Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets (1) | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
(Dollars in thousands) | ||||||||
Non-accrual loans | $ | 17,543 | $ | 17,905 | ||||
Loans 90 days or more past due and still accruing interest | - | - | ||||||
Total non-performing loans | 17,543 | 17,905 | ||||||
Other real estate and repossessed assets | 9,376 | 18,282 | ||||||
Total non-performing assets | $ | 26,919 | $ | 36,187 | ||||
As a percent of Portfolio Loans | ||||||||
Non-performing loans | 1.25 | % | 1.30 | % | ||||
Allowance for loan losses | 1.97 | 2.35 | ||||||
Non-performing assets to total assets | 1.20 | 1.64 | ||||||
Allowance for loan losses as a percent of non-performing loans | 156.80 | 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")
September 30, 2014 | ||||||||||||
Commercial | Retail | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR's | $ | 30,768 | $ | 75,680 | $ | 106,448 | ||||||
Non-performing TDR's(1) | 3,263 | 5,515 | (2) | 8,778 | ||||||||
Total | $ | 34,031 | $ | 81,195 | $ | 115,226 | ||||||
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 | ||||||||||||||||
Nine months ended | ||||||||||||||||
September 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 | (2,049 | ) | - | (3,153 | ) | - | ||||||||||
Recoveries credited to allowance | 5,438 | - | 6,893 | - | ||||||||||||
Loans charged against the allowance | (8,206 | ) | - | (13,578 | ) | - | ||||||||||
Additions (deductions) included in non-interest expense | - | 27 | - | (57 | ) | |||||||||||
Balance at end of period | $ | 27,508 | $ | 535 | $ | 34,437 | $ | 541 | ||||||||
Net loans charged against the allowance to average Portfolio Loans (annualized) | 0.27 | % | 0.65 | % |
Capitalization | ||||||||
September 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 | 352,129 | 351,173 | ||||||
Accumulated deficit | (98,979 | ) | (110,347 | ) | ||||
Accumulated other comprehensive loss | (6,083 | ) | (9,245 | ) | ||||
Total shareholders’ equity | 247,067 | 231,581 | ||||||
Total capitalization | $ | 286,567 | $ | 271,081 |
2
Non-Interest Income | ||||||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Service charges on deposit accounts | $ | 3,579 | $ | 3,532 | $ | 3,614 | $ | 10,166 | $ | 10,603 | ||||||||||
Interchange income | 1,984 | 2,067 | 1,852 | 5,992 | 5,542 | |||||||||||||||
Net gains (losses) on assets | ||||||||||||||||||||
Mortgage loans | 1,490 | 1,505 | 1,570 | 4,139 | 8,415 | |||||||||||||||
Securities | 168 | 54 | 14 | 334 | 205 | |||||||||||||||
Other than temporary impairment loss on securities | ||||||||||||||||||||
Total impairment loss | (9 | ) | - | - | (9 | ) | (26 | ) | ||||||||||||
Loss recognized in other comprehensive income | - | - | - | - | - | |||||||||||||||
Net impairment loss recognized in earnings | (9 | ) | - | - | (9 | ) | (26 | ) | ||||||||||||
Mortgage loan servicing | 932 | 193 | 338 | 1,389 | 2,614 | |||||||||||||||
Investment and insurance commissions | 404 | 499 | 447 | 1,305 | 1,280 | |||||||||||||||
Bank owned life insurance | 361 | 341 | 353 | 1,021 | 1,028 | |||||||||||||||
Title insurance fees | 243 | 217 | 409 | 734 | 1,261 | |||||||||||||||
Increase in fair value of U.S. Treasury warrant | - | - | - | - | (1,025 | ) | ||||||||||||||
Other | 1,391 | 1,668 | 1,240 | 4,503 | 4,019 | |||||||||||||||
Total non-interest income | $ | 10,543 | $ | 10,076 | $ | 9,837 | $ | 29,574 | $ | 33,916 |
Capitalized Mortgage Loan Servicing Rights | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(In thousands) | ||||||||||||||||
Balance at beginning of period | $ | 12,796 | $ | 13,037 | $ | 13,710 | $ | 11,013 | ||||||||
Originated servicing rights capitalized | 489 | 772 | 1,253 | 2,661 | ||||||||||||
Amortization | (628 | ) | (793 | ) | (1,827 | ) | (3,111 | ) | ||||||||
