Independent Bank Corporation Form 10-Q/A

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q/A
AMENDMENT NO. 1

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2007

Commission file number 0-7818

INDEPENDENT BANK CORPORATION
(Exact name of registrant as specified in its charter)

Michigan 38-2032782
(State or jurisdiction of
Incorporation or Organization)		 (I.R.S. Employer Identification
Number)

230 West Main Street, P.O. Box 491, Ionia, Michigan 48846
(Address of principal executive offices)

(616) 527-9450
(Registrant’s telephone number, including area code)

NONE
Former name, address and fiscal year, if changed since last report.

        Indicate by check mark whether the registrant (1) has filed all documents and reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [ X ]     NO [__]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer or non-accelerated filer.
Large accelerated filer [__]       Accelerated filer [ X ]       Non-accelerated filer [__]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES [__]     NO [ X ]

        Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock, par value $1 22,584,455
Class Outstanding at May 7, 2007

Explanatory Note

        This Amendment No. 1 on Form 10-Q/A is being filed solely to: (i) correct Notes 2, 6, and 7 of the Notes to Interim Consolidated Financial Statements; (ii) to add Notes 11 and 12 to the Notes to Interim Consolidated Financial Statements; and (iii) to renumber former Notes 11 and 12 as Notes 13 and 14, respectively, of the Notes to Interim Consolidated Financial Statements. Accordingly, this Form 10-Q/A includes only Item 1 of Part I (pursuant to Rule 12b-15) as it is the only Item being amended.

        To comply with certain technical requirements of the SEC’s rules in connection with the filing of this Amendment No. 1 on Form 10-Q/A we are adding, as exhibits, certain current dated certifications of our principal executive officer and principal financial officer. This Amendment No. 1 on Form 10-Q/A continues to speak as of the date of Form 10-Q as originally filed on May 7, 2007 (the “Original Report”). We have not updated the disclosures contained herein to reflect any events that occurred at a date subsequent to the date of the Original Report. The filing of this Amendment No. 1 on Form 10-Q/A is not a representation that any statement contained in the Original Report or this Amendment No. 1 on Form 10-Q/A are true or complete subsequent to the date of the Original Report. This Amendment No. 1 on Form 10-Q/A does not affect the information set forth in the original Form 10-Q, except for the matters described in this Explanatory Note.

Part I
Item 1.

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition

March 31,
2007		 December 31,
2006
(unaudited)
Assets (in thousands)
Cash and due from banks     $ 67,209   $ 73,142  
Federal funds sold and other overnight investments    94,661  
Cash and cash equivalents    161,870    73,142  
Securities available for sale    430,949    434,785  
Federal Home Loan Bank stock, at cost    14,326    14,325  
Loans held for sale    33,959    31,846  
Loans  
  Commercial    1,081,502    1,083,921  
  Real estate mortgage    858,288    865,522  
  Installment    354,705    350,273  
  Finance receivables    189,852    183,679  
Total Loans    2,484,347    2,483,395  
  Allowance for loan losses    (30,908 )  (26,879 )
Net Loans    2,453,439    2,456,516  
Property and equipment, net    72,230    67,992  
Bank owned life insurance    41,557    41,109  
Goodwill    66,735    48,709  
Other intangibles    18,065    7,854  
Assets of discontinued operations    339    189,432  
Accrued income and other assets    62,102    64,188  
Total Assets   $ 3,355,571   $ 3,429,898  
Liabilities and Shareholders' Equity  
Deposits  
  Non-interest bearing   $ 318,238   $ 282,632  
  Savings and NOW    1,033,586    875,541  
  Time    1,551,708    1,444,618  
Total Deposits    2,903,532    2,602,791  
Federal funds purchased    84,081  
Other borrowings    60,436    163,681  
Subordinated debentures    64,197    64,197  
Financed premiums payable    34,861    32,767  
Liabilities of discontinued operations    183,676  
Accrued expenses and other liabilities    40,728    40,538  
Total Liabilities    3,103,754    3,171,731  
Shareholders' Equity  
  Preferred stock, no par value--200,000 shares authorized; none  
    outstanding  
  Common stock, $1.00 par value--40,000,000 shares authorized;  
    issued and outstanding: 22,584,455 shares at March 31, 2007  
    and 22,864,587 shares at December 31, 2006    22,584    22,865  
  Capital surplus    194,902    200,241  
  Retained earnings    30,924    31,420  
  Accumulated other comprehensive income    3,407    3,641  
Total Shareholders' Equity    251,817    258,167  
Total Liabilities and Shareholders' Equity   $ 3,355,571   $ 3,429,898  

