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):January 16, 2003
| 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 January 16, 2003 regarding its earnings for the quarter and year ended December 31, 2002. | ||
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition
December 31,
2002 2001
----------------- -----------------
(unaudited)
-----------------------------------
Assets (in thousands)
Cash and due from banks $ 60,731 $ 50,525
Securities available for sale 371,246 290,303
Federal Home Loan Bank stock, at cost 9,704 21,266
Loans held for sale 129,577 77,220
Loans
Commercial 536,715 482,046
Real estate mortgage 601,799 661,462
Installment 242,928 241,176
-------------- -------------
Total Loans 1,381,442 1,384,684
Allowance for loan losses (16,705) (16,167)
-------------- -------------
Net Loans 1,364,737 1,368,517
Property and equipment, net 40,735 35,944
Bank owned life insurance 35,415
Accrued income and other assets 45,417 44,682
-------------- -------------
Total Assets $ 2,057,562 $ 1,888,457
============== =============
Liabilities and Shareholders' Equity
Deposits
Non-interest bearing $ 179,871 $ 160,598
Savings and NOW 657,530 601,949
Time 698,202 624,820
-------------- -------------
Total Deposits 1,535,603 1,387,367
Federal funds purchased 23,840 35,100
Other borrowings 310,413 288,010
Guaranteed preferred beneficial interests in Company's subordinated
debentures 17,250 17,250
Accrued expenses and other liabilities 32,409 28,827
-------------- -------------
Total Liabilities 1,919,515 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: 17,822,090 shares at December 31, 2002
and 17,797,314 shares at December 31, 2001 17,822 17,797
Capital surplus 75,076 76,580
Retained earnings 41,785 39,355
Accumulated other comprehensive income - (loss) 3,364 (1,829)
-------------- -------------
Total Shareholders' Equity 138,047 131,903
-------------- -------------
Total Liabilities and Shareholders' Equity $ 2,057,562 $ 1,888,457
============== =============
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INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
----------- ------------ ------------ -----------
(unaudited) (unaudited)
------------------------- -------------------------
Interest Income (in thousands, except per share amounts)
Interest and fees on loans $ 27,778 $ 28,414 $ 109,297 $ 117,735
Securities available for sale
Taxable 2,962 2,525 12,211 9,334
Tax-exempt 1,842 1,594 7,018 5,920
Other investments 302 367 1,289 1,513
----------- ------------ ------------ -----------
Total Interest Income 32,884 32,900 129,815 134,502
----------- ------------ ------------ -----------
Interest Expense
Deposits 8,472 9,651 35,134 44,611
Other borrowings 3,319 3,869 12,874 17,849
----------- ------------ ------------ -----------
Total Interest Expense 11,791 13,520 48,008 62,460
----------- ------------ ------------ -----------
Net Interest Income 21,093 19,380 81,807 72,042
Provision for loan losses 717 782 3,562 3,737
----------- ------------ ------------ -----------
Net Interest Income After Provision for Loan Losses 20,376 18,598 78,245 68,305
----------- ------------ ------------ -----------
Non-interest Income
Service charges on deposit accounts 3,639 3,045 13,049 9,936
Net gains (losses) on assets
Real estate mortgage loans 3,854 1,965 8,178 6,306
Securities (750) 364 (24) 522
Other income 2,777 2,409 9,708 10,321
----------- ------------ ------------ -----------
Total Non-interest Income 9,520 7,783 30,911 27,085
----------- ------------ ------------ -----------
Non-interest Expense
Compensation and employee benefits 9,673 8,165 37,343 31,545
Occupancy, net 1,403 1,264 5,424 4,966
Furniture and fixtures 1,358 1,164 4,731 4,371
Other expenses 6,536 6,403 20,795 20,787
----------- ------------ ------------ -----------
Total Non-interest Expense 18,970 16,996 68,293 61,669
----------- ------------ ------------ -----------
Income Before Federal Income Tax 10,926 9,385 40,863 33,721
Federal income tax expense 2,969 2,739 11,396 9,288
----------- ------------ ------------ -----------
Net Income Before Cumulative Effect of Change
in Accounting Principle 7,957 6,646 29,467 24,433
Cumulative effect of change in accounting
principle, net of tax (35)
----------- ------------ ------------ -----------
Net Income $ 7,957 $ 6,646 $ 29,467 $ 24,398
=========== ============ ============ ===========
Net Income Per Share Before Cumulative
Effect of Change in Accounting Principle
Basic $ .45 $ .35 $ 1.61 $ 1.29
Diluted .44 .35 1.58 1.27
Net Income Per Share
Basic $ .45 $ .35 $ 1.61 $ 1.29
Diluted .44 .35 1.58 1.27
