XML 36 R18.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUBORDINATED DEBENTURES
12 Months Ended
Dec. 31, 2017
SUBORDINATED DEBENTURES [Abstract]  
SUBORDINATED DEBENTURES
NOTE 10 – SUBORDINATED DEBENTURES
 
We have formed various special purpose entities (the “trusts”) for the purpose of issuing trust preferred securities in either public or pooled offerings or in private placements. Independent Bank Corporation owns all of the common stock of each trust and has issued subordinated debentures to each trust in exchange for all of the proceeds from the issuance of the common stock and the trust preferred securities. Trust preferred securities totaling $34.5 million at both December 31, 2017 and 2016, respectively, qualified as Tier 1 regulatory capital.
 
These trusts are not consolidated with Independent Bank Corporation and accordingly, we report the common securities of the trusts held by us in accrued income and other assets and the subordinated debentures that we have issued to the trusts in the liability section of our Consolidated Statements of Financial Condition.
 
 
Summary information regarding subordinated debentures as of December 31 follows:
2017 and 2016
Entity Name
Issue
Date
Subordinated
Debentures
Trust
Preferred
Securities
Issued
Common
Stock
Issued
(In thousands)
IBC Capital Finance III
May 2007
$
12,372
 
$
12,000
 
$
372
 
IBC Capital Finance IV
September 2007
 
15,465
 
 
15,000
 
 
465
 
Midwest Guaranty Trust I
November 2002
 
7,732
 
 
7,500
 
 
232
 
$
35,569
 
$
34,500
 
$
1,069
 
 
Other key terms for the subordinated debentures and trust preferred securities that were outstanding at December 31, 2017 and 2016 follow:
Entity Name
Maturity
Date
Interest Rate
First Permitted
Redemption Date
IBC Capital Finance III
July 30, 2037
3 month LIBOR plus 1.60%
July 30, 2012
IBC Capital Finance IV
September 15, 2037
3 month LIBOR plus 2.85%
September 15, 2012
Midwest Guaranty Trust I
November 7, 2032
3 month LIBOR plus 3.45%
November 7, 2007
 
The subordinated debentures and trust preferred securities are cumulative and have a feature that permits us to defer distributions (payment of interest) from time to time for a period not to exceed 20 consecutive quarters. Interest is payable quarterly on each of the subordinated debentures and trust preferred securities and no distributions were deferred at December 31, 2017 and 2016.
 
We have the right to redeem the subordinated debentures and trust preferred securities (at par) in whole or in part from time to time on or after the first permitted redemption date specified above or upon the occurrence of specific events defined within the trust indenture agreements.
 
Issuance costs have been capitalized and are being amortized on a straight- line basis over a period not exceeding 30 years and are included in interest expense in the Consolidated Statements of Operations. Distributions (payment of interest) on the trust preferred securities are also included in interest expense – other borrowings and subordinated debentures in the Consolidated Statements of Operations.