EX-99 4 ibc8k_013007ex99-2.htm Independent Bank Corporation Form 8-K for January 30, 2007 Exhibit 99.2

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data

Non-performing assets

December 31,
2006 2005


(dollars in thousands)
  Non-accrual loans     $ 35,683   $ 11,546  
  Loans 90 days or more past due and  
    still accruing interest    3,479    4,862  
  Restructured loans    60    84  


                           Total non-performing loans    39,222    16,492  
  Other real estate    3,153    2,147  


                          Total non-performing assets   $ 42,375   $ 18,639  


As a percent of Portfolio Loans  
     Non-performing loans    1.58 %  0.70 %
     Allowance for loan losses    1.08    0.95  
   Non-performing assets to total assets    1.24    0.56  
   Allowance for loan losses as a percent of  
     non-performing loans    69    136  

Allowance for loan losses

Twelve months ended
December 31,
2006 2005


Loan
Losses
Unfunded
Commitments
Loan
Losses
Unfunded
Commitments




(in thousands)
Balance at beginning of period     $ 22,420   $ 1,820   $ 24,162   $ 1,846  
Additions (deduction)  
  Provision charged to operating expense    16,283    61    7,832    (26 )
  Recoveries credited to allowance    2,237        1,518  
  Loans charged against the allowance    (14,061 )      (11,092 )




Balance at end of period   $ 26,879   $ 1,881   $ 22,420   $ 1,820  




Net loans charged against the allowance to  
       average Portfolio Loans (annualized)    0.48 %    0.43 %

           Alternative Sources of Funds

December 31,
2006
December 31,
2005


Amount
Average
Maturity

Rate

Amount
Average
Maturity

Rate

(dollars in thousands)
Brokered CDs(1) (2)     $ 1,055,010     1.9 years     4.72 % 1,009,804   1.8 years     3.79 %
Fixed rate FHLB advances(1)    58,272    4.6 years    5.66    51,525    6.2 years    5.65  
Variable rate FHLB advances(1)    2,000    0.5 years    5.31    25,000    0.5 years    4.18  
Securities sold under agreements  
   to Repurchase(1)    83,431    0.1 years    5.34    137,903    0.1 years    4.41  
Federal funds purchased    84,081    1 day    5.40    80,299    1 day    4.23  


      Total   $ 1,282,794    1.8 years    4.85 % $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.
(2) Includes brokered CDs related to discontinued operations of $165,496 and $166,818, at December 31, 2006 and 2005, respectively.


Capitalization

December 31,
2006 2005


(in thousands)
Unsecured debt     $ 5,000   $ 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    22,865    21,991  
  Capital surplus    200,241    179,913  
  Retained earnings    31,420    41,486  
  Accumulated other comprehensive income    3,641    4,869  


          Total shareholders' equity    258,167    248,259  


          Total capitalization   $ 325,517   $ 317,609  


Non-Interest Income

Three months ended
December 31,
Twelve months ended
December 31,
2006 2005 2006 2005




(in thousands)
Service charges on deposit accounts     $ 5,152   $ 4,858   $ 19,936   $ 19,342  
Mepco litigation settlement            2,800      
Net gains (losses) on asset sales  
  Real estate mortgage loans    1,264    1,167    4,593    5,370  
       Securities        256    171    1,484  
Title insurance fees    426    503    1,724    1,962  
VISA check card interchange income    900    758    3,432    2,778  
Bank owned life insurance    433    404    1,628    1,554  
Manufactured home loan origination fees  
  and commissions    184    311    884    1,216  
Mutual fund and annuity commissions    321    375    1,291    1,348  
   Real estate mortgage loan servicing    605    553    2,440    2,627  
Other    1,461    1,363    5,951    5,145  




      Total non-interest income   $ 10,746   $ 10,548   $ 44,850   $ 42,826  




Real Estate Mortgage Loan Activity

Three months ended
December 31,
Twelve months ended
December 31,
2006 2005 2006 2005




(in thousands)
Real estate mortgage loans originated     $ 125,031   $ 170,336   $ 525,849   $ 678,409  
Real estate mortgage loans sold    72,298    91,689    281,285    377,265  
Real estate mortgage loans sold with servicing  
  rights released    11,436    10,807    41,494    44,274  
Net gains on the sale of real estate mortgage loans    1,264    1,167    4,593    5,370  
Net gains as a percent of real estate mortgage  
  loans sold ("Loan Sale Margin")    1.75 %  1.27 %  1.63 %  1.42 %
SFAS #133 adjustments included in the Loan  
  Sale Margin    0.15 %  (0.10 %)  0.05 %  0.00 %

Capitalized Real Estate Mortgage Loan Servicing Rights

Three months ended
December 31,
Twelve months ended
December 31,
2006 2005 2006 2005




(in thousands)
Balance at beginning of period     $ 14,453   $ 13,058   $ 13,439   $ 11,360  
  Originated servicing rights capitalized    726    793    2,862    3,247  
      Amortization    (348 )  (455 )  (1,462 )  (1,923 )
       (Increase)/decrease in impairment reserve    (49 )  43    (57 )  755  




