8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report: August 5, 2010

INDEPENDENT BANK CORPORATION

(Exact name of registrant as specified in its charter)

Michigan	0-7818	38-2032782
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

230 West Main Street
Ionia, Michigan	48846
(Address of principal executive office)	(Zip Code)

Registrant’s telephone number,
including area code:
(616) 527-5820

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On August 5, 2010, Independent Bank Corporation issued a press release announcing its financial results for the quarter ended June 30, 2010. A copy of the press release is attached as Exhibit 99.1. Attached Exhibit 99.2 contains supplemental data to that press release.

The information in this Form 8-K and the attached Exhibits shall not be deemed filed for purposes of Section 18 of the Securities Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits

Exhibits.

99.1	Press release dated August 5, 2010.
99.2	Supplemental data to the Registrant’s press release dated August 5, 2010.

SIGNATURE

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.

	INDEPENDENT BANK CORPORATION (Registrant)
Date August 5, 2010	By:	s/Robert N. Shuster
		Robert N. Shuster, Principal Financial
		Officer

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EX-99.1

Exhibit 99.1

News Release

Independent Bank Corporation

230 West Main Street

Ionia, MI 48846

616.527.5820

For Release:	Immediately
Contact:	Robert Shuster, Chief Financial Officer, 616.522.1765

INDEPENDENT BANK CORPORATION REPORTS
2010 SECOND QUARTER RESULTS

IONIA, Mich., Aug. 5, 2010 — Independent Bank Corporation (Nasdaq: IBCP) reported second quarter 2010 net income applicable to common stock of $6.8 million, or $0.04 per diluted share, versus a net loss applicable to common stock of $6.2 million, or $0.26 per share, in the prior-year period. For the six months ended June 30, 2010 and 2009, the Company reported a net loss applicable to common stock of $8.1 million, or $0.31 per share, and $25.9 million, or $1.09 per share, respectively. The improved results were primarily due to an $18.1 million gain on the extinguishment of debt and a decline in the provision for loan losses, which were partially offset by a decline in net interest income.

Michael M. Magee, President and CEO of Independent Bank Corporation, commented: “We are pleased to report a profit in the second quarter of 2010, even though we understand these results were driven largely by a gain on the exchange of some of our trust preferred securities into common stock. We are also pleased that we have made further progress in improving our asset quality, which was reflected in a reduction in our provision for loan losses, loan net charge-offs, and non-performing loans. While our operating results continue to reflect the difficult market conditions we face in Michigan, we are encouraged by our asset quality trends. In addition, although a decline in our net interest income adversely impacted our core operating results, the decline was primarily driven by our goal of maintaining very high levels of liquidity and otherwise managing our balance sheet in order to preserve our regulatory capital ratios. As we look ahead in 2010, there are a number of actions that we are focused on under our capital restoration plan that should help revitalize the core financial foundation of Independent Bank Corporation. During the second quarter of 2010, we announced a number of key accomplishments in our plan to improve our overall capital position.”

Operating Results

The Company’s net interest income totaled $28.6 million during the second quarter of 2010, a decrease of $6.9 million or 19.6% from the year-ago period, and a decrease of $1.5 million, or 4.9% from the first quarter of 2010. The Company’s net interest income as a percent of average interest-earning assets (the “net interest margin”) was 4.38% during the second quarter of 2010 compared to 5.17% in the year-ago period, and 4.45% in the first quarter of 2010. The decrease in the net interest margin is primarily due to a change in asset mix, as higher yielding loans declined and lower yielding overnight investments at the Federal Reserve Bank increased. This change in asset mix principally reflects the Company’s current strategy of maintaining significantly higher balances of overnight investments to enhance liquidity. Average interest-earning assets declined to $2.61 billion in the second quarter of 2010 compared to $2.76 billion in the year-ago quarter and $2.73 billion in the first quarter of 2010. The Company’s June 2010 exchange of common stock for $41.4 million of trust preferred securities is expected to reduce future interest expense by approximately $3.5 million annually.

Net gains on the sale of mortgage loans were $2.4 million in the second quarter of 2010, compared to $3.3 million in the year-ago quarter. The decrease in net gains relates primarily to a decline in mortgage loan origination volume, loan sales and commitments to originate mortgage loans that are held for sale. The first half of 2009 reflected a significant amount of refinancing activity resulting from generally lower mortgage loan interest rates during that time period. Although mortgage loan

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interest rates were even lower during the second quarter of 2010, refinance activity has been, to date, relatively moderate as many borrowers already refinanced in 2009 (and the interest rate differential between where they refinanced in 2009 and current interest rates was not that significant). Also, many borrowers are unable to refinance because of negative equity in their homes or credit-related impediments.

Net securities gains totaled $1.4 million during the three months ended June 30, 2010, compared to $4.2 million for the comparable period in 2009. The second quarter 2010 net securities gains were primarily due to the sale of agency mortgage-backed securities. The second quarter 2009 net securities gains were primarily due to increases in the fair value and gains on the sale of a Bank of America preferred stock. The Company sold all of this preferred stock in June 2009. The sale of securities over the past two years, generally reflects the Company’s current process of selectively deleveraging the balance sheet in order to preserve regulatory capital ratios and augment liquidity.