See notes to interim consolidated financial statements

2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations

Three Months Ended
March 31,
2007 2006
(unaudited)
(in thousands, except
per share amounts)
Interest Income            
  Interest and fees on loans   $ 49,953   $ 46,046  
  Securities available for sale  
    Taxable    2,477    2,848  
    Tax-exempt    2,600    2,869  
  Other investments    314    223  
Total Interest Income    55,344    51,986  
Interest Expense  
  Deposits    22,408    15,927  
  Other borrowings    3,304    4,324  
Total Interest Expense    25,712    20,251  
Net Interest Income    29,632    31,735  
Provision for loan losses    8,139    1,386  
Net Interest Income After Provision for Loan Losses    21,493    30,349  
Non-interest Income  
  Service charges on deposit accounts    4,888    4,468  
  Mepco litigation settlement    2,800  
  Net gains on assets  
    Real estate mortgage loans    1,081    1,026  
    Securities    79  
  VISA check card interchange income    950    791  
  Real estate mortgage loan servicing    527    653  
  Title insurance fees    414    442  
  Other income    2,731    2,358  
Total Non-interest Income    10,670    12,538  
Non-interest Expense  
  Compensation and employee benefits    13,968    13,541  
  Occupancy, net    2,614    2,687  
  Furniture, fixtures and equipment    1,900    1,783  
  Data processing    1,438    1,342  
  Advertising    1,152    987  
  Branch acquisition and conversion costs    422  
  Goodwill impairment    343  
  Other expenses    6,129    5,898  
Total Non-interest Expense    27,966    26,238  
Income From Continuing Operations Before Income Tax    4,197    16,649  
Income tax expense    305    3,593  
Income From Continuing Operations    3,892    13,056  
Discontinued operations, net of tax    351    (713 )
Net Income   $ 4,243   $ 12,343  
Income Per Share From Continuing Operations  
  Basic   $ .17   $ .57  
  Diluted    .17    .56  
Net Income Per Share  
  Basic    .19    .54  
  Diluted    .18    .53  
Dividends Per Common Share  
  Declared   $ .21   $ .19  
  Paid    .20    .18  

See notes to interim consolidated financial statements

3

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows

Three Months Ended
March 31,
2007 2006
(unaudited)
(in thousands)
Net Income     $ 4,243   $ 12,343  
Adjustments to Reconcile Net Income  
  to Net Cash from Operating Activities  
    Proceeds from sales of loans held for sale    70,293    61,273  
    Disbursements for loans held for sale    (71,325 )  (61,321 )
    Provision for loan losses    8,288    1,586  
    Depreciation and amortization of premiums and accretion of  
      discounts on securities and loans    (2,584 )  (2,696 )
    Net gains on sales of real estate mortgage loans    (1,081 )  (1,026 )
    Net gains on securities    (79 )
    Goodwill impairment    343  
    Deferred loan fees    (82 )  (53 )
    Increase (decrease) in accrued income and other assets    813    (3,039 )
    Decrease in accrued expenses and other liabilities    (4,776 )  (6,433 )
     (190 )  (11,709 )
Net Cash from Operating Activities    4,053    634  
   
