EX-99.2 3 ex99_2.htm EXHIBIT 99.2

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data

Non-performing assets (1)
                             
   
June 30,
2016
   
March 31,
2016
   
December 31,
2015
   
September 30,
2015
   
June 30,
2015
 
   
(Dollars in thousands)
 
Non-accrual loans
 
$
10,803
   
$
10,425
   
$
10,607
   
$
15,834
   
$
12,274
 
Loans 90 days or more past due and still accruing interest
   
94
     
147
     
116
     
-
     
63
 
Total non-performing loans
   
10,897
     
10,572
     
10,723
     
15,834
     
12,337
 
Other real estate and repossessed assets
   
5,572
     
6,672
     
7,150
     
3,851
     
4,471
 
Total non-performing assets
 
$
16,469
   
$
17,244
   
$
17,873
   
$
19,685
   
$
16,808
 
                                         
As a percent of Portfolio Loans
                                       
Non-performing loans
   
0.69
%
   
0.69
%
   
0.71
%
   
1.08
%
   
0.85
%
Allowance for loan losses
   
1.44
     
1.46
     
1.49
     
1.68
     
1.70
 
Non-performing assets to total assets
   
0.67
     
0.69
     
0.74
     
0.82
     
0.73
 
Allowance for loan losses as a percent of non-performing loans
   
208.42
     
212.78
     
210.48
     
155.39
     
199.29
 
 
(1) Excludes loans classified as "trouble debt restructured" that are not past due and vehicle service contract counterparty receivables, net.
 
Troubled debt restructurings ("TDR")
                 
   
June 30, 2016
 
   
Commercial
   
Retail
   
Total
 
   
(In thousands)
 
Performing TDR's
 
$
14,130
   
$
64,818
   
$
78,948
 
Non-performing TDR's(1)
   
2,678
     
3,788
(2)
 
 
6,466
 
Total
 
$
16,808
   
$
68,606
   
$
85,414
 
 
   
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
     
   
Six months ended
 
   
June 30,
 
   
2016
   
2015
 
         
Unfunded
         
Unfunded
 
   
Loans
   
Commitments
   
Loans
   
Commitments
 
   
(Dollars in thousands)
 
Balance at beginning of period
 
$
22,570
   
$
652
   
$
25,990
   
$
539
 
Additions (deductions)
                               
Provision for loan losses
   
(1,264
)
   
-
     
(793
)
   
-
 
Recoveries credited to allowance
   
2,718
     
-
     
2,245
     
-
 
Loans charged against the allowance
   
(1,312
)
   
-
     
(2,856
)
   
-
 
Additions (deductions) included in non-interest expense
   
-
     
(67
)
   
-
     
20
 
Balance at end of period
 
$
22,712
   
$
585
   
$
24,586
   
$
559
 
                                 
Net loans charged against the allowance to average Portfolio Loans (annualized)
   
(0.18
)%
           
0.09
%
       
 
Capitalization
           
   
June 30,
   
December 31,
 
   
2016
   
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
   
324,268
     
339,462
 
Accumulated deficit
   
(74,062
)
   
(82,334
)
Accumulated other comprehensive loss
   
(3,283
)
   
(6,036
)
Total shareholders’ equity
   
246,923
     
251,092
 
Total capitalization
 
$
281,423
   
$
285,592
 
 
2

Non-Interest Income
                             
   
Three months ended
   
Six months ended
 
   
June 30,
   
March 31,
   
June 30,
   
June 30,
 
   
2016
   
2016
   
2015
   
2016
   
2015
 
   
(In thousands)
             
Service charges on deposit accounts
 
$
3,038
   
$
2,845
   
$
3,117
   
$
5,883
   
$
5,967
 
Interchange income
   
1,976
     
1,878
     
2,240
     
3,854
     
4,382
 
Net gains (losses) on assets
                                       
Mortgage loans
   
2,529
     
1,642
     
1,784
     
4,171
     
3,923
 
Securities
   
185
     
162
     
(33
)
   
347
     
52
 
Mortgage loan servicing
   
(334
)
   
(978
)
   
1,452
     
(1,312
)
   
1,032
 
Investment and insurance commissions
   
384
     
467
     
487
     
851
     
933
 
Bank owned life insurance
   
298
     
290
     
325
     
588
     
675
 
Title insurance fees
   
253
     
288
     
337
     
541
     
593
 
Other
   
1,251
     
1,215
     
1,278
     
2,466
     
2,392
 
Total non-interest income
 
$
9,580
   
$
7,809
   
$
10,987
   
$
17,389
   
$
19,949
 

Capitalized Mortgage Loan Servicing Rights
       

   
Three months ended
   
Six months ended
 
   
June 30,
   
June 30,
 
   
2016
   
2015
   
2016
   
2015
 
   
(In thousands)
 