Change in valuation allowance | 523 | 35 | 44 | 2,488 | ||||||||||||
Balance at end of period | $ | 13,180 | $ | 13,051 | $ | 13,180 | $ | 13,051 | ||||||||
Valuation allowance at end of period | $ | 2,811 | $ | 3,599 | $ | 2,811 | $ | 3,599 |
3
Mortgage Loan Activity | ||||||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Mortgage loans originated | $ | 77,501 | $ | 65,430 | $ | 97,391 | $ | 187,172 | $ | 347,177 | ||||||||||
Mortgage loans sold | 62,007 | 46,965 | 96,989 | 156,090 | 340,318 | |||||||||||||||
Mortgage loans sold with servicing rights released | 11,229 | 8,357 | 16,017 | 27,447 | 46,250 | |||||||||||||||
Net gains on the sale of mortgage loans | 1,490 | 1,505 | 1,570 | 4,139 | 8,415 | |||||||||||||||
Net gains as a percent of mortgage loans sold ("Loan Sales Margin") | 2.40 | % | 3.20 | % | 1.62 | % | 2.65 | % | 2.47 | % | ||||||||||
Fair value adjustments included in the Loan Sales Margin | (0.13 | ) | 0.61 | (0.89 | ) | 0.09 | (0.58 | ) |
Non-Interest Expense | ||||||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Compensation | $ | 8,574 | $ | 8,439 | $ | 8,529 | $ | 25,321 | $ | 25,080 | ||||||||||
Performance-based compensation | 1,203 | 1,233 | 2,104 | 3,348 | 4,686 | |||||||||||||||
Payroll taxes and employee benefits | 1,941 | 2,146 | 1,958 | 6,105 | 5,847 | |||||||||||||||
Compensation and employee benefits | 11,718 | 11,818 | 12,591 | 34,774 | 35,613 | |||||||||||||||
Occupancy, net | 2,079 | 2,153 | 2,017 | 6,715 | 6,588 | |||||||||||||||
Data processing | 1,790 | 1,777 | 2,090 | 5,653 | 6,048 | |||||||||||||||
Loan and collection | 1,391 | 1,427 | 1,584 | 4,283 | 5,512 | |||||||||||||||
Furniture, fixtures and equipment | 1,005 | 1,053 | 1,051 | 3,127 | 3,171 | |||||||||||||||
Communications | 712 | 711 | 695 | 2,212 | 2,205 | |||||||||||||||
Advertising | 427 | 601 | 652 | 1,547 | 1,881 | |||||||||||||||
Legal and professional fees | 559 | 420 | 487 | 1,380 | 1,843 | |||||||||||||||
FDIC deposit insurance | 396 | 422 | 685 | 1,235 | 2,026 | |||||||||||||||
Interchange expense | 368 | 342 | 410 | 1,112 | 1,238 | |||||||||||||||
Supplies | 249 | 258 | 277 | 746 | 771 | |||||||||||||||
Credit card and bank service fees | 226 | 245 | 310 | 734 | 975 | |||||||||||||||
Amortization of intangible assets | 134 | 134 | 203 | 402 | 609 | |||||||||||||||
Vehicle service contract counterparty contingencies | 28 | 73 | 149 | 169 | 3,403 | |||||||||||||||
Cost (recoveries) related to unfunded lending commitments | 12 | 5 | (86 | ) | 27 | (57 | ) | |||||||||||||
Provision for loss reimbursement on sold loans | - | 15 | 1,417 | (466 | ) | 2,436 | ||||||||||||||
Net (gains) losses on other real estate and repossessed assets | (285 | ) | (38 | ) | 119 | (410 | ) | 1,091 | ||||||||||||
Other | 1,275 | 1,144 | 1,283 | 3,804 | 3,796 | |||||||||||||||
Total non-interest expense | $ | 22,084 | $ | 22,560 | $ | 25,934 | $ | 67,044 | $ | 79,149 |
4
Average Balances and Tax Equivalent Rates | ||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate (3) | Balance | Interest | Rate (3) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets (1) | ||||||||||||||||||||||||
Taxable loans | $ | 1,390,811 | $ | 17,768 | 5.08 | % | $ | 1,396,709 | $ | 20,027 | 5.70 | % | ||||||||||||
Tax-exempt loans (2) | 4,803 | 77 | 6.36 | 5,321 | 86 | 6.41 | ||||||||||||||||||
Taxable securities | 484,687 | 1,644 | 1.35 | 337,299 | 1,109 | 1.30 | ||||||||||||||||||
Tax-exempt securities (2) | 40,613 | 430 | 4.20 | 35,242 | 433 | 4.87 | ||||||||||||||||||
Interest bearing cash and repurchase agreement | 76,529 | 61 | 0.32 | 117,971 | 68 | 0.23 | ||||||||||||||||||
Other investments | 23,415 | 264 | 4.47 | 21,496 | 242 | 4.47 | ||||||||||||||||||
Interest Earning Assets | 2,020,858 | 20,244 | 3.98 | 1,914,038 | 21,965 | 4.57 | ||||||||||||||||||
Cash and due from banks | 46,643 | 46,069 | ||||||||||||||||||||||
