Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Non-performing assets(1) | (dollars in thousands) | |||||||
Non-accrual loans | $ | 69,634 | $ | 105,965 | ||||
Loans 90 days or more past due and still accruing interest | 493 | 3,940 | ||||||
Total non-performing loans | 70,127 | 109,905 | ||||||
Other real estate and repossessed assets | 44,953 | 31,534 | ||||||
Total non-performing assets | $ | 115,080 | $ | 141,439 | ||||
As a percent of Portfolio Loans | ||||||||
Non-performing loans | 3.67 | % | 4.78 | % | ||||
Allowance for loan losses | 3.75 | 3.55 | ||||||
Non-performing assets to total assets | 4.20 | 4.77 | ||||||
Allowance for loan losses as a percent of non-performing loans | 102.31 | 74.35 |
(1) | Excludes loans that are classified as “troubled debt restructured” that are still performing. |
Nine months ended | ||||||||||||||||
September 30, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Unfunded | Unfunded | |||||||||||||||
Loans | Commitments | Loans | Commitments | |||||||||||||
Allowance for loan losses | (dollars in thousands) | |||||||||||||||
Balance at beginning of period | $ | 81,717 | $ | 1,858 | $ | 57,900 | $ | 2,144 | ||||||||
Additions (deduction) | ||||||||||||||||
Provision for loan losses | 39,237 | — | 78,208 | — | ||||||||||||
Recoveries credited to allowance | 2,656 | — | 2,130 | — | ||||||||||||
Loans charged against the allowance | (51,866 | ) | — | (64,528 | ) | — | ||||||||||
Additions (deductions) included in non-interest expense | — | (471 | ) | — | (292 | ) | ||||||||||
Balance at end of period | $ | 71,744 | $ | 1,387 | $ | 73,710 | $ | 1,852 | ||||||||
Net loans charged against the allowance to average Portfolio Loans (annualized) | 3.13 | % | 3.41 | % |
September 30, | December 31, | |||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Amount | Maturity | Rate | Amount | Maturity | Rate | |||||||||||||||||||
Alternative Sources of Funds | (dollars in thousands) | |||||||||||||||||||||||
Brokered CDs | $ | 347,639 | 2.4 years | 2.97 | % | $ | 629,150 | 2.2 years | 2.46 | % | ||||||||||||||
Fixed rate FHLB advances | 23,101 | 5.6 years | 6.41 | 27,382 | 5.5 years | 6.59 | ||||||||||||||||||
Variable rate FHLB advances | 75,000 | 1.0 years | 0.55 | 67,000 | 1.4 years | 0.32 | ||||||||||||||||||
Securities sold under agreements to repurchase | 35,000 | .1 years | 4.42 | 35,000 | .9 years | 4.42 | ||||||||||||||||||
Total | $ | 480,740 | 2.2 years | 2.87 | % | $ | 758,532 | 2.2 years | 2.51 | % | ||||||||||||||
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September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Capitalization | (in thousands) | |||||||
Subordinated debentures | $ | 50,175 | $ | 92,888 | ||||
Amount not qualifying as regulatory capital | (1,507 | ) | (2,788 | ) | ||||
Amount qualifying as regulatory capital | 48,668 | 90,100 | ||||||
Shareholders’ Equity | ||||||||
Preferred stock | 71,566 | 69,157 | ||||||
Common stock | 250,861 | 2,386 | ||||||
Capital surplus | — | 223,095 | ||||||
Accumulated deficit | (184,961 | ) | (169,098 | ) | ||||
Accumulated other comprehensive loss | (12,371 | ) | (15,679 | ) | ||||
Total shareholders’ equity | 125,095 | 109,861 | ||||||
Total capitalization | $ | 173,763 | $ | 199,961 | ||||
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2010 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
Non-Interest Income | (in thousands) | |||||||||||||||||||
Service charges on deposit accounts | $ | 5,516 | $ | 5,833 | $ | 6,384 | $ | 16,624 | $ | 18,212 | ||||||||||
Net gains (losses) on assets | ||||||||||||||||||||
