SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported):October 23, 2002
| INDEPENDENT BANK CORPORATION (Exact name of registrant as specified in its charter) |
| Michigan (State or Jurisdiction of Incorporation or Organization) |
| 0-7818 (Commission File Number) | 38-2032782 (I.R.S. Employer Identification No.) |
| 230 West Main Street, Ionia, Michigan 48846 (Address of principal executive offices) |
(616) 527-9450
(Registrant's telephone number, including area code)
| NONE Former name, address and fiscal year, if changed since last report. |
| Item 1. | Changes in Control of Registrant | |
| Not Applicable | ||
| Item 2. | Acquisition or Disposition of Assets | |
| Not Applicable | ||
| Item 3. | Bankruptcy or Receivership | |
| Not Applicable | ||
| Item 4. | Changes in Registrant's Certifying Accountant | |
| Not Applicable | ||
| Item 5. | Other Events | |
| Not Applicable | ||
| Item 6. | Resignations of Registrant's Directors | |
| Not Applicable | ||
| Item 7. | Financial Statements and Exhibits | |
| Not Applicable | ||
| Item 8. | Change in Fiscal Year | |
| Not Applicable | ||
| Item 9. | Regulation FD Disclosure | |
| The information attached at Exhibit A is supplemental data to the Registrant's press release dated October 23, 2002 regarding its earnings during the quarter ended September 30, 2002. | ||
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition
September 30, December 31,
2002 2001
----------------- -----------------
(unaudited)
-----------------------------------
Assets (in thousands)
Cash and due from banks $ 61,971 $ 50,525
Securities available for sale 365,918 290,303
Federal Home Loan Bank stock, at cost 21,521 21,266
Loans held for sale 120,040 77,220
Loans
Commercial 526,547 482,046
Real estate mortgage 601,391 661,462
Installment 250,168 241,176
-------------- -------------
Total Loans 1,378,106 1,384,684
Allowance for loan losses (17,698) (16,167)
-------------- -------------
Net Loans 1,360,408 1,368,517
Property and equipment, net 39,325 35,944
Bank owned life insurance 35,007
Accrued income and other assets 40,872 44,682
-------------- -------------
Total Assets $ 2,045,062 $ 1,888,457
============== =============
Liabilities and Shareholders' Equity
Deposits
Non-interest bearing $ 181,628 $ 160,598
Savings and NOW 630,114 601,949
Time 715,044 624,820
-------------- -------------
Total Deposits 1,526,786 1,387,367
Federal funds purchased 50,175 35,100
Other borrowings 279,450 288,010
Guaranteed preferred beneficial interests in Company's subordinated
debentures 17,250 17,250
Accrued expenses and other liabilities 32,987 28,827
-------------- -------------
Total Liabilities 1,906,648 1,756,554
-------------- -------------
Shareholders' Equity
Preferred stock, no par value--200,000 shares authorized; none
outstanding
Common stock, $1.00 par value--30,000,000 shares authorized;
issued and outstanding: 11,966,530 shares at September 30, 2002
and 11,864,876 shares at December 31, 2001 11,967 11,865
Capital surplus 83,926 82,512
Retained earnings 36,342 39,355
Accumulated other comprehensive income 6,179 (1,829)
-------------- -------------
Total Shareholders' Equity 138,414 131,903
-------------- -------------
Total Liabilities and Shareholders' Equity $ 2,045,062 $ 1,888,457
============== =============
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INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
----------- ------------ ------------ -----------
(unaudited) (unaudited)
------------------------- -------------------------
Interest Income (in thousands, except per share amounts)
Interest and fees on loans $ 27,616 $ 29,734 $ 81,519 $ 89,321
Securities available for sale
Taxable 3,223 2,451 9,249 6,809
Tax-exempt 1,776 1,485 5,176 4,326
Other investments 340 378 987 1,146
----------- ------------ ------------ -----------
Total Interest Income 32,955 34,048 96,931 101,602
----------- ------------ ------------ -----------
Interest Expense
Deposits 8,994 10,601 26,662 34,960
Other borrowings 2,957 5,007 9,555 13,980
----------- ------------ ------------ -----------
Total Interest Expense 11,951 15,608 36,217 48,940
