Return on average equity and return on average assets [based on annualized net income or (loss)] were (8.97)% and (0.66)%, respectively, in the third quarter of 2008, compared to 6.01% and 0.46%, respectively, in the third quarter of 2007.
The net loss for the nine months ended
The year-on-year decrease in third quarter 2008 results was primarily
attributable to securities losses (
Operating Results
The Company's tax equivalent net interest income totaled
Service charges on deposits totaled
Securities losses totaled
Gains on the sale of mortgage loans were
Mortgage loan servicing income was
Non-interest expense totaled
Asset Quality
Commenting on asset quality, CEO Magee stated: "Although our provision for loan losses remained elevated, and we continue to be cautious about economic conditions, we did see notable improvements in credit metrics during the current quarter. Commercial loan 30- to 89-day delinquency rates were at the lowest levels since 2005, and our level of commercial loan watch credits declined for the first time in over two years. These improvements reflect, in part, the number of ongoing efforts of our team to proactively identify, assess and resolve potential problem loans."
A breakdown of non-performing loans by loan type is as follows: Loan Type 9/30/2008 6/30/2008 12/31/2007 (Dollars in Millions) Commercial $74.2 $74.4 $49.0 Consumer 3.9 3.9 3.4 Mortgage 33.9 30.6 23.1 Finance receivables 2.6 2.5 1.7 Total $114.6 $111.4 $77.2 Ratio of non-performing loans to total portfolio loans 4.58% 4.40% 3.07% Ratio of non-performing assets to total assets 4.29% 3.82% 2.68% Ratio of the allowance for loan losses to non- performing loans 47.01% 45.87% 58.63%
The increase in non-performing loans since year-end 2007 is due
principally to an increase in non-performing commercial loans, which is
primarily the result of several additional credits with real estate developers
becoming past due in 2008. These delinquencies largely reflect cash flow
difficulties encountered by many real estate developers in
The provision for loan losses was
Balance Sheet
Total assets were
Stockholders' equity totaled
Regulatory Capital Ratio 9/30/2008 12/31/2007 Well Capitalized Minimum Tier 1 capital to average assets (estimate) 7.45% 7.35% 5.00% Tier 1 capital to risk-weighted assets (estimate) 9.58% 9.25% 6.00% Total capital to risk-weighted assets (estimate) 10.84% 10.50% 10.00%
"We continue to closely monitor the implementation of the recently enacted
plan out of
Conference Call
To participate in the live conference call, please dial 1-800-860-2442.
The call can also be accessed (listen-only mode) via the Company's website at
www.ibcp.com in the "Investor Relations" section. A playback of the call can
be accessed by dialing 1-877-344-7529 (Replay Passcode # 423281). The replay
will be available through
In addition, a Power Point presentation associated with the third quarter
2008 conference call will be available on the Company's website at
www.ibcp.com in the "Investor Relations" section under the "Presentations" tab
beginning on
About Independent Bank Corporation
Independent Bank Corporation (Nasdaq: IBCP) is a
Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "expect," "believe," "intend," "estimate," "project," "may" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are predicated on management's beliefs and assumptions based on information known to Independent Bank Corporation's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Independent Bank Corporation's management for future or past operations, products or services, and forecasts of the Company's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, and estimates of credit quality trends. Such statements reflect the view of Independent Bank Corporation's management as of this date with respect to future events and are not guarantees of future performance, involve assumptions and are subject to substantial risks and uncertainties, such as the changes in Independent Bank Corporation's plans, objectives, expectations and intentions. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, the Company's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in interest rates, changes in the accounting treatment of any particular item, the results of regulatory examinations, changes in industries where the Company has a concentration of loans, changes in the level of fee income, changes in general economic conditions and related credit and market conditions, and the impact of regulatory responses to any of the foregoing. Forward-looking statements speak only as of the date they are made. Independent Bank Corporation does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Independent Bank Corporation claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES Consolidated Statements of Financial Condition September 30, December 31, 2008 2007 (unaudited) Assets (in thousands) Cash and due from banks $94,316 $79,289 Federal funds sold 250 Cash and cash equivalents 94,566 79,289 Trading securities 5,179 Securities available for sale 241,910 364,194 Federal Home Loan Bank and Federal Reserve Bank stock, at cost 28,063 21,839 Loans held for sale, carried at fair value, at September 30, 2008 24,867 33,960 Loans Commercial 1,012,569 1,066,276 Mortgage 856,875 873,945 Installment 