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
 
Gavin A. Mohr, Chief Financial Officer, 616.447.3929

 INDEPENDENT BANK CORPORATION REPORTS
2020 FOURTH QUARTER AND FULL YEAR RESULTS

GRAND RAPIDS, Mich., Jan. 28, 2021 -
Independent Bank Corporation (NASDAQ: IBCP) reported fourth quarter 2020 net income of $17.0 million, or $0.77 per diluted share, versus net income of $13.9 million, or $0.61 per diluted share, in the prior-year period.  For the year ended December 31, 2020, the Company reported net income of $56.2 million, or $2.53 per diluted share, compared to net income of $46.4 million, or $2.00 per diluted share, in 2019.  The increase in 2020 fourth quarter and full-year 2020 earnings as compared to 2019 primarily reflects increases in non-interest income that were partially offset by a decrease in interest income and an increase in non-interest expense and income tax expense.

Fourth quarter 2020 highlights include:


Increases in net income and diluted earnings per share of  22.4% and 26.2%, respectively, compared to 2019;

Return on average assets and return on average equity of 1.61% and 17.82%, respectively, compared to 1.56% and 15.92%, respectively, in 2019;

Net gains on mortgage loans of $15.9 million (up 148.5% over 2019) and total mortgage loan origination volume of $502.5 million;

Deposit net growth of $39.6 million (or 1.1%);

Continued strong asset quality metrics as evidenced by net loan recoveries during the quarter, a low level of non-performing loans and non-performing assets;

COVID related forbearances declined to 0.83% of total loans; and

The payment of a 20 cent per share dividend on common stock on November 16, 2020.

Full year 2020 highlights include:


Increases in net income and diluted earnings per share of  20.9% and 26.3%, respectively, compared to 2019;

Return on average assets and return on average equity of 1.43% and 15.68 %, respectively, compared to 1.35% and 13.63%, respectively, in 2019;

Net gains on mortgage loans of $62.6 million (up 213.1% over 2019) and total mortgage loan origination volume of $1.8 billion;

Deposit net growth of $600.6 million (or 19.8 %); and

Tangible common equity per share increased by 16% to $16.33 from $14.08.

1

Significant items impacting comparable quarterly and year to date 2020 and 2019 results include the following:


As a result of hedge de-designation the company realized an increase in interest expense of $1.6 million ($0.06 per diluted share, after tax) due to accelerated amortization of deferred losses on certain derivative instruments. As cash flow hedges these losses were previously recorded in accumulated other comprehensive income (loss).

Changes in the fair value due to price of capitalized mortgage loan servicing rights (the “MSR Changes”) of a negative $0.9 million ($0.03 per diluted share, after taxes) and a negative $10.8 million ($0.39 per diluted share, after taxes) for the three-months and full-year ended December 31, 2020, respectively, as compared to 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 three-months and full year ended December 31, 2019, respectively.

Approximately $1.54 million ($0.06 per diluted share, after taxes) and $3.0 million ($0.11 per diluted share, after taxes) of expenses related to the ongoing data processing conversion and the completed bank branch closures (as described further below under “Operating Results”) for the three-months and full-year ended December 31, 2020, respectively.

William B. (“Brad”) Kessel, the President and Chief Executive Officer of Independent Bank Corporation, commented: “We are pleased to report very strong financial performance in the fourth quarter and for the full-year 2020 as we continue to navigate the many challenges brought on by the COVID-19 pandemic.  Our associates continued their amazing efforts during this quarter!  We closed over one-half billion dollars of mortgage loans, helping our customers buy new homes or refinance existing mortgage loans. We assisted our customers in completing and submitting PPP forgiveness applications to the SBA, with over 38% of outstanding balances submitted. We continued to effectively operate our Business Continuity Plan to safely serve our customers and protect our employees.  Finally, we maintained solid asset quality metrics during the fourth quarter of 2020. COVID-19 related loan forbearance balances decreased by 62.7% during the fourth quarter of 2020. As we look ahead to 2021 and beyond, we are mindful of the ongoing challenges from the COVID-19 pandemic, however, we are confident of our continued ability to effectively respond to these challenges and remain optimistic about our future.”

