5. Segments

Our reportable segments are based upon legal entities. We currently have two reportable segments: Independent Bank ("IB" or "Bank") and Mepco. These business segments are also differentiated based on the products and services provided. We evaluate performance based principally on net income (loss) of the respective reportable segments.

In the normal course of business, our IB segment provides funding to our Mepco segment through an intercompany line of credit priced at the prime rate of interest as published in the Wall Street Journal. Our IB segment also provides certain administrative services to our Mepco segment which reimburses at an agreed upon rate. These intercompany transactions are eliminated upon consolidation. The only other material intersegment balances and transactions are investments in subsidiaries at the parent entities and cash balances on deposit at our IB segment.

A summary of selected financial information for our reportable segments as of or for the three-month and nine-month periods ended September 30 follows:

As of or for the three months ended September 30,

	IB		Mepco			Other(1)			Elimination(2)			Total
	(In thousands)
2012
Total assets	$	2,252,476	$	145,690		$	178,098		$	(175,432	)	$	2,400,832
Interest income		21,057		3,676			-			-			24,733
Net interest income		19,380		2,806			(735	)		-			21,451
Provision for loan losses		270		(19	)		-			-			251
Income (loss) before income tax		6,988		405			(923	)		(24	)		6,446
Net income (loss)		7,125		268			(923	)		(24	)		6,446

2011
Total assets	$	2,116,134		$	202,034		$	168,422		$	(169,217	)	$	2,317,373
Interest income		22,913			5,274			-			-			28,187
Net interest income		20,474			3,982			(682	)		-			23,774
Provision for loan losses		6,165			6			-			-			6,171
Loss before income tax		(3,594	)		(150	)		(836	)		(24	)		(4,604	)
Net loss		(3,164	)		(96	)		(838	)		(24	)		(4,122	)

(1)	Includes amounts relating to our parent company and certain insignificant operations.

(2)	Includes parent company's investment in subsidiaries and cash balances maintained at subsidiary.

As of or for the nine months ended September 30,

	IB		Mepco		Other(1)			Elimination(2)			Total
	(In thousands)
2012
Total assets	$	2,252,476	$	145,690	$	178,098		$	(175,432	)	$	2,400,832
Interest income		64,452		11,232		-			-			75,684
Net interest income		59,085		8,487		(2,191	)		-			65,381
Provision for loan losses		6,436		2		-			-			6,438
Income (loss) before income tax		14,945		2,298		(2,889	)		(71	)		14,283
Net income (loss)		15,726		1,517		(2,889	)		(71	)		14,283

2011
Total assets	$	2,116,134		$	202,034		$	168,422		$	(169,217	)	$	2,317,373
Interest income		71,226			16,806			-			-			88,032
Net interest income		61,078			12,556			(2,026			-			71,608
Provision for loan losses		20,986			43			-			-			21,029
Loss before income tax		(9,463	)		(1,062	)		(1,638	)		(71	)		(12,234	)
Net loss		(9,097	)		(678	)		(1,640	)		(71	)		(11,486	)

(1)Includes amounts relating to our parent company and certain insignificant operations.

(2)Includes parent company's investment in subsidiaries and cash balances maintained at subsidiary.