INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2

Attached files

file	filename
8-K - FORM 8-K - INDEPENDENT BANK CORP /MI/	k48899e8vk.htm
EX-99.1 - EX-99.1 - INDEPENDENT BANK CORP /MI/	k48899exv99w1.htm

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data

Non-performing assets


	December 31,
	2009			2008
	(dollars in thousands)
Non-accrual loans ⁽¹⁾	$	105,965		$	122,639
Loans 90 days or more past due and still accruing interest		3,940			2,626

Total non-performing loans		109,905			125,265
Other real estate		31,534			19,998

Total non-performing assets	$	141,439		$	145,263

As a percent of Portfolio Loans
Non-performing loans		4.78	%		5.09	%
Allowance for loan losses		3.55			2.35
Non-performing assets to total assets		4.77			4.91
Allowance for loan losses as a percent of non-performing loans		74			46


⁽¹⁾		Excludes $2.2 million commercial loan on non-accrual at December 31, 2009 that is classified as held for sale. This loan was sold during January, 2010.

Allowance for loan losses


	Twelve months ended
	December 31,
	2009						2008
				Unfunded						Unfunded
	Loans			Commitments			Loans			Commitments
	(in thousands)
Balance at beginning of period	$	57,900		$	2,144		$	45,294		$	1,936
Additions (deduction)
Provision charged to operating expense		103,318			(286	)		71,113			208
Recoveries credited to allowance		2,795						3,489
Loans charged against the allowance		(82,296	)					(61,996	)

Balance at end of period	$	81,717		$	1,858		$	57,900		$	2,144


Net loans charged against the allowance to average Portfolio Loans (annualized)		3.28	%					2.30	%

Alternative Sources of Funds


	December 31,
	2009						2008
	Amount		Average Maturity	Rate			Amount		Average Maturity	Rate
	(dollars in thousands)
Brokered CDs	$	629,150	2.2 years		2.46	%	$	182,283	1.1 years		3.63	%
Fixed rate FHLB advances		27,382	5.5 years		6.59			95,714	2.2 years		3.64
Variable rate FHLB advances		67,000	1.4 years		0.32			218,500	2.3 years		3.43
Securities sold under agreements to Repurchase		35,000	.9 years		4.42			35,000	1.9 years		4.42
FRB — Discount borrowing								189,500	.1 years		0.54
Federal funds purchased								750	1 day		0.25

Total	$	758,532	2.2 years		2.51	%	$	721,747	1.4 years		2.80	%

Capitalization


	December 31,
	2009			2008
	(in thousands)
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		69,157			68,456
Common stock, par value $1.00 per share		23,863			22,791
Capital surplus		201,618			200,687
Accumulated deficit		(169,098	)		(73,849	)
Accumulated other comprehensive loss		(15,679	)		(23,208	)

Total shareholders’ equity		109,861			194,877

Total capitalization	$	199,961		$	284,977

Non-Interest Income


	Three months ended									Twelve months ended
	December 31,			September 30,			December 31,			December 31,
	2009			2009			2008			2009			2008
	(in thousands)
Service charges on deposit accounts	$	6,158		$	6,384		$	5,996		$	24,370		$	24,223
Net gains (losses) on assets
Mortgage loans		2,060			2,257			1,204			10,860			5,181
Securities		39			138			(6,883	)		3,826			(14,795	)
Other than temporary loss on securities available for sale
Total impairment loss		(4,056	)		(17	)		(41	)		(4,073	)		(166	)
Loss recognized in other comprehensive loss		3,991									3,991

Net impairment loss recognized in earnings		(65	)		(17	)		(41	)		(82	)		(166	)
VISA check card interchange income		1,527			1,480			1,394			5,922			5,728
Mortgage loan servicing		1,241			(496	)		(3,616	)		2,252			(2,071	)
Mutual fund and annuity commissions		527			498			459			2,017			2,207
Bank owned life insurance		472			387			492			1,615			1,960
Title insurance fees		410			521			280			2,272			1,388
Other		920			1,629			1,359			5,607			6,066

