Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Supplemental Data
Non-performing assets
June 30, | December 31, | |||||||
2008 | 2007 | |||||||
(dollars in thousands) | ||||||||
Non-accrual loans | $ | 109,844 | $ | 72,682 | ||||
Loans 90 days or more past due and still accruing interest | 1,560 | 4,394 | ||||||
Restructured loans | 173 | |||||||
Total non-performing loans | 111,404 | 77,249 | ||||||
Other real estate | 11,098 | 9,723 | ||||||
Total non-performing assets | $ | 122,502 | $ | 86,972 | ||||
As a percent of Portfolio Loans | ||||||||
Non-performing loans | 4.34 | % | 3.03 | % | ||||
Allowance for loan losses | 1.99 | 1.78 | ||||||
Non-performing assets to total assets | 3.78 | 2.65 | ||||||
Allowance for loan losses as a percent of non-performing loans | 46 | 59 |
Allowance for loan losses
Six months ended | ||||||||||||||||
June 30, | ||||||||||||||||
2008 | 2007 | |||||||||||||||
Unfunded | Unfunded | |||||||||||||||
Loans | Commitments | Loans | Commitments | |||||||||||||
(in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 45,294 | $ | 1,936 | $ | 26,879 | $ | 1,881 | ||||||||
Additions (deduction) | ||||||||||||||||
Provision charged to operating expense | 23,875 | (207 | ) | 22,658 | 374 | |||||||||||
Recoveries credited to allowance | 1,099 | 1,140 | ||||||||||||||
Loans charged against the allowance | (19,164 | ) | (12,464 | ) | ||||||||||||
Balance at end of period | $ | 51,104 | $ | 1,729 | $ | 38,213 | $ | 2,255 | ||||||||
Net loans charged against the allowance to average Portfolio Loans (annualized) | 1.43 | % | 0.92 | % |
Alternative Sources of Funds
June 30, | December 31, | |||||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Amount | Maturity | Rate | Amount | Maturity | Rate | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Brokered CDs(1,2) | $ | 112,539 | 1.8 years | 4.24 | % | $ | 516,077 | 1.9 years | 4.72 | % | ||||||||||||||
Fixed rate FHLB advances(1) | 396,925 | 2.1 years | 3.15 | 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 | 2.4 years | 4.42 | 35,000 | 2.9 years | 4.42 | ||||||||||||||||||
FRB — Discount borrowing | 269,000 | .2 years | 2.25 | |||||||||||||||||||||
Federal funds purchased | 40,671 | 1 day | 2.25 | 54,452 | 1 day | 4.00 | ||||||||||||||||||
Total | $ | 854,135 | 1.4 years | 3.02 | % | $ | 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
June 30, | December 31, | |||||||
2008 | 2007 | |||||||
(in thousands) | ||||||||
Unsecured debt | $ | 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 | 22,773 | 22,601 | ||||||
Capital surplus | 196,819 | 195,302 | ||||||
Retained earnings | 22,178 | 22,770 | ||||||
Accumulated other comprehensive income (loss) | (3,500 | ) | (171 | ) | ||||
Total shareholders’ equity | 238,270 | 240,502 | ||||||
Total capitalization | $ | 328,370 | $ | 333,602 | ||||
2
Non-Interest Income
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2008 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Service charges on deposit accounts | $ | 6,164 | $ | 5,647 | $ | 6,380 | $ | 11,811 | $ | 11,268 | ||||||||||
Net gains (losses) on assets | ||||||||||||||||||||
Mortgage loans | 1,141 | 1,867 | 1,238 | 3,008 | 2,319 | |||||||||||||||
Securities | 837 | (2,163 | ) | 128 | (1,326 | ) | 207 | |||||||||||||
VISA check card interchange income | 1,495 | 1,371 | 1,292 | 2,866 | 2,242 | |||||||||||||||
Mortgage loan servicing | 1,528 | (323 | ) | 712 | 1,205 | 1,239 | ||||||||||||||
Mutual fund and annuity commissions | 644 | 424 | 467 | 1,068 | 946 | |||||||||||||||
Bank owned life insurance | 484 | 478 | 448 | 962 | 897 | |||||||||||||||
Title insurance fees | 384 | 417 | 430 | 801 | 844 | |||||||||||||||
Manufactured home loan origination fees and commissions | 115 | 229 | ||||||||||||||||||
Other | 1,460 | 1,774 | 1,563 | 3,234 | 3,252 | |||||||||||||||
Total non-interest income | $ | 14,137 | $ | 9,492 | $ | 12,773 | $ | 23,629 | $ | 23,443 | ||||||||||
Mortgage Loan Activity
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2008 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Mortgage loans originated | $ | 111,316 | $ | 118,242 | $ | 129,613 | $ | 229,558 | $ | 246,428 | ||||||||||
