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,
2019
   
June 30,
2019
   
March 31,
2019
   
December 31,
2018
   
September 30,
2018
 
   
(Dollars in thousands)
 
Non-accrual loans
 
$
7,124
   
$
7,798
   
$
8,849
   
$
9,029
   
$
9,343
 
Loans 90 days or more past due and still accruing interest
   
-
     
-
     
-
     
5
     
-
 
Total non-accrual loans
   
7,124
     
7,798
     
8,849
     
9,034
     
9,343
 
Less:  Government guaranteed loans
   
475
     
436
     
617
     
460
     
279
 
Total non-performing loans
   
6,649
     
7,362
     
8,232
     
8,574
     
9,064
 
Other real estate and repossessed assets
   
1,789
     
1,990
     
1,338
     
1,299
     
1,445
 
Total non-performing assets
 
$
8,438
   
$
9,352
   
$
9,570
   
$
9,873
   
$
10,509
 
                                         
As a percent of Portfolio Loans
                                       
Non-performing loans
   
0.24
%
   
0.27
%
   
0.31
%
   
0.33
%
   
0.35
%
Allowance for loan losses
   
0.96
     
0.96
     
0.96
     
0.96
     
0.95
 
Non-performing assets to total assets
   
0.24
     
0.27
     
0.28
     
0.29
     
0.32
 
Allowance for loan losses as a percent of non-performing loans
   
393.26
     
351.85
     
306.78
     
290.27
     
269.21
 

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

Troubled debt restructurings (“TDR”)

   
September 30, 2019
 
   
Commercial
   
Retail (1)
   
Total
 
   
(In thousands)
 
Performing TDR’s
 
$
6,947
   
$
40,873
   
$
47,820
 
Non-performing TDR’s (2)
   
46
     
2,357
(3) 
   
2,403
 
Total
 
$
6,993
   
$
43,230
   
$
50,223
 

   
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

   
Nine months ended
September 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
   
1,045
     
-
     
912
     
-
 
Recoveries credited to allowance
   
3,109
     
-
     
3,768
     
-
 
Loans charged against the allowance
   
(2,894
)
   
-
     
(2,866
)
   
-
 
Additions included in non-interest expense
   
-
     
341
     
-
     
(6
)
Balance at end of period
 
$
26,148
   
$
1,637
   
$
24,401
   
$
1,119
 
                                 
Net loans charged against the allowance to average Portfolio Loans
   
(0.01
)%
           
(0.04
)%
       

Capitalization

   
September 30,
2019
   
December 31,
2018
 
   
(In thousands)
 
Subordinated debentures
 
$
39,439
   
$
39,388
 
Amount not qualifying as regulatory capital
   
(1,224
)
   
(1,224
)
Amount qualifying as regulatory capital
   
38,215
     
38,164
 
Shareholders’ equity
               
Common stock
   
351,839
     
377,372
 
Accumulated deficit
   
(8,221
)
   
(28,270
)
Accumulated other comprehensive loss
   
(3,373
)
   
(10,108
)
Total shareholders’ equity
   
340,245
     
338,994
 
Total capitalization
 
$
378,460
   
$
377,158
 

2

Non-Interest Income

   
Three months ended
   
Nine months ended
 
   
September 30,
2019
   
June 30,
2019
   
September 30,
2018
   
September 30,
 
 
2019
   
2018
 
   
(In thousands)
 
Service charges on deposit accounts
 
$
2,883
   
$
2,800
   
$
3,166
   
$
8,323
   
$
9,166
 
Interchange income
   
2,785
     
2,604
     
2,486
     
7,744
     
7,236
 
Net gains on assets
                                       
Mortgage loans
   
5,677
     
4,302
     
2,745
     
13,590
     
8,571
 
Securities
   
-
     
-
     
93
     
304
     
(71
)
Mortgage loan servicing, net
   
(1,562
)
   
(1,907
)
   
1,212
     
(4,684
)
   
4,668
 
Investment and insurance commissions
   
450
     
450
     
513
     
1,197
     
1,434
 
Bank owned life insurance
   
301
     
270
     
237
     
813
     
713
 
Other
   
1,741
     
1,386
     
1,384
     
4,852
     
4,147
 
Total non-interest income
 
$
12,275
   
$
9,905
   
$
11,836
   
$
32,139
   
$
35,864
 

Capitalized Mortgage Loan Servicing Rights

   
Three months ended
September 30,
   
Nine months ended
September 30,
 
   
2019
   
2018
   
2019
   
2018
 
   
(In thousands)
 
Balance at beginning of period
 
$
17,894
   
$
21,848
   
$
21,400
   
$
15,699
 
Servicing rights acquired
   
-
     
-
     
-
     
3,047
 
Originated servicing rights capitalized
   
2,157
     
1,501
     
4,764
     
3,711
 
Change in fair value
   
(3,145
)
   
