EX-99 4 ibc8k_102606ex992.htm Independent Bank Corporation Form 8-K Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data Exhibit 99.2

Non-performing assets

September 30,
2006		 December 31,
2005
(dollars in thousands)
Non-accrual loans     $ 25,470   $ 13,057  
Loans 90 days or more past due and  
  still accruing interest    5,226    4,862  
Restructured loans    65    84  
Total non-performing loans    30,761    18,003  
Other real estate    2,541    2,147  
Total non-performing assets   $ 33,302   $ 20,150  
As a percent of Portfolio Loans  
  Non-performing loans    1.15 %  0.70 %
  Allowance for loan losses    0.95    0.90  
Non-performing assets to total assets    0.96    0.60  
Allowance for loan losses as a percent of  
  non-performing loans    82    128  

Allowance for loan losses

Nine months ended
September 30,
2006 2005
Loan
Losses		 Unfunded
Commitments		 Loan
Losses		 Unfunded
Commitments
(in thousands)
Balance at beginning of period   $ 23,035   $ 1,820   $ 24,737   $ 1,846  
Additions (deduction)  
  Provision charged to operating expense    9,028    (176 )  5,854    (132 )
  Recoveries credited to allowance    1,671    1,181  
  Loans charged against the allowance    (8,370 )  (5,422 )
Balance at end of period   $ 25,364   $ 1,644   $ 26,350   $ 1,714  
Net loans charged against the allowance to  
       average Portfolio Loans (annualized)    0.34 %      0.24 %

Alternative Sources of Funds

September 30,
2006		 December 31,
2005
Amount Average
Maturity		 Rate Amount Average
Maturity		 Rate
(dollars in thousands)
Brokered CDs(1)     $ 1,099,213    2.0 years    4.66 % $ 1,009,804    1.8 years    3.79 %
Fixed rate FHLB advances(1)    48,325    5.8 years    5.75    51,525    6.2 years    5.65  
Variable rate FHLB advances(1)    25,000    0.5 years    4.18  
Securities sold under agreements to  
   Repurchase(1)    66,910    0.1 years    5.25    137,903    0.1 years    4.41  
Federal funds purchased    100,786    1 day    5.50    80,299    1 day    4.23  
      Total   $ 1,315,234    1.9 years    4.80 % $ 1,304,531    1.7 years    3.96 %

(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

September 30,
2006		 December 31,
2005
(in thousands)
Unsecured debt     $5,500   $ 7,000  
   
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    22,855    21,991  
  Capital surplus    200,035    179,913  
  Retained earnings    33,616    41,486  
  Accumulated other comprehensive income    3,909    4,869  
          Total shareholders' equity    260,415    248,259  
          Total capitalization   $ 328,265   $ 317,609  

Non-Interest Income

Three months ended
September 30,		 Nine months ended
September 30,
2006 2005 2006 2005
(in thousands)
Service charges on deposit accounts   $ 5,285   $ 5,172   $ 14,784   $ 14,484  
Mepco litigation settlement            2,800
Net gains (losses) on asset sales  
  Real estate mortgage loans    1,115    1,508    3,329    4,203  
  Securities         (23 )  171    1,228  
Title insurance fees    416    494    1,298    1,459  
VISA check card interchange income    870    713    2,532    2,020  
Bank owned life insurance    402    393    1,195    1,150  
Manufactured home loan origination fees  
  and commissions    214    294    700    905  
Mutual fund and annuity commissions    324    276    970    973  
Real estate mortgage loan servicing    561    836    1,835    2,074  
Other    1,534    1,408    4,490    3,782  
      Total non-interest income   $ 10,721   $ 11,071   $ 34,104   $ 32,278  

Real Estate Mortgage Loan Activity

Three months ended
September 30,		 Nine months ended
September 30,
2006 2005 2006 2005
(in thousands)
Real estate mortgage loans originated   $ 146,384   $ 174,113   $ 400,818   $ 508,073  
Real estate mortgage loans sold    75,517    101,703    208,987    285,576  
Real estate mortgage loans sold with servicing  
  rights released    13,678    11,945    30,058    33,467  
Net gains on the sale of real estate mortgage loans    1,115    1,508    3,329    4,203  
Net gains as a percent of real estate mortgage  
  loans sold ("Loan Sale Margin")    1.48 %  1.48 %  1.59 %  1.47 %
SFAS #133 adjustments included in the Loan  
  Sale Margin    (0.05 %)  0.08 %  0.01 %  0.04 %

Capitalized Real Estate Mortgage Loan Servicing Rights

Three months ended
September 30,		 Nine months ended
September 30,
2006 2005 2006 2005
(in thousands)
Balance at beginning of period   $ 14,128   $ 12,315   $ 13,439   $ 11,360  
  Originated servicing rights capitalized    742    875    2,136    2,454  
  Amortization    (398 )  (510 )  (1,114 )  (1,468 )
  (Increase)/decrease in impairment reserve    (19 )  378    (8 )  712  
Balance at end of period   $ 14,453   $ 13,058   $ 14,453   $ 13,058  
   
