EX-99.2 3 k47722exv99w2.htm EX-99.2 exv99w2
Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets
                 
    March 31,     December 31,  
    2009     2008  
    (dollars in thousands)  
Non-accrual loans
  $ 124,848     $ 122,639  
Loans 90 days or more past due and still accruing interest
    4,198       2,626  
 
           
Total non-performing loans
    129,046       125,265  
Other real estate
    26,122       19,998  
 
           
Total non-performing assets
  $ 155,168     $ 145,263  
 
           
As a percent of Portfolio Loans
               
Non-performing loans
    5.27 %     5.09 %
Allowance for loan losses
    2.38       2.35  
Non-performing assets to total assets
    5.25       4.91  
Allowance for loan losses as a percent of non-performing loans
    45       46  
Allowance for loan losses
                                 
    Three months ended  
    March 31,  
    2009     2008  
            Unfunded             Unfunded  
    Loans     Commitments     Loans     Commitments  
    (in thousands)  
Balance at beginning of period
  $ 57,900     $ 2,144     $ 45,294     $ 1,936  
Additions (deduction)
                               
Provision charged to operating expense
    30,924       (86 )     11,383       (67 )
Recoveries credited to allowance
    607               569          
Loans charged against the allowance
    (31,126 )             (7,335 )        
 
                       
Balance at end of period
  $ 58,305     $ 2,058     $ 49,911     $ 1,869  
 
                       
 
                               
Net loans charged against the allowance to average Portfolio Loans (annualized)
    5.05 %             1.07 %        


 

Alternative Sources of Funds
                                                 
    March 31,     December 31,  
    2009     2008  
            Average                     Average        
    Amount     Maturity     Rate     Amount     Maturity     Rate  
    (dollars in thousands)  
Brokered CDs(1)
  $ 233,919     1.5 years     2.78 %   $ 182,283     1.1 years     3.63 %
Fixed rate FHLB advances(1)
    276,705     1.7 years     1.78       314,214     2.3 years     3.49  
Variable rate FHLB advances(1)
                                               
Securities sold under agreements to Repurchase(1)
    35,000     1.6 years     4.42       35,000     1.9 years     4.42  
FRB — Discount borrowing
    130,000     .1 years     0.25       189,500     .1 years     0.54  
Federal funds purchased
                            750     1 day     0.25  
         
Total
  $ 675,624     1.3 years     1.97 %   $ 721,747     1.4 years     2.80 %
         
 
(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
                 
    March 31,     December 31,  
    2009     2008  
    (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
    68,631       68,456  
Common stock, par value $1.00 per share
    23,816       22,791  
Capital surplus
    201,025       200,687  
Retained earnings (accumulated deficit)
    (93,761 )     (73,849 )
Accumulated other comprehensive loss
    (22,275 )     (23,208 )
 
           
Total shareholders’ equity
    177,436       194,877  
 
           
Total capitalization
  $ 267,536     $ 284,977  
 
           

2


 

Non-Interest Income
                         
    Three months ended  
    March 31,     December 31,     March 31,  
    2009     2008     2008  
    (in thousands)  
Service charges on deposit accounts
  $ 5,507     $ 5,996     $ 5,647  
Net gains (losses) on assets
                       
Mortgage loans
    3,281       1,204       1,867  
Securities
    (581 )     (6,924 )     (2,163 )
VISA check card interchange income
    1,415       1,394       1,371  
Mortgage loan servicing
    (842 )     (3,616 )     (323 )
Mutual fund and annuity commissions
    453       459       424  
Bank owned life insurance
    401       492       478  
Title insurance fees
    609       280       417  
Other
    1,335       1,359       1,774  
 
                 
Total non-interest income
  $ 11,578     $ 644     $ 9,492  
 
                 
Mortgage Loan Activity
                         
    Three months ended
    March 31,   December 31,   March 31,
    2009   2008   2008
    (in thousands)
Mortgage loans originated
  $ 154,608     $ 64,453     $ 118,242  
Mortgage loans sold
    142,636       49,692       84,449  
Mortgage loans sold with servicing rights released
    5,429       15,573       7,882  
Net gains on the sale of mortgage loans
    3,281       1,204       1,867  
Net gains as a percent of mortgage loans sold (“Loan Sale Margin”)
    2.30 %     2.42 %     2.21 %
SFAS #133/#159 and SAB #109 adjustments included in the Loan Sale Margin
    0.65       0.74       0.97  
Capitalized Real Estate Mortgage Loan Servicing Rights
                 
    Three months ended  
    March 31,  
    2009     2008  
    (in thousands)  
Balance at beginning of period
  $ 11,966     $ 15,780  
Originated servicing rights capitalized
    1,499       878  
Amortization
    (1,179 )     (636 )
(Increase)/decrease in impairment reserve
    (697 )     (725 )
 
