What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-03-04 compared with 2021-03-05 · 59 added, 309 removed, 17 unchanged (96% of the section changed)

BUSINESS (continued)

Depending upon the capital category to which an institution is assigned, the regulators' corrective powers include:

requiring the submission of a capital restoration

placing limits on asset growth and restrictions on activities;

requiring the institution to issue additional capital stock (including additional voting stock) or to be acquired;

restricting transactions with affiliates;

restricting the

interest rates the institution may pay on deposits;

ordering a new election of directors of the institution;

requiring that senior executive officers or directors be dismissed;

prohibiting the institution from accepting deposits from correspondent

requiring the institution to divest certain subsidiaries;

prohibiting the payment of principal or interest on subordinated debt;

and ultimately, appointing a receiver for the institution.

In general, a depository institution may be reclassified to a lower category than is indicated by its capital levels if the appropriate federal depository institution

regulatory agency determines the institution to be otherwise in an unsafe or unsound condition or to be engaged in an unsafe or unsound practice.

This could include a failure by the institution to correct the deficiency following receipt of a

less-than-satisfactory rating on its most recent examination report.

Under Michigan law, banks are restricted as to the maximum

amount of dividends they may pay on their common stock.

Our bank may not pay dividends except out of its net income after deducting its losses and bad debts.

In addition, a Michigan bank may not declare or pay a dividend unless the bank

will have a surplus amounting to at least 20 percent of its capital after the payment of the dividend.

In addition, as a member of the Federal Reserve System, our bank is required to obtain the prior approval of the Federal Reserve for the declaration or payment of a

dividend if the total of all dividends declared in any year will exceed the total of (a) the bank's retained net income (as defined by federal regulation) for that year, plus (b) the bank's retained net income for the preceding two years.

Federal law also generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to

its holding company if the depository institution would thereafter be undercapitalized.

In addition, the Federal Reserve may prohibit the payment of dividends by a bank if such payment is determined, by reason of the financial condition of the

bank, to be an unsafe and unsound banking practice or if the bank is in default of payment of any assessment due to the FDIC.

Insider Transactions .

Our bank is subject to certain restrictions

imposed by the Federal Reserve Act on "covered transactions" with us or our subsidiaries, which include investments in our stock or other securities issued by us or our subsidiaries, the acceptance of our stock or other securities issued by us or

our subsidiaries as collateral for loans, and extensions of credit to us or our subsidiaries.

Certain limitations and reporting requirements are also placed on extensions of credit by our bank to the directors and officers of the holding company,

the bank, and the subsidiaries of the bank;

to the principal shareholders of the holding company;

and to "related interests" of such directors, officers, and principal shareholders.

In addition, federal law and regulations may affect the terms

upon which any person becoming one of our directors or officers or a principal shareholder may obtain credit from banks with which our bank maintains a correspondent relationship.

Safety and Soundness Standards .

Pursuant to the Federal Deposit

Insurance Corporation Improvement Act of 1991 ("FDICIA"), the FDIC adopted guidelines to establish operational and managerial standards to promote the safety and soundness of federally-insured depository institutions.

The guidelines establish

standards for internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, asset quality, and earnings.

Investment and Other Activities .

Under federal law and regulations,

FDIC-insured state banks are prohibited, subject to certain exceptions, from making or retaining equity investments of a type, or in an amount, that are not permissible for a national bank.

FDICIA, as implemented by FDIC regulations, also

prohibits FDIC-insured state banks and their subsidiaries, subject to certain exceptions, from engaging as a principal in any activity that is not permitted for a national bank or its subsidiary, respectively, unless the bank meets, and continues

to meet, its minimum regulatory capital requirements and the bank's primary federal regulator determines the activity would not pose a significant risk to the DIF.

Impermissible investments and activities must be otherwise divested or discontinued

within certain time frames set by the bank's primary federal regulator in accordance with federal law.

