Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data |
Non-performing assets
September 30, | December 31, | |||||||
2009 | 2008 | |||||||
(dollars in thousands) | ||||||||
Non-accrual loans | $ | 113,003 | $ | 122,639 | ||||
Loans 90 days or more past due and still accruing interest | 4,468 | 2,626 | ||||||
Total non-performing loans | 117,471 | 125,265 | ||||||
Other real estate | 32,923 | 19,998 | ||||||
Total non-performing assets | $ | 150,394 | $ | 145,263 | ||||
As a percent of Portfolio Loans | ||||||||
Non-performing loans | 4.92 | % | 5.09 | % | ||||
Allowance for loan losses | 3.09 | 2.35 | ||||||
Non-performing assets to total assets | 5.07 | 4.91 | ||||||
Allowance for loan losses as a percent of non-performing loans | 63 | 46 |
Allowance for loan losses
Nine months ended | ||||||||||||||||
September 30, | ||||||||||||||||
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 | 78,208 | (292 | ) | 44,039 | (583 | ) | ||||||||||
Recoveries credited to allowance | 2,130 | 2,707 | ||||||||||||||
Loans charged against the allowance | (64,528 | ) | (38,142 | ) | ||||||||||||
Balance at end of period | $ | 73,710 | $ | 1,852 | $ | 53,898 | $ | 1,353 | ||||||||
Net loans charged against the allowance to average Portfolio Loans (annualized) | 3.41 | % | 1.85 | % |
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Alternative Sources of Funds
September 30, 2009 | December 31, 2008 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Amount | Maturity | Rate | Amount | Maturity | Rate | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Brokered CDs | $ | 529,521 | 1.8 years | 2.31 | % | $ | 182,283 | 1.1 years | 3.63 | % | ||||||||||||||
Fixed rate FHLB advances | 124,454 | 2.2 years | 2.54 | 314,214 | 2.3 years | 3.49 | ||||||||||||||||||
Securities sold under agreements to Repurchase | 35,000 | 1.1 years | 4.42 | 35,000 | 1.9 years | 4.42 | ||||||||||||||||||
FRB — Discount borrowing | 189,500 | .1 years | 0.54 | |||||||||||||||||||||
Federal funds purchased | 750 | 1 day | 0.25 | |||||||||||||||||||||
Total | $ | 688,975 | 1.8 years | 2.46 | % | $ | 721,747 | 1.4 years | 2.80 | % | ||||||||||||||
Capitalization
September 30, | 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 | 68,982 | 68,456 | ||||||
Common stock, par value $1.00 per share | 23,832 | 22,791 | ||||||
Capital surplus | 201,360 | 200,687 | ||||||
Retained earnings (accumulated deficit) | (118,268 | ) | (73,849 | ) | ||||
Accumulated other comprehensive loss | (15,965 | ) | (23,208 | ) | ||||
Total shareholders’ equity | 159,941 | 194,877 | ||||||
Total capitalization | $ | 250,041 | $ | 284,977 | ||||
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Non-Interest Income
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Service charges on deposit accounts | $ | 6,384 | $ | 6,321 | $ | 6,416 | $ | 18,212 | $ | 18,227 | ||||||||||
Net gains (losses) on assets | ||||||||||||||||||||
Mortgage loans | 2,257 | 3,262 | 969 | 8,800 | 3,977 | |||||||||||||||
Securities | 121 | 4,230 | (6,711 | ) | 3,770 | (8,037 | ) | |||||||||||||
VISA check card interchange income | 1,480 | 1,500 | 1,468 | 4,395 | 4,334 | |||||||||||||||
Mortgage loan servicing | (496 | ) | 2,349 | 340 | 1,011 | 1,545 | ||||||||||||||
Mutual fund and annuity commissions | 498 | 539 | 680 | 1,490 | 1,748 | |||||||||||||||
Bank owned life insurance | 387 | 355 | 506 | 1,143 | 1,468 | |||||||||||||||
Title insurance fees | 521 | 732 | 307 | 1,862 | 1,108 | |||||||||||||||
Other | 1,629 | 1,723 | 1,473 | 4,687 | 4,707 | |||||||||||||||
Total non-interest income | $ | 12,781 | $ | 21,011 | $ | 5,448 | $ | 45,370 | $ | 29,077 | ||||||||||
Mortgage Loan Activity
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Mortgage loans originated | $ | 110,229 | $ | 196,927 | $ | 74,506 | $ | 461,764 | $ | 304,064 | ||||||||||
Mortgage loans sold | 144,518 | 158,173 | 52,837 | 445,327 | 217,524 | |||||||||||||||
