OPERATING SEGMENTS

12 Months Ended

Dec. 31, 2012

OPERATING SEGMENTS [Abstract]

OPERATING SEGMENTS

NOTE 24 — OPERATING SEGMENTS

Our reportable segments are based upon legal entities. We have two reportable segments: Independent Bank ("IB") and Mepco. The accounting policies of the segments are the same as those described in Note 1 to the consolidated financial statements. 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 follows:

	IB			Mepco			Other(1)			Elimination(2)			Total
	(In thousands)
2012
Total assets	$	1,885,807		$	135,447		$	192,343		$	(189,730	)	$	2,023,867
Interest income		84,760			14,638			-			-			99,398
Net interest income		77,919			11,115			(2,779	)		-			86,255
Provision for loan losses		6,895			(8	)		-			-			6,887
Income (loss) before income tax		27,379			2,591			(3,677	)		(95	)		26,198
Net income (loss)		28,260			1,710			(3,677	)		(95	)		26,198
2011
Total assets	$	2,132,736		$	172,007		$	157,251		$	(154,588	)	$	2,307,406
Interest income		93,310			21,452			-			-			114,762
Net interest income		81,224			16,074			(2,729	)		-			94,569
Provision for loan losses		27,972			(26	)		-			-			27,946
Loss before income tax		(11,137	)		(6,694	)		(2,486	)		(95	)		(20,412	)
Net loss		(12,768	)		(4,849	)		(2,488	)		(95	)		(20,200	)
2010
Total assets	$	2,270,881		$	265,201		$	176,740		$	(177,574	)	$	2,535,248
Interest income		111,470			37,381			-			-			148,851
Net interest income		87,521			28,602			(4,470	)		-			111,653
Provision for loan losses		47,093			(328	)		-			-			46,765
Income (loss) before income tax		(27,763	)		(2,264	)		11,823			(95	)		(18,299	)
Net income (loss)		(27,049	)		(1,388	)		11,823			(95	)		(16,709	)

___________ 

(1) Includes amounts relating to our parent company and certain insignificant operations. Net income in 2010 includes parent company's $18.1 million gain on extinguishment of debt.

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