Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets (1) | ||||||||||||||||||||
September 30, 2020 | June 30, 2020 | March 31, 2019 | December 31, 2019 | September 30, 2019 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Non-accrual loans | $ | 10,481 | $ | 12,938 | $ | 17,454 | $ | 10,178 | $ | 7,124 | ||||||||||
Loans 90 days or more past due and still accruing interest | 266 | 5 | - | - | - | |||||||||||||||
Subtotal | 10,747 | 12,943 | 17,454 | 10,178 | 7,124 | |||||||||||||||
Less: Government guaranteed loans | 510 | 604 | 676 | 646 | 475 | |||||||||||||||
Total non-performing loans | 10,237 | 12,339 | 16,778 | 9,532 | 6,649 | |||||||||||||||
Other real estate and repossessed assets | 1,487 | 1,569 | 1,494 | 1,865 | 1,789 | |||||||||||||||
Total non-performing assets | $ | 11,724 | $ | 13,908 | $ | 18,272 | $ | 11,397 | $ | 8,438 | ||||||||||
As a percent of Portfolio Loans | ||||||||||||||||||||
Non-performing loans | 0.36 | % | 0.43 | % | 0.62 | % | 0.35 | % | 0.24 | % | ||||||||||
Allowance for loan losses | 1.25 | 1.20 | 1.20 | 0.96 | 0.96 | |||||||||||||||
Non-performing assets to total assets | 0.28 | 0.34 | 0.50 | 0.32 | 0.24 | |||||||||||||||
Allowance for loan losses as a percent of non-performing loans | 349.43 | 279.60 | 193.68 | 274.32 | 393.26 |
(1) | Excludes loans classified as "trouble debt restructured" that are not past due. |
Troubled debt restructurings ("TDR")
September 30, 2020 | ||||||||||||
Commercial | Retail (1) | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR's | $ | 8,292 | $ | 37,337 | $ | 45,629 | ||||||
Non-performing TDR's (2) | 1,203 | 1,850 | (3) | 3,053 | ||||||||
Total | $ | 9,495 | $ | 39,187 | $ | 48,682 | ||||||
December 31, 2019 | ||||||||||||
Commercial | Retail (1) | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR's | $ | 7,974 | $ | 39,601 | $ | 47,575 | ||||||
Non-performing TDR's (2) | 540 | 2,607 | (3) | 3,147 | ||||||||
Total | $ | 8,514 | $ | 42,208 | $ | 50,722 |
(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
Nine months ended September 30, | ||||||||||||||||
2020 | 2019 | |||||||||||||||
Loans | Unfunded Commitments | Loans | Unfunded Commitments | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 26,148 | $ | 1,542 | $ | 24,888 | $ | 1,296 | ||||||||
Additions (deductions) | ||||||||||||||||
Provision for loan losses | 12,884 | - | 1,045 | - | ||||||||||||
Recoveries credited to allowance | 2,404 | - | 3,109 | - | ||||||||||||
Loans charged against the allowance | (5,665 | ) | - | (2,894 | ) | - | ||||||||||
Additions included in non-interest expense | - | 271 | - | 341 | ||||||||||||
Balance at end of period | $ | 35,771 | $ | 1,813 | $ | 26,148 | $ | 1,637 | ||||||||
Net loans charged against the allowance to average Portfolio Loans | 0.16 | % | (0.01 | )% |
Capitalization
September 30, 2020 | December 31, 2019 | |||||||
(In thousands) | ||||||||
Subordinated debt | $ | 39,261 | $ | - | ||||
Subordinated debentures | 39,507 | 39,456 | ||||||
Amount not qualifying as regulatory capital | (485 | ) | (1,224 | ) | ||||
Amount qualifying as regulatory capital | 78,283 | 38,232 | ||||||
Shareholders’ equity | ||||||||
Common stock | 339,408 | 352,344 | ||||||
