Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets(1) | ||||||||
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in thousands) | ||||||||
Non-accrual loans | $ | 53,273 | $ | 66,652 | ||||
Loans 90 days or more past due and still accruing interest | 443 | 928 | ||||||
Total non-performing loans | 53,716 | 67,580 | ||||||
Other real estate and repossessed assets | 37,608 | 39,413 | ||||||
Total non-performing assets | $ | 91,324 | $ | 106,993 | ||||
As a percent of Portfolio Loans | ||||||||
Non-performing loans | 3.21 | % | 3.73 | % | ||||
Allowance for loan losses | 3.65 | 3.75 | ||||||
Non-performing assets to total assets | 3.94 | 4.22 | ||||||
Allowance for loan losses as a percent of non-performing loans | 113.77 | 100.50 |
(1) Excludes loans classified as “troubled debt restructured” that are not past due and vehicle service contract counterparty receivables, net.
Troubled debt restructurings (“TDR”) | ||||||||||||
June 30, 2011 | ||||||||||||
Commercial | Retail | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR’s | $ | 13,119 | $ | 95,004 | $ | 108,123 | ||||||
Non-performing TDR’s (1) | 3,994 | 12,945 | (2) | 16,939 | ||||||||
Total | $ | 17,113 | $ | 107,949 | $ | 125,062 |
December 31, 2010 | ||||||||||||
Commercial | Retail | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR’s | $ | 16,957 | $ | 96,855 | $ | 113,812 | ||||||
Non-performing TDR’s (1) | 7,814 | 16,616 | (2) | 24,430 | ||||||||
Total | $ | 24,771 | $ | 113,471 | $ | 138,242 |
(1) | Included in non-performing loans table above. |
(2) | Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis. |
Allowance for Loan Losses
Six months ended June 30, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
Loans | Unfunded Commitments | Loans | Unfunded Commitments | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 67,915 | $ | 1,322 | $ | 81,717 | $ | 1,858 | ||||||||
Additions (deduction) | ||||||||||||||||
Provision for loan losses | 15,454 | - | 29,694 | - | ||||||||||||
Recoveries credited to allowance | 2,182 | - | 1,839 | - | ||||||||||||
Loans charged against the allowance | (24,436 | ) | - | (37,644 | ) | - | ||||||||||
Additions (deductions) included in non-interest expense | - | 184 | - | 336 | ||||||||||||
Balance at end of period | $ | 61,115 | $ | 1,506 | $ | 75,606 | $ | 2,194 | ||||||||
Net loans charged against the allowance to average Portfolio Loans (annualized) | 2.58 | % | 3.33 | % |
Alternative Sources of Funds
June 30, 2011 | December 31, 2010 | |||||||||||||||||
Amount | Average Maturity | Rate | Amount | Average Maturity | Rate | |||||||||||||
(Dollars in thousands) | ||||||||||||||||||
Brokered CDs | $ | 90,429 | 2.0 years | 2.73 | % | $ | 273,546 | 2.4 years | 2.89 | % | ||||||||
Fixed rate FHLB advances | 20,907 | 5.4 years | 6.34 | 21,022 | 5.9 years | 6.34 | ||||||||||||
Variable rate FHLB advances(1) | 20,000 | 0.5 years | 0.34 | 50,000 | 0.8 years | 0.41 | ||||||||||||
Total | $ | 131,336 | 2.3 years | 2.94 | % | $ | 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, including pay-fixed interest rate swaps. |
Capitalization
June 30, 2011 | December 31, 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 | 77,759 | 75,700 | ||||||
Common stock | 248,198 | 246,407 | ||||||
Accumulated deficit | (199,326 | ) | (189,902 | ) | ||||
