Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets
March 31, 2008 | December 31, 2007 | |||||||
---|---|---|---|---|---|---|---|---|
(dollars in thousands) | ||||||||
Non-accrual loans | $ | 95,096 | $ | 72,682 | ||||
Loans 90 days or more past due and | ||||||||
still accruing interest | 6,921 | 4,394 | ||||||
Restructured loans | 169 | 173 | ||||||
Total non-performing loans | 102,186 | 77,249 | ||||||
Other real estate | 12,589 | 9,723 | ||||||
Total non-performing assets | $ | 114,775 | $ | 86,972 | ||||
As a percent of Portfolio Loans | ||||||||
Non-performing loans | 4.03 | % | 3.03 | % | ||||
Allowance for loan losses | 1.97 | 1.78 | ||||||
Non-performing assets to total assets | 3.53 | 2.65 | ||||||
Allowance for loan losses as a percent of | ||||||||
non-performing loans | 49 | 59 |
Allowance for loan losses
Three months ended March 31, | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2008 | 2007 | |||||||||||||
Loans | Unfunded Commitments | Loans | Unfunded Commitments | |||||||||||
(in thousands) | ||||||||||||||
Balance at beginning of period | $ | 45,294 | $ | 1,936 | $ | 26,879 | $ | 1,881 | ||||||
Additions (deduction) | ||||||||||||||
Provision charged to operating expense | 11,383 | (67 | ) | 7,989 | 150 | |||||||||
Recoveries credited to allowance | 569 | 555 | ||||||||||||
Loans charged against the allowance | (7,335 | ) | (4,515 | ) | ||||||||||
Balance at end of period | $ | 49,911 | $ | 1,869 | $ | 30,908 | $ | 2,031 | ||||||
Net loans charged against the allowance to | ||||||||||||||
average Portfolio Loans (annualized) | 1.07 | % | 0.65 | % |
Alternative Sources of Funds
March 31, 2008 | December 31, 2007 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amount | Average Maturity | Rate | Amount | Average Maturity | Rate | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Brokered CDs(1,2) | $ | 247,603 | 2.1 years | 4.60 | % | $ | 516,077 | 1.9 years | 4.72 | % | ||||||||||
Fixed rate FHLB advances(1) | 351,754 | 1.7 years | 3.80 | 240,509 | 1.3 years | 4.81 | ||||||||||||||
Variable rate FHLB advances(1) | 20,000 | .3 years | 4.35 | |||||||||||||||||
Securities sold under agreements to | ||||||||||||||||||||
Repurchase(1) | 35,000 | 2.7 years | 4.42 | 35,000 | 2.9 years | 4.42 | ||||||||||||||
FRB - Discount borrowing | 150,000 | .1 years | 2.68 | |||||||||||||||||
Federal funds purchased | 45,831 | 1 day | 2.50 | 54,452 | 1 day | 4.00 | ||||||||||||||
Total | $ | 830,188 | 1.5 years | 3.79 | % | $ | 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
March 31, 2008 | December 31, 2007 | |||||||
---|---|---|---|---|---|---|---|---|
(dollars in thousands) | ||||||||
Unsecured debt | $ | 2,500 | $ | 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 | 22,765 | 22,601 | ||||||
Capital surplus | 196,675 | 195,302 | ||||||
Retained earnings | 19,062 | 22,770 | ||||||
Accumulated other comprehensive income (loss) | 38 | (171 | ) | |||||
Total shareholders' equity | 238,540 | 240,502 | ||||||
Total capitalization | $ | 331,140 | $ | 333,602 | ||||
Non-Interest Income
Three months ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2008 | December 31, 2007 | March 31, 2007 | |||||||||
(in thousands) | |||||||||||
Service charges on deposit accounts | $ | 5,647 | $ | 6,418 | $ | 4,888 | |||||
Net gains (losses) on assets | |||||||||||
Mortgage loans | 1,867 | 904 | 1,081 | ||||||||
Securities | (2,163 | ) | (964 | ) | 79 | ||||||
VISA check card interchange income | 1,371 | 1,376 | 950 | ||||||||