Mortgage loan servicing generated a loss of $2.0 million in the second quarter of 2010 compared to income of $2.3 million in the second quarter of 2009. This variance is primarily due to changes in the impairment reserve on, and the amortization of, capitalized mortgage loan servicing rights. The period-end impairment reserve is based on a valuation of the Company’s mortgage loan servicing portfolio, and the amortization is primarily impacted by prepayment activity. In the second quarter of 2010, the Company recorded an impairment charge of $2.5 million which primarily reflects lower mortgage loan interest rates resulting in higher estimated future prepayment rates being used in the valuation at June 30, 2010. In the second quarter of 2009, the Company recorded a $3.0 million recovery of previously recorded impairment charges. Capitalized mortgage loan servicing rights totaled $13.0 million at June 30, 2010. The Company was servicing approximately $1.74 billion in mortgage loans for others on which servicing rights had been capitalized at June 30, 2010.

In the second quarter of 2010, the Company recorded an $18.1 million gain on the extinguishment of debt. On June 23, 2010, the Company exchanged 51.1 million shares of its common stock (having a fair value of approximately $23.5 million on the date of the exchange) for $41.4 million in liquidation value of trust preferred securities and $2.3 million of accrued and unpaid interest on such securities.

Non-interest expenses totaled $37.2 million in the second quarter of 2010, compared to $37.0 million in the year-ago period. The increase in non-interest expenses was primarily due to increases in vehicle service contract payment plan counterparty contingencies (up $2.6 million) and credit costs related to unfunded lending commitments (up $0.3 million). These increases were partially offset by declines in several categories, including: loan and collection expenses (down $0.4 million), losses on other real estate (“ORE”) and repossessed assets (down $0.4 million), FDIC deposit insurance (down $1.0 million), furniture, fixtures and equipment expense (down $0.2 million), and advertising expense (down $0.7 million).

Second quarter 2010 non-interest expenses included a $4.9 million charge (compared to $2.2 million in the second quarter of 2009) related to Mepco Finance Corporation’s (“Mepco”) business of purchasing and servicing payment plans for vehicle service contracts. These payment plans (which are classified as payment plan receivables in the Company’s Consolidated Statements of Financial Condition) permit a consumer to purchase coverage under a vehicle service contract by making monthly payments, generally for a term of 12 to 24 months, to the sellers of those contracts (referred to as Mepco’s “counterparties”). Mepco purchases these payment plans from these counterparties. When consumers stop making payments or exercise their right to voluntarily cancel the contract, the remaining unpaid balance of the payment plan is normally recouped by Mepco from the counterparties that sold the vehicle service contract and provided the coverage. Since mid-2009, payment defaults and voluntary cancellations have been at elevated levels reflecting both weak economic conditions and adverse publicity impacting the vehicle service contract industry. When counterparties do not honor their contractual obligations to Mepco to repay advanced funds, Mepco recognizes estimated probable incurred losses. Mepco pursues collection (including commencing legal action) of funds due to it under its various contracts with counterparties. During the first half of 2010, payment plan receivables declined by $120.6 million (or nearly a 60% annualized rate) to $285.7 million, as the Company seeks to strategically reduce its assets in this business segment.

Although loan and collection expenses and losses on ORE and repossessed assets both declined on a comparative quarterly basis, they remain elevated due primarily to management, collection, holding and disposition costs related to non-performing assets.

FDIC deposit insurance costs declined in 2010 on both a quarterly and year-to-date basis compared to 2009. The second quarter of 2009 included a $1.4 million expense related to an industry-wide special assessment.

Pre-Tax, Pre-Provision Core Operating Earnings

The Company is presenting pre-tax, pre-provision core operating earnings in this release for purposes of additional analysis of operating results. Pre-tax, pre-provision core operating earnings, as defined by management, represents the Company’s income (loss) excluding: income tax expense (benefit), the provision for loan losses, credit costs related to unfunded commitments, securities gains or losses, vehicle service contract counterparty contingencies, and any impairment charges (including capitalized

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mortgage loan servicing rights, goodwill, losses on ORE or repossessed assets, and certain fair-value adjustments) and elevated loan and collection costs caused by the current economic cycle.

The following table reconciles pre-tax, pre-provision core operating earnings to consolidated net income (loss) presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Pre-tax, pre-provision core operating earnings is not a measurement of the Company’s financial performance under GAAP and should not be considered as an alternative to net income (loss) under GAAP. Pre-tax, pre-provision core operating earnings has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of the Company’s results as reported under GAAP. However, the Company believes presenting pre-tax, pre-provision core operating earnings provides investors with the ability to gain a further understanding of its underlying operating trends separate from the direct effects of any impairment charges, credit issues, certain fair value adjustments, securities gains or losses, and challenges inherent in the real estate downturn and other economic cycle issues. It displays core operating earnings trends before the impact of these challenges. The Asset Quality section of this release isolates the challenges and issues related to the credit quality of the Company’s loan portfolio and the impact on its results as reflected in the provision for loan losses.

The decline in the Company’s pre-tax, pre-provision core operating earnings in 2010 as compared to 2009, is principally due to a decrease in net interest income as described above.