Total non-interest income	$	13,289		$	12,781		$	644		$	58,659		$	29,721

Mortgage Loan Activity


		Three months ended									Twelve months ended
		December 31,			September 30,			December 31,			December 31,
		2009			2009			2008			2009			2008
	(in thousands)
Mortgage loans originated		$	114,254		$	110,229		$	64,453		$	576,018		$	368,517
Mortgage loans sold			95,386			144,518			49,692			540,713			267,216
Mortgage loans sold with servicing rights released			20,216			20,676			15,573			55,495			51,875
Net gains on the sale of mortgage loans			2,060			2,257			1,204			10,860			5,181
Net gains as a percent of mortgage loans sold (“Loan Sale Margin”)			2.16	%		1.56	%		2.42	%		2.01	%		1.94	%
Fair value adjustments included in the Loan Sale Margin			0.11			(0.51	)		0.74			0.07			0.36

Capitalized Real Estate Mortgage Loan Servicing Rights


		Three months ended						Twelve months ended
		December 31,						December 31,
		2009			2008			2009			2008
	(in thousands)
Balance at beginning of period		$	14,334		$	16,260		$	11,966		$	15,780
Originated servicing rights capitalized			769			370			5,213			2,405
Amortization			(720	)		(409	)		(4,255	)		(1,887	)
(Increase)/decrease in impairment reserve			890			(4,255	)		2,349			(4,332	)

Balance at end of period		$	15,273		$	11,966		$	15,273		$	11,966


Impairment reserve at end of period		$	2,302		$	4,651		$	2,302		$	4,651

Non-Interest Expense


	Three months ended						Twelve months ended
	December 31,		September 30,		December 31,		December 31,
	2009		2009		2008		2009		2008
	(in thousands)
Salaries	$	10,364	$	10,205	$	10,188	$	40,053	$	40,181
Performance-based compensation and benefits		746		1,067		778		2,889		4,861
Other benefits		2,165		2,551		2,198		10,061		10,137

Compensation and employee benefits		13,275		13,823		13,164		53,003		55,179
Vehicle service contract counterparty contingencies		19,506		8,713		966		31,234		966
Loan and collection		3,834		3,628		3,536		14,727		9,431
Occupancy, net		2,882		2,602		3,054		11,092		11,852
Loss on other real estate and repossessed assets		1,796		3,558		2,258		8,554		4,349
Data processing		2,134		2,146		1,951		8,386		7,148
Deposit insurance		1,658		1,729		462		7,328		1,988
Furniture, fixtures and equipment		1,735		1,727		1,770		7,159		7,074
Credit card and bank service fees		1,754		1,722		1,325		6,608		4,818
Advertising		1,498		1,335		1,691		5,696		5,534
Communications		1,120		1,152		1,014		4,424		4,018
Legal and professional		1,144		732		624		3,222		2,032
Amortization of intangible assets		523		432		758		1,930		3,072
Supplies		470		439		496		1,835		2,030
Goodwill impairment		16,734				50,020		16,734		50,020
Other		1,119		1,419		1,963		5,655		7,639

Total non-interest expense	$	71,182	$	45,157	$	85,052	$	187,587	$	177,150

Average Balances and Tax Equivalent Rates


	Three Months Ended
	December 31,
	2009							2008
	Average							Average
	Balance		Interest		Rate			Balance		Interest		Rate
	(dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	2,370,452	$	42,910		7.20	%	$	2,507,518	$	45,334		7.20	%
Tax-exempt loans ⁽²⁾		10,361		189		7.24			10,084		169		6.67
Taxable securities		102,509		1,420		5.50			118,815		1,909		6.39
Tax-exempt securities ⁽²⁾		71,448		1,138		6.32			109,220		1,972		7.18
Cash — interest bearing		194,683		134		0.27
Other investments		27,854		110		1.57			28,063		99		1.40