Mortgage loans | 3,829 | 2,372 | 2,257 | 8,044 | 8,800 | |||||||||||||||
Securities | (3 | ) | 1,363 | 121 | 1,625 | 3,787 | ||||||||||||||
Other than temporary loss on securities available for sale | ||||||||||||||||||||
Total impairment loss | (316 | ) | — | — | (434 | ) | (17 | ) | ||||||||||||
Loss recognized in other comprehensive loss | — | — | — | — | — | |||||||||||||||
Net impairment loss recognized in earnings | (316 | ) | — | — | (434 | ) | (17 | ) | ||||||||||||
VISA check card interchange income | 1,625 | 1,655 | 1,480 | 4,852 | 4,395 | |||||||||||||||
Mortgage loan servicing | (1,377 | ) | (2,043 | ) | (496 | ) | (2,988 | ) | 1,011 | |||||||||||
Mutual fund and annuity commissions | 506 | 409 | 498 | 1,304 | 1,490 | |||||||||||||||
Bank owned life insurance | 502 | 483 | 387 | 1,453 | 1,143 | |||||||||||||||
Title insurance fees | 533 | 366 | 521 | 1,393 | 1,862 | |||||||||||||||
Gain (loss) on extinguishment of debt | (20 | ) | 18,086 | — | 18,066 | — | ||||||||||||||
Other | 1,233 | 790 | 1,629 | 3,420 | 4,687 | |||||||||||||||
Total non-interest income | $ | 12,028 | $ | 29,314 | $ | 12,781 | $ | 53,359 | $ | 45,370 | ||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Capitalized Mortgage Loan Servicing Rights | (in thousands) | |||||||||||||||
Balance at beginning of period | $ | 13,022 | $ | 14,538 | $ | 15,273 | $ | 11,966 | ||||||||
Originated servicing rights capitalized | 1,084 | 1,321 | 2,539 | 4,444 | ||||||||||||
Amortization | (1,104 | ) | (716 | ) | (2,495 | ) | (3,535 | ) | ||||||||
(Increase)/decrease in impairment reserve | (1,335 | ) | (809 | ) | (3,650 | ) | 1,459 | |||||||||
Balance at end of period | $ | 11,667 | $ | 14,334 | $ | 11,667 | $ | 14,334 | ||||||||
Impairment reserve at end of period | $ | 5,952 | $ | 3,192 | $ | 5,952 | $ | 3,192 | ||||||||
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Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2010 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
Mortgage Loan Activity | (dollars in thousands) | |||||||||||||||||||
Mortgage loans originated | $ | 153,920 | $ | 93,900 | $ | 110,229 | $ | 337,827 | $ | 461,764 | ||||||||||
Mortgage loans sold | 124,383 | 87,583 | 144,518 | 299,674 | 445,327 | |||||||||||||||
Mortgage loans sold with servicing rights released | 20,411 | 20,747 | 20,676 | 53,022 | 35,279 | |||||||||||||||
Net gains on the sale of mortgage loans | 3,829 | 2,372 | 2,257 | 8,044 | 8,800 | |||||||||||||||
Net gains as a percent of mortgage loans sold (“Loan Sales Margin”) | 3.08 | % | 2.71 | % | 1.56 | % | 2.68 | % | 1.98 | % | ||||||||||
Fair value adjustments included in the Loan Sales Margin | 0.83 | 0.43 | (0.51 | ) | 0.45 | 0.06 |
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2010 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
Non-Interest Expense | (in thousands) | |||||||||||||||||||
Salaries | $ | 10,336 | $ | 10,242 | $ | 10,205 | $ | 30,754 | $ | 29,689 | ||||||||||
Performance-based compensation and benefits | 357 | 655 | 1,067 | 1,656 | 2,143 | |||||||||||||||
Other benefits | 2,113 | 2,533 | 2,551 | 7,039 | 7,896 | |||||||||||||||
Compensation and employee benefits | 12,806 | 13,430 | 13,823 | 39,449 | 39,728 | |||||||||||||||
Vehicle service contract counterparty contingencies | 5,968 | 4,861 | 8,713 | 14,247 | 11,728 | |||||||||||||||
Loan and collection | 3,805 | 2,785 | 3,628 | 11,376 | 10,893 | |||||||||||||||
Occupancy, net | 2,721 | 2,595 | 2,602 | 8,225 | 8,210 | |||||||||||||||
Data processing | 1,798 | 2,039 | 2,146 | 5,942 | 6,252 | |||||||||||||||
