EX-99.2 3 ex99_2.htm EXHIBIT 99.2

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Supplemental Data

Non-performing assets⁽¹⁾

	September 30,			December 31,
	2013			2012
	(Dollars in thousands)
Non-accrual loans	$	20,014		$	32,929
Loans 90 days or more past due and still accruing interest		356			7
Total non-performing loans		20,370			32,936
Other real estate and repossessed assets		16,637			26,133
Total non-performing assets	$	37,007		$	59,069
As a percent of Portfolio Loans
Non-performing loans		1.48	%		2.32	%
Allowance for loan losses		2.50			3.12
Non-performing assets to total assets		1.69			2.92
Allowance for loan losses as a percent of non-performing loans		169.06			134.43

⁽¹⁾	Excludes loans classified as “troubled debt restructured” that are not past due and vehicle service contract counterparty receivables, net.

Troubled debt restructurings (“TDR”)

		September 30, 2013
		Commercial		Retail				Total
	(In thousands)
Performing TDR’s		$	38,299		$	80,630			$	118,929
Non-performing TDR’s ⁽¹⁾			5,338			5,630	⁽²⁾			10,968
Total		$	43,637		$	86,260			$	129,897

	December 31, 2012
	Commercial		Retail			Total
	(In thousands)
Performing TDR’s	$	40,753	$	85,977		$	126,730
Non-performing TDR’s ⁽¹⁾		7,756		9,177	⁽²⁾		16,933
Total	$	48,509	$	95,154		$	143,663

⁽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.

Allowance for loan losses	Nine months ended
	September 30,
	2013						2012
				Unfunded						Unfunded
	Loans			Commitments			Loans			Commitments
	(Dollars in thousands)
Balance at beginning of period	$	44,275		$	598		$	58,884		$	1,286
Additions (deduction)
Provision for loan losses		(3,153	)		-			6,438			-
Recoveries credited to allowance		6,893			-			4,603			-
Loans charged against the allowance		(13,578	)		-			(21,294	)		-
Reclassification to loans held for sale		-						(610	)
Deductions included in non-interest expense		-			(57	)		-			(597	)
Balance at end of period	$	34,437		$	541		$	48,021		$	689

Net loans charged against the allowance to average Portfolio Loans		0.65	%					1.46	%

Alternative Sources of Funds

	September 30,							December 31,
	2013							2012
				Average						Average
	Amount			Maturity	Rate			Amount		Maturity	Rate
			(Dollars in thousands)
Brokered CDs	$	13,227		0.4 years		1.35	%	$	14,591	0.6 years		1.70	%
Fixed-rate FHLB advances		17,281		3.8 years		6.38			17,622	4.5 years		6.38
Total	$	30,508		2.3 years		4.20	%	$	32,213	2.7 years		4.26	%

Capitalization
	September 30,			December 31,
	2013			2012
	(In thousands)
Subordinated debentures	$	50,175		$	50,175
Amount not qualifying as regulatory capital		(1,507	)		(1,507	)
Amount qualifying as regulatory capital		48,668			48,668
Shareholders’ equity
Convertible preferred stock		-			84,204
Common stock		350,926			251,237
Accumulated deficit		(115,155	)		(192,408	)
Accumulated other comprehensive loss		(9,170	)		(8,058	)
Total shareholders’ equity		226,601			134,975
Total capitalization	$	275,269		$	183,643

Non-Interest Income
	Three months ended								Nine months ended
	September 30,		June 30,			September 30,			September 30,
	2013		2013			2012			2013			2012
	(In thousands)
Service charges on deposit accounts	$	3,614	$	3,583		$	4,739		$	10,603		$	13,492
Interchange income		1,852		1,933			2,324			5,542			7,053
Net gains (losses) on assets
Mortgage loans		1,570		3,208			4,602			8,415			12,041
Securities		14		107			301			205			1,154
Other than temporary impairment loss on securities
Total impairment loss		-		(26	)		(70	)		(26	)		(332	)
Loss recognized in other comprehensive income		-		-			-			-			-
Net impairment loss recognized in earnings		-		(26	)		(70	)		(26	)		(332	)
Mortgage loan servicing		338		1,654			(364	)		2,614			(716	)
Investment and insurance commissions		447		383			491			1,280			1,586
Bank owned life insurance		353		337			398			1,028			1,221
Title insurance fees		409		368			482			1,261			1,479
(Increase) decrease in fair value of U.S.
Treasury warrant		-		20			(32	)		(1,025	)		(211	)
Other		1,240		1,444			1,671			4,019			5,401
Total non-interest income	$	9,837	$	13,011		$	14,542		$	33,916		$	42,168

