Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets(1) | ||||||||
June 30, | December 31, | |||||||
2013 | 2012 | |||||||
(Dollars in thousands) | ||||||||
Non-accrual loans | $ | 19,973 | $ | 32,929 | ||||
Loans 90 days or more past due and still accruing interest | 131 | 7 | ||||||
Total non-performing loans | 20,104 | 32,936 | ||||||
Other real estate and repossessed assets | 17,790 | 26,133 | ||||||
Total non-performing assets | $ | 37,894 | $ | 59,069 | ||||
As a percent of Portfolio Loans | ||||||||
Non-performing loans | 1.45 | % | 2.32 | % | ||||
Allowance for loan losses | 2.65 | 3.12 | ||||||
Non-performing assets to total assets | 1.78 | 2.92 | ||||||
Allowance for loan losses as a percent of non-performing loans | 182.98 | 134.43 |
(1) | Excludes loans classified as "troubled debt restructured" that are not past due and vehicle service contract counterparty receivables, net. |
Troubled debt restructurings ("TDR") | ||||||||||||
June 30, 2013 | ||||||||||||
Commercial | Retail | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR's | $ | 42,543 | $ | 83,187 | $ | 125,730 | ||||||
Non-performing TDR's (1) | 3,298 | 6,470 | (2) | 9,768 | ||||||||
Total | $ | 45,841 | $ | 89,657 | $ | 135,498 |
December 31, 2012 | ||||||||||||
Commercial | Retail | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR's | $ | 40,753 | $ | 85,977 | $ | 126,730 | ||||||
Non-performing TDR's (1) | 7,756 | 9,177 | (2) | 16,933 | ||||||||
Total | $ | 48,509 | $ | 95,154 | $ | 143,663 |
(1) | Included in non-performing assets table above. |
(2) | Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis. |
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Allowance for loan losses | Six months ended | |||||||||||||||
June 30, | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Unfunded | Unfunded | |||||||||||||||
Loans | Commitments | Loans | Commitments | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 44,275 | $ | 598 | $ | 58,884 | $ | 1,286 | ||||||||
Additions (deduction) | ||||||||||||||||
Provision for loan losses | (2,798 | ) | - | 6,187 | - | |||||||||||
Recoveries credited to allowance | 5,409 | - | 3,231 | - | ||||||||||||
Loans charged against the allowance | (10,100 | ) | - | (16,175 | ) | - | ||||||||||
Reclassification to loans held for sale | - | (781 | ) | |||||||||||||
Additions (deductions) included in non-interest expense | - | 29 | - | (59 | ) | |||||||||||
Balance at end of period | $ | 36,786 | $ | 627 | $ | 51,346 | $ | 1,227 | ||||||||
Net loans charged against the allowance to average Portfolio Loans | 0.68 | % | 1.69 | % |
Alternative Sources of Funds
June 30, | December 31, | ||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Average | Average | ||||||||||||||||||||
Amount | Maturity | Rate | Amount | Maturity | Rate | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Brokered CDs | $ | 13,225 | 0.5 years | 1.29 | % | $ | 14,591 | 0.6 years | 1.70 | % | |||||||||||
Fixed-rate FHLB advances | 17,500 | 4.0 years | 6.37 | 17,622 | 4.5 years | 6.38 | |||||||||||||||
Variable-rate FHLB advances | - | - | |||||||||||||||||||
Total | $ | 30,725 | 2.5 years | 4.19 | % | $ | 32,213 | 2.7 years | 4.26 | % |
Capitalization | ||||||||
June 30, | December 31, | |||||||
2013 | 2012 | |||||||
(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 | ||||||||
Convertible preferred stock | 86,455 | 84,204 | ||||||
Common stock | 255,114 | 251,237 | ||||||
Accumulated deficit | (125,464 | ) | (192,408 | ) | ||||
