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

Attached files

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8-K - FORM 8-K - INDEPENDENT BANK CORP /MI/	k50004e8vk.htm
EX-99.1 - EX-99.1 - INDEPENDENT BANK CORP /MI/	k50004exv99w1.htm

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data

Non-performing assets⁽¹⁾


	December 31,
	2010			2009
	(dollars in thousands)
Non-accrual loans	$	66,652		$	105,965
Loans 90 days or more past due and still accruing interest		928			3,940

Total non-performing loans		67,580			109,905
Other real estate and repossessed assets		39,413			31,534

Total non-performing assets	$	106,993		$	141,439

As a percent of Portfolio Loans
Non-performing loans		3.73	%		4.78	%
Allowance for loan losses		3.75			3.55
Non-performing assets to total assets		4.22			4.77
Allowance for loan losses as a percent of non-performing loans		100.50			74.35


⁽¹⁾		Excludes loans that are classified as “troubled debt restructured” that are still performing.

Troubled debt restructurings (“TDRs”)


	December 31, 2010
	Commercial		Retail			Total
	(dollars in thousands)
Performing TDRs	$	16,957	$	96,856		$	113,813
Non-performing TDRs ⁽¹⁾		7,814		16,616	⁽²⁾		24,430

Total	$	24,771	$	113,472		$	138,243


	December 31, 2009
	Commercial		Retail			Total
	(dollars in thousands)
Performing TDRs	$	3,500	$	68,461		$	71,961
Non-performing TDRs ⁽¹⁾		—		14,937	⁽²⁾		14,937

Total	$	3,500	$	83,398		$	86,898


⁽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.

Allowance for loan losses


	Twelve months ended
	December 31,
	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		46,765			—			103,318			—
Recoveries credited to allowance		3,612			—			2,795			—
Loans charged against the allowance		(64,179	)		—			(82,296	)		—
Additions (deductions) included in non-interest expense		—			(536	)		—			(286	)

Balance at end of period	$	67,915		$	1,322		$	81,717		$	1,858


Net loans charged against the allowance to average Portfolio Loans		2.97	%					3.28	%

Alternative Sources of Funds


	December 31,
	2010						2009
			Average						Average
	Amount		Maturity	Rate			Amount		Maturity	Rate
	(dollars in thousands)
Brokered CDs	$	273,546	2.4 years		2.89	%	$	629,150	2.2 years	2.46	%
Fixed rate FHLB advances		21,022	5.9 years		6.34			27,382	5.5 years	6.59
Variable rate FHLB advances		50,000	0.8 years		0.41			67,000	1.4 years	0.32
Securities sold under agreements to repurchase								35,000	.9 years	4.42

Total	$	344,568	2.4 years		2.74	%	$	758,532	2.2 years	2.51	%

Capitalization


	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		75,700			69,157
Common stock		246,407			2,386
Capital surplus		—			223,095
Accumulated deficit		(189,902	)		(169,098	)
Accumulated other comprehensive loss		(13,120	)		(15,679	)

Total shareholders’ equity		119,085			109,861

Total capitalization	$	167,753		$	199,961

Non-Interest Income


				Three months ended						Twelve months ended
	December 31,			September 30,			December 31,			December 31,
	2010			2010			2009			2010			2009
	(in thousands)
Service charges on deposit accounts	$	4,887		$	5,516		$	6,158		$	21,511		$	24,370
Net gains (losses) on assets
Mortgage loans		4,286			3,829			2,060			12,330			10,860
Securities		14			(3	)		39			1,639			3,826
Other than temporary loss on securities available for sale
Total impairment loss		(28	)		(316	)		(4,056	)		(462	)		(4,073	)
Loss recognized in other comprehensive loss		—			—			3,991			—			3,991

Net impairment loss recognized in earnings		(28	)		(316	)		(65	)		(462	)		(82	)
VISA check card interchange income		2,160			2,075			1,858			8,257			7,064
Mortgage loan servicing		2,465			(1,377	)		1,241			(523	)		2,252
Mutual fund and annuity commissions		585			506			527			1,889			2,017
Bank owned life insurance		464			502			472			1,917			1,615
Title insurance fees		644			533			410			2,037			2,272
Gain (loss) on extinguishment of debt		—			(20	)		—			18,066			—
Other		1,732			1,233			920			5,152			5,607

