Independent Bank (IBCP) 8-K Independent Bank Corporation Reports

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Supplemental Data

Non-performing assets ⁽¹⁾

	June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017
	(Dollars in thousands)
Non-accrual loans	$	9,082		$	6,629		$	8,184		$	8,410		$	8,542
Loans 90 days or more past due and still accruing interest		-			-			-			-			-
Total non-performing loans		9,082			6,629			8,184			8,410			8,542
Other real estate and repossessed assets		1,689			1,647			1,643			2,150			2,368
Total non-performing assets	$	10,771		$	8,276		$	9,827		$	10,560		$	10,910
As a percent of Portfolio Loans
Non-performing loans		0.37	%		0.32	%		0.41	%		0.43	%		0.47	%
Allowance for loan losses		0.95			1.11			1.12			1.11			1.14
Non-performing assets to total assets		0.33			0.30			0.35			0.38			0.41
Allowance for loan losses as a percent of non-performing loans		258.80			348.03			275.99			255.39			241.00

₍₁₎ Excludes loans classified as “trouble debt restructured” that are not past due.

Troubled debt restructurings (“TDR”)

			June 30, 2018
			Commercial		Retail			Total
	(In thousands)
Performing TDR’s		$	7,792	$	50,313		$	58,105
Non-performing TDR’s(1)			245		3,112	(2)		3,357
Total		$	8,037	$	53,425		$	61,462

			December 31, 2017
			Commercial		Retail			Total
	(In thousands)
Performing TDR’s		$	7,748	$	52,367		$	60,115
Non-performing TDR’s(1)			323		4,506	(2)		4,829
Total		$	8,071	$	56,873		$	64,944

₍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,
	2018						2017
	Loans			Unfunded Commitments			Loans			Unfunded Commitments
	(Dollars in thousands)
Balance at beginning of period	$	22,587		$	1,125		$	20,234		$	650
Additions (deductions)
Provision for loan losses		965			-			224			-
Recoveries credited to allowance		1,860			-			1,786			-
Loans charged against the allowance		(1,908	)		-			(1,658	)		-
Additions included in non-interest expense		-			(77	)		-			240
Balance at end of period	$	23,504		$	1,048		$	20,586		$	890
Net loans charged against the allowance to average Portfolio Loans		0.00	%					(0.02	)%

Capitalization

	June 30, 2018			December 31, 2017
	(In thousands)
Subordinated debentures	$	39,354		$	35,569
Amount not qualifying as regulatory capital		(1,224	)		(1,069	)
Amount qualifying as regulatory capital		38,130			34,500
Shareholders’ equity
Common stock		389,195			324,986
Accumulated deficit		(42,898	)		(54,054	)
Accumulated other comprehensive loss		(9,214	)		(5,999	)
Total shareholders’ equity		337,083			264,933
Total capitalization	$	375,213		$	299,433

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Non-Interest Income

	Three months ended								Six months ended
	June 30, 2018		March 30, 2018			June 30, 2017			June 30,
									2018			2017
	(In thousands)
Service charges on deposit accounts	$	3,095	$	2,905		$	3,175		$	6,000		$	6,184
Interchange income		2,504		2,246			2,005			4,750			3,927
Net gains (losses) on assets
Mortgage loans		3,255		2,571			3,344			5,826			5,915
Securities		9		(173	)		(34	)		(164	)		(7	)
Mortgage loan servicing, net		1,235		2,221			(158	)		3,456			667
Investment and insurance commissions		483		438			467			921			935
Bank owned life insurance		220		256			240			476			493
Other		1,514		1,249			1,407			2,763			2,671
Total non-interest income	$	12,315	$	11,713		$	10,446		$	24,028		$	20,785

