Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets (1)
September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Non-accrual loans | $ | 10,801 | $ | 10,803 | $ | 10,425 | $ | 10,607 | $ | 15,834 | ||||||||||
Loans 90 days or more past due and still accruing interest | - | 94 | 147 | 116 | - | |||||||||||||||
Total non-performing loans | 10,801 | 10,897 | 10,572 | 10,723 | 15,834 | |||||||||||||||
Other real estate and repossessed assets | 4,989 | 5,572 | 6,672 | 7,150 | 3,851 | |||||||||||||||
Total non-performing assets | $ | 15,790 | $ | 16,469 | $ | 17,244 | $ | 17,873 | $ | 19,685 | ||||||||||
As a percent of Portfolio Loans | ||||||||||||||||||||
Non-performing loans | 0.67 | % | 0.69 | % | 0.69 | % | 0.71 | % | 1.08 | % | ||||||||||
Allowance for loan losses | 1.37 | 1.44 | 1.46 | 1.49 | 1.68 | |||||||||||||||
Non-performing assets to total assets | 0.62 | 0.67 | 0.69 | 0.74 | 0.82 | |||||||||||||||
Allowance for loan losses as a percent of non-performing loans | 204.08 | 208.42 | 212.78 | 210.48 | 155.39 |
(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, 2016 | |||||||||||||
Commercial | Retail | Total | |||||||||||
(In thousands) | |||||||||||||
Performing TDR's | $ | 12,642 | $ | 62,299 | $ | 74,941 | |||||||
Non-performing TDR's(1) | 2,352 | 3,421 | (2) | 5,773 | |||||||||
Total | $ | 14,994 | $ | 65,720 | $ | 80,714 |
December 31, 2015 | |||||||||||||
Commercial | Retail | Total | |||||||||||
(In thousands) | |||||||||||||
Performing TDR's | $ | 13,318 | $ | 68,194 | $ | 81,512 | |||||||
Non-performing TDR's(1) | 3,041 | 3,777 | (2) | 6,818 | |||||||||
Total | $ | 16,359 | $ | 71,971 | $ | 88,330 |
(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, | ||||||||||||||||
2016 | 2015 | |||||||||||||||
Loans | Unfunded Commitments | Loans | Unfunded Commitments | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 22,570 | $ | 652 | $ | 25,990 | $ | 539 | ||||||||
Additions (deductions) | ||||||||||||||||
Provision for loan losses | (1,439 | ) | - | (1,037 | ) | - | ||||||||||
Recoveries credited to allowance | 3,623 | - | 3,418 | - | ||||||||||||
Loans charged against the allowance | (2,711 | ) | - | (3,767 | ) | - | ||||||||||
Additions (deductions) included in non-interest expense | - | 6 | - | 46 | ||||||||||||
Balance at end of period | $ | 22,043 | $ | 658 | $ | 24,604 | $ | 585 | ||||||||
Net loans charged against the allowance to average Portfolio Loans (annualized) | (0.08 | )% | 0.03 | % |
Capitalization
September 30, 2016 | December 31, 2015 | |||||||
(In thousands) | ||||||||
Subordinated debentures | $ | 35,569 | $ | 35,569 | ||||
Amount not qualifying as regulatory capital | (1,069 | ) | (1,069 | ) | ||||
Amount qualifying as regulatory capital | 34,500 | 34,500 | ||||||
Shareholders’ equity | ||||||||
Common stock | 323,303 | 339,462 | ||||||
Accumulated deficit | (69,386 | ) | (82,334 | ) | ||||
Accumulated other comprehensive loss | (3,015 | ) | (6,036 | ) | ||||
Total shareholders’ equity | 250,902 | 251,092 | ||||||
Total capitalization | $ | 285,402 | $ | 285,592 |
2
Non-Interest Income
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Service charges on deposit accounts | $ | 3,281 | $ | 3,038 | $ | 3,294 | $ | 9,164 | $ | 9,261 | ||||||||||
Interchange income | 1,943 | 1,976 | 2,169 | 5,797 | 6,551 | |||||||||||||||
Net gains (losses) on assets | ||||||||||||||||||||
Mortgage loans | 3,556 | 2,529 | 1,812 | 7,727 | 5,735 | |||||||||||||||
Securities | (45 | ) | 185 | 45 | 302 | 97 | ||||||||||||||
Mortgage loan servicing, net | 858 | (334 | ) | (556 | ) | (454 | ) | 476 | ||||||||||||
Investment and insurance commissions | 427 | 384 | 447 | 1,278 | 1,380 | |||||||||||||||
Bank owned life insurance | 282 | 298 | 304 | 870 | 979 | |||||||||||||||
Title insurance fees | 319 | 253 | 281 | 860 | 874 | |||||||||||||||
Net gain on branch sale | - | - | 1,193 | - | 1,193 | |||||||||||||||
Other | 1,087 | 1,251 | 1,130 | 3,553 | 3,522 | |||||||||||||||
