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,
2019
   
March 31,
2019
   
December 31,
2018
   
September 30,
2018
   
June 30,
2018
 
   
(Dollars in thousands)
 
Non-accrual loans
 
$
7,798
   
$
8,849
   
$
9,029
   
$
9,343
   
$
9,082
 
Loans 90 days or more past due and still accruing interest
   
-
     
-
     
5
     
-
     
-
 
Total non-accrual loans
   
7,798
     
8,849
     
9,034
     
9,343
     
9,082
 
Less:  Government guaranteed loans
   
436
     
617
     
460
     
279
     
224
 
Total non-performing loans
   
7,362
     
8,232
     
8,574
     
9,064
     
8,858
 
Other real estate and repossessed assets
   
1,990
     
1,338
     
1,299
     
1,445
     
1,689
 
Total non-performing assets
 
$
9,352
   
$
9,570
   
$
9,873
   
$
10,509
   
$
10,547
 
                                         
As a percent of Portfolio Loans
                                       
Non-performing loans
   
0.27
%
   
0.31
%
   
0.33
%
   
0.35
%
   
0.36
%
Allowance for loan losses
   
0.96
     
0.96
     
0.96
     
0.95
     
0.95
 
Non-performing assets to total assets
   
0.27
     
0.28
     
0.29
     
0.32
     
0.33
 
Allowance for loan losses as a percent of non-performing loans
   
351.85
     
306.78
     
290.27
     
269.21
     
265.34
 

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

Troubled debt restructurings ("TDR")

   
June 30, 2019
 
   
Commercial
   
Retail (1)
   
Total
 
   
(In thousands)
 
Performing TDR's
 
$
7,166
   
$
42,136
   
$
49,302
 
Non-performing TDR's (2)
   
54
     
2,783
(3) 
   
2,837
 
Total
 
$
7,220
   
$
44,919
   
$
52,139
 
                         
   
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

   
Six months ended
June 30,
 
   
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
   
1,316
     
-
     
965
     
-
 
Recoveries credited to allowance
   
1,457
     
-
     
1,860
     
-
 
Loans charged against the allowance
   
(1,758
)
   
-
     
(1,908
)
   
-
 
Additions included in non-interest expense
   
-
     
187
     
-
     
(77
)
Balance at end of period
 
$
25,903
   
$
1,483
   
$
23,504
   
$
1,048
 
                                 
Net loans charged against the allowance to average Portfolio Loans
   
0.02
%
           
0.00
%
       

Capitalization

   
June 30,
2019
   
December 31,
2018
 
   
(In thousands)
 
Subordinated debentures
 
$
39,422
   
$
39,388
 
Amount not qualifying as regulatory capital
   
(1,224
)
   
(1,224
)
Amount qualifying as regulatory capital
   
38,198
     
38,164
 
Shareholders’ equity
               
Common stock
   
351,894
     
377,372
 
Accumulated deficit
   
(16,617
)
   
(28,270
)
Accumulated other comprehensive loss
   
(4,431
)
   
(10,108
)
Total shareholders’ equity
   
330,846
     
338,994
 
Total capitalization
 
$
369,044
   
$
377,158
 

2

Non-Interest Income

   
Three months ended
   
Six months ended
 
   
June 30,
   
March 31,
   
June 30,
   
June 30,
 
   
2019
   
2019
   
2018
   
2019
   
2018
 
   
(In thousands)
 
Service charges on deposit accounts
 
$
2,800
   
$
2,640
   
$
3,095
   
$
5,440
   
$
6,000
 
Interchange income
   
2,604
     
2,355
     
2,504
     
4,959
     
4,750
 
Net gains on assets
                                       
Mortgage loans
   
4,302
     
3,611
     
3,255
     
7,913
     
5,826
 
Securities
   
-
     
304
     
9
     
304
     
(164
)
Mortgage loan servicing, net
   
(1,907
)
   
(1,215
)
   
1,235
     
(3,122
)
   
3,456
 
Investment and insurance commissions
   
450
     
297
     
483
     
747
     
921
 
Bank owned life insurance
   
270
     
242
     
220
     
512
     
476
 
Other
   
1,386
     
1,725
     
1,514
     
3,111
     
2,763
 
Total non-interest income
 
$
9,905
   
$
9,959
   
$
12,315
   
$
19,864
   
$
24,028
 

Capitalized Mortgage Loan Servicing Rights

   
Three months ended
June 30,
   
Six months ended
June 30,
 
   
2019
   
2018
   
2019
   
2018
 
   
(In thousands)
 
Balance at beginning of period
 
$
19,909
   
$
17,783
   
$
21,400
   
$
15,699
 
Servicing rights acquired
   
-
   
$
3,047
     
-
   
$
3,047
 
Originated servicing rights capitalized
   
1,407
     
1,155
     
2,607
     
2,210
 
Change in fair value
   
(3,422
)
   
