Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets (1)
June 30, 2019 | March 31, 2019 | December 31, 2018 | September 30, 2018 | June 30, 2018 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Non-accrual loans | $ | 7,798 | $ | 8,849 | $ | 9,029 | $ | 9,343 | $ | 9,082 | ||||||||||
Loans 90 days or more past due and still accruing interest | - | - | 5 | - | - | |||||||||||||||
Total non-accrual loans | 7,798 | 8,849 | 9,034 | 9,343 | 9,082 | |||||||||||||||
Less: Government guaranteed loans | 436 | 617 | 460 | 279 | 224 | |||||||||||||||
Total non-performing loans | 7,362 | 8,232 | 8,574 | 9,064 | 8,858 | |||||||||||||||
Other real estate and repossessed assets | 1,990 | 1,338 | 1,299 | 1,445 | 1,689 | |||||||||||||||
Total non-performing assets | $ | 9,352 | $ | 9,570 | $ | 9,873 | $ | 10,509 | $ | 10,547 | ||||||||||
As a percent of Portfolio Loans | ||||||||||||||||||||
Non-performing loans | 0.27 | % | 0.31 | % | 0.33 | % | 0.35 | % | 0.36 | % | ||||||||||
Allowance for loan losses | 0.96 | 0.96 | 0.96 | 0.95 | 0.95 | |||||||||||||||
Non-performing assets to total assets | 0.27 | 0.28 | 0.29 | 0.32 | 0.33 | |||||||||||||||
Allowance for loan losses as a percent of non-performing loans | 351.85 | 306.78 | 290.27 | 269.21 | 265.34 |
(1) | Excludes loans classified as "trouble debt restructured" that are not past due. |
Troubled debt restructurings ("TDR")
June 30, 2019 | ||||||||||||
Commercial | Retail (1) | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR's | $ | 7,166 | $ | 42,136 | $ | 49,302 | ||||||
Non-performing TDR's (2) | 54 | 2,783 | (3) | 2,837 | ||||||||
Total | $ | 7,220 | $ | 44,919 | $ | 52,139 | ||||||
December 31, 2018 | ||||||||||||
Commercial | Retail (1) | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR's | $ | 6,460 | $ | 46,627 | $ | 53,087 | ||||||
Non-performing TDR's (2) | 74 | 2,884 | (3) | 2,958 | ||||||||
Total | $ | 6,534 | $ | 49,511 | $ | 56,045 |
(1) | Retail loans include mortgage and installment loan segments. |
(2) | Included in non-performing assets table above. |
(3) | 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, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Loans | Unfunded Commitments | Loans | Unfunded Commitments | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 24,888 | $ | 1,296 | $ | 22,587 | $ | 1,125 | ||||||||
Additions (deductions) | ||||||||||||||||
Provision for loan losses | 1,316 | - | 965 | - | ||||||||||||
Recoveries credited to allowance | 1,457 | - | 1,860 | - | ||||||||||||
Loans charged against the allowance | (1,758 | ) | - | (1,908 | ) | - | ||||||||||
Additions included in non-interest expense | - | 187 | - | (77 | ) | |||||||||||
Balance at end of period | $ | 25,903 | $ | 1,483 | $ | 23,504 | $ | 1,048 | ||||||||
Net loans charged against the allowance to average Portfolio Loans | 0.02 | % | 0.00 | % |
Capitalization
June 30, 2019 | December 31, 2018 | |||||||
(In thousands) | ||||||||
Subordinated debentures | $ | 39,422 | $ | 39,388 | ||||
Amount not qualifying as regulatory capital | (1,224 | ) | (1,224 | ) | ||||
Amount qualifying as regulatory capital | 38,198 | 38,164 | ||||||
Shareholders’ equity | ||||||||
Common stock | 351,894 | 377,372 | ||||||
