IONIA, MI – Independent Bank Corp. announced Friday, Jan. 23, it will close six branches in out-state Michigan as part of its continuing strategy to improve its balance sheet and bottom line.
The branch closings include its Broadway branch in Bay City, its Croton branch in Newaygo County, its Kingston, Ubly and Unionville branches in the Thumb and its Vermontville branch in Eaton County.
Independent executives estimate they will save about $1.6 million a year in expenses by closing the branches while losing about $300,000 to $400,000 in lost business. The branch closings, which will include staffing reductions, are expected to be completed by April 30, the company said.
"The decision to close or consolidate a branch office is a very difficult one,” said President and CEO William “Brad" Kessel in a statement. “We recognize that it impacts some of our customers and our employees in that community.
“However, the ways in which we interact with our customers continues to evolve. Branch transaction volumes are declining, while mobile and other electronic channels continue to experience greatly increased usage.
“It is necessary to continually evaluate our branch office footprint and make necessary adjustments in response to these changing transaction patterns. We are confident that neighboring branches, along with our many available electronic channels, will be able to serve our customers well."
The announcement came in an earnings statement in which Independent announced fourth quarter profits of $3.9 million, or 17 cents per share, compared to 2013’s fourth quarter profit of $4.8 million, or 21 cents per share.
For the year, Independent reported net earnings of $18 million, or 77 cents per share, compared to its 2013 earnings of $82.1 million, or $3.55 share. The 2013 earnings included $55 million in income from the return of a previous tax write-down.
Kessel said the bank was able to increase its commercial loan activity and continued to clean up its balance sheet in the fourth quarter of 2014.
In December, Independent bought back and retired $5 million in trust preferred securities, resulting in a $500,000 gain and annual savings of about $100,000.
The company also announced a stock buyback program aimed at taking up to 5 percent of its stock off the market. Stock buyback programs tend to increase shareholder values by spreading the company’s income over fewer shares.
“As we assess all of 2014, we are proud of our many significant achievements, including: our first full year of loan growth since 2007; a significant reduction in non-performing assets; growth in pre-tax earnings; and implementation of several new technology driven products to better serve our customers,” Kessel said in the announcement.
Independent, which celebrated its 150th anniversary last year, has been restructuring for the past two years as it attempts to emerge from the pounding it took during the “Great Recession.”
The bank holding company sold off 21 bank branches and issued 13.2 million shares of new stock in 2013. The company also resumed dividend payments in 2013 after paying off its obligations to the federal government under the Troubled Assets Relief Program (TARP).
With 69 branches remaining after the closings announced Friday, Independent Bank is the fifth largest bank headquartered in Michigan with total assets of $2.25 billion.
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Jim Harger covers business for MLive/Grand Rapids Press. Email him at jharger@mlive.com or follow him on Twitter or Facebook or Google+.