Mortgage loans sold | 80,238 | 84,449 | 77,913 | 164,687 | 147,125 | |||||||||||||||
Mortgage loans sold with servicing rights released | 11,660 | 7,882 | 12,604 | 19,542 | 24,283 | |||||||||||||||
Net gains on the sale of mortgage loans | 1,141 | 1,867 | 1,238 | 3,008 | 2,319 | |||||||||||||||
Net gains as a percent of mortgage loans sold (“Loan Sale Margin”) | 1.42 | % | 2.21 | % | 1.59 | % | 1.83 | % | 1.58 | % | ||||||||||
SFAS #133/#159 adjustments included in the Loan Sale Margin | (0.25 | ) | 0.97 | 0.00 | 0.38 | 0.00 |
Capitalized Real Estate Mortgage Loan Servicing Rights
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 15,297 | $ | 14,961 | $ | 15,780 | $ | 14,782 | ||||||||
Originated servicing rights capitalized | 754 | 776 | 1,632 | 1,462 | ||||||||||||
Amortization | (496 | ) | (432 | ) | (1,132 | ) | (839 | ) | ||||||||
(Increase)/decrease in impairment reserve | 996 | 138 | 271 | 38 | ||||||||||||
Balance at end of period | $ | 16,551 | $ | 15,443 | $ | 16,551 | $ | 15,443 | ||||||||
Impairment reserve at end of period | $ | 48 | $ | 30 | $ | 48 | $ | 30 | ||||||||
3
Non-Interest Expense
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2008 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Salaries | $ | 9,727 | $ | 10,156 | $ | 10,776 | $ | 19,883 | $ | 20,777 | ||||||||||
Performance-based compensation and benefits | 1,443 | 1,304 | 1,153 | 2,747 | 2,474 | |||||||||||||||
Other benefits | 2,638 | 2,724 | 2,855 | 5,362 | 5,501 | |||||||||||||||
Compensation and employee benefits | 13,808 | 14,184 | 14,784 | 27,992 | 28,752 | |||||||||||||||
Occupancy, net | 2,813 | 3,114 | 2,735 | 5,927 | 5,349 | |||||||||||||||
Loan and collection | 2,031 | 1,856 | 1,221 | 3,887 | 2,227 | |||||||||||||||
Furniture, fixtures and equipment | 1,825 | 1,817 | 1,991 | 3,642 | 3,891 | |||||||||||||||
Data processing | 1,712 | 1,725 | 1,912 | 3,437 | 3,350 | |||||||||||||||
Loss on other real estate and repossessed assets | 1,560 | 106 | 68 | 1,666 | 92 | |||||||||||||||
Advertising | 1,168 | 1,100 | 1,341 | 2,268 | 2,493 | |||||||||||||||
Credit card and bank service fees | 1,174 | 1,046 | 970 | 2,220 | 1,937 | |||||||||||||||
Communications | 1,021 | 1,015 | 1,014 | 2,036 | 1,844 | |||||||||||||||
Deposit insurance | 418 | 833 | 173 | 1,251 | 260 | |||||||||||||||
Amortization of intangible assets | 761 | 793 | 935 | 1,554 | 1,505 | |||||||||||||||
Supplies | 472 | 543 | 581 | 1,015 | 1,188 | |||||||||||||||
Legal and professional | 463 | 418 | 457 | 881 | 963 | |||||||||||||||
Branch acquisition and conversion costs | (92 | ) | 330 | |||||||||||||||||
Goodwill impairment | 343 | |||||||||||||||||||
Other | 1,965 | 1,701 | 1,711 | 3,666 | 3,243 | |||||||||||||||
Total non-interest expense | $ | 31,191 | $ | 30,251 | $ | 29,801 | $ | 61,442 | $ | 57,767 | ||||||||||
4
Average Balances and Tax Equivalent Rates
Three Months Ended | ||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Taxable loans(1) | $ | 2,578,668 | $ | 46,618 | 7.26 | % | $ | 2,523,614 | $ | 50,468 | 8.01 | % | ||||||||||||
Tax-exempt loans(1,2) | 11,316 | 203 | 7.22 | 9,761 | 166 | 6.82 | ||||||||||||||||||
Taxable securities | 153,895 | 2,176 | 5.69 | 202,342 | 2,592 | 5.14 | ||||||||||||||||||
Tax-exempt securities(2) | 189,313 | 3,346 | 7.11 | 230,873 | 4,069 | 7.07 | ||||||||||||||||||
Other investments | 27,633 | �� | 362 | 5.27 | 38,068 | 464 | 4.89 | |||||||||||||||||
Interest Earning Assets - Continuing Operations | 2,960,825 | 52,705 | 7.15 | 3,004,658 | 57,759 | 7.70 | ||||||||||||||||||
Cash and due from banks | 50,637 | 49,947 | ||||||||||||||||||||||
Taxable loans — discontinued operations | 744 | |||||||||||||||||||||||
Other assets, net | 228,550 | 230,147 | ||||||||||||||||||||||
Total Assets | $ | 3,240,012 | $ | 3,285,496 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and NOW | $ | 993,186 | 2,454 | 0.99 | $ | 994,116 | 4,728 | 1.91 | ||||||||||||||||
Time deposits | 872,385 | 8,737 | 4.03 | 1,521,496 | 18,650 | 4.92 | ||||||||||||||||||