Pre-Tax, Pre-Provision Core Operating Earnings
				Quarter Ended
	6/30/10			3/31/10			6/30/09
				(in thousands)
Net income (loss)	$	7,884		$	(13,837	)	$	(5,161	)
Income tax expense (benefit)		156			(264	)		(959	)
Provision for loan losses		12,680			17,014			25,659
Credit costs related to unfunded lending commitments		280			56			(66	)
Securities (gains) losses		(1,363	)		(147	)		(4,230	)
Vehicle service contract counterparty contingencies		4,861			3,418			2,215
Impairment (recovery) charge on capitalized loan servicing		2,460			(145	)		(2,965	)
Gain on extinguishment of debt		(18,086	)		—			—
Losses on ORE and repossessed assets		1,554			2,029			1,939
Elevated loan and collection costs (1)		1,535			3,536			1,977
Pre-Tax, Pre-Provision Core Operating Earnings	$	11,961		$	11,660		$	18,409

⁽¹⁾ Represents the excess amount over a “normalized” level (experienced prior to 2008) of $1.25 million quarterly.

Asset Quality

Commenting on asset quality, CEO Magee added: “Our provision for loan losses decreased by $13.0 million, or 50.6%, in the second quarter of 2010 compared to the year-ago level, primarily reflecting a reduction in non-performing loans, reduced levels of loan net-charge offs, and an overall decline in total loan balances. Further, thirty to eighty-nine day delinquency rates remained relatively low for commercial loans and declined from year-end 2009 levels for mortgage and consumer loans. We are optimistic that our team’s ongoing efforts in managing our commercial and retail loan portfolios will yield further continued improvements in asset quality in the future.”

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A breakdown of non-performing loans⁽¹⁾ by loan type is as follows:

Loan Type	6/30/2010			12/31/2009			6/30/2009
	(Dollars in Millions)
Commercial	$	37.6		$	50.4		$	63.0
Consumer/installment		5.9			8.4			7.8
Mortgage		38.6			48.0			51.4
Payment plan receivables (2)		2.4			3.1			3.1
Total	$	84.5		$	109.9		$	125.3
Ratio of non-performing loans to total portfolio loans		4.16	%		4.78	%		5.13	%
Ratio of non-performing assets to total assets		4.61	%		4.77	%		5.21	%
Ratio of the allowance for loan losses to non-performing loans		89.46	%		74.35	%		52.10	%

(1)	Excludes loans that are classified as “troubled debt restructurings” that are still performing.
(2)	Represents payment plans for which no payments have been received for 90 days or more and for which Mepco has not yet completed the process to charge the applicable counterparty for the balance due. The June 30, 2010 balance excludes $23.5 million (net of reserves) of receivables due from Mepco counterparties related to the cancellation of payment plan receivables.

The decrease in non-performing loans since year-end 2009 is due principally to declines in non-performing commercial loans and residential mortgage loans. These declines primarily reflect loan net charge-offs, pay-offs, negotiated transactions, and the migration of loans into ORE during the first half of 2010. Non-performing commercial loans relate largely to delinquencies caused by cash-flow difficulties encountered by real estate developers (due to a decline in sales of real estate) as well as owners of income-producing properties (due to higher vacancy rates and/or lower rental rates). Non-performing commercial loans have declined for the past six quarters. The elevated level of non-performing residential mortgage loans is primarily due to delinquencies reflecting both weak economic conditions and soft residential real estate values in many parts of Michigan. However, retail non-performing loans have declined for four consecutive quarters and are at their lowest level since the first quarter of 2009. ORE and repossessed assets totaled $41.8 million at June 30, 2010, compared to $31.5 million at Dec. 31, 2009, and $29.8 million at June 30, 2009. ORE and repossessed assets are expected to continue to rise throughout the remainder of 2010 as non-performing loans move through the collection cycle.

The provision for loan losses was $12.7 million and $25.7 million in the second quarters of 2010 and 2009, respectively. The level of the provision for loan losses in each period reflects the Company’s overall assessment of the allowance for loan losses, taking into consideration factors such as loan mix, levels of non-performing and classified loans and loan net charge-offs. Loan net charge-offs were $13.2 million (2.52% annualized of average loans) in the second quarter of 2010, compared to $18.7 million (3.05% annualized of average loans) in the second quarter of 2009 and $22.6 million (4.10% annualized of average loans) in the first quarter of 2010. The decline in second quarter 2010 loan net charge-offs compared to year-ago levels is primarily due to a decline in commercial loan net charge-offs. Loan net charge-offs were $35.8 million (3.33% annualized of average loans) and $48.4 million (3.98% annualized of average loans) for the first six months of 2010 and 2009, respectively. At June 30, 2010, the allowance for loan losses totaled $75.6 million, or 3.72% of portfolio loans, compared to $81.7 million, or 3.55% of portfolio loans, at Dec. 31, 2009.

Balance Sheet, Liquidity and Capital

Total assets were $2.74 billion at June 30, 2010, a decrease of $228.2 million, or 7.7%, from Dec. 31, 2009. Loans, excluding loans held for sale, were $2.03 billion at June 30, 2010, compared to $2.30 billion at Dec. 31, 2009. Deposits totaled $2.38 billion at June 30, 2010, a decrease of $188.6 million from Dec. 31, 2009. The decline in deposits primarily reflects a reduction in brokered CDs that was partially offset by an increase in the balance of checking and savings accounts.