Mortgage loan servicing | (323 | ) | 364 | 527 | |||||||
Mutual fund and annuity commissions | 424 | 609 | 479 | ||||||||
Bank owned life insurance | 478 | 462 | 449 | ||||||||
Title insurance fees | 417 | 344 | 414 | ||||||||
Manufactured home loan origination fees | |||||||||||
and commissions | 114 | ||||||||||
Other | 1,774 | 1,660 | 1,689 | ||||||||
Total non-interest income | $ | 9,492 | $ | 11,173 | $ | 10,670 | |||||
Mortgage Loan Activity
Three months ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2008 | December 31, 2007 | March 31, 2007 | |||||||||
(in thousands) | |||||||||||
Mortgage loans originated | $ | 118,242 | $ | 147,220 | $ | 116,815 | |||||
Mortgage loans sold | 84,449 | 64,547 | 69,212 | ||||||||
Mortgage loans sold with servicing | |||||||||||
rights released | 7,882 | 9,379 | 11,679 | ||||||||
Net gains on the sale of Mortgage loans | 1,867 | 904 | 1,081 | ||||||||
Net gains as a percent of Mortgage | |||||||||||
loans sold ("Loan Sale Margin") | 2.21 | % | 1.40 | % | 1.56 | % | |||||
SFAS #133/159 adjustments included in the Loan | |||||||||||
Sale Margin | 0.97 | (0.18 | ) | (0.04 | ) |
Capitalized Mortgage Loan Servicing Rights
Three months ended March 31, | ||||||||
---|---|---|---|---|---|---|---|---|
2008 | 2007 | |||||||
(in thousands) | ||||||||
Balance at beginning of period | $ | 15,780 | $ | 14,782 | ||||
Originated servicing rights capitalized | 878 | 686 | ||||||
Amortization | (636 | ) | (407 | ) | ||||
(Increase)/decrease in impairment reserve | (725 | ) | (100 | ) | ||||
Balance at end of period | $ | 15,297 | $ | 14,961 | ||||
Impairment reserve at end of period | $ | 1,044 | $ | 168 | ||||
Non-Interest Expense
Three months ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2008 | December 31, 2007 | March 31, 2007 | |||||||||
(in thousands) | |||||||||||
Salaries | $ | 10,156 | $ | 9,825 | $ | 10,001 | |||||
Performance-based compensation and benefits | 1,304 | 1,218 | 1,321 | ||||||||
Other benefits | 2,724 | 2,395 | 2,646 | ||||||||
Compensation and employee benefits | 14,184 | 13,438 | 13,968 | ||||||||
Occupancy, net | 3,114 | 2,754 | 2,614 | ||||||||
Loan and collection | 1,925 | 1,437 | 1,006 | ||||||||
Furniture, fixtures and equipment | 1,817 | 1,944 | 1,900 | ||||||||
Data processing | 1,725 | 1,854 | 1,438 | ||||||||
Advertising | 1,100 | 1,549 | 1,152 | ||||||||
Credit card and bank service fees | 1,046 | 1,037 | 967 | ||||||||
Communications | 1,015 | 1,003 | 830 | ||||||||
Deposit insurance | 833 | 268 | 87 | ||||||||
Amortization of intangible assets | 793 | 934 | 570 | ||||||||
Supplies | 543 | 633 | 607 | ||||||||
Legal and professional | 418 | 511 | 506 | ||||||||
Branch acquisition and conversion costs | 422 | ||||||||||
Goodwill impairment | 343 | ||||||||||
Other | 1,738 | 2,223 | 1,556 | ||||||||
Total non-interest expense | $ | 30,251 | $ | 29,585 | $ | 27,966 | |||||
Average Balances and Tax Equivalent Rates
Three Months Ended March 31, | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2008 | 2007 | |||||||||||||||||||
Average Balance | Interest | Rate | Average Interest | Interest | Rate | |||||||||||||||
Assets | (dollars in thousands) | |||||||||||||||||||
Taxable loans(1) | $ | 2,564,643 | $ | 48,013 | 7.52 | % | $ | 2,509,746 | $ | 49,849 | 8.02 | % | ||||||||
Tax-exempt loans(1,2) | 9,628 | 174 | 7.27 | 9,513 | 160 | 6.82 | ||||||||||||||
Taxable securities | 162,170 | 2,304 | 5.71 | 185,139 | 2,477 | 5.43 | ||||||||||||||
Tax-exempt securities(2) | 204,890 | 3,586 | 7.04 | 238,654 | 4,121 | 7.00 | ||||||||||||||