Accumulated other comprehensive loss | (12,190 | ) | (13,120 | ) | ||||
Total shareholders’ equity | 114,441 | 119,085 | ||||||
Total capitalization | $ | 163,109 | $ | 167,753 |
Non-Interest Income
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2011 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Service charges on deposit accounts | $ | 4,784 | $ | 4,282 | $ | 5,833 | $ | 9,066 | $ | 11,108 | ||||||||||
Interchange income | 2,308 | 2,168 | 2,086 | 4,476 | 4,022 | |||||||||||||||
Net gains (losses) on assets | ||||||||||||||||||||
Mortgage loans | 1,793 | 1,935 | 2,372 | 3,728 | 4,215 | |||||||||||||||
Securities | 115 | 213 | 1,363 | 328 | 1,628 | |||||||||||||||
Other than temporary loss on securities available for sale | ||||||||||||||||||||
Total impairment loss | 327 | (469 | ) | - | (142 | ) | (118 | ) | ||||||||||||
Loss recognized in other comprehensive income | (327 | ) | 327 | - | - | - | ||||||||||||||
Net impairment loss recognized in earnings | - | (142 | ) | - | (142 | ) | (118 | ) | ||||||||||||
Mortgage loan servicing | (126 | ) | 896 | (2,043 | ) | 770 | (1,611 | ) | ||||||||||||
Investment and insurance commissions | 524 | 555 | 409 | 1,079 | 798 | |||||||||||||||
Bank owned life insurance | 464 | 425 | 483 | 889 | 951 | |||||||||||||||
Title insurance fees | 318 | 473 | 366 | 791 | 860 | |||||||||||||||
Decrease in fair value of U.S. Treasury warrant | 642 | 354 | 996 | |||||||||||||||||
Gain on extinguishment of debt | - | - | 18,086 | - | 18,086 | |||||||||||||||
Other | 1,634 | 1,552 | 790 | 3,186 | 2,187 | |||||||||||||||
Total non-interest income | $ | 12,456 | $ | 12,711 | $ | 29,745 | $ | 25,167 | $ | 42,126 |
Capitalized Mortgage Loan Servicing Rights
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
Balance at beginning of period | $ | 15,531 | $ | 15,435 | $ | 14,661 | $ | 15,273 | ||||||||
Originated servicing rights capitalized | 431 | 680 | 1,495 | 1,455 | ||||||||||||
Amortization | (574 | ) | (633 | ) | (1,323 | ) | (1,391 | ) | ||||||||
Change in valuation allowance | (647 | ) | (2,460 | ) | (92 | ) | (2,315 | ) | ||||||||
Balance at end of period | $ | 14,741 | $ | 13,022 | $ | 14,741 | $ | 13,022 | ||||||||
Valuation allowance at end of period | $ | 3,302 | $ | 4,617 | $ | 3,302 | $ | 4,617 |
Mortgage Loan Activity
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2011 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Mortgage loans originated | $ | 74,612 | $ | 95,573 | $ | 93,900 | $ | 170,185 | $ | 183,907 | ||||||||||
Mortgage loans sold | 63,369 | 121,488 | 87,583 | 184,857 | 175,291 | |||||||||||||||
Mortgage loans sold with servicing rights released | 18,428 | 16,572 | 20,747 | 35,000 | 32,611 | |||||||||||||||
Net gains on the sale of mortgage loans | 1,793 | 1,935 | 2,372 | 3,728 | 4,215 | |||||||||||||||
Net gains as a percent of mortgage | ||||||||||||||||||||
loans sold (“Loan Sales Margin”) | 2.83 | % | 1.59 | % | 2.71 | % | 2.02 | % | 2.40 | % | ||||||||||
Fair value adjustments included in the Loan | ||||||||||||||||||||
Sales Margin | 0.63 | (0.72 | ) | 0.43 | (0.26 | ) | 0.18 |
Non-Interest Expense
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2011 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Compensation | $ | 10,020 | $ | 9,812 | $ | 10,242 | $ | 19,832 | $ | 20,418 | ||||||||||