Balance at beginning of period
 
$
10,983
   
$
11,318
   
$
12,436
   
$
12,106
 
Originated servicing rights capitalized
   
703
     
787
     
1,257
     
1,450
 
Amortization
   
(709
)
   
(800
)
   
(1,266
)
   
(1,559
)
Change in valuation allowance
   
(646
)
   
1,230
     
(2,096
)
   
538
 
Balance at end of period
 
$
10,331
   
$
12,535
   
$
10,331
   
$
12,535
 
                                 
Valuation allowance at end of period
 
$
5,368
   
$
3,235
   
$
5,368
   
$
3,235
 
 
3

Mortgage Loan Activity
                             
                               
   
Three months ended
   
Six months ended
 
   
June 30,
   
March 31,
   
June 30,
   
June 30,
 
   
2016
   
2016
   
2015
   
2016
   
2015
 
   
(Dollars in thousands)
             
Mortgage loans originated
 
$
91,966
   
$
73,502
   
$
101,306
   
$
165,468
   
$
181,096
 
Mortgage loans sold
   
70,479
     
55,666
     
82,167
     
126,145
     
150,894
 
Net gains on mortgage loans
   
2,529
     
1,642
     
1,784
     
4,171
     
3,923
 
Net gains as a percent of mortgage loans sold  ("Loan Sales Margin")
   
3.59
%
   
2.95
%
   
2.17
%
   
3.31
%
   
2.60
%
Fair value adjustments included in the Loan Sales Margin
   
0.34
     
0.25
     
(0.07
)
   
0.30
     
0.33
 
 
Non-Interest Expense
                             
   
Three months ended
   
Six months ended
 
   
June 30,
   
March 31,
   
June 30,
   
June 30,
 
   
2016
   
2016
   
2015
   
2016
   
2015
 
   
(In thousands)
             
Compensation
 
$
8,168
   
$
8,234
   
$
8,131
   
$
16,402
   
$
16,461
 
Performance-based compensation
   
1,679
     
1,521
     
1,744
     
3,200
     
3,032
 
Payroll taxes and employee benefits
   
2,153
     
2,126
     
1,916
     
4,279
     
4,083
 
Compensation and employee benefits
   
12,000
     
11,881
     
11,791
     
23,881
     
23,576
 
Occupancy, net
   
1,856
     
2,207
     
2,040
     
4,063
     
4,459
 
Data processing
   
1,936
     
2,101
     
2,027
     
4,037
     
3,957
 
Furniture, fixtures and equipment
   
965
     
984
     
965
     
1,949
     
1,917
 
Communications
   
722
     
888
     
694
     
1,610
     
1,430
 
Loan and collection
   
571
     
825
     
967
     
1,396
     
2,122
 
Advertising
   
478
     
477
     
448
     
955
     
932
 
Legal and professional
   
345
     
413
     
453
     
758
     
833
 
FDIC deposit insurance
   
331
     
334
     
351
     
665
     
694
 
Interchange expense
   
267
     
266
     
289
     
533
     
580
 
Credit card and bank service fees
   
198
     
187
     
203
     
385
     
405
 
Supplies
   
197
     
176
     
216
     
373
     
429
 
Amortization of intangible assets
   
87
     
87
     
87
     
174
     
174
 
Vehicle service contract counterparty contingencies
   
(1
)
   
30
     
30
     
29
     
59
 
Provision for loss reimbursement on sold loans
   
-
     
(15
)
   
45
     
(15
)
   
(24
)
Cost (recoveries) related to unfunded lending commitments
   
(80
)
   
13
     
4
     
(67
)
   
20
 
Net gains on other real estate and repossessed assets
   
(159
)
   
(6
)
   
(139
)
   
(165
)
   
(178
)
Other
   
1,182
     
1,197
     
1,108
     
2,379
     
2,345
 
Total non-interest expense
 
$
20,895
   
$
22,045
   
$
21,579
   
$
42,940
   
$
43,730
 
 
4

Average Balances and Tax Equivalent Rates
 
       
   
Three Months Ended
 
   
June 30,
 
         
2016
               
2015
       
   
Average
               
Average
             
   
Balance
   
Interest
   
Rate (3)
   
Balance
   
Interest
   
Rate (3)
 
   
(Dollars in thousands)
 
Assets (1)
                                   
Taxable loans
 
$
1,573,471
   
$
18,173
     
4.64
%
 
$
1,449,218
   
$
17,707
     
4.90
%
Tax-exempt loans (2)
   
3,555
     
55
     
6.22
     
4,198
     
67
     
6.40
 
Taxable securities
   
541,557
     
2,480
     
1.83
     
529,345
     
1,869
     
1.41
 
Tax-exempt securities (2)
   