FDIC deposit insurance | 1,651 | 1,763 | 1,729 | 5,216 | 5,670 | |||||||||||||||
Furniture, fixtures and equipment | 1,591 | 1,648 | 1,727 | 4,958 | 5,424 | |||||||||||||||
Loss on other real estate and repossessed assets | 1,296 | 1,554 | 3,558 | 4,879 | 6,758 | |||||||||||||||
Credit card and bank service fees | 1,378 | 1,500 | 1,722 | 4,553 | 4,854 | |||||||||||||||
Communications | 1,054 | 1,015 | 1,152 | 3,142 | 3,304 | |||||||||||||||
Legal and professional | 831 | 894 | 732 | 2,861 | 2,078 | |||||||||||||||
Advertising | 692 | 674 | 1,335 | 2,145 | 4,198 | |||||||||||||||
Supplies | 429 | 415 | 439 | 1,237 | 1,365 | |||||||||||||||
Amortization of intangible assets | 320 | 323 | 432 | 965 | 1,407 | |||||||||||||||
Costs (recoveries) related to unfunded lending commitments | (807 | ) | 280 | (140 | ) | (471 | ) | (292 | ) | |||||||||||
Other | 1,525 | 1,389 | 1,419 | 4,634 | 4,536 | |||||||||||||||
Total non-interest expense | $ | 37,058 | $ | 37,165 | $ | 45,017 | $ | 113,358 | $ | 116,113 | ||||||||||
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Three Months Ended | ||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate(3) | Balance | Interest | Rate(3) | |||||||||||||||||||
Average Balances and Rates | (dollars in thousands) | |||||||||||||||||||||||
Assets(1) | ||||||||||||||||||||||||
Taxable loans | $ | 2,012,966 | $ | 34,269 | 6.77 | % | $ | 2,464,183 | $ | 45,190 | 7.29 | % | ||||||||||||
Tax-exempt loans(2) | 9,398 | 101 | 4.26 | 7,931 | 100 | 5.00 | ||||||||||||||||||
Taxable securities | 76,935 | 509 | 2.62 | 110,929 | 1,475 | 5.28 | ||||||||||||||||||
Tax-exempt securities(2) | 35,441 | 383 | 4.29 | 81,099 | 841 | 4.11 | ||||||||||||||||||
Cash — interest bearing | 358,183 | 260 | 0.29 | 68,373 | 29 | 0.17 | ||||||||||||||||||
Other investments | 26,443 | 165 | 2.48 | 28,087 | 270 | 3.81 | ||||||||||||||||||
Interest Earning Assets | 2,519,366 | 35,687 | 5.63 | 2,760,602 | 47,905 | 6.90 | ||||||||||||||||||
Cash and due from banks | 53,518 | 57,133 | ||||||||||||||||||||||
Other assets, net | 173,850 | 157,309 | ||||||||||||||||||||||
Total Assets | $ | 2,746,734 | $ | 2,975,044 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and NOW | $ | 1,092,202 | 648 | 0.24 | $ | 1,009,110 | 1,403 | 0.55 | ||||||||||||||||
Time deposits | 938,930 | 6,089 | 2.57 | 1,096,644 | 7,706 | 2.79 | ||||||||||||||||||
Other borrowings | 183,589 | 1,965 | 4.25 | 287,025 | 3,537 | 4.89 | ||||||||||||||||||
Interest Bearing Liabilities | 2,214,721 | 8,702 | 1.56 | 2,392,779 | 12,646 | 2.10 | ||||||||||||||||||
Demand deposits | 361,517 | 326,246 | ||||||||||||||||||||||
Other liabilities | 48,905 | 82,432 | ||||||||||||||||||||||
Shareholders’ equity | 121,591 | 173,587 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,746,734 | $ | 2,975,044 | ||||||||||||||||||||
Net Interest Income | $ | 26,985 | $ | 35,259 | ||||||||||||||||||||
Net Interest Income as a Percent of Earning Assets | 4.26 | % | 5.08 | % | ||||||||||||||||||||
(1) | All domestic, except for $0.2 million and $3.9 million for the three months ended September 30, 2010 and 2009, respectively, of average payment plan receivables included in taxable loans for customers domiciled in Canada. | |
(2) | Interest on tax-exempt loans and securities is not presented on a fully tax equivalent basis due to the current net operating loss carryforward position and the deferred tax asset valuation allowance. | |
(3) | Annualized. |
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Nine Months Ended | ||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate(3) | Balance | Interest | Rate(3) | |||||||||||||||||||