COVID-19 Pandemic Update

The Company continues to respond to the challenges arising from the COVID-19 pandemic. Our response was initially formulated during the month of February 2020 as we prepared our infrastructure to allow the majority of our associates to work remotely.  In March 2020 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 – From mid-March 2020 to mid-June 2020 we limited our branch lobbies to appointment only and kept drive-through windows open.  In mid-June 2020 our bank branch lobbies fully reopened.  On November 13, 2020 we again limited our branch lobbies to appointment only in response to increasing COVID-19 cases in the State of Michigan. Branch lobbies were reopened January 4, 2021.  With the ability to use drive through service, ATMs or our electronic banking solutions there was minimal disruption to our customers.


Employee Safety – For employees that are in our bank branches servicing our customers, 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 38% of our total staff working remotely every day.  We have installed “customer friendly” shields throughout our delivery network and have implemented a variety of other protective processes to promote the safety of our employees and put both customers and staff at ease.


Loan Forbearances – We have forbearance programs in place to proactively work with our customers who have experienced financial difficulty due to the COVID-19 pandemic. Totals for these programs by loan type are presented in the table below under the caption “Asset Quality”. The level of these loans is down significantly after peaking in mid-June 2020, as many customers’ economic situations have improved, allowing them to pay their loans current or return to their original payment terms.


U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) – We built an effective process to manage the high volume of applications that we received.  Customer demand for this program was extraordinary.  As of December 31, 2020, we had 1,483 PPP loans outstanding with a total balance of $169.8 million.  The average balance of PPP loans in the fourth quarter of 2020 was $220.2 million with an average yield of 6.91% (including the accretion of approximately $3.3 million of net of fees).  At December 31, 2020, there was $3.2 million remaining unaccreted net fees related to PPP loans.  These net fees are expected to be accreted into interest income over the next 6 months, and the pace of such accretion will depend on payment activity (including loan forgiveness) within the PPP loan portfolio.  As of December 31, 2020, 808 forgiveness applications (totaling $123.0 million) have been submitted to the SBA with 751 (totaling $92.0 million) applications approved. We are currently taking applications for the second round of the Paycheck Protection Program.

2

Operating Results

The Company’s net interest income totaled $31.0 million during the fourth quarter of 2020, an increase of $0.3 million, or 0.9% from the year-ago period, and down $1.0 million, or 3.0%, from the third quarter of 2020. The Company realized an increase in interest expense of $1.6 million due to accelerated amortization of deferred loss on certain derivative instruments that have been de-designated.  The Company’s tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”) was 3.12% during the fourth quarter of 2020, compared to 3.70% in the year-ago period, and 3.31% in the third quarter of 2020. 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 $3.98 billion in the fourth quarter of 2020, compared to $3.32 billion in the year ago quarter and $3.89 billion in the third quarter of 2020.

For the full year 2020, net interest income totaled $123.6 million, an increase of $1.0 million, or 0.8% from 2019.  The Company’s net interest margin for the full year of 2020 was 3.34% compared to 3.80% in 2019.  The increase in net interest income for the full year of 2020 compared to 2019 is also due to an increase in average interest-earning assets that was largely offset by a decline in the net interest margin.

Due to the economic impact of COVID-19, the Federal Reserve has taken a variety of actions to stimulate the economy, including significantly lowering short-term interest rates.  These actions have placed continued pressure on the Company’s net interest margin.

Non-interest income totaled $22.4 million and $80.7 million, respectively, for the fourth quarter and full year 2020, compared to $15.6 million and $47.7 million in the respective comparable year ago periods.  These changes were primarily due to variances in mortgage banking related revenues (net gains on mortgage loans and mortgage loan servicing, net).

Net gains on mortgage loans in the fourth quarters of 2020 and 2019, were approximately $15.9 million and $6.4 million, respectively.  For full year 2020, net gains on mortgage loans totaled $62.6 million compared to $20.0 million in 2019.  The increase in net gains on mortgage loans in 2020 was primarily due to a significant increase in mortgage loan sales volume (principally reflecting the rise in mortgage loan refinance levels), as well as improved profit margins on mortgage loan sales and fair value adjustments on the mortgage loan pipeline.

