Attached files
| file | filename |
|---|---|
| 8-K - INDEPENDENT BANK CORPORATION 8-K 10-31-2011 - INDEPENDENT BANK CORP /MI/ | form8-k.htm |
| EX-99.1 - EXHIBIT 99.1 - INDEPENDENT BANK CORP /MI/ | ex99_1.htm |
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets(1)
|
September 30,
2011
|
December 31,
2010
|
|||||||
| (Dollars in thousands) | ||||||||
|
Non-accrual loans
|
$ | 50,586 | $ | 66,652 | ||||
|
Loans 90 days or more past due and still accruing interest
|
313 | 928 | ||||||
|
Total non-performing loans
|
50,899 | 67,580 | ||||||
|
Other real estate and repossessed assets
|
34,029 | 39,413 | ||||||
|
Total non-performing assets
|
$ | 84,928 | $ | 106,993 | ||||
|
As a percent of Portfolio Loans
|
||||||||
|
Non-performing loans
|
3.13 | % | 3.73 | % | ||||
|
Allowance for loan losses
|
3.61 | 3.75 | ||||||
|
Non-performing assets to total assets
|
3.66 | 4.22 | ||||||
|
Allowance for loan losses as a percent of non-performing loans
|
115.56 | 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”)
|
September 30, 2011
|
|||||||||||||
|
Commercial
|
Retail
|
Total
|
|||||||||||
|
(In thousands)
|
|||||||||||||
|
Performing TDR’s
|
$ | 22,273 | $ | 90,378 | $ | 112,651 | |||||||
|
Non-performing TDR’s (1)
|
4,552 | 13,753 | (2) | 18,305 | |||||||||
|
Total
|
$ | 26,825 | $ | 104,131 | $ | 130,956 | |||||||
|
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.
|
1
Allowance for loan losses
|
Nine months ended
September 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
|
21,029 | - | 39,237 | - | ||||||||||||
|
Recoveries credited to allowance
|
3,080 | - | 2,656 | - | ||||||||||||
|
Loans charged against the allowance
|
(33,204 | ) | - | (51,866 | ) | - | ||||||||||
|
Additions (deductions) included in non-interest expense
|
- | 12 | - | (471 | ) | |||||||||||
|
Balance at end of period
|
$ | 58,820 | $ | 1,334 | $ | 71,744 | $ | 1,387 | ||||||||
|
Net loans charged against the allowance to average Portfolio Loans (annualized)
|
2.35 | % | 3.13 | % | ||||||||||||
Alternative Sources of Funds
| September 30, 2011 | December 31, 2010 | |||||||||||||||||
|
Amount
|
Average
Maturity |
Rate
|
Amount
|
Average
Maturity |
Rate
|
|||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
|
Brokered CDs
|
$ | 34,148 |
1.0 years
|
1.82 | % | $ | 273,546 |
2.4 years
|
2.89 | % | ||||||||
|
Fixed rate FHLB advances
|
32,719 |
3.3 years
|
4.13 | 21,022 |
5.9 years
|
6.34 | ||||||||||||
|
Variable rate FHLB advances(1)
|
3,000 |
2.6 years
|
0.35 | 50,000 |
0.8 years
|
0.41 | ||||||||||||
|
Total
|
$ | 69,867 |
2.1 years
|
2.84 | % | $ | 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
|
September 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
|
78,802 | 75,700 | ||||||
|
Common stock
|
248,505 | 246,407 | ||||||
|
Accumulated deficit
|
(204,491 | ) | (189,902 | ) | ||||
|
Accumulated other comprehensive loss
|
(12,014 | ) | (13,120 | ) | ||||
|
Total shareholders’ equity
|
110,802 | 119,085 | ||||||
|
Total capitalization
|
$ | 159,470 | $ | 167,753 | ||||
2
Non-Interest Income
| Three months ended |
Nine months ended
|
|||||||||||||||||||
|
September 30,
|
June 30,
|
September 30,
|
September 30,
|
|||||||||||||||||
|
2011
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||
|
Service charges on deposit accounts
|
$ | 4,623 | $ | 4,784 | $ | 5,516 | $ | 13,689 | $ | 16,624 | ||||||||||
|
Interchange income
|
2,356 | 2,308 | 2,075 | 6,832 | 6,097 | |||||||||||||||
|
Net gains (losses) on assets
|
||||||||||||||||||||
|