Retained earnings | 27,538 | 1,611 | ||||||
Accumulated other comprehensive income (loss) | 6,146 | (3,786 | ) | |||||
Total shareholders’ equity | 373,092 | 350,169 | ||||||
Total capitalization | $ | 451,375 | $ | 388,401 |
2
Non-Interest Income
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Service charges on deposit accounts | $ | 2,085 | $ | 1,623 | $ | 2,883 | $ | 6,299 | $ | 8,323 | ||||||||||
Interchange income | 3,428 | 2,526 | 2,785 | $ | 8,411 | $ | 7,744 | |||||||||||||
Net gains on assets | ||||||||||||||||||||
Mortgage loans | 20,205 | 17,642 | 5,677 | 46,687 | 13,590 | |||||||||||||||
Securities | - | - | 0 | 253 | 304 | |||||||||||||||
Mortgage loan servicing, net | (644 | ) | (3,022 | ) | (1,562 | ) | (8,966 | ) | (4,684 | ) | ||||||||||
Investment and insurance commissions | 530 | 435 | 450 | 1,478 | 1,197 | |||||||||||||||
Bank owned life insurance | 215 | 265 | 301 | 750 | 813 | |||||||||||||||
Other | 1,192 | 898 | 1,741 | 3,470 | 4,852 | |||||||||||||||
Total non-interest income | $ | 27,011 | $ | 20,367 | $ | 12,275 | $ | 58,382 | $ | 32,139 |
Capitalized Mortgage Loan Servicing Rights
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(In thousands) | ||||||||||||||||
Balance at beginning of period | $ | 13,773 | $ | 17,894 | $ | 19,171 | $ | 21,400 | ||||||||
Originated servicing rights capitalized | 4,017 | 2,157 | 10,260 | 4,764 | ||||||||||||
Change in fair value | (2,387 | ) | (3,145 | ) | (14,028 | ) | (9,258 | ) | ||||||||
Balance at end of period | $ | 15,403 | $ | 16,906 | $ | 15,403 | $ | 16,906 |
3
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Mortgage loans originated | $ | 536,502 | $ | 470,626 | $ | 329,461 | $ | 1,318,206 | $ | 708,621 | ||||||||||
Mortgage loans sold | 417,092 | 379,048 | 204,058 | 1,058,400 | 490,219 | |||||||||||||||
Net gains on mortgage loans | 20,205 | 17,642 | 5,677 | 46,687 | 13,590 | |||||||||||||||
Net gains as a percent of mortgage loans sold ("Loan Sales Margin") | 4.84 | % | 4.65 | % | 2.78 | % | 4.41 | % | 2.77 | % | ||||||||||
Fair value adjustments included in the Loan Sales Margin | 0.50 | 1.14 | 0.22 | 0.81 | 0.48 |
Non-Interest Expense
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Compensation | $ | 10,294 | $ | 9,668 | $ | 10,327 | $ | 30,665 | $ | 30,993 | ||||||||||
Performance-based compensation | 8,310 | 3,809 | 3,214 | 14,240 | 7,730 | |||||||||||||||
Payroll taxes and employee benefits | 3,350 | 2,802 | 3,132 | 9,837 | 10,232 | |||||||||||||||
Compensation and employee benefits | 21,954 | 16,279 | 16,673 | 54,742 | 48,955 | |||||||||||||||
Occupancy, net | 2,199 | 2,159 | 2,161 | 6,818 | 6,797 | |||||||||||||||
Data processing | 2,215 | 1,590 | 2,282 | 6,160 | 6,597 | |||||||||||||||
Furniture, fixtures and equipment | 999 | 1,090 | 1,023 | 3,125 | 3,058 | |||||||||||||||
Interchange expense | 831 | 726 | 891 | 2,416 | 2,332 | |||||||||||||||
Communications | 806 | 800 | 733 | 2,409 | 2,219 | |||||||||||||||
Loan and collection | 768 | 756 | 714 | 2,329 | 1,976 | |||||||||||||||
Advertising | 589 | 364 | 636 | 1,636 | 1,935 | |||||||||||||||
Legal and professional fees | 566 | 468 | 541 | 1,427 | 1,281 | |||||||||||||||
