EX-99 4 ibc8k_102907ex99p2.htm Independent Bank Corporation Form 8-K Exhibit 99.2

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data

Non-performing assets

September 30,
2007		 December 31,
2006
(dollars in thousands)
Non-accrual loans     $ 64,973   $ 35,683  
Loans 90 days or more past due and  
  still accruing interest(1)    14,061    3,479  
Restructured loans    176    60  
Total non-performing loans    79,210    39,222  
Other real estate    5,615    3,153  
Total non-performing assets   $ 84,825   $ 42,375  
As a percent of Portfolio Loans  
   Non-performing loans    3.15 %    1.58 %  
   Allowance for loan losses    1.69           1.08         
Non-performing assets to total assets    2.60           1.24         
Allowance for loan losses as a percent of  
   non-performing loans    53           69         

(1) The balance of loans 90 days or more past due and still accruing interest at September 30, 2007, includes one commercial relationship (consisting of three loans) totaling $8.4 million that was brought current on October 5, 2007.

Allowance for loan losses

Nine months ended
September 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    33,420    347    8,557    (176 )
  Recoveries credited to allowance    1,741    1,635  
  Loans charged against the allowance    (19,713 )  (8,165 )
Balance at end of period   $ 42,327   $ 2,228   $ 24,447   $ 1,644  
Net loans charged against the allowance to  
       average Portfolio Loans (annualized)    0.96 %  0.33 %


Alternative Sources of Funds

September 30,
2007		 December 31,
2006
Amount Average Maturity Rate Amount Average Maturity Rate
(dollars in thousands)
Brokered CDs (1,2)     $ 704,702   1.7 years   4.77%   $ 1,055,010   1.9 years   4.72%  
Fixed rate FHLB advances(1)    100,067    2.5 years    5.50        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                84,081    1 day    5.40   
        Total   $804,769    1.8 years    4.86%   $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.
(2) The balance of Brokered CD’s at December 31, 2006 includes $165.496 million related to discontinued operations.

Capitalization

September 30,
2007		 December 31,
2006
(in thousands)
Unsecured debt     $ 3,500   $ 5,000  
   
Subordinated debentures    92,888    64,197  
Amount not qualifying as regulatory capital    (2,788 )  (1,847 )
  Amount qualifying as regulatory capital    90,100    62,350  
Shareholders' Equity  
  Preferred stock, no par value  
  Common stock, par value $1.00 per share    22,599    22,865  
  Capital surplus    195,206    200,241  
  Retained earnings    25,094    31,420  
  Accumulated other comprehensive income    1,534    3,641  
          Total shareholders' equity    244,433    258,167  
          Total capitalization   $ 338,033   $ 325,517  

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Non-Interest Income

Three months ended Nine months ended
September 30, June 30, September 30, September 30,
2007 2007 2006 2007 2006
(in thousands)  
Service charges on deposit                        
  accounts   $ 6,565   $ 6,380   $ 5,285   $ 17,833   $ 14,784  
Mepco litigation settlement    2,800  
Net gains on assets sales  
  Real estate mortgage loans    1,094    1,238    1,115    3,413    3,329  
  Securities    52    128    259    171  
VISA check card interchange income    1,287    1,292    870    3,529    2,532  
Real estate mortgage loan servicing    633    712    561    1,872    1,835  
Mutual fund and annuity commissions    517    467    324    1,463    970  
Bank owned life insurance    471    448    402    1,368    1,195  
Title insurance fees    363    430    416    1,207    1,298  
Manufactured home loan origination fees  
  and commissions    10    115    214    239    700  
Other    1,537    1,563    1,534    4,789    4,490  
      Total non-interest income   $ 12,529   $ 12,773   $ 10,721   $ 35,972   $ 34,104  

