FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED
Commission file number 0-7818
INDEPENDENTBANK CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 38-2032782
(State or jurisdiction of Incorporation (I.R.S. Employer Identification Number)
or Organization)
4200 East Beltline,
(Address of principal executive offices) (616) 527-5820 (Registrant's telephone number, including area code) NONE
Former name, address and fiscal year, if changed since last report.
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class Trading Symbol
registered Common stock, no par value IBCP The Nasdaq Stock
Indicate by check mark whether the registrant (1) has filed all documents and reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ? NO ? Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ? NO ? Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, smaller reporting company or an emerging growth company. Large accelerated filer ? Accelerated filer ? Non-accelerated filer ? Smaller reporting company ? Emerging growth company ? If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. Yes ? No ? Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ? NO ? Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: common stock, no par value, 21,884,495 as ofNovember 4, 2020 . -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES INDEX Number(s) PART I - Financial Information Item 1. Condensed Consolidated Statements of Financial Condition 3September 30, 2020 andDecember 31, 2019 Condensed Consolidated Statements of Operations Three- and 4 Nine-month periods endedSeptember 30, 2020 and 2019 Condensed Consolidated Statements of Comprehensive Income 5 Three- and Nine-month periods endedSeptember 30, 2020 and 2019 Condensed Consolidated Statements of Cash Flows Nine-month 6 periods endedSeptember 30, 2020 and 2019 Condensed Consolidated Statements of Shareholders' Equity 7 Three- and Nine-month periods endedSeptember 30, 2020 and 2019 Notes to Interim Condensed Consolidated Financial 8-65 Statements
Item 2. Management's Discussion and Analysis of Financial Condition
66-92
and Results of Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk 93 Item 4. Controls and Procedures 93 PART II - Other Information Item 1A Risk Factors
94
Item 2. Unregistered Sales of Equity Securities and Use of 97 Proceeds Item 6. Exhibits 98 1
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FORWARD-LOOKING STATEMENTS Statements in this report that are not statements of historical fact, including statements that include terms such as ''will,'' ''may,'' ''should,'' ''believe,'' ''expect,'' ''forecast,'' ''anticipate,'' ''estimate,'' ''project,'' ''intend,'' ''likely,'' ''optimistic'' and ''plan'' and statements about future or projected financial and operating results, plans, projections, objectives, expectations, and intentions, are forward-looking statements. Forward-looking statements include, but are not limited to, descriptions of plans and objectives for future operations, products or services; projections of our future revenue, earnings or other measures of economic performance; forecasts of credit losses and other asset quality trends; statements about our business and growth strategies; and expectations about economic and market conditions and trends. These forward-looking statements express our current expectations, forecasts of future events, or long-term goals. They are based on assumptions, estimates, and forecasts that, although believed to be reasonable, may turn out to be incorrect. Actual results could differ materially from those discussed in the forward-looking statements for a variety of reasons, including:
• economic, market, operational, liquidity, credit, and interest rate risks
associated with our business including the impact of the ongoing COVID-19
pandemic on each of these items;
• economic conditions generally and in the financial services industry,
particularly economic conditions within
real estate markets in which our bank operates including the economic impact of
the ongoing COVID-19 pandemic in each of these areas;
• the failure of assumptions underlying the establishment of, and provisions made
to, our allowance for loan losses;
• increased competition in the financial services industry, either nationally or
regionally;
• our ability to achieve loan and deposit growth;
• volatility and direction of market interest rates;
• the continued services of our management team; and
• implementation of new legislation, which may have significant effects on us and
the financial services industry.
This list provides examples of factors that could affect the results described by forward-looking statements contained in this report, but the list is not intended to be all-inclusive. The risk factors disclosed in Part I - Item 1A of our Annual Report on Form 10-K for the year endedDecember 31, 2019 , as updated by any new or modified risk factors disclosed in Part II - Item 1A of any subsequently filed Quarterly Report on Form 10-Q, include the known risks our management believes could materially affect the results described by forward-looking statements in this report. However, those risks may not be the only risks we face. Our results of operations, cash flows, financial position, and prospects could also be materially and adversely affected by additional factors that are not presently known to us that we currently consider to be immaterial, or that develop after the date of this report. We cannot assure you that our future results will meet expectations. While we believe the forward-looking statements in this report are reasonable, you should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. We do not undertake, and expressly disclaim, any obligation to update or alter any statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. 2
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Part I - Item 1. INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Condition September 30, December 31, 2020 2019 (unaudited) (In thousands, except share amounts) Assets Cash and due from banks $ 42,435$ 53,295 Interest bearing deposits 4,121 12,009 Cash and Cash Equivalents 46,556 65,304 Interest bearing deposits - time - 350 Securities available for sale 985,050 518,400
18,427 18,359 Loans held for sale, carried at fair value 99,747 69,800 Loans Commercial 1,351,790 1,166,695 Mortgage 1,024,036 1,098,911 Installment 479,653 459,417 Total Loans 2,855,479 2,725,023 Allowance for loan losses (35,771 ) (26,148 ) Net Loans 2,819,708 2,698,875 Other real estate and repossessed assets, net 1,487 1,865 Property and equipment, net 36,538 38,411 Bank-owned life insurance 55,019 55,710 Deferred tax assets, net 1,572 2,072 Capitalized mortgage loan servicing rights, carried at fair value 15,403 19,171 Other intangibles 4,561 5,326 Goodwill 28,300 28,300 Accrued income and other assets 56,576 42,751 Total Assets $
4,168,944
Liabilities and Shareholders' Equity Deposits Non-interest bearing $ 1,152,072$ 852,076 Savings and interest-bearing checking 1,431,841 1,186,745 Reciprocal 557,551 431,027 Time 303,392 376,877 Brokered time 152,889 190,002 Total Deposits 3,597,745 3,036,727 Other borrowings 30,005 88,646 Subordinated debt 39,261 - Subordinated debentures 39,507 39,456 Accrued expenses and other liabilities 89,334 49,696 Total Liabilities 3,795,852 3,214,525
Commitments and contingent liabilities
Shareholders' Equity Preferred stock, no par value, 200,000 shares authorized; none issued or outstanding
- -
Common stock, no par value, 500,000,000 shares authorized;
issued and outstanding: 21,885,368 shares at
339,408 352,344 Retained earnings 27,538 1,611 Accumulated other comprehensive income (loss) 6,146 (3,786 ) Total Shareholders' Equity 373,092 350,169 Total Liabilities and Shareholders' Equity $ 4,168,944$ 3,564,694
See notes to interim condensed consolidated financial statements (unaudited)
3
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