Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets (1) | ||||||||
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
(Dollars in thousands) | ||||||||
Non-accrual loans | $ | 17,219 | $ | 17,905 | ||||
Loans 90 days or more past due and still accruing interest | 124 | - | ||||||
Total non-performing loans | 17,343 | 17,905 | ||||||
Other real estate and repossessed assets | 18,121 | 18,282 | ||||||
Total non-performing assets | $ | 35,464 | $ | 36,187 | ||||
As a percent of Portfolio Loans | ||||||||
Non-performing loans | 1.26 | % | 1.30 | % | ||||
Allowance for loan losses | 2.05 | 2.35 | ||||||
Non-performing assets to total assets | 1.58 | 1.64 | ||||||
Allowance for loan losses as a percent of non-performing loans | 162.58 | 180.54 |
(1) | Excludes loans classified as "trouble debt restructured" that are not past due and vehicle service contract counterparty receivables, net. |
Troubled debt restructurings ("TDR")
June 30, 2014 | ||||||||||||
Commercial | Retail | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR's | $ | 31,678 | $ | 77,044 | $ | 108,722 | ||||||
Non-performing TDR's(1) | 4,128 | 5,510 | (2) | 9,638 | ||||||||
Total | $ | 35,806 | $ | 82,554 | $ | 118,360 | ||||||
December 31, 2013 | ||||||||||||
Commercial | Retail | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR's | $ | 35,134 | $ | 79,753 | $ | 114,887 | ||||||
Non-performing TDR's(1) | 4,347 | 4,988 | (2) | 9,335 | ||||||||
Total | $ | 39,481 | $ | 84,741 | $ | 124,222 |
(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. |
1
Allowance for loan losses
Six months ended | ||||||||||||||||
June 30, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Unfunded | Unfunded | |||||||||||||||
Loans | Commitments | Loans | Commitments | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 32,325 | $ | 508 | $ | 44,275 | $ | 598 | ||||||||
Additions (deductions) | ||||||||||||||||
Provision for loan losses | (1,417 | ) | - | (2,798 | ) | - | ||||||||||
Recoveries credited to allowance | 3,959 | - | 5,409 | - | ||||||||||||
Loans charged against the allowance | (6,670 | ) | - | (10,100 | ) | - | ||||||||||
Additions (deductions) included in non-interest expense | - | 15 | - | 29 | ||||||||||||
Balance at end of period | $ | 28,197 | $ | 523 | $ | 36,786 | $ | 627 | ||||||||
Net loans charged against the allowance to average Portfolio Loans (annualized) | 0.40 | % | 0.68 | % |
Capitalization
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
(In thousands) | ||||||||
Subordinated debentures | $ | 40,723 | $ | 40,723 | ||||
Amount not qualifying as regulatory capital | (1,223 | ) | (1,223 | ) | ||||
Amount qualifying as regulatory capital | 39,500 | 39,500 | ||||||
Shareholders’ equity | ||||||||
Common stock | 351,791 | 351,173 | ||||||
Accumulated deficit | (102,532 | ) | (110,347 | ) | ||||
Accumulated other comprehensive loss | (6,298 | ) | (9,245 | ) | ||||
Total shareholders’ equity | 242,961 | 231,581 | ||||||
Total capitalization | $ | 282,461 | $ | 271,081 |
2
Non-Interest Income | ||||||||||||||||||||
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Service charges on deposit accounts | $ | 3,532 | $ | 3,055 | $ | 3,583 | $ | 6,587 | $ | 6,989 | ||||||||||
Interchange income | 2,067 | 1,941 | 1,933 | 4,008 | 3,690 | |||||||||||||||
Net gains (losses) on assets | ||||||||||||||||||||
Mortgage loans | 1,505 | 1,144 | 3,208 | 2,649 | 6,845 | |||||||||||||||
Securities | 54 | 112 | 107 | 166 | 191 | |||||||||||||||
Other than temporary impairment loss on securities | ||||||||||||||||||||
Total impairment loss | - | - | (26 | ) | - | (26 | ) | |||||||||||||
Loss recognized in other comprehensive income | - | - | - | - | - | |||||||||||||||
Net impairment loss recognized in earnings | - | - | (26 | ) | - | (26 | ) | |||||||||||||
Mortgage loan servicing | 193 | 264 | 1,654 | 457 | 2,276 | |||||||||||||||
Investment and insurance commissions | 499 | 402 | 383 | 901 | 833 | |||||||||||||||
Bank owned life insurance | 341 | 319 | 337 | 660 | 675 | |||||||||||||||
Title insurance fees | 217 | 274 | 368 | 491 | 852 | |||||||||||||||
