GRAND RAPIDS — Strong loan growth, the recent acquisition of Traverse City State Bank, and a lower tax rate drove Independent Bank Corp.’s earnings significantly higher in the second quarter.
The Grand Rapids-based Independent Bank (Nasdaq: IBCP) this morning reported what CEO Brad Kessel called a “very good quarter,” with net income of $8.8 million, or 36 cents per diluted share. That compares to net income of $5.9 million, or 27 cents per diluted share, in the same period a year earlier.
The new quarterly results included charges of $3.1 million, or 10 cent per share, for merger-related expenses.
Independent Bank recorded net income of $17.9 million, or 78 cents per diluted share, for the first six months of 2018. That compares to $11.9 million, or 55 cents per diluted share, midway through 2017.
“As we look ahead to the remainder of 2018 and beyond, we are focused on building on the momentum generated in the first half of 2018,” Kessel said.
The bank’s total loan portfolio, excluding loans picked up with the Traverse City State Bank acquisition, grew $101.3 million in the quarter for an annualized rate of 19.6 percent. Independent ended the quarter with total loans of $2.46 billion.
The bank expects full-year organic loan growth of 15 percent to 18 percent, presuming Michigan’s economy remains stable, CFO Robert Shuster said in conference call with brokerage analysts.
After closing the $63.2 million deal for TCSB on April 1, Independent remains focused on growing organically, although it would consider another acquisition if the right opportunity arose, Kessel told analysts.
“We have said quarter after quarter, our primary use of capital is geared toward organic loan growth,” he said. “That will continue to be the driver for us in terms of growing our earnings asset base.
“If there were opportunities that had a similar profile (to the Traverse City deal) in terms of financial metrics, earn back, EPS accretion, size and attractive market, we would be interested.”
A lower federal tax rate reduced the corporation’s tax expenses in the quarter from $2.6 million a year earlier to $2 million. Through the first six months, the tax expenses declined from $5.2 million a year ago to $4.1 million this year.
Independent Bank has 68 offices in the Lower Peninsula, including five from the Traverse City State Bank acquisition, plus 12 loan offices in Michigan and two in Ohio. The bank has $3.23 billion in total assets.