Asset Breakdown
| Total Assets | 4.48 Billion | |
| Goodwill | 25.66 Million | |
| Tax Assets | 5.34 Million |
How much will Independent Bank owe in October?
 | By Ellen Johnson | Macroaxis Story |
Independent Bank, a regional bank listed on NASDAQ (USA Stocks: IBCP), has been a subject of discussion among investors due to its potential increase in debt. With net borrowings currently standing at $56M, there is a growing concern about the bank's leverage. However, it's important to note that the bank has a substantial amount of cash and short-term investments, amounting to approximately $853.7M, which could provide a buffer against any potential financial strain. The bank's operating income, which is equivalent to its EBIT, is reported at $97.2M. This, coupled with a free cash flow of $89M, indicates a healthy financial status. However, the bank has also reported other cashflows from investing activities at a loss of $602.9M, which could be a potential red flag for investors. Despite this, Independent Bank has a robust stockholders' equity, standing at a staggering $5B. This figure, along with the bank's net income applicable to common shares of $63.4M, could provide some assurance to investors about the bank's ability to manage its debt. The bank's forward dividend yield is currently at 0.0473, which could be an attractive feature for income-focused investors. However, it's important to note that the bank has paid dividends amounting to $18.6M, which could potentially impact its cash reserves. The analyst overall consensus for Independent Bank is a 'Hold', with four estimates suggesting a naive expected forecast value of $19.02. The lowest estimated target price stands at $21, indicating a potential upside for the stock. In conclusion, while the potential increase in Independent Bank's debt could be a concern, its substantial cash reserves and stockholders' equity provide a level of assurance. Investors should carefully consider these factors before making an investment decision. The upcoming fiscal quarter end for Independent Bank is anticipated to be on September 30, 2023. Currently, the Book Value per Share of Independent Bank is relatively stable compared to the previous year. The bank reported a Book Value per Share of 16.50 last year. As of September 19, 2023, the Enterprise Value over EBIT is projected to increase to 8.68, while the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) are expected to slightly exceed $76.2 million. Given the trend among millennials to steer clear of the banking sector, it is prudent to delve deeper into Independent Bank's current market patterns for a better understanding.
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Reviewed by Gabriel Shpitalnik
The Independent Bank (IBCP) has shown a significant increase in its net borrowings, which currently stands at a substantial 56M. This surge in debt could be seen as a potential risk by some investors, but from a leverage viewpoint, it could also present an investment opportunity. Higher leverage can lead to higher returns, especially when interest rates are low, and the bank can reinvest the borrowed funds at a higher rate. However, it's essential to consider the bank's ability to service this debt. The bank's total revenue is 204.6M, which suggests that it has a steady income stream to meet its debt obligations. However, the downside variance of 2.62 indicates a certain level of risk associated with the bank's returns. This could be a result of the bank's increased borrowings and should be taken into account when making an investment decision. On the other hand, the bank's retained earnings of 119.4M show that it has a substantial amount of profits reinvested back into the business. This could be used to pay down debt if necessary, providing a safety net for investors. In conclusion, while the increase in Independent Bank's debt may present some risks, it could also provide an opportunity for investors looking for a potentially high return investment. However, investors should be mindful of the associated risks and ensure they are comfortable with the level of risk before investing.
Rigorous look
Independent Bank currently holds $226.1 million in liabilities, with a Debt to Equity (D/E) ratio of 0.14. This may suggest that Independent Bank is not leveraging borrowing to its full advantage. Debt can be beneficial for Independent Bank until it encounters difficulties in paying it off, either with new capital or with free cash flow. Therefore, if the company fails to meet its legal obligations to repay its debt, Independent Bank's shareholders could potentially lose their entire investment. However, a more common scenario is when companies like Independent Bank issue additional shares at discounted prices, thereby diluting the value of existing shareholders' stakes. In such cases, debt can be a superior tool for Independent Bank to invest in growth at high rates of return. When evaluating Independent Bank's use of debt, it is crucial to consider it in conjunction with cash and equity.Independent Bank financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Independent Bank, including all of Independent Bank's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Independent Bank assets, the company is considered highly leveraged. Understanding the composition and structure of overall Independent Bank debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.Understanding Independent Total Liabilities
Independent Bank liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Independent Bank has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Independent Bank balance sheet include debt obligations and money owed to different Independent Bank vendors, workers, and loan providers. Below is the chart of Independent short long-term liabilities accounts currently reported on its balance sheet. You can use Independent Bank financial leverage analysis tool to get a better grip on understanding its financial positionHow important is Independent Bank's Liquidity
Independent Bank financial leverage refers to using borrowed capital as a funding source to finance Independent Bank ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Independent Bank financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Independent Bank's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Independent Bank's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Independent Bank's total debt and its cash.
Is Independent Bank valued sensibly by the market?
The modest gains experienced by current holders of Independent Bank may raise some interest from retail investors. The stock closed today at a share price of 18.33 on 36,500 in trading volume. The company executives have been quite successful in maneuvering the stock at opportune times to take advantage of all market conditions in August. The stock standard deviation of daily returns for 90 days investing horizon is currently 1.79. The below-average Stock volatility is a good sign for longer-term investment options and for buy-and-hold investors.
The Independent Bank Corporation (IBCP) has been on the radar of investors due to the potential increase in its debt. The Michigan-based financial institution has a total debt of $226.1M, which includes a long-term debt of $165.1M and short long term debt total of $226.1M.This is balanced by the company's total assets which stand at a staggering $5B, including other assets worth $2.8B. The bank's Debt to Equity ratio is 0.14%, indicating a low level of risk in terms of the company's ability to cover its debts. The bank's financial health is also reflected in its Retained Earnings Total Equity of $119.4M and a Price to Book ratio of 1.29X. Despite the potential increase in debt, the company's Operating Margin stands at 0.38% with an EBITDA of $108.06M, indicating a strong operational efficiency. The bank's performance is further demonstrated by a Return on Equity of 0.17 and a Return on Asset of 0.0121. With a Forward Dividend Yield of 0.0473 and a target price of $21.8, Independent Bank Corporation presents a promising investment opportunity. However, investors should also consider the bank's Probability of Bankruptcy which stands at 42.49% before making an investment decision. .
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