Decrease (increase) in fair value of U.S. Treasury warrant | - | - | 20 | - | (1,025 | ) | ||||||||||||||
Other | 1,668 | 1,444 | 1,444 | 3,112 | 2,779 | |||||||||||||||
Total non-interest income | $ | 10,076 | $ | 8,955 | $ | 13,011 | $ | 19,031 | $ | 24,079 |
Capitalized Mortgage Loan Servicing Rights
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(In thousands) | ||||||||||||||||
Balance at beginning of period | $ | 13,273 | $ | 11,590 | $ | 13,710 | $ | 11,013 | ||||||||
Originated servicing rights capitalized | 382 | 860 | 764 | 1,889 | ||||||||||||
Amortization | (665 | ) | (1,108 | ) | (1,199 | ) | (2,318 | ) | ||||||||
Change in valuation allowance | (194 | ) | 1,695 | (479 | ) | 2,453 | ||||||||||
Balance at end of period | $ | 12,796 | $ | 13,037 | $ | 12,796 | $ | 13,037 | ||||||||
Valuation allowance at end of period | $ | 3,334 | $ | 3,634 | $ | 3,334 | $ | 3,634 |
3
Mortgage Loan Activity
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Mortgage loans originated | $ | 65,430 | $ | 44,241 | $ | 121,054 | $ | 109,671 | $ | 249,786 | ||||||||||
Mortgage loans sold | 46,965 | 47,118 | 112,873 | 94,083 | 243,329 | |||||||||||||||
Mortgage loans sold with servicing rights released | 8,357 | 7,861 | 15,696 | 16,218 | 30,233 | |||||||||||||||
Net gains on the sale of mortgage loans | 1,505 | 1,144 | 3,208 | 2,649 | 6,845 | |||||||||||||||
Net gains as a percent of mortgage loans sold ("Loan Sales Margin") | 3.20 | % | 2.43 | % | 2.84 | % | 2.82 | % | 2.81 | % | ||||||||||
Fair value adjustments included in the Loan Sales Margin | 0.61 | (0.14 | ) | (0.13 | ) | 0.23 | (0.46 | ) |
Non-Interest Expense
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Compensation | $ | 8,439 | $ | 8,308 | $ | 8,346 | $ | 16,747 | $ | 16,551 | ||||||||||
Performance-based compensation | 1,233 | 912 | 1,520 | 2,145 | 2,582 | |||||||||||||||
Payroll taxes and employee benefits | 2,146 | 2,018 | 1,849 | 4,164 | 3,889 | |||||||||||||||
Compensation and employee benefits | 11,818 | 11,238 | 11,715 | 23,056 | 23,022 | |||||||||||||||
Occupancy, net | 2,153 | 2,483 | 2,147 | 4,636 | 4,571 | |||||||||||||||
Data processing | 1,777 | 2,086 | 2,042 | 3,863 | 3,958 | |||||||||||||||
Loan and collection | 1,427 | 1,465 | 1,702 | 2,892 | 3,928 | |||||||||||||||
Furniture, fixtures and equipment | 1,053 | 1,069 | 1,088 | 2,122 | 2,120 | |||||||||||||||
Communications | 711 | 789 | 730 | 1,500 | 1,510 | |||||||||||||||
Advertising | 601 | 519 | 659 | 1,120 | 1,229 | |||||||||||||||
FDIC deposit insurance | 422 | 417 | 711 | 839 | 1,341 | |||||||||||||||
Legal and professional fees | 420 | 401 | 664 | 821 | 1,356 | |||||||||||||||
Interchange expense | 342 | 402 | 418 | 744 | 828 | |||||||||||||||
Credit card and bank service fees | 245 | 263 | 331 | 508 | 665 | |||||||||||||||
Supplies | 258 | 239 | 244 | 497 | 494 | |||||||||||||||
Amortization of intangible assets | 134 | 134 | 203 | 268 | 406 | |||||||||||||||
Vehicle service contract counterparty contingencies | 73 | 68 | 3,127 | 141 | 3,254 | |||||||||||||||
Cost related to unfunded lending commitments | 5 | 10 | 48 | 15 | 29 | |||||||||||||||
Provision for loss reimbursement on sold loans | 15 | (481 | ) | 356 | (466 | ) | 1,019 | |||||||||||||
Net (gains) losses on other real estate and repossessed assets | (38 | ) | (87 | ) | 320 | (125 | ) | 972 | ||||||||||||
Other | 1,144 | 1,385 | 1,237 | 2,529 | 2,513 | |||||||||||||||
Total non-interest expense | $ | 22,560 | $ | 22,400 | $ | 27,742 | $ | 44,960 | $ | 53,215 |
4
Average Balances and Tax Equivalent Rates
Three Months Ended | ||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate (3) | Balance | Interest | Rate (3) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets (1) | ||||||||||||||||||||||||
Taxable loans | $ | 1,373,429 | $ | 18,094 | 5.28 | % | $ | 1,413,738 | $ | 20,243 | 5.74 | % | ||||||||||||
Tax-exempt loans (2) | 5,092 | 80 | 6.30 | 5,684 | 92 | 6.49 | ||||||||||||||||||
Taxable securities | 486,043 | 1,596 | 1.32 | 283,321 | 993 | 1.41 | ||||||||||||||||||
Tax-exempt securities (2) | 42,849 | 439 | 4.11 | 27,053 | 369 | 5.47 | ||||||||||||||||||