Mortgage loans
|
2,025 | 1,793 | 3,829 | 5,753 | 8,044 | |||||||||||||||
|
Securities
|
(57 | ) | 115 | (3 | ) | 271 | 1,625 | |||||||||||||
|
Other than temporary loss on securities available for sale
|
||||||||||||||||||||
|
Total impairment loss
|
(4 | ) | 327 | (316 | ) | (146 | ) | (434 | ) | |||||||||||
|
Loss recognized in other comprehensive income
|
- | (327 | ) | - | - | - | ||||||||||||||
|
Net impairment loss recognized in earnings
|
(4 | ) | - | (316 | ) | (146 | ) | (434 | ) | |||||||||||
|
Mortgage loan servicing
|
(2,655 | ) | (126 | ) | (1,377 | ) | (1,885 | ) | (2,988 | ) | ||||||||||
|
Investment and insurance commissions
|
534 | 524 | 506 | 1,613 | 1,304 | |||||||||||||||
|
Bank owned life insurance
|
496 | 464 | 502 | 1,385 | 1,453 | |||||||||||||||
|
Title insurance fees
|
299 | 318 | 533 | 1,090 | 1,393 | |||||||||||||||
|
Decrease in fair value of U.S. Treasury warrant
|
29 | 642 | - | 1,025 | - | |||||||||||||||
|
Gain on extinguishment of debt
|
- | - | (20 | ) | - | 18,066 | ||||||||||||||
|
Other
|
1,609 | 1,634 | 1,233 | 4,795 | 3,420 | |||||||||||||||
|
Total non-interest income
|
$ | 9,255 | $ | 12,456 | $ | 12,478 | $ | 34,422 | $ | 54,604 | ||||||||||
Capitalized Mortgage Loan Servicing Rights
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
| (In thousands) | ||||||||||||||||
|
Balance at beginning of period
|
$ | 14,741 | $ | 13,022 | $ | 14,661 | $ | 15,273 | ||||||||
|
Originated servicing rights capitalized
|
573 | 1,084 | 2,068 | 2,539 | ||||||||||||
|
Amortization
|
(688 | ) | (1,104 | ) | (2,011 | ) | (2,495 | ) | ||||||||
|
Change in valuation allowance
|
(3,077 | ) | (1,335 | ) | (3,169 | ) | (3,650 | ) | ||||||||
|
Balance at end of period
|
$ | 11,549 | $ | 11,667 | $ | 11,549 | $ | 11,667 | ||||||||
|
Valuation allowance at end of period
|
$ | 6,379 | $ | 5,952 | $ | 6,379 | $ | 5,952 | ||||||||
Mortgage Loan Activity
|
Three months ended
|
Nine months ended
|
|||||||||||||||||||
|
September 30,
|
June 30,
|
September 30,
|
September 30,
|
|||||||||||||||||
|
2011
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
|
Mortgage loans originated
|
$ | 89,526 | $ | 74,612 | $ | 153,920 | $ | 259,711 | $ | 337,827 | ||||||||||
|
Mortgage loans sold
|
80,993 | 63,369 | 124,383 | 265,850 | 299,674 | |||||||||||||||
|
Mortgage loans sold with servicing rights released
|
25,179 | 18,428 | 20,411 | 60,179 | 53,022 | |||||||||||||||
|
Net gains on the sale of mortgage loans
|
2,025 | 1,793 | 3,829 | 5,753 | 8,044 | |||||||||||||||
|
Net gains as a percent of mortgage
|
||||||||||||||||||||
|
loans sold (“Loan Sales Margin”)
|
2.50 | % | 2.83 | % | 3.08 | % | 2.16 | % | 2.68 | % | ||||||||||
|
Fair value adjustments included in the Loan
|
||||||||||||||||||||
|
Sales Margin
|
0.15 | 0.63 | 0.83 | (0.14 | ) | 0.45 | ||||||||||||||
3
Non-Interest Expense
|
Three months ended
|
Nine months ended
|
|||||||||||||||||||
|
September 30,
|
June 30,
|
September 30,
|
September 30,
|
|||||||||||||||||
|
2011
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||
|
Compensation
|
$ | 10,158 | $ | 10,020 | $ | 10,336 | $ | 29,990 | $ | 30,754 | ||||||||||
|
Performance-based compensation
|
281 | 334 | 357 | 772 | 1,656 | |||||||||||||||
|
Payroll taxes and employee benefits
|
2,215 | 2,675 | 2,113 | 7,270 | 7,039 | |||||||||||||||
|
Compensation and employee benefits
|
12,654 | 13,029 | 12,806 | 38,032 | 39,449 | |||||||||||||||
|
Loan and collection
|
2,658 | 3,580 | 3,805 | 10,105 | 11,376 | |||||||||||||||