Mortgage loans sold with servicing rights released | 20,676 | 9,174 | 16,760 | 35,279 | 36,302 | |||||||||||||||
Net gains on the sale of mortgage loans | 2,257 | 3,262 | 969 | 8,800 | 3,977 | |||||||||||||||
Net gains as a percent of mortgage loans sold (“Loan Sale Margin”) | 1.56 | % | 2.06 | % | 1.83 | % | 1.98 | % | 1.82 | % | ||||||||||
SFAS #133/#159 and SAB #109 adjustments included in the Loan Sale Margin | (0.51 | ) | 0.04 | (0.03 | ) | 0.06 | 0.28 |
Capitalized Real Estate Mortgage Loan Servicing Rights
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 14,538 | $ | 16,551 | $ | 11,966 | $ | 15,780 | ||||||||
Originated servicing rights capitalized | 1,321 | 403 | 4,444 | 2,035 | ||||||||||||
Amortization | (716 | ) | (346 | ) | (3,535 | ) | (1,478 | ) | ||||||||
(Increase)/decrease in impairment reserve | (809 | ) | (348 | ) | 1,459 | (77 | ) | |||||||||
Balance at end of period | $ | 14,334 | $ | 16,260 | $ | 14,334 | $ | 16,260 | ||||||||
Impairment reserve at end of period | $ | 3,192 | $ | 396 | $ | 3,192 | $ | 396 | ||||||||
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Non-Interest Expense
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Salaries | $ | 10,205 | $ | 9,815 | $ | 10,110 | $ | 29,689 | $ | 29,993 | ||||||||||
Performance-based compensation and benefits | 1,067 | 747 | 1,336 | 2,143 | 4,083 | |||||||||||||||
Other benefits | 2,551 | 2,766 | 2,577 | 7,896 | 7,939 | |||||||||||||||
Compensation and employee benefits | 13,823 | 13,328 | 14,023 | 39,728 | 42,015 | |||||||||||||||
Vehicle service contract counterparty risk | 8,713 | 2,215 | 11,728 | |||||||||||||||||
Loan and collection | 3,628 | 3,227 | 2,008 | 10,893 | 5,895 | |||||||||||||||
Occupancy, net | 2,602 | 2,560 | 2,871 | 8,210 | 8,798 | |||||||||||||||
Data processing | 2,146 | 2,010 | 1,760 | 6,252 | 5,197 | |||||||||||||||
Deposit insurance | 1,729 | 2,755 | 275 | 5,670 | 1,526 | |||||||||||||||
Furniture, fixtures and equipment | 1,727 | 1,848 | 1,662 | 5,424 | 5,304 | |||||||||||||||
Loss on other real estate and repossessed assets | 1,958 | 1,939 | 425 | 5,158 | 2,091 | |||||||||||||||
Credit card and bank service fees | 1,722 | 1,668 | 1,273 | 4,854 | 3,493 | |||||||||||||||
Advertising | 1,335 | 1,421 | 1,575 | 4,198 | 3,843 | |||||||||||||||
Communications | 1,152 | 1,107 | 968 | 3,304 | 3,004 | |||||||||||||||
Legal and professional | 732 | 705 | 527 | 2,078 | 1,408 | |||||||||||||||
Amortization of intangible assets | 432 | 474 | 760 | 1,407 | 2,314 | |||||||||||||||
Supplies | 439 | 457 | 519 | 1,365 | 1,534 | |||||||||||||||
Other | 1,419 | 1,343 | 2,010 | 4,536 | 5,676 | |||||||||||||||
Total non-interest expense | $ | 43,557 | $ | 37,057 | $ | 30,656 | $ | 114,805 | $ | 92,098 | ||||||||||
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Average Balances and Tax Equivalent Rates
Three Months Ended | ||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Assets(1) | ||||||||||||||||||||||||
Taxable loans | $ | 2,464,183 | $ | 45,190 | 7.29 | % | $ | 2,584,151 | $ | 46,294 | 7.14 | % | ||||||||||||
Tax-exempt loans(2) | 7,931 | 153 | 7.65 | 11,953 | 205 | 6.82 | ||||||||||||||||||
Taxable securities | 110,929 | 1,475 | 5.28 | 142,483 | 2,078 | 5.80 | ||||||||||||||||||
Tax-exempt securities(2) | 81,099 | 1,285 | 6.29 | 145,911 | 2,630 | 7.17 | ||||||||||||||||||
Cash — interest bearing | 68,373 | 29 | 0.17 | |||||||||||||||||||||
Other investments | 28,087 | 270 | 3.81 | 45,362 | 466 | 4.09 | ||||||||||||||||||
Interest Earning Assets | 2,760,602 | 48,402 | 6.97 | 2,929,860 | 51,673 | 7.02 | ||||||||||||||||||
Cash and due from banks | 57,133 | 56,922 | ||||||||||||||||||||||
Other assets, net | 157,309 | 224,626 | ||||||||||||||||||||||
Total Assets | $ | 2,975,044 | $ | 3,211,408 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and NOW | $ | 1,009,110 | 1,403 | 0.55 | $ | 966,415 | 2,262 | 0.93 | ||||||||||||||||
Time deposits | 1,096,644 | 7,706 | 2.79 | 814,434 | 7,315 | 3.57 | ||||||||||||||||||
