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