|
Occupancy, net
|
2,651 | 2,663 | 2,721 | 8,415 | 8,225 | |||||||||||||||
|
Data processing
|
2,502 | 2,415 | 2,248 | 7,227 | 7,187 | |||||||||||||||
|
Vehicle service contract counterparty contingencies
|
1,345 | 1,311 | 5,968 | 5,002 | 14,247 | |||||||||||||||
|
Furniture, fixtures and equipment
|
1,308 | 1,502 | 1,591 | 4,228 | 4,958 | |||||||||||||||
|
Net losses on other real estate and repossessed assets
|
1,931 | 777 | 1,296 | 4,114 | 4,879 | |||||||||||||||
|
Credit card and bank service fees
|
869 | 1,013 | 1,378 | 2,929 | 4,553 | |||||||||||||||
|
FDIC deposit insurance
|
885 | 652 | 1,651 | 2,772 | 5,216 | |||||||||||||||
|
Communications
|
863 | 889 | 1,054 | 2,700 | 3,142 | |||||||||||||||
|
Legal and professional fees
|
751 | 801 | 831 | 2,330 | 2,861 | |||||||||||||||
|
Advertising
|
740 | 670 | 692 | 1,964 | 2,145 | |||||||||||||||
|
Supplies
|
376 | 392 | 429 | 1,170 | 1,237 | |||||||||||||||
|
Amortization of intangible assets
|
343 | 343 | 320 | 1,029 | 965 | |||||||||||||||
|
Costs (recoveries) related to unfunded lending commitments
|
(172 | ) | 89 | (807 | ) | 12 | (471 | ) | ||||||||||||
|
Other
|
1,758 | 1,779 | 1,525 | 5,206 | 4,634 | |||||||||||||||
|
Total non-interest expense
|
$ | 31,462 | $ | 31,905 | $ | 37,508 | $ | 97,235 | $ | 114,603 | ||||||||||
4
Average Balances and Rates
|
Three Months Ended
September 30, |
||||||||||||||||||||||||
|
2011
|
2010
|
|||||||||||||||||||||||
|
Average
Balance |
Interest
|
Rate(3)
|
Average
Balance |
Interest
|
Rate(3)
|
|||||||||||||||||||
|
Assets (1)
|
(Dollars in thousands)
|
|||||||||||||||||||||||
|
Taxable loans
|
$ | 1,668,940 | $ | 27,140 | 6.47 | % | $ | 2,012,966 | $ | 34,269 | 6.77 | % | ||||||||||||
|
Tax-exempt loans (2)
|
7,728 | 82 | 4.21 | 9,398 | 101 | 4.26 | ||||||||||||||||||
|
Taxable securities
|
49,911 | 297 | 2.36 | 76,935 | 509 | 2.62 | ||||||||||||||||||
|
Tax-exempt securities (2)
|
29,259 | 301 | 4.08 | 35,441 | 383 | 4.29 | ||||||||||||||||||
|
Cash – interest bearing
|
282,170 | 179 | 0.25 | 358,183 | 260 | 0.29 | ||||||||||||||||||
|
Other investments
|
21,005 | 188 | 3.55 | 26,443 | 165 | 2.48 | ||||||||||||||||||
|
Interest Earning Assets
|
2,059,013 | 28,187 | 5.44 | 2,519,366 | 35,687 | 5.63 | ||||||||||||||||||
|
Cash and due from banks
|
56,233 | 53,518 | ||||||||||||||||||||||
|
Other assets, net
|
192,282 | 173,850 | ||||||||||||||||||||||
|
Total Assets
|
$ | 2,307,528 | $ | 2,746,734 | ||||||||||||||||||||
|
Liabilities
|
||||||||||||||||||||||||
|
Savings and NOW
|
$ | 1,008,525 | 608 | 0.24 | $ | 1,092,202 | 648 | 0.24 | ||||||||||||||||
|
Time deposits
|
577,723 | 2,622 | 1.80 | 938,930 | 6,089 | 2.57 | ||||||||||||||||||
|
Other borrowings
|
86,696 | 1,183 | 5.41 | 183,589 | 1,965 | 4.25 | ||||||||||||||||||
|
Interest Bearing Liabilities
|
1,672,944 | 4,413 | 1.05 | 2,214,721 | 8,702 | 1.56 | ||||||||||||||||||
|
Demand deposits
|
477,093 | 361,517 | ||||||||||||||||||||||
|
Other liabilities
|
42,614 | 48,905 | ||||||||||||||||||||||
|
Shareholders’ equity
|
114,877 | 121,591 | ||||||||||||||||||||||
|
Total liabilities and shareholders’ equity
|
$ | 2,307,528 | $ | 2,746,734 | ||||||||||||||||||||
|
Net Interest Income
|
$ | 23,774 | $ | 26,985 | ||||||||||||||||||||
|
Net Interest Income as a Percent of Earning Assets
|
4.59 | % | 4.26 | % | ||||||||||||||||||||
|
(1)
|
All domestic, except for $0.01 million and $0.2 million for the three months ended September 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.
