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,
2019
   
December 31,
2018
   
September 30,
2018
   
June 30,
2018
   
March 31,
2018
 
   
(Dollars in thousands)
 
Non-accrual loans
 
$
8,849
   
$
9,029
   
$
9,343
   
$
9,082
   
$
6,629
 
Loans 90 days or more past due and still accruing interest
   
-
     
5
     
-
     
-
     
-
 
Total non-performing loans
   
8,849
     
9,034
     
9,343
     
9,082
     
6,629
 
Other real estate and repossessed assets
   
1,338
     
1,299
     
1,445
     
1,689
     
1,647
 
Total non-performing assets
 
$
10,187
   
$
10,333
   
$
10,788
   
$
10,771
   
$
8,276
 
                                         
As a percent of Portfolio Loans
                                       
Non-performing loans
   
0.34
%
   
0.35
%
   
0.36
%
   
0.37
%
   
0.32
%
Allowance for loan losses
   
0.96
     
0.96
     
0.95
     
0.95
     
1.11
 
Non-performing assets to total assets
   
0.30
     
0.31
     
0.33
     
0.33
     
0.30
 
Allowance for loan losses as a percent of non-performing loans
   
285.39
     
275.49
     
261.17
     
258.80
     
348.03
 

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

   
March 31, 2019
 
   
Commercial
   
Retail (1)
   
Total
 
   
(In thousands)
 
Performing TDR's
 
$
6,209
   
$
44,427
   
$
50,636
 
Non-performing TDR's (2)
   
67
     
2,657
(3) 
   
2,724
 
Total
 
$
6,276
   
$
47,084
   
$
53,360
 

   
December 31, 2018
 
   
Commercial
   
Retail (1)
   
Total
 
   
(In thousands)
 
Performing TDR's
 
$
6,460
   
$
46,627
   
$
53,087
 
Non-performing TDR's (2)
   
74
     
2,884
(3) 
   
2,958
 
Total
 
$
6,534
   
$
49,511
   
$
56,045
 

(1)
Retail loans include mortgage and installment loan segments.
(2)
Included in non-performing assets table above.
(3)
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,
 
   
2019
   
2018
 
   
Loans
   
Unfunded
Commitments
   
Loans
   
Unfunded
Commitments
 
   
(Dollars in thousands)
 
Balance at beginning of period
 
$
24,888
   
$
1,296
   
$
22,587
   
$
1,125
 
Additions (deductions)
                               
Provision for loan losses
   
664
     
-
     
315
     
-
 
Recoveries credited to allowance
   
568
     
-
     
1,014
     
-
 
Loans charged against the allowance
   
(866
)
   
-
     
(845
)
   
-
 
Additions included in non-interest expense
   
-
     
160
     
-
     
(114
)
Balance at end of period
 
$
25,254
   
$
1,456
   
$
23,071
   
$
1,011
 
                                 
Net loans charged against the allowance to average Portfolio Loans
   
0.05
%
           
(0.03
)%
       

Capitalization

   
March 31,
2019
   
December 31,
2018
 
   
(In thousands)
 
Subordinated debentures
 
$
39,405
   
$
39,388
 
Amount not qualifying as regulatory capital
   
(1,224
)
   
(1,224
)
Amount qualifying as regulatory capital
   
38,181
     
38,164
 
Shareholders’ equity
               
Common stock
   
374,678
     
377,372
 
Accumulated deficit
   
(23,135
)
   
(28,270
)
Accumulated other comprehensive loss
   
(6,817
)
   
(10,108
)
Total shareholders’ equity
   
344,726
     
338,994
 
Total capitalization
 
$
382,907
   
$
377,158
 

2

Non-Interest Income

   
Three months ended
 
   
March 31,
2019
   
December 31,
2018
   
March 31,
2018
 
   
(In thousands)
 
