Independent Bank (IBCP) 8-K Independent Bank Corporation Reports 2010 Third Quarter Results

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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