Total non-interest income	$	17,209		$	12,478		$	13,620		$	71,813		$	59,801

Capitalized Mortgage Loan Servicing Rights


	Three months ended						Twelve months ended
	December 31,						December 31,
	2010			2009			2010			2009
				(in thousands)
Balance at beginning of period	$	11,667		$	14,334		$	15,273		$	11,966
Originated servicing rights capitalized		1,619			769			4,158			5,213
Amortization		(1,367	)		(720	)		(3,862	)		(4,255	)
(Increase)/decrease in impairment reserve		2,742			890			(908	)		2,349

Balance at end of period	$	14,661		$	15,273		$	14,661		$	15,273


Impairment reserve at end of period	$	3,210		$	2,302		$	3,210		$	2,302

Mortgage Loan Activity


				Three months ended						Twelve months ended
	December 31,			September 30,			December 31,			December 31,
	2010			2010			2009			2010			2009
				(dollars in thousands)
Mortgage loans originated	$	178,508		$	153,920		$	114,254		$	516,335		$	576,018
Mortgage loans sold		180,892			124,383			95,386			480,566			540,713
Mortgage loans sold with servicing rights released		24,058			20,411			20,216			77,080			55,495
Net gains on the sale of mortgage loans		4,286			3,829			2,060			12,330			10,860
Net gains as a percent of mortgage loans sold (“Loan Sales Margin”)		2.37	%		3.08	%		2.16	%		2.57	%		2.01	%
Fair value adjustments included in the Loan
Sales Margin		(0.49	)		0.83			0.11			0.10			0.07

Non-Interest Expense


				Three months ended					Twelve months ended
	December 31,			September 30,			December 31,		December 31,
	2010			2010			2009		2010			2009
	(in thousands)
Salaries	$	10,073		$	10,336		$	10,364	$	40,827		$	40,053
Performance-based compensation and benefits		147			357			746		1,803			2,889
Other benefits		2,042			2,113			2,165		9,081			10,061

Compensation and employee benefits		12,262			12,806			13,275		51,711			53,003
Vehicle service contract counterparty contingencies		4,386			5,968			19,506		18,633			31,234
Loan and collection		3,947			3,805			3,834		15,323			14,727
Occupancy, net		2,791			2,721			2,882		11,016			11,092
Loss on other real estate and repossessed assets		4,843			1,296			1,796		9,722			8,554
Data processing		2,367			2,248			2,465		9,554			9,528
FDIC deposit insurance		1,589			1,651			1,658		6,805			7,328
Furniture, fixtures and equipment		1,582			1,591			1,735		6,540			7,159
Credit card and bank service fees		1,237			1,378			1,754		5,790			6,608
Communications		996			1,054			1,120		4,138			4,424
Legal and professional		1,239			831			1,144		4,100			3,222
Advertising		567			692			1,498		2,712			5,696
Supplies		393			429			470		1,630			1,835
Amortization of intangible assets		315			320			523		1,280			1,930
Goodwill impairment								16,734					16,734
Costs (recoveries) related to unfunded lending commitments		(65	)		(807	)		6		(536	)		(286	)
Other		1,948			1,525			1,119		6,582			5,655

Total non-interest expense	$	40,397		$	37,508		$	71,519	$	155,000		$	188,443

Average Balances and Rates


					Three Months Ended
					December 31,
	2010							2009
	Average							Average
	Balance		Interest		Rate⁽³⁾			Balance		Interest		Rate⁽³⁾
					(dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,911,195	$	32,116		6.68	%	$	2,370,452	$	42,910		7.20	%
Tax-exempt loans ⁽²⁾		8,750		94		4.26			10,361		123		4.71
Taxable securities		68,171		481		2.80			102,509		1,420		5.50
Tax-exempt securities ⁽²⁾		32,483		338		4.13			71,448		745		4.14
Cash — interest bearing		337,468		215		0.25			194,683		134		0.27
Other investments		24,839		184		2.94			27,854		110		1.57

