EX-99.2 3 ex99_2.htm EXHIBIT 99.2

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
 
Non-performing assets (1)
 
   
March 31,
2017
   
December 31,
2016
   
September 30,
2016
   
June 30,
2016
   
March 31,
2016
 
   
(Dollars in thousands)
 
Non-accrual loans
 
$
9,014
   
$
13,364
   
$
10,801
   
$
10,803
   
$
10,425
 
Loans 90 days or more past due and still accruing interest
   
-
     
-
     
-
     
94
     
147
 
Total non-performing loans
   
9,014
     
13,364
     
10,801
     
10,897
     
10,572
 
Other real estate and repossessed assets
   
5,257
     
5,004
     
4,989
     
5,572
     
6,672
 
Total non-performing assets
 
$
14,271
   
$
18,368
   
$
15,790
   
$
16,469
   
$
17,244
 
                                         
As a percent of Portfolio Loans                                        
Non-performing loans
   
0.54
%
   
0.83
%
   
0.67
%
   
0.69
%
   
0.69
%
Allowance for loan losses
   
1.20
     
1.26
     
1.37
     
1.44
     
1.46
 
Non-performing assets to total assets
   
0.55
     
0.72
     
0.62
     
0.67
     
0.69
 
Allowance for loan losses as a percent of non-performing loans
   
222.30
     
151.41
     
204.08
     
208.42
     
212.78
 

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

Troubled debt restructurings ("TDR")

   
March 31, 2017
 
   
Commercial
   
Retail
     
Total
 
   
(In thousands)
 
Performing TDR's
 
$
10,206
   
$
57,544
     
$
67,750
 
Non-performing TDR's(1)
   
1,039
     
4,099
 
(2) 
   
5,138
 
Total
 
$
11,245
   
$
61,643
     
$
72,888
 

   
December 31, 2016
 
   
Commercial
   
Retail
     
Total
 
   
(In thousands)
 
Performing TDR's
 
$
10,560
   
$
59,726
     
$
70,286
 
Non-performing TDR's(1)
   
3,565
     
4,071
 
(2) 
   
7,636
 
Total
 
$
14,125
   
$
63,797
     
$
77,922
 

(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

   
Three months ended
March 31,
 
   
2017
   
2016
 
   
Loans
   
Unfunded
Commitments
   
Loans
   
Unfunded
Commitments
 
   
(Dollars in thousands)
 
Balance at beginning of period
 
$
20,234
   
$
650
   
$
22,570
   
$
652
 
Additions (deductions)
                               
Provision for loan losses
   
(359
)
   
-
     
(530
)
   
-
 
Recoveries credited to allowance
   
1,129
     
-
     
959
     
-
 
Loans charged against the allowance
   
(966
)
   
-
     
(504
)
   
-
 
Additions (deductions) included in non-interest expense
   
-
     
110
     
-
     
13
 
Balance at end of period
 
$
20,038
   
$
760
   
$
22,495
   
$
665
 
                                 
Net loans charged against the allowance to average Portfolio Loans
   
(0.04
)%
           
(0.12
)%
       
 
Capitalization

   
March 31,
2017
   
December 31,
2016
 
   
(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
   
323,775
     
323,745
 
Accumulated deficit
   
(61,764
)
   
(65,657
)
Accumulated other comprehensive loss
   
(6,536
)
   
(9,108
)
Total shareholders’ equity
   
255,475
     
248,980
 
Total capitalization
 
$
289,975
   
$
283,480
 
 
2

Non-Interest Income

   
Three months ended
 
   
March 31,
2017
   
December 31,
2016
   
March 31,
2016
 
   
(In thousands)
 