Long-term debt | 2,495 | 29 | 4.66 | |||||||||||||||||||||
Other borrowings | 746,983 | 6,975 | 3.76 | 129,781 | 2,284 | 7.06 | ||||||||||||||||||
Interest Bearing Liabilities- Continuing Operations | 2,612,554 | 18,166 | 2.80 | 2,647,888 | 25,691 | 3.89 | ||||||||||||||||||
Demand deposits | 297,151 | 300,329 | ||||||||||||||||||||||
Time deposits — discontinued operations | 527 | |||||||||||||||||||||||
Other liabilities | 89,299 | 82,591 | ||||||||||||||||||||||
Shareholders’ equity | 241,008 | 254,161 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,240,012 | $ | 3,285,496 | ||||||||||||||||||||
Tax Equivalent Net Interest Income | $ | 34,539 | $ | 32,068 | ||||||||||||||||||||
Tax Equivalent Net Interest Income as a Percent of Earning Assets | 4.68 | % | 4.27 | % | ||||||||||||||||||||
(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
Six Months Ended | ||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Taxable loans(1) | $ | 2,571,593 | $ | 94,631 | 7.39 | % | $ | 2,517,273 | $ | 100,317 | 8.01 | % | ||||||||||||
Tax-exempt loans(1,2) | 10,472 | 377 | 7.24 | 9,639 | 326 | 6.82 | ||||||||||||||||||
Taxable securities | 158,032 | 4,480 | 5.70 | 193,787 | 5,069 | 5.27 | ||||||||||||||||||
Tax-exempt securities(2) | 197,102 | 6,932 | 7.07 | 234,741 | 8,190 | 7.04 | ||||||||||||||||||
Other investments | 26,077 | 719 | 5.54 | 31,850 | 778 | 4.93 | ||||||||||||||||||
Interest Earning Assets - Continuing Operations | 2,963,276 | 107,139 | 7.26 | 2,987,290 | 114,680 | 7.72 | ||||||||||||||||||
Cash and due from banks | 51,549 | 51,907 | ||||||||||||||||||||||
Taxable loans — discontinued operations | 16,737 | |||||||||||||||||||||||
Other assets, net | 227,250 | 218,120 | ||||||||||||||||||||||
Total Assets | $ | 3,242,075 | $ | 3,274,054 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and NOW | $ | 995,808 | 6,019 | 1.22 | $ | 949,021 | 8,977 | 1.91 | ||||||||||||||||
Time deposits | 985,865 | 21,384 | 4.36 | 1,514,266 | 36,809 | 4.90 | ||||||||||||||||||
Long-term debt | 497 | 12 | 4.86 | 2,743 | 63 | 4.63 | ||||||||||||||||||
Other borrowings | 638,211 | 13,400 | 4.22 | 164,529 | 5,554 | 6.81 | ||||||||||||||||||
Interest Bearing Liabilities- Continuing Operations | 2,620,381 | 40,815 | 3.13 | 2,630,559 | 51,403 | 3.94 | ||||||||||||||||||
Demand deposits | 293,483 | 291,598 | ||||||||||||||||||||||
Time deposits — discontinued operations | 12,173 | |||||||||||||||||||||||
Other liabilities | 86,306 | 82,828 | ||||||||||||||||||||||
Shareholders’ equity | 241,905 | 256,896 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,242,075 | $ | 3,274,054 | ||||||||||||||||||||
Tax Equivalent Net Interest Income | $ | 66,324 | $ | 63,277 | ||||||||||||||||||||
Tax Equivalent Net Interest Income as a Percent of Earning Assets | 4.49 | % | 4.25 | % | ||||||||||||||||||||
(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 June 30, 2008
Total Commercial Loans | ||||||||||||||||||||
Percent of | ||||||||||||||||||||
Watch Credits | Loan | |||||||||||||||||||
Non- | Category in | |||||||||||||||||||
Loan Category | All Loans | Performing | performing | Total | Watch Credit | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 47,448 | $ | 14,169 | $ | 10,785 | $ | 24,954 | 52.6 | % | ||||||||||
Land Development | 71,588 | 18,822 | 21,807 | 40,629 | 56.8 | % | ||||||||||||||
Construction | 67,181 | 9,915 | 6,601 | 16,516 | 24.6 | % | ||||||||||||||
Income Producing | 432,576 | 65,234 | 25,045 | 90,279 | 20.9 | % | ||||||||||||||
Owner Occupied | 227,863 | 21,307 | 6,392 | 27,699 | 12.2 | % | ||||||||||||||
Total Commercial Real Estate Loans(1) | $ | 846,656 | $ | 129,447 | $ | 70,630 | $ | 200,077 | 23.6 | % | ||||||||||
�� | ||||||||||||||||||||
Other Commercial Loans(1) | $ | 212,985 | $ | 20,053 | $ | 3,808 | $ | 23,861 | 11.2 | % | ||||||||||
Total non-performing commercial loans | $ | 74,438 | ||||||||||||||||||
(1) | The total of these two categories is different than the June 30, 2008, Consolidated Statement of Financial Condition due primarily to loans in process. |
7