Service charges on deposit accounts
 
$
2,640
   
$
3,092
   
$
2,905
 
Interchange income
   
2,355
     
2,669
     
2,246
 
Net gains on assets
                       
Mortgage loans
   
3,611
     
2,026
     
2,571
 
Securities
   
304
     
209
     
(173
)
Mortgage loan servicing, net
   
(1,215
)
   
(1,511
)
   
2,221
 
Investment and insurance commissions
   
297
     
537
     
438
 
Bank owned life insurance
   
242
     
257
     
256
 
Other
   
1,725
     
1,672
     
1,249
 
Total non-interest income
 
$
9,959
   
$
8,951
   
$
11,713
 

Capitalized Mortgage Loan Servicing Rights

   
Three months ended
March 31,
 
   
2019
   
2018
 
   
(In thousands)
 
Balance at beginning of period
 
$
21,400
   
$
15,699
 
Originated servicing rights capitalized
   
1,200
     
1,055
 
Change in fair value
   
(2,691
)
   
1,029
 
Balance at end of period
 
$
19,909
   
$
17,783
 

3

Mortgage Loan Activity

   
Three months ended
 
   
March 31,
2019
   
December 31,
2018
   
March 31,
2018
 
   
(Dollars in thousands)
 
Mortgage loans originated
 
$
137,758
   
$
190,328
   
$
158,967
 
Mortgage loans sold
   
154,525
     
121,426
     
106,343
 
Net gains on mortgage loans
   
3,611
     
2,026
     
2,571
 
Net gains as a percent of mortgage loans sold  ("Loan Sales Margin")
   
2.34
%
   
1.67
%
   
2.42
%
Fair value adjustments included in the Loan Sales Margin
   
0.58
     
(0.39
)
   
0.11
 

Non-Interest Expense

   
Three months ended
 
   
March 31,
2019
   
December 31,
2018
   
March 31,
2018
 
   
(In thousands)
 
Compensation
 
$
10,481
   
$
9,792
   
$
8,930
 
Performance-based compensation
   
2,220
     
2,704
     
2,783
 
Payroll taxes and employee benefits
   
3,650
     
3,076
     
2,755
 
Compensation and employee benefits
   
16,351
     
15,572
     
14,468
 
Occupancy, net
   
2,505
     
2,245
     
2,264
 
Data processing
   
2,144
     
2,082
     
1,878
 
Furniture, fixtures and equipment
   
1,029
     
1,051
     
967
 
Communications
   
769
     
737
     
680
 
Interchange expense
   
688
     
728
     
598
 
Advertising
   
672
     
577
     
441
 
Loan and collection
   
634
     
782
     
677
 
Legal and professional fees
   
369
     
528
     
378
 
FDIC deposit insurance
   
368
     
331
     
230
 
Amortization of intangible assets
   
272
     
293
     
86
 
Costs (recoveries) related to unfunded lending commitments
   
160
     
177
     
(114
)
Supplies
   
158
     
173
     
165
 
Net (gains) losses on other real estate and repossessed assets
   
119
     
(53
)
   
(290
)
Provision for loss reimbursement on sold loans
   
111
     
(68
)
   
11
 
Credit card and bank service fees
   
103
     
104
     
96
 
Merger related expenses
   
-
     
111
     
174
 
Other
   
1,538
     
1,455
     
1,426
 
Total non-interest expense
 
$
27,990
   
$
26,825
   
$
24,135
 

4

Average Balances and Tax Equivalent Rates

   
Three Months Ended
March 31,
 


2019
   
2018
 
   
Average
Balance
   
Interest
   
Rate (2)
   
Average
Balance
   
Interest
   
Rate (2)
 
   
(Dollars in thousands)
 
Assets
                                   
Taxable loans
 
$
2,613,182
   
$
32,600
     
5.03
%
 
$
2,060,720
   
$
23,339
     
4.57
%
Tax-exempt loans (1)
   
8,689
     
103
     
4.81
     
2,127
     
18
     
3.43
 
Taxable securities
   
389,845
     
3,006
     
3.08
     
422,254
     
2,635
     
2.50
 
Tax-exempt securities (1)
   