Cash and cash equivalents totaled $355.9 million at June 30, 2010, versus $288.7 million at Dec. 31, 2009. This increase reflects the Company’s efforts to augment liquidity. In addition, the Company’s bank subsidiary had approximately $650.3 million of unused borrowing capacity at June 30, 2010.

Stockholders’ equity totaled $129.7 million at June 30, 2010, or 4.74% of total assets. The Company’s wholly owned subsidiary, Independent Bank, remains “well capitalized” for regulatory purposes with the following ratios:

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							Well Capitalized
Regulatory Capital Ratio	6/30/10			12/31/2009			Minimum
Tier 1 capital to average total assets		6.37	%		6.72	%		5.00	%
Tier 1 capital to risk-weighted assets		9.27	%		9.08	%		6.00	%
Total capital to risk-weighted assets		10.55	%		10.36	%		10.00	%

Capital Raising Initiatives

As previously announced, the Company adopted a capital restoration plan (the “Capital Plan”) in Jan. 2010. The primary objective of this Capital Plan is to achieve and thereafter maintain certain minimum capital ratios for Independent Bank as established by its Board of Directors. These minimum capital ratios are 8% for Tier 1 Capital to Average Total Assets and 11% for Total Capital to Risk-Weighted Assets. The Company is seeking to achieve these minimum capital ratios by Sept. 30, 2010.

The Capital Plan sets forth three primary capital raising initiatives:

     (1) an offer to exchange shares of the Company’s common stock for any or all of the Company’s outstanding trust preferred securities;

     (2) the exchange of shares of the Company’s common stock for any or all of the shares of preferred stock held by the United States Department of Treasury (“UST”); and

     (3) a public offering of the Company’s common stock for cash.

During the second quarter of 2010, the Company completed transactions designed to accomplish the first two initiatives. On June 23, 2010, the Company completed its offer to exchange shares of its common stock for its outstanding trust preferred securities, which resulted in the issuance of common stock in exchange for the surrender of outstanding trust preferred securities with an aggregate liquidation amount of $41.4 million. On Apr. 16, 2010, the Company closed a transaction with the UST for the exchange of the $72 million of Series A preferred stock that the UST acquired pursuant to the TARP Capital Purchase Program for new shares of Series B convertible preferred stock. A key benefit of this transaction was obtaining the right, under the terms of the new Series B convertible preferred stock, to compel the conversion of this stock into shares of the Company’s common stock, provided that the Company meets a number of conditions. The conditions are primarily intended to ensure that the Company successfully implements the other elements of its Capital Plan, as described above.

These first two initiatives were designed to improve the Company’s ratio of tangible common equity to tangible assets, reduce required annual interest and dividend payments by reducing the aggregate principal amount of outstanding trust preferred securities and outstanding shares of preferred stock, and otherwise improve the Company’s ability to successfully raise additional capital through a public offering of its common stock, which is the last component of the Capital Plan.

In addition to these measures, on July 7, 2010 the Company executed an Investment Agreement and Registration Rights Agreement with Dutchess Opportunity Fund, II, LP (“Dutchess”) for the sale of up to 15.0 million shares of the Company’s common stock. These agreements serve to establish an equity line facility as a contingent source of liquidity for the Company. Pursuant to the Investment Agreement, Dutchess committed to purchase up to $15.0 million of the Company’s common stock over a 36-month period after the registration statement referenced below becomes effective. The Company has the right, but no obligation, to draw on this equity line facility from time to time during such 36-month period by selling shares of its common stock to Dutchess. The sales price would be at a 5% discount to the market price of the Company’s common stock at the time of the draw; as such market price is determined pursuant to the terms of the Investment Agreement. To date, no securities have been sold under the equity line facility. In connection with the Registration Rights Agreement with Dutchess, the Company has agreed to register for resale, the shares that may be sold to Dutchess. The Company expects to file a registration statement with the SEC for these shares on or before Aug. 20, 2010.

About Independent Bank Corporation

Independent Bank Corporation (NASDAQ: IBCP) is a Michigan-based bank holding company with total assets of approximately $2.7 billion. Founded as First National Bank of Ionia in 1864, Independent Bank Corporation now operates over 100 offices across Michigan’s Lower Peninsula through one state-chartered bank subsidiary. This subsidiary (Independent Bank) provides a full range of financial services, including commercial banking, mortgage lending, investments and title services. Independent Bank Corporation is committed to providing exceptional personal service and value to its customers, stockholders and the communities it serves.

