INDEPENDENT BANK CORPORATION 8-K Supplemental

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 22, 2004



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 January 22, 2004.

Item 12.      Results of Operations and Financial Condition.

The information attached at Exhibit 99 is supplemental data to the Registrant’s press release dated January 22, 2004 regarding its earnings during the quarter ended December 31, 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 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.










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 22, 2004
  By s/ Robert N. Shuster
Robert N. Shuster, Principal Financial Officer
 
 
Date January 22, 2004
  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

December 31,
        2003     2002  
(unaudited)
Assets     (in thousands)
Cash and due from banks     $ 61,741   $ 60,731  
Securities available for sale       453,996     371,246  
Federal Home Loan Bank stock, at cost       13,895     9,704  
Loans held for sale       32,642     129,577  
Loans    
  Commercial       603,558     536,715  
  Real estate mortgage       681,602     601,799  
  Installment       234,562     242,928  
  Finance receivables       147,671  
Total Loans       1,667,393     1,381,442  
  Allowance for loan losses       (17,728 )   (16,705 )
Net Loans       1,649,665     1,364,737  
Property and equipment, net       43,979     40,735  
Bank owned life insurance       36,850     35,415  
Goodwill       16,696     7,299  
Other intangibles       7,523     6,420  
Accrued income and other assets       41,570     31,698  
Total Assets     $ 2,358,557   $ 2,057,562  
Liabilities and Shareholders' Equity    
Deposits    
  Non-interest bearing     $ 192,733   $ 179,871  
  Savings and NOW       700,541     657,530  
  Time       809,532     698,202  
Total Deposits       1,702,806     1,535,603  
Federal funds purchased       53,885     23,840  
Other borrowings       331,819     310,413  
Guaranteed preferred beneficial interests in Company's subordinated debentures       50,600     17,250  
Financed premiums payable       26,340  
Accrued expenses and other liabilities       30,891     32,409  
Total Liabilities       2,196,341     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: 19,568,867 shares at December 31, 2003    
    and 17,822,090 shares at December 31, 2002       19,569     17,822  
  Capital surplus       119,353     75,076  
  Retained earnings       16,953     41,785  
  Accumulated other comprehensive income       6,341     3,364  
Total Shareholders' Equity       162,216     138,047  
Total Liabilities and Shareholders' Equity     $ 2,358,557   $ 2,057,562  

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INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations

Three Months Ended
December 31,		 Twelve Months Ended
December 31,
2003 2002 2003 2002
(unaudited) (unaudited)
Interest Income (in thousands, except per share amounts)
  Interest and fees on loans     $ 30,811   $ 27,778   $ 118,861   $ 109,297  
  Securities available for sale    
    Taxable       3,112     2,962     11,687     12,211  
    Tax-exempt       2,225     1,842     8,207     7,018  
  Other investments       169     302     611     1,289  
Total Interest Income       36,317     32,884     139,366     129,815  
Interest Expense    
  Deposits       6,432     8,472     27,802     35,134  
  Other borrowings       4,165     3,319     16,311     12,874  
Total Interest Expense       10,597     11,791     44,113     48,008  
Net Interest Income       25,720     21,093     95,253     81,807  
Provision for loan losses       1,641     717     4,032     3,562  
Net Interest Income After Provision for Loan Losses       24,079     20,376     91,221     78,245  
Non-interest Income    
  Service charges on deposit accounts       3,865     3,639     14,668     13,049  
  Net gains (losses) on asset sales    
    Real estate mortgage loans       2,268     3,854     16,269     8,178  
    Securities       (24 )   (750 )   (779 )   (24 )
  Title insurance fees       459     807     3,092     2,474  
  Manufactured home loan origination fees    
    and commissions       487     507     1,769     1,949  
  Real estate mortgage loan servicing       902     (56 )   (294 )   (870 )
  Other income       1,895     1,519     7,879     6,155  
Total Non-interest Income       9,852     9,520     42,604     30,911  
Non-interest Expense    
  Compensation and employee benefits       11,881     9,673     43,558     37,343  
  Occupancy, net       1,684     1,403     6,519     5,424  
  Furniture and fixtures       1,414     1,358     5,539     4,731  
  Loss on prepayment of borrowings       983     59  
  Other expenses       6,531     6,536     25,907     20,736  
Total Non-interest Expense       21,510     18,970     82,506     68,293  
Income Before Income Tax       12,421     10,926     51,319     40,863  
Income tax expense       3,097     2,969     13,727     11,396  
Net Income     $ 9,324   $ 7,957   $ 37,592   $ 29,467  
Net Income Per Share    
  Basic     $ .48 $ .40 $ 1.91 $ 1.46
  Diluted       .47   .40   1.87   1.44
Dividends Per Common Share    
  Declared     $ .16 $ .13 $ .59 $ .44