Real Estate Mortgage Loan Activity

Three months ended Nine months ended
September 30, June 30, September 30, September 30,
2007 2007 2006 2007 2006
(in thousands)  
Real estate mortgage loans originated      113,563    129,613    146,384    359,991    400,818  
Real estate mortgage loans sold    77,154    77,913    75,517    224,279    208,987  
Real estate mortgage loans sold with   
  servicing rights released    14,121    12,604    13,678    38,404    30,058  
Net gains on the sale of real estate
  mortgage loans		    1,094    1,238    1,115    3,413    3,329  
Net gains as a percent of real estate   
  mortgage loans sold ("Loan Sale
  Margin")		    1.42 %  1.59 %  1.48 %  1.52 %  1.59 %
SFAS #133 adjustments included in the  
  Loan Sale Margin    (0.06 )  0.00    (0.05 )  (0.03 )  0.01  

Capitalized Real Estate Mortgage Loan Servicing Rights

Three months ended
September 30,		 Nine months ended
September 30,
2007 2006 2007 2006
(in thousands)
Balance at beginning of period     $ 15,443   $ 14,128   $ 14,782   $ 13,439  
  Originated servicing rights capitalized    760    742    2,222    2,136  
  Amortization    (381 )  (398 )  (1,220 )  (1,114 )
  (Increase)/decrease in impairment reserve    8    (19 )  46    (8 )
Balance at end of period   $ 15,830   $ 14,453   $ 15,830   $ 14,453  
   
Impairment reserve at end of period   $ 22   $ 19   $ 22   $ 19  

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Non-Interest Expense

Three months ended Nine months ended
September 30, June 30, September 30, September 30,
2007 2007 2006 2007 2006
(in thousands)  
Salaries      9,771    10,776    9,483    30,548    28,217  
Performance-based compensation and benefits    1,287    1,153    (140 )  3,761    1,664  
Other benefits    2,563    2,855    2,320    8,064    7,597  
  Compensation and employee benefits    13,621    14,784    11,663    42,373    37,478  
Occupancy, net    2,521    2,735    2,208    7,870    7,315  
Furniture, fixtures and equipment    1,798    1,991    1,667    5,689    5,183  
Data processing    1,753    1,912    1,378    5,103    4,138  
Advertising    1,472    1,341    1,006    3,965    3,009  
Loan and collection    1,285    1,221    909    3,512    2,714  
Credit card and bank service fees    939    970    958    2,876    2,880  
Communications    962    1,014    861    2,806    2,704  
Supplies    590    581    535    1,778    1,560  
Amortization of intangible assets    934    935    600    2,439    1,800  
Legal and professional    504    457    453    1,467    1,337  
Branch acquisition and conversion costs      (92 )    330
Goodwill impairment                343    612  
Other    1,993    1,952    1,112    5,588    4,398  
      Total non-interest expense   $ 28,372   $ 29,801   $ 23,350   $ 86,139   $ 75,128  

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Average Balances and Tax Equivalent Rates

Three Months Ended
September 30,
2007 2006
Average
Balance		 Interest Rate Average
Balance		 Interest Rate
Assets (dollars in thousands)
Taxable loans (1)   $ 2,528,039   $ 50,835    8.00 % $ 2,481,099   $ 49,267    7.90 %
Tax-exempt loans (1,2)    9,079    163    7.12    7,296    129    7.01  
Taxable securities    163,321    2,308    5.61    202,905    2,713    5.30  
Tax-exempt securities (2)    223,634    3,897    6.91    245,972    4,102    6.62  
Other investments    20,196    232    4.56    15,580    191    4.86  
Interest Earning Assets -  
Continuing Operations    2,944,269    57,435    7.75    2,952,852    56,402    7.60  
Cash and due from banks    34,873          53,384
Taxable loans - discontinued operations    604          208,795
Other assets, net    245,888          214,081
Total Assets   $ 3,225,634         $3,429,112
   
Liabilities  
Savings and NOW   $ 996,125    4,942    1.97   $ 863,260    3,664    1.68  
Time deposits    1,432,098    17,648    4.89    1,439,676    16,384    4.52  
Long-term debt    1,995    23    4.57    3,995    47    4.67  
Other borrowings    160,699    2,941    7.26    300,416    4,739    6.26  
Interest Bearing Liabilities-  
Continuing Operations    2,590,917    25,554    3.91    2,607,347    24,834    3.78  
Demand deposits    316,873          283,518
Time deposits - discontinued operations    434          182,302
Other liabilities    71,430          96,158
Shareholders' equity    245,980          259,787
 Total liabilities and shareholders' equity   $ 3,225,634         $3,429,112
   