Cash Flow from (used in) Investing Activities  
  Proceeds from the sale of securities available for sale    6,367  
  Proceeds from the maturity of securities available for sale    8,790    2,622  
  Principal payments received on securities available for sale    8,094    9,530  
  Purchases of securities available for sale    (19,000 )  (400 )
  (Increase) decrease portfolio loans originated, net of principal payments    4,135    (54,542 )
  Acquisition of business offices, less cash received    210,053  
  Proceeds from sale of insurance premium finance business    175,901  
  Capital expenditures    (2,642 )  (4,579 )
Net Cash from (used in) Investing Activities    391,698    (47,369 )
Cash Flow from (used in) Financing Activities  
  Net increase (decrease) in total deposits    (107,505 )  51,622  
  Net increase (decrease) in short-term borrowings    (169,823 )  21,093  
  Proceeds from Federal Home Loan Bank advances    32,000    700  
  Payments of Federal Home Loan Bank advances    (49,003 )  (25,261 )
  Repayment of long-term debt    (500 )  (500 )
  Net increase (decrease) in financed premiums payable    (1,854 )  6,765  
  Dividends paid    (4,584 )  (4,188 )
  Repurchase of common stock    (5,989 )  (9,178 )
  Proceeds from issuance of common stock    68    213  
Net Cash from (used in) Financing Activities    (307,190 )  41,266  
Net Increase (Decrease) in Cash and Cash Equivalents    88,561    (5,469 )
Change in cash and cash equivalents of discontinued operations    167    30  
Cash and Cash Equivalents at Beginning of Period    73,142    67,522  
Cash and Cash Equivalents at End of Period   $ 161,870   $ 62,083  
   
Cash paid during the period for  
  Interest   $ 28,502   $ 22,470  
  Income taxes    4    63  
Transfer of loans to other real estate    1,059    565  

See notes to interim consolidated financial statements

4

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity

Three Months Ended
March 31,
2007 2006
(unaudited)
(in thousands)
Balance at beginning of period     $ 258,167   $ 248,259  
  Net income    4,243    12,343  
  Cash dividends declared    (4,739 )  (4,128 )
  Issuance of common stock    369    1,771  
  Repurchase of common stock    (5,989 )  (9,178 )
  Net change in accumulated other comprehensive  
    income, net of related tax effect    (234 )  (300 )
Balance at end of period   $ 251,817   $ 248,767  

See notes to interim consolidated financial statements.

5

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.     In our opinion, the accompanying unaudited consolidated financial statements contain all the adjustments necessary to present fairly our consolidated financial condition as of March 31, 2007 and December 31, 2006, and the results of operations for the three-month periods ended March 31, 2007 and 2006. Certain reclassifications have been made in the prior year financial statements to conform to the current year presentation. Our critical accounting policies include the assessment for other than temporary impairment on investment securities, the determination of the allowance for loan losses, the valuation of derivative financial instruments, the valuation of originated mortgage servicing rights, the valuation of deferred tax assets and the valuation of goodwill. Refer to our 2006 Annual Report on Form 10-K for a disclosure of our accounting policies.

2.     Our assessment of the allowance for loan losses is based on an evaluation of the loan portfolio, recent loss experience, current economic conditions and other pertinent factors. Loans on non-accrual status, past due more than 90 days, or restructured amounted to $48.1 million at March 31, 2007, and $39.2 million at December 31, 2006.

3.     Comprehensive income for the three-month periods ended March 31 follows:

Three Months Ended
March 31,
2007 2006
(in thousands)
Net income     $ 4,243   $ 12,343  
Net change in unrealized gain on securities  
  available for sale, net of related tax effect    390    (428 )
Net change in unrealized gain (loss) on derivative  
  instruments, net of related tax effect    (523 )  213  
Reclassification adjustment for accretion on  
  settled derivative financial instruments    (101 )  (85 )
Comprehensive income   $ 4,009   $ 12,043  

The net change in unrealized gain on securities available for sale reflect net gains and losses reclassified into earnings as follows:

Three Months Ended
March 31,
2007 2006
(in thousands)
Gain (loss) reclassified into earnings     $ 79   $    
Federal income tax expense (benefit) as a  
  result of the reclassification of these  
  amounts from comprehensive income    28  

4.     Our reportable segments are based upon legal entities. We have five reportable segments: Independent Bank (“IB”), Independent Bank West Michigan (“IBWM”), Independent Bank South Michigan (“IBSM”), Independent Bank East Michigan (“IBEM”) and Mepco Finance Corporation (“Mepco”). We evaluate performance based principally on net income of the respective reportable segments.