Mortgage loan servicing, net, generated a loss of $0.4 million and a gain of $1.3 million in the fourth quarters of 2020 and 2019, respectively. For full year 2020 and 2019, mortgage loan servicing, net, generated a loss of $9.4 million and $3.3 million, respectively.  The significant variances in mortgage loan servicing, net are primarily due to changes in the fair value of capitalized mortgage loan servicing rights associated with changes in mortgage loan interest rates and expected future prepayment levels. Mortgage loan servicing, net activity is summarized in the following table:

   
Three Months Ended
   
Twelve Months Ended
 
   
12/31/2020
   
12/31/2019
   
12/31/2020
   
12/31/2019
 
Mortgage loan servicing, net:
       
(Dollars in thousands)

   
 
Revenue, net
 
$
1,812
   
$
1,622
   
$
6,874
   
$
6,196
 
Fair value change due to price
   
(892
)
   
628
     
(10,833
)
   
(6,408
)
Fair value change due to pay-downs
   
(1,304
)
   
(902
)
   
(5,391
)
   
(3,124
)
Total
 
$
(384
)
 
$
1,348
   
$
(9,350
)
 
$
(3,336
)

Non-interest expenses totaled $32.7 million in the fourth quarter of 2020, compared to $29.3 million in the year-ago period.  For full year 2020, non-interest expenses totaled $122.4 million versus $111.7 million in 2019.  These year-over-year increases in non-interest expense are primarily due to increases in compensation and employee benefits, FDIC deposit insurance and data processing conversion related expenses. Full year 2020 performance based compensation expense increased $7.7 million primarily as a result of actual performance relative to established management incentive plan targets. The fourth quarter and full year 2020 includes $1.5 million and $2.6 million, respectively, of expenses related to the Company’s core data processing conversion that is in process (this conversion is expected to be completed in April 2021). The full-year 2020 non-interest expense also includes $0.4 million of expenses (primarily write-downs of fixed assets and leases) related to the closures of eight bank branch offices that occurred in June and July 2020.

The Company recorded an income tax expense of $4.1 million and $13.3 million in the fourth quarter and full-year 2020, respectively.  This compares to an income tax expense of $3.3 million and $11.3 million in the fourth quarter and full-year 2019, respectively.  The changes in income tax expense primarily reflect changes in pre-tax earnings in 2020 relative to 2019.

3

Asset Quality

A breakdown of loan forbearance totals by loan type is as follows:

 
12/31/20
   
9/30/20
   
% change vs. prior quarter
 
 Loan Type
   
#
   

$(000’s)

 
% of portfolio
     
#
   
$ (000's)
   
% of portfolio
     
#
   

$
 
Loans serviced for others
   
288
   
$
42,897
     
1.4
%
   
416
   
$
66,279
     
2.3
%
   
(30.8
)%
   
(35.3
)%
                                                                 
Commercial
   
2
   
$
163
     
0.0
%
   
17
   
$
25,105
     
1.9
%
   
(88.2
%)
   
(99.4
%)
Mortgage
   
134
     
19,830
     
2.0
%
   
197
     
32,091
     
3.1
%
   
(32.0
)%
   
(38.2
)%
Installment
   
48
     
1,412
     
0.3
%
   
97
     
2,631
     
0.5
%
   
(50.5
)%
   
(46.3
)%
  Total
   
184
   
$
21,405
     
0.8
%
   
311
   
$
59,827
     
2.1
%
   
(40.8
)%
   
(64.2
)%

Note:  The % of portfolio is based on the dollar amount of forbearances to the total for the loan portfolio segment.

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

Loan Type
 
12/31/2020
   
12/31/2019
   
12/31/2018
 
   
(Dollars in thousands)
 
Commercial
 
$
1,440
   
$
1,377
   
$
2,220
 
Mortgage
   
6,353
     
7,996
     
6,033
 
Installment
   
519
     
805
     
781
 
Subtotal
   
8,312
     
10,178
     
9,034
 
Less – government guaranteed loans
   
439
     
646
     
460
 
Total non-performing loans
 
$
7,873
   
$
9,532
   
$
8,574
 
Ratio of non-performing loans to total portfolio loans
   
0.29
%
   
0.35
%
   
0.33
%
Ratio of non-performing assets to total assets
   
0.21
%
   
0.32
%
   
0.29
%
Ratio of the allowance for loan losses to non-performing loans
   
450.01
%
   
274.32
%
   
290.27
%


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

Non-performing loans have decreased $1.7 million from December 31, 2019, due primarily to a decrease in non-performing mortgage loans.

