EX-99 4 ibc8k_072407ex99-2.htm Independent Bank Corporation Form 8-K for 7/24/07 Exhibit 99.2

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data

Non-performing assets

June 30,
2007
December 31,
2006


(dollars in thousands)
             
  Non-accrual loans   $ 47,544   $ 35,683  
  Loans 90 days or more past due and  
    still accruing interest    7,165    3,479  
  Restructured loans    181    60  


                           Total non-performing loans    54,890    39,222  
  Other real estate    5,363    3,153  


                          Total non-performing assets   $ 60,253   $ 42,375  


As a percent of Portfolio Loans  
     Non-performing loans    2.20 %  1.58 %
     Allowance for loan losses    1.53    1.08  
   Non-performing assets to total assets    1.85    1.24  
   Allowance for loan losses as a percent of  
     non-performing loans    70    69  

Allowance for loan losses

Six months ended
June 30,
2007 2006


Loan
Losses
Unfunded
Commitments
Loan
Losses
Unfunded
Commitments




(in thousands)
                     
Balance at beginning of period   $ 26,879   $ 1,881   $ 22,420   $ 1,820  
Additions (deduction)  
  Provision charged to operating expense    22,658    374    3,979    (82 )
  Recoveries credited to allowance    1,140        1,225      
  Loans charged against the allowance    (12,464 )      (4,056 )    




Balance at end of period   $ 38,213   $ 2,255   $ 23,568   $ 1,738  




   
Net loans charged against the allowance to  
       average Portfolio Loans (annualized)    0.92 %      0.24 %    

Alternative Sources of Funds

June 30,
2007
December 31,
2006


Amount Average
Maturity
Rate Amount Average
Maturity
Rate


(dollars in thousands)
                                 
Brokered CDs(1)   $ 812,929   1.7 years   4.71 % $ 1,055,010   1.9 years   4.72 %
Fixed rate FHLB advances(1)    43,199   5.6 years   6.08    58,272   4.6 years   5.66  
Variable rate FHLB advances(1)               2,000   0.5 years   5.31  
Securities sold under agreements to  
   Repurchase(1)               83,431   0.1 years   5.34  
Federal funds purchased    17,517   1 day   5.50    84,081   1 day   5.40  


      Total   $ 873,645   1.9 years   4.80 % $ 1,282,794   1.8 years   4.85 %


(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.

1


Capitalization

June 30,
2007
December 31,
2006


(in thousands)
             
Unsecured debt   $ 4,000   $ 5,000  


   
Subordinated debentures    72,269    64,197  
Amount not qualifying as regulatory capital    (2,169 )  (1,847 )


  Amount qualifying as regulatory capital    70,100    62,350  


Shareholders' Equity  
  Preferred stock, no par value  
  Common stock, par value $1.00 per share    22,586    22,865  
  Capital surplus    195,014    200,241  
  Retained earnings    26,138    31,420  
  Accumulated other comprehensive income    296    3,641  


          Total shareholders' equity    244,034    258,167  


          Total capitalization   $ 318,134   $ 325,517  


Non-Interest Income

Three months ended Six months ended
June 30, March 31, June 30, June 30,
2007 2007 2006 2007 2006





(in thousands)
                         
Service charges on deposit  
  accounts   $ 6,380   $ 4,888   $ 5,031   $ 11,268   $ 9,499  
Mepco litigation settlement                    2,800  
Net gains on assets sales  
  Real estate mortgage loans    1,238    1,081    1,188    2,319    2,214  
  Securities    128    79    171    207    171  
VISA check card interchange income    1,292    950    871    2,242    1,662  
Real estate mortgage loan servicing    712    527    621    1,239    1,274  
Mutual fund and annuity commissions    467    479    351    946    646  
Bank owned life insurance    448    449    401    897    793  
Title insurance fees    430    414    440    844    882  
Manufactured home loan origination fees  
  and commissions    115    114    247    229    486  
Other    1,563    1,689    1,524    3,252    2,956  





    Total non-interest income   $ 12,773   $ 10,670   $ 10,845   $ 23,443   $ 23,383  





Real Estate Mortgage Loan Activity

Three months ended Six months ended
June 30, March 31, June 30, June 30,
2007 2007 2006 2007 2006





(in thousands)
                         
Real estate mortgage loans originated   $ 129,613   $ 116,815   $ 135,783   $ 246,428   $ 254,434  
Real estate mortgage loans sold    77,913    69,212    73,223    147,125    133,470  
Real estate mortgage loans sold with servicing  
  rights released    12,604    11,679    8,936    24,283    16,380  
Net gains on the sale of real estate mortgage loans    1,238    1,081    1,188    2,319    2,214  
Net gains as a percent of real estate mortgage  
  loans sold ("Loan Sale Margin")    1.59 %  1.56 %  1.62 %  1.58 %  1.66 %
SFAS #133 adjustments included in the Loan  
  Sale Margin    0.00    (0.04 )  (0.13 )  0.00    0.05  

2


Capitalized Real Estate Mortgage Loan Servicing Rights

Three months ended
June 30,
Six months ended
June 30,
2007 2006 2007 2006




(in thousands)
                     
Balance at beginning of period   $ 14,961   $ 13,728   $ 14,782   $ 13,439  
  Originated servicing rights capitalized    776    760    1,462    1,394  
  Amortization    (432 )  (371 )  (839 )  (716 )
  (Increase)/decrease in impairment reserve    138    11    38    11  