Interest Earning Assets		2,777,307		45,901		6.57			2,773,700		49,483		7.11

Cash and due from banks		54,206							55,424
Other assets, net		148,612							232,692

Total Assets	$	2,980,125						$	3,061,816


Liabilities
Savings and NOW	$	1,039,884		1,274		0.49		$	915,288		1,981		0.86
Time deposits		1,143,307		7,663		2.66			884,938		7,736		3.48
Other borrowings		249,811		3,107		4.93			663,788		6,379		3.82

Interest Bearing Liabilities		2,433,002		12,044		1.96			2,464,014		16,096		2.60

Demand deposits		331,204							303,221
Other liabilities		70,489							57,334
Shareholders’ equity		145,430							237,247

Total liabilities and shareholders’ equity	$	2,980,125						$	3,061,816


Tax Equivalent Net Interest Income			$	33,857						$	33,387


Tax Equivalent Net Interest Income as a Percent of Earning Assets						4.85	%						4.80	%


(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%

Average Balances and Tax Equivalent Rates


	Twelve Months Ended
	December 31,
	2009							2008
	Average							Average
	Balance		Interest		Rate			Balance		Interest		Rate
	(dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	2,461,896	$	177,557		7.21	%	$	2,558,621	$	186,259		7.28	%
Tax-exempt loans ⁽²⁾		8,672		601		6.93			10,747		751		6.99
Taxable securities		111,558		6,333		5.68			144,265		8,467		5.87
Tax-exempt securities ⁽²⁾		85,954		5,709		6.64			162,144		11,534		7.11
Cash — interest bearing		72,606		174		0.24
Other investments		28,304		932		3.29			31,425		1,284		4.09

Interest Earning Assets		2,768,990		191,306		6.91			2,907,202		208,295		7.16

Cash and due from banks		55,451							53,873
Other assets, net		157,762							227,969

Total Assets	$	2,982,203						$	3,189,044


Liabilities
Savings and NOW	$	992,529		5,751		0.58		$	968,180		10,262		1.06
Time deposits		1,019,624		29,654		2.91			917,403		36,435		3.97
Long-term debt									247		12		4.86
Other borrowings		394,975		15,128		3.83			682,884		26,878		3.94

Interest Bearing Liabilities		2,407,128		50,533		2.10			2,568,714		73,587		2.86

Demand deposits		321,802							301,117
Other liabilities		80,281							79,929
Shareholders’ equity		172,992							239,284

Total liabilities and shareholders’ equity	$	2,982,203						$	3,189,044


Tax Equivalent Net Interest Income			$	140,773						$	134,708


Tax Equivalent Net Interest Income as a Percent of Earning Assets						5.08	%						4.63	%


(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%

Commercial Loan Portfolio Analysis as of December 31, 2009


	Total Commercial Loans								Percent
	Watch Credits								of Loan
					Non-				Category in
Loan Category	All Loans		Performing		performing		Total		Watch Credit
	(dollars in thousands)
Land	$	27,300	$	5,648	$	6,505	$	12,153		44.5	%
Land Development		32,485		10,155		11,143		21,298		65.6	%
Construction		26,166		8,441		3,643		12,084		46.2	%
Income Producing		377,869		83,771		19,476		103,247		27.3	%
Owner Occupied		193,455		30,084		7,274		37,358		19.3	%

Total Commercial Real Estate Loans ⁽¹⁾	$	657,275	$	138,099	$	48,041	$	186,140		28.3	%


Other Commercial Loans⁽¹⁾	$	182,187	$	29,944		2,358	$	32,302		17.7	%

Total non-performing commercial loans					$	50,399


(1)		The total of these two categories is different than the December 31, 2009, Consolidated Statement of Financial Condition due primarily to loans in process.

INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - February 24, 2010

Attached files

INDEPENDENT BANK CORP /MI/ Reports