The provision for loan losses was a credit of $0.4 million and $0.2 million in the fourth quarters of 2020 and 2019, respectively.  The provision for loan losses was an expense of $12.5 million and 0.8 million for the full-year 2020 and 2019, 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, loan forbearances and loan net charge-offs.  In addition, the higher 2020 full-year provision for loan losses includes an $11.2 million (or 128.3%) increase in the qualitative/subjective portion of the allowance for loan losses.  This increase principally reflects the unique challenges and economic uncertainty resulting from the COVID-19 pandemic and the potential impact on the loan portfolio that is not otherwise captured elsewhere within the allowance for loan losses.  The Company recorded loan net recoveries of $0.1 million and loan net charge offs of $3.2 million in the fourth quarter and full-year 2020, respectively.  This compares to loan net recoveries of $0.2 million and $0.4 million, in the fourth quarter and full-year 2019, respectively.  At December 31, 2020, the allowance for loan losses totaled $35.4 million, or 1.30% of total portfolio loans, compared to $26.1 million, or 0.96% of total portfolio loans, at December 31, 2019. Excluding PPP loans and the remaining Traverse City State Bank acquired loan balances, the allowance for loan losses was equal to 1.43% of portfolio loans at December 31, 2020.

The provision for the loan loss was calculated utilizing the incurred model for the full year 2020. The adoption of CECL was delayed following the updated guidance included in the second COVID-19 relief bill passed in December 2020. The Company is expecting to adopt CECL on January 1, 2021 as allowed under the CARES Act extension. We expect to recognize an cumulative effect adjustment through retained earnings increasing the allowance for loan losses. We are estimating this increase to the allowance for loan losses to be in the range of $10.5 million to $12.5 million.

4

Balance Sheet, Liquidity and Capital

Total assets were $4.2 billion at December 31, 2020, an increase of $639.3 million from December 31, 2019.  Loans, excluding loans held for sale, were $2.73 billion at December 31, 2020, compared to $2.73 billion at December 31, 2019.  Deposits totaled $3.64 billion at December 31, 2020, an increase of $600.6 million from December 31, 2019.  This increase is primarily due to growth in non-interest bearing, savings and interest-bearing checking and reciprocal deposit account balances.

Cash and cash equivalents totaled $118.7 million at December 31, 2020, versus $65.3 million at December 31, 2019. Securities available for sale totaled $1.1 billion at December 31, 2020, versus $518.4 million at December 31, 2019.  The significant increase in securities available for sale is due to the deployment of funds generated from the growth in deposits.

In May 2020, the Company issued $40.0 million of subordinated notes with a ten year maturity, a five year call option and an initial coupon interest rate (fixed for the first five years) of 5.95%.

Total shareholders’ equity was $389.5 million at December 31, 2020, or 9.27% of total assets.  Tangible common equity totaled $356.9 million at December 31, 2020, or $16.33 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
 
12/31/2020
   
12/31/2019
   
Well
Capitalized Minimum
 
Tier 1 capital to average total assets
   
8.81
%
   
9.49
%
   
5.00
%
Tier 1 common equity  to risk-weighted assets
   
12.81
%
   
11.96
%
   
6.50
%
Tier 1 capital to risk-weighted assets
   
12.81
%
   
11.96
%
   
8.00
%
Total capital to risk-weighted assets
   
14.06
%
   
12.96
%
   
10.00
%

Share Repurchase Plan

On December 18, 2020, the Board of Directors of the Company authorized the 2021 share repurchase plan.  Under the terms of the 2021 share repurchase plan, the Company is authorized to purchase up to 1,100,000 shares, or approximately 5% of its outstanding common stock.    The repurchase plan is authorized to last through December 31, 2021.

