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,
   
June 30,
   
March 31,
   
December 31,
   
September 30,
 
   
2018
   
2018
   
2018
   
2017
   
2017
 
   
(Dollars in thousands)
 
Non-accrual loans
 
$
9,343
   
$
9,082
   
$
6,629
   
$
8,184
   
$
8,410
 
Loans 90 days or more past due and still accruing interest
   
-
     
-
     
-
     
-
     
-
 
Total non-performing loans
   
9,343
     
9,082
     
6,629
     
8,184
     
8,410
 
Other real estate and repossessed assets
   
1,445
     
1,689
     
1,647
     
1,643
     
2,150
 
Total non-performing assets
 
$
10,788
   
$
10,771
   
$
8,276
   
$
9,827
   
$
10,560
 
                                         
As a percent of Portfolio Loans
                                       
Non-performing loans
   
0.36
%
   
0.37
%
   
0.32
%
   
0.41
%
   
0.43
%
Allowance for loan losses
   
0.95
     
0.95
     
1.11
     
1.12
     
1.11
 
Non-performing assets to total assets
   
0.33
     
0.33
     
0.30
     
0.35
     
0.38
 
Allowance for loan losses as a percent of non-performing loans
   
261.17
     
258.80
     
348.03
     
275.99
     
255.39
 

(1) Excludes loans classified as "trouble debt restructured" that are not past due.

Troubled debt restructurings ("TDR")

   
September 30, 2018
 
   
Commercial
   
Retail
   
Total
 
   
(In thousands)
 
Performing TDR's
 
$
6,904
   
$
49,397
   
$
56,301
 
Non-performing TDR's(1)
   
212
     
2,799
(2) 
   
3,011
 
Total
 
$
7,116
   
$
52,196
   
$
59,312
 

   
December 31, 2017
 
   
Commercial
   
Retail
   
Total
 
   
(In thousands)
 
Performing TDR's
 
$
7,748
   
$
52,367
   
$
60,115
 
Non-performing TDR's(1)
   
323
     
4,506
(2) 
   
4,829
 
Total
 
$
8,071
   
$
56,873
   
$
64,944
 

(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

   
Nine months ended
 
   
September 30,
 
   
2018
   
2017
 
         
Unfunded
         
Unfunded
 
   
Loans
   
Commitments
   
Loans
   
Commitments
 
   
(Dollars in thousands)
 
Balance at beginning of period
 
$
22,587
   
$
1,125
   
$
20,234
   
$
650
 
Additions (deductions)
                               
Provision for loan losses
   
912
     
-
     
806
     
-
 
Recoveries credited to allowance
   
3,768
     
-
     
2,998
     
-
 
Loans charged against the allowance
   
(2,866
)
   
-
     
(2,560
)
   
-
 
Additions included in non-interest expense
   
-
     
(6
)
   
-
     
332
 
Balance at end of period
 
$
24,401
   
$
1,119
   
$
21,478
   
$
982
 
                                 
Net loans charged against the allowance to average Portfolio Loans
   
(0.04
)%
           
(0.03
)%
       

Capitalization

   
September 30,
   
December 31,
 
   
2018
   
2017
 
   
(In thousands)
 
Subordinated debentures
 
$
39,371
   
$
35,569
 
Amount not qualifying as regulatory capital
   
(1,224
)
   
(1,069
)
Amount qualifying as regulatory capital
   
38,147
     
34,500
 
Shareholders’ equity
               
Common stock
   
389,689
     
324,986
 
Accumulated deficit
   
(34,596
)
   
(54,054
)
Accumulated other comprehensive loss
   
(9,889
)
   
(5,999
)
Total shareholders’ equity
   
345,204
     
264,933
 
Total capitalization
 
$
383,351
   
$
299,433
 

2

Non-Interest Income

   
Three months ended
   
Nine months ended
 
   
September 30,
   
June 30,
   
September 30,
   
September 30,
 
   
2018
   
2018
   
2017
   
2018
   
2017
 
   
(In thousands)
 