Accumulated other comprehensive loss | (7,270 | ) | (8,058 | ) | ||||
Total shareholders' equity | 208,835 | 134,975 | ||||||
Total capitalization | $ | 257,503 | $ | 183,643 |
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Non-Interest Income | ||||||||||||||||||||
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2013 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Service charges on deposit accounts | $ | 3,583 | $ | 3,406 | $ | 4,552 | $ | 6,989 | $ | 8,753 | ||||||||||
Interchange income | 1,933 | 1,757 | 2,407 | 3,690 | 4,729 | |||||||||||||||
Net gains (losses) on assets | ||||||||||||||||||||
Mortgage loans | 3,208 | 3,637 | 3,579 | 6,845 | 7,439 | |||||||||||||||
Securities | 107 | 84 | 169 | 191 | 853 | |||||||||||||||
Other than temporary impairment loss on securities | ||||||||||||||||||||
Total impairment loss | (26 | ) | - | (85 | ) | (26 | ) | (262 | ) | |||||||||||
Loss recognized in other comprehensive income | - | - | - | - | - | |||||||||||||||
Net impairment loss recognized in earnings | (26 | ) | - | (85 | ) | (26 | ) | (262 | ) | |||||||||||
Mortgage loan servicing | 1,654 | 622 | (1,088 | ) | 2,276 | (352 | ) | |||||||||||||
Investment and insurance commissions | 383 | 450 | 648 | 833 | 1,095 | |||||||||||||||
Bank owned life insurance | 337 | 338 | 399 | 675 | 823 | |||||||||||||||
Title insurance fees | 368 | 484 | 489 | 852 | 997 | |||||||||||||||
(Increase) decrease in fair value of U.S. | ||||||||||||||||||||
Treasury warrant | 20 | (1,045 | ) | (25 | ) | (1,025 | ) | (179 | ) | |||||||||||
Other | 1,444 | 1,335 | 1,997 | 2,779 | 3,730 | |||||||||||||||
Total non-interest income | $ | 13,011 | $ | 11,068 | $ | 13,042 | $ | 24,079 | $ | 27,626 |
Capitalized Mortgage Loan Servicing Rights | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands) | ||||||||||||||||
Balance at beginning of period | $ | 11,590 | $ | 11,795 | $ | 11,013 | $ | 11,229 | ||||||||
Originated servicing rights capitalized | 860 | 1,028 | 1,889 | 1,952 | ||||||||||||
Amortization | (1,108 | ) | (1,237 | ) | (2,318 | ) | (2,299 | ) | ||||||||
Change in valuation allowance | 1,695 | (935 | ) | 2,453 | (231 | ) | ||||||||||
Balance at end of period | $ | 13,037 | $ | 10,651 | $ | 13,037 | $ | 10,651 | ||||||||
Valuation allowance at end of period | $ | 3,634 | $ | 6,775 | $ | 3,634 | $ | 6,775 |
Mortgage Loan Activity
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2013 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Mortgage loans originated | $ | 121,054 | $ | 128,732 | $ | 136,835 | $ | 249,786 | $ | 249,633 | ||||||||||
Mortgage loans sold | 112,873 | 130,456 | 127,013 | 243,329 | 239,154 | |||||||||||||||
Mortgage loans sold with servicing rights released | 15,696 | 14,537 | 22,555 | 30,233 | 37,895 | |||||||||||||||
Net gains on the sale of mortgage loans | 3,208 | 3,637 | 3,579 | 6,845 | 7,439 | |||||||||||||||
Net gains as a percent of mortgage loans sold ("Loan Sales Margin") | 2.84 | % | 2.79 | % | 2.82 | % | 2.81 | % | 3.11 | % | ||||||||||
Fair value adjustments included in the Loan Sales Margin | (0.13 | ) | (0.74 | ) | 0.19 | (0.46 | ) | 0.53 |
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Non-Interest Expense | ||||||||||||||||||||
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2013 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Compensation | $ | 8,346 | $ | 8,205 | $ | 9,551 | $ | 16,551 | $ | 19,496 | ||||||||||
Performance-based compensation | 1,520 | 1,062 | 1,735 | 2,582 | 1,820 | |||||||||||||||