Due primarily to the economic uncertainty brought on by the COVID-19 pandemic, the Company suspended its share repurchase plan in March 2020. However, as a result of the Company’s strong financial performance and improved economic conditions, the Company reactivated the share repurchased plan in the fourth quarter of 2020 and acquired 30,027 shares at a weighted average price of $14.90. For the full-year 2020 the Company repurchased 708,956 shares at a weighted average price of $20.07.

Earnings Conference Call

Brad Kessel, President and CEO and Gavin A. Mohr, CFO will review the quarterly results in a conference call for investors and analysts beginning at 11:00 am ET on Thursday, January 28, 2021.
 
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/ibcp210128.html.

A playback of the call can be accessed by dialing 1-877-344-7529 (Conference ID # 10150378). The replay will be available through February 4, 2021.
 
About Independent Bank Corporation

Independent Bank Corporation (NASDAQ: IBCP) is a Michigan-based bank holding company with total assets of approximately $4.2 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.

5

Forward-Looking Statements

This press release contains forward-looking statements about Independent Bank Corporation. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date hereof. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future plans and prospects of Independent Bank Corporation. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. The COVID-19 pandemic is adversely affecting Independent Bank Corporation, its customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity, and prospects is uncertain. Continued deterioration in general business and economic conditions or turbulence in domestic or global financial markets could adversely affect Independent Bank Corporation’s revenues and the values of its assets and liabilities, reduce the availability of funding from certain financial institutions, lead to a tightening of credit, and increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices could affect Independent Bank Corporation in substantial and unpredictable ways. Independent Bank Corporation’s results could also be adversely affected by changes in interest rates; further increases in unemployment rates; deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value of its investment securities; legal and regulatory developments; litigation; increased competition from both banks and non-banks; changes in the level of tariffs and other trade policies of the United States and its global trading partners; changes in customer behavior and preferences; breaches in data security; failures to safeguard personal information; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and management’s ability to effectively manage credit risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputation risk.

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.

6

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition

   
December 31,
 
   
2020
   
2019
 
   
(unaudited)
 
   
(In thousands, except share
 
   
amounts)
 
Assets
 
Cash and due from banks
 
$
56,006
   
$
53,295
 
Interest bearing deposits
   
62,699
     
12,009
 
Cash and Cash Equivalents
   
118,705
     
65,304
 
Interest bearing deposits - time
   
-
     
350
 
Securities available for sale
   
1,072,159
     
518,400
 
Federal Home Loan Bank and Federal Reserve Bank stock, at cost
   
18,427
     
18,359
 
Loans held for sale, carried at fair value
   
92,434
     
69,800
 
Loans
               
Commercial
   
1,242,415
     
1,166,695
 
Mortgage
   
1,015,926
     
1,098,911
 
Installment
   
475,337
     
459,417
 
Total Loans
   
2,733,678
     
2,725,023
 
Allowance for loan losses
   
(35,429
)
   
(26,148
)
Net Loans
   
2,698,249
     
2,698,875
 
Other real estate and repossessed assets
   
766
     
1,865
 
Property and equipment, net
   
36,127
     
38,411
 
Bank-owned life insurance
   
55,180
     
55,710
 
Capitalized mortgage loan servicing rights
   
16,904
     
19,171
 
Other intangibles
   
4,306
     
5,326
 
Goodwill
   
28,300
     
28,300
 
Accrued income and other assets
   
62,456
     
44,823
 
Total Assets
 
$
4,204,013
   
$
3,564,694
 
                 
Liabilities and Shareholders' Equity
 
Deposits
               
Non-interest bearing
 
$
1,153,473
   
$
852,076
 
Savings and interest-bearing checking
   
1,526,465
     
1,186,745
 
Reciprocal
   
556,185
     
431,027
 
Time
   
287,402
     
376,877
 
Brokered time
   
113,830
     
190,002
 
Total Deposits
   
3,637,355
     
3,036,727
 
Other borrowings
   
30,012
     
88,646
 
Subordinated debt
   
39,281
     
-
 
Subordinated debentures
   
39,524
     
39,456
 
Accrued expenses and other liabilities
   
68,319
     
49,696
 
Total Liabilities
   
3,814,491
     
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: 21,853,800 shares at December 31, 2020 and 22,481,643 shares at December 31, 2019
   