Other assets, net | 179,861 | 188,705 | ||||||||||||||||||||||
Total Assets | $ | 2,247,362 | $ | 2,148,812 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest-bearing checking | $ | 949,039 | 270 | 0.11 | $ | 910,422 | 294 | 0.13 | ||||||||||||||||
Time deposits | 402,951 | 966 | 0.95 | 415,090 | 1,077 | 1.03 | ||||||||||||||||||
Other borrowings | 67,114 | 649 | 3.84 | 67,578 | 884 | 5.19 | ||||||||||||||||||
Interest Bearing Liabilities | 1,419,104 | 1,885 | 0.53 | 1,393,090 | 2,255 | 0.64 | ||||||||||||||||||
Non-interest bearing deposits | 551,617 | 502,357 | ||||||||||||||||||||||
Other liabilities | 30,734 | 37,143 | ||||||||||||||||||||||
Shareholders’ equity | 245,907 | 216,222 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,247,362 | $ | 2,148,812 | ||||||||||||||||||||
Net Interest Income | $ | 18,359 | $ | 19,710 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.61 | % | 4.10 | % |
(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 | ||||||||||||||||||||||||
Nine Months Ended | ||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Balance | Interest | Rate (3) | Balance | Interest | Rate (3) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets (1) | ||||||||||||||||||||||||
Taxable loans | $ | 1,377,884 | $ | 54,024 | 5.24 | % | $ | 1,415,545 | $ | 60,919 | 5.75 | % | ||||||||||||
Tax-exempt loans (2) | 5,028 | 239 | 6.36 | 5,628 | 272 | 6.46 | ||||||||||||||||||
Taxable securities | 470,995 | 4,623 | 1.31 | 274,002 | 2,772 | 1.35 | ||||||||||||||||||
Tax-exempt securities (2) | 41,493 | 1,268 | 4.09 | 28,873 | 1,164 | 5.39 | ||||||||||||||||||
Interest bearing cash and repurchase agreement | 87,511 | 219 | 0.33 | 149,807 | 272 | 0.24 | ||||||||||||||||||
Other investments | 23,416 | 857 | 4.89 | 21,274 | 694 | 4.36 | ||||||||||||||||||
Interest Earning Assets | 2,006,327 | 61,230 | 4.08 | 1,895,129 | 66,093 | 4.66 | ||||||||||||||||||
Cash and due from banks | 45,137 | 44,866 | ||||||||||||||||||||||
Other assets, net | 184,709 | 157,038 | ||||||||||||||||||||||
Total Assets | $ | 2,236,173 | $ | 2,097,033 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest-bearing checking | $ | 953,008 | 799 | 0.11 | $ | 906,046 | 864 | 0.13 | ||||||||||||||||
Time deposits | 421,775 | 2,990 | 0.95 | 418,193 | 3,499 | 1.12 | ||||||||||||||||||
Other borrowings | 59,362 | 1,720 | 3.87 | 67,716 | 2,625 | 5.18 | ||||||||||||||||||
Interest Bearing Liabilities | 1,434,145 | 5,509 | 0.51 | 1,391,955 | 6,988 | 0.67 | ||||||||||||||||||
Non-interest bearing deposits | 529,654 | 496,777 | ||||||||||||||||||||||
Other liabilities | 32,226 | 39,292 | ||||||||||||||||||||||
Shareholders’ equity | 240,148 | 169,009 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,236,173 | $ | 2,097,033 | ||||||||||||||||||||
Net Interest Income | $ | 55,721 | $ | 59,105 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.71 | % | 4.17 | % |
(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 September 30, 2014 | ||||||||||||||||||||
Total Commercial Loans | ||||||||||||||||||||
Watch Credits | Percent of Loan Category in Watch Credit | |||||||||||||||||||
Loan Category | All Loans | Performing | Non-performing | Total | ||||||||||||||||
Land | $ | 9,083 | $ | 1,222 | $ | 502 | $ | 1,724 | 19.0 | % | ||||||||||
Land Development | 11,684 | 6,114 | 230 | 6,344 | 54.3 | |||||||||||||||
Construction | 12,572 | 27 | - | 27 | 0.2 | |||||||||||||||
Income Producing | 245,319 | 14,410 | 1,339 | 15,749 | 6.4 | |||||||||||||||
Owner Occupied | 205,647 | 18,471 | 1,807 | 20,278 | 9.9 | |||||||||||||||
Total Commercial Real Estate Loans | $ | 484,305 | $ | 40,244 | 3,878 | $ | 44,122 | 9.1 | ||||||||||||
Other Commercial Loans | $ | 187,782 | $ | 11,624 | 543 | $ | 12,167 | 6.5 | ||||||||||||
Total non-performing commercial loans | $ | 4,421 |
7