Service charges on deposit accounts
 
$
3,009
   
$
3,242
   
$
2,845
 
Interchange income
   
1,922
     
2,141
     
1,878
 
Net gains on assets
                       
Mortgage loans
   
2,571
     
2,839
     
1,642
 
Securities
   
27
     
261
     
162
 
Mortgage loan servicing, net
   
825
     
2,676
     
(978
)
Investment and insurance commissions
   
468
     
369
     
467
 
Bank owned life insurance
   
253
     
254
     
290
 
Title insurance fees
   
264
     
327
     
288
 
Other
   
1,000
     
1,092
     
1,215
 
Total non-interest income
 
$
10,339
   
$
13,201
   
$
7,809
 

Capitalized Mortgage Loan Servicing Rights

   
Three months ended
March 31,
 
   
2017
   
2016
 
   
(In thousands)
 
Balance at beginning of period
 
$
13,671
   
$
12,436
 
Change in accounting
   
542
     
-
 
Balance at beginning of period, as adjusted
 
$
14,213
   
$
12,436
 
Originated servicing rights capitalized
   
778
     
554
 
Amortization
   
-
     
(557
)
Change in valuation allowance
   
-
     
(1,450
)
Change in fair value
   
(264
)
   
-
 
Balance at end of period
 
$
14,727
   
$
10,983
 
                 
Valuation allowance at end of period
 
$
-
   
$
4,722
 
 
3

Mortgage Loan Activity

   
Three months ended
 
   
March 31,
2017
   
December 31,
2016
   
March 31,
2016
 
   
(Dollars in thousands)
 
Mortgage loans originated
 
$
158,081
   
$
139,657
   
$
73,502
 
Mortgage loans sold
   
79,691
     
98,491
     
55,666
 
Net gains on mortgage loans
   
2,571
     
2,839
     
1,642
 
Net gains as a percent of mortgage loans sold  ("Loan Sales Margin")
   
3.23
%
   
2.88
%
   
2.95
%
Fair value adjustments included in the Loan Sales Margin
   
0.20
     
(0.50
)
   
0.25
 

Non-Interest Expense

   
Three months ended
 
   
March 31,
2017
   
December 31,
2016
   
March 31,
2016
 
   
(In thousands)
 
Compensation
 
$
9,672
   
$
8,724
   
$
8,073
 
Performance-based compensation
   
1,993
     
1,900
     
1,682
 
Payroll taxes and employee benefits
   
2,482
     
2,043
     
2,126
 
Compensation and employee benefits
   
14,147
     
12,667
     
11,881
 
Occupancy, net
   
2,142
     
2,041
     
2,207
 
Data processing
   
1,937
     
1,944
     
2,101
 
Furniture, fixtures and equipment
   
977
     
973
     
984
 
Communications
   
683
     
862
     
888
 
Advertising
   
506
     
446
     
477
 
Legal and professional fees
   
437
     
564
     
413
 
Loan and collection
   
413
     
548
     
825
 
Interchange expense
   
283
     
302
     
266
 
FDIC deposit insurance
   
198
     
197
     
334
 
Credit card and bank service fees
   
191
     
203
     
187
 
Supplies
   
172
     
177
     
176
 
Cost (recoveries) related to unfunded lending commitments
   
110
     
(8
)
   
13
 
Amortization of intangible assets
   
87
     
87
     
87
 
Provision for loss reimbursement on sold loans
   
31
     
-
     
(15
)
Net (gains) losses on other real estate and repossessed assets
   
11
     
152
     
(6
)
Litigation settlement expense
   
-
     
2,300
     
-
 
Loss on sale of payment plan business
   
-
     
320
     
-
 
Vehicle service contract counterparty contingencies
   
(105
)
   
(78
)
   
30
 
Other
   
1,349
     
1,181
     
1,197
 
Total non-interest expense
 
$
23,569
   
$
24,878
   
$
22,045
 
 
4

Average Balances and Tax Equivalent Rates
 
   
Three Months Ended
March 31,
 
         
2017
               
2016
       
   
Average
Balance
   
Interest
   
Rate (2)
   