           
Balance at end of period
  $ 11,589     $ 15,297  
 
           
 
               
Impairment reserve at end of period
  $ 5,348     $ 1,044  
 
           

3


 

Non-Interest Expense
                         
    Three months ended  
    March 31,     December 31,     March 31,  
    2009     2008     2008  
    (in thousands)  
Salaries
  $ 9,669     $ 10,188     $ 10,156  
Performance-based compensation and benefits
    329       778       1,304  
Other benefits
    2,579       2,198       2,724  
 
                 
Compensation and employee benefits
    12,577       13,164       14,184  
Loan and collection
    4,038       3,536       1,925  
Occupancy, net
    3,048       3,054       3,114  
Data processing
    2,096       1,951       1,725  
Furniture, fixtures and equipment
    1,849       1,770       1,817  
Credit card and bank service fees
    1,464       1,325       1,046  
Advertising
    1,442       1,691       1,100  
Loss on other real estate and repossessed assets
    1,261       2,258       106  
Deposit insurance
    1,186       462       833  
Communications
    1,045       1,014       1,015  
Legal and professional
    641       624       418  
Amortization of intangible assets
    500       758       793  
Supplies
    469       496       543  
Goodwill impairment
            50,020          
Other
    1,775       1,963       1,632  
 
                 
Total non-interest expense
  $ 33,391     $ 84,086     $ 30,251  
 
                 

4


 

Average Balances and Tax Equivalent Rates
                                                 
    Three Months Ended  
    March 31,  
    2009     2008  
    Average                     Average              
    Balance     Interest     Rate     Balance     Interest     Rate  
    (dollars in thousands)  
Assets
                                               
Taxable loans (1)
  $ 2,497,623     $ 44,300       7.16 %   $ 2,564,643     $ 48,013       7.52 %
Tax-exempt loans (1,2)
    9,927       155       6.33       9,628       174       7.27  
Taxable securities
    114,823       1,733       6.12       162,170       2,304       5.71  
Tax-exempt securities (2)
    103,070       1,750       6.89       204,890       3,586       7.04  
Other investments
    29,277       324       4.49       24,522       357       5.86  
 
                                       
Interest Earning Assets
    2,754,720       48,262       7.08       2,965,853       54,434       7.37  
 
                                           
Cash and due from banks
    61,139                       52,459                  
Other assets, net
    158,443                       225,950                  
 
                                           
Total Assets
  $ 2,974,302                     $ 3,244,262                  
 
                                           
 
                                               
Liabilities
                                               
Savings and NOW
  $ 944,904       1,581       0.68     $ 998,429       3,565       1.44  
Time deposits
    855,025       6,967       3.30       1,099,345       12,647       4.63  
Long-term debt
                            994       12       4.86  
Other borrowings
    599,379       4,670       3.16       529,439       6,425       4.88  
 
                                       
Interest Bearing Liabilities
    2,399,308       13,218       2.23       2,628,207       22,649       3.47  
 
                                           
Demand deposits
    308,538                       289,814                  
Other liabilities
    70,737                       83,426                  
Shareholders’ equity
    195,719                       242,815                  
 
                                           
Total liabilities and shareholders’ equity
  $ 2,974,302                     $ 3,244,262                  
 
                                           
Tax Equivalent Net Interest Income
          $ 35,044                     $ 31,785          
 
                                           
 
                                               
Tax Equivalent Net Interest Income as a Percent of Earning Assets
                    5.13 %                     4.30 %
 
                                           
 
(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


 

Commercial Loan Portfolio Analysis as of March 31, 2009
                                         
    Total Commercial Loans  
                                    Percent of  
            Watch Credits     Loan  
                                    Category in  
Loan Category   All Loans     Performing     Non- performing     Total     Watch Credit  
    (dollars in thousands)  
Land
  $ 30,527     $ 4,767     $ 7,932     $ 12,699       41.6 %
Land Development
    43,931       13,410       15,110       28,520       64.9 %
Construction
    43,348       3,049       8,416       11,465       26.5 %
Income Producing
    405,405       48,311       28,455       76,766       18.9 %
Owner Occupied
    214,484       26,892       5,283       32,175       15.0 %
             
Total Commercial Real Estate Loans (1)
  $ 737,695     $ 96,429     $ 65,196     $ 161,625       21.9 %
                           
 
                                       
Other Commercial Loans(1)
  $ 201,902     $ 23,504       3,703     $ 27,207       13.5 %
Total non-performing commercial loans       $ 68,899                
 
                                     
 
(1)   The total of these two categories is different than the March 31, 2009, Consolidated Statement of Financial Condition due primarily to loans in process.

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