 Balance at end of period   $ 15,443   $ 14,128   $ 15,443   $ 14,128  




   
 Impairment reserve at end of period   $ 30       $ 30      




Non-Interest Expense

Three months ended Six months ended
June 30, March 31, June 30, June 30,
2007 2007 2006 2007 2006





(in thousands)
                         
 Salaries   $ 10,776   $ 10,001   $ 9,358   $ 20,777   $ 18,734  
 Performance-based compensation and benefits    1,153    1,321    315    2,474    1,804  
 Other benefits    2,855    2,646    2,601    5,501    5,277  





   Compensation and employee benefits    14,784    13,968    12,274    28,752    25,815  
 Occupancy, net    2,735    2,614    2,420    5,349    5,107  
 Furniture, fixtures and equipment    1,991    1,900    1,733    3,891    3,516  
 Data processing    1,912    1,438    1,418    3,350    2,760  
 Advertising    1,341    1,152    1,016    2,493    2,003  
 Loan and collection    1,221    1,006    982    2,227    1,805  
 Credit card and bank service fees    970    967    1,015    1,937    1,922  
 Communications    1,014    830    852    1,844    1,843  
 Supplies    581    607    516    1,188    1,025  
 Amortization of intangible assets    935    570    600    1,505    1,200  
 Legal and professional    457    506    396    963    884  
 Branch acquisition and conversion costs    (92 )  422        330      
 Goodwill impairment        343    612    343    612  
 Other    1,952    1,643    1,706    3,595    3,286  





       Total non-interest expense   $ 29,801   $ 27,966   $ 25,540   $ 57,767   $ 51,778  





3


Average Balances and Tax Equivalent Rates

Three Months Ended
June 30,
2007 2006


Average
Balance
Interest Rate Average
Balance
Interest Rate






(dollars in thousands)
                             
Assets  
Taxable loans (1)   $ 2,523,614   $ 50,468    8.01 % $ 2,461,397   $ 48,362    7.87 %
Tax-exempt loans (1,2)    9,761    166    6.82    6,577    115    7.01  
Taxable securities    202,342    2,592    5.14    210,785    2,797    5.32  
Tax-exempt securities (2)    230,873    4,069    7.07    248,301    4,498    7.27  
Other investments    38,068    464    4.89    17,359    199    4.60  




               Interest Earning Assets -  
                   Continuing Operations    3,004,658    57,759    7.70    2,944,419    55,971    7.62  


Cash and due from banks    49,947            52,906          
Taxable loans - discontinued operations    744            201,017          
Other assets, net    230,147            210,694          


                            Total Assets   $ 3,285,496           $ 3,409,036          


   
Liabilities  
Savings and NOW   $ 994,116    4,728    1.91   $ 850,491    3,077    1.45  
Time deposits    1,521,496    18,650    4.92    1,354,352    13,894    4.11  
Long-term debt    2,495    29    4.66    4,495    52    4.64  
Other borrowings    129,781    2,284    7.06    398,925    5,655    5.69  




           Interest Bearing Liabilities -  
                    Continuing Operations    2,647,888    25,691    3.89    2,608,263    22,678    3.49  


Demand deposits    300,329            277,340          
Time deposits - discontinued operations    527            176,316          
Other liabilities    82,591            91,716          
Shareholders' equity    254,161            255,401          


 Total liabilities and shareholders' equity   $ 3,285,496           $ 3,409,036          


        
   
         Tax Equivalent Net Interest Income       $ 32,068           $ 33,293      


   
      Tax Equivalent Net Interest Income  
          as a Percent of Earning Assets            4.27 %          4.53 %





(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%

4


Average Balances and Tax Equivalent Rates

Six Months Ended
June 30,
2007 2006


Average
Balance
Interest Rate Average
Balance
Interest Rate






(dollars in thousands)
                             
Assets  
Taxable loans (1)   $ 2,517,273   $ 100,317    8.01 % $ 2,434,790   $ 94,340    7.79 %
Tax-exempt loans (1,2)    9,639    326    6.82    6,237    220    7.11  
Taxable securities    193,787    5,069    5.27    216,082    5,645    5.27  
Tax-exempt securities (2)    234,741    8,190    7.04    251,482    9,031    7.24  
Other investments    31,850    778    4.93    17,398    422    4.89  




Interest Earning Assets -  
Continuing Operations    2,987,290    114,680    7.72    2,925,989    109,658    7.54  


  
Cash and due from banks    51,907            54,012          
Taxable loans - discontinued operations    16,737            198,099          
Other assets, net    218,120            207,656          


Total Assets   $ 3,274,054           $ 3,385,756          


   
Liabilities  
Savings and NOW   $ 949,021    8,977    1.91   $ 864,533    6,065    1.41  
Time deposits    1,514,266    36,809    4.90    1,358,177    26,833    3.98  
Long-term debt    2,743    63    4.63    4,743    109    4.63  
Other borrowings    164,529    5,554    6.81    360,862    9,922    5.54  




Interest Bearing Liabilities-  
Continuing Operations    2,630,559    51,403    3.94    2,588,315    42,929    3.34  


  
Demand deposits    291,598            276,647          
Time deposits - discontinued operations    12,173            172,051          
Other liabilities    82,828            96,930          
Shareholders' equity    256,896            251,813          


 Total liabilities and shareholders' equity   $ 3,274,054           $ 3,385,756          


   
Tax Equivalent Net Interest Income       $ 63,277           $ 66,729      


   
Tax Equivalent Net Interest Income  
as a Percent of Earning Assets            4.25 %          4.58 %


(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