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, 2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015
	(Dollars in thousands)
Non-accrual loans	$	10,801		$	10,803		$	10,425		$	10,607		$	15,834
Loans 90 days or more past due and still accruing interest		-			94			147			116			-
Total non-performing loans		10,801			10,897			10,572			10,723			15,834
Other real estate and repossessed assets		4,989			5,572			6,672			7,150			3,851
Total non-performing assets	$	15,790		$	16,469		$	17,244		$	17,873		$	19,685

As a percent of Portfolio Loans
Non-performing loans		0.67	%		0.69	%		0.69	%		0.71	%		1.08	%
Allowance for loan losses		1.37			1.44			1.46			1.49			1.68
Non-performing assets to total assets		0.62			0.67			0.69			0.74			0.82
Allowance for loan losses as a percent of non-performing loans		204.08			208.42			212.78			210.48			155.39

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

Troubled debt restructurings ("TDR")

	September 30, 2016
	Commercial		Retail			Total
	(In thousands)
Performing TDR's	$	12,642	$	62,299		$	74,941
Non-performing TDR's(1)		2,352		3,421	⁽²⁾		5,773
Total	$	14,994	$	65,720		$	80,714

	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.

Allowance for loan losses

	Nine months ended September 30,
	2016					2015
	Loans			Unfunded Commitments		Loans			Unfunded Commitments
	(Dollars in thousands)
Balance at beginning of period	$	22,570		$	652	$	25,990		$	539
Additions (deductions)
Provision for loan losses		(1,439	)		-		(1,037	)		-
Recoveries credited to allowance		3,623			-		3,418			-
Loans charged against the allowance		(2,711	)		-		(3,767	)		-
Additions (deductions) included in non-interest expense		-			6		-			46
Balance at end of period	$	22,043		$	658	$	24,604		$	585

Net loans charged against the allowance to average Portfolio Loans (annualized)		(0.08	)%				0.03	%

Capitalization

	September 30, 2016			December 31, 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		323,303			339,462
Accumulated deficit		(69,386	)		(82,334	)
Accumulated other comprehensive loss		(3,015	)		(6,036	)
Total shareholders’ equity		250,902			251,092
Total capitalization	$	285,402		$	285,592

Non-Interest Income

	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,
	2016			2016			2015			2016			2015
	(In thousands)
Service charges on deposit accounts	$	3,281		$	3,038		$	3,294		$	9,164		$	9,261
Interchange income		1,943			1,976			2,169			5,797			6,551
Net gains (losses) on assets
Mortgage loans		3,556			2,529			1,812			7,727			5,735
Securities		(45	)		185			45			302			97
Mortgage loan servicing, net		858			(334	)		(556	)		(454	)		476
Investment and insurance commissions		427			384			447			1,278			1,380
Bank owned life insurance		282			298			304			870			979
Title insurance fees		319			253			281			860			874
Net gain on branch sale		-			-			1,193			-			1,193
Other		1,087			1,251			1,130			3,553			3,522
Total non-interest income	$	11,708		$	9,580		$	10,119		$	29,097		$	30,068

Capitalized Mortgage Loan Servicing Rights

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
	(In thousands)
Balance at beginning of period	$	10,331		$	12,535		$	12,436		$	12,106
Originated servicing rights capitalized		896			678			2,153			2,128
Amortization		(799	)		(700	)		(2,065	)		(2,259	)
Change in valuation allowance		620			(883	)		(1,476	)		(345	)
Balance at end of period	$	11,048		$	11,630		$	11,048		$	11,630

Valuation allowance at end of period	$	4,748		$	4,118		$	4,748		$	4,118

Mortgage Loan Activity

	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,
	2016			2016			2015			2016			2015
	(Dollars in thousands)
Mortgage loans originated	$	123,124		$	91,966		$	79,648		$	288,592		$	260,744
Mortgage loans sold		89,349			70,479			71,063			215,494			221,957
Net gains on mortgage loans		3,556			2,529			1,812			7,727			5,735
Net gains as a percent of mortgage loans sold ("Loan Sales Margin")		3.98	%		3.59	%		2.55	%		3.59	%		2.58	%
Fair value adjustments included in the Loan Sales Margin		0.55			0.34			(0.05	)		0.40			0.21