These restrictions are not currently expected to have a material impact on the operations of our bank.

BUSINESS (continued)

Consumer Banking .

Our bank's business includes making a variety of types of loans to individuals.

In making these

loans, our bank is subject to state usury and other consumer protection laws and to various federal statutes, including provisions of the Gramm Leach-Bliley Act aimed at protecting the privacy of consumer financial information, the Equal Credit

Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act (TILA), the Real Estate Settlement Procedures Act (RESPA), the Home Mortgage Disclosure Act, and the regulations promulgated under these statutes, which (among other things)

prohibit discrimination, specify disclosures to be made to borrowers regarding credit and settlement costs, and regulate the mortgage loan servicing activities of our bank, including the maintenance and operation of escrow accounts and the transfer

of mortgage loan servicing.

In receiving deposits, our bank is subject to extensive regulation under state and federal law and regulations, including the Truth in Savings Act, the Expedited Funds Availability Act, the Electronic Funds Transfer

Act, and the Federal Deposit Insurance Act.

Violation of these laws could result in the imposition of significant damages and fines upon our bank and its directors and officers.

Anti-Money Laundering and the USA PATRIOT Act .

The bank is subject to

a number of financial recordkeeping and anti-money laundering laws and regulations including the Bank Secrecy Act and the USA PATRIOT Act, as well as similar rules and guidelines implemented and enforced by the Department of the Treasury's

Financial Crimes Enforcement Network ("FinCEN") and the Federal Financial Institutions Council ("FFIEC").

These laws and regulations require the bank to take certain steps to prevent the use of the bank or its systems from facilitating the flow of

illegal or illicit money or terrorist funds.

These regulations include FinCEN's Customer Due Diligence Requirements for Financial Institutions, which is designed to identify and verify the identity of natural persons (known as beneficial owners)

of legal entity customers who own, control and profit from companies when those companies open accounts.

A number of consumer protection laws were implemented following the 2008 recession, including the Dodd-Frank Act, adopted in 2010.

The Dodd-Frank Act created the

Consumer Financial Protection Bureau (CFPB), which was given the power to issue and enforce certain consumer protection laws.

The CFPB has issued a number of consumer protection regulations over the last decade, including regulations that impact

residential mortgage lending and servicing.

We have experienced, and expect to continue to experience, increased costs and expenses related to compliance with these consumer protection regulations as well as new

regulations that may be implemented in the future.

2018 Regulatory Reform .

In May 2018 the Economic Growth, Regulatory

Relief and Consumer Protection Act (the "2018 Act"), was enacted to modify or remove certain financial reform rules and regulations, including some of those implemented under the Dodd-Frank Act.

While the 2018 Act maintains most of the regulatory

structure established by the Dodd-Frank Act, it amends certain aspects of the regulatory framework for small depository institutions with assets of less than $10 billion and for large banks with assets of more than $50 billion.

Among other changes, the 2018 Act expanded the definition of qualified mortgages that may be held by a financial institution and simplified the regulatory capital

rules for financial institutions and their holding companies with total consolidated assets of less than $10 billion by instructing the federal banking regulators to establish a single "Community Bank Leverage Ratio" of between 8% and 10% to

replace the leverage and risk-based regulatory capital ratios.

Effective January 1, 2020, qualifying community banking organizations may elect to comply with a greater than 9% community bank leverage ratio (the “CBLR”) requirement in lieu of the

currently applicable requirements for calculating and reporting risk-based capital ratios.

The CBLR is equal to Tier 1 capital divided by average total consolidated assets.

In order to qualify for the CBLR election, a community bank must (1) have a

leverage capital ratio greater than 9 percent, (2) have less than $10 billion in average total consolidated assets, (3) not exceed certain levels of off-balance sheet exposure and trading assets plus trading liabilities, and (4) not be an advanced

approaches banking organization.