Payroll taxes and employee benefits | 1,849 | 2,040 | 2,220 | 3,889 | 4,672 | |||||||||||||||
Compensation and employee benefits | 11,715 | 11,307 | 13,506 | 23,022 | 25,988 | |||||||||||||||
Occupancy, net | 2,147 | 2,424 | 2,490 | 4,571 | 5,206 | |||||||||||||||
Data processing | 2,042 | 1,916 | 2,003 | 3,958 | 3,936 | |||||||||||||||
Loan and collection | 1,702 | 2,226 | 2,407 | 3,928 | 5,297 | |||||||||||||||
Vehicle service contract counterparty contingencies | 3,127 | 127 | 326 | 3,254 | 797 | |||||||||||||||
Furniture, fixtures and equipment | 1,088 | 1,032 | 1,211 | 2,120 | 2,407 | |||||||||||||||
Communications | 730 | 780 | 922 | 1,510 | 1,895 | |||||||||||||||
Legal and professional fees | 664 | 692 | 1,268 | 1,356 | 2,165 | |||||||||||||||
FDIC deposit insurance | 711 | 630 | 816 | 1,341 | 1,673 | |||||||||||||||
Advertising | 659 | 570 | 639 | 1,229 | 1,195 | |||||||||||||||
Provision for loss reimbursement on sold loans | 356 | 663 | 126 | 1,019 | 558 | |||||||||||||||
Net losses on other real estate and repossessed assets | 320 | 652 | 633 | 972 | 1,620 | |||||||||||||||
Interchange expense | 418 | 410 | 447 | 828 | 853 | |||||||||||||||
Credit card and bank service fees | 331 | 334 | 624 | 665 | 1,275 | |||||||||||||||
Supplies | 244 | 250 | 340 | 494 | 734 | |||||||||||||||
Amortization of intangible assets | 203 | 203 | 272 | 406 | 544 | |||||||||||||||
Cost (recoveries) related to unfunded lending commitments | 48 | (19 | ) | (12 | ) | 29 | (59 | ) | ||||||||||||
Other | 1,237 | 1,276 | 1,465 | 2,513 | 1,448 | |||||||||||||||
Total non-interest expense | $ | 27,742 | $ | 25,473 | $ | 29,483 | $ | 53,215 | $ | 57,532 |
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Average Balances and Tax Equivalent Rates
Three Months Ended | ||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate(3) | Balance | Interest | Rate(3) | |||||||||||||||||||
Assets (1) | (Dollars in thousands) | |||||||||||||||||||||||
Taxable loans | $ | 1,413,738 | $ | 20,243 | 5.74 | % | $ | 1,556,478 | $ | 23,623 | 6.09 | % | ||||||||||||
Tax-exempt loans (2, 3) | 5,684 | 92 | 6.49 | 7,085 | 112 | 6.36 | ||||||||||||||||||
Taxable securities | 283,321 | 993 | 1.41 | 261,554 | 933 | 1.43 | ||||||||||||||||||
Tax-exempt securities (2, 3) | 27,053 | 369 | 5.47 | 26,431 | 383 | 5.83 | ||||||||||||||||||
Cash – interest bearing | 146,132 | 84 | 0.23 | 306,329 | 196 | 0.26 | ||||||||||||||||||
Other investments | 21,481 | 240 | 4.48 | 20,564 | 186 | 3.64 | ||||||||||||||||||
Interest Earning Assets | 1,897,409 | 22,021 | 4.65 | 2,178,441 | 25,433 | 4.69 | ||||||||||||||||||
Cash and due from banks | 42,943 | 51,470 | ||||||||||||||||||||||
Other assets, net | 140,288 | 163,096 | ||||||||||||||||||||||
Total Assets | $ | 2,080,640 | $ | 2,393,007 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest-bearing checking | $ | 906,655 | 288 | 0.13 | $ | 1,080,130 | 486 | 0.18 | ||||||||||||||||
Time deposits | 422,406 | 1,175 | 1.12 | 571,088 | 1,819 | 1.28 | ||||||||||||||||||
Other borrowings | 67,771 | 876 | 5.18 | 69,826 | 1,120 | 6.45 | ||||||||||||||||||
Interest Bearing Liabilities | 1,396,832 | 2,339 | 0.67 | 1,721,044 | 3,425 | 0.80 | ||||||||||||||||||
Non-interest bearing deposits | 493,932 | 523,647 | ||||||||||||||||||||||
Other liabilities | 39,685 | 39,630 | ||||||||||||||||||||||
Shareholders' equity | 150,191 | 108,686 | ||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 2,080,640 | $ | 2,393,007 | ||||||||||||||||||||