Interest bearing cash and repurchase agreement | 77,502 | 67 | 0.35 | 146,132 | 84 | 0.23 | ||||||||||||||||||
Other investments | 23,414 | 261 | 4.47 | 21,481 | 240 | 4.48 | ||||||||||||||||||
Interest Earning Assets | 2,008,329 | 20,537 | 4.10 | 1,897,409 | 22,021 | 4.65 | ||||||||||||||||||
Cash and due from banks | 43,314 | 42,943 | ||||||||||||||||||||||
Other assets, net | 186,342 | 140,288 | ||||||||||||||||||||||
Total Assets | $ | 2,237,985 | $ | 2,080,640 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest-bearing checking | $ | 963,662 | 266 | 0.11 | $ | 906,655 | 288 | 0.13 | ||||||||||||||||
Time deposits | 419,190 | 994 | 0.95 | 422,406 | 1,175 | 1.12 | ||||||||||||||||||
Other borrowings | 56,503 | 559 | 3.97 | 67,771 | 876 | 5.18 | ||||||||||||||||||
Interest Bearing Liabilities | 1,439,355 | 1,819 | 0.51 | 1,396,832 | 2,339 | 0.67 | ||||||||||||||||||
Non-interest bearing deposits | 525,441 | 493,932 | ||||||||||||||||||||||
Other liabilities | 33,568 | 39,685 | ||||||||||||||||||||||
Shareholders’ equity | 239,621 | 150,191 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,237,985 | $ | 2,080,640 | ||||||||||||||||||||
Net Interest Income | $ | 18,718 | $ | 19,682 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.74 | % | 4.16 | % |
(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 |
5
Average Balances and Tax Equivalent Rates
Six Months Ended | ||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate (3) | Balance | Interest | Rate (3) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets (1) | ||||||||||||||||||||||||
Taxable loans | $ | 1,371,274 | $ | 36,256 | 5.32 | % | $ | 1,425,078 | $ | 40,892 | 5.77 | % | ||||||||||||
Tax-exempt loans (2) | 5,142 | 162 | 6.35 | 5,783 | 186 | 6.49 | ||||||||||||||||||
Taxable securities | 464,035 | 2,979 | 1.29 | 241,829 | 1,663 | 1.39 | ||||||||||||||||||
Tax-exempt securities (2) | 41,941 | 838 | 4.03 | 25,635 | 731 | 5.75 | ||||||||||||||||||
Interest bearing cash and repurchase agreement | 93,093 | 158 | 0.34 | 165,988 | 204 | 0.25 | ||||||||||||||||||
Other investments | 23,416 | 593 | 5.11 | 21,161 | 452 | 4.31 | ||||||||||||||||||
Interest Earning Assets | 1,998,901 | 40,986 | 4.13 | 1,885,474 | 44,128 | 4.71 | ||||||||||||||||||
Cash and due from banks | 44,370 | 44,256 | ||||||||||||||||||||||
Other assets, net | 187,290 | 140,942 | ||||||||||||||||||||||
Total Assets | $ | 2,230,561 | $ | 2,070,672 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest-bearing checking | $ | 955,026 | 529 | 0.11 | $ | 900,535 | 570 | 0.13 | ||||||||||||||||
Time deposits | 431,343 | 2,024 | 0.95 | 423,057 | 2,422 | 1.15 | ||||||||||||||||||
Other borrowings | 55,422 | 1,071 | 3.90 | 67,786 | 1,741 | 5.18 | ||||||||||||||||||
Interest Bearing Liabilities | 1,441,791 | 3,624 | 0.51 | 1,391,378 | 4,733 | 0.69 | ||||||||||||||||||
Non-interest bearing deposits | 518,491 | 493,942 | ||||||||||||||||||||||
Other liabilities | 32,944 | 40,340 | ||||||||||||||||||||||
Shareholders’ equity | 237,335 | 145,012 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,230,561 | $ | 2,070,672 | ||||||||||||||||||||
Net Interest Income | $ | 37,362 | $ | 39,395 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.76 | % | 4.20 | % |
(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 |
6
Commercial Loan Portfolio Analysis as of June 30, 2014
Total Commercial Loans | ||||||||||||||||||||
Watch Credits | Percent of Loan Category in Watch Credit | |||||||||||||||||||
Loan Category | All Loans | Performing | Non-performing | Total | ||||||||||||||||
Land | $ | 9,184 | $ | 1,625 | $ | 413 | $ | 2,038 | 22.2 | % | ||||||||||
Land Development | 12,709 | 7,322 | 274 | 7,596 | 59.8 | |||||||||||||||
Construction | 12,057 | 936 | - | 936 | 7.8 | |||||||||||||||
Income Producing | 242,032 | 15,932 | 1,454 | 17,386 | 7.2 | |||||||||||||||
Owner Occupied | 202,442 | 18,696 | 2,034 | 20,730 | 10.2 | |||||||||||||||
Total Commercial Real Estate Loans | $ | 478,424 | $ | 44,511 | 4,175 | $ | 48,686 | 10.2 | ||||||||||||
Other Commercial Loans | $ | 175,824 | $ | 12,398 | 932 | $ | 13,330 | 7.6 | ||||||||||||
Total non-performing commercial loans | $ | 5,107 |
7