Capitalized Mortgage Loan Servicing Rights

	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018		2017
	(In thousands)
Balance at beginning of period	$	17,783		$	14,727		$	15,699	$	13,671
Change in accounting		-			-			-		542
Balance at beginning of period, as adjusted		17,783			14,727			15,699		14,213
Servicing rights acquired		3,047			-			3,047		-
Originated servicing rights capitalized		1,155			1,019			2,210		1,797
Change in fair value		(137	)		(1,231	)		892		(1,495	)
Balance at end of period	$	21,848		$	14,515		$	21,848	$	14,515

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Mortgage Loan Activity

	Three months ended									Six months ended
	June 30, 2018			March 30, 2018			June 30, 2017			June 30,
										2018			2017
	(Dollars in thousands)
Mortgage loans originated	$	226,264		$	158,967		$	235,087		$	385,231		$	393,168
Mortgage loans sold		115,299			106,343			104,714			221,642			184,405
Net gains on mortgage loans		3,255			2,571			3,344			5,826			5,915
Net gains as a percent of mortgage loans sold  (“Loan Sales Margin”)		2.82	%		2.42	%		3.19	%		2.63	%		3.21	%
Fair value adjustments included in the Loan Sales Margin		0.57			0.11			0.32			0.35			0.27

Non-Interest Expense

	Three months ended								Six months ended
	June 30, 2018			March 30, 2018			June 30, 2017		June 30,
									2018			2017
	(In thousands)
Compensation	$	9,574		$	8,930		$	8,707	$	18,504		$	18,379
Performance-based compensation		3,150			2,783			2,138		5,933			4,131
Payroll taxes and employee benefits		3,145			2,755			2,535		5,900			5,017
Compensation and employee benefits		15,869			14,468			13,380		30,337			27,527
Occupancy, net		2,170			2,264			1,920		4,434			4,062
Data processing		2,251			1,878			1,937		4,129			3,874
Merger related expenses		3,082			174			-		3,256			-
Furniture, fixtures and equipment		1,019			967			1,005		1,986			1,982
Communications		704			680			678		1,384			1,361
Loan and collection		692			677			670		1,369			1,083
Interchange expense		661			598			292		1,259			575
Advertising		543			441			519		984			1,025
Legal and professional fees		456			378			389		834			826
FDIC deposit insurance		250			230			202		480			400
Amortization of intangible assets		295			86			86		381			173
Supplies		178			165			159		343			331
Credit card and bank service fees		106			96			136		202			327
Provision for loss reimbursement on sold loans		20			11			20		31			51
Costs (recoveries) related to unfunded lending commitments		37			(114	)		130		(77	)		240
Net (gains) losses on other real estate and repossessed assets		(4	)		(290	)		91		(294	)		102
Other		1,432			1,426			1,147		2,858			2,391
Total non-interest expense	$	29,761		$	24,135		$	22,761	$	53,896		$	46,330

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Average Balances and Tax Equivalent Rates

	Three Months Ended June 30,
			2018							2017
	Average Balance		Interest		Rate (2)			Average Balance		Interest		Rate (2)
	(Dollars in thousands)
Assets
Taxable loans	$	2,442,159	$	29,606		4.86	%	$	1,779,916	$	19,919		4.49	%
Tax-exempt loans (1)		6,897		85		4.94			3,037		46		6.08
Taxable securities		401,102		2,720		2.71			503,863		2,781		2.21
Tax-exempt securities (1)		69,325		559		3.23			88,731		783		3.53
Interest bearing cash		28,187		66		0.94			32,193		53		0.66
Other investments		16,312		199		4.89			15,543		239		6.17
Interest Earning Assets		2,963,982		33,235		4.49			2,423,283		23,821		3.94
Cash and due from banks		31,564							30,649
Other assets, net		172,650							144,673
Total Assets	$	3,168,196						$	2,598,605
Liabilities
Savings and interest-bearing checking	$	1,241,700		1,011		0.33		$	1,058,768		316		0.12
Time deposits		603,833		2,198		1.46			468,705		1,162		0.99
Other borrowings		100,754		914		3.64			68,511		563		3.30
Interest Bearing Liabilities		1,946,287		4,123		0.85			1,595,984		2,041		0.51
Non-interest bearing deposits		855,829							712,132
Other liabilities		31,454							30,394
Shareholders’ equity		334,626							260,095
Total liabilities and shareholders’ equity	$	3,168,196						$	2,598,605
Net Interest Income			$	29,112						$	21,780
Net Interest Income as a Percent of Average Interest Earning Assets						3.93	%						3.60	%

₍₁₎ Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21% in 2018 and 35% in 2017.

