Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
(dollars in thousands) | ||||||||
Non-accrual loans | $ | 126,639 | $ | 72,682 | ||||
Loans 90 days or more past due and still accruing interest | 2,626 | 4,394 | ||||||
Restructured loans | 173 | |||||||
Total non-performing loans | 129,265 | 77,249 | ||||||
Other real estate | 20,498 | 9,723 | ||||||
Total non-performing assets | $ | 149,763 | $ | 86,972 | ||||
As a percent of Portfolio Loans | ||||||||
Non-performing loans | 5.25 | % | 3.07 | % | ||||
Allowance for loan losses | 2.35 | 1.80 | ||||||
Non-performing assets to total assets | 5.06 | 2.68 | ||||||
Allowance for loan losses as a percent of non-performing loans | 45 | 59 |
Allowance for loan losses
Twelve months ended | ||||||||||||||||
December 31, | ||||||||||||||||
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 | 68,079 | 208 | 43,105 | 55 | ||||||||||||
Recoveries credited to allowance | 3,489 | 2,346 | ||||||||||||||
Loans charged against the allowance | (58,962 | ) | (27,036 | ) | ||||||||||||
Balance at end of period | $ | 57,900 | $ | 2,144 | $ | 45,294 | $ | 1,936 | ||||||||
Net loans charged against the allowance to average Portfolio Loans | 2.18 | % | 0.98 | % |
Alternative Sources of Funds
December 31, | December 31, | |||||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Amount | Maturity | Rate | Amount | Maturity | Rate | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Brokered CDs(1) | $ | 182,283 | 1.1 years | 3.63 | % | $ | 516,077 | 1.9 years | 4.72 | % | ||||||||||||||
Fixed rate FHLB advances(1) | 314,214 | 2.3 years | 3.49 | 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 | 1.9 years | 4.42 | 35,000 | 2.9 years | 4.42 | ||||||||||||||||||
FRB — Discount borrowing | 189,500 | .1 years | 0.54 | |||||||||||||||||||||
Federal funds purchased | 750 | 1 day | 0.25 | 54,452 | 1 day | 4.00 | ||||||||||||||||||
Total | $ | 721,747 | 1.4 years | 2.80 | % | $ | 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
December 31, | 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, Series A, no par value | 68,456 | |||||||
Common stock, par value $1.00 per share | 22,791 | 22,601 | ||||||
Capital surplus | 200,687 | 195,302 | ||||||
Retained earnings (accumulated deficit) | (70,149 | ) | 22,770 | |||||
Accumulated other comprehensive loss | (23,208 | ) | (171 | ) | ||||
Total shareholders’ equity | 198,577 | 240,502 | ||||||
Total capitalization | $ | 288,677 | $ | 333,602 | ||||
2
Non-Interest Income
Three months ended | Twelve months ended | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | |||||||||||||||||
2008 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Service charges on deposit accounts | $ | 5,996 | $ | 6,416 | $ | 6,418 | $ | 24,223 | $ | 24,251 | ||||||||||
Net gains (losses) on assets | ||||||||||||||||||||
Mortgage loans | 1,204 | 969 | 904 | 5,181 | 4,317 | |||||||||||||||
Securities | (6,924 | ) | (6,711 | ) | (964 | ) | (14,961 | ) | (705 | ) | ||||||||||
VISA check card interchange income | 1,394 | 1,468 | 1,376 | 5,728 | 4,905 | |||||||||||||||
Mortgage loan servicing | (3,616 | ) | 340 | 364 | (2,071 | ) | 2,236 | |||||||||||||
Mutual fund and annuity commissions | 459 | 680 | 609 | 2,207 | 2,072 | |||||||||||||||
Bank owned life insurance | 492 | 506 | 462 | 1,960 | 1,830 | |||||||||||||||
Title insurance fees | 280 | 307 | 344 | 1,388 | 1,551 | |||||||||||||||
Manufactured home loan origination fees and commissions | 239 | |||||||||||||||||||
Other | 1,359 | 1,473 | 1,660 | 6,066 | 6,449 | |||||||||||||||
Total non-interest income | $ | 644 | $ | 5,448 | $ | 11,173 | $ | 29,721 | $ | 47,145 | ||||||||||
Mortgage Loan Activity
Three months ended | Twelve months ended | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | |||||||||||||||||
2008 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Mortgage loans originated | $ | 64,453 | $ | 74,506 | $ | 147,220 | $ | 368,517 | $ | 507,211 | ||||||||||