FDIC deposit insurance | 411 | 430 | 13 | 1,211 | 723 | |||||||||||||||
Conversion related expenses | 643 | 346 | - | 1,045 | - | |||||||||||||||
Amortization of intangible assets | 255 | 255 | 272 | 765 | 817 | |||||||||||||||
Supplies | 126 | 203 | 163 | 513 | 474 | |||||||||||||||
Branch closure costs | - | 417 | - | 417 | - | |||||||||||||||
Correspondent bank service fees | 101 | 94 | 100 | 294 | 300 | |||||||||||||||
Costs related to unfunded lending commitments | 41 | 111 | 154 | 271 | 341 | |||||||||||||||
Provision for loss reimbursement on sold loans | 46 | 77 | 33 | 160 | 179 | |||||||||||||||
Net (gains) losses on other real estate and repossessed assets | 46 | (9 | ) | 52 | 146 | (27 | ) | |||||||||||||
Other | 1,045 | 1,190 | 1,407 | 3,822 | 4,473 | |||||||||||||||
Total non-interest expense | $ | 33,641 | $ | 27,346 | $ | 27,848 | $ | 89,706 | $ | 82,430 |
4
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||||
Average Balance | Interest | Rate (2) | Average Balance | Interest | Rate (2) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Taxable loans | $ | 2,918,946 | $ | 30,323 | 4.14 | % | $ | 2,779,132 | $ | 34,151 | 4.89 | % | ||||||||||||
Tax-exempt loans (1) | 6,926 | 88 | 5.05 | 7,412 | 94 | 5.03 | ||||||||||||||||||
Taxable securities | 733,977 | 3,450 | 1.88 | 371,157 | 2,771 | 2.99 | ||||||||||||||||||
Tax-exempt securities (1) | 157,998 | 1,194 | 3.02 | 52,098 | 400 | 3.07 | ||||||||||||||||||
Interest bearing cash | 51,181 | 14 | 0.11 | 56,923 | 229 | 1.60 | ||||||||||||||||||
Other investments | 18,427 | 223 | 4.81 | 18,359 | 266 | 5.75 | ||||||||||||||||||
Interest Earning Assets | 3,887,455 | 35,292 | 3.62 | 3,285,081 | 37,911 | 4.60 | ||||||||||||||||||
Cash and due from banks | 52,676 | 34,598 | ||||||||||||||||||||||
Other assets, net | 162,187 | 163,617 | ||||||||||||||||||||||
Total Assets | $ | 4,102,318 | $ | 3,483,296 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest- bearing checking | $ | 1,922,971 | 686 | 0.14 | $ | 1,487,820 | 2,818 | 0.75 | ||||||||||||||||
Time deposits | 498,796 | 1,376 | 1.10 | 658,426 | 3,418 | 2.06 | ||||||||||||||||||
Other borrowings | 110,714 | 1,006 | 3.61 | 72,887 | 703 | 3.83 | ||||||||||||||||||
Interest Bearing Liabilities | 2,532,481 | 3,068 | 0.48 | 2,219,133 | 6,939 | 1.24 | ||||||||||||||||||
Non-interest bearing deposits | 1,137,303 | 877,088 | ||||||||||||||||||||||
Other liabilities | 67,820 | 49,913 | ||||||||||||||||||||||
Shareholders’ equity | 364,714 | 337,162 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 4,102,318 | $ | 3,483,296 | ||||||||||||||||||||
Net Interest Income | $ | 32,224 | $ | 30,972 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.31 | % | 3.76 | % |
(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
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||||
Average Balance | Interest | Rate | Average Balance | Interest | Rate | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Taxable loans | $ | 2,861,776 | $ | 91,804 | 4.28 | % | $ | 2,695,435 | $ | 100,513 | 4.98 | % | ||||||||||||
Tax-exempt loans (1) | 7,266 | 273 | 5.02 | 7,856 | 291 | 4.95 | ||||||||||||||||||