(198
)
   
(9,258
)
   
694
 
Balance at end of period
 
$
16,906
   
$
23,151
   
$
16,906
   
$
23,151
 

3

Mortgage Loan Activity

   
Three months ended
   
Nine months ended
 
   
September 30,
2019
   
June 30,
2019
   
September 30,
2018
   
September 30,
 
 
2019
   
2018
 
   
(Dollars in thousands)
 
Mortgage loans originated
 
$
329,461
   
$
241,402
   
$
231,849
   
$
708,621
   
$
617,080
 
Mortgage loans sold
   
204,058
     
131,636
     
148,730
     
490,219
     
370,372
 
Net gains on mortgage loans
   
5,677
     
4,302
     
2,745
     
13,590
     
8,571
 
Net gains as a percent of mortgage loans sold  (“Loan Sales Margin”)
   
2.78
%
   
3.27
%
   
1.85
%
   
2.77
%
   
2.31
%
Fair value adjustments included in the Loan Sales Margin
   
0.22
     
0.74
     
(0.26
)
   
0.48
     
0.10
 

Non-Interest Expense

   
Three months ended
   
Nine months ended
 
   
September 30,
2019
   
June 30,
2019
   
September 30,
2018
   
September 30,
 
 
2019
   
2018
 
   
(In thousands)
 
Compensation
 
$
10,327
   
$
10,185
   
$
9,582
   
$
30,993
   
$
28,086
 
Performance-based compensation
   
3,214
     
2,296
     
3,305
     
7,730
     
9,238
 
Payroll taxes and employee benefits
   
3,132
     
3,450
     
3,282
     
10,232
     
9,182
 
Compensation and employee benefits
   
16,673
     
15,931
     
16,169
     
48,955
     
46,506
 
Occupancy, net
   
2,161
     
2,131
     
2,233
     
6,797
     
6,667
 
Data processing
   
2,282
     
2,171
     
2,051
     
6,597
     
6,180
 
Furniture, fixtures and equipment
   
1,023
     
1,006
     
1,043
     
3,058
     
3,029
 
Interchange expense
   
891
     
753
     
715
     
2,332
     
1,974
 
Communications
   
733
     
717
     
727
     
2,219
     
2,111
 
Loan and collection
   
714
     
628
     
531
     
1,976
     
1,900
 
Advertising
   
636
     
627
     
594
     
1,935
     
1,578
 
Legal and professional fees
   
541
     
371
     
477
     
1,281
     
1,311
 
Amortization of intangible assets
   
272
     
273
     
295
     
817
     
676
 
FDIC deposit insurance
   
13
     
342
     
270
     
723
     
750
 
Supplies
   
163
     
153
     
173
     
474
     
516
 
Costs (recoveries) related to unfunded lending commitments
   
154
     
27
     
71
     
341
     
(6
)
Credit card and bank service fees
   
100
     
97
     
108
     
300
     
310
 
Provision for loss reimbursement on sold loans
   
33
     
35
     
47
     
179
     
78
 
Net (gains) losses on other real estate and repossessed assets
   
52
     
(198
)
   
(325
)
   
(27
)
   
(619
)
Merger related expenses
   
-
     
-
     
98
     
-
     
3,354
 
Other
   
1,407
     
1,528
     
1,463
     
4,473
     
4,321
 
Total non-interest expense
 
$
27,848
   
$
26,592
   
$
26,740
   
$
82,430
   
$
80,636
 

4

Average Balances and Tax Equivalent Rates

 
 
Three Months Ended
September 30,
 
 
 
2019
   
2018
 
 
 
Average
Balance
   
Interest
   
Rate (2)
   
Average
Balance
   
Interest
   
Rate (2)
 
 
 
(Dollars in thousands)
 
Assets
                                   
Taxable loans
 
$
2,779,132
   
$
34,151
     
4.89
%
 
$
2,543,712
   
$
30,936
     
4.84
%
Tax-exempt loans (1)
   
7,412
     
94
     
5.03
     
6,590
     
81
     
4.88
 
Taxable securities
   
371,157
     
2,771
     
2.99
     
379,985
     
2,737
     
2.88
 
Tax-exempt securities (1)
   
52,098
     
400
     
3.07
     
62,964
     
518
     
3.29
 
Interest bearing cash
   
56,923
     
229
     
1.60
     
27,477
     
66
     
0.95
 
Other investments
   
18,359
     
266
     
5.75
     
17,493
     
237
     
5.38
 
Interest Earning Assets
   
3,285,081
     
37,911
     
4.60
     
3,038,221
     
34,575
     
4.53
 
Cash and due from banks
   
34,598
                     
35,874
                 
Other assets, net
   
163,617
                     
173,508
                 
Total Assets
 
$
3,483,296
                   
$
3,247,603
                 
 
                                               