Cash Dividends Declared $ .14 $ .11 $ .48 $ .41
3
Non-performing assets
December 31,
2002 2001
----------------- -----------------
(dollars in thousands)
Non-accrual loans $5,738 $5,990
Loans 90 days or more past due and
still accruing interest 3,961 2,771
Restructured loans 270 285
----------------- -----------------
Total non-performing loans 9,969 9,046
Other real estate 3,908 1,610
----------------- -----------------
Total non-performing assets $13,877 $10,656
================= =================
As a percent of Portfolio Loans
Non-performing loans 0.72 % 0.65 %
Non-performing assets 1.00 0.77
Allowance for loan losses 1.21 1.17
Allowance for loan losses as a percent of
non-performing loans 168 179
Twelve months ended
December 31,
2002 2001
------------- ------------
(in thousands)
Balance at beginning of period $16,167 $13,982
Additions (deduction)
Provision charged to operating expense 3,562 3,737
Recoveries credited to allowance 733 644
Loans charged against the allowance (3,757) (2,196)
------------- ------------
Balance at end of period $16,705 $16,167
============= ============
Net loans charged against the allowance to
average Portfolio Loans 0.23 % 0.11 %
December 31, 2002
---------------------------------------------------------------------
Average Average
Amount Maturity Rate Amount Maturity Rate
------ -------- ---- ------ -------- ----
(dollars in thousands)
Brokered CDs (1) $278,012 1.9 years 3.03% $163,315 1.7 years 3.83%
Fixed-rate FHLB advances (1) 62,861 7.9 years 5.83 129,084 4.1 years 4.08
Variable-rate FHLB advances (1) 131,200 0.3 years 1.50 93,000 0.4 years 1.83
Securities sold under agreements to
repurchase (1) 98,712 0.1 years 1.74 54,963 0.2 years 1.94
Federal Funds purchased 23,840 1 day 1.38 35,100 1 day 1.86
-------------------------------- ----------------------------------
Total $594,625 1.8 years 2.71% $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. |
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December 31,
2002 2001
------------------- -------------------
(in thousands)
Unsecured debt $12,600 $10,500
------------------- -------------------
Preferred Securities 17,250 17,250
------------------- -------------------
Shareholders' Equity
Preferred stock, no par value
Common Stock, par value $1.00 per share 17,822 17,797
Capital surplus 75,076 76,580
Retained earnings 41,785 39,355
Accumulated other comprehensive income (loss) 3,364 (1,829)
------------------- -------------------
Total shareholders' equity 138,047 131,903
------------------- -------------------
Total capitalization $167,897 $159,653
=================== ===================
Net interest income and selected ratios
Three months ended Twelve months ended
December 31, December 31,
2002 2001 2002 2001
-------------- ------------- ------------- --------------
Average earning assets (in thousands) $1,891,002 $1,753,147 $1,813,364 $1,704,909
Tax equivalent net interest income 22,228 20,363 86,183 75,849
As a percent of average earning assets
Tax equivalent interest income 7.16 % 7.69 % 7.40 % 8.11 %
Interest expense 2.47 3.06 2.65 3.66
Tax equivalent net interest income 4.69 4.63 4.75 4.45
Average earning assets as a
percent of average assets 92.85 % 94.46 % 93.77 % 94.20 %
Free-funds ratio 10.60 % 12.06 % 11.18 % 11.27 %
Non-Interest Income
Three months ended Twelve months ended
December 31, December 31,
2002 2001 2002 2001
---------- ---------- ---------- -----------
(in thousands)
Service charges on deposit accounts $3,639 $3,045 $13,049 $9,936
Net gains (losses) on assets
Real estate mortgage loans 3,854 1,965 8,178 6,306
Securities (750) 364 (24) 522
Title insurance fees 807 517 2,474 1,874
Manufactured home loan origination fees
and commissions 507 616 1,949 2,258
Mutual fund and annuity commissions 198 194 979 798
Real estate mortgage loan servicing fees (56) (7) (606) 833
Other 1,321 1,089 4,912 4,558
---------- ---------- ---------- ----------
Total non-interest income $9,520 $7,783 $30,911 $27,085
========== ========== ========== ==========
5
Three months ended Twelve months ended
December 31, December 31,
2002 2001 2002 2001
-------------- ------------- ------------- --------------
(in thousands)
Real estate mortgage loans originated $331,493 $212,051 $876,667 $680,702
Real estate mortgage loans sold 251,367 117,026 600,300 410,998
Real estate mortgage loans sold with servicing
rights released 89,810 25,955 165,133 282,240
Net gains on the sale of real estate mortgage loans 3,854 1,965 8,178 6,306
Net gains as a percent of real estate mortgage
loans sold 1.53% 1.68% 1.36% 1.53%
Three months ended Twelve months ended
December 31, December 31,