Average
Balance
   
Interest
   
Rate (2)
 
   
(Dollars in thousands)
 
Assets
                                   
Taxable loans
 
$
1,685,936
   
$
19,824
     
4.75
%
 
$
1,546,142
   
$
18,520
     
4.81
%
Tax-exempt loans (1)
   
4,067
     
52
     
5.19
     
3,647
     
55
     
6.07
 
Taxable securities
   
521,407
     
2,754
     
2.11
     
521,833
     
2,244
     
1.72
 
Tax-exempt securities (1)
   
78,044
     
698
     
3.58
     
41,982
     
381
     
3.63
 
Interest bearing cash
   
66,708
     
113
     
0.69
     
81,436
     
106
     
0.52
 
Other investments
   
15,543
     
199
     
5.19
     
15,546
     
200
     
5.17
 
Interest Earning Assets
   
2,371,705
     
23,640
     
4.02
     
2,210,586
     
21,506
     
3.90
 
Cash and due from banks
   
33,790
                     
45,165
                 
Other assets, net
   
153,992
                     
165,104
                 
Total Assets
 
$
2,559,487
                   
$
2,420,855
                 
                                                 
Liabilities
                                               
Savings and interest-bearing checking
 
$
1,047,114
     
283
     
0.11
   
$
1,014,117
     
270
     
0.11
 
Time deposits
   
482,188
     
1,160
     
0.98
     
435,943
     
844
     
0.78
 
Other borrowings
   
45,004
     
470
     
4.24
     
47,524
     
477
     
4.04
 
Interest Bearing Liabilities
   
1,574,306
     
1,913
     
0.49
     
1,497,584
     
1,591
     
0.43
 
Non-interest bearing deposits
   
704,551
                     
653,417
                 
Other liabilities
   
29,064
                     
23,768
                 
Shareholders’ equity
   
251,566
                     
246,086
                 
Total liabilities and shareholders’ equity
 
$
2,559,487
                   
$
2,420,855
                 
                                                 
Net Interest Income
         
$
21,727
                   
$
19,915
         
                                                 
Net Interest Income as a Percent of Average Interest Earning Assets
                   
3.69
%
                   
3.61
%


(1)
Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 35%
(2)
Annualized
 
5

Reconciliation of Net Interest Margin, Fully Taxable Equivalent ("FTE")

   
Three Months Ended
March 31,
 
   
2017
   
2016
 
   
(Dollars in thousands)
 
Net interest income
 
$
21,466
   
$
19,763
 
Add:  taxable equivalent adjustment
   
261
     
152
 
Net interest income - taxable equivalent
 
$
21,727
   
$
19,915
 
Net interest margin (GAAP) (1)
   
3.67
%
   
3.60
%
Net interest margin (FTE) (1)
   
3.69
%
   
3.61
%


(1)
Annualized

Commercial Loan Portfolio Analysis as of March 31, 2017

   
Total Commercial Loans
 
         
Watch Credits
   
Percent of
Loan
 
Loan Category
 
All Loans
   
Performing
   
Non-
performing
   
Total
   
Category in
Watch Credit
 
   
(Dollars in thousands)
 
Land
 
$
7,273
   
$
66
   
$
-
   
$
66
     
0.9
%
Land Development
   
4,161
     
-
     
4
     
4
     
0.1
 
Construction
   
42,081
     
-
     
-
     
-
     
0.0
 
Income Producing
   
281,427
     
3,802
     
579
     
4,381
     
1.6
 
Owner Occupied
   
264,496
     
6,064
     
99
     
6,163
     
2.3
 
Total Commercial Real Estate Loans
 
$
599,438
   
$
9,932
     
682
   
$
10,614
     
1.8
 
                                         
Other Commercial Loans
 
$
216,046
   
$
6,535
     
643
   
$
7,178
     
3.3
 
Total non-performing commercial loans
                 
$
1,325
                 

 
6