EX-99 4 ibc8k_012406-ex99p2.htm Independent Bank Corporation Form 8-K Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data Exhibit 99.2

Non-performing assets

December 31,
2005 2004
(dollars in thousands)
  Non-accrual loans     $ 13,057   $ 11,804  
  Loans 90 days or more past due and  
    still accruing interest    4,862    3,123  
  Restructured loans    84    218  
Total non-performing loans    18,003    15,145  
  Other real estate    2,147    2,113  
Total non-performing assets   $ 20,150   $ 17,258  
As a percent of Portfolio Loans  
     Non-performing loans    .70 %    0.68 %  
     Allowance for loan losses    .90        1.11      
   Non-performing assets to total assets    .60        0.56      
   Allowance for loan losses as a percent of  
     non-performing loans    128        163      

Allowance for loan losses

Twelve months ended
December 31,
2005 2004
Loan
Losses		 Unfunded
Commitments		 Loan
Losses		 Unfunded
Commitments
(in thousands)
Balance at beginning of period     $ 24,737   $ 1,846   $ 16,836   $ 892  
Additions (deduction)  
  Allowance on loans acquired    8,236  
  Provision charged to operating expense    8,097    (26 )  3,355    954  
  Recoveries credited to allowance    1,560    1,251  
  Loans charged against the allowance    (11,359 )  (4,941 )
Balance at end of period   $ 23,035   $ 1,820   $ 24,737   $ 1,846  
Net loans charged against the allowance to  
       average Portfolio Loans (annualized)    0.41 %  0.19 %

Alternate Sources of Funds

December 31,
2005 2004
Amount Average Maturity Rate Amount Average Maturity Rate
(dollars in thousands)
Brokered CDs(1)     $ 1,009,804    1.8 years    3 .79% $576,944    1.9 years    2 .56%
Fixed rate FHLB advances(1)    51,525    6.2 years    5 .65  59,902    6.4 years    5 .55
Variable rate FHLB advances(1)    25,000    0.5 years    4 .18  164,000    0.4 years    2 .32
Securities sold under agreements to  
   Repurchase(1)    137,903    0.1 years    4 .41  169,810    0.2 years    2 .27
Federal funds purchased    80,299    1 day    4 .23  117,552    1 day    2 .44
      Total   $ 1,304,531    1.7 years    3 .96% $1,088,208 1.4 years    2 .63%

(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

December 31,
2005 2004
(in thousands)
Unsecured debt     $ 7,000   $ 9,000  
Subordinated debentures    64,197    64,197  
Amount not qualifying as regulatory capital    (1,847 )  (1,847 )
  Amount qualifying as regulatory capital    62,350    62,350  
Shareholders' Equity  
  Preferred stock, no par value  
  Common stock, par value $1.00 per share    21,991    21,195  
  Capital surplus    179,913    158,797  
  Retained earnings    41,486    41,795  
  Accumulated other comprehensive income    4,869    8,505  
          Total shareholders' equity    248,259    230,292  
          Total capitalization   $ 317,609   $ 301,642  

Non-Interest Income

Three months ended
December 31,		 Twelve months ended
December 31,
2005 2004 2005 2004
(in thousands)
Service charges on deposit accounts     $ 4,719   $ 4,570   $ 18,761   $ 17,089  
Net gains (losses) on asset sales  
  Real estate mortgage loans    1,167    1,353    5,370    5,956  
  Securities    256    (1,200 )  1,484    856  
Title insurance fees    503    457    1,962    2,036  
VISA check card interchange income    758    600    2,778    2,054  
Bank owned life insurance    404    395    1,554    1,486  
Manufactured home loan origination fees  
  and commissions    311    341    1,216    1,264  
Mutual fund and annuity commissions    375    285    1,348    1,260  
Real estate mortgage loan servicing    553    269    2,627    1,427  
Other    1,363    1,189    5,145    4,370  
      Total non-interest income   $ 10,409   $ 8,259   $ 42,245   $ 37,798  

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Real Estate Mortgage Loan Activity

Three months ended
December 31,		 Twelve months ended
December 31,
2005 2004 2005 2004
(in thousands)
Real estate mortgage loans originated     $ 170,336   $ 165,192   $ 678,409   $ 687,894  
Real estate mortgage loans sold    91,689    98,239    377,265    385,445  
Real estate mortgage loans sold with servicing  
  rights released    10,807    14,767    44,274    53,082  
Net gains on the sale of real estate mortgage loans    1,167    1,353    5,370    5,956  
Net gains as a percent of real estate mortgage  
  loans sold ("Loan Sale Margin")    1.27 %  1.38 %  1.42 %  1.55 %
SFAS #133 adjustments included in the Loan  
  Sale Margin    (0.10 %)  (0.04 %)  0.00 %  0.00 %

Capitalized Real Estate Mortgage Loan Servicing Rights

Three months ended
December 31,		 Twelve months ended
December 31,
2005 2004 2005 2004
(in thousands)
Balance at beginning of period     $ 13,058   $ 11,123   $ 11,360   $ 8,873  
  Servicing rights acquired    1,138  
  Originated servicing rights capitalized    793    898    3,247    3,341  
  Amortization    (455 )  (491 )  (1,923 )  (1,948 )
  (Increase)/decrease in impairment reserve    43    (170 )  755    (44 )
Balance at end of period   $ 13,439   $ 11,360   $ 13,439   $ 11,360  
Impairment reserve at end of period   $ 11   $ 766   $ 11   $ 766  