6

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

A summary of selected financial information for our reportable segments as of or for the three-month periods ended March 31, follows:

As of or for the three months ended March 31,
IB IBWM IBSM IBEM Mepco Other(1) Elimination Total
(in thousands)
2007                                  
  Total assets   $ 1,103,707   $ 772,973   $ 568,275   $ 710,977   $ 214,776   $ 339,617   $ (354,754 ) $3,355,571
  Interest income    16,946    13,592    8,082    11,682    5,198    5    (161 )  55,344  
  Net interest income    8,938    8,206    4,111    6,714    3,268    (1,563 )  (42 )  29,632  
  Provision for loan losses    1,063    2,455    1,816    2,676    129    8,139  
  Income (loss) from  
    continuing operations  
    before income tax    2,792    2,399    (50 )  (165 )  1,388    (2,226 )  59    4,197  
  Discontinued operations,  
    Net of tax    351    351  
  Net income (loss)    2,194    1,789    228    119    1,220    (1,321 )  14    4,243  
   
   
2006    
  Total assets   $ 1,029,276   $ 727,604   $ 490,211   $ 724,119   $ 432,301   $ 346,789   $ (347,526 ) $3,402,774
  Interest income    15,771    12,301    7,490    11,284    5,307    5    (172 )  51,986  
  Net interest income    9,901    8,383    4,448    7,296    3,261    (1,512 )  (42 )  31,735  
  Provision for loan losses    340    232    542    218    54    1,386  
  Income (loss) from  
    continuing operations  
    before income tax    4,706    4,736    1,963    2,520    1,724    979    21    16,649  
  Discontinued operations,  
    Net of tax    (713 )  (713 )
  Net income (loss)    3,603    3,326    1,579    1,899    355    1,605    (24 )  12,343  

        (1)        Includes items relating to the Registrant and certain insignificant operations. 2006 net income includes $2.8 million of non-interest income related to the settlement of litigation involving the former owners of Mepco. This amount is not taxable.

7

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

5.     Basic income per share is based on weighted average common shares outstanding during the period. Diluted income per share includes the dilutive effect of additional potential common shares to be issued upon the exercise of stock options and stock units for a deferred compensation plan for non-employee directors.

A reconciliation of basic and diluted earnings per share for the three-month periods ended March 31 follows:

Three Months Ended
March 31,
2007 2006
(in thousands, except per share amounts)
Income from continuing operations     $ 3,892   $ 13,056  
Net income   $ 4,243   $ 12,343  
   
Shares outstanding    22,829    22,938  
  Effect of stock options    257    340  
  Stock units for deferred compensation plan for non-employee directors    58    52  
         Shares outstanding for calculation of diluted earnings per share    23,144    23,330  
Income per share from continuing operations  
   Basic   $ .17   $ .57  
   Diluted    .17    .56  
Net income per share  
   Basic    .19    .54  
   Diluted    .18    .53  

Weighted average stock options outstanding that were anti-dilutive totaled 0.8 million and 0.5 million for the three-months ended March 31, 2007 and 2006, respectively.

Per share data has been restated for a 5% stock dividend in 2006.

6.     Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” (“SFAS #133”) which was subsequently amended by SFAS #138, requires companies to record derivatives on the balance sheet as assets and liabilities measured at their fair value. The accounting for increases and decreases in the value of derivatives depends upon the use of derivatives and whether the derivatives qualify for hedge accounting.

8

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Our derivative financial instruments according to the type of hedge in which they are designated under SFAS #133 follows:

March 31, 2007
Notional Amount Average Maturity (years) Fair Value
(dollars in thousands)
Fair Value Hedge - pay variable interest-rate swap agreements     $ 450,159    2.7   $ (3,112 )
   
Cash Flow Hedge  
    Pay fixed interest-rate swap agreements   $ 54,500    2.2   $ 900  
    Interest-rate cap agreements    225,500    2.0    945  
    $ 280,000    2.0   $ 1,845  
   
No hedge designation  
   Pay fixed interest-rate swap agreements   $ 5,000    1.1    60  
   Pay variable interest-rate swap agreements    25,000    0.5    (77 )
   Interest-rate cap agreements    55,000    1.7    50  
   Rate-lock real estate mortgage loan commitments    47,693    0.1    19  
   Mandatory commitments to sell real estate mortgage loans    46,017    0.1    24  
            Total   $ 178,710    0.7   $ 76  

We have established management objectives and strategies that include interest-rate risk parameters for maximum fluctuations in net interest income and market value of portfolio equity. We monitor our interest rate risk position via simulation modeling reports. The goal of our asset/liability management efforts is to maintain profitable financial leverage within established risk parameters.