2002 2001 2002 2001
--------------- --------------- --------------- ----------------
(in thousands)
Salaries $ 6,326 $ 5,757 $24,891 $ 22,226
Performance-based compensation
and benefits 1,373 750 5,247 3,392
Other benefits 1,974 1,658 7,205 5,927
--------------- --------------- --------------- ---------------
Salaries and benefits 9,673 8,165 37,343 31,545
Occupancy, net 1,403 1,264 5,424 4,966
Furniture and fixtures 1,358 1,164 4,731 4,371
Data processing 1,016 693 3,209 2,558
Communications 679 556 2,484 2,275
Advertising 973 743 2,813 2,490
Loan and collection 1,154 942 3,028 2,748
Supplies 492 342 1,626 1,442
Amortization of intangible assets 278 426 1,014 1,704
Other 1,944 2,701 6,621 7,570
--------------- --------------- --------------- ---------------
Total non-interest expense $18,970 $16,996 $68,293 $61,669
=============== =============== =============== ===============
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Three Months Ended
December 31,
2002 2001
------------------------------------ ------------------------------------------
Average Average
Balance Interest Rate Balance Interest Rate
----------- ---------- -------- ------------ ---------- --------
Assets (dollars in thousands)
Taxable loans (1) $ 1,493,507 $ 27,617 7.36 % $ 1,429,943 $ 28,250 7.87 %
Tax-exempt loans (1,2) 11,933 248 8.25 11,959 252 8.36
Taxable securities 211,067 2,962 5.57 158,766 2,525 6.31
Tax-exempt securities (2) 153,761 2,890 7.46 131,192 2,489 7.53
Other investments 20,734 302 5.78 21,287 367 6.84
----------- ---------- ----------- ----------
Interest Earning Assets 1,891,002 34,019 7.16 1,753,147 33,883 7.69
---------- ----------
Cash and due from banks 44,620 37,999
Other assets, net 101,042 64,916
----------- -----------
Total Assets $ 2,036,664 $ 1,856,062
=========== ===========
Liabilities
Savings and NOW $ 642,445 1,666 1.03 $ 591,290 2,124 1.43
Time deposits 713,010 6,806 3.79 637,741 7,527 4.68
Other borrowings 335,081 3,319 3.93 312,733 3,869 4.91
----------- ---------- ------------ ----------
Interest Bearing Liabilities 1,690,536 11,791 2.77 1,541,764 13,520 3.48
---------- ----------
Demand deposits 175,661 147,556
Other liabilities 31,790 32,091
Shareholders' equity 138,677 134,651
----------- -----------
Total liabilities and shareholders' equity $ 2,036,664 $ 1,856,062
=========== ===========
Tax Equivalent Net Interest Income $ 22,228 $ 20,363
========== ==========
Tax Equivalent Net Interest Income
as a Percent of Earning Assets 4.69 % 4.63 %
======== ========
| (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% |
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Twelve Months Ended
December 31,
2002 2001
------------------------------------ ------------------------------------------
Average Average
Balance Interest Rate Balance Interest Rate
----------- ---------- -------- ------------ ---------- --------
Assets (dollars in thousands)
Taxable loans (1) $ 1,426,286 $ 108,664 7.62 % $ 1,415,136 $ 117,002 8.27 %
Tax-exempt loans (1,2) 11,639 974 8.37 13,058 1,127 8.63
Taxable securities 211,777 12,211 5.77 137,085 9,334 6.81
Tax-exempt securities (2) 142,320 11,053 7.77 119,282 9,333 7.82
Other investments 21,342 1,289 6.04 20,348 1,513 7.44
----------- ---------- ----------- ----------
Interest Earning Assets 1,813,364 134,191 7.40 1,704,909 138,309 8.11
---------- ----------
Cash and due from banks 40,533 38,602
Other assets, net 79,848 66,383
----------- -----------
Total Assets $ 1,933,745 $ 1,809,894
=========== ===========
Liabilities
Savings and NOW $ 634,357 7,444 1.17 $ 583,817 11,484 1.97
Time deposits 688,297 27,690 4.02 623,657 33,127 5.31
Long-term debt 371 26 7.01
Other borrowings 287,983 12,874 4.47 304,973 17,823 5.84
----------- ---------- ----------- ----------
Interest Bearing Liabilities 1,610,637 48,008 2.98 1,512,818 62,460 4.13
---------- ----------
Demand deposits 156,294 138,200
Other liabilities 28,762 27,162
Shareholders' equity 138,052 131,714
----------- -----------
Total liabilities and shareholders' equity $ 1,933,745 $ 1,809,894
=========== ===========
Tax Equivalent Net Interest Income $ 86,183 $ 75,849
========== ==========
Tax Equivalent Net Interest Income
as a Percent of Earning Assets 4.75 % 4.45 %
======== ========
| (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
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 | January 16, 2003 | By | s/Robert N. Shuster Robert N. Shuster, Principal Financial Officer | |
| Date | January 16, 2003 | By | s/James J. Twarozynski James J. Twarozynski, Principal Accounting Officer |
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