Impairment reserve at end of period   $ 19   $ 54   $ 19   $ 54  

Non-Interest Expense

Three months ended
September 30,		 Nine months ended
September 30,
2006 2005 2006 2005
(in thousands)
Salaries   $ 9,529   $ 9,487   $ 28,408   $ 26,525  
Performance-based compensation  
  and benefits    (100 )  2,089    2,194    6,207  
Other benefits    2,417    2,626    7,940    8,126  
  Compensation and employee  
    benefits    11,846    14,202    38,542    40,858  
Occupancy, net    2,295    2,182    7,576    6,523  
Furniture, fixtures and equipment    1,718    1,637    5,320    5,150  
Data processing    1,447    1,350    4,336    3,740  
Advertising    1,061    1,128    3,136    3,206  
Credit card and bank service fees    999    868    3,012    2,270  
Loan and collection    931    1,034    2,771    3,118  
Communications    933    989    2,912    2,973  
Amortization of intangible assets    642    693    1,928    2,080  
Goodwill impairment            612
Supplies    551    537    1,608    1,761  
Legal and professional    577    729    1,569    2,082  
Mepco claims expense            1,600
Other    1,299    1,806    5,239    5,738  
      Total non-interest expense   $ 24,299   $ 27,155   $ 80,161   $ 79,499  

Average Balances and Tax Equivalent Rates

Three Months Ended
September 30,
2006 2005
Average
Balance		 Interest Rate Average
Balance		 Interest Rate
Assets (dollars in thousands)
Taxable loans (1)     $ 2,689,894   $ 53,761    7.92 % $ 2,465,256   $ 46,036    7.43 %
Tax-exempt loans (1,2)    7,296    129    7.01    6,019    114    7.51  
Taxable securities    202,905    2,713    5.30    257,707    3,304    5.09  
Tax-exempt securities (2)    245,972    4,102    6.62    261,829    4,396    6.66  
Other investments    15,580    191    4.86    17,322    199    4.56  
Interest Earning Assets    3,161,647    60,896    7.66    3,008,133    54,049    7.14  
Cash and due from banks    53,384    60,870  
Other assets, net    214,081    192,710  
Total Assets   $ 3,429,112   $ 3,261,713  
   
Liabilities  
Savings and NOW   $ 863,260    3,664    1.68   $ 866,789    2,209    1.01  
Time deposits    1,621,978    18,942    4.63    1,268,303    10,477    3.28  
Long-term debt    3,995    47    4.67    5,995    69    4.57  
Other borrowings    300,416    4,739    6.26    488,942    5,371    4.36  
Interest Bearing Liabilities    2,789,649    27,392    3.90    2,630,029    18,126    2.73  
Demand deposits    283,518    294,108  
Other liabilities    96,158    89,459  
Shareholders' equity    259,787    248,117  
Total liabilities and shareholders' equity   $ 3,429,112   $ 3,261,713  
Tax Equivalent Net Interest Income   $ 33,504   $ 35,923  
Tax Equivalent Net Interest Income  
as a Percent of Earning Assets    4.22 %  4.75 %
(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%

Average Balances and Tax Equivalent Rates

Nine Months Ended
September 30,
2006 2005
Average
Balance		 Interest Rate Average
Balance		 Interest Rate
Assets (dollars in thousands)
Taxable loans (1)     $ 2,652,591   $ 156,140    7.86 % $ 2,383,723   $ 131,051    7.34 %
Tax-exempt loans (1,2)    6,594    349    7.08    6,294    352    7.48  
Taxable securities    211,640    8,358    5.28    283,090    10,557    4.99  
Tax-exempt securities (2)    249,624    13,133    7.03    253,885    12,738    6.71  
Other investments    16,787    613    4.88    17,359    534    4.11  
Interest Earning Assets    3,137,236    178,593    7.61    2,944,351    155,232    7.04  
Cash and due from banks    53,664    60,448  
Other assets, net    209,686    191,196  
Total Assets   $ 3,400,586   $ 3,195,995  
   
Liabilities  
Savings and NOW   $ 864,102    9,729    1.51   $ 875,335    5,750    0.88  
Time deposits    1,561,147    50,191    4.30    1,181,408    26,774    3.03  
Long-term debt    4,491    156    4.64    6,491    223    4.59  
Other borrowings    340,492    14,661    5.76    519,081    15,486    3.99  
Interest Bearing Liabilities    2,770,232    74,737    3.61    2,582,315    48,233    2.50  
Demand deposits    278,845    280,498  
Other liabilities    97,006    89,735  
Shareholders' equity    254,503    243,447  
Total liabilities and shareholders' equity   $ 3,400,586   $ 3,195,995  
Tax Equivalent Net Interest Income   $ 103,856   $ 106,999  
Tax Equivalent Net Interest Income  
as a Percent of Earning Assets    4.42 %  4.85 %
(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%