EX-99.2 3 k33107exv99w2.htm SUPPLEMENTAL DATA exv99w2
Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets
                 
    June 30,     December 31,  
    2008     2007  
    (dollars in thousands)  
Non-accrual loans
   $ 109,844     $ 72,682  
Loans 90 days or more past due and still accruing interest
     1,560       4,394  
Restructured loans
             173  
 
            
Total non-performing loans
     111,404       77,249  
Other real estate
     11,098       9,723  
 
            
Total non-performing assets
   $ 122,502     $ 86,972  
 
            
As a percent of Portfolio Loans
                
Non-performing loans
     4.34 %     3.03 %
Allowance for loan losses
     1.99       1.78  
Non-performing assets to total assets
     3.78       2.65  
Allowance for loan losses as a percent of non-performing loans
     46       59  
Allowance for loan losses
                                 
    Six months ended  
    June 30,  
    2008     2007  
            Unfunded             Unfunded  
    Loans     Commitments     Loans     Commitments  
    (in thousands)  
Balance at beginning of period
   $ 45,294     $ 1,936     $ 26,879     $ 1,881  
Additions (deduction)
                                
Provision charged to operating expense
     23,875       (207 )     22,658       374  
Recoveries credited to allowance
     1,099               1,140          
Loans charged against the allowance
     (19,164 )             (12,464 )        
 
                        
Balance at end of period
   $ 51,104     $ 1,729     $ 38,213     $ 2,255  
 
                        
Net loans charged against the allowance to average Portfolio Loans (annualized)
     1.43 %             0.92 %        

 

 

Alternative Sources of Funds
                                                 
    June 30,   December 31,
    2008   2007
            Average                   Average    
    Amount   Maturity   Rate   Amount   Maturity   Rate
    (dollars in thousands)
Brokered CDs(1,2)
   $ 112,539     1.8 years     4.24 %   $ 516,077     1.9 years     4.72 %
Fixed rate FHLB advances(1)
     396,925     2.1 years     3.15       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     2.4 years     4.42       35,000     2.9 years     4.42  
FRB — Discount borrowing
     269,000       .2 years     2.25                          
Federal funds purchased
     40,671     1 day     2.25       54,452      1 day     4.00  
         
Total
   $ 854,135     1.4 years     3.02 %   $ 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
                 
    June 30,     December 31,  
    2008     2007  
    (in thousands)  
Unsecured debt
           $ 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
     22,773       22,601  
Capital surplus
     196,819       195,302  
Retained earnings
     22,178       22,770  
Accumulated other comprehensive income (loss)
     (3,500 )     (171 )
 
            
Total shareholders’ equity
     238,270       240,502  
 
            
Total capitalization
   $ 328,370     $ 333,602  
 
            

2

 

Non-Interest Income
                                         
    Three months ended     Six months ended  
    June 30,     March 31,     June 30,     June 30,  
    2008     2008     2007     2008     2007  
    (in thousands)  
Service charges on deposit accounts
   $ 6,164     $ 5,647     $ 6,380     $ 11,811     $ 11,268  
Net gains (losses) on assets
                                        
Mortgage loans
     1,141       1,867       1,238       3,008       2,319  
Securities
     837       (2,163 )     128       (1,326 )     207  
VISA check card interchange income
     1,495       1,371       1,292       2,866       2,242  
Mortgage loan servicing
     1,528       (323 )     712       1,205       1,239  
Mutual fund and annuity commissions
     644       424       467       1,068       946  
Bank owned life insurance
     484       478       448       962       897  
Title insurance fees
     384       417       430       801       844  
Manufactured home loan origination fees and commissions
                     115               229  
Other
     1,460       1,774       1,563       3,234       3,252  
 
                              
Total non-interest income
   $ 14,137     $ 9,492     $ 12,773     $ 23,629     $ 23,443  
 