(137
)
   
(6,113
)
   
892
 
Balance at end of period
 
$
17,894
   
$
21,848
   
$
17,894
   
$
21,848
 

3

Mortgage Loan Activity

   
Three months ended
   
Six months ended
 
   
June 30,
   
March 31,
   
June 30,
   
June 30,
 
   
2019
   
2019
   
2018
   
2019
   
2018
 
   
(Dollars in thousands)
 
Mortgage loans originated
 
$
241,402
   
$
137,758
   
$
226,264
   
$
379,160
   
$
385,231
 
Mortgage loans sold
   
131,636
     
154,525
     
115,299
     
286,161
     
221,642
 
Net gains on mortgage loans
   
4,302
     
3,611
     
3,255
     
7,913
     
5,826
 
Net gains as a percent of mortgage loans sold  ("Loan Sales Margin")
   
3.27
%
   
2.34
%
   
2.82
%
   
2.77
%
   
2.63
%
Fair value adjustments included in the Loan Sales Margin
   
0.74
     
0.58
     
0.57
     
0.66
     
0.35
 

Non-Interest Expense

   
Three months ended
   
Six months ended
 
   
June 30,
   
March 31,
   
June 30,
   
June 30,
 
   
2019
   
2019
   
2018
   
2019
   
2018
 
   
(In thousands)
 
Compensation
 
$
10,185
   
$
10,481
   
$
9,574
   
$
20,666
   
$
18,504
 
Performance-based compensation
   
2,296
     
2,220
     
3,150
     
4,516
     
5,933
 
Payroll taxes and employee benefits
   
3,450
     
3,650
     
3,145
     
7,100
     
5,900
 
Compensation and employee benefits
   
15,931
     
16,351
     
15,869
     
32,282
     
30,337
 
Occupancy, net
   
2,131
     
2,505
     
2,170
     
4,636
     
4,434
 
Data processing
   
2,171
     
2,144
     
2,251
     
4,315
     
4,129
 
Furniture, fixtures and equipment
   
1,006
     
1,029
     
1,019
     
2,035
     
1,986
 
Communications
   
717
     
769
     
704
     
1,486
     
1,384
 
Interchange expense
   
753
     
688
     
661
     
1,441
     
1,259
 
Advertising
   
627
     
672
     
543
     
1,299
     
984
 
Loan and collection
   
628
     
634
     
692
     
1,262
     
1,369
 
Legal and professional fees
   
371
     
369
     
456
     
740
     
834
 
FDIC deposit insurance
   
342
     
368
     
250
     
710
     
480
 
Amortization of intangible assets
   
273
     
272
     
295
     
545
     
381
 
Supplies
   
153
     
158
     
178
     
311
     
343
 
Credit card and bank service fees
   
97
     
103
     
106
     
200
     
202
 
Costs (recoveries) related to unfunded lending commitments
   
27
     
160
     
37
     
187
     
(77
)
Provision for loss reimbursement on sold loans
   
35
     
111
     
20
     
146
     
31
 
Net (gains) losses on other real estate and repossessed assets
   
(198
)
   
119
     
(4
)
   
(79
)
   
(294
)
Merger related expenses
   
-
     
-
     
3,082
     
-
     
3,256
 
Other
   
1,528
     
1,538
     
1,432
     
3,066
     
2,858
 
Total non-interest expense
 
$
26,592
   
$
27,990
   
$
29,761
   
$
54,582
   
$
53,896
 

4

Average Balances and Tax Equivalent Rates

   
Three Months Ended
June 30,
 
         
2019
               
2018
       
   
Average
Balance
   
Interest
   
Rate (2)
   
Average
Balance
   
Interest
   
Rate (2)
 
   
(Dollars in thousands)
 
Assets
                                   
Taxable loans
 
$
2,692,168
   
$
33,762
     
5.02
%
 
$
2,442,159
   
$
29,606
     
4.86
%
Tax-exempt loans (1)
   
7,480
     
94
     
5.04
     
6,897
     
85
     
4.94
 
Taxable securities
   
392,075
     
3,034
     
3.10
     
401,102
     
2,720
     
2.71
 
Tax-exempt securities (1)
   
