EX-99 4 ibc8k_042408ex99p2a.htm Independent Bank Corproration Form 8-K

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data

Non-performing assets

March 31,
2008
December 31,
2007


(dollars in thousands)
Non-accrual loans     $ 95,096   $ 72,682  
Loans 90 days or more past due and  
  still accruing interest    6,921    4,394  
Restructured loans    169    173  


Total non-performing loans    102,186    77,249  
Other real estate    12,589    9,723  


Total non-performing assets   $ 114,775   $ 86,972  


As a percent of Portfolio Loans  
  Non-performing loans    4.03 %  3.03 %
  Allowance for loan losses    1.97    1.78  
Non-performing assets to total assets    3.53    2.65  
Allowance for loan losses as a percent of  
  non-performing loans    49    59  

Allowance for loan losses

Three months ended
March 31,
2008 2007


Loans Unfunded
Commitments
Loans Unfunded
Commitments




(in thousands)
Balance at beginning of period     $ 45,294   $ 1,936   $ 26,879   $ 1,881  
Additions (deduction)  
  Provision charged to operating expense    11,383    (67 )  7,989    150  
  Recoveries credited to allowance    569        555  
  Loans charged against the allowance    (7,335 )      (4,515 )




Balance at end of period   $ 49,911   $ 1,869   $ 30,908   $ 2,031  




   
Net loans charged against the allowance to  
       average Portfolio Loans (annualized)    1.07 %    0.65 %


Alternative Sources of Funds

March 31,
2008
December 31,
2007


Amount Average
Maturity
Rate Amount Average
Maturity
Rate


(dollars in thousands)
Brokered CDs(1,2)     $ 247,603    2.1 years    4.60 % $ 516,077    1.9 years    4.72 %
Fixed rate FHLB advances(1)    351,754    1.7 years    3.80    240,509    1.3 years    4.81  
Variable rate FHLB advances(1)                20,000    .3 years    4.35  
Securities sold under agreements to  
   Repurchase(1)    35,000    2.7 years    4.42    35,000    2.9 years    4.42  
FRB - Discount borrowing    150,000    .1 years    2.68  
Federal funds purchased    45,831    1 day    2.50    54,452    1 day    4.00  


      Total   $ 830,188    1.5 years    3.79 % $ 866,038    1.6 years    4.68 %



   (1) Certain of these items have had their average maturity and rate altered through the use of derivative instruments, including pay-fixed and pay-variable interest rate swaps.

Capitalization

March 31,
2008
December 31,
2007


(dollars in thousands)
Unsecured debt     $ 2,500   $ 3,000  


   
Subordinated debentures    92,888    92,888  
  Amount not qualifying as regulatory capital    (2,788 )  (2,788 )


  Amount qualifying as regulatory capital    90,100    90,100  


Shareholders' Equity  
  Preferred stock, no par value  
  Common stock, par value $1.00 per share    22,765    22,601  
  Capital surplus    196,675    195,302  
  Retained earnings    19,062    22,770  
  Accumulated other comprehensive income (loss)    38    (171 )


    Total shareholders' equity    238,540    240,502  


    Total capitalization   $ 331,140   $ 333,602  




Non-Interest Income

Three months ended
March 31,
2008
December 31,
2007
March 31,
2007



(in thousands)
Service charges on deposit accounts     $ 5,647   $ 6,418   $ 4,888  
Net gains (losses) on assets  
  Mortgage loans    1,867    904    1,081  
  Securities    (2,163 )  (964 )  79  
VISA check card interchange income    1,371    1,376    950  
Mortgage loan servicing    (323 )  364    527  
Mutual fund and annuity commissions    424    609    479  
Bank owned life insurance    478    462    449  
Title insurance fees    417    344    414  
Manufactured home loan origination fees  
  and commissions            114  
Other    1,774    1,660    1,689  



    Total non-interest income   $ 9,492   $ 11,173   $ 10,670  



Mortgage Loan Activity

Three months ended
March 31,
2008
December 31,
2007
March 31,
2007



(in thousands)
Mortgage loans originated     $ 118,242   $ 147,220   $ 116,815  
Mortgage loans sold    84,449    64,547    69,212  
Mortgage loans sold with servicing  
  rights released    7,882    9,379    11,679  
Net gains on the sale of Mortgage loans    1,867    904    1,081  
Net gains as a percent of Mortgage  
  loans sold ("Loan Sale Margin")    2.21 %  1.40 %  1.56 %
SFAS #133/159 adjustments included in the Loan  
  Sale Margin    0.97    (0.18 )  (0.04 )

Capitalized Mortgage Loan Servicing Rights

Three months ended
March 31,
2008 2007


(in thousands)
Balance at beginning of period     $ 15,780   $ 14,782  
  Originated servicing rights capitalized    878    686  
  Amortization    (636 )  (407 )
  (Increase)/decrease in impairment reserve    (725 )  (100 )