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For more information, please visit the Company’s Web site at: IndependentBank.com

Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as “expect,” “believe,” “intend,” “estimate,” “project,” “may” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are predicated on management’s beliefs and assumptions based on information known to Independent Bank Corporation’s management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Independent Bank Corporation’s management for future operations, products or services, and forecasts of the Company’s revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, and estimates of credit quality trends. Such statements reflect the view of Independent Bank Corporation’s management as of this date with respect to future events and are not guarantees of future performance, involve assumptions and are subject to substantial risks and uncertainties, such as the changes in Independent Bank Corporation’s plans, objectives, expectations and intentions. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, the Company’s actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include the ability of Independent Bank Corporation to meet the objectives of its capital restoration plan, the ability of Independent Bank to remain well-capitalized under federal regulatory standards, the pace of economic recovery within Michigan and beyond, changes in interest rates, changes in the accounting treatment of any particular item, the results of regulatory examinations, changes in industries where the Company has a concentration of loans, changes in the level of fee income, changes in general economic conditions and related credit and market conditions, and the impact of regulatory responses to any of the foregoing. Forward-looking statements speak only as of the date they are made. Independent Bank Corporation does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Independent Bank Corporation claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

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INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition

	June 30,			December 31,
	2010			2009
	(unaudited)
	(in thousands, except share amounts)
Assets
Cash and due from banks	$	52,663		$	65,214
Interest bearing deposits		303,268			223,522
Cash and Cash Equivalents		355,931			288,736
Trading securities		27			54
Securities available for sale		112,947			164,151
Federal Home Loan Bank and Federal Reserve Bank stock, at cost		26,443			27,854
Loans held for sale, carried at fair value		32,786			34,234
Loans
Commercial		767,285			840,367
Mortgage		704,604			749,298
Installment		275,335			303,366
Payment plan receivables		285,749			406,341
Total Loans		2,032,973			2,299,372
Allowance for loan losses		(75,606	)		(81,717	)
Net Loans		1,957,367			2,217,655
Other real estate and repossessed assets		41,785			31,534
Property and equipment, net		70,277			72,616
Bank-owned life insurance		46,953			46,514
Other intangibles		9,615			10,260
Capitalized mortgage loan servicing rights		13,022			15,273
Prepaid FDIC deposit insurance assessment		18,811			22,047
Vehicle service contract counterparty receivables, net		25,376			5,419
Accrued income and other assets		25,821			29,017
Total Assets	$	2,737,161		$	2,965,364
Liabilities and Shareholders’ Equity
Deposits
Non-interest bearing	$	347,844		$	334,608
Savings and NOW		1,069,062			1,059,840
Retail time		537,496			542,170
Brokered time		422,749			629,150
Total Deposits		2,377,151			2,565,768
Other borrowings		133,402			131,182
Subordinated debentures		50,175			92,888
Vehicle service contract counterparty payables		13,999			21,309
Accrued expenses and other liabilities		32,762			44,356
Total Liabilities		2,607,489			2,855,503
Shareholders’ Equity
Preferred stock, no par value, 200,000 shares authorized
Issued and outstanding:
At June 30, 2010: Series B, 74,426 shares, $1,010 liquidation preference per share		70,458			—
At December 31, 2009: Series A, 72,000 shares, $1,000 liquidation preference per share		—			69,157
Common stock, no par value at June 30, 2010, and $1.00 par value at December 31, 2009—authorized: 500,000,000 shares at June 30, 2010, and 60,000,000 shares at December 31, 2009; issued and outstanding: 75,123,427 shares at June 30, 2010, and 24,028,505 shares at December 31, 2009		250,737			23,863
Capital surplus		—			201,618
Accumulated deficit		(177,242	)		(169,098	)
Accumulated other comprehensive loss		(14,281	)		(15,679	)
Total Shareholders’ Equity		129,672			109,861
Total Liabilities and Shareholders’ Equity	$	2,737,161		$	2,965,364

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INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations

