INDEPENDENT BANK CORPORATION 8-K

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, 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 7.      Financial Statements and Exhibits.

Exhibit

99   Supplemental data to the Registrant's press release dated October 23, 2003.

Item 12.      Results of Operations and Financial Condition.

The information attached at Exhibit 99 is supplemental data to the Registrant's press release dated October 23, 2003 regarding its earnings during the quarter ended September 30, 2003.

The information in this Form 8-K and the attached Exhibit shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.








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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 October 23, 2003
  By s/ Robert N. Shuster
Robert N. Shuster, Principal Financial Officer
 
 
Date October 23, 2003
  By s/ James J. Twarozynski
James J. Twarozynski, Principal Accounting Officer
 
 











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INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition		 Exhibit 99

  September 30, 2003   December 31, 2002
 
 
  (unaudited)
 
Assets (in thousands)
Cash and due from banks $      54,633    $      60,731 
Securities available for sale 437,687    371,246 
Federal Home Loan Bank stock, at cost 13,895    9,704 
Loans held for sale 69,780    129,577 
Loans
  Commercial 594,462    536,715 
  Real estate mortgage 657,723    601,799 
  Installment 237,820    242,928 
  Finance receivables 125,560     
 
 
Total Loans 1,615,565    1,381,442 
  Allowance for loan losses (17,848)   (16,705)
 
 
Net Loans 1,597,717    1,364,737 
Property and equipment, net 43,330    40,735 
Bank owned life insurance 36,545    35,415 
Goodwill 16,289    7,299 
Other intangibles 8,017    6,420 
Accrued income and other assets 37,869    31,698 
 
 
Total Assets $ 2,315,762    $ 2,057,562 
 
 
Liabilities and Shareholders' Equity
Deposits
  Non-interest bearing $    195,871    $    179,871 
  Savings and NOW 688,767    657,530 
  Time 754,720    698,202 
 
 
Total Deposits 1,639,358    1,535,603 
Federal funds purchased 67,460    23,840 
Other borrowings 346,190    310,413 
Guaranteed preferred beneficial interests in Company's subordinated
  debentures 50,600    17,250 
Financed premiums payable 26,406     
Accrued expenses and other liabilities 31,099    32,409 
 
 
Total Liabilities 2,161,113    1,919,515 
 
 
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: 19,525,840 shares at September 30, 2003
    and 17,822,090 shares at December 31, 2002 19,526    17,822 
  Capital surplus 119,434    75,076 
  Retained earnings 11,094    41,785 
  Accumulated other comprehensive income 4,595    3,364 
 
 
Total Shareholders' Equity 154,649    138,047 
 
 
Total Liabilities and Shareholders' Equity $ 2,315,762    $ 2,057,562 
 
 

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INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations

  Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2003 2002 2003 2002  
 
 
  (unaudited) (unaudited)
 
Interest Income (in thousands, except per share amounts)
  Interest and fees on loans  $ 30,945   $ 27,616   $   88,050   $ 81,519  
  Securities available for sale 
    Taxable  2,727   3,223   8,575   9,249  
    Tax-exempt  2,134   1,776   5,982   5,176  
  Other investments  165   340   442   987  
 
 
Total Interest Income  35,971   32,955   103,049   96,931  
 
 
Interest Expense 
  Deposits  6,769   8,994   21,370   26,662  
  Other borrowings  3,943   2,957   12,146   9,555  
 
 
Total Interest Expense  10,712   11,951   33,516   36,217  
 
 
Net Interest Income  25,259   21,004   69,533   60,714  
Provision for loan losses  569   752   2,279   2,845  
 
 
Net Interest Income After Provision for Loan Losses  24,690   20,252   67,254   57,869  
 
 
Non-interest Income 
  Service charges on deposit accounts  3,855   3,457   10,803   9,410  
  Net gains (losses) on asset sales 
    Real estate mortgage loans  5,652   1,280   14,001   4,324  
    Securities  (1,314 ) 550   (755 ) 726  
  Title insurance fees  983   580   2,633   1,667  
  Manufactured home loan origination fees 
    and commissions  535   445   1,282   1,442  
  Real estate mortgage loan servicing  201   (1,118 ) (1,196 ) (550 )
  Other income  1,902   1,487   5,872   4,372  
 
 
Total Non-interest Income  11,814   6,681   32,640   21,391  
 
 
Non-interest Expense 
  Compensation and employee benefits  11,241   9,620   31,677   27,670  
  Occupancy, net  1,611   1,371   4,835   4,021  
  Furniture and fixtures  1,381   1,123   4,125   3,373  
  Loss on prepayment of borrowings 983 0   983   59  
  Other expenses  7,078   4,963   19,376   14,200  
 
 
Total Non-interest Expense  22,294   17,077   60,996   49,323  
 
 
Income Before Income Tax  14,210   9,856   38,898   29,937  
Income tax expense  3,890   2,743   10,630   8,427  
 