We use variable rate and short-term fixed-rate (less than 12 months) debt obligations to fund a portion of our balance sheet, which exposes us to variability in cash flows due to changes in interest rates. To meet our objectives, we may periodically enter into derivative financial instruments to mitigate exposure to fluctuations in cash flows resulting from changes in interest rates (“Cash Flow Hedges”). Cash Flow Hedges currently include certain pay-fixed interest-rate swaps and interest-rate cap agreements.

Pay-fixed interest-rate swaps convert the variable-rate cash flows on debt obligations to fixed-rates. Under interest-rate caps, we will receive cash if interest rates rise above a predetermined level. As a result, we effectively have variable rate debt with an established maximum rate.

We record the fair value of Cash Flow Hedges in accrued income and other assets and accrued expenses and other liabilities. On an ongoing basis, we adjust our balance sheet to reflect the then current fair value of Cash Flow Hedges. The related gains or losses are reported in other comprehensive income and are subsequently reclassified into earnings, as a yield adjustment in the same period in which the related interest on the hedged items (primarily variable-rate debt obligations) affect earnings. It is anticipated that approximately $0.3 million, net of tax, of unrealized gains on Cash Flow Hedges at March 31, 2007 will be reclassified to earnings over the next twelve months. To the extent that the Cash Flow Hedges are not effective, the ineffective portion of the Cash Flow Hedges are immediately recognized as interest expense. The maximum term of any Cash Flow Hedge at March 31, 2007 is 5.2 years.

9

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

We also use long-term, fixed-rate brokered CDs to fund a portion of our balance sheet. These instruments expose us to variability in fair value due to changes in interest rates. To meet our objectives, we may enter into derivative financial instruments to mitigate exposure to fluctuations in fair values of such fixed-rate debt instruments (“Fair Value Hedges”). Fair Value Hedges currently include pay-variable interest rate swaps.

Also, we record Fair Value Hedges at fair value in accrued income and other assets and accrued expenses and other liabilities. The hedged items (primarily fixed-rate debt obligations) are also recorded at fair value through the statement of operations, which offsets the adjustment to Fair Value Hedges. On an ongoing basis, we will adjust our balance sheet to reflect the then current fair value of both the Fair Value Hedges and the respective hedged items. To the extent that the change in value of the Fair Value Hedges do not offset the change in the value of the hedged items, the ineffective portion is immediately recognized as interest expense.

Certain financial derivative instruments are not designated as hedges. The fair value of these derivative financial instruments have been recorded on our balance sheet and are adjusted on an ongoing basis to reflect their then current fair value. The changes in the fair value of derivative financial instruments not designated as hedges, are recognized currently in earnings.

In the ordinary course of business, we enter into rate-lock real estate mortgage loan commitments with customers (“Rate Lock Commitments”). These commitments expose us to interest rate risk. We also enter into mandatory commitments to sell real estate mortgage loans (“Mandatory Commitments”) to reduce the impact of price fluctuations of mortgage loans held for sale and Rate Lock Commitments. Mandatory Commitments help protect our loan sale profit margin from fluctuations in interest rates. The changes in the fair value of Rate Lock Commitments and Mandatory Commitments are recognized currently as part of gains on the sale of real estate mortgage loans. We obtain market prices from an outside third party on Mandatory Commitments and Rate Lock Commitments. Net gains on the sale of real estate mortgage loans, as well as net income may be more volatile as a result of these derivative instruments, which are not designated as hedges.

