EX-99.2 3 k46814exv99w2.htm EXHIBIT 99.2 EX-99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Exhibit 99.2
Non-performing assets
                 
    September 30,     December 31,  
    2008     2007  
    (dollars in thousands)  
Non-accrual loans
   $ 111,756     $ 72,682  
Loans 90 days or more past due and still accruing interest
     2,893       4,394  
Restructured loans
             173  
 
            
Total non-performing loans
     114,649       77,249  
Other real estate
     19,993       9,723  
 
            
Total non-performing assets
   $ 134,642     $ 86,972  
 
            
As a percent of Portfolio Loans
                
Non-performing loans
     4.58 %     3.07 %
Allowance for loan losses
     2.15       1.80  
Non-performing assets to total assets
     4.29       2.68  
Allowance for loan losses as a percent of non-performing loans
     47       59  
Allowance for loan losses
                                 
    Nine months ended  
    September 30,  
    2008     2007  
            Unfunded             Unfunded  
    Loans     Commitments     Loans     Commitments  
    (in thousands)  
Balance at beginning of period
   $ 45,294     $ 1,936     $ 26,879     $ 1,881  
Additions (deduction)
                                
Provision charged to operating expense
     44,039       (583 )     33,420       347  
Recoveries credited to allowance
     2,707               1,741          
Loans charged against the allowance
     (38,142 )             (19,713 )        
 
                        
Balance at end of period
   $ 53,898     $ 1,353     $ 42,327     $ 2,228  
 
                        
 
                                
Net loans charged against the allowance to average Portfolio Loans (annualized)
     1.85 %             0.96 %        

 

 

Alternative Sources of Funds
                                                 
    September 30,   December 31,
    2008   2007
            Average                   Average    
    Amount   Maturity   Rate   Amount   Maturity   Rate
    (dollars in thousands)
Brokered CDs(1,2)
   $ 201,709     1.2 years     3.65 %   $ 516,077     1.9 years     4.72 %
Fixed rate FHLB advances(1)
     309,777     2.5 years     3.21       240,509     1.3 years     4.81  
Variable rate FHLB advances(1)
     10,000     .5 years     2.00       20,000     .3 years     4.35  
Securities sold under agreements to Repurchase(1)
     35,000     2.2 years     4.42       35,000     2.9 years     4.42  
FRB — Discount borrowing
     255,000     .2 years     2.25                          
Federal funds purchased
                             54,452     1 day     4.00  
         
Total
   $ 811,486     1.4 years     3.06 %   $ 866,038     1.6 years     4.68 %
         
 
(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.
Capitalization
                 
    September 30,     December 31,  
    2008     2007  
    (in thousands)  
Unsecured debt
           $ 3,000  
 
            
 
                
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, no par value
                
Common stock, par value $1.00 per share
     22,782       22,601  
Capital surplus
     196,954       195,302  
Retained earnings
     16,621       22,770  
Accumulated other comprehensive loss
     (11,072 )     (171 )
 
            
Total shareholders’ equity
     225,285       240,502  
 
            
Total capitalization
   $ 315,385     $ 333,602  
 
            

2

 

Non-Interest Income
                                         
    Three months ended     Nine months ended  
    September 30,     June 30,     September 30,     September 30,  
    2008     2008     2007     2008     2007  
    (in thousands)  
Service charges on deposit accounts
   $ 6,416     $ 6,164     $ 6,565     $ 18,227     $ 17,833  
Net gains (losses) on assets
                                        
Mortgage loans
     969       1,141       1,094       3,977       3,413  
Securities
     (6,711 )     837       52       (8,037 )     259  
VISA check card interchange income
     1,468       1,495       1,287       4,334       3,529  
Mortgage loan servicing
     340       1,528       633       1,545       1,872  
Mutual fund and annuity commissions
     680       644       517       1,748       1,463  
Bank owned life insurance
     506       484       471       1,468       1,368  
Title insurance fees
     307       384       363       1,108       1,207  
Manufactured home loan origination fees and commissions
                     10               239  
Other
     1,473       1,460       1,537       4,707       4,789  
 
                              
Total non-interest income
   $ 5,448     $ 14,137     $ 12,529     $ 29,077     $ 35,972  
 
