Attached files
file | filename |
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8-K - INDEPENDENT BANK CORPORATION 8-K 2-2-2012 - INDEPENDENT BANK CORP /MI/ | form8k.htm |
EX-99.1 - EXHIBIT 99.1 - INDEPENDENT BANK CORP /MI/ | ex99_1.htm |
Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets(1) | ||||||||
December 31, | ||||||||
2011
|
2010
|
|||||||
(Dollars in thousands) | ||||||||
Non-accrual loans
|
$ | 59,309 | $ | 66,652 | ||||
Loans 90 days or more past due and still accruing interest
|
574 | 928 | ||||||
Total non-performing loans
|
59,883 | 67,580 | ||||||
Other real estate and repossessed assets
|
34,042 | 39,413 | ||||||
Total non-performing assets
|
$ | 93,925 | $ | 106,993 | ||||
As a percent of Portfolio Loans
|
||||||||
Non-performing loans
|
3.80 | % | 3.73 | % | ||||
Allowance for loan losses
|
3.73 | 3.75 | ||||||
Non-performing assets to total assets
|
4.07 | 4.22 | ||||||
Allowance for loan losses as a percent of non-performing loans
|
98.33 | 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”)
|
||||||||||||
December 31, 2011
|
||||||||||||
Commercial
|
Retail
|
Total
|
||||||||||
(In thousands)
|
||||||||||||
Performing TDR’s
|
$ | 19,889 | $ | 86,770 | $ | 106,659 | ||||||
Non-performing TDR’s (1)
|
5,730 | 14,081 | (2) | 19,811 | ||||||||
Total
|
$ | 25,619 | $ | 100,851 | $ | 126,470 |
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 receive on a timely basis.
10
Allowance for loan losses |
Twelve months ended
|
||||||||||||||||
December 31, | ||||||||||||||||
2011
|
2010 | |||||||||||||||
Unfunded
|
Unfunded
|
|||||||||||||||
Loans
|
Commitments
|
Loans
|
Commitments
|
|||||||||||||
(Dollars in thousands) | ||||||||||||||||
Balance at beginning of period
|
$ | 67,915 | $ | 1,322 | $ | 81,717 | $ | 1,858 | ||||||||
Additions (deduction)
|
||||||||||||||||
Provision for loan losses
|
27,946 | - | 46,765 | - | ||||||||||||
Recoveries credited to allowance
|
4,747 | - | 3,612 | - | ||||||||||||
Loans charged against the allowance
|
(41,724 | ) | - | (64,179 | ) | - | ||||||||||
Additions (deductions) included in non-interest expense
|
- | (36 | ) | - | (536 | ) | ||||||||||
Balance at end of period
|
$ | 58,884 | $ | 1,286 | $ | 67,915 | $ | 1,322 | ||||||||
Net loans charged against the allowance to average Portfolio Loans
|
2.20 | % | 2.97 | % |
Alternative Sources of Funds |
December 31,
|
||||||||||||||||||
2011
|
2010
|
|||||||||||||||||
Average
|
Average
|
|||||||||||||||||
Amount
|
Maturity
|
Rate
|
Amount
|
Maturity
|
Rate
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||||
Brokered CDs
|
$ | 42,279 |
1.0 years
|
1.59 | % | $ | 273,546 |
2.4 years
|
2.89 | % | ||||||||
Fixed rate FHLB advances
|
30,384 |
3.3 years
|
3.99 | 21,022 |
5.9 years
|
6.34 | ||||||||||||
Variable rate FHLB advances(1)
|
3,000 |
2.3 years
|
0.51 | 50,000 |
0.8 years
|
0.41 | ||||||||||||
Total
|
$ | 75,663 |
2.0 years
|
2.51 | % | $ | 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
December 31,
|
||||||||
2011
|
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
|
79,857 | 75,700 | ||||||
Common stock
|
248,950 | 246,407 | ||||||
Accumulated deficit
|
(214,259 | ) | (189,902 | ) | ||||
Accumulated other comprehensive loss
|
(11,921 | ) | (13,120 | ) | ||||
Total shareholders’ equity
|
102,627 | 119,085 | ||||||
Total capitalization
|
$ | 151,295 | $ | 167,753 |
11
Non-Interest Income |
Three months ended
|
Twelve months ended
|
|||||||||||||||||||
December 31,
|
September 30,
|
December 31,
|
December 31,
|
|||||||||||||||||
2011