339,353
     
352,344
 
Retained earnings
   
40,145
     
1,611
 
Accumulated other comprehensive income (loss)
   
10,024
     
(3,786
)
Total Shareholders’ Equity
   
389,522
     
350,169
 
Total Liabilities and Shareholders’ Equity
 
$
4,204,013
   
$
3,564,694
 

7

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations

   
Three Months Ended
   
Twelve Months Ended
 
   
December 31,
   
September 30,
   
December 31,
   
December 31,
 
   
2020
   
2020
   
2019
   
2020
   
2019
 
   
(unaudited)
 
Interest Income
 
(In thousands, except per share amounts)
 
Interest and fees on loans
 
$
31,139
   
$
30,393
   
$
33,140
   
$
123,159
   
$
133,883
 
Interest on securities available for sale
                                       
Taxable
   
3,299
     
3,450
     
3,031
     
12,655
     
11,842
 
Tax-exempt
   
789
     
954
     
325
     
2,926
     
1,342
 
Other investments
   
235
     
237
     
412
     
1,089
     
1,861
 
Total Interest Income
   
35,462
     
35,034
     
36,908
     
139,829
     
148,928
 
Interest Expense
                                       
Deposits
   
3,516
     
2,062
     
5,487
     
12,666
     
23,425
 
Other borrowings and subordinated debt and debentures
   
953
     
1,006
     
711
     
3,551
     
2,922
 
Total Interest Expense
   
4,469
     
3,068
     
6,198
     
16,217
     
26,347
 
Net Interest Income
   
30,993
     
31,966
     
30,710
     
123,612
     
122,581
 
Provision for loan losses
   
(421
)
   
975
     
(221
)
   
12,463
     
824
 
Net Interest Income After Provision for Loan Losses
   
31,414
     
30,991
     
30,931
     
111,149
     
121,757
 
Non-interest Income
                                       
Service charges on deposit accounts
   
2,218
     
2,085
     
2,885
     
8,517
     
11,208
 
Interchange income
   
2,819
     
3,428
     
2,553
     
11,230
     
10,297
 
Net gains on assets
                                       
Mortgage loans
   
15,873
     
20,205
     
6,388
     
62,560
     
19,978
 
Securities available for sale
   
14
     
-
     
3
     
267
     
307
 
Mortgage loan servicing, net
   
(384
)
   
(644
)
   
1,348
     
(9,350
)
   
(3,336
)
Other
   
1,823
     
1,937
     
2,420
     
7,521
     
9,282
 
Total Non-interest Income
   
22,363
     
27,011
     
15,597
     
80,745
     
47,736
 
Non-interest Expense
                                       
Compensation and employee benefits
   
20,039
     
21,954
     
18,546
     
74,781
     
67,501
 
Occupancy, net
   
2,120
     
2,199
     
2,216
     
8,938
     
9,013
 
Data processing
   
2,374
     
2,215
     
2,308
     
8,534
     
8,905
 
Furniture, fixtures and equipment
   
964
     
999
     
1,055
     
4,089
     
4,113
 
Interchange expense
   
926
     
831
     
883
     
3,342
     
3,215
 
Communications
   
785
     
806
     
728
     
3,194
     
2,947
 
Loan and collection
   
708
     
768
     
709
     
3,037
     
2,685
 
Conversion related expenses
   
1,541
     
643
     
-
     
2,586
     
-
 
Advertising
   
594
     
589
     
515
     
2,230
     
2,450
 
Legal and professional
   
600
     
566
     
533
     
2,027
     
1,814
 
FDIC deposit insurance
   
385
     
411
     
(38
)
   
1,596
     
685
 
Branch closure costs
   
-
     
-
             
417
     
-
 
Correspondent bank service fees
   
101
     
101
     
111
     
395
     
411
 
Net (gains) losses on other real estate and repossessed assets
   
(82
)
   
46
     
(63
)
   