Average Balances and Rates | (dollars in thousands) | |||||||||||||||||||||||
Assets(1) | ||||||||||||||||||||||||
Taxable loans | $ | 2,126,705 | $ | 109,760 | 6.90 | % | $ | 2,490,900 | $ | 134,647 | 7.22 | % | ||||||||||||
Tax-exempt loans(2) | 9,795 | 312 | 4.26 | 8,442 | 268 | 4.24 | ||||||||||||||||||
Taxable securities | 86,830 | 2,571 | 3.96 | 114,608 | 4,913 | 5.73 | ||||||||||||||||||
Tax-exempt securities(2) | 49,516 | 1,594 | 4.30 | 90,843 | 2,924 | 4.30 | ||||||||||||||||||
Cash — interest bearing | 319,548 | 609 | 0.25 | 31,467 | 40 | 0.17 | ||||||||||||||||||
Other investments | 27,094 | 577 | 2.85 | 28,454 | 822 | 3.86 | ||||||||||||||||||
Interest Earning Assets | 2,619,488 | 115,423 | 5.89 | 2,764,714 | 143,614 | 6.94 | ||||||||||||||||||
Cash and due from banks | 53,742 | 55,871 | ||||||||||||||||||||||
Other assets, net | 160,960 | 158,753 | ||||||||||||||||||||||
Total Assets | $ | 2,834,190 | $ | 2,979,338 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and NOW | $ | 1,088,437 | 2,181 | 0.27 | $ | 976,571 | 4,477 | 0.61 | ||||||||||||||||
Time deposits | 1,028,119 | 20,283 | 2.64 | 977,943 | 21,991 | 3.01 | ||||||||||||||||||
Other borrowings | 212,901 | 7,372 | 4.63 | 443,895 | 12,021 | 3.62 | ||||||||||||||||||
Interest Bearing Liabilities | 2,329,457 | 29,836 | 1.71 | 2,398,409 | 38,489 | 2.15 | ||||||||||||||||||
Demand deposits | 343,340 | 318,633 | ||||||||||||||||||||||
Other liabilities | 55,486 | 80,010 | ||||||||||||||||||||||
Shareholders’ equity | 105,907 | 182,286 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,834,190 | $ | 2,979,338 | ||||||||||||||||||||
Net Interest Income | $ | 85,587 | $ | 105,125 | ||||||||||||||||||||
Net Interest Income as a Percent of Earning Assets | 4.37 | % | 5.08 | % | ||||||||||||||||||||
(1) | All domestic, except for $0.5 million and $6.2 million for the nine months ended September 30, 2010 and 2009, respectively, of average payment plan receivables included in taxable loans for customers domiciled in Canada. | |
(2) | Interest on tax-exempt loans and securities is not presented on a fully tax equivalent basis due to the current net operating loss carryforward position and the deferred tax asset valuation allowance. | |
(3) | Annualized. |
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Commercial Loan Portfolio Analysis as of September 30, 2010
Total Commercial Loans | ||||||||||||||||||||
Percent of | ||||||||||||||||||||
Watch Credits | Loan | |||||||||||||||||||
Non- | Category in | |||||||||||||||||||
Loan Category | All Loans | Performing | performing | Total | Watch Credit | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 27,165 | $ | 10,409 | $ | 3,092 | $ | 13,501 | 49.7 | % | ||||||||||
Land Development | 22,829 | 8,681 | 2,699 | 11,380 | 49.8 | |||||||||||||||
Construction | 20,406 | 12,851 | 2,011 | 14,862 | 72.8 | |||||||||||||||
Income Producing | 315,126 | 66,873 | 14,755 | 81,628 | 25.9 | |||||||||||||||
Owner Occupied | 192,404 | 32,700 | 4,810 | 37,510 | 19.5 | |||||||||||||||
Total Commercial Real Estate Loans(1) | $ | 577,930 | $ | 131,514 | $ | 27,367 | $ | 158,881 | 27.5 | |||||||||||
Other Commercial Loans(1) | $ | 152,542 | $ | 25,191 | 2,426 | $ | 27,617 | 18.1 | ||||||||||||
Total non-performing commercial loans | $ | 29,793 | ||||||||||||||||||
(1) | The total of these two categories is different than the September 30, 2010, Consolidated Statement of Financial Condition due primarily to loans in process. |
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