----------- ------------ ------------ -----------
Net Interest Income 21,004 18,440 60,714 52,662
Provision for loan losses 752 1,061 2,845 2,955
----------- ------------ ------------ -----------
Net Interest Income After Provision for Loan Losses 20,252 17,379 57,869 49,707
----------- ------------ ------------ -----------
Non-interest Income
Service charges on deposit accounts 3,457 2,808 9,410 6,891
Net gains on asset sales
Real estate mortgage loans 1,280 1,294 4,324 4,341
Securities 550 726 158
Other income 1,394 2,856 6,931 7,912
----------- ------------ ------------ -----------
Total Non-interest Income 6,681 6,958 21,391 19,302
----------- ------------ ------------ -----------
Non-interest Expense
Compensation and employee benefits 9,620 7,854 27,670 23,380
Occupancy, net 1,371 1,229 4,021 3,702
Furniture and fixtures 1,123 1,040 3,373 3,207
Other expenses 4,963 5,483 14,259 14,384
----------- ------------ ------------ -----------
Total Non-interest Expense 17,077 15,606 49,323 44,673
----------- ------------ ------------ -----------
Income Before Federal Income Tax 9,856 8,731 29,937 24,336
Federal income tax expense 2,743 2,486 8,427 6,549
----------- ------------ ------------ -----------
Net Income Before Cumulative Effect of Change
in Accounting Principle 7,113 6,245 21,510 17,787
Cumulative effect of change in accounting
principle, net of tax (35)
----------- ------------ ------------ -----------
Net Income $ 7,113 $ 6,245 $ 21,510 $ 17,752
=========== ============ ============ ===========
Net Income Per Share Before Cumulative
Effect of Change in Accounting Principle
Basic $ .58 $ .49 $ 1.75 $ 1.40
Diluted .57 .48 1.72 1.38
Net Income Per Share
Basic $ .58 $ .49 $ 1.75 $ 1.40
Diluted .57 .48 1.72 1.38
Dividends Per Common Share
Declared $ .17 $ .15 $ .51 $ .44
Paid .17 .15 .51 .43
3
Non-performing assets
September 30, December 31,
2002 2001
----------------- -----------------
(dollars in thousands)
Non-accrual loans $7,803 $5,990
Loans 90 days or more past due and
still accruing interest 5,413 2,771
Restructured loans 275 285
----------------- -----------------
Total non-performing loans 13,491 9,046
Other real estate 2,230 1,610
----------------- -----------------
Total non-performing assets $15,721 $10,656
================= =================
As a percent of Portfolio Loans
Non-performing loans 0.98 % 0.65 %
Non-performing assets 1.14 0.77
Allowance for loan losses 1.28 1.17
Allowance for loan losses as a percent of
non-performing loans 131 179
Allowance for loan losses
Nine months ended
September 30,
2002 2001
------------- ------------
(in thousands)
Balance at beginning of period $16,167 $13,982
Additions (deduction)
Provision charged to operating expense 2,845 2,955
Recoveries credited to allowance 551 476
Loans charged against the allowance (1,865) (1,651)
------------- ------------
Balance at end of period $17,698 $15,762
============= ============
Net loans charged against the allowance to
average Portfolio Loans (annualized) 0.12 % 0.11 %
September 30, 2002 December 31, 2001
-------------------------------- ----------------------------------
Average Average
Amount Maturity Rate Amount Maturity Rate
------ -------- ---- ------ -------- ----
(dollars in thousands)
Brokered CDs (1) $283,281 1.8 years 2.95% $163,315 1.7 years 3.83%
Fixed-rate FHLB advances (1) 62,904 8.1 years 5.83 129,084 4.1 years 4.08
Variable-rate FHLB advances (1) 91,500 0.4 years 2.14 93,000 0.4 years 1.83
Securities sold under agreements to
repurchase (1) 109,185 0.2 years 1.86 54,963 0.2 years 1.94
Federal Funds purchased 50,175 1 day 2.13 35,100 1 day 1.86
-------------------------------- ----------------------------------
Total $597,045 1.8 years 2.86% $475,462 1.8 years 3.15%
================================ ==================================
| (1) | Certain of these items have had their average maturity and rate altered through the use of derivative instruments, including pay-fixed and pay-variable interest rate swaps. |
4
Capitalization
September 30, December 31,
2002 2001
------------------- -------------------
(in thousands)
Unsecured debt $10,500 $10,500