64
     
(90
)
Other
   
1,652
     
1,513
     
1,800
     
7,183
     
8,084
 
Total Non-interest Expense
   
32,707
     
33,641
     
29,303
     
122,413
     
111,733
 
Income Before Income Tax
   
21,070
     
24,361
     
17,225
     
69,481
     
57,760
 
Income tax expense
   
4,084
     
4,777
     
3,346
     
13,329
     
11,325
 
Net Income
 
$
16,986
   
$
19,584
   
$
13,879
   
$
56,152
   
$
46,435
 
Net Income Per Common Share
                                       
Basic
 
$
0.78
   
$
0.90
   
$
0.62
   
$
2.56
   
$
2.03
 
Diluted
 
$
0.77
   
$
0.89
   
$
0.61
   
$
2.53
   
$
2.00
 

8

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Selected Financial Data

     
December 31,
2020
     
September 30,
2020
     
June 30,
2020
     
March 31,
2020
     
December 31,
2019
  
   
(unaudited)
 
   
(Dollars in thousands except per share data)
 
Three Months Ended
                             
Net interest income
 
$
30,993
   
$
31,966
   
$
30,462
   
$
30,191
   
$
30,710
 
Provision for loan losses
   
(421
)
   
975
     
5,188
     
6,721
     
(221
)
Non-interest income
   
22,363
     
27,011
     
20,367
     
11,004
     
15,597
 
Non-interest expense
   
32,707
     
33,641
     
27,346
     
28,719
     
29,303
 
Income before income tax
   
21,070
     
24,361
     
18,295
     
5,755
     
17,225
 
Income tax expense
   
4,084
     
4,777
     
3,523
     
945
     
3,346
 
Net income
 
$
16,986
   
$
19,584
   
$
14,772
   
$
4,810
   
$
13,879
 
                                         
Basic earnings per share
 
$
0.78
   
$
0.90
   
$
0.67
   
$
0.22
   
$
0.62
 
Diluted earnings per share
   
0.77
     
0.89
     
0.67
     
0.21
     
0.61
 
Cash dividend per share
   
0.20
     
0.20
     
0.20
     
0.20
     
0.18
 
                                         
Average shares outstanding
   
21,866,326
     
21,881,562
     
21,890,761
     
22,271,412
     
22,481,551
 
Average diluted shares outstanding
   
22,112,829
     
22,114,692
     
22,113,187
     
22,529,370
     
22,776,908
 
                                         
Performance Ratios
                                       
Return on average assets
   
1.61
%
   
1.90
%
   
1.54
%
   
0.54
%
   
1.56
%
Return on average equity
   
17.82
     
21.36
     
17.39
     
5.54
     
15.92
 
Efficiency ratio (1)
   
60.59
     
56.36
     
53.07
     
69.32
     
62.56
 
                                         
As a Percent of Average Interest-Earning Assets (1)
                                 