Net Interest Income | $ | 19,682 | $ | 22,008 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 4.16 | % | 4.06 | % |
(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% |
(3) | Annualized. |
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Average Balances and Tax Equivalent Rates
Six Months Ended | ||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate(3) | Balance | Interest | Rate(3) | |||||||||||||||||||
Assets (1) | (Dollars in thousands) | |||||||||||||||||||||||
Taxable loans | $ | 1,425,078 | $ | 40,892 | 5.77 | % | $ | 1,569,460 | $ | 47,893 | 6.13 | % | ||||||||||||
Tax-exempt loans (2, 3) | 5,783 | 186 | 6.49 | 7,162 | 229 | 6.43 | ||||||||||||||||||
Taxable securities | 241,829 | 1,663 | 1.39 | 223,176 | 1,591 | 1.43 | ||||||||||||||||||
Tax-exempt securities (2, 3) | 25,635 | 731 | 5.75 | 26,788 | 822 | 6.17 | ||||||||||||||||||
Cash – interest bearing | 165,988 | 204 | 0.25 | 312,452 | 395 | 0.25 | ||||||||||||||||||
Other investments | 21,161 | 452 | 4.31 | 20,696 | 383 | 3.72 | ||||||||||||||||||
Interest Earning Assets | 1,885,474 | 44,128 | 4.71 | 2,159,734 | 51,313 | 4.77 | ||||||||||||||||||
Cash and due from banks | 44,256 | 53,776 | ||||||||||||||||||||||
Other assets, net | 140,942 | 163,608 | ||||||||||||||||||||||
Total Assets | $ | 2,070,672 | $ | 2,377,118 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest-bearing checking | $ | 900,535 | 570 | 0.13 | $ | 1,067,013 | 958 | 0.18 | ||||||||||||||||
Time deposits | 423,057 | 2,422 | 1.15 | 574,028 | 3,771 | 1.32 | ||||||||||||||||||
Other borrowings | 67,786 | 1,741 | 5.18 | 76,605 | 2,292 | 6.02 | ||||||||||||||||||
Interest Bearing Liabilities | 1,391,378 | 4,733 | 0.69 | 1,717,646 | 7,021 | 0.82 | ||||||||||||||||||
Non-interest bearing deposits | 493,942 | 513,833 | ||||||||||||||||||||||
Other liabilities | 40,340 | 39,442 | ||||||||||||||||||||||
Shareholders' equity | 145,012 | 106,197 | ||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 2,070,672 | $ | 2,377,118 | ||||||||||||||||||||
Net Interest Income | $ | 39,395 | $ | 44,292 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 4.20 | % | 4.12 | % |
(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% |
(3) | Annualized. |
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Commercial Loan Portfolio Analysis as of June 30, 2013 | ||||||||||||||||||||
Total Commercial Loans | ||||||||||||||||||||
Watch Credits | Percent of Loan | |||||||||||||||||||
Loan Category | All Loans | Performing | Non- performing | Total | Category in Watch Credit | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Land | $ | 11,285 | $ | 1,358 | $ | 1,136 | $ | 2,494 | 22.1 | % | ||||||||||
Land Development | 12,748 | 3,662 | 638 | 4,300 | 33.7 | |||||||||||||||
Construction | 15,368 | 749 | - | 749 | 4.9 | |||||||||||||||
Income Producing | 234,780 | 35,476 | 1,700 | 37,176 | 15.8 | |||||||||||||||
Owner Occupied | 204,223 | 25,406 | 1,192 | 26,598 | 13.0 | |||||||||||||||
Total Commercial Real Estate Loans (1) | $ | 478,404 | $ | 66,651 | 4,666 | $ | 71,317 | 14.9 | ||||||||||||
Other Commercial Loans(1) | $ | 138,646 | $ | 14,766 | 319 | $ | 15,085 | 10.9 | ||||||||||||
Total non-performing commercial loans | $ | 4,985 |
(1) | The total of these two categories is different than the June 30, 2013, Consolidated Statement of Financial Condition due primarily to loans in process. |
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