56,889
     
469
     
3.30
     
78,345
     
603
     
3.08
 
Interest bearing cash
   
65,213
     
311
     
1.93
     
32,901
     
82
     
1.01
 
Other investments
   
18,359
     
264
     
5.83
     
15,543
     
248
     
6.47
 
Interest Earning Assets
   
3,152,177
     
36,753
     
4.70
     
2,611,890
     
26,925
     
4.15
 
Cash and due from banks
   
34,240
                     
32,135
                 
Other assets, net
   
170,586
                     
132,961
                 
Total Assets
 
$
3,357,003
                   
$
2,776,986
                 
                                                 
Liabilities
                                               

                                               
Savings and interest- bearing checking
 
$
1,361,057
     
1,486
     
0.44
   
$
1,094,981
     
551
     
0.20
 
Time deposits
   
688,434
     
4,195
     
2.47
     
564,282
     
1,736
     
1.25
 
Other borrowings
   
66,058
     
712
     
4.37
     
64,890
     
574
     
3.59
 
Interest Bearing Liabilities
   
2,115,549
     
6,393
     
1.23
     
1,724,153
     
2,861
     
0.67
 
Non-interest bearing deposits
   
859,605
                     
758,643
                 
Other liabilities
   
40,257
                     
29,606
                 
Shareholders’ equity
   
341,592
                     
264,584
                 
Total liabilities and shareholders’ equity
 
$
3,357,003
                   
$
2,776,986
                 
                                                 
Net Interest Income
         
$
30,360
                   
$
24,064
         
                                                 
Net Interest Income as a Percent of Average Interest Earning Assets
                   
3.88
%
                   
3.71
%


(1)
Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.

(2)
Annualized

5

Commercial Loan Portfolio Analysis as of March 31, 2019

   
Total Commercial Loans
 
 
Loan Category

 
All Loans


Watch Credits
     
Percent of Loan
Category in
Watch Credit

Performing
   
Non-
performing
   
Total
   
(Dollars in thousands)
 
Land
 
$
12,627
   
$
61
   
$
-
   
$
61
     
0.5
%
Land Development
   
11,152
     
137
     
-
     
137
     
1.2
 
Construction
   
60,958
     
6,565
     
-
     
6,565
     
10.8
 
Income Producing
   
397,578
     
15,019
     
-
     
15,019
     
3.8
 
Owner Occupied
   
356,589
     
24,600
     
824
     
25,424
     
7.1
 
Total Commercial Real Estate Loans
 
$
838,904
   
$
46,382
     
824
   
$
47,206
     
5.6
 
                                         
Other Commercial Loans
 
$
329,500
   
$
16,146
     
881
   
$
17,027
     
5.2
 
Total non-performing commercial loans
                 
$
1,705
                 

Commercial Loan Portfolio Analysis as of December 31, 2018

   
Total Commercial Loans
 
         
Watch Credits
   
Percent of Loan
Category in
Watch Credit
 
Loan Category
 
All Loans
   
Performing
   
Non-
performing
   
Total
     
   
(Dollars in thousands)
 
Land
 
$
12,308
   
$
63
   
$
-
   
$
63
     
0.5
%
Land Development
   
12,155
     
338
     
-
     
338
     
2.8
 
Construction
   
59,856
     
7,901
     
-
     
7,901
     
13.2
 
Income Producing
   
388,311
     
12,430
     
-
     
12,430
     
3.2
 
Owner Occupied
   
353,572
     
23,041
     
846
     
23,887
     
6.8
 
Total Commercial Real Estate Loans
 
$
826,202
   
$
43,773
     
846
   
$
44,619
     
5.4
 
                                         
Other Commercial Loans
 
$
318,279
   
$
16,695
     
1,374
   
$
18,069
     
5.7
 
Total non-performing commercial loans
                 
$
2,220
                 


6