₍₂₎ Annualized

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Average Balances and Tax Equivalent Rates

	Six Months Ended June 30,
			2018							2017
	Average Balance		Interest		Rate (2)			Average Balance		Interest		Rate (2)
	(Dollars in thousands)
Assets
Taxable loans	$	2,252,492	$	52,945		4.72	%	$	1,733,225	$	39,743		4.61	%
Tax-exempt loans (1)		4,526		104		4.63			3,549		98		5.57
Taxable securities		411,619		5,355		2.60			512,586		5,535		2.16
Tax-exempt securities (1)		73,810		1,162		3.15			83,417		1,481		3.55
Interest bearing cash		30,531		148		0.98			49,356		166		0.68
Other investments		15,930		447		5.66			15,543		438		5.68
Interest Earning Assets		2,788,908		60,161		4.33			2,397,676		47,461		3.98
Cash and due from banks		31,848							32,212
Other assets, net		152,912							149,306
Total Assets	$	2,973,668						$	2,579,194
Liabilities
Savings and interest-bearing checking	$	1,168,747		1,562		0.27		$	1,052,973		599		0.11
Time deposits		584,167		3,934		1.36			475,409		2,322		0.98
Other borrowings		82,920		1,488		3.62			56,823		1,033		3.67
Interest Bearing Liabilities		1,835,834		6,984		0.77			1,585,205		3,954		0.50
Non-interest bearing deposits		807,504							708,363
Other liabilities		30,531							29,772
Shareholders’ equity		299,799							255,854
Total liabilities and shareholders’ equity	$	2,973,668						$	2,579,194
Net Interest Income			$	53,177						$	43,507
Net Interest Income as a Percent of Average Interest Earning Assets						3.83	%						3.65	%

₍₁₎ Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21% in 2018 and 35% in 2017.

₍₂₎ Annualized

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Commercial Loan Portfolio Analysis as of June 30, 2018

	Total Commercial Loans
			Watch Credits						Percent of Loan
Loan Category	All Loans		Performing		Non- performing		Total		Category in Watch Credit
	(Dollars in thousands)
Land	$	10,835	$	70	$	-	$	70		0.6	%
Land Development		15,181		-		-		-		0.0
Construction		35,697		6,431		2,401		8,832		24.7
Income Producing		365,672		2,895		-		2,895		0.8
Owner Occupied		352,478		15,266		165		15,431		4.4
Total Commercial Real Estate Loans	$	779,863	$	24,662		2,566	$	27,228		3.5
Other Commercial Loans	$	327,124	$	20,997		323	$	21,320		6.5
Total non-performing commercial loans					$	2,889

Commercial Loan Portfolio Analysis as of December 31, 2017

	Total Commercial Loans
			Watch Credits						Percent of Loan
Loan Category	All Loans		Performing		Non- performing		Total		Category in Watch Credit
	(Dollars in thousands)
Land	$	8,559	$	60	$	9	$	69		0.8	%
Land Development		9,685		-		-		-		0.0
Construction		51,733		-		-		-		0.0
Income Producing		289,799		1,590		30		1,620		0.6
Owner Occupied		258,888		11,491		170		11,661		4.5
Total Commercial Real Estate Loans	$	618,664	$	13,141		209	$	13,350		2.2
Other Commercial Loans	$	234,596	$	19,109		437	$	19,546		8.3
Total non-performing commercial loans					$	646

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