                              
Mortgage Loan Activity
                                         
    Three months ended     Six months ended  
    June 30,     March 31,     June 30,     June 30,  
    2008     2008     2007     2008     2007  
    (in thousands)  
Mortgage loans originated
   $ 111,316     $ 118,242     $ 129,613     $ 229,558     $ 246,428  
Mortgage loans sold
     80,238       84,449       77,913       164,687       147,125  
Mortgage loans sold with servicing rights released
     11,660       7,882       12,604       19,542       24,283  
Net gains on the sale of mortgage loans
     1,141       1,867       1,238       3,008       2,319  
Net gains as a percent of mortgage loans sold (“Loan Sale Margin”)
     1.42 %     2.21 %     1.59 %     1.83 %     1.58 %
SFAS #133/#159 adjustments included in the Loan Sale Margin
     (0.25 )     0.97       0.00       0.38       0.00  
Capitalized Real Estate Mortgage Loan Servicing Rights
                                 
    Three months ended     Six months ended  
    June 30,     June 30,  
    2008     2007     2008     2007  
    (in thousands)  
Balance at beginning of period
   $ 15,297     $ 14,961     $ 15,780     $ 14,782  
Originated servicing rights capitalized
     754       776       1,632       1,462  
Amortization
     (496 )     (432 )     (1,132 )     (839 )
(Increase)/decrease in impairment reserve
     996       138       271       38  
 
                        
Balance at end of period
   $ 16,551     $ 15,443     $ 16,551     $ 15,443  
 
                        
 
Impairment reserve at end of period
   $ 48     $ 30     $ 48     $ 30  
 
                        

3

 

Non-Interest Expense
                                         
    Three months ended     Six months ended  
    June 30,     March 31,     June 30,     June 30,  
    2008     2008     2007     2008     2007  
                    (in thousands)                  
Salaries
   $ 9,727     $ 10,156     $ 10,776     $ 19,883     $ 20,777  
Performance-based compensation and benefits
     1,443       1,304       1,153       2,747       2,474  
Other benefits
     2,638       2,724       2,855       5,362       5,501  
 
                              
Compensation and employee benefits
     13,808       14,184       14,784       27,992       28,752  
Occupancy, net
     2,813       3,114       2,735       5,927       5,349  
Loan and collection
     2,031       1,856       1,221       3,887       2,227  
Furniture, fixtures and equipment
     1,825       1,817       1,991       3,642       3,891  
Data processing
     1,712       1,725       1,912       3,437       3,350  
Loss on other real estate and repossessed assets
     1,560       106       68       1,666       92  
Advertising
     1,168       1,100       1,341       2,268       2,493  
Credit card and bank service fees
     1,174       1,046       970       2,220       1,937  
Communications
     1,021       1,015       1,014       2,036       1,844  
Deposit insurance
     418       833       173       1,251       260  
Amortization of intangible assets
     761       793       935       1,554       1,505  
Supplies
     472       543       581       1,015       1,188  
Legal and professional
     463       418       457       881       963  
Branch acquisition and conversion costs
                     (92 )             330  
Goodwill impairment
                                     343  
Other
     1,965       1,701       1,711       3,666       3,243  
 
                              
Total non-interest expense
   $ 31,191     $ 30,251     $ 29,801     $ 61,442     $ 57,767  
 
                              

4

 

Average Balances and Tax Equivalent Rates
                                                 
                    Three Months Ended                  
                    June 30,                  
    2008     2007  
    Average                     Average              
    Balance     Interest     Rate     Balance     Interest     Rate  
    (dollars in thousands)  
Assets
                                                
Taxable loans (1)
   $ 2,578,668     $ 46,618       7.26 %   $ 2,523,614     $ 50,468       8.01 %
Tax-exempt loans (1,2)
     11,316       203       7.22       9,761       166       6.82  
Taxable securities
     153,895       2,176       5.69       202,342       2,592       5.14  
Tax-exempt securities (2)
     189,313       3,346       7.11       230,873       4,069       7.07  
Other investments
     27,633       362       5.27       38,068       464       4.89  
 
                                        
Interest Earning Assets -
Continuing Operations
     2,960,825       52,705       7.15       3,004,658       57,759       7.70  
 
                                            
Cash and due from banks
     50,637                       49,947                  
Taxable loans — discontinued operations
                             744                  
Other assets, net
     228,550                       230,147                  
 
                                            
Total Assets
   $ 3,240,012                     $ 3,285,496                  
 
                                            
 
                                                
Liabilities
                                                
Savings and NOW
   $ 993,186       2,454       0.99     $ 994,116       4,728       1.91  
Time deposits
     872,385       8,737       4.03       1,521,496       18,650       4.92  
Long-term debt
                             2,495       29       4.66  
Other borrowings
     746,983       6,975       3.76       129,781       2,284       7.06  
 