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Service charges on deposit accounts
|
$ | 4,617 | $ | 4,623 | $ | 4,887 | $ | 18,306 | $ | 21,511 | ||||||||||
Interchange income
|
2,259 | 2,356 | 2,160 | 9,091 | 8,257 | |||||||||||||||
Net gains (losses) on assets
|
||||||||||||||||||||
Mortgage loans
|
3,509 | 2,025 | 4,286 | 9,262 | 12,330 | |||||||||||||||
Securities
|
(22 | ) | (57 | ) | 14 | 249 | 1,639 | |||||||||||||
Other than temporary loss on securities available for sale
|
||||||||||||||||||||
Total impairment loss
|
(614 | ) | (4 | ) | (28 | ) | (760 | ) | (462 | ) | ||||||||||
Loss recognized in other comprehensive income
|
- | - | - | - | - | |||||||||||||||
Net impairment loss recognized in earnings
|
(614 | ) | (4 | ) | (28 | ) | (760 | ) | (462 | ) | ||||||||||
Mortgage loan servicing
|
(126 | ) | (2,655 | ) | 2,465 | (2,011 | ) | (523 | ) | |||||||||||
Investment and insurance commissions
|
437 | 534 | 585 | 2,050 | 1,889 | |||||||||||||||
Bank owned life insurance
|
493 | 496 | 464 | 1,878 | 1,917 | |||||||||||||||
Title insurance fees
|
375 | 299 | 644 | 1,465 | 2,037 | |||||||||||||||
Decrease in fair value of U.S. Treasury warrant
|
112 | 29 | 393 | 1,137 | 393 | |||||||||||||||
Gain on extinguishment of debt
|
- | - | - | - | 18,066 | |||||||||||||||
Other
|
1,451 | 1,609 | 1,339 | 6,246 | 4,759 | |||||||||||||||
Total non-interest income
|
$ | 12,491 | $ | 9,255 | $ | 17,209 | $ | 46,913 | $ | 71,813 |
Capitalized Mortgage Loan Servicing Rights
|
Three months ended
December 31,
|
Twelve months ended
December 31,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Balance at beginning of period
|
$ | 11,549 | $ | 11,667 | $ | 14,661 | $ | 15,273 | ||||||||
Originated servicing rights capitalized
|
899 | 1,619 | 2,967 | 4,158 | ||||||||||||
Amortization
|
(1,054 | ) | (1,367 | ) | (3,065 | ) | (3,862 | ) | ||||||||
Change in valuation allowance
|
(165 | ) | 2,742 | (3,334 | ) | (908 | ) | |||||||||
Balance at end of period
|
$ | 11,229 | $ | 14,661 | $ | 11,229 | $ | 14,661 | ||||||||
Valuation allowance at end of period
|
$ | 6,544 | $ | 3,210 | $ | 6,544 | $ | 3,210 |
Mortgage Loan Activity
|
Three months ended
|
Twelve months ended
|
|||||||||||||||||||
December 31
|
September 31
|
December 31
|
December 31
|
|||||||||||||||||
2011
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Mortgage loans originated
|
$ | 139,351 | $ | 89,526 | $ | 178,508 | $ | 399,062 | $ | 516,335 | ||||||||||
Mortgage loans sold
|
117,643 | 80,993 | 180,892 | 383,493 | 480,566 | |||||||||||||||
Mortgage loans sold with servicing rights released
|
21,017 | 25,179 | 24,058 | 81,196 | 77,080 | |||||||||||||||
Net gains on the sale of mortgage loans
|
3,509 | 2,025 | 4,286 | 9,262 | 12,330 | |||||||||||||||
Net gains as a percent of mortgage loans sold (“Loan Sales Margin”)
|
2.98 | % | 2.50 | % | 2.37 | % | 2.42 | % | 2.57 | % | ||||||||||
Fair value adjustments included in the Loan Sales Margin
|
0.29 | 0.15 | (0.49 | ) | (0.01 | ) | 0.10 |
12
Non-Interest Expense
|
Three months ended
|
Twelve months ended
|
|||||||||||||||||||
December 31,
|
September 30,
|
December 31,
|
December 31,
|
|||||||||||||||||
2011
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Compensation
|
$ | 9,845 | $ | 10,158 | $ | 10,073 | $ | 39,835 | $ | 40,827 | ||||||||||
Performance-based compensation
|
677 | 281 | 147 | 1,449 | 1,803 | |||||||||||||||
Payroll taxes and employee benefits
|
1,930 | 2,215 | 2,042 | 9,200 | 9,081 | |||||||||||||||
Compensation and employee benefits
|
12,452 | 12,654 | 12,262 | 50,484 | 51,711 | |||||||||||||||