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Non-performing assets

December 31,
2003 2002
(dollars in thousands)
  Non-accrual loans $  9,122  $  5,738 
  Loans 90 days or more past due and
    still accruing interest 3,284  3,961 
  Restructured loans 335  270 
Total non-performing loans 12,741  9,969 
  Other real estate 3,256  3,908 
Total non-performing assets $15,997  $13,877 
As a percent of Portfolio Loans
     Non-performing loans     0.76 %     0.72 %
     Allowance for loan losses     1.06         1.21    
   Non-performing assets to total assets     0.68         0.67    
   Allowance for loan losses as a percent of
     non-performing loans     139         168    

Allowance for loan losses

Twelve months ended
December 31,		  
    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   4,032   3,562  
  Recoveries credited to allowance   1,087   733  
  Loans charged against the allowance   (4,613 ) (3,757 )
Balance at end of period   $ 17,728   $ 16,705  
Net loans charged against the allowance to  
       average Portfolio Loans (annualized)   0.23 % 0.22 %


December 31,
    2003 2002
Amount   Average
Maturity		   Rate   Amount   Average
Maturity		   Rate  
(dollars in thousands)
Brokered CDs(1)   $416,566   2.3 years   2.43 % $278,012 1.9 years   3.03 %
Fixed rate FHLB advances(1)   84,638   5.0 years   3.99 62,861   7.9 years   5.83
Variable rate FHLB advances(1)   104,150   0.4 years   1.30 131,200   0.3 years   1.50
Securities sold under agreements to  
   Repurchase(1)   140,969   0.3 years   1.22 98,712   0.1 years   1.74
Federal funds purchased   53,885   1 day   1.16 23,840   1 day   1.38
      Total   $800,208   1.8 years   2.15 % $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

December 31,
2003 2002
(dollars 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 19,569  17,822 
  Capital surplus 119,353  75,076 
  Retained earnings 16,953  41,785 
  Accumulated other comprehensive income 6,341  3,364 
          Total shareholders’ equity 162,216  138,047 
          Total capitalization $212,816  $167,897 

Non-Interest Income

Three Months Ended
December 31,		 Twelve Months Ended
December 31,
2003 2002 2003 2002
(in thousands)
Service charges on deposit accounts     $ 3,865   $ 3,639   $ 14,668   $ 13,049  
Net gains (losses) on asset sales    
  Real estate mortgage loans       2,268     3,854     16,269     8,178  
  Securities       (24 )   (750 )   (779 )   (24 )
Title insurance fees       459     807     3,092     2,474  
Bank owned life insurance       330     395     1,432     403  
Manufactured home loan origination fees    
  and commissions       487     507     1,769     1,949  
Mutual fund and annuity commissions       318     198     1,227     979  
Real estate mortgage loan servicing       902     (56 )   (294 )   (870 )
Other       1,247     926     5,220     4,773  
      Total non-interest income     $ 9,852   $ 9,520   $ 42,604     30,911  

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Three Months Ended
December 31,		 Twelve Months Ended
December 31,
2003 2002 2003 2002
(in thousands)
Real estate mortgage loans originated     $ 153,039   $ 331,493   $ 1,123,249   $ 876,667  
Real estate mortgage loans sold       120,728     251,367     892,482     600,300  
Real estate mortgage loans sold with servicing    
  rights released       8,330     89,810     51,847     165,133  
Net gains on the sale of real estate mortgage loans       2,268     3,854     16,269     8,178  
Net gains as a percent of real estate mortgage    
  loans sold (“Loan Sale Margin”)       1.88 %   1.53 %   1.82 %   1.36 %
SFAS #133 adjustments included in the Loan    
  Sale Margin       0.43 %   (0.06 )%   0.10 %   (0.16 )%