Service charges on deposit accounts
 
$
3,166
   
$
3,095
   
$
3,281
   
$
9,166
   
$
9,465
 
Interchange income
   
2,486
     
2,504
     
1,942
     
7,236
     
5,869
 
Net gains (losses) on assets
                                       
Mortgage loans
   
2,745
     
3,255
     
2,971
     
8,571
     
8,886
 
Securities
   
93
     
9
     
69
     
(71
)
   
62
 
Mortgage loan servicing, net
   
1,212
     
1,235
     
1
     
4,668
     
668
 
Investment and insurance commissions
   
513
     
483
     
606
     
1,434
     
1,541
 
Bank owned life insurance
   
237
     
220
     
283
     
713
     
776
 
Other
   
1,384
     
1,514
     
1,151
     
4,147
     
3,822
 
Total non-interest income
 
$
11,836
   
$
12,315
   
$
10,304
   
$
35,864
   
$
31,089
 

Capitalized Mortgage Loan Servicing Rights

   
Three months ended
   
Nine months ended
 
   
September 30,
   
September 30,
 
   
2018
   
2017
   
2018
   
2017
 
   
(In thousands)
 
Balance at beginning of period
 
$
21,848
   
$
14,515
   
$
15,699
   
$
13,671
 
Change in accounting
   
-
     
-
     
-
     
542
 
Balance at beginning of period, as adjusted
   
21,848
     
14,515
     
15,699
     
14,213
 
Servicing rights acquired
   
-
     
-
     
3,047
     
-
 
Originated servicing rights capitalized
   
1,501
     
1,250
     
3,711
     
3,047
 
Change in fair value
   
(198
)
   
(1,090
)
   
694
     
(2,585
)
Balance at end of period
 
$
23,151
   
$
14,675
   
$
23,151
   
$
14,675
 

3

Mortgage Loan Activity

   
Three months ended
   
Nine months ended
 
   
September 30,
   
June 30,
   
September 30,
   
September 30,
 
   
2018
   
2018
   
2017
   
2018
   
2017
 
   
(Dollars in thousands)
 
Mortgage loans originated
 
$
231,849
   
$
226,264
   
$
264,177
   
$
617,080
   
$
657,345
 
Mortgage loans sold
   
148,730
     
115,299
     
120,981
     
370,372
     
305,386
 
Net gains on mortgage loans
   
2,745
     
3,255
     
2,971
     
8,571
     
8,886
 
Net gains as a percent of mortgage loans sold ("Loan Sales Margin")
   
1.85
%
   
2.82
%
   
2.46
%
   
2.31
%
   
2.91
%
Fair value adjustments included in the Loan Sales Margin
   
(0.26
)
   
0.57
     
(0.22
)
   
0.10
     
0.08
 

Non-Interest Expense

   
Three months ended
   
Nine months ended
 
   
September 30,
   
June 30,
   
September 30,
   
September 30,
 
   
2018
   
2018
   
2017
   
2018
   
2017
 
   
(In thousands)
 