Total non-interest income | $ | 11,708 | $ | 9,580 | $ | 10,119 | $ | 29,097 | $ | 30,068 |
Capitalized Mortgage Loan Servicing Rights
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(In thousands) | ||||||||||||||||
Balance at beginning of period | $ | 10,331 | $ | 12,535 | $ | 12,436 | $ | 12,106 | ||||||||
Originated servicing rights capitalized | 896 | 678 | 2,153 | 2,128 | ||||||||||||
Amortization | (799 | ) | (700 | ) | (2,065 | ) | (2,259 | ) | ||||||||
Change in valuation allowance | 620 | (883 | ) | (1,476 | ) | (345 | ) | |||||||||
Balance at end of period | $ | 11,048 | $ | 11,630 | $ | 11,048 | $ | 11,630 | ||||||||
Valuation allowance at end of period | $ | 4,748 | $ | 4,118 | $ | 4,748 | $ | 4,118 |
3
Mortgage Loan Activity
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Mortgage loans originated | $ | 123,124 | $ | 91,966 | $ | 79,648 | $ | 288,592 | $ | 260,744 | ||||||||||
Mortgage loans sold | 89,349 | 70,479 | 71,063 | 215,494 | 221,957 | |||||||||||||||
Net gains on mortgage loans | 3,556 | 2,529 | 1,812 | 7,727 | 5,735 | |||||||||||||||
Net gains as a percent of mortgage loans sold ("Loan Sales Margin") | 3.98 | % | 3.59 | % | 2.55 | % | 3.59 | % | 2.58 | % | ||||||||||
Fair value adjustments included in the Loan Sales Margin | 0.55 | 0.34 | (0.05 | ) | 0.40 | 0.21 |
Non-Interest Expense
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Compensation | $ | 8,546 | $ | 8,168 | $ | 8,419 | $ | 24,948 | $ | 24,880 | ||||||||||
Performance-based compensation | 2,174 | 1,679 | 1,572 | 5,374 | 4,604 | |||||||||||||||
Payroll taxes and employee benefits | 2,311 | 2,153 | 2,038 | 6,590 | 6,121 | |||||||||||||||
Compensation and employee benefits | 13,031 | 12,000 | 12,029 | 36,912 | 35,605 | |||||||||||||||
Data processing | 1,971 | 1,936 | 2,001 | 6,008 | 5,958 | |||||||||||||||
Occupancy, net | 1,919 | 1,856 | 1,940 | 5,982 | 6,399 | |||||||||||||||
Furniture, fixtures and equipment | 990 | 965 | 998 | 2,939 | 2,915 | |||||||||||||||
Communications | 670 | 722 | 754 | 2,280 | 2,184 | |||||||||||||||
Loan and collection | 568 | 571 | 816 | 1,964 | 2,938 | |||||||||||||||
Advertising | 455 | 478 | 406 | 1,410 | 1,338 | |||||||||||||||
Legal and professional fees | 420 | 345 | 519 | 1,178 | 1,352 | |||||||||||||||
FDIC deposit insurance | 187 | 331 | 350 | 852 | 1,044 | |||||||||||||||
Interchange expense | 276 | 267 | 279 | 809 | 859 | |||||||||||||||
Credit card and bank service fees | 203 | 198 | 197 | 588 | 602 | |||||||||||||||
Supplies | 178 | 197 | 190 | 551 | 619 | |||||||||||||||
Amortization of intangible assets | 86 | 87 | 86 | 260 | 260 | |||||||||||||||
Net (gains) losses on other real estate and repossessed assets | 263 | (159 | ) | 5 | 98 | (173 | ) | |||||||||||||
Provision for loss reimbursement on sold loans | 45 | - | (35 | ) | 30 | (59 | ) | |||||||||||||
Cost (recoveries) related to unfunded lending commitments | 73 | (80 | ) | 26 | 6 | 46 | ||||||||||||||
Vehicle service contract counterparty contingencies | (39 | ) | (1 | ) | 30 | (10 | ) | 89 | ||||||||||||
Other | 1,233 | 1,182 | 1,288 | 3,612 | 3,633 | |||||||||||||||
Total non-interest expense | $ | 22,529 | $ | 20,895 | $ | 21,879 | $ | 65,469 | $ | 65,609 |
4
Average Balances and Tax Equivalent Rates
Three Months Ended September 30, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
Average Balance | Interest | Rate (3) | Average Balance | Interest | Rate (3) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets (1) | ||||||||||||||||||||||||
Taxable loans | $ | 1,613,189 | $ | 18,562 | 4.59 | % | $ | 1,470,529 | $ | 17,834 | 4.83 | % | ||||||||||||
Tax-exempt loans (2) | 3,492 | 53 | 6.04 | 3,740 | 54 | 5.73 | ||||||||||||||||||
Taxable securities | 534,319 | 2,537 | 1.90 | 520,805 | 1,901 | 1.46 | ||||||||||||||||||
Tax-exempt securities (2) | 58,694 | 507 | 3.46 | 33,104 | 347 | 4.19 | ||||||||||||||||||
Interest bearing cash | 69,603 | 86 | 0.49 | 68,972 | 70 | 0.40 | ||||||||||||||||||