Interest income
   
3.57
%
   
3.62
%
   
3.72
%
   
4.28
%
   
4.44
%
Interest expense
   
0.45
     
0.31
     
0.36
     
0.65
     
0.74
 
Net interest income
   
3.12
     
3.31
     
3.36
     
3.63
     
3.70
 
                                         
Average Balances
                                       
Loans
 
$
2,876,795
   
$
2,925,872
   
$
2,913,857
   
$
2,766,770
   
$
2,776,037
 
Securities available for sale
   
1,009,578
     
891,975
     
660,126
     
527,395
     
488,016
 
Total earning assets
   
3,984,080
     
3,887,455
     
3,659,614
     
3,350,948
     
3,320,828
 
Total assets
   
4,195,546
     
4,102,318
     
3,868,408
     
3,565,829
     
3,529,744
 
Deposits
   
3,632,758
     
3,559,070
     
3,303,302
     
3,066,298
     
3,040,099
 
Interest bearing liabilities
   
2,574,306
     
2,532,481
     
2,402,361
     
2,309,995
     
2,251,928
 
Shareholders' equity
   
379,232
     
364,714
     
341,606
     
348,963
     
345,910
 
                                         
End of Period
                                       
Capital
                                       
Tangible common equity ratio
   
8.56
%
   
8.23
%
   
8.03
%
   
8.40
%
   
8.96
%
Average equity to average assets
   
9.04
     
8.89
     
8.83
     
9.79
     
9.80
 
Common shareholders' equity per share of common stock
 
$
17.82
   
$
17.05
   
$
16.23
   
$
15.33
   
$
15.58
 
Tangible common equity per share of common stock
   
16.33
     
15.55
     
14.72
     
13.81
     
14.08
 
Total shares outstanding
   
21,853,800
     
21,885,368
     
21,880,183
     
21,892,001
     
22,481,643
 
                                         
Selected Balances
                                       
Loans
 
$
2,733,678
   
$
2,855,479
   
$
2,866,663
   
$
2,718,115
   
$
2,725,023
 
Securities available for sale
   
1,072,159
     
985,050
     
856,280
     
594,284
     
518,400
 
Total earning assets
   
3,979,397
     
3,962,824
     
3,833,523
     
3,416,845
     
3,343,941
 
Total assets
   
4,204,013
     
4,168,944
     
4,043,315
     
3,632,387
     
3,564,694
 
Deposits
   
3,637,355
     
3,597,745
     
3,485,125
     
3,083,564
     
3,036,727
 
Interest bearing liabilities
   
2,553,418
     
2,515,185
     
2,456,193
     
2,350,056
     
2,312,753
 
Shareholders' equity
   
389,522
     
373,092
     
355,123
     
335,618
     
350,169
 

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

9

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,
  
   
2020
   
2019
   
2020
   
2019
 
   
(Dollars in thousands)
 
Net Interest Margin, Fully Taxable Equivalent ("FTE")
                       
                         
Net interest income
 
$
30,993
   
$
30,710
   
$
123,612
   
$
122,581
 
Add:  taxable equivalent adjustment
   
221
     
104
     
823
     
423
 
Net interest income - taxable equivalent
 
$
31,214
   
$
30,814
   
$
124,435
   
$
123,004
 
Net interest margin (GAAP) (1)
   
3.10
%
   
3.68
%
   
3.32
%
   
3.79
%
Net interest margin (FTE) (1)
   
3.12
%
   
3.70
%
   
3.34
%
   
3.80
%

(1)
Annualized for three months ended December 31, 2020 and 2019.

Tangible Common Equity Ratio

     
December 31,
2020
     
September 30,
2020
     
June 30,
2020
     
March 31,
2020
     
December 31,
2019
  
   
(Dollars in thousands)
 
Common shareholders' equity
 
$
389,522
   
$
373,092
   
$
355,123
   
$
335,618
   
$
350,169
 
Less:
                                       
Goodwill
   
28,300
     
28,300
     
28,300
     
28,300
     
28,300
 
Other intangibles
   
4,306
     
4,561
     
4,816
     
5,071
     
5,326
 
Tangible common equity
 
$
356,916
   
$
340,231
   
$
322,007
   
$
302,247
   
$
316,543
 
                                         
Total assets
 
$
4,204,013
   
$
4,168,944
   
$
4,043,315
   
$
3,632,387
   
$
3,564,694
 
Less:
                                       
Goodwill
   
28,300
     
28,300
     
28,300
     
28,300
     
28,300
 
Other intangibles
   
4,306
     
4,561
     
4,816
     
5,071
     
5,326
 
Tangible assets
 
$
4,171,407
   
$
4,136,083
   
$
4,010,199
   
$
3,599,016
   
$
3,531,068
 
                                         
Common equity ratio
   
9.27
%
   
8.95
%
   
8.78
%
   
9.24
%
   
9.82
%
Tangible common equity ratio
   
8.56
%
   
8.23
%
   
8.03
%
   
8.40
%
   
8.96
%
                                         
Tangible Common Equity per Share of Common Stock:
                                 
                                         
Common shareholders' equity
 
$
389,522
   
$
373,092
   
$
355,123
   
$
335,618
   
$
350,169
 
Tangible common equity
 
$
356,916
   
$
340,231
   
$
322,007
   
$
302,247
   
$
316,543
 
Shares of common stock outstanding (in thousands)
   
21,854
     
21,885
     
21,880
     
21,892
     
22,482
 
                                         
Common shareholders' equity per share of common stock
 
$
17.82
   
$
17.05
   
$
16.23
   
$
15.33
   
$
15.58
 
Tangible common equity per share of common stock
 
$
16.33
   
$
15.55
   
$
14.72
   
$
13.81
   
$
14.08
 

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, January 28, 2021 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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