------------------- -------------------
Preferred Securities 17,250 17,250
------------------- -------------------
Shareholders' Equity
Preferred stock, no par value
Common Stock, par value $1.00 per share 11,967 11,865
Capital surplus 83,926 82,512
Retained earnings 36,342 39,355
Accumulated other comprehensive income (loss) 6,179 (1,829)
------------------- -------------------
Total shareholders' equity 138,414 131,903
------------------- -------------------
Total capitalization $166,164 $159,653
=================== ===================
Net interest income and selected ratios
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
-------------- ------------- ------------- --------------
Average earning assets (in thousands) $1,828,101 $1,736,140 $1,787,200 $1,688,682
Tax equivalent net interest income 22,115 19,421 63,955 55,486
As a percent of average earning assets
Tax equivalent interest income 7.41 % 8.03 % 7.49 % 8.25 %
Interest expense 2.59 3.57 2.71 3.87
Tax equivalent net interest income 4.82 4.46 4.78 4.38
Average earning assets as a
percent of average assets 93.46 % 94.46 % 94.11 % 94.11 %
Free-funds ratio 10.98 % 11.46 % 11.39 % 10.99 %
Non-Interest Income
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
---------- ---------- ---------- -----------
(in thousands)
Service charges on deposit accounts $3,457 $2,808 $9,410 $6,891
Net gains on asset sales
Real estate mortgage loans 1,280 1,294 4,324 4,341
Securities 550 726 158
Title insurance fees 580 509 1,667 1,357
Manufactured home loan origination fees
and commissions 445 613 1,442 1,642
Mutual fund and annuity commissions 203 214 781 604
Real estate mortgage loan servicing fees (1,118) 284 (550) 840
Other 1,284 1,236 3,591 3,469
---------- ---------- ---------- ----------
Total non-interest income $6,681 $6,958 $21,391 $19,302
========== ========== ========== ==========
5
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
-------------- ------------- ------------- --------------
(in thousands)
Real estate mortgage loans originated $251,695 $160,599 $545,174 $468,651
Real estate mortgage loans sold 105,613 99,385 348,933 293,972
Real estate mortgage loans sold with servicing
rights released 53,828 85,885 75,323 256,285
Net gains on the sale of real estate mortgage loans 1,280 1,294 4,324 4,341
Net gains as a percent of real estate mortgage
loans sold 1.21% 1.30% 1.24% 1.48%
Non-Interest Expense
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
--------------- --------------- --------------- ----------------
(in thousands)
Salaries $ 6,435 $ 5,575 $18,565 $ 16,469
Performance-based compensation
and benefits 1,325 782 3,874 2,642
Other benefits 1,860 1,497 5,231 4,269
--------------- --------------- --------------- ---------------
Salaries and benefits 9,620 7,854 27,670 23,380
Occupancy, net 1,371 1,229 4,021 3,702
Furniture and fixtures 1,123 1,040 3,373 3,207
Data processing 766 728 2,193 1,865
Communications 592 554 1,805 1,719
Advertising 663 613 1,840 1,747
Loan and collection 659 733 1,874 1,806
Supplies 463 433 1,134 1,100
Amortization of intangible assets 244 426 736 1,278
Other 1,576 1,996 4,677 4,869
--------------- --------------- --------------- ---------------
Total non-interest expense $17,077 $15,606 $49,323 $44,673
=============== =============== =============== ===============
6
Average Balances and Tax Equivalent Rates
Three Months Ended
September 30,
2002 2001
------------------------------------ ------------------------------------------
Average Average
Balance Interest Rate Balance Interest Rate
----------- ---------- -------- ------------ ---------- --------
Assets (dollars in thousands)
Taxable loans (1) $1,428,149 $ 27,456 7.65 % $1,434,456 $ 29,543 8.20 %
Tax-exempt loans (1,2) 11,541 246 8.46 12,681 294 9.20
Taxable securities 221,333 3,223 5.78 148,408 2,451 6.55
Tax-exempt securities (2) 145,557 2,801 7.63 119,784 2,363 7.83
Other investments 21,521 340 6.27 20,811 378 7.21
--------- -------- --------- --------
Interest Earning Assets 1,828,101 34,066 7.41 1,736,140 35,029 8.03
Cash and due from banks 40,513 -------- 36,066 --------
Other assets, net 87,496 65,842
