Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets(1) | ||||||||
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
(dollars in thousands) | ||||||||
Non-accrual loans | $ | 59,543 | $ | 66,652 | ||||
Loans 90 days or more past due and still accruing interest | 309 | 928 | ||||||
Total non-performing loans | 59,852 | 67,580 | ||||||
Other real estate and repossessed assets | 37,513 | 39,413 | ||||||
Total non-performing assets | $ | 97,365 | $ | 106,993 | ||||
As a percent of Portfolio Loans | ||||||||
Non-performing loans | 3.45 | % | 3.73 | % | ||||
Allowance for loan losses | 3.82 | 3.75 | ||||||
Non-performing assets to total assets | 3.93 | 4.22 | ||||||
Allowance for loan losses as a percent of non-performing loans | 110.50 | 100.50 |
(1) Excludes loans that are classified as “troubled debt restructured” that are still performing.
Troubled debt restructurings (“TDRs”) | ||||||||||||
March 31, 2011 | ||||||||||||
Commercial | Retail | Total | ||||||||||
(in thousands) | ||||||||||||
Performing TDRs | $ | 9,772 | $ | 99,469 | $ | 109,241 | ||||||
Non-performing TDRs (1) | 7,387 | 15,237 | (2) | 22,624 | ||||||||
Total | $ | 17,159 | $ | 114,706 | $ | 131,865 |
December 31, 2010 | ||||||||||||
Commercial | Retail | Total | ||||||||||
(in thousands) | ||||||||||||
Performing TDRs | $ | 16,957 | $ | 96,855 | $ | 113,812 | ||||||
Non-performing TDRs (1) | 7,814 | 16,616 | (2) | 24,430 | ||||||||
Total | $ | 24,771 | $ | 113,471 | $ | 138,242 |
(1) Included in NPL table above.
(2) Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis.
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Allowance for loan losses | ||||||||||||||||
Three months ended | ||||||||||||||||
March 31, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
Unfunded | Unfunded | |||||||||||||||
Loans | Commitments | Loans | Commitments | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 67,915 | $ | 1,322 | $ | 81,717 | $ | 1,858 | ||||||||
Additions (deduction) | ||||||||||||||||
Provision for loan losses | 11,076 | -- | 17,014 | -- | ||||||||||||
Recoveries credited to allowance | 935 | -- | 991 | -- | ||||||||||||
Loans charged against the allowance | (13,791 | ) | -- | (23,590 | ) | -- | ||||||||||
Additions (deductions) included in non-interest expense | -- | 95 | -- | 56 | ||||||||||||
Balance at end of period | $ | 66,135 | $ | 1,417 | $ | 76,132 | $ | 1,914 | ||||||||
Net loans charged against the allowance to average Portfolio Loans (annualized) | 2.93 | % | 4.10 | % |
Alternative Sources of Funds
March 31, 2011 | December 31, 2010 | |||||||||||||||||
Average | Average | |||||||||||||||||
Amount | Maturity | Rate | Amount | Maturity | Rate | |||||||||||||
(dollars in thousands) | ||||||||||||||||||
Brokered CDs | $ | 250,166 | 2.3 years | 2.88 | % | $ | 273,546 | 2.4 years | 2.89 | % | ||||||||
Fixed rate FHLB advances | 21,012 | 5.6 years | 6.34 | 21,022 | 5.9 years | 6.34 | ||||||||||||
Variable rate FHLB advances (1) | 25,000 | 1.1 years | 0.50 | 50,000 | 0.8 years | 0.41 | ||||||||||||
Total | $ | 296,178 | 2.4 years | 2.93 | % | $ | 344,568 | 2.4 years | 2.74 | % |
(1) Certain of these items have had their average maturity and rate altered through the use of derivative instruments, such as pay-fixed interest rate swaps.