Other investments | 15,347 | 195 | 5.05 | 15,231 | 225 | 5.86 | ||||||||||||||||||
Interest Earning Assets | 2,294,644 | 21,940 | 3.81 | 2,112,381 | 20,431 | 3.85 | ||||||||||||||||||
Cash and due from banks | 34,565 | 45,477 | ||||||||||||||||||||||
Other assets, net | 152,793 | 164,253 | ||||||||||||||||||||||
Total Assets | $ | 2,482,002 | $ | 2,322,111 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest- bearing checking | $ | 1,014,201 | 284 | 0.11 | $ | 990,229 | 266 | 0.11 | ||||||||||||||||
Time deposits | 438,504 | 970 | 0.88 | 371,501 | 721 | 0.77 | ||||||||||||||||||
Other borrowings | 47,227 | 493 | 4.15 | 47,769 | 465 | 3.86 | ||||||||||||||||||
Interest Bearing Liabilities | 1,499,932 | 1,747 | 0.46 | 1,409,499 | 1,452 | 0.41 | ||||||||||||||||||
Non-interest bearing deposits | 706,282 | 633,305 | ||||||||||||||||||||||
Other liabilities | 27,110 | 23,844 | ||||||||||||||||||||||
Shareholders’ equity | 248,678 | 255,463 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,482,002 | $ | 2,322,111 | ||||||||||||||||||||
Net Interest Income | $ | 20,193 | $ | 18,979 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.51 | % | 3.58 | % |
(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, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
Average Balance | Interest | Rate (3) | Average Balance | Interest | Rate (3) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets (1) | ||||||||||||||||||||||||
Taxable loans | $ | 1,577,758 | $ | 55,255 | 4.67 | % | $ | 1,446,857 | $ | 52,736 | 4.87 | % | ||||||||||||
Tax-exempt loans (2) | 3,564 | 163 | 6.11 | 4,097 | 189 | 6.17 | ||||||||||||||||||
Taxable securities | 532,576 | 7,261 | 1.82 | 518,906 | 5,528 | 1.42 | ||||||||||||||||||
Tax-exempt securities (2) | 50,286 | 1,320 | 3.50 | 32,790 | 1,021 | 4.15 | ||||||||||||||||||
Interest bearing cash | 75,121 | 292 | 0.52 | 64,913 | 194 | 0.40 | ||||||||||||||||||
Other investments | 15,456 | 592 | 5.12 | 17,772 | 728 | 5.48 | ||||||||||||||||||
Interest Earning Assets | 2,254,761 | 64,883 | 3.84 | 2,085,335 | 60,396 | 3.87 | ||||||||||||||||||
Cash and due from banks | 38,069 | 44,829 | ||||||||||||||||||||||
Other assets, net | 157,570 | 167,849 | ||||||||||||||||||||||
Total Assets | $ | 2,450,400 | $ | 2,298,013 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest-bearing checking | $ | 1,018,727 | 831 | 0.11 | $ | 988,594 | 792 | 0.11 | ||||||||||||||||
Time deposits | 435,146 | 2,689 | 0.83 | 373,235 | 2,169 | 0.78 | ||||||||||||||||||
Other borrowings | 47,405 | 1,455 | 4.10 | 47,930 | 1,382 | 3.86 | ||||||||||||||||||
Interest Bearing Liabilities | 1,501,278 | 4,975 | 0.44 | 1,409,759 | 4,343 | 0.41 | ||||||||||||||||||
Non-interest bearing deposits | 677,645 | 609,192 | ||||||||||||||||||||||
Other liabilities | 25,612 | 24,581 | ||||||||||||||||||||||
Shareholders’ equity | 245,865 | 254,481 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,450,400 | $ | 2,298,013 | ||||||||||||||||||||
Net Interest Income | $ | 59,908 | $ | 56,053 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.55 | % | 3.59 | % |
(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, 2016
Total Commercial Loans | ||||||||||||||||||||
Watch Credits | Percent of Loan | |||||||||||||||||||
Loan Category | All Loans | Performing | Non- performing | Total | Category in Watch Credit | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Land | $ | 9,162 | $ | 194 | $ | 78 | $ | 272 | 3.0 | % | ||||||||||
Land Development | 5,345 | - | 133 | 133 | 2.5 | |||||||||||||||
Construction | 39,345 | - | - | - | 0.0 | |||||||||||||||
Income Producing | 274,026 | 4,383 | 658 | 5,041 | 1.8 | |||||||||||||||
Owner Occupied | 252,600 | 6,688 | 438 | 7,126 | 2.8 | |||||||||||||||
Total Commercial Real Estate Loans | $ | 580,478 | $ | 11,265 | 1,307 | $ | 12,572 | 2.2 | ||||||||||||
Other Commercial Loans | $ | 204,498 | $ | 10,465 | 2,079 | $ | 12,544 | 6.1 | ||||||||||||
Total non-performing commercial loans | $ | 3,386 |
7