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): July 24, 2002
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INDEPENDENT BANK CORPORATION
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(Exact name of registrant as specified in its charter)
Michigan
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(State or Jurisdiction of Incorporation or Organization)
0-7818 38-2032782
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(Commission File Number) (I.R.S. Employer Identification No.)
230 West Main Street, Ionia, Michigan 48846
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(Address of principal executive offices)
(616) 527-9450
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(Registrant's telephone number, including area code)
NONE
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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 July 24, 2002
regarding its earnings during the quarter ended June 30,
2002.
2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition
June 30, December 31,
2002 2001
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(unaudited)
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Assets (in thousands)
Cash and due from banks $ 57,734 $ 50,525
Securities available for sale 380,558 290,303
Federal Home Loan Bank stock, at cost 21,521 21,266
Loans held for sale 34,184 77,220
Loans
Commercial 513,903 482,046
Real estate mortgage 615,159 661,462
Installment 248,435 241,176
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Total Loans 1,377,497 1,384,684
Allowance for loan losses (17,494) (16,167)
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Net Loans 1,360,003 1,368,517
Property and equipment, net 38,239 35,944
Accrued income and other assets 42,398 44,682
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Total Assets $ 1,934,637 $ 1,888,457
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Liabilities and Shareholders' Equity
Deposits
Non-interest bearing $ 158,609 $ 160,598
Savings and NOW 634,771 601,949
Time 702,604 624,820
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Total Deposits 1,495,984 1,387,367
Federal funds purchased 33,650 35,100
Other borrowings 217,202 288,010
Guaranteed preferred beneficial interests in Company's subordinated
debentures 17,250 17,250
Accrued expenses and other liabilities 29,616 28,827
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Total Liabilities 1,793,702 1,756,554
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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: 11,723,396 shares at June 30, 2002
and 11,864,876 shares at December 31, 2001 11,723 11,865
Capital surplus 76,525 82,512
Retained earnings 49,529 39,355
Accumulated other comprehensive income 3,158 (1,829)
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Total Shareholders' Equity 140,935 131,903
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Total Liabilities and Shareholders' Equity $ 1,934,637 $ 1,888,457
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INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
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(unaudited) (unaudited)
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Interest Income (in thousands, except per share amounts)
Interest and fees on loans $ 26,849 $ 29,423 $ 53,903 $ 59,587
Securities available for sale
Taxable 3,315 2,086 6,026 4,358
Tax-exempt 1,757 1,438 3,400 2,841
Other investments 334 379 647 768
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Total Interest Income 32,255 33,326 63,976 67,554
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Interest Expense
Deposits 9,042 11,428 17,668 24,359
Other borrowings 2,970 4,788 6,598 8,973
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Total Interest Expense 12,012 16,216 24,266 33,332
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Net Interest Income 20,243 17,110 39,710 34,222
Provision for loan losses 1,166 1,261 2,093 1,894
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Net Interest Income After Provision for Loan Losses 19,077 15,849 37,617 32,328
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Non-interest Income
Service charges on deposit accounts 3,241 2,265 5,953 4,083
Net gains on asset sales
Real estate mortgage loans 1,238 2,052 3,044 3,047
Securities 210 123 176 158
Other income 2,896 2,898 5,537 5,056
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Total Non-interest Income 7,585 7,338 14,710 12,344
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Non-interest Expense
Salaries and employee benefits 9,262 7,874 18,050 15,526
Occupancy, net 1,344 1,183 2,650 2,473
Furniture and fixtures 1,144 1,109 2,250 2,167
Other expenses 4,754 4,802 9,296 8,901
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Total Non-interest Expense 16,504 14,968 32,246 29,067
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Income Before Federal Income Tax 10,158 8,219 20,081 15,605
Federal income tax expense 2,870 1,970 5,684 4,063
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Net Income Before Cumulative Effect of Change
in Accounting Principle 7,288 6,249 14,397 11,542
Cumulative effect of change in accounting
principle, net of tax (35)
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Net Income $ 7,288 $ 6,249 $ 14,397 $ 11,507
======== ======== ======== ========
Net Income Per Share Before Cumulative
Effect of Change in Accounting Principle
Basic $ .62 $ .52 $ 1.22 $ .95
Diluted .61 .51 1.20 .94
Net Income Per Share
Basic $ .62 $ .52 $ 1.22 $ .95
Diluted .61 .51 1.20 .94
Dividends Per Common Share
Declared $ .18 $ .15 $ .36 $ .30
Paid .18 .15 .36 .29
4
NON-PERFORMING ASSETS
June 30, December 31,
2002 2001
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(dollars in thousands)
Non-accrual loans $8,023 $5,990
Loans 90 days or more past due and
still accruing interest 3,676 2,771
Restructured loans 276 285
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Total non-performing loans 11,975 9,046
Other real estate 1,518 1,610
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Total non-performing assets $13,493 $10,656
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As a percent of Portfolio Loans
Non-performing loans 0.87% 0.65%
Non-performing assets 0.98 0.77
Allowance for loan losses 1.27 1.17
Allowance for loan losses as a percent of
non-performing loans 146 179
ALLOWANCE FOR LOAN LOSSES
Six months ended
June 30,
2002 2001
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(in thousands)
Balance at beginning of period $16,167 $13,982
Additions (deduction)
Provision charged to operating expense 2,093 1,894
Recoveries credited to allowance 395 302
Loans charged against the allowance (1,161) (1,029)
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Balance at end of period $17,494 $15,149
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Net loans charged against the allowance to