Mortgage loans sold | 49,692 | 52,837 | 64,547 | 267,216 | 288,826 | |||||||||||||||
Mortgage loans sold with servicing rights released | 15,573 | 16,760 | 9,379 | 51,875 | 47,783 | |||||||||||||||
Net gains on the sale of mortgage loans | 1,204 | 969 | 904 | 5,181 | 4,317 | |||||||||||||||
Net gains as a percent of mortgage loans sold (“Loan Sale Margin”) | 2.42 | % | 1.83 | % | 1.40 | % | 1.94 | % | 1.49 | % | ||||||||||
SFAS #133/#159 adjustments included in the Loan Sale Margin | 0.74 | (0.03 | ) | (0.18 | ) | 0.36 | (0.06 | ) |
Capitalized Real Estate Mortgage Loan Servicing Rights
Three months ended | Twelve months ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 16,260 | $ | 15,830 | $ | 15,780 | $ | 14,782 | ||||||||
Originated servicing rights capitalized | 370 | 651 | 2,405 | 2,873 | ||||||||||||
Amortization | (409 | ) | (404 | ) | (1,887 | ) | (1,624 | ) | ||||||||
(Increase)/decrease in impairment reserve | (4,255 | ) | (297 | ) | (4,332 | ) | (251 | ) | ||||||||
Balance at end of period | $ | 11,966 | $ | 15,780 | $ | 11,966 | $ | 15,780 | ||||||||
Impairment reserve at end of period | $ | 4,651 | $ | 319 | $ | 4,651 | $ | 319 | ||||||||
3
Non-Interest Expense
Three months ended | Twelve months ended | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | |||||||||||||||||
2008 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Salaries | $ | 10,188 | $ | 10,110 | $ | 9,825 | $ | 40,181 | $ | 40,373 | ||||||||||
Performance-based compensation and benefits | 778 | 1,336 | 1,218 | 4,861 | 4,979 | |||||||||||||||
Other benefits | 2,198 | 2,577 | 2,395 | 10,137 | 10,459 | |||||||||||||||
Compensation and employee benefits | 13,164 | 14,023 | 13,438 | 55,179 | 55,811 | |||||||||||||||
Occupancy, net | 3,054 | 2,871 | 2,754 | 11,852 | 10,624 | |||||||||||||||
Loan and collection | 3,536 | 2,008 | 1,437 | 9,431 | 4,949 | |||||||||||||||
Furniture, fixtures and equipment | 1,770 | 1,662 | 1,944 | 7,074 | 7,633 | |||||||||||||||
Data processing | 1,951 | 1,760 | 1,854 | 7,148 | 6,957 | |||||||||||||||
Loss on other real estate and repossessed assets | 1,758 | 425 | 104 | 3,849 | 276 | |||||||||||||||
Advertising | 1,691 | 1,575 | 1,549 | 5,534 | 5,514 | |||||||||||||||
Credit card and bank service fees | 1,325 | 1,273 | 1,037 | 4,818 | 3,913 | |||||||||||||||
Communications | 1,014 | 968 | 1,003 | 4,018 | 3,809 | |||||||||||||||
Deposit insurance | 462 | 275 | 268 | 1,988 | 628 | |||||||||||||||
Amortization of intangible assets | 758 | 760 | 934 | 3,072 | 3,373 | |||||||||||||||
Supplies | 496 | 519 | 633 | 2,030 | 2,411 | |||||||||||||||
Legal and professional | 624 | 527 | 511 | 2,032 | 1,978 | |||||||||||||||
Branch acquisition and conversion costs | 330 | |||||||||||||||||||
Goodwill impairment | 50,020 | 50,020 | 343 | |||||||||||||||||
Other | 1,963 | 2,010 | 2,119 | 7,639 | 7,175 | |||||||||||||||
Total non-interest expense | $ | 83,586 | $ | 30,656 | $ | 29,585 | $ | 175,684 | $ | 115,724 | ||||||||||
4
Average Balances and Tax Equivalent Rates
Three Months Ended | ||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Taxable loans(1) | $ | 2,507,518 | $ | 45,334 | 7.20 | % | $ | 2,564,579 | $ | 50,772 | 7.87 | % | ||||||||||||
Tax-exempt loans(1,2) | 10,084 | 169 | 6.67 | 9,919 | 183 | 7.32 | ||||||||||||||||||
Taxable securities | 118,815 | 1,909 | 6.39 | 162,585 | 2,258 | 5.51 | ||||||||||||||||||
Tax-exempt securities(2) | 109,220 | 1,972 | 7.18 | 209,882 | 3,686 | 6.97 | ||||||||||||||||||
Other investments | 28,063 | 99 | 1.40 | 26,863 | 328 | 4.84 | ||||||||||||||||||
Interest Earning Assets — Continuing Operations | 2,773,700 | 49,483 | 7.11 | 2,973,828 | 57,227 | 7.65 | ||||||||||||||||||
Cash and due from banks | 55,424 | 56,470 | ||||||||||||||||||||||
Taxable loans — discontinued operations | 476 | |||||||||||||||||||||||
Other assets, net | 232,692 | 224,519 | ||||||||||||||||||||||
Total Assets | $ | 3,061,816 | $ | 3,255,293 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and NOW | $ | 915,288 | 1,981 | 0.86 | $ | 992,317 | 4,849 | 1.94 | ||||||||||||||||