Non-Interest Expense

	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,
	2016			2016			2015			2016			2015
	(In thousands)
Compensation	$	8,546		$	8,168		$	8,419		$	24,948		$	24,880
Performance-based compensation		2,174			1,679			1,572			5,374			4,604
Payroll taxes and employee benefits		2,311			2,153			2,038			6,590			6,121
Compensation and employee benefits		13,031			12,000			12,029			36,912			35,605
Data processing		1,971			1,936			2,001			6,008			5,958
Occupancy, net		1,919			1,856			1,940			5,982			6,399
Furniture, fixtures and equipment		990			965			998			2,939			2,915
Communications		670			722			754			2,280			2,184
Loan and collection		568			571			816			1,964			2,938
Advertising		455			478			406			1,410			1,338
Legal and professional fees		420			345			519			1,178			1,352
FDIC deposit insurance		187			331			350			852			1,044
Interchange expense		276			267			279			809			859
Credit card and bank service fees		203			198			197			588			602
Supplies		178			197			190			551			619
Amortization of intangible assets		86			87			86			260			260
Net (gains) losses on other real estate and repossessed assets		263			(159	)		5			98			(173	)
Provision for loss reimbursement on sold loans		45			-			(35	)		30			(59	)
Cost (recoveries) related to unfunded lending commitments		73			(80	)		26			6			46
Vehicle service contract counterparty contingencies		(39	)		(1	)		30			(10	)		89
Other		1,233			1,182			1,288			3,612			3,633
Total non-interest expense	$	22,529		$	20,895		$	21,879		$	65,469		$	65,609

Average Balances and Tax Equivalent Rates

	Three Months Ended September 30,
			2016							2015
	Average Balance		Interest		Rate ⁽³⁾			Average Balance		Interest		Rate ⁽³⁾
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,613,189	$	18,562		4.59	%	$	1,470,529	$	17,834		4.83	%
Tax-exempt loans ⁽²⁾		3,492		53		6.04			3,740		54		5.73
Taxable securities		534,319		2,537		1.90			520,805		1,901		1.46
Tax-exempt securities⁽²⁾		58,694		507		3.46			33,104		347		4.19
Interest bearing cash		69,603		86		0.49			68,972		70		0.40
Other investments		15,347		195		5.05			15,231		225		5.86
Interest Earning Assets		2,294,644		21,940		3.81			2,112,381		20,431		3.85
Cash and due from banks		34,565							45,477
Other assets, net		152,793							164,253
Total Assets	$	2,482,002						$	2,322,111

Liabilities
Savings and interest- bearing checking	$	1,014,201		284		0.11		$	990,229		266		0.11
Time deposits		438,504		970		0.88			371,501		721		0.77
Other borrowings		47,227		493		4.15			47,769		465		3.86
Interest Bearing Liabilities		1,499,932		1,747		0.46			1,409,499		1,452		0.41
Non-interest bearing deposits		706,282							633,305
Other liabilities		27,110							23,844
Shareholders’ equity		248,678							255,463
Total liabilities and shareholders’ equity	$	2,482,002						$	2,322,111

Net Interest Income			$	20,193						$	18,979

Net Interest Income as a Percent of Average Interest Earning Assets						3.51	%						3.58	%

(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,
	2016							2015

	Average Balance		Interest		Rate ⁽³⁾			Average Balance		Interest		Rate ⁽³⁾
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,577,758	$	55,255		4.67	%	$	1,446,857	$	52,736		4.87	%
Tax-exempt loans ⁽²⁾		3,564		163		6.11			4,097		189		6.17
Taxable securities		532,576		7,261		1.82			518,906		5,528		1.42
Tax-exempt securities⁽²⁾		50,286		1,320		3.50			32,790		1,021		4.15
Interest bearing cash		75,121		292		0.52			64,913		194		0.40
Other investments		15,456		592		5.12			17,772		728		5.48
Interest Earning Assets		2,254,761		64,883		3.84			2,085,335		60,396		3.87
Cash and due from banks		38,069							44,829
Other assets, net		157,570							167,849
Total Assets	$	2,450,400						$	2,298,013

Liabilities
Savings and interest-bearing checking	$	1,018,727		831		0.11		$	988,594		792		0.11
Time deposits		435,146		2,689		0.83			373,235		2,169		0.78
Other borrowings		47,405		1,455		4.10			47,930		1,382		3.86
Interest Bearing Liabilities		1,501,278		4,975		0.44			1,409,759		4,343		0.41
Non-interest bearing deposits		677,645							609,192
Other liabilities		25,612							24,581
Shareholders’ equity		245,865							254,481
Total liabilities and shareholders’ equity	$	2,450,400						$	2,298,013

Net Interest Income			$	59,908						$	56,053

Net Interest Income as a Percent of Average Interest Earning Assets						3.55	%						3.59	%

(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, 2016

	Total Commercial Loans
			Watch Credits						Percent of Loan
Loan Category	All Loans		Performing		Non- performing		Total		Category in Watch Credit
	(Dollars in thousands)
Land	$	9,162	$	194	$	78	$	272		3.0	%
Land Development		5,345		-		133		133		2.5
Construction		39,345		-		-		-		0.0
Income Producing		274,026		4,383		658		5,041		1.8
Owner Occupied		252,600		6,688		438		7,126		2.8
Total Commercial Real Estate Loans	$	580,478	$	11,265		1,307	$	12,572		2.2

Other Commercial Loans	$	204,498	$	10,465		2,079	$	12,544		6.1
Total non-performing commercial loans					$	3,386