Performance-based compensation | 334 | 157 | 655 | 491 | 1,299 | |||||||||||||||
Payroll taxes and employee benefits | 2,675 | 2,380 | 2,533 | 5,055 | 4,926 | |||||||||||||||
Compensation and employee benefits | 13,029 | 12,349 | 13,430 | 25,378 | 26,643 | |||||||||||||||
Loan and collection | 3,580 | 3,867 | 2,785 | 7,447 | 7,571 | |||||||||||||||
Occupancy, net | 2,663 | 3,101 | 2,595 | 5,764 | 5,504 | |||||||||||||||
Data processing | 2,415 | 2,310 | 2,470 | 4,725 | 4,939 | |||||||||||||||
Vehicle service contract counterparty contingencies | 1,311 | 2,346 | 4,861 | 3,657 | 8,279 | |||||||||||||||
Furniture, fixtures and equipment | 1,502 | 1,418 | 1,648 | 2,920 | 3,367 | |||||||||||||||
Net losses on other real estate and repossessed assets | 777 | 1,406 | 1,554 | 2,183 | 3,583 | |||||||||||||||
Credit card and bank service fees | 1,013 | 1,047 | 1,500 | 2,060 | 3,175 | |||||||||||||||
FDIC deposit insurance | 652 | 1,235 | 1,763 | 1,887 | 3,565 | |||||||||||||||
Communications | 889 | 948 | 1,015 | 1,837 | 2,088 | |||||||||||||||
Legal and professional fees | 801 | 778 | 894 | 1,579 | 2,030 | |||||||||||||||
Advertising | 670 | 554 | 674 | 1,224 | 1,453 | |||||||||||||||
Supplies | 392 | 402 | 415 | 794 | 808 | |||||||||||||||
Amortization of intangible assets | 343 | 343 | 323 | 686 | 645 | |||||||||||||||
Costs related to unfunded lending commitments | 89 | 95 | 280 | 184 | 336 | |||||||||||||||
Other | 1,557 | 1,295 | 1,389 | 2,852 | 3,109 | |||||||||||||||
Total non-interest expense | $ | 31,683 | $ | 33,494 | $ | 37,596 | $ | 65,177 | $ | 77,095 |
Average Balances and Rates
Three Months Ended June 30,2011 | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Average Balance | Interest | Rate(3) | Average Balance | Interest | Rate(3) | |||||||||||||||||||
Assets (1) | (Dollars in thousands) | |||||||||||||||||||||||
Taxable loans | $ | 1,718,171 | $ | 28,017 | 6.54 | % | $ | 2,115,837 | $ | 36,569 | 6.93 | % | ||||||||||||
Tax-exempt loans (2) | 8,080 | 85 | 4.22 | 9,866 | 106 | 4.31 | ||||||||||||||||||
Taxable securities | 61,407 | 344 | 2.25 | 87,554 | 902 | 4.13 | ||||||||||||||||||
Tax-exempt securities (2) | 30,064 | 298 | 3.98 | 49,012 | 526 | 4.30 | ||||||||||||||||||
Cash – interest bearing | 306,864 | 194 | 0.25 | 324,592 | 192 | 0.24 | ||||||||||||||||||
Other investments | 22,852 | 189 | 3.32 | 27,001 | 197 | 2.93 | ||||||||||||||||||
Interest Earning Assets | 2,147,438 | 29,127 | 5.43 | 2,613,862 | 38,492 | 5.90 | ||||||||||||||||||
Cash and due from banks | 50,250 | 48,751 | ||||||||||||||||||||||
Other assets, net | 189,472 | 160,291 | ||||||||||||||||||||||
Total Assets | $ | 2,387,160 | $ | 2,822,904 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and NOW | $ | 1,013,095 | 608 | 0.24 | $ | 1,088,526 | 670 | 0.25 | ||||||||||||||||
Time deposits | 680,267 | 3,903 | 2.30 | 1,019,882 | 6,838 | 2.69 | ||||||||||||||||||
Other borrowings | 94,609 | 1,232 | 5.22 | 227,979 | 2,413 | 4.25 | ||||||||||||||||||
Interest Bearing Liabilities | 1,787,971 | 5,743 | 1.29 | 2,336,387 | 9,921 | 1.70 | ||||||||||||||||||
Demand deposits | 443,163 | 340,558 | ||||||||||||||||||||||
Other liabilities | 44,674 | 52,051 | ||||||||||||||||||||||
Shareholders’ equity | 111,352 | 93,908 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,387,160 | $ | 2,822,904 | ||||||||||||||||||||