	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,
	2010			2010			2009			2010			2009
	(unaudited)
	(in thousands)
Interest Income
Interest and fees on loans	$	36,675		$	39,027		$	45,224		$	75,702		$	89,625
Interest on securities
Taxable		902			1,160			1,705			2,062			3,438
Tax-exempt		526			685			976			1,211			2,083
Other investments		389			372			239			761			563
Total Interest Income		38,492			41,244			48,144			79,736			95,709
Interest Expense
Deposits		7,508			8,219			8,811			15,727			17,359
Other borrowings		2,413			2,994			3,814			5,407			8,484
Total Interest Expense		9,921			11,213			12,625			21,134			25,843
Net Interest Income		28,571			30,031			35,519			58,602			69,866
Provision for loan losses		12,680			17,014			25,659			29,694			55,783
Net Interest Income After Provision for Loan Losses		15,891			13,017			9,860			28,908			14,083
Non-interest Income
Service charges on deposit accounts		5,833			5,275			6,321			11,108			11,828
Net gains (losses) on assets
Mortgage loans		2,372			1,843			3,262			4,215			6,543
Securities		1,363			265			4,230			1,628			3,666
Other than temporary loss on securities available for sale
Total impairment loss		—			(118	)		—			(118	)		(17	)
Loss recognized in other comprehensive loss		—			—			—			—			—
Net impairment loss recognized in earnings		—			(118	)		—			(118	)		(17	)
VISA check card interchange income		1,655			1,572			1,500			3,227			2,915
Mortgage loan servicing		(2,043	)		432			2,349			(1,611	)		1,507
Title insurance fees		366			494			732			860			1,341
Gain on extinguishment of debt		18,086			—			—			18,086			—
Other income		1,682			2,254			2,617			3,936			4,806
Total Non-interest Income		29,314			12,017			21,011			41,331			32,589
Non-interest Expense
Compensation and employee benefits		13,430			13,213			13,328			26,643			25,905
Vehicle service contract counterparty contingencies		4,861			3,418			2,215			8,279			3,015
Loan and collection		2,785			4,786			3,227			7,571			7,265
Occupancy, net		2,595			2,909			2,560			5,504			5,608
Data processing		2,039			2,105			2,010			4,144			4,106
Loss on other real estate and repossessed assets		1,554			2,029			1,939			3,583			3,200
FDIC deposit insurance		1,763			1,802			2,755			3,565			3,941
Furniture, fixtures and equipment		1,648			1,719			1,848			3,367			3,697
Credit card and bank service fees		1,500			1,675			1,668			3,175			3,132
Advertising		674			779			1,421			1,453			2,863
Other expenses		4,316			4,700			4,020			9,016			8,364
Total Non-interest Expense		37,165			39,135			36,991			76,300			71,096
Income (Loss) Before Income Tax		8,040			(14,101	)		(6,120	)		(6,061	)		(24,424	)
Income tax expense (benefit)		156			(264	)		(959	)		(108	)		(666	)
Net Income (Loss)	$	7,884		$	(13,837	)	$	(5,161	)	$	(5,953	)	$	(23,758	)
Preferred dividends and discount accretion		1,113			1,077			1,075			2,190			2,150
Net Income (Loss) Applicable to Common Stock	$	6,771		$	(14,914	)	$	(6,236	)	$	(8,143	)	$	(25,908	)

10

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Selected Financial Data

	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,
	2010			2010			2009			2010			2009
	(unaudited)
Per Common Share Data (A)
Net Income (Loss) Per Common Share
Basic (B)	$	.24		$	(.62	)	$	(.26	)	$	(.31	)	$	(1.09	)
Diluted (C)		.04			(.62	)		(.26	)		(.31	)		(1.09	)
Cash dividends declared per common share		.00			.00			.01			.00			.02
Selected Ratios (annualized) (A)
As a Percent of Average Interest-Earning Assets
Interest income		5.90	%		6.12	%		7.01	%		6.01	%		6.99	%
Interest expense		1.52			1.67			1.84			1.60			1.89
Net interest income		4.38			4.45			5.17			4.41			5.10
Net Income (Loss) to
Average common equity		111.56	%		(184.46	)%		(22.98	)%		(57.53	)%		(44.24	)%
Average assets		.96			(2.06	)		(0.83	)		(0.57	)		(1.75	)
Average Shares
Basic (B)		28,524,140			24,031,606			24,029,942			26,290,283			23,700,213
Diluted (C)		176,073,257			24,103,545			24,102,482			100,508,481			23,768,494

(A)	These amounts are calculated using net income (loss) applicable to common stock. For any period in which net income applicable to common stock is recorded, dividends on convertible preferred stock are added back in the diluted per share calculation.
(B)	Average shares of common stock for basic net income per share include shares issued and outstanding during the period and participating share awards.
(C)	Average shares of common stock for diluted net income per share include shares to be issued upon conversion of convertible preferred stock, shares to be issued upon exercise of common stock warrants, shares to be issued upon exercise of stock options and stock units for deferred compensation plan for non-employee directors. For any period in which a loss is recorded, the assumed conversion of convertible preferred stock, assumed exercise of common stock warrants, assumed exercise of stock options, and stock units for deferred compensation plan for non-employee directors would have an anti-dilutive impact on the loss per share and are thus ignored in the diluted per share calculation.

11

EX-99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Supplemental Data Exhibit 99.2

Non-performing assets

	June 30,			December 31,
	2010			2009
	(dollars in thousands)
Non-accrual loans	$	84,158		$	105,965
Loans 90 days or more past due and still accruing interest		356			3,940
Total non-performing loans		84,514			109,905
Other real estate and repossessed assets		41,785			31,534
Total non-performing assets	$	126,299		$	141,439
As a percent of Portfolio Loans
Non-performing loans		4.16	%		4.78	%
Allowance for loan losses		3.72			3.55
Non-performing assets to total assets		4.61			4.77
Allowance for loan losses as a percent of non-performing loans		89.46			74.35

Allowance for loan losses

	Six months ended
				June 30,
	2010					2009
				Unfunded					Unfunded
	Loans			Commitments		Loans			Commitments
				(dollars in thousands)
Balance at beginning of period	$	81,717		$	1,858	$	57,900		$	2,144
Additions (deduction)
Provision for loan losses		29,694					55,783
Recoveries credited to allowance		1,839					1,494
Loans charged against the allowance		(37,644	)				(49,906	)
Additions (deductions) included in non-interest expense					336					(152	)
Balance at end of period	$	75,606		$	2,194	$	65,271		$	1,992
Net loans charged against the allowance to average Portfolio Loans (annualized)		3.33	%				3.98	%