Capitalized Mortgage Loan Servicing Rights
	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
	(In thousands)
Balance at beginning of period	$	13,037		$	10,651		$	11,013		$	11,229
Originated servicing rights capitalized		772			996			2,661			2,948
Amortization		(793	)		(1,052	)		(3,111	)		(3,351	)
Change in valuation allowance		35			(390	)		2,488			(621	)
Balance at end of period	$	13,051		$	10,205		$	13,051		$	10,205

Valuation allowance at end of period	$	3,599		$	7,165		$	3,599		$	7,165

Mortgage Loan Activity

	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,
	2013			2013			2012			2013			2012
	(Dollars in thousands)
Mortgage loans originated	$	97,391		$	121,054		$	135,263		$	347,177		$	384,896
Mortgage loans sold		96,989			112,873			128,196			340,318			367,350
Mortgage loans sold with servicing rights released		16,017			15,696			21,942			46,250			59,837
Net gains on the sale of mortgage loans		1,570			3,208			4,602			8,415			12,041
Net gains as a percent of mortgage loans sold (“Loan Sales Margin”)		1.62	%		2.84	%		3.59	%		2.47	%		3.28	%
Fair value adjustments included in the Loan Sales Margin		(0.89	)		(0.13	)		0.29			(0.58	)		0.45

Non-Interest Expense

	Three months ended								Nine months ended
	September 30,			June 30,		September 30,				September 30,
	2013			2013		2012				2013			2012
	(In thousands)
Compensation	$	8,529		$	8,346	$	9,702			$	25,080		$	29,198
Performance-based compensation		2,104			1,520		1,712				4,686			3,532
Payroll taxes and employee benefits		1,958			1,849		2,196				5,847			6,868
Compensation and employee benefits		12,591			11,715		13,610				35,613			39,598
Occupancy, net		2,017			2,147		2,482				6,588			7,688
Data processing		2,090			2,042		2,024				6,048			5,960
Loan and collection		1,584			1,702		2,832				5,512			8,129
Vehicle service contract counterparty contingencies		149			3,127		281				3,403			1,078
Furniture, fixtures and equipment		1,051			1,088		1,083				3,171			3,490
Provision for loss reimbursement on sold loans		1,417			356		193				2,436			751
Communications		695			730		896				2,205			2,791
FDIC deposit insurance		685			711		816				2,026			2,489
Advertising		652			659		647				1,881			1,842
Legal and professional fees		487			664		952				1,843			3,117
Interchange expense		410			418		468				1,238			1,321
Net losses on other real estate and repossessed assets		119			320		291				1,091			1,911
Credit card and bank service fees		310			331		433				975			1,708
Supplies		277			244		299				771			1,033
Amortization of intangible assets		203			203		272				609			816
Write-down of property and equipment held for sale		-			-		860				-			860
Cost (recoveries) related to unfunded lending commitments		(86	)		48		(538	)			(57	)		(597	)
Other		1,283			1,237		1,395				3,796			2,843
Total non-interest expense	$	25,934		$	27,742	$	29,296			$	79,149		$	86,828