Other investments | 24,522 | 357 | 5.86 | 25,563 | 314 | 4.98 | ||||||||||||||
Interest Earning Assets - | ||||||||||||||||||||
Continuing Operations | 2,965,853 | 54,434 | 7.37 | 2,968,615 | 56,921 | 7.74 | ||||||||||||||
Cash and due from banks | 52,459 | 53,228 | ||||||||||||||||||
Taxable loans - discontinued operations | 33,084 | |||||||||||||||||||
Other assets, net | 225,950 | 205,532 | ||||||||||||||||||
Total Assets | $ | 3,244,262 | $ | 3,260,459 | ||||||||||||||||
Liabilities | ||||||||||||||||||||
Savings and NOW | $ | 998,429 | 3,565 | 1.44 | $ | 903,426 | 4,249 | 1.91 | ||||||||||||
Time deposits | 1,099,345 | 12,647 | 4.63 | 1,506,171 | 18,159 | 4.89 | ||||||||||||||
Long-term debt | 994 | 12 | 4.86 | 2,994 | 34 | 4.61 | ||||||||||||||
Other borrowings | 529,439 | 6,425 | 4.88 | 199,667 | 3,270 | 6.64 | ||||||||||||||
Interest Bearing Liabilities- | ||||||||||||||||||||
Continuing Operations | 2,628,207 | 22,649 | 3.47 | 2,612,258 | 25,712 | 3.99 | ||||||||||||||
Demand deposits | 289,814 | 282,172 | ||||||||||||||||||
Time deposits - discontinued operations | 24,732 | |||||||||||||||||||
Other liabilities | 83,426 | 81,636 | ||||||||||||||||||
Shareholders' equity | 242,815 | 259,661 | ||||||||||||||||||
Total liabilities and shareholders' equity | $ | 3,244,262 | $ | 3,260,459 | ||||||||||||||||
Tax Equivalent Net Interest Income | $ | 31,785 | $ | 31,209 | ||||||||||||||||
Tax Equivalent Net Interest Income | ||||||||||||||||||||
as a Percent of Earning Assets | 4.30 | % | 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% |
Commercial Loan Portfolio Analysis as of March 31, 2008
Total Commercial Loans Watch Credits | Percent of | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Loan | |||||||||||||||||
Loan Category | All Loans | Performing | Non- performing | Total | Category in Watch Credit | ||||||||||||
(dollars in thousands) | |||||||||||||||||
Land | $ | 32,332 | $ | 10,494 | $ | 11,183 | $ | 21,677 | 67.0 | % | |||||||
Land Development | 48,587 | 9,771 | 20,858 | 30,629 | 63.0 | % | |||||||||||
Construction | 95,015 | 22,577 | 13,863 | 36,440 | 38.4 | % | |||||||||||
Income Producing | 340,579 | 37,805 | 12,229 | 50,034 | 14.7 | % | |||||||||||
Owner Occupied | 339,147 | 42,844 | 10,248 | 53,092 | 15.7 | % | |||||||||||
Total Commercial Real Estate Loans(1) | $ | 855,660 | $ | 123,491 | $ | 68,381 | $ | 191,872 | 22.4 | % | |||||||
Other Commercial Loans(1) | $ | 195,601 | $ | 22,723 | $ | 3,344 | $ | 26,067 | 13.3 | % | |||||||
Total non-performing commercial loans | $ | 71,725 | |||||||||||||||
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 | $ | 20,536 | $ | 1,211 | $ | 15,449 | $ | 16,660 | 81.1 | % | |||||||
Land Development | 18,725 | 13,038 | 13,038 | 69.6 | % | ||||||||||||
Construction | 25,751 | 5,673 | 4,570 | 10,243 | 39.8 | % | |||||||||||
Income Producing | 109,773 | 13,755 | 6,358 | 20,113 | 18.3 | % | |||||||||||
Owner Occupied | 93,502 | 8,004 | 6,920 | 14,924 | 16.0 | % | |||||||||||
Total Commercial Real Estate Loans | $ | 268,287 | $ | 28,643 | $ | 46,335 | $ | 74,978 | 27.9 | % | |||||||
Other Commercial Loans | $ | 61,226 | $ | 12,508 | $ | 1,077 | $ | 13,585 | 22.2 | % | |||||||
Total non-performing commercial loans in | |||||||||||||||||
Southeastern Michigan | $ | 47,412 | |||||||||||||||
(1) | The total of these two categories is different than the March 31, 2008, Consolidated Statement of Financial Condition due primarily to loans in process. |