EX-99 4 ibc8k_012308ex99-2.htm Independent Bank Corporation Form 8-K Exhibit 99.2

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data

Non-performing assets

December 31, December 31,
2007 2006
(dollars in thousands)
Non-accrual loans     $ 76,355   $ 35,683  
Loans 90 days or more past due and  
   still accruing interest    3,958    3,479  
Restructured loans    173    60  
Total non-performing loans    80,486    39,222  
Other real estate    6,050    3,153  
Total non-performing assets   $ 86,536   $ 42,375  
As a percent of Portfolio Loans  
   Non-performing loans    3.16 %  1.58 %
   Allowance for loan losses    1.78    1.08  
Non-performing assets to total assets    2.64    1.24  
Allowance for loan losses as a percent of  
   non-performing loans    56    69  

Allowance for loan losses

Twelve months ended
December 31,
2007 2006
Loans Unfunded
Commitments		 Loans Unfunded
Commitments
(in thousands)
Balance at beginning of period     $ 26,879   $ 1,881   $ 22,420   $ 1,820  
Additions (deduction)  
  Provision charged to operating expense    43,105    55    16,283    61  
  Recoveries credited to allowance    2,346        2,237  
  Loans charged against the allowance    (27,036 )      (14,061 )
Balance at end of period   $ 45,294   $ 1,936   $ 26,879   $ 1,881  
Net loans charged against the allowance to  
       average Portfolio Loans    0.98 %    0.48 %

Alternative Sources of Funds

December 31,
2007		 December 31,
2006
Amount Average
Maturity		 Rate Amount Average
Maturity		 Rate
(dollars in thousands)
Brokered CDs(1, 2)     $ 516,077    1.9 year s  4.72 % $ 1,055,010  1.9 year s  4.72 %
Fixed rate FHLB advances(1)    240,509    1.3 year s  4.81    58,272    4.6 year s  5.66  
Variable rate FHLB advances(1)    20,000    .3 year s  4.35    2,000    0.5 year s  5.31  
Securities sold under agreements to  
   Repurchase(1)    35,000    2.9 year s  4.42    83,431    0.1 year s  5.34  
Federal funds purchased    54,452    1 da y  4.00    84,081    1 da y  5.40  
      Total   $ 866,038    1.6 year s  4.68 % $ 1,282,794  1.8 year s  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

December 31, December 31,
2007 2006
(in thousands)
Unsecured debt     $ 3,000   $ 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    22,601    22,865  
  Capital surplus    195,302    200,241  
  Retained earnings    22,770    31,420  
  Accumulated other comprehensive income (loss)    (171 )  3,641  
          Total shareholders' equity    240,502    258,167  
          Total capitalization   $ 333,602   $ 325,517  

2

Non-Interest Income

Three months ended Twelve months ended
December 31, September 30, December 31, December 31,
2007 2007 2006 2007 2006
(in thousands)
Service charges on deposit                        
  accounts   $ 6,418   $ 6,565   $ 5,152   $ 24,251   $ 19,936  
Mepco litigation settlement    2,800  
Net gains (losses) on assets  
  Real estate mortgage loans    904    1,094    1,264    4,317    4,593  
  Securities    (964 )  52        (705 )  171  
VISA check card interchange income    1,376    1,287    900    4,905    3,432  
Real estate mortgage loan servicing    364    633    605    2,236    2,440  
Mutual fund and annuity commissions    609    517    321    2,072    1,291  
Bank owned life insurance    462    471    433    1,830    1,628  
Title insurance fees    344    363    426    1,551    1,724  
Manufactured home loan origination fees  
  and commissions    10    184    239    884  
Other    1,660    1,537    1,461    6,449    5,951  
      Total non-interest income   $ 11,173   $ 12,529   $ 10,746   $ 47,145   $ 44,850  