A community bank that meets the above qualifications and elects to utilize the CBLR is considered to have satisfied the risk-based and leverage capital requirements in the generally applicable capital rules and is

also considered to be “well capitalized” under the prompt corrective action rules.

BUSINESS (continued)

The 2018 Act also includes regulatory relief for community banks regarding regulatory examination cycles, call reports, the Volcker Rule (proprietary trading

prohibitions), mortgage disclosures, and risk weights for certain high-risk commercial real estate loans.

However, it remains difficult to predict the full extent to which the 2018 Act or the implementing rules and regulations will affect our

business in the future.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security ("CARES") Act of 2020 was signed into law.

Among other things, the CARES Act temporarily lowered the community bank leverage ratio to 8%.

federal bank regulators subsequently issued a rule implementing the lower ratio effective April 23, 2020.

The rule also established a two-quarter grace period for a qualifying institution whose leverage ratio falls below the 8% community bank

leverage ratio requirement so long as the bank maintains a leverage ratio of 7% or greater.

Another rule was issued to transition back to the 9% community bank leverage ratio by increasing the ratio to 8.5% for calendar year 2021 and 9%

In addition, the CARES Act allows banks to elect to suspend requirements under U.S.

GAAP for loan modifications related to the COVID-19 pandemic (for loans that were not more than 30 days past due as of December 31, 2019) that would

otherwise be categorized as a TDR, including impairment for accounting purposes.

The passage of the Bipartisan-Bicameral Omnibus COVID Relief Deal in December 2020 permitted further suspension of these requirements until the earlier of 60 days

after the termination date of the national emergency or January 1, 2022.

Finally, as discussed below, the CARES Act and this

December 2020 legislation delayed the required implementation of the Current Expected Credit Loss (CECL) accounting standard.

Anti-Money Laundering Act of 2020 .

The National Defense Authorization Act for Fiscal Year 2021 (the "NDAA") enacted January 1, 2021 over a presidential veto, includes a number of significant new requirements intended to enhance U.S.

laundering efforts.

These provisions, many of which are contained within a section of the NDAA known as the Anti-Money Laundering Act of 2020 (the "AMLA"), include establishment of a beneficial ownership registration database, the creation of two

new criminal offenses regarding money laundering, new penalties for Bank Secrecy Act violations, and increased whistleblower rewards and protections.

Under these new laws, various government agencies will also be tasked with identification of

policy priorities, establishment of streamlined processes, creation of information sharing programs, and regular reporting to Congress in an effort to modernize anti-money laundering enforcement.

The development of rules and regulations

implementing the AMLA are currently in the very early stages and future impacts are difficult to predict at this time.

The National Defense Authorization Act for Fiscal Year 2021 (the "NDAA") enacted

January 1, 2021 over a presidential veto, includes a number of significant new requirements intended to enhance U.S.

anti-money laundering efforts.

These provisions, many of which are contained within a section of the NDAA known as the Anti-Money

Laundering Act of 2020 (the "AMLA"), include establishment of a beneficial ownership registration database, the creation of two new criminal offenses regarding money laundering, new penalties for Bank Secrecy Act violations, and increased

whistleblower rewards and protections.

Under these new laws, various government agencies will also be tasked with identification of policy priorities, establishment of streamlined processes, creation of information sharing programs, and regular

reporting to Congress in an effort to modernize anti-money laundering enforcement.

Branching Authority .

Michigan banks, such as our bank, have the

authority under Michigan law to establish branches anywhere in the State of Michigan, subject to receipt of all required regulatory approvals.

Michigan banks, such as our bank, have the authority under Michigan law to establish branches

anywhere in the State of Michigan, subject to receipt of all required regulatory approvals.

Banks may establish interstate branch networks through acquisitions of other banks.

The establishment

of de novo interstate branches or the acquisition of individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in

its entirety) is allowed only if specifically authorized by state law.

The establishment of de novo

interstate branches or the acquisition of individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) is allowed only if specifically authorized by state law.