Accumulated deficit | (16,617 | ) | (28,270 | ) | ||||
Accumulated other comprehensive loss | (4,431 | ) | (10,108 | ) | ||||
Total shareholders’ equity | 330,846 | 338,994 | ||||||
Total capitalization | $ | 369,044 | $ | 377,158 |
2
Non-Interest Income
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Service charges on deposit accounts | $ | 2,800 | $ | 2,640 | $ | 3,095 | $ | 5,440 | $ | 6,000 | ||||||||||
Interchange income | 2,604 | 2,355 | 2,504 | 4,959 | 4,750 | |||||||||||||||
Net gains on assets | ||||||||||||||||||||
Mortgage loans | 4,302 | 3,611 | 3,255 | 7,913 | 5,826 | |||||||||||||||
Securities | - | 304 | 9 | 304 | (164 | ) | ||||||||||||||
Mortgage loan servicing, net | (1,907 | ) | (1,215 | ) | 1,235 | (3,122 | ) | 3,456 | ||||||||||||
Investment and insurance commissions | 450 | 297 | 483 | 747 | 921 | |||||||||||||||
Bank owned life insurance | 270 | 242 | 220 | 512 | 476 | |||||||||||||||
Other | 1,386 | 1,725 | 1,514 | 3,111 | 2,763 | |||||||||||||||
Total non-interest income | $ | 9,905 | $ | 9,959 | $ | 12,315 | $ | 19,864 | $ | 24,028 |
Capitalized Mortgage Loan Servicing Rights
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In thousands) | ||||||||||||||||
Balance at beginning of period | $ | 19,909 | $ | 17,783 | $ | 21,400 | $ | 15,699 | ||||||||
Servicing rights acquired | - | $ | 3,047 | - | $ | 3,047 | ||||||||||
Originated servicing rights capitalized | 1,407 | 1,155 | 2,607 | 2,210 | ||||||||||||
Change in fair value | (3,422 | ) | (137 | ) | (6,113 | ) | 892 | |||||||||
Balance at end of period | $ | 17,894 | $ | 21,848 | $ | 17,894 | $ | 21,848 |
3
Mortgage Loan Activity
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Mortgage loans originated | $ | 241,402 | $ | 137,758 | $ | 226,264 | $ | 379,160 | $ | 385,231 | ||||||||||
Mortgage loans sold | 131,636 | 154,525 | 115,299 | 286,161 | 221,642 | |||||||||||||||
Net gains on mortgage loans | 4,302 | 3,611 | 3,255 | 7,913 | 5,826 | |||||||||||||||
Net gains as a percent of mortgage loans sold ("Loan Sales Margin") | 3.27 | % | 2.34 | % | 2.82 | % | 2.77 | % | 2.63 | % | ||||||||||
Fair value adjustments included in the Loan Sales Margin | 0.74 | 0.58 | 0.57 | 0.66 | 0.35 |
Non-Interest Expense
Three months ended | Six months ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Compensation | $ | 10,185 | $ | 10,481 | $ | 9,574 | $ | 20,666 | $ | 18,504 | ||||||||||
Performance-based compensation | 2,296 | 2,220 | 3,150 | 4,516 | 5,933 | |||||||||||||||
Payroll taxes and employee benefits | 3,450 | 3,650 | 3,145 | 7,100 | 5,900 | |||||||||||||||
Compensation and employee benefits | 15,931 | 16,351 | 15,869 | 32,282 | 30,337 | |||||||||||||||
Occupancy, net | 2,131 | 2,505 | 2,170 | 4,636 | 4,434 | |||||||||||||||
Data processing | 2,171 | 2,144 | 2,251 | 4,315 | 4,129 | |||||||||||||||
Furniture, fixtures and equipment | 1,006 | 1,029 | 1,019 | 2,035 | 1,986 | |||||||||||||||
Communications | 717 | 769 | 704 | 1,486 | 1,384 | |||||||||||||||
Interchange expense | 753 | 688 | 661 | 1,441 | 1,259 | |||||||||||||||
Advertising | 627 | 672 | 543 | 1,299 | 984 | |||||||||||||||
Loan and collection | 628 | 634 | 692 | 1,262 | 1,369 | |||||||||||||||