49,448
     
406
     
3.28
     
69,325
     
559
     
3.23
 
Interest bearing cash
   
31,734
     
115
     
1.45
     
28,187
     
66
     
0.94
 
Other investments
   
18,359
     
264
     
5.77
     
16,312
     
199
     
4.89
 
Interest Earning Assets
   
3,191,264
     
37,675
     
4.73
     
2,963,982
     
33,235
     
4.49
 
Cash and due from banks
   
33,252
                     
31,564
                 
Other assets, net
   
163,882
                     
172,650
                 
Total Assets
 
$
3,388,398
                   
$
3,168,196
                 
                                                 
Liabilities
                                               
Savings and interest- bearing checking
 
$
1,413,073
     
2,647
     
0.75
   
$
1,241,700
     
1,011
     
0.33
 
Time deposits
   
664,909
     
3,374
     
2.04
     
603,833
     
2,198
     
1.46
 
Other borrowings
   
77,678
     
796
     
4.11
     
100,754
     
914
     
3.64
 
Interest Bearing Liabilities
   
2,155,660
     
6,817
     
1.27
     
1,946,287
     
4,123
     
0.85
 
Non-interest bearing deposits
   
851,903
                     
855,829
                 
Other liabilities
   
42,581
                     
31,454
                 
Shareholders’ equity
   
338,254
                     
334,626
                 
Total liabilities and shareholders’ equity
 
$
3,388,398
                   
$
3,168,196
                 
                                                 
Net Interest Income
         
$
30,858
                   
$
29,112
         
                                                 
Net Interest Income as a Percent of Average Interest Earning Assets
                   
3.87
%
                   
3.93
%


(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

Average Balances and Tax Equivalent Rates

   
Six Months Ended
June 30,
 
         
2019
               
2018
       
   
Average
Balance
   
Interest
   
Rate (2)
   
Average
Balance
   
Interest
   
Rate (2)
 
   
(Dollars in thousands)
 
Assets
                                   
Taxable loans
 
$
2,652,893
   
$
66,362
     
5.03
%
 
$
2,252,492
   
$
52,945
     
4.72
%
Tax-exempt loans (1)
   
8,081
     
197
     
4.92
     
4,526
     
104
     
4.63
 
Taxable securities
   
390,966
     
6,040
     
3.09
     
411,619
     
5,355
     
2.60
 
Tax-exempt securities (1)
   
53,148
     
875
     
3.29
     
73,810
     
1,162
     
3.15
 
Interest bearing cash
   
48,381
     
426
     
1.78
     
30,531
     
148
     
0.98
 
Other investments
   
18,359
     
528
     
5.80
     
15,930
     
447
     
5.66
 
Interest Earning Assets
   
3,171,828
     
74,428
     
4.72
     
2,788,908
     
60,161
     
4.33
 
Cash and due from banks
   
33,744
                     
31,848
                 
Other assets, net
   
167,270
                     
152,912
                 
Total Assets
 
$
3,372,842
                   
$
2,973,668
                 
                                                 
Liabilities
                                               
Savings and interest- bearing checking
 
$
1,387,208
     
4,969
     
0.72
   
$
1,168,747
     
1,562
     
0.27
 
Time deposits
   
676,606
     
6,733
     
2.01
     
584,167
     
3,934
     
1.36
 
Other borrowings
   
71,901
     
1,508
     
4.23
     
82,920
     
1,488
     
3.62
 
Interest Bearing Liabilities
   
2,135,715
     
13,210
     
1.25
     
1,835,834
     
6,984
     
0.77
 
Non-interest bearing deposits
   
855,732
                     
807,504
                 
Other liabilities
   
41,481
                     
30,531
                 
Shareholders’ equity
   
339,914
                     
299,799
                 
Total liabilities and shareholders’ equity
 
$
3,372,842
                   
$
2,973,668
                 
                                                 
Net Interest Income
         
$
61,218
                   
$
53,177
         
                                                 
Net Interest Income as a Percent of Average Interest Earning Assets
                   
3.88
%
                   
3.83
%


(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

6

Commercial Loan Portfolio Analysis as of June 30, 2019

   
Total Commercial Loans
 
         
Watch Credits
   
Percent of Loan
 
Loan Category
 
All Loans
   
Performing
   
Non-
performing
   
Total
   
Category in
Watch Credit
 
   
(Dollars in thousands)
 
Land
 
$
12,387
   
$
772
   
$
-
   
$
772
     
6.2
%
Land Development
   
9,136
     
499
     
-
     
499
     
5.5
 
Construction
   
71,472
     
7,925
     
-
     
7,925
     
11.1
 
Income Producing
   
398,074
     
16,484
     
-
     
16,484
     
4.1
 
Owner Occupied
   
350,774
     
33,597
     
54
     
33,651
     
9.6
 
Total Commercial Real Estate Loans
 
$
841,843
   
$
59,277
     
54
   
$
59,331
     
7.0
 
                                         
Other Commercial Loans
 
$
334,127
   
$
18,736
     
749
   
$
19,485
     
5.8
 
Total non-performing commercial loans
                 
$
803
                 

Commercial Loan Portfolio Analysis as of December 31, 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
 
$
12,308
   
$
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
                 


7