Net Interest Income | $ | 23,384 | $ | 28,571 | ||||||||||||||||||||
Net Interest Income as a Percent of Earning Assets | 4.36 | % | 4.38 | % |
(1) | All domestic, except for $0.01 million and $0.4 million for the three months ended June 30, 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. |
Average Balances and Rates
Six Months Ended | ||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Average Balance | Interest | Rate(3) | Average Balance | Interest | Rate(3) | |||||||||||||||||||
Assets (1) | (Dollars in thousands) | |||||||||||||||||||||||
Taxable loans | $ | 1,757,979 | $ | 57,414 | 6.57 | % | $ | 2,184,046 | $ | 75,491 | 6.95 | % | ||||||||||||
Tax-exempt loans (2) | 8,235 | 172 | 4.21 | 9,997 | 211 | 4.26 | ||||||||||||||||||
Taxable securities | 51,568 | 811 | 3.17 | 91,859 | 2,062 | 4.53 | ||||||||||||||||||
Tax-exempt securities (2) | 30,508 | 630 | 4.16 | 56,671 | 1,211 | 4.31 | ||||||||||||||||||
Cash – interest bearing | 338,154 | 426 | 0.25 | 299,910 | 349 | 0.23 | ||||||||||||||||||
Other investments | 23,239 | 392 | 3.40 | 27,426 | 412 | 3.03 | ||||||||||||||||||
Interest Earning Assets | 2,209,683 | 59,845 | 5.45 | 2,669,909 | 79,736 | 6.01 | ||||||||||||||||||
Cash and due from banks | 50,568 | 53,855 | ||||||||||||||||||||||
Other assets, net | 190,672 | 154,408 | ||||||||||||||||||||||
Total Assets | $ | 2,450,923 | $ | 2,878,172 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and NOW | $ | 1,003,864 | 1,197 | 0.24 | $ | 1,086,524 | 1,533 | 0.28 | ||||||||||||||||
Time deposits | 742,609 | 8,259 | 2.24 | 1,073,452 | 14,194 | 2.67 | ||||||||||||||||||
Other borrowings | 99,730 | 2,555 | 5.17 | 227,801 | 5,407 | 4.79 | ||||||||||||||||||
Interest Bearing Liabilities | 1,846,203 | 12,011 | 1.31 | 2,387,777 | 21,134 | 1.78 | ||||||||||||||||||
Demand deposits | 446,056 | 334,100 | ||||||||||||||||||||||
Other liabilities | 44,515 | 58,359 | ||||||||||||||||||||||
Shareholders’ equity | 114,149 | 97,936 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,450,923 | $ | 2,878,172 | ||||||||||||||||||||
Net Interest Income | $ | 47,834 | $ | 58,602 | ||||||||||||||||||||
Net Interest Income as a Percent of Earning Assets | 4.35 | % | 4.41 | % |
(1) | All domestic, except for $0.02 million and $0.7 million for the six months ended June 30, 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. |
Commercial Loan Portfolio Analysis as of June 30, 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 | $ | 19,738 | $ | 5,268 | $ | 1,031 | $ | 6,299 | 31.9 | % | ||||||||||
Land development | 20,553 | 8,202 | 3,798 | 12,000 | 58.4 | |||||||||||||||
Construction | 17,192 | 4,268 | 398 | 4,666 | 27.1 | |||||||||||||||
Income producing | 287,933 | 58,698 | 11,447 | 70,145 | 24.4 | |||||||||||||||
Owner occupied | 180,435 | 26,324 | 5,565 | 31,889 | 17.7 | |||||||||||||||
Total Commercial Real Estate Loans (1) | $ | 525,851 | $ | 102,760 | 22,239 | $ | 124,999 | 23.8 | ||||||||||||
Other Commercial Loans(1) | $ | 142,672 | $ | 19,146 | 2,954 | $ | 22,100 | 15.5 | ||||||||||||
Total non-performing commercial loans | $ | 25,193 |
(1) | The total of these two categories is different than the June 30, 2011, Consolidated Statement of Financial Condition due primarily to loans in process. |