Taxable securities | 579,704 | 9,356 | 2.15 | 384,291 | 8,811 | 3.06 | ||||||||||||||||||
Tax-exempt securities (1) | 114,187 | 2,682 | 3.13 | 52,794 | 1,275 | 3.22 | ||||||||||||||||||
Interest bearing cash | 52,265 | 160 | 0.41 | 51,260 | 655 | 1.71 | ||||||||||||||||||
Other investments | 18,404 | 694 | 5.04 | 18,359 | 794 | 5.78 | ||||||||||||||||||
Interest Earning Assets | 3,633,602 | 104,969 | 3.85 | 3,209,995 | 112,339 | 4.67 | ||||||||||||||||||
Cash and due from banks | 49,345 | 34,032 | ||||||||||||||||||||||
Other assets, net | 163,503 | 166,037 | ||||||||||||||||||||||
Total Assets | $ | 3,846,450 | $ | 3,410,064 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest- bearing checking | $ | 1,764,933 | 3,121 | 0.24 | $ | 1,421,114 | 7,787 | 0.73 | ||||||||||||||||
Time deposits | 529,248 | 6,029 | 1.52 | 670,479 | 10,151 | 2.02 | ||||||||||||||||||
Other borrowings | 121,195 | 2,598 | 2.86 | 72,233 | 2,211 | 4.09 | ||||||||||||||||||
Interest Bearing Liabilities | 2,415,376 | 11,748 | 0.65 | 2,163,826 | 20,149 | 1.24 | ||||||||||||||||||
Non-interest bearing deposits | 1,016,286 | 862,929 | ||||||||||||||||||||||
Other liabilities | 62,984 | 44,323 | ||||||||||||||||||||||
Shareholders’ equity | 351,804 | 338,986 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,846,450 | $ | 3,410,064 | ||||||||||||||||||||
Net Interest Income | $ | 93,221 | $ | 92,190 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.42 | % | 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%. |
6
Total Commercial Loans | ||||||||||||||||||||
Watch Credits | Percent of Loan | |||||||||||||||||||
Loan Category | All Loans | Performing | Non-accrual | Total | Category in Watch Credit | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Land | $ | 14,695 | $ | 119 | $ | 554 | $ | 673 | 4.6 | % | ||||||||||
Land Development | 10,803 | 37 | - | 37 | 0.3 | |||||||||||||||
Construction | 109,048 | 36 | - | 36 | 0.0 | |||||||||||||||
Income Producing | 334,140 | 5,625 | - | 5,625 | 1.7 | |||||||||||||||
Owner Occupied | 351,951 | 28,235 | 769 | 29,004 | 8.2 | |||||||||||||||
Total Commercial Real Estate Loans | $ | 820,637 | $ | 34,052 | 1,323 | $ | 35,375 | 4.3 | ||||||||||||
Other Commercial Loans | $ | 531,153 | $ | 22,117 | 1,164 | $ | 23,281 | 4.4 | ||||||||||||
Total non-performing commercial loans | $ | 2,487 |
Commercial Loan Portfolio Analysis as of December 31, 2019
Total Commercial Loans | ||||||||||||||||||||
Watch Credits | Percent of Loan | |||||||||||||||||||
Loan Category | All Loans | Performing | Non-accrual | Total | Category in Watch Credit | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Land | $ | 11,235 | $ | 275 | $ | 735 | $ | 1,010 | 9.0 | % | ||||||||||
Land Development | 12,899 | - | - | - | 0.0 | |||||||||||||||
Construction | 97,463 | - | - | - | 0.0 | |||||||||||||||
Income Producing | 409,897 | 15,347 | - | 15,347 | 3.7 | |||||||||||||||
Owner Occupied | 323,694 | 35,485 | 295 | 35,780 | 11.1 | |||||||||||||||
Total Commercial Real Estate Loans | $ | 855,188 | $ | 51,107 | 1,030 | $ | 52,137 | 6.1 | ||||||||||||
Other Commercial Loans | $ | 311,507 | $ | 20,580 | 347 | $ | 20,927 | 6.7 | ||||||||||||
Total non-performing commercial loans | $ | 1,377 |
7