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Independent's Net Income Dives
IONIA — Independent Bank Corp. reported second quarter 2007 net income of $0.1 million, or $0.00 per diluted share, versus net income of $10.4 million, or 45 cents per share in the prior year’s second quarter. The company recorded a net loss of $43,000, or $0.00 per share for the quarter, compared with net income of $10.6 million, or 45 cents per diluted share a year earlier.
Return on average equity and return on average assets were 0.17 percent and 0.01 percent, respectively, compared with 16.37 and 1.23 percent, respectively in the prior year period.
The company attributed the year-on-year decline in net income on an increase in the provision for loan losses, which was $14.9 million and $2.5 million in the second quarters of 2007 and 2006, respectively. The bank reported the rise in non-performing loans and loan net charge-offs earlier this month. At June 30, the allowance for loan losses totaled $38.2 million or 1.53 percent of portfolio loans.
“This adverse credit cycle has been extremely frustrating both because of the sudden and unpredictable timeframes of some loans becoming non-performing, as well as steep declines in collateral values, especially those related to residential real estate development,” said President and CEO Michael Magee.
In March of this year Independent completed the purchase of 10 branches from TCF National Bank, which collectively represented $241.4 million in deposits. The acquisition increased deposit-related revenues in the second quarter. Service charges on deposits totaled $6.4 million in the second quarter of 2007, up from $0.9 million in the second quarter of 2006.