Capitalization | ||||||||
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
(in thousands) | ||||||||
Subordinated debentures | $ | 50,175 | $ | 50,175 | ||||
Amount not qualifying as regulatory capital | (1,507 | ) | (1,507 | ) | ||||
Amount qualifying as regulatory capital | 48,668 | 48,668 | ||||||
Shareholders’ Equity | ||||||||
Preferred stock | 76,708 | 75,700 | ||||||
Common stock | 247,406 | 246,407 | ||||||
Accumulated deficit | (198,311 | ) | (189,902 | ) | ||||
Accumulated other comprehensive loss | (12,865 | ) | (13,120 | ) | ||||
Total shareholders’ equity | 112,938 | 119,085 | ||||||
Total capitalization | $ | 161,606 | $ | 167,753 |
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Non-Interest Income | ||||||||||||
Three months ended | ||||||||||||
March 31, 2011 | December 31, 2010 | March 31, 2010 | ||||||||||
(in thousands) | ||||||||||||
Service charges on deposit accounts | $ | 4,282 | $ | 4,887 | $ | 5,275 | ||||||
Net gains (losses) on assets | ||||||||||||
Mortgage loans | 1,935 | 4,286 | 1,843 | |||||||||
Securities | 213 | 14 | 265 | |||||||||
Other than temporary loss on securities available for sale | ||||||||||||
Total impairment loss | (469 | ) | (28 | ) | (118 | ) | ||||||
Loss recognized in other comprehensive income | 327 | -- | -- | |||||||||
Net impairment loss recognized in earnings | (142 | ) | (28 | ) | (118 | ) | ||||||
Interchange income | 2,168 | 2,160 | 1,936 | |||||||||
Mortgage loan servicing | 896 | 2,465 | 432 | |||||||||
Investment and insurance commissions | 555 | 585 | 389 | |||||||||
Bank owned life insurance | 425 | 464 | 468 | |||||||||
Title insurance fees | 473 | 644 | 494 | |||||||||
Other | 1,906 | 1,732 | 1,397 | |||||||||
Total non-interest income | $ | 12,711 | $ | 17,209 | $ | 12,381 |
Capitalized Mortgage Loan Servicing Rights | ||||||||
Three months ended March 31, | ||||||||
2011 | 2010 | |||||||
(in thousands) | ||||||||
Balance at beginning of period | $ | 14,661 | $ | 15,273 | ||||
Originated servicing rights capitalized | 1,064 | 775 | ||||||
Amortization | (749 | ) | (758 | ) | ||||
Decrease in impairment reserve | 555 | 145 | ||||||
Balance at end of period | $ | 15,531 | $ | 15,435 | ||||
Impairment reserve at end of period | $ | 2,655 | $ | 2,157 |
Mortgage Loan Activity
Three months ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2011 | 2010 | 2010 | ||||||||||
(dollars in thousands) | ||||||||||||
Mortgage loans originated | $ | 95,573 | $ | 178,508 | $ | 90,007 | ||||||
Mortgage loans sold | 121,488 | 180,892 | 87,708 | |||||||||
Mortgage loans sold with servicing rights released | 16,572 | 24,058 | 11,864 | |||||||||
Net gains on the sale of mortgage loans | 1,935 | 4,286 | 1,843 | |||||||||
Net gains as a percent of mortgage loans sold (“Loan Sales Margin”) | 1.59 | % | 2.37 | % | 2.10 | % | ||||||
Fair value adjustments included in the Loan | ||||||||||||
Sales Margin | (0.72 | ) | (0.49 | ) | (0.07 | ) |
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Non-Interest Expense | ||||||||||||
Three months ended | ||||||||||||
March 31, 2011 | December 31, 2010 | March 31, 2010 | ||||||||||
(in thousands) | ||||||||||||
Salaries | $ | 9,812 | $ | 10,073 | $ | 10,176 | ||||||
Performance-based compensation and benefits | 157 | 147 | 644 | |||||||||
Other benefits | 2,380 | 2,042 | 2,393 | |||||||||
Compensation and employee benefits | 12,349 | 12,262 | 13,213 | |||||||||
Loan and collection | 3,867 | 3,947 | 4,786 | |||||||||
Occupancy, net | 3,101 | 2,791 | 2,909 | |||||||||
Vehicle service contract counterparty contingencies | 2,346 | 4,386 | 3,418 | |||||||||
Data processing | 2,310 | 2,367 | 2,469 | |||||||||
Furniture, fixtures and equipment | 1,418 | 1,582 | 1,719 | |||||||||
Net losses on other real estate and repossessed assets | 1,406 | 4,843 | 2,029 | |||||||||