Real Estate Mortgage Loan Activity

Three months ended Twelve months ended
December 31, September 30, December 31, December 31,
2007 2007 2006 2007 2006
(in thousands)
Real estate mortgage loans originated     $ 147,220   $ 113,563   $ 125,031   $ 507,211   $ 525,849  
Real estate mortgage loans sold    64,547    77,154    72,298    288,826    281,285  
Real estate mortgage loans sold with   
  servicing rights released    9,379    14,121    11,436    47,783    41,494  
Net gains on the sale of real estate
  mortgage loans		    904    1,094    1,264    4,317    4,593  
Net gains as a percent of real estate   
  mortgage loans sold ("Loan Sale Margin")    1.40 %  1.42 %  1.75 %  1.49 %  1.63 %
SFAS #133 adjustments included in the   
  Loan Sale Margin    (0.18 )  (0.06 )  0.15    (0.06 )  0.05  

Capitalized Real Estate Mortgage Loan Servicing Rights

Three months ended
December 31,		 Twelve months ended
December 31,
2007 2006 2007 2006
(in thousands)
Balance at beginning of period     $ 15,830   $ 14,453   $ 14,782   $ 13,439  
  Originated servicing rights capitalized    651    726    2,873    2,862  
  Amortization    (404 )  (348 )  (1,624 )  (1,462 )
  (Increase)/decrease in impairment reserve    (297 )  (49 )  (251 )  (57 )
Balance at end of period   $ 15,780   $ 14,782   $ 15,780   $ 14,782  
   
Impairment reserve at end of period   $ 319   $ 68   $ 319   $ 68  

3

Non-Interest Expense

Three months ended Twelve months ended
December 31, September 30, December 31, December 31,
2007 2007 2006 2007 2006
(in thousands)
Salaries     $ 9,825   $ 9,771   $ 9,380   $ 40,373   $ 37,597  
Performance-based compensation
    and benefits		    1,218    1,287    1,536    4,979    3,200  
Other benefits    2,395    2,563    2,407    10,459    10,004  
  Compensation and employee benefits    13,438    13,621    13,323    55,811    50,801  
Occupancy, net    2,754    2,521    2,311    10,624    9,626  
Furniture, fixtures and equipment    1,944    1,798    1,874    7,633    7,057  
Data processing    1,854    1,753    1,481    6,957    5,619  
Advertising    1,549    1,472    988    5,514    3,997  
Loan and collection    1,437    1,285    896    4,949    3,610  
Credit card and bank service fees    1,037    939    959    3,913    3,839  
Communications    1,003    962    852    3,809    3,556  
Supplies    633    590    553    2,411    2,113  
Amortization of intangible assets    934    934    600    3,373    2,400  
Legal and professional    511    504    516    1,978    1,853  
Branch acquisition and conversion costs          330
Loss on receivable from warranty  
    payment plan seller            2,400        2,400  
Goodwill impairment            2,963    343    3,575  
Other    2,491    1,993    1,372    8,079    5,770  
      Total non-interest expense   $ 29,585   $ 28,372   $ 31,088   $ 115,724   $ 106,216  

4

Average Balances and Tax Equivalent Rates

Three Months Ended
December 31,
2007 2006
Average
Balance		 Interest Rate Average
Balance		 Interest Rate
Assets (dollars in thousands)
Taxable loans (1)     $ 2,564,579   $ 50,772    7.87 % $ 2,504,662   $ 49,999    7.94 %
Tax-exempt loans (1,2)    9,919    183    7.32    9,371    160    6.77  
Taxable securities    162,585    2,258    5.51    195,039    2,750    5.59  
Tax-exempt securities (2)    209,882    3,686    6.97    245,147    4,351    7.04  
Other investments    26,863    328    4.84    15,123    189    4.96  
Interest Earning Assets -  
Continuing Operations    2,973,828    57,227    7.65    2,969,342    57,449    7.69  
Cash and due from banks    56,470        52,180
Taxable loans - discontinued operations    476        188,208
Other assets, net    224,519        214,064
Total Assets   $ 3,255,293       $3,423,794
   
Liabilities  
Savings and NOW   $ 992,317    4,849    1.94   $ 865,784    3,875    1.78  
Time deposits    1,298,269    15,835    4.84    1,464,759    17,469    4.73  
Long-term debt    1,495    18    4.78    3,495    49    5.58  
Other borrowings    332,151    5,004    5.98    295,589    4,542    6.10  
Interest Bearing Liabilities-  
Continuing Operations    2,624,232    25,706    3.89    2,629,627    25,935    3.91  
Demand deposits    299,112        278,522
Time deposits - discontinued operations    339        163,915
Other liabilities    86,183        85,746
Shareholders' equity    245,427        265,984
 Total liabilities and shareholders' equity   $ 3,255,293       $3,423,794
   