                              
Mortgage Loan Activity
                                         
    Three months ended   Nine months ended
    September 30,   June 30,   September 30,   September 30,
    2008   2008   2007   2008   2007
    (in thousands)
Mortgage loans originated
   $ 74,506     $ 111,316     $ 113,563     $ 304,064     $ 359,991  
Mortgage loans sold
     52,837       80,238       77,154       217,524       224,279  
Mortgage loans sold with servicing rights released
     16,760       11,660       14,121       36,302       38,404  
Net gains on the sale of mortgage loans
     969       1,141       1,094       3,977       3,413  
Net gains as a percent of mortgage loans sold (“Loan Sale Margin”)
     1.83 %     1.42 %     1.42 %     1.82 %     1.52 %
SFAS #133/#159 adjustments included in the Loan Sale Margin
     (0.03 )     (0.25 )     (0.06 )     0.28       (0.03 )
Capitalized Real Estate Mortgage Loan Servicing Rights
                                 
    Three months ended     Nine months ended  
    September 30,     September 30,  
    2008     2007     2008     2007  
    (in thousands)  
Balance at beginning of period
   $ 16,551     $ 15,443     $ 15,780     $ 14,782  
Originated servicing rights capitalized
     403       760       2,035       2,222  
Amortization
     (346 )     (381 )     (1,478 )     (1,220 )
(Increase)/decrease in impairment reserve
     (348 )     8       (77 )     46  
 
                        
Balance at end of period
   $ 16,260     $ 15,830     $ 16,260     $ 15,830  
 
                        
 
                                
Impairment reserve at end of period
   $ 396     $ 22     $ 396     $ 22  
 
                        

3

 

Non-Interest Expense
                                         
    Three months ended     Nine months ended  
    September 30,     June 30,     September 30,     September 30,  
    2008     2008     2007     2008     2007  
    (in thousands)  
Salaries
   $ 10,110     $ 9,727     $ 9,771     $ 29,993     $ 30,548  
Performance-based compensation and benefits
     1,336       1,443       1,287       4,083       3,761  
Other benefits
     2,577       2,638       2,563       7,939       8,064  
 
                              
Compensation and employee benefits
     14,023       13,808       13,621       42,015       42,373  
Occupancy, net
     2,871       2,813       2,521       8,798       7,870  
Loan and collection
     2,008       2,031       1,285       5,895       3,512  
Furniture, fixtures and equipment
     1,662       1,825       1,798       5,304       5,689  
Data processing
     1,760       1,712       1,753       5,197       5,103  
Loss on other real estate and repossessed assets
     425       1,560       80       2,091       172  
Advertising
     1,575       1,168       1,472       3,843       3,965  
Credit card and bank service fees
     1,273       1,174       939       3,493       2,876  
Communications
     968       1,021       962       3,004       2,806  
Deposit insurance
     275       418       100       1,526       360  
Amortization of intangible assets
     760       761       934       2,314       2,439  
Supplies
     519       472       590       1,534       1,778  
Legal and professional
     527       463       504       1,408       1,467  
Branch acquisition and conversion costs
                                     330  
Goodwill impairment
                                     343  
Other
     2,010       1,965       1,813       5,676       5,056  
 
                              
Total non-interest expense
   $ 30,656     $ 31,191     $ 28,372     $ 92,098     $ 86,139  
 
                              

4

 

Average Balances and Tax Equivalent Rates
                                                 
    Three Months Ended  
    September 30,  
    2008     2007  
    Average                     Average              
    Balance     Interest     Rate     Balance     Interest     Rate  
    (dollars in thousands)  
Assets
                                                
Taxable loans (1)
   $ 2,584,151     $ 46,294       7.14 %   $ 2,528,039     $ 50,835       8.00 %
Tax-exempt loans (1,2)
     11,953       205       6.82       9,079       163       7.12  
Taxable securities
     142,483       2,078       5.80       163,321       2,308       5.61  
Tax-exempt securities (2)
     145,911       2,630       7.17       223,634       3,897       6.91  
Other investments
     45,362       466       4.09       20,196       232       4.56  
 
                                        
Interest Earning Assets — Continuing Operations
    2,929,860       51,673       7.02       2,944,269       57,435       7.75  
 
                                            
Cash and due from banks
     56,922                       34,873                  
Taxable loans — discontinued operations
                             604                  
Other assets, net
     224,626                       245,888                  
 
                                            
Total Assets
   $ 3,211,408                     $ 3,225,634                  
 
                                            
 