368,651 368,478 Finance receivables 267,307 209,631 Total Loans 2,505,402 2,518,330 Allowance for loan losses (53,898) (45,294) Net Loans 2,451,504 2,473,036 Property and equipment, net 72,771 73,558 Bank owned life insurance 44,404 42,934 Goodwill 66,754 66,754 Other intangibles 12,948 15,262 Capitalized mortgage loan servicing rights 16,260 15,780 Accrued income and other assets 79,394 60,910 Total Assets $3,138,620 $3,247,516 Liabilities and Shareholders' Equity Deposits Non-interest bearing $310,510 $294,332 Savings and NOW 960,975 987,299 Retail time 687,347 707,419 Brokered time 201,709 516,077 Total Deposits 2,160,541 2,505,127 Federal funds purchased 54,452 Other borrowings 611,646 302,539 Subordinated debentures 92,888 92,888 Financed premiums payable 26,181 16,345 Liabilities of discontinued operations 34 Accrued expenses and other liabilities 22,079 35,629 Total Liabilities 2,913,335 3,007,014 Shareholders' Equity Preferred stock, no par value-- 200,000 shares authorized; none outstanding Common stock, $1.00 par value-- 40,000,000 shares authorized; issued and outstanding: 23,014,147 shares at September 30, 2008 and 22,647,511 shares at December 31, 2007 22,782 22,601 Capital surplus 196,954 195,302 Retained earnings 16,621 22,770 Accumulated other comprehensive loss (11,072) (171) Total Shareholders' Equity 225,285 240,502 Total Liabilities and Shareholders' Equity $3,138,620 $3,247,516 INDEPENDENT BANK CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, 2008 2008 2007 2008 2007 (unaudited) (in thousands) Interest Income Interest and fees on loans $46,427 $46,750 $50,941 $141,303 $151,470 Interest on securities Taxable 2,078 2,176 2,308 6,558 7,377 Tax-exempt 1,652 2,099 2,488 5,998 7,623 Other investments 466 362 232 1,185 1,010 Total Interest Income 50,623 51,387 55,969 155,044 167,480 Interest Expense Deposits 9,577 11,191 22,590 36,980 68,376 Other borrowings 7,099 6,975 2,964 20,511 8,581 Total Interest Expense 16,676 18,166 25,554 57,491 76,957 Net Interest Income 33,947 33,221 30,415 97,553 90,523 Provision for loan losses 19,788 12,352 10,735 43,456 33,767 Net Interest Income After Provision for Loan Losses 14,159 20,869 19,680 54,097 56,756 Non-interest Income Service charges on deposit accounts 6,416 6,164 6,565 18,227 17,833 Net gains (losses) on assets Mortgage loans 969 1,141 1,094 3,977 3,413 Securities (6,711) 837 52 (8,037) 259 VISA check card interchange income 1,468 1,495 1,287 4,334 3,529 Mortgage loan servicing 340 1,528 633 1,545 1,872 Title insurance fees 307 384 363 1,108 1,207 Other income 2,659 2,588 2,535 7,923 7,859 Total Non- interest Income 5,448 14,137 12,529 29,077 35,972 Non-interest Expense Compensation and employee benefits 14,023 13,808 13,621 42,015 42,373 Occupancy, net 2,871 2,813 2,521 8,798 7,870 Loan and collection 2,008 2,031 1,285 5,895 3,512 Furniture, fixtures and equipment 1,662 1,825 1,798 5,304 5,689 Data processing 1,760 1,712 1,753 5,197 5,103 Loss on other real estate and repossessed assets 425 1,560 80 2,091 172 Advertising 1,575 1,168 1,472 3,843 3,965 Branch acquisition and conversion costs 330 Goodwill impairment 343 Other expenses 6,332 6,274 5,842 18,955 16,782 Total Non- interest Expense 30,656 31,191 28,372 92,098 86,139 Income (Loss) From Continuing Operations Before Income Tax (11,049) 3,815 3,837 (8,924) 6,589 Income tax expense (benefit) (5,723) 469 160 (7,285) (1,088) Income (Loss) From Continuing Operations (5,326) 3,346 3,677 (1,639) 7,677 Discontinued operations, net of tax 48 248 Net Income (Loss) $(5,326) $3,346 $3,725 $(1,639) $7,925 INDEPENDENT BANK CORPORATION AND SUBSIDIARIES Selected Financial Data Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, 2008 2008 2007 2008 2007 (unaudited) Per Share Data Income (Loss) From Continuing Operations Basic (A) $(.23) $.15 $.16 $(.07) $.34 Diluted (B) (.23) .15 .16 (.07) .34 Net Income (Loss) Basic (A) $(.23) $.15 $.16 $(.07) $.35 Diluted (B) (.23) .15 .16 (.07) .35 Cash dividends declared .01 .01 .21 .13 .63 Selected Ratios (annualized) As a Percent of Average Interest- Earning Assets Tax equivalent interest income 7.02% 7.15% 7.75% 7.18% 7.73% Interest expense 2.26 2.47 3.44 2.60 3.46 Tax equivalent net interest income 4.76 4.68 4.31 4.58 4.27 Income (Loss) From Continuing Operations Average equity (8.97)% 5.58% 5.93% (0.91)% 4.05% Average assets (0.66) 0.42 0.45 (0.07) 0.31 Net Income (Loss) to Average equity (8.97)% 5.58% 6.01% (0.91)% 4.18% Average assets (0.66) 0.42 0.46 (0.07) 0.33 Average Shares Basic (A) 22,777,760 22,767,396 22,586,916 22,728,200 22,665,803 Diluted (B) 22,837,476 22,834,331 22,732,135 22,818,372 22,883,747
(A) Average shares of common stock for basic net income per share include shares issued and outstanding during the period.
(B) Average shares of common stock for diluted net income per share include shares to be issued upon exercise of stock options, stock units for deferred compensation plan for non-employee directors and unvested restricted shares. For any period in which a loss is recorded, the assumed exercise of stock options and stock units for deferred compensation plan for non-employee directors would have an anti-dilutive impact on the loss per share and thus are ignored in the diluted per share calculation.
SOURCE Independent Bank Corporation