average Portfolio Loans (annualized) 0.11% 0.10%
June 30, 2002 December 31, 2001
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Average Average
Amount Maturity Rate Amount Maturity Rate
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(dollars in thousands)
Brokered CDs (1) $253,430 1.7 years 3.13% $163,315 1.7 years 3.83%
Fixed-rate FHLB advances (1) 60,998 8.6 years 5.94 129,084 4.1 years 4.08
Variable-rate FHLB advances (1) 48,300 0.4 years 2.22 93,000 0.4 years 1.83
Securities sold under agreements to
Repurchase (1) 93,174 0.1 years 1.91 54,963 0.2 years 1.94
Federal Funds purchased 33,650 1 day 2.07 35,100 1 day 1.86
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Total $489,552 2.0 years 3.08% $475,462 1.8 years 3.15%
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(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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CAPITALIZATION
June 30, December 31,
2002 2001
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(in thousands)
Unsecured debt $ 10,500 $ 10,500
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Preferred Securities 17,250 17,250
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Shareholders' Equity
Preferred stock, no par value
Common Stock, par value $1.00 per share 11,723 11,865
Capital surplus 76,525 82,512
Retained earnings 49,529 39,355
Accumulated other comprehensive income (loss) 3,158 (1,829)
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Total shareholders' equity 140,935 131,903
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Total capitalization $ 168,685 $ 159,653
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NET INTEREST INCOME AND SELECTED RATIOS
Three months ended Six months ended
June 30, June 30,
2002 2001 2002 2001
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Average earning assets (in thousands) $ 1,779,117 $ 1,670,563 $ 1,766,408 $ 1,664,557
Tax equivalent net interest income 21,342 18,049 41,840 36,065
As a percent of average earning assets
Tax equivalent interest income 7.51% 8.21% 7.52% 8.38%
Interest expense 2.71 3.89 2.77 4.04
Tax equivalent net interest income 4.80 4.32 4.75 4.34
Average earning assets as a
percent of average assets 94.49% 93.86% 94.45% 93.97%
Free-funds ratio 11.72% 11.01% 11.60% 10.74%
NON-INTEREST INCOME
Three months ended Six months ended
June 30, June 30,
2002 2001 2002 2001
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(in thousands)
Service charges on deposit accounts $ 3,241 $ 2,265 $ 5,953 $ 4,083
Net gains on asset sales
Real estate mortgage loans 1,238 2,052 3,044 3,047
Securities 210 123 176 158
Manufactured home loan origination fees
and commissions 553 676 997 1,029
Title insurance fees 464 562 1,087 848
Real estate mortgage loan servicing fees 273 165 568 556
Mutual fund and annuity commissions 349 218 578 390
Other 1,257 1,277 2,307 2,233
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Total non-interest income $ 7,585 $ 7,338 $14,710 $12,344
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6
Three months ended Six months ended
June 30, June 30,
2002 2001 2002 2001
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(in thousands)
Real estate mortgage loans originated $152,759 $192,081 $293,479 $308,052
Real estate mortgage loans sold 91,500 128,073 243,320 194,587
Real estate mortgage loans sold with servicing
rights released 9,158 112,481 21,495 170,400
Net gains on the sale of real estate mortgage loans 1,238 2,052 3,044 3,047
Net gains as a percent of real estate mortgage
loans sold 1.35% 1.60% 1.25% 1.57%
NON-INTEREST EXPENSE
Three months ended Six months ended
June 30, June 30,
2002 2001 2002 2001
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(in thousands)
Salaries $ 6,312 $ 5,408 $12,130 $10,894
Performance-based compensation
and benefits 1,359 1,051 2,549 1,860
Other benefits 1,591 1,415 3,371 2,772
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Salaries and benefits $ 9,262 $ 7,874 $18,050 $15,526
Occupancy, net 1,344 1,183 2,650 2,473
Furniture and fixtures 1,144 1,109 2,250 2,167
Data processing 714 583 1,427 1,137
Communications 567 577 1,213 1,165
Advertising 565 633 1,177 1,134
Loan and collection 710 608 1,215 1,073
Supplies 338 298 671 667
Amortization of intangible assets 246 425 492 852
Other 1,614 1,678 3,101 2,873
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Total non-interest expense $16,504 $14,968 $32,246 $29,067
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AVERAGE BALANCE SHEET (IN THOUSANDS)
Three months ended Six months ended
June 30, June 30,
2002 2002
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Loans and loans held for sale $1,388,209 $1,402,712
Other interest bearing assets 390,908 363,696
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Total interest earning assets 1,779,117 1,766,408
Non interest earning assets 103,706 103,723
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Total assets $1,882,823 $1,870,131
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Deposits $1,087,634 $1,085,056
Brokered CD's 232,214 206,954
Other borrowings 250,793 269,527
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Interest bearing liabilities 1,570,641 1,561,537
Demand deposits 149,040 145,978
Other liabilities 26,592 26,807
Shareholders' equity 136,550 135,809
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Total liabilities and Shareholders' equity $1,882,823 $1,870,131
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2001 RECLASSIFIED QUARTERLY NET INTEREST INCOME AND NON-INTEREST EXPENSE
Three Months Ended
March 31, June 30, September 30, December 31,
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(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
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Total Interest Income 34,228 33,326 34,048 32,900
Interest expense 17,116 16,216 15,608 13,520
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Net Interest Income (1) $17,112 $17,110 $18,440 $19,380
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Net interest income as a percent
of average earning assets (1) 4.35% 4.32% 4.46% 4.63%
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Non-interest expense (1) $14,099 $14,968 $15,606 $16,996
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Reclassification (1) $ 1,024 $ 2,079 $ 1,872 $ 1,882
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(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.
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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 July 24, 2002 By /s/ Robert N. Shuster
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Robert N. Shuster, Principal Financial
Officer
Date July 24, 2002 By /s/ James J. Twarozynski
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James J. Twarozynski, Principal
Accounting Officer
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