|
5
Average Balances and Rates
|
Nine Months Ended
September 30,
|
||||||||||||||||||||||||
|
2011
|
2010
|
|||||||||||||||||||||||
|
Average
Balance |
Interest
|
Rate(3)
|
Average
Balance |
Interest
|
Rate(3)
|
|||||||||||||||||||
|
Assets (1)
|
(Dollars in thousands)
|
|||||||||||||||||||||||
|
Taxable loans
|
$ | 1,728,076 | $ | 84,554 | 6.54 | % | $ | 2,126,705 | $ | 109,760 | 6.90 | % | ||||||||||||
|
Tax-exempt loans (2)
|
8,064 | 254 | 4.21 | 9,795 | 312 | 4.26 | ||||||||||||||||||
|
Taxable securities
|
51,010 | 1,108 | 2.90 | 86,830 | 2,571 | 3.96 | ||||||||||||||||||
|
Tax-exempt securities (2)
|
30,087 | 931 | 4.14 | 49,516 | 1,594 | 4.30 | ||||||||||||||||||
|
Cash – interest bearing
|
319,288 | 605 | 0.25 | 319,548 | 609 | 0.25 | ||||||||||||||||||
|
Other investments
|
22,486 | 580 | 3.45 | 27,094 | 577 | 2.85 | ||||||||||||||||||
|
Interest Earning Assets
|
2,159,011 | 88,032 | 5.45 | 2,619,488 | 115,423 | 5.89 | ||||||||||||||||||
|
Cash and due from banks
|
52,475 | 53,742 | ||||||||||||||||||||||
|
Other assets, net
|
191,215 | 160,960 | ||||||||||||||||||||||
|
Total Assets
|
$ | 2,402,701 | $ | 2,834,190 | ||||||||||||||||||||
|
Liabilities
|
||||||||||||||||||||||||
|
Savings and NOW
|
$ | 1,005,436 | 1,805 | 0.24 | $ | 1,088,437 | 2,181 | 0.27 | ||||||||||||||||
|
Time deposits
|
687,043 | 10,881 | 2.12 | 1,028,119 | 20,283 | 2.64 | ||||||||||||||||||
|
Other borrowings
|
95,337 | 3,738 | 5.24 | 212,901 | 7,372 | 4.63 | ||||||||||||||||||
|
Interest Bearing Liabilities
|
1,787,816 | 16,424 | 1.23 | 2,329,457 | 29,836 | 1.71 | ||||||||||||||||||
|
Demand deposits
|
456,514 | 343,340 | ||||||||||||||||||||||
|
Other liabilities
|
43,977 | 55,486 | ||||||||||||||||||||||
|
Shareholders’ equity
|
114,394 | 105,907 | ||||||||||||||||||||||
|
Total liabilities and shareholders’ equity
|
$ | 2,402,701 | $ | 2,834,190 | ||||||||||||||||||||
|
Net Interest Income
|
$ | 71,608 | $ | 85,587 | ||||||||||||||||||||
|
Net Interest Income as a Percent of Earning Assets
|
4.43 | % | 4.37 | % | ||||||||||||||||||||
|
(1)
|
All domestic, except for $0.02 million and $0.5 million for the nine months ended September 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.
|
6
Commercial Loan Portfolio Analysis as of September 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
|
$ | 18,872 | $ | 3,992 | $ | 2,441 | $ | 6,433 | 34.1 | % | ||||||||||
|
Land Development
|
19,854 | 9,855 | 1,707 | 11,562 | 58.2 | |||||||||||||||
|
Construction
|
18,422 | 4,058 | 396 | 4,454 | 24.2 | |||||||||||||||
|
Income Producing
|
278,912 | 57,929 | 10,175 | 68,104 | 24.4 | |||||||||||||||
|
Owner Occupied
|
174,978 | 27,574 | 4,891 | 32,465 | 18.6 | |||||||||||||||
|
Total Commercial Real Estate Loans (1)
|
$ | 511,038 | $ | 103,408 | 19,610 | $ | 123,018 | 24.1 | ||||||||||||
|
Other Commercial Loans(1)
|
$ | 143,284 | $ | 18,585 | 2,717 | $ | 21,302 | 14.9 | ||||||||||||
|
Total non-performing commercial loans
|
$ | 22,327 | ||||||||||||||||||
|
|
(1)
|
The total of these two categories is different than the September 30, 2011, Consolidated Statement of Financial Condition due primarily to loans in process.
|
7