Michigan permits both U.S.

6 unchanged sentences

branches located in Michigan.

BUSINESS (continued)

Current Expected Credit Loss ("CECL") .

In June 2016, the Financial

Accounting Standards Board (“FASB”) adopted a new accounting standard that was expected to be effective for the Bank for the calendar year beginning on January 1, 2020.

This standard, referred to as Current Expected Credit Loss, or CECL, requires

financial institutions to determine periodic estimates of lifetime expected credit losses on loans, and recognize the expected credit losses as allowances for loan losses.

This represents a change from the previous method of providing allowances

for loan losses that are probable and the implementation of the new standard may require us to increase our allowance for loan losses.

It may also greatly increase the data we will need to collect and review to determine the appropriate level of

the allowance for loan losses.

Any increase in our allowance for loan losses, or expenses incurred to determine the appropriate level of the allowance for loan losses, may have a material adverse effect on our financial condition and results of

However, pursuant to the CARES Act passed on March 27, 2020 and subsequent legislation passed in December 2020, the required implementation of CECL was permitted to be delayed until the earlier of January 1, 2022 or the first day of the

fiscal year that begins after the termination of the COVID-related national emergency.

Early adoption is allowed on either January 1, 2020 or January 1, 2021.

In addition, on March 27, 2020, the Federal Reserve and other federal bank regulatory

agencies released a joint regulatory capital rule providing a new option for phasing CECL impacts into regulatory capital over the next five years.

London Interbank Offered Rate ("LIBOR") .

In 2017, the Chief Executive of the United Kingdom Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit rates for

the calibration of LIBOR after 2021.

In June 2016, the Financial Accounting Standards Board (‘‘FASB’’) issued

Accounting Standards Update (‘‘ASU’’) 2016-13, ‘‘Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments’’.

We were originally required to adopt this ASU on January 1, 2020 but section 4014 of the

CARES Act allowed for temporary relief from applying this ASU.

Under the amended CARES Act we were allowed to delay the adoption of this ASU until the earlier of the termination of the national emergency that was declared on March 13, 2020, or

January 1, 2022.

Early adoption was also allowed on either January 1, 2020 or January 1, 2021.

As such, we chose to delay the adoption of this ASU during 2020 and adopted this ASU on January 1, 2021.

This ASU, also referred to as Current Expected

Credit Loss, or CECL, requires financial institutions to determine periodic estimates of lifetime expected credit losses on loans, and recognize the expected credit losses as allowances for credit losses.

This represents a change from the previous

method of providing allowances for credit losses that are probable and the implementation of the new standard may require us to increase our allowance for credit losses.

It may also greatly increase the data we will need to collect and review to

determine the appropriate level of the allowance for credit losses.

Any increase in our allowance for credit losses, or expenses incurred to determine the appropriate level of the allowance for credit losses, may have a material adverse effect on

our financial condition and results of operations.

In addition, federal bank regulatory agencies allow for a an optional phase-in period for the impact of CECL on regulatory capital.

We have elected the three year CECL method for regulatory

See note #1, “Accounting Policies” in the Notes to Consolidated Financial Statements in our annual report, to be delivered to shareholders in connection with the April 19, 2022 Annual Meeting of Shareholders (filed as exhibit 13 to this

report on Form 10-K) for additional discussion relating to our adoption of CECL.

Replacement of LIBOR .

the Chief Executive of the United Kingdom Financial Conduct Authority, which regulates the London Interbank Offered Rate ("LIBOR"), announced that it intended to stop persuading or compelling banks to submit rates for the calibration of LIBOR

On March 5, 2021, LIBOR’s administrator announced that end dates for publication of LIBOR:

December 31, 2021 for one-week and two-month USD LIBOR maturities and non-USD LIBOR maturities, and June 30, 2023 for all other tenors.

bank regulators have issued guidance indicating that banks should “cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021.”

