatory Matters
Regulatory Matters (Details)
Regulatory Matters (Tables)
Revenue From Contracts With Customers
Revenue From Contracts With Customers (Details)
Revenue From Contracts With Customers (Tables)
Securities
Securities (Details)
Securities (Tables)
Securities, Amortized Cost And Fair Value Securities Available For Sale Contractual Maturities (Details)
Securities, Gains And Losses Realized On Sale Of Securities Available For Sale (Details)
Share Based Compensation
Share Based Compensation (Details)
Share Based Compensation (Tables)
Share Based Compensation, Options Exercised During The Periods (Details)
Share Based Compensation, Outstanding Non-Vested Restricted Stock And Psus And Related Transactions (Details)
Share Based Compensation, Outstanding Stock Option Grants And Related Transactions (Details)
Shareholders' Equity And Earnings Per Common Share
Shareholders' Equity And Earnings Per Common Share (Details)
Shareholders' Equity And Earnings Per Common Share (Tables)

Material Contracts, Statements, Certifications & more

Independent Bank Corp provided additional information to their SEC Filing as exhibits

Ticker: IBCP
CIK: 39311
Form Type: 10-Q Quarterly Report
Accession Number: 0001140361-20-010734
Submitted to the SEC: Tue May 05 2020 5:12:52 PM EST
Accepted by the SEC: Tue May 05 2020
Period: Tuesday, March 31, 2020
Industry: State Commercial Banks

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