Time deposits | 884,938 | 7,736 | 3.48 | 1,298,269 | 15,835 | 4.84 | ||||||||||||||||||
Long-term debt | 1,495 | 18 | 4.78 | |||||||||||||||||||||
Other borrowings | 663,788 | 6,379 | 3.82 | 332,151 | 5,004 | 5.98 | ||||||||||||||||||
Interest Bearing Liabilities— Continuing Operations | 2,464,014 | 16,096 | 2.60 | 2,624,232 | 25,706 | 3.89 | ||||||||||||||||||
Demand deposits | 303,221 | 299,112 | ||||||||||||||||||||||
Time deposits — discontinued operations | 339 | |||||||||||||||||||||||
Other liabilities | 57,334 | 86,183 | ||||||||||||||||||||||
Shareholders’ equity | 237,247 | 245,427 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,061,816 | $ | 3,255,293 | ||||||||||||||||||||
Tax Equivalent Net Interest Income | $ | 33,387 | $ | 31,521 | ||||||||||||||||||||
Tax Equivalent Net Interest Income as a Percent of Earning Assets | 4.80 | % | 4.22 | % | ||||||||||||||||||||
(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
Twelve Months Ended | ||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Taxable loans(1) | $ | 2,558,621 | $ | 186,259 | 7.28 | % | $ | 2,531,737 | $ | 201,924 | 7.98 | % | ||||||||||||
Tax-exempt loans(1,2) | 10,747 | 751 | 6.99 | 9,568 | 672 | 7.02 | ||||||||||||||||||
Taxable securities | 144,265 | 8,467 | 5.87 | 179,878 | 9,635 | 5.36 | ||||||||||||||||||
Tax-exempt securities(2) | 162,144 | 11,534 | 7.11 | 225,676 | 15,773 | 6.99 | ||||||||||||||||||
Other investments | 31,425 | 1,284 | 4.09 | 26,017 | 1,338 | 5.14 | ||||||||||||||||||
Interest Earning Assets — Continuing Operations | 2,907,202 | 208,295 | 7.16 | 2,972,876 | 229,342 | 7.71 | ||||||||||||||||||
Cash and due from banks | 53,873 | 57,174 | ||||||||||||||||||||||
Taxable loans — discontinued operations | 8,542 | |||||||||||||||||||||||
Other assets, net | 227,969 | 218,553 | ||||||||||||||||||||||
Total Assets | $ | 3,189,044 | $ | 3,257,145 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and NOW | $ | 968,180 | 10,262 | 1.06 | $ | 971,807 | 18,768 | 1.93 | ||||||||||||||||
Time deposits | 917,403 | 36,435 | 3.97 | 1,439,177 | 70,292 | 4.88 | ||||||||||||||||||
Long-term debt | 247 | 12 | 4.86 | 2,240 | 104 | 4.64 | ||||||||||||||||||
Other borrowings | 682,884 | 26,878 | 3.94 | 205,811 | 13,499 | 6.56 | ||||||||||||||||||
Interest Bearing Liabilities — Continuing Operations | 2,568,714 | 73,587 | 2.86 | 2,619,035 | 102,663 | 3.92 | ||||||||||||||||||
Demand deposits | 301,117 | 300,886 | ||||||||||||||||||||||
Time deposits — discontinued operations | 6,166 | |||||||||||||||||||||||
Other liabilities | 79,929 | 79,750 | ||||||||||||||||||||||
Shareholders’ equity | 239,284 | 251,308 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,189,044 | $ | 3,257,145 | ||||||||||||||||||||
Tax Equivalent Net Interest Income | $ | 134,708 | $ | 126,679 | ||||||||||||||||||||
Tax Equivalent Net Interest Income as a Percent of Earning Assets | 4.63 | % | 4.26 | % | ||||||||||||||||||||
(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 December 31, 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 | $ | 36,382 | $ | 5,785 | $ | 11,935 | $ | 17,720 | 48.7 | % | ||||||||||
Land Development | 61,607 | 8,233 | 27,359 | 35,592 | 57.8 | % | ||||||||||||||
Construction | 47,338 | 3,791 | 7,954 | 11,745 | 24.8 | % | ||||||||||||||
Income Producing | 415,329 | 61,171 | 26,735 | 87,906 | 21.2 | % | ||||||||||||||
Owner Occupied | 218,527 | 25,678 | 4,892 | 30,570 | 14.0 | % | ||||||||||||||
Total Commercial Real Estate Loans(1) | $ | 779,183 | $ | 104,658 | $ | 78,875 | $ | 183,533 | 23.6 | % | ||||||||||
Other Commercial Loans(1) | $ | 199,177 | $ | 22,899 | 3,180 | $ | 26,079 | 13.1 | % | |||||||||||
Total non-performing commercial loans | $ | 82,055 | ||||||||||||||||||
(1) | The total of these two categories is different than the December 31, 2008, Consolidated Statement of Financial Condition due primarily to loans in process. |
7