BUSINESS (continued)

The Federal Reserve and the Alternative Reference Rates Committee ("ARRC"), a steering committee comprised primarily of large U.S.

financial institutions, have identified the Secured Overnight Financing Rate

("SOFR"), a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities, as a potential alternative to LIBOR, and the Federal Reserve announced final plans for the production of SOFR.

Whether SOFR will become a

LIBOR replacement and the ultimate future of LIBOR remain uncertain.

However, both Fannie Mae and Freddie Mac announced in 2020 that they would cease purchasing and issuing LIBOR-based products by the end of 2020 and have begun accepting

mortgages based on SOFR.

The language in our LIBOR-based contracts and financial instruments has developed over time and may specify various events that will trigger when a successor rate would be selected.

Some contracts and financial

instruments may give the calculation agent discretion over the substitute index or indices for the calculation of interest rates.

Furthermore, implementation of successor indices may lead to additional documentation requirements, compliance

measures, and financial impacts, as well as potential disputes or litigation with customers and creditors.

financial institutions, have identified

the Secured Overnight Financing Rate ("SOFR"), a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities, as a potential alternative to LIBOR, and the Federal Reserve announced final plans for the production of

In July 2021, the ARRC formally recommended the CME SOFR Term Rates.

Whether SOFR will become a LIBOR replacement and the ultimate future of LIBOR remain uncertain.

Some financial institutions have indicated an intent to use other rates in

addition to SOFR.

However, both Fannie Mae and Freddie Mac announced in 2020 that they would cease purchasing and issuing LIBOR-based products by the end of 2020 and have begun accepting mortgages based on SOFR.

We have formed a cross-functional project team to lead this transition from LIBOR to a planned adoption of reference rates which could

include SOFR, amongst others.

Implementation of successor indices may lead to additional documentation requirements, compliance measures, financial impacts, and technology-related challenges, as well as potential disputes or litigation

with customers and creditors.

We are utilizing the timeline guidance published by the ARRC to develop and achieve internal milestones during this transitional period.

We have discontinued the use of new LIBOR-based

loans and interest rate derivative as of December 31, 2021, according to regulatory guidelines.

Future Legislation

Various other legislative and regulatory initiatives, including proposals to overhaul the bank regulatory system, are from time to time introduced in Congress and

state legislatures, as well as regulatory agencies.

Such future legislation regarding financial institutions may change banking statutes and our operating environment in substantial and unpredictable ways and could increase or decrease the cost of

doing business, limit or expand permissible activities, or affect the competitive balance among organizations within the industry.

The nature and extent of future legislative and regulatory changes affecting financial institutions is very

unpredictable.

Various other legislative and regulatory initiatives, including proposals to overhaul the bank regulatory system, are from time to time introduced in Congress and state

legislatures, as well as regulatory agencies.

Such future legislation regarding financial institutions may change banking statutes and our operating environment in substantial and unpredictable ways and could increase or decrease the cost of doing

business, limit or expand permissible activities, or affect the competitive balance among organizations within the industry.

The nature and extent of future legislative and regulatory changes affecting financial institutions is very unpredictable.

We cannot determine the ultimate effect that any such potential legislation, if enacted, would have upon our financial condition or results of operations.

Available Information

Our annual reports on Forms 10-K, quarterly reports on Forms 10-Q, current reports on Forms 8-K, and all amendments to those reports are available free of charge

through our website at www.IndependentBank.com as soon as reasonably practicable after filing with the Securities and Exchange Commission (SEC).

BUSINESS -- STATISTICAL DISCLOSURE

DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;

INTEREST RATES AND INTEREST DIFFERENTIAL

INTEREST RATES AND DIFFERENTIAL

The information set forth in the tables captioned "Average Balances and Rates" and "Change in Net Interest Income" of our annual report, to be delivered to

shareholders in connection with the April 20, 2021 Annual Meeting of Shareholders (filed as exhibit 13 to this report on Form 10-K), is incorporated herein by reference.