                                                
Liabilities
                                                
Savings and NOW
   $ 966,415       2,262       0.93     $ 996,125       4,942       1.97  
Time deposits
     814,434       7,315       3.57       1,432,098       17,648       4.89  
Long-term debt
                             1,995       23       4.57  
Other borrowings
     790,353       7,099       3.57       160,699       2,941       7.26  
 
                                        
Interest Bearing Liabilities— Continuing Operations
     2,571,202       16,676       2.58       2,590,917       25,554       3.91  
 
                                            
Demand deposits
     314,116                       316,873                  
Time deposits — discontinued operations
                             434                  
Other liabilities
     89,951                       71,430                  
Shareholders’ equity
     236,139                       245,980                  
 
                                            
Total liabilities and shareholders’ equity
   $ 3,211,408                     $ 3,225,634                  
 
                                            
Tax Equivalent Net Interest Income
           $ 34,997                     $ 31,881          
 
                                            
 
                                                
Tax Equivalent Net Interest Income as a Percent of Earning Assets
                     4.76 %                     4.31 %
 
                                            
 
(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
                                                 
    Nine Months Ended  
    September 30,  
    2008     2007  
    Average                     Average              
    Balance     Interest     Rate     Balance     Interest     Rate  
    (dollars in thousands)  
Assets
                                                
Taxable loans (1)
   $ 2,575,809     $ 140,925       7.30 %   $ 2,520,661     $ 151,152       8.01 %
Tax-exempt loans (1,2)
     10,969       582       7.09       9,450       489       6.92  
Taxable securities
     152,812       6,558       5.73       185,707       7,377       5.31  
Tax-exempt securities (2)
     179,914       9,562       7.10       230,998       12,087       7.00  
Other investments
     32,553       1,185       4.86       25,732       1,010       5.25  
 
                                        
Interest Earning Assets — Continuing Operations
     2,952,057       158,812       7.18       2,972,548       172,115       7.73  
 
                                            
Cash and due from banks
     53,354                       30,663                  
Taxable loans — discontinued operations
                             11,274                  
Other assets, net
     226,367                       244,780                  
 
                                            
Total Assets
  $ 3,231,778                     $ 3,259,265                  
 
                                            
 
                                                
Liabilities
                                                
Savings and NOW
   $ 985,938       8,281       1.12     $ 964,895       13,919       1.93  
Time deposits
     928,304       28,699       4.13       1,486,616       54,457       4.90  
Long-term debt
     330       12       4.86       2,491       86       4.62  
Other borrowings
     689,296       20,499       3.97       163,237       8,495       6.96  
 
                                        
Interest Bearing Liabilities— Continuing Operations
     2,603,868       57,491       2.95       2,617,239       76,957       3.93  
 
                                            
Demand deposits
     300,411                       303,045                  
Time deposits — discontinued operations
                             8,176                  
Other liabilities
     87,530                       77,548                  
Shareholders’ equity
     239,969                       253,257                  
 
                                            
Total liabilities and shareholders’ equity
   $ 3,231,778                     $ 3,259,265                  
 
                                            
 
                                                
Tax Equivalent Net Interest Income
          $ 101,321                     $ 95,158          
 
                                            
 
                                                
Tax Equivalent Net Interest Income as a Percent of Earning Assets
                     4.58 %                     4.27 %
 
                                            
 
(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 September 30, 2008
                                         
    Total Commercial Loans  
                                    Percent of  
            Watch Credits     Loan  
                    Non-             Category in  
    All Loans     Performing     performing     Total     Watch Credit  
Loan Category   (dollars in thousands)  
Land
   $ 39,843     $ 7,874     $ 10,900     $ 18,774       47.1 %
Land Development
     62,904       17,129       19,551       36,680       58.3 %
Construction
     54,954       9,622       6,609       16,231       29.5 %
Income Producing
     422,557       56,075       28,617       84,692       20.0 %
Owner Occupied
     223,792       24,234       5,045       29,279       13.1 %
                   
Total Commercial Real Estate Loans (1)
   $ 804,050     $ 114,934     $ 70,722     $ 185,656       23.1 %
                             
 
                                        
Other Commercial Loans(1)
   $ 205,523     $ 17,628       3,497     $ 21,125       10.3 %
                           
Total non-performing commercial loans
                   $ 74,219                  
 
                                      
 
(1)   The total of these two categories is different than the September 30, 2008, Consolidated Statement of Financial Condition due primarily to loans in process.

7