 Balance at end of period   $ 14,782   $ 13,439   $ 14,782   $ 13,439  




   
 Impairment reserve at end of period   $ 68   $ 11   $ 68   $ 11  




Non-Interest Expense

Three months ended
December 31,
Twelve months ended,
December 31,
2006 2005 2006 2005




(in thousands)
Salaries     $ 9,380   $ 8,887   $ 37,597   $ 35,229  
Performance-based compensation  
  and benefits    1,536    1,226    3,200    6,844  
Other benefits    2,407    2,338    10,004    10,074  




  Compensation and employee  
    benefits    13,323    12,451    50,801    52,147  
Occupancy, net    2,311    2,261    9,626    8,590  
Furniture, fixtures and equipment    1,874    1,783    7,057    6,812  
Data processing    1,481    1,312    5,619    4,905  
Advertising    988    1,205    3,997    4,311  
Credit card and bank service fees    959    812    3,839    2,952  
Loan and collection    896    1,021    3,610    4,102  
Goodwill impairment    2,963        3,575      
Communications    852    934    3,556    3,724  
Amortization of intangible assets    600    633    2,400    2,529  
Loss on receivable from warranty  
  payment plan seller    2,400        2,400      
Supplies    553    529    2,113    2,247  
Legal and professional    516    657    1,853    2,509  
Other    1,372    1,758    5,770    6,957  




      Total non-interest expense   $ 31,088   $ 25,356   $ 106,216   $ 101,785  





Average Balances and Tax Equivalent Rates

Three Months Ended
December 31,
2006 2005


Average
Balance

Interest

Rate
Average
Balance

Interest

Rate






(dollars in thousands)
Assets
Taxable loans (1)
    $ 2,504,662   $ 49,999     7.94 % $ 2,369,647   $ 45,120     7.57 %
Tax-exempt loans (1,2)    9,371    160    6.77    5,920    102    6.84  
Taxable securities    195,039    2,750    5.59    238,176    3,031    5.05  
Tax-exempt securities (2)    245,147    4,351    7.04    259,630    4,404    6.73  
Other investments    15,123    189    4.96    17,322    179    4.10  




                   Interest Earning Assets -  
                       Continuing Operations    2,969,342    57,449    7.69    2,890,695    52,836    7.27  


Cash and due from banks    52,180            48,490          
Taxable loans - discontinued operations    188,208            173,040          
Other assets, net    214,064            197,485          


                                Total Assets   $ 3,423,794           $ 3,309,710          


Liabilities  
Savings and NOW   $ 865,784    3,875    1.78   $ 860,510    2,595    1.20  
Time deposits    1,464,759    17,469    4.73    1,209,878    10,493    3.44  
Long-term debt    3,495    49    5.58    5,495    64    4.62  
Other borrowings    295,589    4,542    6.10    450,375    5,421    4.78  




               Interest Bearing Liabilities-  
                       Continuing Operations    2,629,627    25,935    3.91    2,526,258    18,573    2.92  


Demand deposits    278,522            291,031          
Time deposits - discontinued operations    163,915            151,323          
Other liabilities    85,746            89,958          
Shareholders' equity    265,984            251,140          


  Total liabilities and shareholders' equity   $ 3,423,794           $ 3,309,710          


          Tax Equivalent Net Interest Income       $ 31,514           $ 34,263      


          Tax Equivalent Net Interest Income  
              as a Percent of Earning Assets            4.23 %          4.72 %


(1)
(2)
All domestic
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

Twelve Months Ended
December 31,
2006 2005


Average
Balance

Interest

Rate
Average
Balance

Interest

Rate






(dollars in thousands)
Assets                            
Taxable loans (1)   $ 2,464,798   $ 193,606    7.85 % $ 2,262,647   $ 167,551    7.41 %
Tax-exempt loans (1,2)    7,293    509    6.98    6,199    454    7.32  
Taxable securities    207,456    11,108    5.35    271,770    13,588    5.00  
Tax-exempt securities (2)    248,495    17,484    7.04    255,333    17,142    6.71  
Other investments    16,366    802    4.90    17,350    713    4.11  




                  Interest Earning Assets -  
                      Continuing Operations    2,944,408    223,509    7.59    2,813,299    199,448    7.09  


Cash and due from banks    53,844            57,912          
Taxable loans - discontinued operations    198,335            161,111          
Other assets, net    210,190            192,840          


                               Total Assets   $ 3,406,777           $ 3,225,162          


Liabilities  
Savings and NOW   $ 864,528    13,604    1.57   $ 871,599    8,345    0.96  
Time deposits    1,405,850    60,686    4.32    1,087,830    33,560    3.09  
Long-term debt    4,240    205    4.83    6,240    287    4.60  
Other borrowings    329,175    19,203    5.83    501,763    20,907    4.17  




              Interest Bearing Liabilities-  
                      Continuing Operations    2,603,793    93,698    3.60    2,467,432    63,099    2.56  


Demand deposits    279,279            283,670          
Time deposits - discontinued operations    172,317            138,897          
Other liabilities    92,451            89,781          
Shareholders' equity    258,937            245,382          


 Total liabilities and shareholders' equity   $ 3,406,777           $ 3,225,162          


         Tax Equivalent Net Interest Income       $ 129,811           $ 136,349      


         Tax Equivalent Net Interest Income  
             as a Percent of Earning Assets            4.41 %          4.85 %


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