Tax Equivalent Net Interest Income     $31,521           $ 31,514  
   
Tax Equivalent Net Interest Income  
as a Percent of Earning Assets            4.22 %          4.23 %

(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

Average Balances and Tax Equivalent Rates

Twelve Months Ended
December 31,
2007 2006
Average
Balance		 Interest Rate Average
Balance		 Interest Rate
Assets (dollars in thousands)
Taxable loans (1)     $ 2,531,737   $ 201,924    7.98 % $ 2,464,798   $ 193,606    7.85 %
Tax-exempt loans (1,2)    9,568    672    7.02    7,293    509    6.98  
Taxable securities    179,878    9,635    5.36    207,456    11,108    5.35  
Tax-exempt securities (2)    225,676    15,773    6.99    248,495    17,484    7.04  
Other investments    26,017    1,338    5.14    16,366    802    4.90  
Interest Earning Assets -  
Continuing Operations    2,972,876    229,342    7.71    2,944,408    223,509    7.59  
  
Cash and due from banks    57,174        53,844
Taxable loans - discontinued operations    8,542        198,335
Other assets, net    218,553        210,190
Total Assets   $ 3,257,145       $3,406,777
   
Liabilities  
Savings and NOW   $ 971,807    18,768    1.93   $ 864,528    13,604    1.57  
Time deposits    1,439,177    70,292    4.88    1,405,850    60,686    4.32  
Long-term debt    2,240    104    4.64    4,240    205    4.83  
Other borrowings    205,811    13,499    6.56    329,175    19,203    5.83  
Interest Bearing Liabilities-  
Continuing Operations    2,619,035    102,663    3.92    2,603,793    93,698    3.60  
  
Demand deposits    300,886        279,279
Time deposits - discontinued operations    6,166        172,317
Other liabilities    79,750        92,451
Shareholders' equity    251,308        258,937
Total liabilities and shareholders' equity   $ 3,257,145       $3,406,777
   
Tax Equivalent Net Interest Income     $126,679     $129,811
   
Tax Equivalent Net Interest Income  
as a Percent of Earning Assets            4.26 %          4.41 %

(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%

6

Commercial Loan Portfolio Analysis as of December 31, 2007

Total Commercial Loans
 
Watch Credits Percent
 of Loan
Loan Category All Loans Performing Non-performing Total Category in
Watch Credit
(dollars in thousands)
Land     $ 31,581   $ 14,676   $ 10,340   $ 25,016    79.2 %
Land Development    58,294    23,883    14,424    38,307    65.7 %
Construction    96,252    28,929    5,696    34,625    36.0 %
Income Producing    338,760    22,321    9,881    32,202    9.5 %
Owner Occupied    339,510    47,499    7,012    54,511    16.1 %
Total Commercial Real Estate Loans(1)   $ 864,397    137,308    47,353   $ 184,661    21.4 %
   
Other Commercial Loans(1)   $ 198,343   $ 21,701    1,592   $ 23,293    11.7 %
Total non-performing commercial loans       $48,945


Commercial Loans in Southeastern Michigan
 
Watch Credits Percent
 of Loan
Loan Category All Loans Performing Non-performing Total Category in
Watch Credit
(dollars in thousands)
Land     $ 21,543   $ 14,321   $ 7,222   $ 21,543    100.0 %
Land Development    23,969    9,189    10,424    19,613    81.8 %
Construction    25,446    8,786    1,306    10,092    40.0 %
Income Producing    109,920    7,477    5,462    12,939    11.8 %
Owner Occupied    93,489    13,369    620    13,989    15.0 %
Total Commercial Real Estate Loans   $ 274,367   $ 53,142    25,034   $ 78,176    28.5 %
   
Other Commercial Loans   $ 56,728   $ 7,756    880   $ 8,636    15.2 %
Total non-performing commercial   
  loans in Southeastern Michigan       $25,914

(1) The total of these two categories is different than the December 31, 2007, Consolidated Statement of Financial Condition due primarily to loans in process.

7