FDIC deposit insurance | 1,235 | 1,589 | 1,802 | |||||||||
Credit card and bank service fees | 1,047 | 1,237 | 1,675 | |||||||||
Communications | 948 | 996 | 1,073 | |||||||||
Legal and professional | 778 | 1,239 | 1,136 | |||||||||
Advertising | 554 | 567 | 779 | |||||||||
Supplies | 402 | 393 | 393 | |||||||||
Amortization of intangible assets | 343 | 315 | 322 | |||||||||
Costs (recoveries) related to unfunded lending commitments | 95 | (65 | ) | 56 | ||||||||
Other | 1,295 | 1,948 | 1,720 | |||||||||
Total non-interest expense | $ | 33,494 | $ | 40,397 | $ | 39,499 |
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Average Balances and Rates | ||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||
March 31, | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate(3) | Balance | Interest | Rate(3) | |||||||||||||||||||
Assets (1) | (dollars in thousands) | |||||||||||||||||||||||
Taxable loans | $ | 1,798,106 | $ | 29,397 | 6.60 | % | $ | 2,252,674 | $ | 38,922 | 6.98 | % | ||||||||||||
Tax-exempt loans (2) | 8,391 | 87 | 4.20 | 10,128 | 105 | 4.20 | ||||||||||||||||||
Taxable securities | 41,621 | 467 | 4.55 | 96,213 | 1,160 | 4.89 | ||||||||||||||||||
Tax-exempt securities (2) | 30,956 | 332 | 4.35 | 64,415 | 685 | 4.31 | ||||||||||||||||||
Cash – interest bearing | 369,793 | 232 | 0.25 | 274,955 | 157 | 0.23 | ||||||||||||||||||
Other investments | 23,630 | 203 | 3.48 | 27,854 | 215 | 3.13 | ||||||||||||||||||
Interest Earning Assets | 2,272,497 | 30,718 | 5.46 | 2,726,239 | 41,244 | 6.12 | ||||||||||||||||||
Cash and due from banks | 50,888 | 59,018 | ||||||||||||||||||||||
Other assets, net | 191,884 | 148,460 | ||||||||||||||||||||||
Total Assets | $ | 2,515,269 | $ | 2,933,717 | ||||||||||||||||||||
Liabilities | �� | |||||||||||||||||||||||
Savings and NOW | $ | 994,530 | 589 | 0.24 | $ | 1,084,499 | 863 | 0.32 | ||||||||||||||||
Time deposits | 805,645 | 4,356 | 2.19 | 1,127,618 | 7,356 | 2.65 | ||||||||||||||||||
Other borrowings | 104,907 | 1,323 | 5.11 | 227,621 | 2,994 | 5.33 | ||||||||||||||||||
Interest Bearing Liabilities | 1,905,082 | 6,268 | 1.33 | 2,439,738 | 11,213 | 1.86 | ||||||||||||||||||
Demand deposits | 448,979 | 327,570 | ||||||||||||||||||||||
Other liabilities | 44,231 | 64,396 | ||||||||||||||||||||||
Shareholders’ equity | 116,977 | 102,013 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,515,269 | $ | 2,933,717 | ||||||||||||||||||||
Net Interest Income | $ | 24,450 | $ | 30,031 | ||||||||||||||||||||
Net Interest Income as a Percent of Earning Assets | 4.34 | % | 4.45 | % |
(1) | All domestic, except for $0.03 million and $0.9 million for the three months ended March 31, 2011 and 2010, 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 March 31, 2011
Total Commercial Loans | ||||||||||||||||||||
Watch Credits | Percent of Loan | |||||||||||||||||||
Loan Category | All Loans | Performing | Non- performing | Total | Category in Watch Credit | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 20,957 | $ | 5,578 | $ | 1,821 | $ | 7,399 | 35.3 | % | ||||||||||
Land Development | 21,335 | 8,185 | 3,953 | 12,138 | 56.9 | |||||||||||||||
Construction | 18,344 | 4,610 | 2,012 | 6,622 | 36.1 | |||||||||||||||
Income Producing | 298,503 | 64,992 | 10,968 | 75,960 | 25.4 | |||||||||||||||
Owner Occupied | 183,300 | 30,717 | 5,867 | 36,584 | 20.0 | |||||||||||||||
Total Commercial Real Estate Loans (1) | $ | 542,439 | $ | 114,082 | $ | 24,621 | $ | 138,703 | 25.6 | |||||||||||
Other Commercial Loans(1) | $ | 145,410 | $ | 20,805 | 1,893 | $ | 22,698 | 15.6 | ||||||||||||
Total non-performing commercial loans | $ | 26,514 |
(1) | The total of these two categories is different than the March 31, 2011, Consolidated Statement of Financial Condition due primarily to loans in process. |
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