Liabilities
                                               
Savings and interest- bearing checking
 
$
1,487,820
     
2,818
     
0.75
   
$
1,241,868
     
1,223
     
0.39
 
Time deposits
   
658,426
     
3,418
     
2.06
     
664,098
     
2,753
     
1.64
 
Other borrowings
   
72,887
     
703
     
3.83
     
80,939
     
779
     
3.82
 
Interest Bearing Liabilities
   
2,219,133
     
6,939
     
1.24
     
1,986,905
     
4,755
     
0.95
 
Non-interest bearing deposits
   
877,088
                     
884,003
                 
Other liabilities
   
49,913
                     
34,697
                 
Shareholders’ equity
   
337,162
                     
341,998
                 
Total liabilities and shareholders’ equity
 
$
3,483,296
                   
$
3,247,603
                 
 
                                               
Net Interest Income
         
$
30,972
                   
$
29,820
         
 
                                               
Net Interest Income as a Percent of Average Interest Earning Assets
                   
3.76
%
                   
3.91
%



(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

 
 
 
Nine Months Ended
September 30,
 
 
 
2019
   
2018
 
 
 
Average
Balance
   
Interest
   
Rate (2)
   
Average
Balance
   
Interest
   
Rate (2)
 
   
(Dollars in thousands)
 
Assets
                                   
Taxable loans
 
$
2,695,435
   
$
100,513
     
4.98
%
 
$
2,350,883
   
$
83,881
     
4.77
%
Tax-exempt loans (1)
   
7,856
     
291
     
4.95
     
5,221
     
185
     
4.74
 
Taxable securities
   
384,291
     
8,811
     
3.06
     
400,957
     
8,092
     
2.69
 
Tax-exempt securities (1)
   
52,794
     
1,275
     
3.22
     
70,155
     
1,680
     
3.19
 
Interest bearing cash
   
51,260
     
655
     
1.71
     
29,502
     
214
     
0.97
 
Other investments
   
18,359
     
794
     
5.78
     
16,457
     
684
     
5.56
 
Interest Earning Assets
   
3,209,995
     
112,339
     
4.67
     
2,873,175
     
94,736
     
4.40
 
Cash and due from banks
   
34,032
                     
33,204
                 
Other assets, net
   
166,037
                     
159,844
                 
Total Assets
 
$
3,410,064
                   
$
3,066,223
                 
 
                                               
Liabilities
                                               
Savings and interest- bearing checking
 
$
1,421,114
     
7,787
     
0.73
   
$
1,193,388
     
2,785
     
0.31
 
Time deposits
   
670,479
     
10,151
     
2.02
     
611,103
     
6,687
     
1.46
 
Other borrowings
   
72,233
     
2,211
     
4.09
     
82,253
     
2,267
     
3.68
 
Interest Bearing Liabilities
   
2,163,826
     
20,149
     
1.24
     
1,886,744
     
11,739
     
0.83
 
Non-interest bearing deposits
   
862,929
                     
833,283
                 
Other liabilities
   
44,323
                     
32,177
                 
Shareholders’ equity
   
338,986
                     
314,019
                 
Total liabilities and shareholders’ equity
 
$
3,410,064
                   
$
3,066,223
                 
 
                                               
Net Interest Income
         
$
92,190
                   
$
82,997
         
 
                                               
Net Interest Income as a Percent of Average Interest Earning Assets
                   
3.83
%
                   
3.86
%



(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 September 30, 2019


 
Total Commercial Loans
 


All Loans
 
Watch Credits
   
Percent of Loan
Category in
Watch Credit
 
Loan Category
 
Performing
   
Non-
performing
   
Total
 
   
(Dollars in thousands)
 
Land
 
$
12,202
   
$
106
   
$
654
   
$
760
     
6.2
%
Land Development
   
10,859
     
-
     
-
     
-
     
0.0
 
Construction
   
78,948
     
7,868
     
-
     
7,868
     
10.0
 
Income Producing
   
423,911
     
15,504
     
-
     
15,504
     
3.7
 
Owner Occupied
   
331,487
     
39,406
     
46
     
39,452
     
11.9
 
Total Commercial Real Estate Loans
 
$
857,407
   
$
62,884
     
700
   
$
63,584
     
7.4
 
                                         
Other Commercial Loans
 
$
331,610
   
$
20,714
     
41
   
$
20,755
     
6.3
 
Total non-performing commercial loans
                 
$
741
                 

Commercial Loan Portfolio Analysis as of December 31, 2018


 
Total Commercial Loans
 

 
All Loans
   
Watch Credits
   
Percent of Loan
Category in
Watch Credit
 
Loan Category
 
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
                 
 

7