INVESTMENT PORTFOLIO

(A) The following table sets forth the fair value of securities at December

(in thousands)

Equity securities at fair value

Available for sale

agency residential mortgage-backed

Obligations of states and political subdivisions

Other asset backed

Private label mortgage-backed

agency commercial mortgage-backed

Trust preferred

Foreign government

BUSINESS -- STATISTICAL DISCLOSURE (Continued)

(B) The following

table sets forth contractual maturities of securities at December 31, 2020 and the weighted average yield of such securities:

(dollars in thousands)

Available for sale

agency residential mortgage-backed

Obligations of states and political subdivisions

Other asset backed

Private label mortage-backed

agency commercial mortgage-backed

Trust preferred

Foreign government

Tax equivalent adjustment for calculation of yield

The rates set forth in the tables above for those obligations of state and political subdivisions that are tax exempt have been restated on a tax equivalent basis

assuming a marginal tax rate of 21%.

The amount of the adjustment is as follows.

Available for sale

After 10 years

The rates in this table are different from the rates in the table above due to obligations of states and political subdivisions in the table above include both taxable and tax

exempt securities.

BUSINESS -- STATISTICAL DISCLOSURE (Continued)

LOAN PORTFOLIO

(A) The following table sets forth total loans outstanding at December 31:

(in thousands)

Loans held for sale(a)

2016 includes $30.6 million of payment plan receivables and $0.8 million commercial loans related to the then pending sale of Mepco and $35.9 million of 1-4 family residential

The loan portfolio is periodically and systematically reviewed, and the results of these reviews are reported to the Board of Directors of our bank.

The purpose of

these reviews is to assist in assuring proper loan documentation, to facilitate compliance with applicable laws and regulations, to provide for the early identification of potential problem loans (which enhances collection prospects) and to

evaluate the adequacy of the allowance for loan losses.

(B) The following table sets forth scheduled loan repayments (excluding

1-4 family residential mortgages and installment loans) at December 31, 2020:

(in thousands)

The following table sets forth loans due after one year which have predetermined (fixed) interest rates and/or adjustable (variable) interest rates at December 31,

(in thousands)

Due after one but within five years

Due after five years

BUSINESS -- STATISTICAL DISCLOSURE (Continued)

days or more past due and troubled debt restructured loans at December 31:

(in thousands)

(a) Loans accounted for on a non-accrual basis (1, 2)

(b) Aggregate amount of loans ninety days or more past due (excludes loans in (a) above)

The accrual of interest income is discontinued when a loan becomes 90 days past due and the borrower's capacity to repay the loan and collateral values appear insufficient.

Non-accrual loans may be restored to accrual status when interest and principal payments are current and the loan appears otherwise collectible.

Interest in the amount of $3.25 million would have been earned in 2020 had loans in categories (a) and (c) remained at their original terms;

however, only $2.74 million was

included in interest income for the year with respect to these loans.

Potential problem loans identified by the loan review department which are not included as non-performing in the table above were zero at December 31, 2020.

At December 31, 2020, there was no concentration of loans exceeding 10% of total loans which is not already disclosed as a category of loans in this section "Loan

Portfolio" (Item III(A)).

There were no other interest-bearing assets at December 31, 2020, that would be required to be disclosed above (Item III(C)), if such assets were loans.

There were no foreign loans at December 31, 2020, 2019, 2018, 2017 and 2016.