Alternative Sources of Funds

	June 30,						December 31,
	2010						2009
			Average						Average
	Amount		Maturity	Rate			Amount		Maturity	Rate
				(dollars in thousands)
Brokered CDs	$	422,749	2.5 years		2.95	%	$	629,150	2.2 years		2.46	%
Fixed rate FHLB advances		23,275	5.9 years		6.41			27,382	5.5 years		6.59
Variable rate FHLB advances		75,000	1.2 years		0.48			67,000	1.4 years		0.32
Securities sold under agreements to repurchase		35,000	.4 years		4.42			35,000	.9 years		4.42
Total	$	556,024	2.3 years		2.86	%	$	758,532	2.2 years		2.51	%

12

Capitalization

	June 30,			December 31,
	2010			2009
	(in thousands)
Subordinated debentures	$	50,175		$	92,888
Amount not qualifying as regulatory capital		(1,507	)		(2,788	)
Amount qualifying as regulatory capital		48,668			90,100
Shareholders’ Equity
Preferred stock		70,458			69,157
Common stock		250,737			23,863
Capital surplus					201,618
Accumulated deficit		(177,242	)		(169,098	)
Accumulated other comprehensive loss		(14,281	)		(15,679	)
Total shareholders’ equity		129,672			109,861
Total capitalization	$	178,340		$	199,961

Non-Interest Income

	Three months ended								Six months ended
	June 30,			March 31,			June 30,		June 30,
	2010			2010			2009		2010			2009
	(in thousands)
Service charges on deposit accounts	$	5,833		$	5,275		$	6,321	$	11,108		$	11,828
Net gains (losses) on assets
Mortgage loans		2,372			1,843			3,262		4,215			6,543
Securities		1,363			265			4,230		1,628			3,666
Other than temporary loss on securities available for sale
Total impairment loss					(118	)				(118	)		(17	)
Loss recognized in other comprehensive loss
Net impairment loss recognized in earnings					(118	)				(118	)		(17	)
VISA check card interchange income		1,655			1,572			1,500		3,227			2,915
Mortgage loan servicing		(2,043	)		432			2,349		(1,611	)		1,507
Mutual fund and annuity commissions		409			389			539		798			992
Bank owned life insurance		483			468			355		951			756
Title insurance fees		366			494			732		860			1,341
Gain on extinguishment of debt		18,086								18,086
Other		790			1,397			1,723		2,187			3,058
Total non-interest income	$	29,314		$	12,017		$	21,011	$	41,331		$	32,589

Capitalized Real Estate Mortgage Loan Servicing Rights

	Three months ended						Six months ended
	June 30,						June 30,
	2010			2009			2010			2009
				(in thousands)
Balance at beginning of period	$	15,435		$	11,589		$	15,273		$	11,966
Originated servicing rights capitalized		680			1,624			1,455			3,123
Amortization		(633	)		(1,640	)		(1,391	)		(2,819	)
(Increase)/decrease in impairment reserve		(2,460	)		2,965			(2,315	)		2,268
Balance at end of period	$	13,022		$	14,538		$	13,022		$	14,538
Impairment reserve at end of period	$	4,617		$	2,383		$	4,617		$	2,383

13

          Mortgage Loan Activity

	Three months ended									Six months ended
	June 30,			March 31,			June 30,			June 30,
	2010			2010			2009			2010			2009
	(in thousands)
Mortgage loans originated	$	93,900		$	90,007		$	196,927		$	183,907		$	351,535
Mortgage loans sold		87,583			87,708			158,173			175,291			300,809
Mortgage loans sold with servicing rights released		20,747			11,864			9,174			32,611			14,603
Net gains on the sale of mortgage loans		2,372			1,843			3,262			4,215			6,543
Net gains as a percent of mortgage loans sold (“Loan Sale Margin”)		2.71	%		2.10	%		2.06	%		2.40	%		2.18	%
Fair value adjustments included in the Loan Sale Margin		0.43			(.07	)		0.04			0.18			0.33

     Non-Interest Expense

	Three months ended							Six months ended
	June 30,		March 31,		June 30,			June 30,
	2010		2010		2009			2010		2009
	(in thousands)
Salaries	$	10,242	$	10,176	$	9,815		$	20,418	$	19,484
Performance-based compensation and benefits		655		644		747			1,299		1,076
Other benefits		2,533		2,393		2,766			4,926		5,345
Compensation and employee benefits		13,430		13,213		13,328			26,643		25,905
Vehicle service contract counterparty contingencies		4,861		3,418		2,215			8,279		3,015
Loan and collection		2,785		4,786		3,227			7,571		7,265
Occupancy, net		2,595		2,909		2,560			5,504		5,608
Data processing		2,039		2,105		2,010			4,144		4,106
Loss on other real estate and repossessed assets		1,554		2,029		1,939			3,583		3,200
FDIC deposit insurance		1,763		1,802		2,755			3,565		3,941
Furniture, fixtures and equipment		1,648		1,719		1,848			3,367		3,697
Credit card and bank service fees		1,500		1,675		1,668			3,175		3,132
Communications		1,015		1,073		1,107			2,088		2,152
Legal and professional		894		1,136		705			2,030		1,346
Advertising		674		779		1,421			1,453		2,863
Supplies		415		393		457			808		926
Amortization of intangible assets		323		322		474			645		975
Credit costs related to unfunded lending commitments		280		56		(66	)		336		(152	)
Other		1,389		1,720		1,343			3,109		3,117
Total non-interest expense	$	37,165	$	39,135	$	36,991		$	76,300	$	71,096

