INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data | Exhibit 99.2 |
Non-performing assets
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
(dollars in thousands) | ||||||||
Non-accrual loans | $ | 84,158 | $ | 105,965 | ||||
Loans 90 days or more past due and still accruing interest | 356 | 3,940 | ||||||
Total non-performing loans | 84,514 | 109,905 | ||||||
Other real estate and repossessed assets | 41,785 | 31,534 | ||||||
Total non-performing assets | $ | 126,299 | $ | 141,439 | ||||
As a percent of Portfolio Loans | ||||||||
Non-performing loans | 4.16 | % | 4.78 | % | ||||
Allowance for loan losses | 3.72 | 3.55 | ||||||
Non-performing assets to total assets | 4.61 | 4.77 | ||||||
Allowance for loan losses as a percent of non-performing loans | 89.46 | 74.35 |
Allowance for loan losses
Six months ended | ||||||||||||||||
June 30, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Unfunded | Unfunded | |||||||||||||||
Loans | Commitments | Loans | Commitments | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 81,717 | $ | 1,858 | $ | 57,900 | $ | 2,144 | ||||||||
Additions (deduction) | ||||||||||||||||
Provision for loan losses | 29,694 | 55,783 | ||||||||||||||
Recoveries credited to allowance | 1,839 | 1,494 | ||||||||||||||
Loans charged against the allowance | (37,644 | ) | (49,906 | ) | ||||||||||||
Additions (deductions) included in non-interest expense | 336 | (152 | ) | |||||||||||||
Balance at end of period | $ | 75,606 | $ | 2,194 | $ | 65,271 | $ | 1,992 | ||||||||
Net loans charged against the allowance to average Portfolio Loans (annualized) | 3.33 | % | 3.98 | % |
Alternative Sources of Funds
June 30, | December 31, | |||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Amount | Maturity | Rate | Amount | Maturity | Rate | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Brokered CDs | $ | 422,749 | 2.5 years | 2.95 | % | $ | 629,150 | 2.2 years | 2.46 | % | ||||||||||||||
Fixed rate FHLB advances | 23,275 | 5.9 years | 6.41 | 27,382 | 5.5 years | 6.59 | ||||||||||||||||||
Variable rate FHLB advances | 75,000 | 1.2 years | 0.48 | 67,000 | 1.4 years | 0.32 | ||||||||||||||||||
Securities sold under agreements to repurchase | 35,000 | .4 years | 4.42 | 35,000 | .9 years | 4.42 | ||||||||||||||||||
Total | $ | 556,024 | 2.3 years | 2.86 | % | $ | 758,532 | 2.2 years | 2.51 | % | ||||||||||||||
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Capitalization
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
Subordinated debentures | $ | 50,175 | $ | 92,888 | ||||
Amount not qualifying as regulatory capital | (1,507 | ) | (2,788 | ) | ||||
Amount qualifying as regulatory capital | 48,668 | 90,100 | ||||||
Shareholders’ Equity | ||||||||
Preferred stock | 70,458 | 69,157 | ||||||
Common stock | 250,737 | 23,863 | ||||||
Capital surplus | 201,618 | |||||||
Accumulated deficit | (177,242 | ) | (169,098 | ) | ||||
Accumulated other comprehensive loss | (14,281 | ) | (15,679 | ) | ||||
Total shareholders’ equity | 129,672 | 109,861 | ||||||
Total capitalization | $ | 178,340 | $ | 199,961 | ||||
Non-Interest Income