Balance at end of period   $ 15,297   $ 14,961  


   
Impairment reserve at end of period   $ 1,044   $ 168  




Non-Interest Expense

Three months ended
March 31,
2008
December 31,
2007
March 31,
2007



(in thousands)
Salaries     $ 10,156   $ 9,825   $ 10,001  
Performance-based compensation and benefits    1,304    1,218    1,321  
Other benefits    2,724    2,395    2,646  



  Compensation and employee benefits    14,184    13,438    13,968  
Occupancy, net    3,114    2,754    2,614  
Loan and collection    1,925    1,437    1,006  
Furniture, fixtures and equipment    1,817    1,944    1,900  
Data processing    1,725    1,854    1,438  
Advertising    1,100    1,549    1,152  
Credit card and bank service fees    1,046    1,037    967  
Communications    1,015    1,003    830  
Deposit insurance    833    268    87  
Amortization of intangible assets    793    934    570  
Supplies    543    633    607  
Legal and professional    418    511    506  
Branch acquisition and conversion costs            422  
Goodwill impairment            343  
Other    1,738    2,223    1,556  



      Total non-interest expense   $ 30,251   $ 29,585   $ 27,966  





Average Balances and Tax Equivalent Rates

Three Months Ended
March 31,
2008 2007


Average
Balance
Interest Rate Average
Interest
Interest Rate






Assets (dollars in thousands)
Taxable loans (1)     $ 2,564,643   $ 48,013    7.52 % $ 2,509,746   $ 49,849    8.02 %
Tax-exempt loans (1,2)    9,628    174    7.27    9,513    160    6.82  
Taxable securities    162,170    2,304    5.71    185,139    2,477    5.43  
Tax-exempt securities (2)    204,890    3,586    7.04    238,654    4,121    7.00  
Other investments    24,522    357    5.86    25,563    314    4.98  




Interest Earning Assets -  
Continuing Operations    2,965,853    54,434    7.37    2,968,615    56,921    7.74  


   
Cash and due from banks    52,459        53,228
Taxable loans - discontinued operations          33,084
Other assets, net    225,950        205,532


Total Assets   $ 3,244,262       $3,260,459


   
Liabilities  
Savings and NOW   $ 998,429    3,565    1.44   $ 903,426    4,249    1.91  
Time deposits    1,099,345    12,647    4.63    1,506,171    18,159    4.89  
Long-term debt    994    12    4.86    2,994    34    4.61  
Other borrowings    529,439    6,425    4.88    199,667    3,270    6.64  




Interest Bearing Liabilities-  
Continuing Operations    2,628,207    22,649    3.47    2,612,258    25,712    3.99  


Demand deposits    289,814        282,172
Time deposits - discontinued operations          24,732
Other liabilities    83,426        81,636
Shareholders' equity    242,815        259,661


 Total liabilities and shareholders' equity   $ 3,244,262       $3,260,459


   
Tax Equivalent Net Interest Income     $31,785           $ 31,209  


   
Tax Equivalent Net Interest Income  
as a Percent of Earning Assets            4.30 %          4.23 %



(1) All domestic
(2) Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 35%


Commercial Loan Portfolio Analysis as of March 31, 2008

Total Commercial Loans

Watch Credits
Percent of

Loan
Loan Category All Loans Performing Non-
performing
Total Category in
Watch Credit






(dollars in thousands)
Land     $ 32,332   $ 10,494   $ 11,183   $ 21,677    67.0 %
Land Development    48,587    9,771    20,858    30,629    63.0 %
Construction    95,015    22,577    13,863    36,440    38.4 %
Income Producing    340,579    37,805    12,229    50,034    14.7 %
Owner Occupied    339,147    42,844    10,248    53,092    15.7 %

Total Commercial Real Estate Loans (1)   $ 855,660   $ 123,491   $ 68,381   $ 191,872    22.4 %


   
Other Commercial Loans(1)   $ 195,601   $ 22,723   $ 3,344   $ 26,067    13.3 %



Total non-performing commercial loans   $ 71,725  



Commercial Loans in Southeastern Michigan
 
Watch Credits Percent of

Loan
Loan Category All Loans Performing Non-
performing
Total Category in
Watch Credit






(dollars in thousands)
Land     $ 20,536   $ 1,211   $ 15,449   $ 16,660    81.1 %
Land Development     18,725       13,038   13,038    69.6 %
Construction    25,751    5,673    4,570    10,243    39.8 %
Income Producing    109,773    13,755    6,358    20,113    18.3 %
Owner Occupied    93,502    8,004    6,920    14,924    16.0 %




Total Commercial Real Estate Loans   $ 268,287   $ 28,643   $ 46,335   $ 74,978    27.9 %


   
Other Commercial Loans   $ 61,226   $ 12,508   $ 1,077   $ 13,585    22.2 %



Total non-performing commercial loans in  
  Southeastern Michigan   $ 47,412  


(1) The total of these two categories is different than the March 31, 2008, Consolidated Statement of Financial Condition due primarily to loans in process.