50,091
     
432
     
3.45
     
31,397
     
341
     
4.34
 
Interest bearing cash
   
74,384
     
100
     
0.54
     
50,664
     
54
     
0.43
 
Other investments
   
15,478
     
197
     
5.12
     
18,145
     
235
     
5.19
 
Interest Earning Assets
   
2,258,536
     
21,437
     
3.81
     
2,082,967
     
20,273
     
3.90
 
Cash and due from banks
   
34,515
                     
42,980
                 
Other assets, net
   
154,859
                     
167,499
                 
Total Assets
 
$
2,447,910
                   
$
2,293,446
                 
                                                 
Liabilities
                                               
Savings and interest- bearing checking
 
$
1,027,913
     
277
     
0.11
   
$
990,019
     
260
     
0.11
 
Time deposits
   
430,955
     
875
     
0.82
     
371,304
     
707
     
0.76
 
Other borrowings
   
47,467
     
485
     
4.11
     
47,986
     
463
     
3.87
 
Interest Bearing Liabilities
   
1,506,335
     
1,637
     
0.44
     
1,409,309
     
1,430
     
0.41
 
Non-interest bearing deposits
   
672,920
                     
603,706
                 
Other liabilities
   
25,855
                     
25,948
                 
Shareholders’ equity
   
242,800
                     
254,483
                 
Total liabilities and shareholders’ equity
 
$
2,447,910
                   
$
2,293,446
                 
                                                 
Net Interest Income
         
$
19,800
                   
$
18,843
         
                                                 
Net Interest Income as a Percent of Average Interest Earning Assets
                   
3.52
%
                   
3.62
%
 

(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
 
       
   
Six Months Ended
 
   
June 30,
 
         
2016
               
2015
       
   
Average
               
Average
             
   
Balance
   
Interest
   
Rate (3)
   
Balance
   
Interest
   
Rate (3)
 
   
(Dollars in thousands)
 
Assets (1)
                                   
Taxable loans
 
$
1,559,807
   
$
36,693
     
4.72
%
 
$
1,434,817
   
$
34,902
     
4.89
%
Tax-exempt loans (2)
   
3,601
     
110
     
6.14
     
4,279
     
135
     
6.36
 
Taxable securities
   
531,695
     
4,724
     
1.78
     
517,941
     
3,627
     
1.40
 
Tax-exempt securities (2)
   
46,036
     
813
     
3.53
     
32,630
     
674
     
4.13
 
Interest bearing cash
   
77,910
     
206
     
0.53
     
62,850
     
124
     
0.40
 
Other investments
   
15,512
     
397
     
5.15
     
19,063
     
503
     
5.32
 
Interest Earning Assets
   
2,234,561
     
42,943
     
3.86
     
2,071,580
     
39,965
     
3.88
 
Cash and due from banks
   
39,841
                     
44,500
                 
Other assets, net
   
159,979
                     
169,678
                 
Total Assets
 
$
2,434,381
                   
$
2,285,758
                 
                                                 
Liabilities
                                               
Savings and interest-bearing checking
 
$
1,021,015
     
547
     
0.11
   
$
987,763
     
526
     
0.11
 
Time deposits
   
433,449
     
1,719
     
0.80
     
374,115
     
1,448
     
0.78
 
Other borrowings
   
47,495
     
962
     
4.07
     
48,012
     
917
     
3.85
 
Interest Bearing Liabilities
   
1,501,959
     
3,228
     
0.43
     
1,409,890
     
2,891
     
0.41
 
Non-interest bearing deposits
   
663,168
                     
596,935
                 
Other liabilities
   
24,811
                     
24,951
                 
Shareholders’ equity
   
244,443
                     
253,982
                 
Total liabilities and shareholders’ equity
 
$
2,434,381
                   
$
2,285,758
                 
                                                 
Net Interest Income
         
$
39,715
                   
$
37,074
         
                                                 
Net Interest Income as a Percent of Average Interest Earning Assets
                   
3.57
%
                   
3.60
%
 

(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 June 30, 2016
 
       
   
Total Commercial Loans
 
         
Watch Credits
   
Percent of Loan
Category in
Watch Credit
 
Loan Category
 
All Loans
   
Performing
   
Non-
performing
   
Total
     
   
(Dollars in thousands)
 
Land
 
$
8,813
   
$
354
   
$
-
   
$
354
     
4.0
%
Land Development
   
5,875
     
1,425
     
133
     
1,558
     
26.5
 
Construction
   
33,651
     
-
     
-
     
-
     
0.0
 
Income Producing
   
307,108
     
6,355
     
950
     
7,305
     
2.4
 
Owner Occupied
   
220,263
     
6,621
     
459
     
7,080
     
3.2
 
Total Commercial Real Estate Loans
 
$
575,710
   
$
14,755
     
1,542
   
$
16,297
     
2.8
 
                                         
Other Commercial Loans
 
$
216,290
   
$
12,068
     
2,168
   
$
14,236
     
6.6
 
Total non-performing commercial loans
                 
$
3,710
                 
 
 
7