Non-Interest Expense

Three Months Ended
December 31,		 Twelve Months Ended
December 31,
2003 2002 2003 2002
(in thousands)
Salaries     $ 8,028   $ 6,326   $ 28,474   $ 24,891  
Performance-based compensation and benefits       1,702     1,373     6,262     5,247  
Other benefits       2,151     1,974     8,822     7,205  
  Compensation and employee benefits       11,881     9,673     43,558     37,343  
Occupancy, net       1,684     1,403     6,519     5,424  
Furniture and fixtures       1,414     1,358     5,539     4,731  
Advertising       1,117     973     4,011     2,813  
Data processing       1,021     1,016     3,942     3,209  
Loan and collection       697     1,154     3,352     3,028  
Communications       761     679     2,895     2,484  
Supplies       500     492     1,920     1,626  
Amortization of intangible assets       495     278     1,721     1,014  
Legal and professional       236     437     1,651     1,238  
Loss on prepayment of borrowings       983     59  
Other       1,704     1,507     6,415     5,324  
      Total non-interest expense     $ 21,510   $ 18,970   $ 82,506   $ 68,293  

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Average Balances and Tax Equivalent Rates

Three Months Ended
December 31,
    2003 2002
Average
Balance		   Interest   Rate   Average
Balance		   Interest   Rate  
Assets (dollars in thousands)
Taxable loans (1)     $ 1,684,148   $ 30,687     7.25 % $ 1,493,507   $ 27,617     7.36 %
Tax-exempt loans (1,2)       9,993     190     7.54   11,933     248     8.25
Taxable securities       250,147     3,112     4.94   211,067     2,962     5.57
Tax-exempt securities (2)       195,470     3,516     7.14   153,761     2,890     7.46
Other investments     13,930 169   4.81   20,734   302 5.78
Interest Earning Assets       2,153,688     37,674     6.95   1,891,002     34,019     7.16
Cash and due from banks       50,023     44,620  
Other assets, net       124,821     101,042  
Total Assets     $ 2,328,532   $ 2,036,664  
 
Liabilities    
Savings and NOW     $ 695,464     1,012     0.58 $ 642,445     1,666     1.03
Time deposits       781,726     5,420     2.75   713,010     6,806     3.79
Other borrowings       441,930     4,165     3.74   335,081     3,319     3.93
Interest Bearing Liabilities       1,919,120     10,597     2.19   1,690,536     11,791     2.77
Demand deposits       193,404     175,661  
Other liabilities       57,582     31,790  
Shareholders’ equity       158,426     138,677  
 Total liabilities and shareholders’
    equity		     $ 2,328,532   $ 2,036,664  
Tax Equivalent Net Interest Income     $ 27,077   $ 22,228  
Tax Equivalent Net Interest Income    
as a Percent of Earning Assets   5.00 % 4.69 %
(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


Average Balances and Tax Equivalent Rates

Twelve Months Ended
December 31,
    2003 2002
Average
Balance		   Interest   Rate   Average
Balance		   Interest   Rate  
Assets (dollars in thousands)
Taxable loans (1)     $ 1,612,316   $ 118,277     7.34 % $ 1,426,286   $ 108,664     7.62 %
Tax-exempt loans (1,2)       11,249     898     7.98   11,639     974     8.37
Taxable securities       239,296     11,687     4.88   211,777     12,211     5.77
Tax-exempt securities (2)       179,668     12,992     7.23   142,320     11,053     7.77
Other investments       12,341   611   4.95 21,342   1,289   6.04
Interest Earning Assets       2,054,870     144,465     7.03   1,813,364     134,191     7.40
Cash and due from banks       48,839     40,533  
Other assets, net       118,309   79,848
Total Assets     $ 2,222,018   $ 1,933,745  
 
Liabilities    
Savings and NOW     $ 688,697     4,879     0.71 $ 634,357     7,444     1.17
Time deposits       741,731     22,923     3.09   688,297     27,690     4.02
Other borrowings       407,264     16,311     4.01   287,983     12,874     4.47
Interest Bearing Liabilities       1,837,692     44,113     2.40   1,610,637     48,008     2.98
Demand deposits       183,032     156,294  
Other liabilities       50,283     28,762  
Shareholders’ equity       151,011     138,052  
 Total liabilities and shareholders’
    equity		     $ 2,222,018   $ 1,933,745  
Tax Equivalent Net Interest Income     $ 100,352   $ 86,183  
Tax Equivalent Net Interest Income    
as a Percent of Earning Assets     4.88 %   4.75 %
(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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