EX-99.2 3 k49209exv99w2.htm EX-99.2 exv99w2
Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets
                 
    March 31,     December 31,  
    2010     2009  
    (dollars in thousands)  
Non-accrual loans
  $ 95,989     $ 105,965  
Loans 90 days or more past due and still accruing interest
    2,266       3,940  
 
           
Total non-performing loans
    98,255       109,905  
Other real estate and repossessed assets
    40,284       31,534  
 
           
Total non-performing assets
  $ 138,539     $ 141,439  
 
           
As a percent of Portfolio Loans
               
Non-performing loans
    4.56 %     4.78 %
Allowance for loan losses
    3.53       3.55  
Non-performing assets to total assets
    4.78       4.77  
Allowance for loan losses as a percent of non-performing loans
    77.48       74.35  
                                 
Allowance for loan losses    
    Three months ended  
    March 31,  
    2010     2009  
            Unfunded             Unfunded  
    Loans     Commitments     Loans     Commitments  
            (dollars in thousands)          
Balance at beginning of period
  $ 81,717     $ 1,858     $ 57,900     $ 2,144  
Additions (deduction)
                               
Provision charged to operating expense
    17,014       56       30,124       (86 )
Recoveries credited to allowance
    991               607          
Loans charged against the allowance
    (23,590 )             (30,326 )        
 
                       
Balance at end of period
  $ 76,132     $ 1,914     $ 58,305     $ 2,058  
 
                       
 
                               
Net loans charged against the allowance to average Portfolio Loans (annualized)
    4.10 %             4.91 %        


 

Alternative Sources of Funds
                                                 
    March 31,     December 31,  
    2010     2009  
            Average                     Average        
    Amount     Maturity     Rate     Amount     Maturity     Rate  
    (dollars in thousands)  
Brokered CDs
  $ 523,052     2.4 years     2.81 %   $ 629,150     2.2 years     2.46 %
Fixed rate FHLB advances
    52,372     2.8 years     3.76       27,382     5.5 years     6.59  
Variable rate FHLB advances
    70,000     1.3 years     0.30       67,000     1.4 years     0.32  
Securities sold under agreements to repurchase
    35,000     .6 years     4.42       35,000     .9 years     4.42  
 
                                   
Total
  $ 680,424     2.2 years     2.71 %   $ 758,532     2.2 years     2.51 %
 
                                           
Capitalization
                 
    March 31,     December 31,  
    2010     2009  
    (in thousands)  
Subordinated debentures
  $ 92,888     $ 92,888  
Amount not qualifying as regulatory capital
    (2,788 )     (2,788 )
 
           
Amount qualifying as regulatory capital
    90,100       90,100  
 
           
Shareholders’ Equity
               
Preferred stock, Series A, no par value
    69,334       69,157  
Common stock, par value $1.00 per share
    23,884       23,863  
Capital surplus
    201,754       201,618  
Accumulated deficit
    (184,012 )     (169,098 )
Accumulated other comprehensive loss
    (13,749 )     (15,679 )
 
           
Total shareholders’ equity
    97,211       109,861  
 
           
Total capitalization
  $ 187,311     $ 199,961  
 
           

2


 

Non-Interest Income
                         
    Three months ended  
    March 31,     December 31,     March 31,  
    2010     2009     2009  
    (in thousands)  
Service charges on deposit accounts
  $ 5,275     $ 6,158     $ 5,507  
Net gains (losses) on assets
                       
Mortgage loans
    1,843       2,060       3,281  
Securities
    265       39       (564 )
Other than temporary loss on securities available for sale
                       
Total impairment loss
    (118 )     (4,056 )     (17 )
Loss recognized in other comprehensive loss
            3,991          
 
                 
Net impairment loss recognized in earnings
    (118 )     (65 )     (17 )
VISA check card interchange income
    1,572       1,527       1,415  
Mortgage loan servicing
    432       1,241       (842 )
Mutual fund and annuity commissions
    389       527       453  
Bank owned life insurance
    468       472       401  
Title insurance fees
    494       410       609  
Other
    1,397       920       1,335  
 
                 
Total non-interest income
  $ 12,017     $ 13,289     $ 11,578  
 
                 
Mortgage Loan Activity
                         
    Three months ended
    March 31,   December 31,   March 31,
    2010   2009   2009
    (dollars in thousands)
Mortgage loans originated
  $ 90,007     $ 114,254     $ 154,608  
Mortgage loans sold
    87,708       95,386       142,636  
Mortgage loans sold with servicing rights released
    11,864       20,216       5,429  
Net gains on the sale of mortgage loans
    1,843       2,060       3,281  
Net gains as a percent of mortgage loans sold (“Loan Sale Margin”)
    2.10 %     2.16 %     2.30 %
Fair value adjustments included in the Loan Sale Margin
    (.07 )     0.11       0.65  
Capitalized Real Estate Mortgage Loan Servicing Rights
                 
    Three months ended  
    March 31,  
    2010     2009  
    (in thousands)  
Balance at beginning of period
  $ 15,273     $ 11,966  
Originated servicing rights capitalized
    775       1,499  
Amortization
    (758 )     (1,179 )
(Increase)/decrease in impairment reserve
    145       (697 )
 