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2010 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Service charges on deposit accounts | $ | 5,833 | $ | 5,275 | $ | 6,321 | $ | 11,108 | $ | 11,828 | ||||||||||
Net gains (losses) on assets | ||||||||||||||||||||
Mortgage loans | 2,372 | 1,843 | 3,262 | 4,215 | 6,543 | |||||||||||||||
Securities | 1,363 | 265 | 4,230 | 1,628 | 3,666 | |||||||||||||||
Other than temporary loss on securities available for sale | ||||||||||||||||||||
Total impairment loss | (118 | ) | (118 | ) | (17 | ) | ||||||||||||||
Loss recognized in other comprehensive loss | ||||||||||||||||||||
Net impairment loss recognized in earnings | (118 | ) | (118 | ) | (17 | ) | ||||||||||||||
VISA check card interchange income | 1,655 | 1,572 | 1,500 | 3,227 | 2,915 | |||||||||||||||
Mortgage loan servicing | (2,043 | ) | 432 | 2,349 | (1,611 | ) | 1,507 | |||||||||||||
Mutual fund and annuity commissions | 409 | 389 | 539 | 798 | 992 | |||||||||||||||
Bank owned life insurance | 483 | 468 | 355 | 951 | 756 | |||||||||||||||
Title insurance fees | 366 | 494 | 732 | 860 | 1,341 | |||||||||||||||
Gain on extinguishment of debt | 18,086 | 18,086 | ||||||||||||||||||
Other | 790 | 1,397 | 1,723 | 2,187 | 3,058 | |||||||||||||||
Total non-interest income | $ | 29,314 | $ | 12,017 | $ | 21,011 | $ | 41,331 | $ | 32,589 | ||||||||||
Capitalized Real Estate Mortgage Loan Servicing Rights
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 15,435 | $ | 11,589 | $ | 15,273 | $ | 11,966 | ||||||||
Originated servicing rights capitalized | 680 | 1,624 | 1,455 | 3,123 | ||||||||||||
Amortization | (633 | ) | (1,640 | ) | (1,391 | ) | (2,819 | ) | ||||||||
(Increase)/decrease in impairment reserve | (2,460 | ) | 2,965 | (2,315 | ) | 2,268 | ||||||||||
Balance at end of period | $ | 13,022 | $ | 14,538 | $ | 13,022 | $ | 14,538 | ||||||||
Impairment reserve at end of period | $ | 4,617 | $ | 2,383 | $ | 4,617 | $ | 2,383 | ||||||||
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Mortgage Loan Activity
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2010 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Mortgage loans originated | $ | 93,900 | $ | 90,007 | $ | 196,927 | $ | 183,907 | $ | 351,535 | ||||||||||
Mortgage loans sold | 87,583 | 87,708 | 158,173 | 175,291 | 300,809 | |||||||||||||||
Mortgage loans sold with servicing rights released | 20,747 | 11,864 | 9,174 | 32,611 | 14,603 | |||||||||||||||
Net gains on the sale of mortgage loans | 2,372 | 1,843 | 3,262 | 4,215 | 6,543 | |||||||||||||||
Net gains as a percent of mortgage loans sold (“Loan Sale Margin”) | 2.71 | % | 2.10 | % | 2.06 | % | 2.40 | % | 2.18 | % | ||||||||||
Fair value adjustments included in the Loan Sale Margin | 0.43 | (.07 | ) | 0.04 | 0.18 | 0.33 |
Non-Interest Expense
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2010 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Salaries | $ | 10,242 | $ | 10,176 | $ | 9,815 | $ | 20,418 | $ | 19,484 | ||||||||||
Performance-based compensation and benefits | 655 | 644 | 747 | 1,299 | 1,076 | |||||||||||||||
Other benefits | 2,533 | 2,393 | 2,766 | 4,926 | 5,345 | |||||||||||||||
Compensation and employee benefits | 13,430 | 13,213 | 13,328 | 26,643 | 25,905 | |||||||||||||||