Non-Interest Expense

Three months ended
December 31,		 Twelve months ended
December 31,
2005 2004 2005 2004
(in thousands)
Salaries     $ 8,977   $ 11,036   $ 35,502   $ 35,243  
Performance-based compensation  
  and benefits    1,440    635    7,647    4,851  
Other benefits    2,420    2,854    10,546    9,987  
  Compensation and employee  
    benefits    12,837    14,525    53,695    50,081  
Occupancy, net    2,340    1,921    8,863    7,539  
Furniture, fixtures and equipment    1,835    1,649    6,985    6,122  
Data processing    1,372    1,130    5,112    4,462  
Advertising    1,290    908    4,496    3,787  
Loan and collection    1,036    897    4,154    3,556  
Communications    997    971    3,970    3,553  
Legal and professional    768    723    2,850    2,718  
Amortization of intangible assets    694    756    2,774    2,479  
Supplies    548    579    2,309    2,140  
Mepco claims expense    2,700  
Write-off of uncompleted software    977  
Other    2,650    2,203    10,216    8,554  
      Total non-interest expense   $ 26,367   $ 26,262   $ 105,424   $ 98,668  

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Average Balances and Tax Equivalent Rates

Three Months Ended
December 31,
2005 2004
Average
Balance 		Interest Rate Average
Balance 		Interest Rate
(dollars in thousands)
Assets                            
Taxable loans (1)   $ 2,542,687   $ 48,389    7 .57% $2,254,015 $39,786  7 .03%
Tax-exempt loans (1,2)    5,920    102    6 .84  7,580    126    6 .61
Taxable securities    238,176    3,031    5 .05  271,908    3,131    4 .58
Tax-exempt securities (2)    259,630    4,404    6 .73  231,409    3,978    6 .84
Other investments    17,322    179    4 .10  17,278    228    5 .25
Interest Earning Assets    3,063,735    56,105    7 .28  2,782,190    47,249    6 .77
Cash and due from banks    48,490    63,775  
Other assets, net    197,485    172,284  
Total Assets   $ 3,309,710   $ 3,018,249  
   
Liabilities  
Savings and NOW   $ 860,510    2,595    1 .20 $ 859,184    1,348    0 .62
Time deposits    1,361,201    12,242    3 .57  1,053,244    6,940    2 .62
Long-term debt    5,495    64    4 .62  7,495    76    4 .03
Other borrowings    450,375    5,421    4 .78  503,277    4,413    3 .49
Interest Bearing Liabilities    2,677,581    20,322    3 .01  2,423,200    12,777    2 .10
Demand deposits    291,031    283,933  
Other liabilities    89,958    82,292  
Shareholders' equity    251,140    228,824  
Total liabilities and shareholders' equity   $ 3,309,710   $ 3,018,249  
   
Tax Equivalent Net Interest Income   $ 35,783   $ 34,472  
   
Tax Equivalent Net Interest Income  
as a Percent of Earning Assets    4 .65%  4 .94%
(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%

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Average Balances and Tax Equivalent Rates

Twelve Months Ended
December 31,
2005 2004
Average
Balance 		Interest Rate Average
Balance 		Interest Rate
(dollars in thousands)
Assets                            
Taxable loans (1)   $ 2,423,758   $ 179,440    7 .40% $2,004,544 $139,517  6 .96%
Tax-exempt loans (1,2)    6,199    454    7 .32  7,637    507    6 .64
Taxable securities    271,770    13,588    5 .00  266,704    12,497    4 .69
Tax-exempt securities (2)    255,333    17,142    6 .71  212,441    14,914    7 .02
Other investments    17,350    713    4 .11  16,283    765    4 .70
Interest Earning Assets    2,974,410    211,337    7 .11  2,507,609    168,200    6 .71
Cash and due from banks    57,912    55,728  
Other assets, net    192,840    153,245  
Total Assets   $ 3,225,162   $ 2,716,582  
   
Liabilities  
Savings and NOW   $ 871,599    8,345    0 .96 $ 805,885    4,543    0 .56
Time deposits    1,226,727    39,016    3 .18  912,285    23,820    2 .61
Long-term debt    6,240    287    4 .60  4,549    177    3 .89
Other borrowings    501,763    20,907    4 .17  480,956    16,474    3 .43
Interest Bearing Liabilities    2,606,329    68,555    2 .63  2,203,675    45,014    2 .04
Demand deposits    283,670    240,800  
Other liabilities    89,781    73,574  
Shareholders' equity    245,382    198,533  
 Total liabilities and shareholders' equity   $ 3,225,162   $ 2,716,582  
   
Tax Equivalent Net Interest Income   $ 142,782   $ 123,186  
   
Tax Equivalent Net Interest Income  
as a Percent of Earning Assets    4 .80%  4 .91%
(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%

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