Average Balances and Tax Equivalent Rates

	Three Months Ended
	September 30,
	2013							2012
	Average							Average
	Balance		Interest		Rate⁽³⁾			Balance		Interest		Rate⁽³⁾
Assets ⁽¹⁾	(Dollars in thousands)
Taxable loans	$	1,396,709	$	20,027		5.70	%	$	1,532,773	$	23,312		6.06	%
Tax-exempt loans ⁽²⁾		5,321		86		6.41			6,709		111		6.58
Taxable securities		337,299		1,109		1.30			217,427		655		1.20
Tax-exempt securities ⁽²⁾		35,242		433		4.87			26,116		398		6.06
Cash – interest bearing		117,971		68		0.23			377,899		243		0.26
Other investments		21,496		242		4.47			20,494		189		3.67
Interest Earning Assets		1,914,038		21,965		4.57			2,181,418		24,908		4.55
Cash and due from banks		46,069							56,289
Other assets, net		188,705							161,971
Total Assets	$	2,148,812						$	2,399,678

Liabilities
Savings and interest-bearing checking	$	910,422		294		0.13		$	1,079,389		494		0.18
Time deposits		415,090		1,077		1.03			549,319		1,729		1.25
Other borrowings		67,578		884		5.19			67,994		1,059		6.20
Interest Bearing Liabilities		1,393,090		2,255		0.64			1,696,702		3,282		0.77
Non-interest bearing deposits		502,357							545,945
Other liabilities		37,143							40,477
Shareholders’ equity		216,222							116,554
Total liabilities and shareholders’ equity	$	2,148,812						$	2,399,678

Net Interest Income			$	19,710						$	21,626

Net Interest Income as a Percent of Average Interest Earning Assets						4.10	%						3.95	%

(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.

Average Balances and Tax Equivalent Rates

	Nine Months Ended
	September 30,
	2013							2012
	Average							Average
	Balance		Interest		Rate⁽³⁾			Balance		Interest		Rate⁽³⁾
Assets ⁽¹⁾	(Dollars in thousands)
Taxable loans	$	1,415,545	$	60,919		5.75	%	$	1,557,164	$	71,209		6.11	%
Tax-exempt loans ⁽²⁾		5,628		272		6.46			7,010		336		6.40
Taxable securities		274,002		2,772		1.35			221,245		2,246		1.36
Tax-exempt securities ⁽²⁾		28,873		1,164		5.39			26,563		1,220		6.13
Cash – interest bearing		149,807		272		0.24			334,426		638		0.25
Other investments		21,274		694		4.36			20,628		572		3.70
Interest Earning Assets		1,895,129		66,093		4.66			2,167,036		76,221		4.70
Cash and due from banks		44,866							54,619
Other assets, net		157,038							163,058
Total Assets	$	2,097,033						$	2,384,713

Liabilities
Savings and interest-bearing checking	$	906,046		864		0.13		$	1,071,169		1,452		0.18
Time deposits		418,193		3,499		1.12			565,731		5,500		1.30
Other borrowings		67,716		2,625		5.18			73,714		3,351		6.07
Interest Bearing Liabilities		1,391,955		6,988		0.67			1,710,614		10,303		0.80
Non-interest bearing deposits		496,777							524,615
Other liabilities		39,292							39,810
Shareholders’ equity		169,009							109,674
Total liabilities and shareholders’ equity	$	2,097,033						$	2,384,713

Net Interest Income			$	59,105						$	65,918

Net Interest Income as a Percent of Average Interest Earning Assets						4.17	%						4.06	%

(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.

Commercial Loan Portfolio Analysis as of September 30, 2013

			Total Commercial Loans
			Watch Credits						Percent of Loan
Loan Category	All Loans		Performing		Non- performing		Total		Category in Watch Credit
	(Dollars in thousands)
Land	$	17,416	$	1,362	$	965	$	2,327		13.4	%
Land Development		12,788		3,482		327		3,809		29.8
Construction		15,625		653		-		653		4.2
Income Producing		239,961		27,340		4,813		32,153		13.4
Owner Occupied		201,707		24,660		284		24,944		12.4
Total Commercial Real Estate Loans ⁽¹⁾	$	487,497	$	57,497		6,389	$	63,886		13.1

Other Commercial Loans⁽¹⁾	$	137,875	$	12,942		296	$	13,238		9.6
Total non-performing commercial loans					$	6,685

(1)	The total of these two categories is different than the September 30, 2013, Consolidated Statement of Financial Condition due primarily to loans in process.