Vehicle service contract counterparty contingencies | 4,861 | 3,418 | 2,215 | 8,279 | 3,015 | |||||||||||||||
Loan and collection | 2,785 | 4,786 | 3,227 | 7,571 | 7,265 | |||||||||||||||
Occupancy, net | 2,595 | 2,909 | 2,560 | 5,504 | 5,608 | |||||||||||||||
Data processing | 2,039 | 2,105 | 2,010 | 4,144 | 4,106 | |||||||||||||||
Loss on other real estate and repossessed assets | 1,554 | 2,029 | 1,939 | 3,583 | 3,200 | |||||||||||||||
FDIC deposit insurance | 1,763 | 1,802 | 2,755 | 3,565 | 3,941 | |||||||||||||||
Furniture, fixtures and equipment | 1,648 | 1,719 | 1,848 | 3,367 | 3,697 | |||||||||||||||
Credit card and bank service fees | 1,500 | 1,675 | 1,668 | 3,175 | 3,132 | |||||||||||||||
Communications | 1,015 | 1,073 | 1,107 | 2,088 | 2,152 | |||||||||||||||
Legal and professional | 894 | 1,136 | 705 | 2,030 | 1,346 | |||||||||||||||
Advertising | 674 | 779 | 1,421 | 1,453 | 2,863 | |||||||||||||||
Supplies | 415 | 393 | 457 | 808 | 926 | |||||||||||||||
Amortization of intangible assets | 323 | 322 | 474 | 645 | 975 | |||||||||||||||
Credit costs related to unfunded lending commitments | 280 | 56 | (66 | ) | 336 | (152 | ) | |||||||||||||
Other | 1,389 | 1,720 | 1,343 | 3,109 | 3,117 | |||||||||||||||
Total non-interest expense | $ | 37,165 | $ | 39,135 | $ | 36,991 | $ | 76,300 | $ | 71,096 | ||||||||||
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Average Balances and Rates
Three Months Ended | ||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Assets(1) | ||||||||||||||||||||||||
Taxable loans | $ | 2,115,837 | $ | 36,569 | 6.93 | % | $ | 2,513,367 | $ | 45,157 | 7.20 | % | ||||||||||||
Tax-exempt loans(2) | 9,866 | 106 | 4.31 | 7,069 | 67 | 3.80 | ||||||||||||||||||
Taxable securities | 87,554 | 902 | 4.13 | 118,116 | 1,705 | 5.79 | ||||||||||||||||||
Tax-exempt securities(2) | 49,012 | 526 | 4.30 | 88,601 | 976 | 4.42 | ||||||||||||||||||
Cash — interest bearing | 324,592 | 192 | 0.24 | |||||||||||||||||||||
Other investments | 27,001 | 197 | 2.93 | 28,011 | 239 | 3.42 | ||||||||||||||||||
Interest Earning Assets | 2,613,862 | 38,492 | 5.90 | 2,755,164 | 48,144 | 7.01 | ||||||||||||||||||
Cash and due from banks | 48,751 | 74,659 | ||||||||||||||||||||||
Other assets, net | 160,291 | 165,715 | ||||||||||||||||||||||
Total Assets | $ | 2,822,904 | $ | 2,995,538 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and NOW | $ | 1,088,526 | 670 | 0.25 | $ | 974,994 | 1,493 | 0.61 | ||||||||||||||||
Time deposits | 1,019,882 | 6,838 | 2.69 | 979,506 | 7,318 | 3.00 | ||||||||||||||||||
Other borrowings | 227,979 | 2,413 | 4.25 | 448,714 | 3,814 | 3.41 | ||||||||||||||||||
Interest Bearing Liabilities | 2,336,387 | 9,921 | 1.70 | 2,403,214 | 12,625 | 2.11 | ||||||||||||||||||
Demand deposits | 340,558 | 320,920 | ||||||||||||||||||||||
Other liabilities | 52,051 | 93,861 | ||||||||||||||||||||||
Shareholders’ equity | 93,908 | 177,543 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,822,904 | $ | 2,995,538 | ||||||||||||||||||||
Net Interest Income | $ | 28,571 | $ | 35,519 | ||||||||||||||||||||
Net Interest Income as a Percent of Earning Assets | 4.38 | % | 5.17 | % | ||||||||||||||||||||
(1) | All domestic, except for $0.4 million and $8.8 million for the three months ended June 30, 2010 and 2009, 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. |