10

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

The impact of SFAS #133 on net income and other comprehensive income for the three-month periods ended March 31, 2007 and 2006 is as follows:

Income (Expense)
Net Income Other Comprehensive Income Total
(in thousands)
Change in fair value during the three-                
  month period ended March 31, 2007  
   
  Interest-rate swap agreements  
    not designated as hedges   $ 17       $ 17  
  Interest-rate cap agreements  
    not designated as hedges    (38 )  (38 )
  Rate Lock Commitments    50    50  
  Mandatory Commitments    (75 )  (75 )
  Ineffectiveness of Fair value hedges    5    5  
  Ineffectiveness of Cash flow hedges    3    3  
  Cash flow hedges   $ (1,425 )  (1,425 )
  Reclassification adjustment    466    466  
    Total    (38 )  (959 )  (997 )
  Income tax    (13 )  (335 )  (348 )
    Net   $ (25 ) $ (624 ) $ (649 )

Income (Expense)
Net Income Other Comprehensive Income Total
(in thousands)
Change in fair value during the three-                
  month period ended March 31, 2006  
   
  Interest-rate swap agreements  
    not designated as hedges   $ (62 )     $ (62 )
  Interest-rate cap agreements  
    not designated as hedges    29        29  
  Rate Lock Commitments    (160 )      (160 )
  Mandatory Commitments    316        316  
  Ineffectiveness of Fair value hedges    6        6  
  Cash flow hedges       $ (632 )  (632 )
  Reclassification adjustment        829    829  
    Total    129    197    326  
  Income tax    45    69    114  
    Net   $ 84   $ 128   $ 212  

11

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

7.     Statement of Financial Accounting Standards No. 141, “Business Combinations,” (“SFAS #141”) and Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” (“SFAS #142”) effects how organizations account for business combinations and for the goodwill and intangible assets that arise from those combinations or are acquired otherwise.

Intangible assets, net of amortization, were comprised of the following at March 31, 2007 and December 31, 2006:

March 31, 2007 December 31, 2006
Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization
(dollars in thousands)
                     
  Amortized intangible assets  
     Core deposit   $ 31,326   $ 14,148   $ 20,545   $ 13,679  
     Customer relationship    1,302    1,024    1,302    999  
     Covenants not to compete    1,520    911    1,520    835  
        Total   $ 34,148   $ 16,083   $ 23,367   $ 15,513  
   
  Unamortized intangible assets -  
      Goodwill   $ 66,735     $48,709

Amortization of intangibles has been estimated through 2012 and thereafter in the following table, and does not take into consideration any potential future acquisitions or branch purchases.

(dollars in thousands)
Nine months ended December 31, 2007     $ 2,803  
Year ending December 31:  
    2008    3,072  
    2009    1,838  
    2010    1,310  
    2011    1,398  
    2012 and thereafter    7,644  
          Total   $ 18,065  

12

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Changes in the carrying amount of goodwill and core deposit intangible by reporting segment for the periods presented were as follows:

IB IBWM IBSM IBEM Mepco Other(1) Total
(dollars in thousands)
Goodwill                                
  Balance, December 31, 2006   $ 8,394   $ 32       $ 23,205   $ 16,735   $ 343   $ 48,709  
  Acquired during period (2)    11,341       $ 7,028                18,369  
  Impairment during period    (343 )                      (343 )
  Balance, March 31, 2007   $ 19,392   $ 32   $ 7,028   $ 23,205   $ 16,735   $ 343   $ 66,735  
   
  Balance, December 31, 2005   $ 9,560   $ 32       $ 23,205   $ 18,673   $ 343   $ 51,813  
  Acquired during period                    471 (3)      471  
  Balance, March 31, 2006   $ 9,560   $ 32       $ 23,205   $ 19,144   $ 343   $ 52,284  
   
Core deposit  
  Balance, December 31, 2006   $ 1,562   $ 33   $ 174   $ 5,072       $ 25   $ 6,866  
  Acquired during period (2)    6,098        4,683                10,781  
  Amortization    (113 )  (3 )  (37 )  (312 )      (4 )  (469 )
  Balance, March 31, 2007   $ 7,547   $ 30   $ 4,820   $ 4,760       $ 21   $ 17,178  

(1) Includes items relating to the Registrant and certain insignificant operations.
(2) Goodwill and deposit customer relationship value, including core deposit value associated with the acquisition of 10 branches from TCF National Bank. The weighted average amortization period of the deposit customer relationship value, including core deposit value is 6.8 years.
(3) Goodwill associated with contingent consideration accrued pursuant to an earnout.