14

Average Balances and Rates

	Three Months Ended
	June 30,
	2010							2009
	Average							Average
	Balance		Interest		Rate			Balance		Interest		Rate
	(dollars in thousands)
Assets (1)
Taxable loans	$	2,115,837	$	36,569		6.93	%	$	2,513,367	$	45,157		7.20	%
Tax-exempt loans (2)		9,866		106		4.31			7,069		67		3.80
Taxable securities		87,554		902		4.13			118,116		1,705		5.79
Tax-exempt securities (2)		49,012		526		4.30			88,601		976		4.42
Cash — interest bearing		324,592		192		0.24
Other investments		27,001		197		2.93			28,011		239		3.42
Interest Earning Assets		2,613,862		38,492		5.90			2,755,164		48,144		7.01
Cash and due from banks		48,751							74,659
Other assets, net		160,291							165,715
Total Assets	$	2,822,904						$	2,995,538
Liabilities
Savings and NOW	$	1,088,526		670		0.25		$	974,994		1,493		0.61
Time deposits		1,019,882		6,838		2.69			979,506		7,318		3.00
Other borrowings		227,979		2,413		4.25			448,714		3,814		3.41
Interest Bearing Liabilities		2,336,387		9,921		1.70			2,403,214		12,625		2.11
Demand deposits		340,558							320,920
Other liabilities		52,051							93,861
Shareholders’ equity		93,908							177,543
Total liabilities and shareholders’ equity	$	2,822,904						$	2,995,538
Net Interest Income			$	28,571						$	35,519
Net Interest Income as a Percent of Earning Assets						4.38	%						5.17	%

(1)	All domestic, except for $0.4 million and $8.8 million for the three months ended June 30, 2010 and 2009, respectively, of average payment plan receivables included in taxable loans for customers domiciled in Canada.
(2)	Interest on tax-exempt loans and securities is not presented on a fully tax equivalent basis due to the current net operating loss carryforward position and the deferred tax asset valuation allowance.

15

Average Balances and Rates

	Six Months Ended
	June 30,
	2010							2009
	Average							Average
	Balance		Interest		Rate			Balance		Interest		Rate
	(dollars in thousands)
Assets (1)
Taxable loans	$	2,184,046	$	75,491		6.95	%	$	2,504,582	$	89,457		7.19	%
Tax-exempt loans (2)		9,997		211		4.26			8,490		168		3.99
Taxable securities		91,859		2,062		4.53			116,478		3,438		5.95
Tax-exempt securities (2)		56,671		1,211		4.31			95,795		2,083		4.38
Cash — interest bearing		299,910		349		0.23
Other investments		27,426		412		3.03			28,641		563		3.96
Interest Earning Assets		2,669,909		79,736		6.01			2,753,986		95,709		6.99
Cash and due from banks		53,855							67,935
Other assets, net		154,408							162,086
Total Assets	$	2,878,172						$	2,984,007
Liabilities
Savings and NOW	$	1,086,524		1,533		0.28		$	960,032		3,074		0.65
Time deposits		1,073,452		14,194		2.67			917,609		14,285		3.14
Other borrowings		227,801		5,407		4.79			523,630		8,484		3.27
Interest Bearing Liabilities		2,387,777		21,134		1.78			2,401,271		25,843		2.17
Demand deposits		334,100							314,762
Other liabilities		58,359							81,267
Shareholders’ equity		97,936							186,707
Total liabilities and shareholders’ equity	$	2,878,172						$	2,984,007
Net Interest Income			$	58,602						$	69,866
Net Interest Income as a Percent of Earning Assets						4.41	%						5.10	%

(1)	All domestic, except for $0.7 million and $7.4 million for the six months ended June 30, 2010 and 2009, respectively, of average payment plan receivables included in taxable loans for customers domiciled in Canada.
(2)	Interest on tax-exempt loans and securities is not presented on a fully tax equivalent basis due to the current net operating loss carryforward position and the deferred tax asset valuation allowance.

16

Commercial Loan Portfolio Analysis as of June 30, 2010

	Total Commercial Loans
			Watch Credits						Percent of Loan Category in Watch
Loan Category	All Loans		Performing		Non- performing		Total		Credit
	(dollars in thousands)
Land	$	28,587	$	9,939	$	3,621	$	13,560		47.4	%
Land Development		23,116		8,626		3,520		12,146		52.5
Construction		24,372		13,638		2,392		16,030		65.8
Income Producing		342,334		69,114		21,358		90,472		26.4
Owner Occupied		182,962		34,292		4,728		39,020		21.3
Total Commercial Real Estate Loans (1)	$	601,371	$	135,609	$	35,619	$	171,228		28.5
Other Commercial Loans(1)	$	165,386	$	26,871		1,977	$	28,848		17.4
Total non-performing commercial loans					$	37,596

(1) The total of these two categories is different than the June 30, 2010, Consolidated Statement of Financial Condition due primarily to loans in process.

17