Interest Earning Assets		2,382,906		33,428		5.58			2,777,307		45,442		6.50

Cash and due from banks		49,989							54,206
Other assets, net		188,395							148,612

Total Assets	$	2,621,290						$	2,980,125


Liabilities
Savings and NOW	$	1,094,605		648		0.23		$	1,039,884		1,274		0.49
Time deposits		829,668		5,052		2.42			1,143,307		7,663		2.66
Other borrowings		153,898		1,662		4.28			249,811		3,107		4.93

Interest Bearing Liabilities		2,078,171		7,362		1.41			2,433,002		12,044		1.96

Demand deposits		375,448							331,204
Other liabilities		49,532							70,489
Shareholders’ equity		118,139							145,430

Total liabilities and shareholders’ equity	$	2,621,290						$	2,980,125


Net Interest Income			$	26,066						$	33,398


Net Interest Income as a Percent of Earning Assets						4.35	%						4.78	%


(1)		All domestic, except for $0.1 million and $2.1 million for the three months ended December 31, 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.

(3)		Annualized.

Average Balances and Rates


					Twelve Months Ended
					December 31,
	2010							2009
	Average							Average
	Balance		Interest		Rate			Balance		Interest		Rate
					(dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	2,072,586	$	141,876		6.85	%	$	2,461,896	$	177,557		7.21	%
Tax-exempt loans ⁽²⁾		9,531		406		4.26			8,672		391		4.51
Taxable securities		82,127		3,052		3.72			111,558		6,333		5.68
Tax-exempt securities ⁽²⁾		45,223		1,932		4.27			85,954		3,669		4.27
Cash — interest bearing		324,065		824		0.25			72,606		174		0.24
Other investments		26,526		761		2.87			28,304		932		3.29

Interest Earning Assets		2,560,058		148,851		5.81			2,768,990		189,056		6.83

Cash and due from banks		50,739							55,451
Other assets, net		167,873							157,762

Total Assets	$	2,778,670						$	2,982,203


Liabilities
Savings and NOW	$	1,089,992		2,829		0.26		$	992,529		5,751		0.58
Time deposits		978,098		25,335		2.59			1,019,624		29,654		2.91
Other borrowings		198,030		9,034		4.56			394,975		15,128		3.83

Interest Bearing Liabilities		2,266,120		37,198		1.64			2,407,128		50,533		2.10

Demand deposits		349,376							321,802
Other liabilities		54,183							80,281
Shareholders’ equity		108,991							172,992

Total liabilities and shareholders’ equity	$	2,778,670						$	2,982,203


Net Interest Income			$	111,653						$	138,523


Net Interest Income as a Percent of Earning Assets						4.36	%						5.00	%


(1)		All domestic, except for $0.4 million and $5.1 million for the twelve months ended December 31, 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.

Commercial Loan Portfolio Analysis as of December 31, 2010


					Total Commercial Loans				Percent of
			Watch Credits						Loan
									Category in Watch
Loan Category	All Loans		Performing		Non- performing		Total		Credit
					(dollars in thousands)
Land	$	21,345	$	5,919	$	2,369	$	8,288		38.8	%
Land Development		22,869		9,564		3,418		12,982		56.8
Construction		18,259		4,081		3,884		7,965		43.6
Income Producing		308,006		71,427		12,197		83,624		27.2
Owner Occupied		186,326		32,962		5,757		38,719		20.8

Total Commercial Real Estate Loans ⁽¹⁾	$	556,805	$	123,953	$	27,625	$	151,578		27.2


Other Commercial Loans⁽¹⁾	$	151,128	$	24,242		1,916	$	26,158		17.3

Total non-performing commercial loans					$	29,541


(1)		The total of these two categories is different than the December 31, 2010, Consolidated Statement of Financial Condition due primarily to loans in process.

INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - February 1, 2011

Attached files

INDEPENDENT BANK CORP /MI/ Reports