During the three month period ended March 31, 2007 we recorded a goodwill impairment charge of $0.3 million at First Home Financial (FHF) which was acquired in 1998. FHF is a loan origination company based in Grand Rapids, Michigan that specializes in the financing of manufactured homes located in mobile home parks or communities and is a subsidiary of our IB segment above. Revenues and profits have declined at FHF over the last few years and have continued to decline in the first quarter of 2007. We test goodwill for impairment and based on the fair value of FHF the goodwill associated with FHF was reduced to zero. This amount is included in Goodwill Impairment in the Consolidated Statements of Operations.

8.     We maintain performance-based compensation plans that includes a long-term incentive plan that permits the issuance of share based compensation awards, including stock options and restricted stock. Share based compensation awards, including stock options and restricted stock, are measured at fair value at the date of grant and expensed over the requisite service period.

All share based compensation awards outstanding at December 31, 2005 were fully vested and there were no new or modified share based grants during 2006 or the three month period ended March 31, 2007.

13

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

A summary of outstanding stock option grants and transactions for the three month period ended March 31, 2007 follows:

Number
of Shares		 Average
Exercise
Price
Outstanding at January 1, 2007      1,481,276   $ 19.82  
  Granted  
  Exercised    7,233    9.35  
  Forfeited  
Outstanding at March 31, 2007    1,474,043   $ 19.88  

The aggregate intrinsic value and weighted-average remaining contractual term of outstanding options at March 31, 2007 were $5.1 million and 6.1 years, respectively.

Common shares issued upon exercise of stock options come from currently authorized but unissued shares. The following summarizes certain information regarding options exercised during the three month periods ending March 31:

2007 2006
(in thousands)
 
Intrinsic value     $ 80   $ 261  
Cash proceeds received   $ 68   $ 214  
Tax benefit realized   $ 28   $ 92  

9.     On January 1, 2007 we adopted Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109,” (“FIN #48”), which clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with SFAS #109, “Accounting for Income Taxes”. FIN #48 prescribes a recognition and measurement threshold for a tax position taken or expected to be taken in a tax return. FIN #48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The adoption of FIN #48 at January 1, 2007 did not have an impact on our financial statements.

At January 1, 2007 (date of adoption) and March 31, 2007 we had approximately $2.4 million and $2.5 million, respectively, of gross unrecognized tax benefits. Included in both of these amounts is approximately $0.1 million of interest. We classify penalties and interest in our financial statements as income taxes. All gross unrecognized tax benefits, if recognized, would affect our effective tax rate.

At January 1, 2007, U.S. Federal tax years 2003 through the present date remain open.

10.     In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” (“SFAS #159”). This statement allows entities to voluntarily choose, at specified election dates, to measure many financial assets and financial liabilities (as well as certain non-financial instruments that are similar to financial instruments) at fair value. The election is made on an instrument-by-instrument basis and is irrevocable. The statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Earlier adoption of the Statement is

14

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

permitted as of the beginning of an entity’s fiscal year, provided the choice to early adopt is made within 120 days of the beginning of the fiscal year of adoption and the entity has not yet issued financial statements for any interim period of that fiscal year. We expect to adopt SFAS #159 on January 1, 2008.

11.     On January 15, 2007 we sold substantially all of the assets of Mepco’s insurance premium finance business to Premium Financing Specialists, Inc. (“PFS”). We received $176 million of cash that was utilized to payoff Brokered CD’s and short-term borrowings at Mepco’s parent company, Independent Bank. Under the terms of the sale, PFS also assumed approximately $11.7 million in liabilities. Revenues and expenses associated with Mepco’s insurance premium finance business have been presented as discontinued operations in the Consolidated Statements of Operations. Likewise, in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the assets and liabilities associated with this business have been reclassified to discontinued operations in the Consolidated Statements of Financial Condition. Funding for Mepco’s insurance premium finance business was accomplished by loans from its parent company, Independent Bank. Those loans were primarily funded with brokered certificates of deposit which are included in liabilities of discontinued operations at December 31, 2006. We have elected to not make any reclassifications in the Consolidated Statements of Cash Flows for the three months ended March 31, 2006.