Compensation
 
$
9,582
   
$
9,574
   
$
8,494
   
$
28,086
   
$
26,872
 
Performance-based compensation
   
3,305
     
3,150
     
2,688
     
9,238
     
6,819
 
Payroll taxes and employee benefits
   
3,282
     
3,145
     
2,395
     
9,182
     
7,413
 
Compensation and employee benefits
   
16,169
     
15,869
     
13,577
     
46,506
     
41,104
 
Occupancy, net
   
2,233
     
2,170
     
1,970
     
6,667
     
6,032
 
Data processing
   
2,051
     
2,251
     
1,796
     
6,180
     
5,670
 
Merger related expenses
   
98
     
3,082
     
10
     
3,354
     
10
 
Furniture, fixtures and equipment
   
1,043
     
1,019
     
961
     
3,029
     
2,943
 
Communications
   
727
     
704
     
685
     
2,111
     
2,046
 
Interchange expense
   
715
     
661
     
294
     
1,974
     
869
 
Loan and collection
   
531
     
692
     
481
     
1,900
     
1,564
 
Advertising
   
594
     
543
     
526
     
1,578
     
1,551
 
Legal and professional fees
   
477
     
456
     
540
     
1,311
     
1,366
 
FDIC deposit insurance
   
270
     
250
     
208
     
750
     
608
 
Amortization of intangible assets
   
295
     
295
     
87
     
676
     
260
 
Supplies
   
173
     
178
     
176
     
516
     
507
 
Credit card and bank service fees
   
108
     
106
     
105
     
310
     
432
 
Provision for loss reimbursement on sold loans
   
47
     
20
     
15
     
78
     
66
 
Costs (recoveries) related to unfunded lending commitments
   
71
     
37
     
92
     
(6
)
   
332
 
Net (gains) losses on other real estate and repossessed assets
   
(325
)
   
(4
)
   
30
     
(619
)
   
132
 
Other
   
1,463
     
1,432
     
1,063
     
4,321
     
3,454
 
Total non-interest expense
 
$
26,740
   
$
29,761
   
$
22,616
   
$
80,636
   
$
68,946
 

4

Average Balances and Tax Equivalent Rates

   
Three Months Ended
 
   
September 30,
 
         
2018
               
2017
       
   
Average
               
Average
             
   
Balance
   
Interest
   
Rate (2)
   
Balance
   
Interest
   
Rate (2)
 
   
(Dollars in thousands)
 
Assets
                                   
Taxable loans
 
$
2,543,712
   
$
30,936
     
4.84
%
 
$
1,908,497
   
$
21,801
     
4.55
%
Tax-exempt loans (1)
   
6,590
     
81
     
4.88
     
3,138
     
47
     
5.94
 
Taxable securities
   
379,985
     
2,737
     
2.88
     
474,901
     
2,765
     
2.33
 
Tax-exempt securities (1)
   
62,964
     
518
     
3.29
     
90,645
     
783
     
3.46
 
Interest bearing cash
   
27,477
     
66
     
0.95
     
29,336
     
63
     
0.85
 
Other investments
   
17,493
     
237
     
5.38
     
15,543
     
200
     
5.11
 
Interest Earning Assets
   
3,038,221
     
34,575
     
4.53
     
2,522,060
     
25,659
     
4.05
 
Cash and due from banks
   
35,874
                     
33,019
                 
Other assets, net
   
173,508
                     
142,283
                 
Total Assets
 
$
3,247,603
                   
$
2,697,362
                 
                                                 
Liabilities
                                               
Savings and interest-bearing checking
 
$
1,241,868
     
1,223
     
0.39
   
$
1,048,289
     
408
     
0.15
 
Time deposits
   
664,098
     
2,753
     
1.64
     
531,226
     
1,425
     
1.06
 
Other borrowings
   
80,939
     
779
     
3.82
     
85,219
     
626
     
2.91
 
Interest Bearing Liabilities
   
1,986,905
     
4,755
     
0.95
     
1,664,734
     
2,459
     
0.59
 
Non-interest bearing deposits
   
884,003
                     
736,291
                 
Other liabilities
   
34,697
                     
31,263
                 
Shareholders’ equity
   
341,998
                     
265,074
                 
Total liabilities and shareholders’ equity
 
$
3,247,603
                   
$
2,697,362
                 
                                                 
Net Interest Income
         
$
29,820
                   
$
23,200
         
                                                 
Net Interest Income as a Percent of Average Interest Earning Assets
                   
3.91
%
                   
3.66
%
__________
(1)
Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21% in 2018 and 35% in 2017.
(2)
Annualized
5


Average Balances and Tax Equivalent Rates

   
Nine Months Ended
 
   
September 30,
 
         
2018
               
2017
       
   
Average
               
Average
             
   
Balance
   
Interest
   
Rate (2)
   
Balance
   
Interest
   
Rate (2)
 
   
(Dollars in thousands)
 