Other borrowings | 287,025 | 3,537 | 4.89 | 790,353 | 7,099 | 3.57 | ||||||||||||||||||
Interest Bearing Liabilities | 2,392,779 | 12,646 | 2.10 | 2,571,202 | 16,676 | 2.58 | ||||||||||||||||||
Demand deposits | 326,246 | 314,116 | ||||||||||||||||||||||
Other liabilities | 82,432 | 89,951 | ||||||||||||||||||||||
Shareholders’ equity | 173,587 | 236,139 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,975,044 | $ | 3,211,408 | ||||||||||||||||||||
Tax Equivalent Net Interest Income | $ | 35,756 | $ | 34,997 | ||||||||||||||||||||
Tax Equivalent Net Interest Income as a Percent of Earning Assets | 5.15 | % | 4.76 | % | ||||||||||||||||||||
(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% |
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Average Balances and Tax Equivalent Rates
Nine Months Ended | ||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Assets(1) | ||||||||||||||||||||||||
Taxable loans | $ | 2,490,900 | $ | 134,647 | 7.22 | % | $ | 2,575,809 | $ | 140,925 | 7.30 | % | ||||||||||||
Tax-exempt loans(2) | 8,442 | 412 | 6.53 | 10,969 | 582 | 7.09 | ||||||||||||||||||
Taxable securities | 114,608 | 4,913 | 5.73 | 152,812 | 6,558 | 5.73 | ||||||||||||||||||
Tax-exempt securities(2) | 90,843 | 4,571 | 6.73 | 179,914 | 9,562 | 7.10 | ||||||||||||||||||
Cash — interest bearing | 31,467 | 40 | 0.17 | |||||||||||||||||||||
Other investments | 28,454 | 822 | 3.86 | 32,553 | 1,185 | 4.86 | ||||||||||||||||||
Interest Earning Assets | 2,764,714 | 145,405 | 7.03 | 2,952,057 | 158,812 | 7.18 | ||||||||||||||||||
Cash and due from banks | 55,871 | 53,354 | ||||||||||||||||||||||
Other assets, net | 158,753 | 226,367 | ||||||||||||||||||||||
Total Assets | $ | 2,979,338 | $ | 3,231,778 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and NOW | $ | 976,571 | 4,477 | 0.61 | $ | 985,938 | 8,281 | 1.12 | ||||||||||||||||
Time deposits | 977,943 | 21,991 | 3.01 | 928,304 | 28,699 | 4.13 | ||||||||||||||||||
Long-term debt | 330 | 12 | 4.86 | |||||||||||||||||||||
Other borrowings | 443,895 | 12,021 | 3.62 | 689,296 | 20,499 | 3.97 | ||||||||||||||||||
Interest Bearing Liabilities | 2,398,409 | 38,489 | 2.15 | 2,603,868 | 57,491 | 2.95 | ||||||||||||||||||
Demand deposits | 318,633 | 300,411 | ||||||||||||||||||||||
Other liabilities | 80,010 | 87,530 | ||||||||||||||||||||||
Shareholders’ equity | 182,286 | 239,969 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,979,338 | $ | 3,231,778 | ||||||||||||||||||||
Tax Equivalent Net Interest Income | $ | 106,916 | $ | 101,321 | ||||||||||||||||||||
Tax Equivalent Net Interest Income as a Percent of Earning Assets | 5.17 | % | 4.58 | % | ||||||||||||||||||||
(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% |
17
Commercial Loan Portfolio Analysis as of September 30, 2009
Total Commercial Loans | ||||||||||||||||||||
Percent of | ||||||||||||||||||||
Watch Credits | Loan | |||||||||||||||||||
Non- | Category in Watch | |||||||||||||||||||
Loan Category | All Loans | Performing | performing | Total | Credit | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 28,984 | $ | 6,158 | $ | 6,629 | $ | 12,787 | 44.1 | % | ||||||||||
Land Development | 34,320 | 10,475 | 13,208 | 23,683 | 69.0 | % | ||||||||||||||
Construction | 32,010 | 4,541 | 7,880 | 12,421 | 38.8 | % | ||||||||||||||
Income Producing | 385,420 | 76,497 | 18,506 | 95,003 | 24.6 | % | ||||||||||||||
Owner Occupied | 195,454 | 27,642 | 8,525 | 36,167 | 18.5 | % | ||||||||||||||
Total Commercial Real Estate Loans(1) | $ | 676,188 | $ | 125,313 | $ | 54,748 | $ | 180,061 | 26.6 | % | ||||||||||
Other Commercial Loans(1) | $ | 184,774 | $ | 27,812 | 2,045 | $ | 29,857 | 16.2 | % | |||||||||||
Total non-performing commercial loans | $ | 56,793 | ||||||||||||||||||
(1) | The total of these two categories is different than the September 30, 2009, Consolidated Statement of Financial Condition due primarily to loans in process. |
18