12.     On March 23, 2007, we completed the acquisition of ten branches with total deposits of $241.4 million from TCF National Bank. In accordance with Statement of Financial Accounting Standards No. 141 “Business Combinations” and related interpretations, this acquisition was considered a business acquisition, as the acquired assets and assumed liabilities enable us to sustain a revenue stream and provide products and services to these customers without significant disruption or difficulty. We paid a premium of approximately $29.2 million, including capitalizable costs of acquisition, for this business. Approximately $10.8 million of this premium is attributable to the value of deposit customer relationships acquired, including core deposit value. This will be amortized over its expected life of 15 years. The remaining $18.4 million will be recorded as goodwill and represents the intangible value of the work force in place and other attributes. This acquisition provides us with funds to payoff higher cost short term borrowings and brokered certificates of deposit and provides additional branch facilities from which to serve our customers and expand our services. Proforma information with respect to the estimated impact of this acquisition on our results of operations is not presented as it is not material.

13.     On April 23, 2007 we filed a Form 8-K Current Report that included a press release (Exhibit 99.1) dated April 23, 2007 announcing our financial results for the quarter ended March 31, 2007 and supplemental financial data (Exhibit 99.2) to the press release. Those previously reported financial results have been revised to increase our allowance for loan losses and provision for loan losses by $650,000. The increase in the allowance for loan losses is to record a specific reserve on a residential real estate development loan collateralized by property located in East Lansing, Michigan. In the fourth quarter of 2006 a partial charge-off of $1.3 million was recorded on this loan (reducing the balance on the loan from $4.7 million to $3.4 million). Based on an updated appraisal, including a review appraisal received in early May 2007, we have determined that an additional specific reserve of $650,000 is required.

15

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

The additional specific reserve results in the following changes to our previously reported financial results:

As Previously Reported Adjustment As Revised
(in thousands, except per share amounts)
Consolidated Statement of Financial Condition as of March 31, 2007:
  Allowance for Loan Losses   $ (30,258 ) $ (650 ) $ (30,908 )
  Net loans    2,454,089    (650 )  2,453,439  
  Total assets    3,356,221    (650 )  3,355,571  
  Accrued expenses and other liabilities    40,949    (221 )  40,728  
  Total liabilities    3,103,975    (221 )  3,103,754  
  Retained earnings    31,353    (429 )  30,924  
  Total shareholders' equity    252,246    (429 )  251,817  
  Total liabilities and shareholders' equity    3,356,221    (650 )  3,355,571  
   
Consolidated Statement of Operations for the three months ended March 31, 2007:  
  Provision for loan losses   $ 7,489   $ 650   $ 8,139  
  Income from continuing operations before income tax    4,847    (650 )  4,197  
  Income tax expense    526    (221 )  305  
  Income from continuing operations    4,321    (429 )  3,892  
  Net income    4,672    (429 )  4,243  
  Income per share from continuing operations:  
      Basic    0.19    (0.02 )  0.17  
      Diluted    0.19    (0.02 )  0.17  
  Net income per share:  
      Basic    0.20    (0.01 )  0.19  
      Diluted    0.20    (0.02 )  0.18  

14.     The results of operations for the three-month periods ended March 31, 2007, are not necessarily indicative of the results to be expected for the full year.

16

Part II

Item 6.   Exhibits

  (a) The following exhibits (listed by number corresponding to the Exhibit Table as Item 601 in Regulation S-K) are filed with this report:
  31.1 Certificate of the Chief Executive Officer of Independent Bank Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
  31.2 Certificate of the Chief Financial Officer of Independent Bank Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
  32.1 Certificate of the Chief Executive Officer of Independent Bank Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
  32.2 Certificate of the Chief Financial Officer of Independent Bank Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

17

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 9, 2007
          ——————————————
 INDEPENDENT BANK CORPORATION


By /s/ Robert N. Shuster
      ——————————————
      Robert N. Shuster, Principal Financial
           Officer

18