Independent Bank exits TARP, spikes income to $62.2M in 2Q13
Ionia-based Independent Bank Corp. has reported its income in the second quarter of 2013 ballooned to $62.2 million — compared to $3.2 million in 2Q12.
Six quarters of profitability and the reversal of its deferred tax asset valuation allowance, along with beginning its exit from the federal Troubled Asset Relief Program, has allowed Independent Bank to report the increase on Monday.
Six-month income and TARP
For the six months ended June 30, Independent Bank (NASDAQ: IBCP) reported net income on common stock of $66.9 million, or $2.90 per share, compared to $5.7 million, or 19 cents per share, in the prior-year period.
The bank said its 2013 results thus far include an income tax benefit of $57.6 million, stemming from the reversal of substantially all of the company’s deferred tax asset valuation allowance in June.
William B. Kessel, president/CEO, said the bank reached an agreement with the Treasury to buy back the preferred stock and stock warrant the Treasury owns “and exit TARP,” which he called “a significant milestone for the company.”
“We plan to complete the common equity offering necessary to close this transaction with the UST by Oct. 31,” he added.
Kessel said the bank’s sixth consecutive quarter of profitability, as well as further progress in improving asset quality, “as evidenced by a reduction in our non-performing loans, loan net charge-offs and the provision for loan losses as compared to the year-ago quarter,” along with the reversal of the valuation allowance on deferred tax assets, also had “a significant favorable impact on 2013 results, with increases in both earnings and common equity.”
Last December, Independent Bank completed the sale of 21 branches.
Smart Option Student Loan
Independent Bank also announced it has partnered with Sallie Mae to offer customers a private education loan program to help families save money and pay off their loan faster than other alternatives. The Smart Option Student Loan offers degree-seeking students competitive interest rates, as well as in-school payment choices to help them graduate with less debt.
Designed to supplement federal student loans and other financial aid, the Smart Option Student Loan can enable students to cover up to 100 percent of their education expenses. The loan rewards responsible customers with benefits, such as an on-time payment reward and interest-rate discounts for automatic payments.
To offer the Smart Option Student Loan, Independent Bank partnered with Sallie Mae, the nation’s number one financial services company specializing in education.
On July 26, the bank and Treasury executed a Securities Purchase Agreement, where the bank will purchase for $81 million 74,426 shares of Cumulative Mandatorily Convertible Preferred Stock, Series B, including any and all accrued and unpaid dividends, and the amended and re-stated warrant to purchase up to 346,154 shares of company common stock. As a condition to the closing of the purchase of these securities, the bank has also agreed to complete a common equity offering, providing a minimum of $86 million in cash proceeds.