Legal and professional fees | 371 | 369 | 456 | 740 | 834 | |||||||||||||||
FDIC deposit insurance | 342 | 368 | 250 | 710 | 480 | |||||||||||||||
Amortization of intangible assets | 273 | 272 | 295 | 545 | 381 | |||||||||||||||
Supplies | 153 | 158 | 178 | 311 | 343 | |||||||||||||||
Credit card and bank service fees | 97 | 103 | 106 | 200 | 202 | |||||||||||||||
Costs (recoveries) related to unfunded lending commitments | 27 | 160 | 37 | 187 | (77 | ) | ||||||||||||||
Provision for loss reimbursement on sold loans | 35 | 111 | 20 | 146 | 31 | |||||||||||||||
Net (gains) losses on other real estate and repossessed assets | (198 | ) | 119 | (4 | ) | (79 | ) | (294 | ) | |||||||||||
Merger related expenses | - | - | 3,082 | - | 3,256 | |||||||||||||||
Other | 1,528 | 1,538 | 1,432 | 3,066 | 2,858 | |||||||||||||||
Total non-interest expense | $ | 26,592 | $ | 27,990 | $ | 29,761 | $ | 54,582 | $ | 53,896 |
4
Average Balances and Tax Equivalent Rates
Three Months Ended June 30, | ||||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||||
Average Balance | Interest | Rate (2) | Average Balance | Interest | Rate (2) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Taxable loans | $ | 2,692,168 | $ | 33,762 | 5.02 | % | $ | 2,442,159 | $ | 29,606 | 4.86 | % | ||||||||||||
Tax-exempt loans (1) | 7,480 | 94 | 5.04 | 6,897 | 85 | 4.94 | ||||||||||||||||||
Taxable securities | 392,075 | 3,034 | 3.10 | 401,102 | 2,720 | 2.71 | ||||||||||||||||||
Tax-exempt securities (1) | 49,448 | 406 | 3.28 | 69,325 | 559 | 3.23 | ||||||||||||||||||
Interest bearing cash | 31,734 | 115 | 1.45 | 28,187 | 66 | 0.94 | ||||||||||||||||||
Other investments | 18,359 | 264 | 5.77 | 16,312 | 199 | 4.89 | ||||||||||||||||||
Interest Earning Assets | 3,191,264 | 37,675 | 4.73 | 2,963,982 | 33,235 | 4.49 | ||||||||||||||||||
Cash and due from banks | 33,252 | 31,564 | ||||||||||||||||||||||
Other assets, net | 163,882 | 172,650 | ||||||||||||||||||||||
Total Assets | $ | 3,388,398 | $ | 3,168,196 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest- bearing checking | $ | 1,413,073 | 2,647 | 0.75 | $ | 1,241,700 | 1,011 | 0.33 | ||||||||||||||||
Time deposits | 664,909 | 3,374 | 2.04 | 603,833 | 2,198 | 1.46 | ||||||||||||||||||
Other borrowings | 77,678 | 796 | 4.11 | 100,754 | 914 | 3.64 | ||||||||||||||||||
Interest Bearing Liabilities | 2,155,660 | 6,817 | 1.27 | 1,946,287 | 4,123 | 0.85 | ||||||||||||||||||
Non-interest bearing deposits | 851,903 | 855,829 | ||||||||||||||||||||||
Other liabilities | 42,581 | 31,454 | ||||||||||||||||||||||
Shareholders’ equity | 338,254 | 334,626 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,388,398 | $ | 3,168,196 | ||||||||||||||||||||
Net Interest Income | $ | 30,858 | $ | 29,112 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.87 | % | 3.93 | % |
(1) | Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%. |
(2) | Annualized |
5
Average Balances and Tax Equivalent Rates
Six Months Ended June 30, | ||||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||||
Average Balance | Interest | Rate (2) | Average Balance | Interest | Rate (2) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Taxable loans | $ | 2,652,893 | $ | 66,362 | 5.03 | % | $ | 2,252,492 | $ | 52,945 | 4.72 | % | ||||||||||||