Assets
                                   
Taxable loans
 
$
2,350,883
   
$
83,881
     
4.77
%
 
$
1,792,381
   
$
61,544
     
4.59
%
Tax-exempt loans (1)
   
5,221
     
185
     
4.74
     
3,410
     
145
     
5.69
 
Taxable securities
   
400,957
     
8,092
     
2.69
     
499,886
     
8,300
     
2.21
 
Tax-exempt securities (1)
   
70,155
     
1,680
     
3.19
     
85,853
     
2,264
     
3.52
 
Interest bearing cash
   
29,502
     
214
     
0.97
     
42,610
     
229
     
0.72
 
Other investments
   
16,457
     
684
     
5.56
     
15,543
     
638
     
5.49
 
Interest Earning Assets
   
2,873,175
     
94,736
     
4.40
     
2,439,683
     
73,120
     
4.00
 
Cash and due from banks
   
33,204
                     
32,492
                 
Other assets, net
   
159,844
                     
146,753
                 
Total Assets
 
$
3,066,223
                   
$
2,618,928
                 
                                                 
Liabilities
                                               
Savings and interest-bearing checking
 
$
1,193,388
     
2,785
     
0.31
   
$
1,051,395
     
1,007
     
0.13
 
Time deposits
   
611,103
     
6,687
     
1.46
     
494,219
     
3,747
     
1.01
 
Other borrowings
   
82,253
     
2,267
     
3.68
     
66,392
     
1,659
     
3.34
 
Interest Bearing Liabilities
   
1,886,744
     
11,739
     
0.83
     
1,612,006
     
6,413
     
0.53
 
Non-interest bearing deposits
   
833,283
                     
717,589
                 
Other liabilities
   
32,177
                     
30,372
                 
Shareholders’ equity
   
314,019
                     
258,961
                 
Total liabilities and shareholders’ equity
 
$
3,066,223
                   
$
2,618,928
                 
                                                 
Net Interest Income
         
$
82,997
                   
$
66,707
         
                                                 
Net Interest Income as a Percent of Average Interest Earning Assets
                   
3.86
%
                   
3.65
%
__________
(1)
Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21% in 2018 and 35% in 2017.
(2)
Annualized
6

Commercial Loan Portfolio Analysis as of September 30, 2018

   
Total Commercial Loans
 
         
Watch Credits
   
Percent of Loan
 
Loan Category
 
All Loans
   
Performing
   
Non-performing
   
Total
   
Category in
Watch Credit
 
   
(Dollars in thousands)
 
Land
 
$
12,439
   
$
67
   
$
-
   
$
67
     
0.5
%
Land Development
   
13,249
     
-
     
-
     
-
     
0.0
 
Construction
   
38,549
     
6,690
     
2,403
     
9,093
     
23.6
 
Income Producing
   
377,906
     
3,257
     
-
     
3,257
     
0.9
 
Owner Occupied
   
349,271
     
19,315
     
72
     
19,387
     
5.6
 
Total Commercial Real Estate Loans
 
$
791,414
   
$
29,329
     
2,475
   
$
31,804
     
4.0
 
                                         
Other Commercial Loans
 
$
320,687
   
$
18,142
     
307
   
$
18,449
     
5.8
 
Total non-performing commercial loans
                 
$
2,782
                 

Commercial Loan Portfolio Analysis as of December 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
 
$
8,559
   
$
60
   
$
9
   
$
69
     
0.8
%
Land Development
   
9,685
     
-
     
-
     
-
     
0.0
 
Construction
   
51,733
     
-
     
-
     
-
     
0.0
 
Income Producing
   
289,799
     
1,590
     
30
     
1,620
     
0.6
 
Owner Occupied
   
258,888
     
11,491
     
170
     
11,661
     
4.5
 
Total Commercial Real Estate Loans
 
$
618,664
   
$
13,141
     
209
   
$
13,350
     
2.2
 
                                         
Other Commercial Loans
 
$
234,596
   
$
19,109
     
437
   
$
19,546
     
8.3
 
Total non-performing commercial loans
                 
$
646
                 


7