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Average Balances and Rates
Six Months Ended | ||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Assets(1) | ||||||||||||||||||||||||
Taxable loans | $ | 2,184,046 | $ | 75,491 | 6.95 | % | $ | 2,504,582 | $ | 89,457 | 7.19 | % | ||||||||||||
Tax-exempt loans(2) | 9,997 | 211 | 4.26 | 8,490 | 168 | 3.99 | ||||||||||||||||||
Taxable securities | 91,859 | 2,062 | 4.53 | 116,478 | 3,438 | 5.95 | ||||||||||||||||||
Tax-exempt securities(2) | 56,671 | 1,211 | 4.31 | 95,795 | 2,083 | 4.38 | ||||||||||||||||||
Cash — interest bearing | 299,910 | 349 | 0.23 | |||||||||||||||||||||
Other investments | 27,426 | 412 | 3.03 | 28,641 | 563 | 3.96 | ||||||||||||||||||
Interest Earning Assets | 2,669,909 | 79,736 | 6.01 | 2,753,986 | 95,709 | 6.99 | ||||||||||||||||||
Cash and due from banks | 53,855 | 67,935 | ||||||||||||||||||||||
Other assets, net | 154,408 | 162,086 | ||||||||||||||||||||||
Total Assets | $ | 2,878,172 | $ | 2,984,007 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and NOW | $ | 1,086,524 | 1,533 | 0.28 | $ | 960,032 | 3,074 | 0.65 | ||||||||||||||||
Time deposits | 1,073,452 | 14,194 | 2.67 | 917,609 | 14,285 | 3.14 | ||||||||||||||||||
Other borrowings | 227,801 | 5,407 | 4.79 | 523,630 | 8,484 | 3.27 | ||||||||||||||||||
Interest Bearing Liabilities | 2,387,777 | 21,134 | 1.78 | 2,401,271 | 25,843 | 2.17 | ||||||||||||||||||
Demand deposits | 334,100 | 314,762 | ||||||||||||||||||||||
Other liabilities | 58,359 | 81,267 | ||||||||||||||||||||||
Shareholders’ equity | 97,936 | 186,707 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,878,172 | $ | 2,984,007 | ||||||||||||||||||||
Net Interest Income | $ | 58,602 | $ | 69,866 | ||||||||||||||||||||
Net Interest Income as a Percent of Earning Assets | 4.41 | % | 5.10 | % | ||||||||||||||||||||
(1) | All domestic, except for $0.7 million and $7.4 million for the six months ended June 30, 2010 and 2009, 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. |
16
Commercial Loan Portfolio Analysis as of June 30, 2010
Total Commercial Loans | ||||||||||||||||||||
Watch Credits | Percent of Loan Category in Watch | |||||||||||||||||||
Loan Category | All Loans | Performing | Non- performing | Total | Credit | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 28,587 | $ | 9,939 | $ | 3,621 | $ | 13,560 | 47.4 | % | ||||||||||
Land Development | 23,116 | 8,626 | 3,520 | 12,146 | 52.5 | |||||||||||||||
Construction | 24,372 | 13,638 | 2,392 | 16,030 | 65.8 | |||||||||||||||
Income Producing | 342,334 | 69,114 | 21,358 | 90,472 | 26.4 | |||||||||||||||
Owner Occupied | 182,962 | 34,292 | 4,728 | 39,020 | 21.3 | |||||||||||||||
Total Commercial Real Estate Loans(1) | $ | 601,371 | $ | 135,609 | $ | 35,619 | $ | 171,228 | 28.5 | |||||||||||
Other Commercial Loans(1) | $ | 165,386 | $ | 26,871 | 1,977 | $ | 28,848 | 17.4 | ||||||||||||
Total non-performing commercial loans | $ | 37,596 | ||||||||||||||||||
(1) | The total of these two categories is different than the June 30, 2010, Consolidated Statement of Financial Condition due primarily to loans in process. |
17