BUSINESS -- STATISTICAL DISCLOSURE (Continued)

SUMMARY OF LOAN LOSS EXPERIENCE

(A) The following table sets forth loan balances and summarizes the changes in the allowance for loan losses for each of the years ended December 31:

(dollars in thousands)

Total loans outstanding at the end of the year (net of unearned fees)

Average total loans outstanding for the year (net of unearned fees)

Balance at beginning of year

Loans charged-off

Total loans charged-off

Recoveries of loans previously charged-off

Total recoveries

Net loans charged-off (recovered)

Additions included in operations

Balance at end of year

Net loans charged-off (recovered) as a percent of average loans outstanding (includes loans held for

sale) for the year

Allowance for loan losses as a percent of loans outstanding (includes loans held for sale) at the

end of the year

BUSINESS -- STATISTICAL DISCLOSURE (Continued)

(dollars in thousands)

Total loans outstanding at the end of the year (net of unearned fees)

Average total loans outstanding for the year (net of unearned fees)

Balance at beginning of year

Loans charged-off

Total loans charged-off

Recoveries of loans previously charged-off

Total recoveries

Net loans charged-off (recovered)

Reclassification to loans held for sale

Additions (deductions) included in operations

Balance at end of year

Net loans charged-off as a percent of average loans outstanding (includes loans held for sale) for

Allowance for loan losses as a percent of loans outstanding (includes loans held for sale) at the

end of the year

The allowance for loan losses reflected above is a valuation allowance in its entirety and the only allowance available to absorb probable incurred loan losses.

Further discussion of the provision and allowance for loan losses (a critical accounting policy) as well as non-performing loans, is presented in Management's

Discussion and Analysis of Financial Condition and Results of Operations in our annual report, to be delivered to shareholders in connection with the April 20, 2021 Annual Meeting of Shareholders (filed as exhibit 13 to this report on Form 10-K),

and is incorporated herein by reference.

BUSINESS -- STATISTICAL DISCLOSURE (Continued)

SUMMARY OF LOAN LOSS EXPERIENCE (Continued)

(B) We have allocated the allowance for loan losses to provide for probable incurred losses within the categories of loans set forth in the table

The amount of the allowance for loan losses that is allocated and the ratio of loans within each category to total loans at December 31 follow:

(dollars in thousands)

Payment plan receivables

Subjective allocation

(dollars in thousands)

Payment plan receivables(a)

Subjective allocation

Allowance for loan losses of $0.06 million related to payment plan receivables was reclassified to loans held for sale at December 31, 2016.

BUSINESS -- STATISTICAL DISCLOSURE (Continued)

The following table sets forth average deposit balances and the weighted-average rates paid thereon for the years ended December 31:

(dollars in thousands)

Non-interest bearing deposits

Savings and interest-bearing checking

Time deposits

The following table summarizes time deposits in amounts of 0.10 million or more by time remaining until maturity at December 31, 2020:

(in thousands)

Three months or less

Over three through six months

Over six months through one year

Over one year

RETURN ON EQUITY AND ASSETS

The ratio of net income to average shareholders' equity and to average assets, and certain other ratios, for the years ended December 31 follow:

Net income as a percent of

Average shareholders' equity

Average assets

Dividends declared per share as a percent of diluted net income per share

Average shareholders' equity as a percent of average assets

Additional performance ratios are set forth in Selected Consolidated Financial Data in our annual report, to be delivered to shareholders in connection with the April

20, 2021 Annual Meeting of Shareholders (filed as exhibit 13 to this report on Form 10-K), and is incorporated herein by reference.

Any significant changes in the current trend of the above ratios are reviewed in Management's Discussion and

Analysis of Financial Condition and Results of Operations in our annual report, to be delivered to shareholders in connection with the April 20, 2021 Annual Meeting of Shareholders (filed as exhibit 13 to this report on Form 10-K), and is

incorporated herein by reference.

SHORT-TERM BORROWINGS

Short-term borrowings are discussed in note 9 to the consolidated financial statements incorporated herein by reference to Part II, Item 8 of this report.

Our annual reports on Forms 10-K, quarterly reports on Forms 10-Q, current reports on Forms 8-K, and all amendments to those reports are available free of charge through

our website at www.IndependentBank.com as soon as reasonably practicable after filing with the SEC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business