 
Net Income  $ 10,320   $   7,113   $   28,268   $ 21,510  
 
 
Net Income Per Share 
  Basic  $      .53   $      .35   $       1.44   $     1.06  
  Diluted  .51   .35   1.41   1.04  
Dividends Per Common Share 
  Declared  $      .16   $      .10   $        .43   $      .31  
  Paid  .16   .10   .43   .31  

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Non-performing assets      
  September 30,
2003		   December 31,
2002		  
 
 
 
  (dollars in thousands)
  Non-accrual loans   $  5,047   $  5,738  
  Loans 90 days or more past due and 
    still accruing interest  3,619   3,961  
  Restructured loans  286   270  
 
 
 
Total non-performing loans  8,952   9,969  
  Other real estate  3,080   3,908  
 
 
 
Total non-performing assets  $12,032   $13,877  
 
 
 
As a percent of Portfolio Loans 
     Non-performing loans  0.55 %   0.72 %  
     Allowance for loan losses  1.10   1.21  
   Non-performing assets to total assets  0.52   0.67  
   Allowance for loan losses as a percent of 
     non-performing loans  199   168  




Allowance for loan losses      
  Nine months ended
September 30,
  2003   2002  
 
 
 
  (in thousands)
Balance at beginning of period   $ 16,705   $ 16,167  
Additions (deduction) 
  Allowance on loans acquired  517  
  Provision charged to operating expense  2,279   2,845  
  Recoveries credited to allowance  795   551  
  Loans charged against the allowance  (2,448 ) (1,865 )
 
 
 
Balance at end of period  $ 17,848   $ 17,698  
 
 
 
Net loans charged against the allowance to 
       average Portfolio Loans (annualized)  0.15 %   0.12 %  





  September 30, 2003   December 31, 2002
 
 
  Amount   Average
Maturity		   Rate   Amount   Average
Maturity		   Rate
 
 
  (dollars in thousands)
Brokered CDs(1)   $354,503   2.2 years   2.43 %   $278,012   1.9 years   3.03 %
Fixed rate FHLB advances(1)   61,684   7.1 years   5.04   62,861   7.9 years   5.83
Variable rate FHLB advances(1)   147,550   0.3 years   1.32   131,200   0.3 years   1.50
Securities sold under agreements to Repurchase(1)   133,961   0.1 years   1.26   98,712   0.1 years   1.74
Federal funds purchased   67,460   1 day   1.29   23,840   1 day   1.38
 
 
Total   $765,158   1.7 years   2.12 %   $594,625   1.8 years   2.71 %
 
 

            (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         
  September 30,
2003		   December 31,
2002		  
 
 
 
  (in thousands)
Unsecured debt     $  12,600  
     
 
Preferred Securities  $  50,600   17,250  
 
 
 
Shareholders' Equity 
  Preferred stock, no par value 
  Common Stock, par value $1.00 per share  19,526   17,822  
  Capital surplus  119,434   75,076  
  Retained earnings  11,094   41,785  
  Accumulated other comprehensive income (loss)  4,595   3,364  
 
 
 
          Total shareholders' equity  154,649   138,047  
 
 
 
          Total capitalization  $205,249   $167,897  
 
 
 
Non-Interest Income          
  Three months ended
September 30,		 Nine months ended
September 30,
  2003   2002   2003   2002  
 
 
 
 
 
Service charges on deposit accounts   $   3,855   $ 3,457   $ 10,803   $   9,410  
Net gains (losses) on asset sales 
Real estate mortgage loans  5,652   1,280   14,001   4,324  
Securities  (1,314 ) 550   (755 ) 726  
Title insurance fees  983   580   2,633   1,667  
Bank owned life insurance  360   8   1,102   8  
Manufactured home loan origination fees 
  and commissions  535   445   1,282   1,442  
Mutual fund and annuity commissions  319   203   909   781  
Real estate mortgage loan servicing  201   (1,118 ) (1,196 ) (550 )
Other  1,223   1,276   3,861   3,583  
 
 
 
 
 
      Total non-interest income  $ 11,814   $ 6,681   $ 32,640   $ 21,391  
 
 
 
 
 

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  Three months ended
September 30,		   Nine months ended
September 30,
  2003   2002   2003   2002  
 
 
 
 
 
  (in thousands)
Real estate mortgage loans originated   $ 344,999   $ 251,695   $970,210   $ 545,174  
Real estate mortgage loans sold  299,502   105,613   771,754   348,933  
Real estate mortgage loans sold with servicing 
  rights released  12,802   53,828   43,517   75,323  
Net gains on the sale of real estate mortgage loans  5,652   1,280   14,001   4,324  
Net gains as a percent of real estate mortgage 
  loans sold ("Loan Sale Margin")  1.89 % 1.21 % 1.81 % 1.24 %
SFAS #133 adjustments included in the Loan 
  Sale Margin  (0.16 )% (0.56 )% 0.05 % (0.24 )%