Tax Equivalent Net Interest Income       $ 31,881       $31,568  
   
Tax Equivalent Net Interest Income  
as a Percent of Earning Assets            4.31 %          4.26 %
(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

Nine Months Ended
September 30,
2007 2006
Average
Balance		 Interest Rate Average
Balance		 Interest Rate
Assets (dollars in thousands)
Taxable loans (1)   $ 2,520,661   $ 151,152    8.01 % $ 2,450,857   $ 143,607    7.83 %
Tax-exempt loans (1,2)    9,450    489    6.92    6,594    349    7.08  
Taxable securities    185,707    7,377    5.31    211,640    8,358    5.28  
Tax-exempt securities (2)    230,998    12,087    7.00    249,624    13,133    7.03  
Other investments    25,732    1,010    5.25    16,787    613    4.88  
Interest Earning Assets -  
Continuing Operations    2,972,548    172,115    7.73    2,935,502    166,060    7.56  
Cash and due from banks    30,663          53,664
Taxable loans - discontinued operations    11,274          201,734
Other assets, net    244,780          209,686
Total Assets   $ 3,259,265         $3,400,586
   
Liabilities  
Savings and NOW   $ 964,895    13,919    1.93   $ 864,102    9,729    1.51  
Time deposits    1,486,616    54,457    4.90    1,385,807    43,217    4.17  
Long-term debt    2,491    86    4.62    4,491    156    4.64  
Other borrowings    163,237    8,495    6.96    340,492    14,661    5.76  
Interest Bearing Liabilities-  
Continuing Operations    2,617,239    76,957    3.93    2,594,892    67,763    3.49  
Demand deposits    303,045          278,845
Time deposits - discontinued operations    8,176          175,340
Other liabilities    77,548          97,006
Shareholders' equity    253,257          254,503
Total liabilities and shareholders' equity   $ 3,259,265         $3,400,586
   
Tax Equivalent Net Interest Income       $ 95,158       $98,297
   
Tax Equivalent Net Interest Income  
as a Percent of Earning Assets            4.27 %      4.47 %
(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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Commercial Loan Portfolio Analysis as of September 30, 2007

Total Commercial Loans
Loan Category All Loans Watch Credits Performing Watch Credits Non-performing Total Watch Credits Percent of Loan Category in Watch Credit
(dollars in thousands)
Land     $ 34,117   $ 5,211   $ 16,733   $ 21,944    64.3 %
Land Development    57,487    18,237    13,969    32,206    56.0 %
Construction    93,054    20,726    3,998    24,724    26.6 %
Income Producing    335,775    26,715    9,688    36,403    10.8 %
Owner occupied    343,774    37,724    5,792    43,516    12.7 %
Total Commercial Real Estate Loans (1)   $ 864,207   $ 108,613    50,180   $ 158,793    18.4 %
   
Other Commercial Loans(1)   $ 199,000   $ 23,952    1,607   $ 25,559    12.8 %
Non-performing not in watch credit    216
Total non-performing commercial loans   $ 52,003  

Commercial Loans in Southeastern Michigan
Loan Category All Loans Watch Credits Performing Watch Credits Non-performing Total Internal Watch Credits Percent of Loan Category in Watch Credit
Land     $ 23,360   $ 3,520   $ 14,783   $ 18,303    78.4 %
Land Development    24,606    5,477    10,674    16,151    65.6 %
Construction    21,289    3,544    1,688    5,232    24.6 %
Income Producing    126,488    10,006    7,541    17,547    13.9 %
Owner occupied    124,278    19,224    1,907    21,131    17.0 %
Total Commercial Real Estate Loans   $ 320,021   $ 41,771    36,593   $ 78,364    24.5 %
   
Other Commercial Loans   $ 72,000   $ 8,296    980   $ 9,276    12.9 %
Non-performing not in watch credit    154  
    $37,727

(1) The total of these two categories is different than the September 30, 2007, Consolidated Statement of Financial Condition due primarily to loans in process.


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