           
Balance at end of period
  $ 15,435     $ 11,589  
 
           
 
               
Impairment reserve at end of period
  $ 2,157     $ 5,348  
 
           

3


 

Non-Interest Expense
                         
    Three months ended  
    March 31,     December 31,     March 31,  
    2010     2009     2009  
    (in thousands)  
Salaries
  $ 10,176     $ 10,364     $ 9,669  
Performance-based compensation and benefits
    644       746       329  
Other benefits
    2,393       2,165       2,579  
 
                 
Compensation and employee benefits
    13,213       13,275       12,577  
Loan and collection
    4,786       3,834       4,038  
Vehicle service contract counterparty contingencies
    3,418       19,506       800  
Occupancy, net
    2,909       2,882       3,048  
Data processing
    2,105       2,134       2,096  
Loss on other real estate and repossessed assets
    2,029       1,796       1,261  
FDIC deposit insurance
    1,802       1,658       1,186  
Furniture, fixtures and equipment
    1,719       1,735       1,849  
Credit card and bank service fees
    1,675       1,754       1,464  
Legal and professional fees
    1,136       1,144       641  
Communications
    1,073       1,120       1,045  
Advertising
    779       1,498       1,442  
Supplies
    393       470       469  
Amortization of intangible assets
    322       523       501  
Goodwill impairment
            16,734          
Other
    1,720       1,119       1,774  
 
                 
Total non-interest expense
  $ 39,079     $ 71,182     $ 34,191  
 
                 

4


 

Average Balances and Rates
                                                 
    Three Months Ended  
    March 31,  
    2010     2009  
    Average                     Average              
    Balance     Interest     Rate     Balance     Interest     Rate  
                    (dollars in thousands)                  
Assets (1)
                                               
Taxable loans
  $ 2,252,674     $ 38,922       6.98 %   $ 2,497,623     $ 44,300       7.16 %
Tax-exempt loans (2)
    10,128       105       4.20       9,927       101       4.13  
Taxable securities
    96,213       1,160       4.89       114,823       1,733       6.12  
Tax-exempt securities (2)
    64,415       685       4.31       103,070       1,107       4.36  
Cash — interest bearing
    274,955       157       0.23                          
Other investments
    27,854       215       3.13       29,277       324       4.49  
 
                                       
Interest Earning Assets
    2,726,239       41,244       6.12       2,754,720       47,565       6.98  
 
                                           
Cash and due from banks
    59,018                       61,139                  
Other assets, net
    148,460                       158,443                  
 
                                           
Total Assets
  $ 2,933,717                     $ 2,974,302                  
 
                                           
Liabilities
                                               
Savings and NOW
  $ 1,084,499       863       0.32     $ 944,904       1,581       0.68  
Time deposits
    1,127,618       7,356       2.65       855,025       6,967       3.30  
Other borrowings
    227,621       2,994       5.33       599,379       4,670       3.16  
 
                                       
Interest Bearing Liabilities
    2,439,738       11,213       1.86       2,399,308       13,218       2.23  
 
                                           
Demand deposits
    327,570                       308,538                  
Other liabilities
    64,396                       70,737                  
Shareholders’ equity
    102,013                       195,719                  
 
                                           
Total liabilities and shareholders’ equity
  $ 2,933,717                     $ 2,974,302                  
 
                                           
 
                                               
Net Interest Income
          $ 30,031                     $ 34,347          
 
                                           
 
                                               
Net Interest Income as a Percent of Earning Assets
                    4.45 %                     5.03 %
 
                                           
 
(1)   All domestic, except for $0.9 million and $6.9 million for the three months ended March 31, 2010 and 2009, respectively, of average finance receivables included in taxable loans for customers domiciled in Canada.
 
(2)   Interest on tax-exempt loans and securities is not presented on a fully tax equivalent basis due to the current net operating loss carryforward position and the deferred tax asset valuation allowance.

5


 

Commercial Loan Portfolio Analysis as of March 31, 2010
                                         
    Total Commercial Loans  
                                    Percent of  
            Watch Credits     Loan  
                    Non-             Category in  
Loan Category   All Loans     Performing     performing     Total     Watch Credit  
    (dollars in thousands)  
Land
  $ 30,828     $ 11,681     $ 4,242     $ 15,923       51.7 %
Land Development
    25,601       8,464       6,110       14,574       56.9  
Construction
    25,871       8,775       3,110       11,885       45.9  
Income Producing
    361,445       72,413       21,460       93,873       26.0  
Owner Occupied
    185,445       31,539       6,571       38,110       20.6  
                   
Total Commercial Real Estate Loans (1)
  $ 629,190     $ 132,872     $ 41,493     $ 174,365       27.7  
                             
 
Other Commercial Loans(1)
  $ 170,340     $ 26,000       2,365     $ 28,365       16.7  
                           
Total non-performing commercial loans
                  $ 43,858                  
 
                                     
 
(1)   The total of these two categories is different than the March 31, 2010, Consolidated Statement of Financial Condition due primarily to loans in process.

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