Loan and collection
|
2,309 | 2,658 | 3,947 | 12,414 | 15,323 | |||||||||||||||
Occupancy, net
|
2,768 | 2,651 | 2,791 | 11,183 | 11,016 | |||||||||||||||
Vehicle service contract counterparty contingencies
|
6,046 | 1,345 | 4,386 | 11,048 | 18,633 | |||||||||||||||
Data processing
|
2,524 | 2,502 | 2,367 | 9,751 | 9,554 | |||||||||||||||
Net losses on other real estate and repossessed assets
|
1,710 | 1,931 | 4,843 | 5,824 | 9,722 | |||||||||||||||
Furniture, fixtures and equipment
|
1,307 | 1,308 | 1,582 | 5,535 | 6,540 | |||||||||||||||
Legal and professional fees
|
1,611 | 751 | 1,239 | 3,941 | 4,100 | |||||||||||||||
Credit card and bank service fees
|
727 | 869 | 1,237 | 3,656 | 5,790 | |||||||||||||||
Communications
|
852 | 863 | 996 | 3,552 | 4,138 | |||||||||||||||
FDIC deposit insurance
|
735 | 885 | 1,589 | 3,507 | 6,805 | |||||||||||||||
Advertising
|
539 | 740 | 567 | 2,503 | 2,712 | |||||||||||||||
Provision for loss reimbursement on sold loans
|
973 | 251 | 55 | 1,993 | 215 | |||||||||||||||
Supplies
|
401 | 376 | 393 | 1,571 | 1,630 | |||||||||||||||
Amortization of intangible assets
|
342 | 343 | 315 | 1,371 | 1,280 | |||||||||||||||
Recoveries related to unfunded lending commitments
|
(48 | ) | (172 | ) | (65 | ) | (36 | ) | (536 | ) | ||||||||||
Other
|
1,465 | 1,507 | 1,893 | 5,651 | 6,367 | |||||||||||||||
Total non-interest expense
|
$ | 36,713 | $ | 31,462 | $ | 40,397 | $ | 133,948 | $ | 155,000 |
13
Average Balances and Rates
|
Three Months Ended
December 31,
|
||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Average
Balance
|
Interest
|
Rate(3)
|
Average
Balance
|
Interest
|
Rate(3)
|
|||||||||||||||||||
Assets (1)
|
(Dollars in thousands)
|
|||||||||||||||||||||||
Taxable loans
|
$ | 1,632,445 | $ | 25,688 | 6.26 | % | $ | 1,911,195 | $ | 32,116 | 6.68 | % | ||||||||||||
Tax-exempt loans (2)
|
7,378 | 78 | 4.19 | 8,750 | 94 | 4.26 | ||||||||||||||||||
Taxable securities
|
95,859 | 314 | 1.30 | 68,171 | 481 | 2.80 | ||||||||||||||||||
Tax-exempt securities (2)
|
28,214 | 288 | 4.05 | 32,483 | 338 | 4.13 | ||||||||||||||||||
Cash – interest bearing
|
292,658 | 187 | 0.25 | 337,468 | 215 | 0.25 | ||||||||||||||||||
Other investments
|
20,893 | 175 | 3.32 | 24,839 | 184 | 2.94 | ||||||||||||||||||
Interest Earning Assets
|
2,077,447 | 26,730 | 5.12 | 2,382,906 | 33,428 | 5.58 | ||||||||||||||||||
Cash and due from banks
|
54,944 | 49,989 | ||||||||||||||||||||||
Other assets, net
|
180,769 | 188,395 | ||||||||||||||||||||||
Total Assets
|
$ | 2,313,160 | $ | 2,621,290 | ||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Savings and interest-bearing checking
|
$ | 1,008,884 | 458 | 0.18 | $ | 1,094,605 | 648 | 0.23 | ||||||||||||||||
Time deposits
|
567,629 | 2,113 | 1.48 | 829,668 | 5,052 | 2.42 | ||||||||||||||||||
Other borrowings
|
85,586 | 1,198 | 5.55 | 153,898 | 1,662 | 4.28 | ||||||||||||||||||
Interest Bearing Liabilities
|
1,662,099 | 3,769 | .90 | 2,078,171 | 7,362 | 1.41 | ||||||||||||||||||
Non-interest bearing deposits
|
499,325 | 375,448 | ||||||||||||||||||||||
Other liabilities
|
41,254 | 49,532 | ||||||||||||||||||||||
Shareholders’ equity
|
110,482 | 118,139 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$ | 2,313,160 | $ | 2,621,290 | ||||||||||||||||||||
Net Interest Income
|
$ | 22,961 | $ | 26,066 | ||||||||||||||||||||
Net Interest Income as a Percent of Earning Assets
|
4.40 | % | 4.35 | % |
(1)
|
All domestic, except for $0.1 million for the three months ended December 31, 2010, 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.