Tax-exempt loans (1) | 8,081 | 197 | 4.92 | 4,526 | 104 | 4.63 | ||||||||||||||||||
Taxable securities | 390,966 | 6,040 | 3.09 | 411,619 | 5,355 | 2.60 | ||||||||||||||||||
Tax-exempt securities (1) | 53,148 | 875 | 3.29 | 73,810 | 1,162 | 3.15 | ||||||||||||||||||
Interest bearing cash | 48,381 | 426 | 1.78 | 30,531 | 148 | 0.98 | ||||||||||||||||||
Other investments | 18,359 | 528 | 5.80 | 15,930 | 447 | 5.66 | ||||||||||||||||||
Interest Earning Assets | 3,171,828 | 74,428 | 4.72 | 2,788,908 | 60,161 | 4.33 | ||||||||||||||||||
Cash and due from banks | 33,744 | 31,848 | ||||||||||||||||||||||
Other assets, net | 167,270 | 152,912 | ||||||||||||||||||||||
Total Assets | $ | 3,372,842 | $ | 2,973,668 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest- bearing checking | $ | 1,387,208 | 4,969 | 0.72 | $ | 1,168,747 | 1,562 | 0.27 | ||||||||||||||||
Time deposits | 676,606 | 6,733 | 2.01 | 584,167 | 3,934 | 1.36 | ||||||||||||||||||
Other borrowings | 71,901 | 1,508 | 4.23 | 82,920 | 1,488 | 3.62 | ||||||||||||||||||
Interest Bearing Liabilities | 2,135,715 | 13,210 | 1.25 | 1,835,834 | 6,984 | 0.77 | ||||||||||||||||||
Non-interest bearing deposits | 855,732 | 807,504 | ||||||||||||||||||||||
Other liabilities | 41,481 | 30,531 | ||||||||||||||||||||||
Shareholders’ equity | 339,914 | 299,799 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,372,842 | $ | 2,973,668 | ||||||||||||||||||||
Net Interest Income | $ | 61,218 | $ | 53,177 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.88 | % | 3.83 | % |
(1) | Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%. |
(2) | Annualized |
6
Commercial Loan Portfolio Analysis as of June 30, 2019
Total Commercial Loans | ||||||||||||||||||||
Watch Credits | Percent of Loan | |||||||||||||||||||
Loan Category | All Loans | Performing | Non- performing | Total | Category in Watch Credit | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Land | $ | 12,387 | $ | 772 | $ | - | $ | 772 | 6.2 | % | ||||||||||
Land Development | 9,136 | 499 | - | 499 | 5.5 | |||||||||||||||
Construction | 71,472 | 7,925 | - | 7,925 | 11.1 | |||||||||||||||
Income Producing | 398,074 | 16,484 | - | 16,484 | 4.1 | |||||||||||||||
Owner Occupied | 350,774 | 33,597 | 54 | 33,651 | 9.6 | |||||||||||||||
Total Commercial Real Estate Loans | $ | 841,843 | $ | 59,277 | 54 | $ | 59,331 | 7.0 | ||||||||||||
Other Commercial Loans | $ | 334,127 | $ | 18,736 | 749 | $ | 19,485 | 5.8 | ||||||||||||
Total non-performing commercial loans | $ | 803 |
Commercial Loan Portfolio Analysis as of December 31, 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 | $ | 12,308 | $ | 63 | $ | - | $ | 63 | 0.5 | % | ||||||||||
Land Development | 12,155 | 338 | - | 338 | 2.8 | |||||||||||||||
Construction | 59,856 | 7,901 | - | 7,901 | 13.2 | |||||||||||||||
Income Producing | 388,311 | 12,430 | - | 12,430 | 3.2 | |||||||||||||||
Owner Occupied | 353,572 | 23,041 | 846 | 23,887 | 6.8 | |||||||||||||||
Total Commercial Real Estate Loans | $ | 826,202 | $ | 43,773 | 846 | $ | 44,619 | 5.4 | ||||||||||||
Other Commercial Loans | $ | 318,279 | $ | 16,695 | 1,374 | $ | 18,069 | 5.7 | ||||||||||||
Total non-performing commercial loans | $ | 2,220 |
7