--------- ---------
Total Assets $1,956,110 $1,838,048
========= =========
Liabilities
Savings and NOW $ 637,858 1,878 1.17 $ 587,287 2,780 1.88
Time deposits 712,287 7,116 3.96 599,038 7,821 5.18
Other borrowings 277,199 2,957 4.23 350,894 5,007 5.66
--------- -------- --------- --------
Interest Bearing Liabilities 1,627,344 11,951 2.91 1,537,219 15,608 4.03
Demand deposits 157,227 -------- 139,520 --------
Other liabilities 29,580 26,873
Shareholders' equity 141,959 134,436
--------- ---------
Total liabilities and shareholders' equity $1,956,110 $1,838,048
========= =========
Tax Equivalent Net Interest Income $ 22,115 $ 19,421
======== ========
Tax Equivalent Net Interest Income
as a Percent of Earning Assets 4.82 % 4.46 %
====== ======
| (1) | All domestic |
| (2) | Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 35% |
7
Average Balances and Tax Equivalent Rates
Nine Months Ended
September 30,
2002 2001
------------------------------------ ------------------------------------------
Average Average
Balance Interest Rate Balance Interest Rate
----------- ---------- -------- ------------ ---------- --------
Assets (dollars in thousands)
Taxable loans (1) $1,403,633 $ 81,047 7.71 % $1,410,149 $ 88,752 8.40 %
Tax-exempt loans (1,2) 11,541 726 8.41 13,429 875 8.71
Taxable securities 212,014 9,249 5.83 129,795 6,809 7.01
Tax-exempt securities (2) 138,465 8,163 7.88 115,278 6,844 7.94
Other investments 21,547 987 6.12 20,031 1,146 7.65
--------- ------- --------- -------
Interest Earning Assets 1,787,200 100,172 7.49 1,688,682 104,426 8.25
Cash and due from banks 39,163 ------- 38,804 -------
Other assets, net 72,747 66,848
--------- ---------
Total Assets $1,899,110 $1,794,334
========= =========
Liabilities
Savings and NOW $ 631,633 5,778 1.22 $ 581,301 9,360 2.15
Time deposits 679,968 20,884 4.11 618,911 25,600 5.53
Long-term debt 496 26 7.01
Other borrowings 272,111 9,555 4.69 302,359 13,954 6.17
--------- ------- --------- -------
Interest Bearing Liabilities 1,583,712 36,217 3.06 1,503,067 48,940 4.35
Demand deposits 149,775 ------- 135,049 -------
Other liabilities 27,741 25,494
Shareholders' equity 137,882 130,724
--------- ---------
Total liabilities and shareholders' equity $1,899,110 $1,794,334
========= =========
Tax Equivalent Net Interest Income $ 63,955 $ 55,486
======= =======
Tax Equivalent Net Interest Income
as a Percent of Earning Assets 4.78 % 4.38 %
======= =======
| (1) | All domestic |
| (2) | Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 35% |
8
2001 Reclassified Quarterly Net Interest Income and Non-interest Expense
Three Months Ended
March 31, June 30, September 30, December 31,
----------------- ----------------- ----------------- -----------------
(dollars in thousands)
Interest on fees and loans (1) $30,164 $29,423 $29,734 $28,414
Other interest income 4,064 3,903 4,314 4,486
----------------- ----------------- ----------------- -----------------
Total Interest Income 34,228 33,326 34,048 32,900
Interest expense 17,116 16,216 15,608 13,520
----------------- ----------------- ----------------- -----------------
Net Interest Income (1) $17,112 $17,110 $18,440 $19,380
================= ================= ================= =================
Net interest income as a percent
of average earning assets (1) 4.35 % 4.32 % 4.46 % 4.63 %
================= ================= ================= =================
Non-interest expense (1) $14,099 $14,968 $15,606 $16,996
================= ================= ================= =================
Reclassification (1) $1,024 $2,079 $1,872 $1,882
================= ================= ================= =================
| (1) | Reflects reclassification of loan origination fees and direct loan origination costs pursuant to SFAS #91. The amounts were reclassified between interest and fees on loans and non-interest expenses. |
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date | October 23, 2002 | By | s/Robert N. Shuster Robert N. Shuster, Principal Financial Officer | |
| Date | October 23, 2002 | By | s/James J. Twarozynski James J. Twarozynski, Principal Accounting Officer |
10