|
14
Average Balances and Rates
|
Twelve Months Ended
December 31,
|
||||||||||||||||||||||||
2011
|
2010
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Rate
|
Average
Balance
|
Interest
|
Rate
|
|||||||||||||||||||
Assets (1)
|
(Dollars in thousands)
|
|||||||||||||||||||||||
Taxable loans
|
$ | 1,704,057 | $ | 110,242 | 6.47 | % | $ | 2,072,586 | $ | 141,876 | 6.85 | % | ||||||||||||
Tax-exempt loans (2)
|
7,891 | 332 | 4.21 | 9,531 | 406 | 4.26 | ||||||||||||||||||
Taxable securities
|
62,315 | 1,422 | 2.28 | 82,127 | 3,052 | 3.72 | ||||||||||||||||||
Tax-exempt securities (2)
|
29,615 | 1,219 | 4.12 | 45,223 | 1,932 | 4.27 | ||||||||||||||||||
Cash – interest bearing
|
312,576 | 792 | 0.25 | 324,065 | 824 | 0.25 | ||||||||||||||||||
Other investments
|
22,084 | 755 | 3.42 | 26,526 | 761 | 2.87 | ||||||||||||||||||
Interest Earning Assets
|
2,138,538 | 114,762 | 5.36 | 2,560,058 | 148,851 | 5.81 | ||||||||||||||||||
Cash and due from banks
|
53,098 | 50,739 | ||||||||||||||||||||||
Other assets, net
|
188,583 | 167,873 | ||||||||||||||||||||||
Total Assets
|
$ | 2,380,219 | $ | 2,778,670 | ||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Savings and interest-bearing checking
|
$ | 1,006,305 | 2,263 | 0.22 | $ | 1,089,992 | 2,829 | 0.26 | ||||||||||||||||
Time deposits
|
656,944 | 12,994 | 1.98 | 978,098 | 25,335 | 2.59 | ||||||||||||||||||
Other borrowings
|
92,879 | 4,936 | 5.31 | 198,030 | 9,034 | 4.56 | ||||||||||||||||||
Interest Bearing Liabilities
|
1,756,128 | 20,193 | 1.15 | 2,266,120 | 37,198 | 1.64 | ||||||||||||||||||
Non-interest bearing deposits
|
467,305 | 349,376 | ||||||||||||||||||||||
Other liabilities
|
43,378 | 54,183 | ||||||||||||||||||||||
Shareholders’ equity
|
113,408 | 108,991 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$ | 2,380,219 | $ | 2,778,670 | ||||||||||||||||||||
Net Interest Income
|
$ | 94,569 | $ | 111,653 | ||||||||||||||||||||
|
||||||||||||||||||||||||
Net Interest Income as a Percent of Earning Assets
|
4.42 | % | 4.36 | % |
(1)
|
All domestic, except for $0.01 million and $0.4 million for the years ended December 31, 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.
|
15
Commercial Loan Portfolio Analysis as of December 31, 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
|
$ | 18,371 | $ | 1,157 | $ | 4,882 | $ | 6,039 | 32.9 | % | ||||||||||
Land Development
|
18,600 | 9,528 | 1,757 | 11,285 | 60.7 | |||||||||||||||
Construction
|
17,597 | 3,451 | 392 | 3,843 | 21.8 | |||||||||||||||
Income Producing
|
272,769 | 57,501 | 14,267 | 71,768 | 26.3 | |||||||||||||||
Owner Occupied
|
180,197 | 24,773 | 5,758 | 30,531 | 16.9 | |||||||||||||||
Total Commercial Real Estate Loans (1)
|
$ | 507,534 | $ | 96,410 | 27,056 | $ | 123,466 | 24.3 | ||||||||||||
Other Commercial Loans(1)
|
$ | 144,306 | $ | 16,725 | 2,226 | $ | 18,951 | 13.1 | ||||||||||||
Total non-performing commercial loans
|
$ | 29,282 |
(1) The total of these two categories is different than the December 31, 2011, Consolidated Statement of Financial Condition due primarily to loans in process.
|
16