                                        
Interest Bearing Liabilities-
Continuing Operations
     2,612,554       18,166       2.80       2,647,888       25,691       3.89  
 
                                            
Demand deposits
     297,151                       300,329                  
Time deposits — discontinued operations
                             527                  
Other liabilities
     89,299                       82,591                  
Shareholders’ equity
     241,008                       254,161                  
 
                                            
Total liabilities and shareholders’ equity
   $ 3,240,012                     $ 3,285,496                  
 
                                            
 
Tax Equivalent Net Interest Income
           $ 34,539                     $ 32,068          
 
                                            
 
Tax Equivalent Net Interest Income as a Percent of Earning Assets
                     4.68 %                     4.27 %
 
                                          
 
(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%

5

 

Average Balances and Tax Equivalent Rates
                                                 
    Six Months Ended  
    June 30,  
    2008     2007  
    Average                     Average              
    Balance     Interest     Rate     Balance     Interest     Rate  
    (dollars in thousands)  
Assets
                                                
Taxable loans (1)
   $ 2,571,593     $ 94,631       7.39 %   $ 2,517,273     $ 100,317       8.01 %
Tax-exempt loans (1,2)
     10,472       377       7.24       9,639       326       6.82  
Taxable securities
     158,032       4,480       5.70       193,787       5,069       5.27  
Tax-exempt securities (2)
     197,102       6,932       7.07       234,741       8,190       7.04  
Other investments
     26,077       719       5.54       31,850       778       4.93  
 
                                        
Interest Earning Assets -
Continuing Operations
     2,963,276       107,139       7.26       2,987,290       114,680       7.72  
 
                                            
Cash and due from banks
     51,549                       51,907                  
Taxable loans — discontinued operations
                             16,737                  
Other assets, net
     227,250                       218,120                  
 
                                            
Total Assets
   $ 3,242,075                     $ 3,274,054                  
 
                                            
 
                                                
Liabilities
                                                
Savings and NOW
   $ 995,808       6,019       1.22     $ 949,021       8,977       1.91  
Time deposits
     985,865       21,384       4.36       1,514,266       36,809       4.90  
Long-term debt
     497       12       4.86       2,743       63       4.63  
Other borrowings
     638,211       13,400       4.22       164,529       5,554       6.81  
 
                                        
Interest Bearing Liabilities-
Continuing Operations
     2,620,381       40,815       3.13       2,630,559       51,403       3.94  
 
                                            
Demand deposits
     293,483                       291,598                  
Time deposits — discontinued operations
                             12,173                  
Other liabilities
     86,306                       82,828                  
Shareholders’ equity
     241,905                       256,896                  
 
                                            
Total liabilities and shareholders’ equity
   $ 3,242,075                     $ 3,274,054                  
 
                                            
 
Tax Equivalent Net Interest Income
           $ 66,324                     $ 63,277          
 
                                            
 
Tax Equivalent Net Interest Income as a Percent of Earning Assets
                     4.49 %                     4.25 %
 
                                            
 
(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%

6

 

Commercial Loan Portfolio Analysis as of June 30, 2008
                                         
            Total Commercial Loans        
                                    Percent of  
            Watch Credits     Loan  
                    Non-             Category in  
Loan Category   All Loans     Performing     performing     Total     Watch Credit  
    (dollars in thousands)  
Land
   $ 47,448     $ 14,169     $ 10,785     $ 24,954       52.6 %
Land Development
     71,588       18,822       21,807       40,629       56.8 %
Construction
     67,181       9,915       6,601       16,516       24.6 %
Income Producing
     432,576       65,234       25,045       90,279       20.9 %
Owner Occupied
     227,863       21,307       6,392       27,699       12.2 %
             
Total Commercial Real Estate Loans (1)
   $ 846,656     $ 129,447     $ 70,630     $ 200,077       23.6 %
                           
 
                                        
Other Commercial Loans(1)
   $ 212,985     $ 20,053     $ 3,808     $ 23,861       11.2 %
                         
Total non-performing commercial loans
                   $ 74,438                  
 
                                      
 
(1)   The total of these two categories is different than the June 30, 2008, Consolidated Statement of Financial Condition due primarily to loans in process.

7