Non-Interest Expense          
  Three months ended
September 30,		   Nine months ended
September 30,		  
  2003   2002   2003   2002  
 
 
 
 
 
  (in thousands)
Salaries  $  7,183   $  6,435   $20,446   $18,565  
Performance-based compensation 
  and benefits  1,670   1,325   4,560   3,874  
Other benefits  2,388   1,860   6,671   5,231  
 
 
 
 
 
  Compensation and employee 
    benefits  11,241   9,620   31,677   27,670  
Occupancy, net  1,611   1,371   4,835   4,021  
Furniture and fixtures  1,381   1,123   4,125   3,373  
Data processing  1,025   766   2,921   2,193  
Advertising  1,151   663   2,894   1,840  
Loan and collection  824   659   2,655   1,874  
Communications  738   592   2,134   1,805  
Supplies  461   463   1,420   1,134  
Legal and professional  584   302   1,415   801  
Amortization of intangible assets  492   244   1,226   736  
Loss on prepayment of borrowings  983       983   59  
Other  1,803   1,274   4,711   3,817  
 
 
 
 
 
      Total non-interest expense  $22,294   $17,077   $60,996   $49,323  
 
 
 
 
 

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Average Balances and Tax Equivalent Rates
  Three Months Ended
September 30,
  2003   2002  
 
 
 
  Average
Balance		   Interest   Rate   Average
Balance		   Interest   Rate
 
 
 
   
 
 
 
Assets   (dollars in thousands)
Taxable loans (1)   $1,698,405   $30,797   7.22 %   $1,428,149   $27,456   7.65 %
Tax-exempt loans (1,2)  11,236   228   7.98     11,541   246   8.46
Taxable securities  246,360   2,727   4.39   221,333   3,223   5.78
Tax-exempt securities (2)  188,775   3,376   7.10   145,557   2,801   7.63
Other investments   13,414 165 4.88 21,521 340 6.27
 
 
     
 
   
                    Interest Earning Assets  2,158,190   37,293   6.87 1,828,101   34,066   7.41
   
       
   
Cash and due from banks  55,626             40,513  
Other assets, net  121,333             87,496
 
       
     
                               Total Assets  $2,335,149             $1,956,110  
 
       
     
Liabilities 
Savings and NOW  $   696,523   1,070   0.61   $   637,858   1,878   1.17
Time deposits  771,731   5,699   2.93   712,287   7,116   3.96
Other borrowings  452,372   3,943   3.46   277,199   2,957   4.23
 
 
     
 
   
               Interest Bearing Liabilities  1,920,626   10,712   2.21   1,627,344   11,951   2.91
   
       
   
Demand deposits  204,480             157,227  
Other liabilities  57,121             29,580  
Shareholders' equity  152,922             141,959  
 
       
     
 Total liabilities and shareholders' equity  $2,335,149             $1,956,110  
 
       
     
         Tax Equivalent Net Interest Income      $     26,581             $     22,115  
   
       
   
         Tax Equivalent Net Interest Income 
             as a Percent of Earning Assets        4.90 %         4.82 %
     
       
 

(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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Average Balances and Tax Equivalent Rates
  Nine Months Ended
September 30,
  2003   2002  
 
 
 
  Average
Balance		   Interest   Rate   Average
Balance		   Interest   Rate
 
 
 
   
 
 
 
Assets   (dollars in thousands)
Taxable loans (1)   $1,588,440   $87,590   7.36 %   $1,403,633   $81,047   7.71 %
Tax-exempt loans (1,2)  11,674   708   8.11     11,541   726   8.41
Taxable securities  235,641   8,575   4.87   212,014   9,249   5.83
Tax-exempt securities (2)  174,344   9,476   7.27   138,465   8,163   7.88
Other investments   11,802 442 5.01 21,547 987 6.12
 
 
     
 
   
                    Interest Earning Assets  2,021,901   106,791   7.06 1,787,200   100,172   7.49
   
       
   
Cash and due from banks  48,897             39,163  
Other assets, net  117,029             72,747
 
       
     
                               Total Assets  $2,187,827             $1,899,110  
 
       
     
Liabilities 
Savings and NOW  $   686,418   3,867   0.75   $   631,633   5,778   1.22
Time deposits  728,254   17,503   3.21   679,968   20,884   4.11
Other borrowings  395,579   12,146   4.11   272,111   9,555   4.69
 
 
     
 
   
               Interest Bearing Liabilities  1,810,251   33,516   2.48   1,583,712   36,217   3.06
   
       
   
Demand deposits  179,975             149,775  
Other liabilities  49,090             27,741  
Shareholders' equity  148,511             137,882  
 
       
     
 Total liabilities and shareholders' equity  $2,187,827             $1,899,110  
 
       
     
         Tax Equivalent Net Interest Income      $     73,275             $     63,955  
   
       
   
         Tax Equivalent Net Interest Income 
             as a Percent of Earning Assets        4.84 %         4.78 %
     
       
 

(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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