Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets (1)
December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Non-accrual loans | $ | 13,364 | $ | 10,801 | $ | 10,803 | $ | 10,425 | $ | 10,607 | ||||||||||
Loans 90 days or more past due and still accruing interest | - | - | 94 | 147 | 116 | |||||||||||||||
Total non-performing loans | 13,364 | 10,801 | 10,897 | 10,572 | 10,723 | |||||||||||||||
Other real estate and repossessed assets | 5,004 | 4,989 | 5,572 | 6,672 | 7,150 | |||||||||||||||
Total non-performing assets | $ | 18,368 | $ | 15,790 | $ | 16,469 | $ | 17,244 | $ | 17,873 | ||||||||||
As a percent of Portfolio Loans | ||||||||||||||||||||
Non-performing loans | 0.83 | % | 0.67 | % | 0.69 | % | 0.69 | % | 0.71 | % | ||||||||||
Allowance for loan losses | 1.26 | 1.37 | 1.44 | 1.46 | 1.49 | |||||||||||||||
Non-performing assets to total assets | 0.72 | 0.62 | 0.67 | 0.69 | 0.74 | |||||||||||||||
Allowance for loan losses as a percent of non-performing loans | 151.41 | 204.08 | 208.42 | 212.78 | 210.48 |
(1) | Excludes loans classified as "trouble debt restructured" that are not past due and vehicle service contract counterparty receivables, net. |
Troubled debt restructurings ("TDR")
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 |
December 31, 2015 | ||||||||||||
Commercial | Retail | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR's | $ | 13,318 | $ | 68,194 | $ | 81,512 | ||||||
Non-performing TDR's(1) | 3,041 | 3,777 | (2) | 6,818 | ||||||||
Total | $ | 16,359 | $ | 71,971 | $ | 88,330 |
(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
Twelve months ended December 31, | ||||||||||||||||
2016 | 2015 | |||||||||||||||
Loans | Unfunded Commitments | Loans | Unfunded Commitments | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 22,570 | $ | 652 | $ | 25,990 | $ | 539 | ||||||||
Additions (deductions) | ||||||||||||||||
Provision for loan losses | (1,309 | ) | - | (2,714 | ) | - | ||||||||||
Recoveries credited to allowance | 4,619 | - | 5,022 | - | ||||||||||||
Loans charged against the allowance | (5,587 | ) | - | (5,728 | ) | - | ||||||||||
Reclassification to loans held for sale | (59 | ) | ||||||||||||||
Additions (deductions) included in non-interest expense | - | (2 | ) | - | 113 | |||||||||||
Balance at end of period | $ | 20,234 | $ | 650 | $ | 22,570 | $ | 652 | ||||||||
Net loans charged against the allowance to average Portfolio Loans | 0.06 | % | 0.05 | % |
Capitalization
December 31, 2016 | December 31, 2015 | |||||||
(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 | 323,745 | 339,462 | ||||||
Accumulated deficit | (65,657 | ) | (82,334 | ) | ||||
Accumulated other comprehensive loss | (9,108 | ) | (6,036 | ) | ||||
Total shareholders’ equity | 248,980 | 251,092 | ||||||
Total capitalization | $ | 283,480 | $ | 285,592 |
2
Non-Interest Income
Three months ended | Twelve months ended | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | |||||||||||||||||
2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Service charges on deposit accounts | $ | 3,242 | $ | 3,281 | $ | 3,128 | $ | 12,406 | $ | 12,389 | ||||||||||
Interchange income | 2,141 | 1,943 | 1,930 | 7,938 | 8,481 | |||||||||||||||
Net gains (losses) on assets | ||||||||||||||||||||
Mortgage loans | 2,839 | 3,556 | 1,713 | 10,566 | 7,448 | |||||||||||||||
Securities | 261 | (45 | ) | (77 | ) | 563 | 20 | |||||||||||||
Mortgage loan servicing, net | 2,676 | 858 | 1,275 | 2,222 | 1,751 | |||||||||||||||
Investment and insurance commissions | 369 | 427 | 447 | 1,647 | 1,827 | |||||||||||||||
Bank owned life insurance | 254 | 282 | 303 | 1,124 | 1,282 | |||||||||||||||
Title insurance fees | 327 | 319 | 282 | 1,187 | 1,156 | |||||||||||||||
Net gain on branch sale | - | - | 0 | - | 1,193 | |||||||||||||||
Other | 1,092 | 1,087 | 1,061 | 4,645 | 4,583 | |||||||||||||||
Total non-interest income | $ | 13,201 | $ | 11,708 | $ | 10,062 | $ | 42,298 | $ | 40,130 |
Capitalized Mortgage Loan Servicing Rights
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(In thousands) | ||||||||||||||||
Balance at beginning of period | $ | 11,048 | $ | 11,630 | $ | 12,436 | $ | 12,106 | ||||||||
Originated servicing rights capitalized | 966 | 569 | 3,119 | 2,697 | ||||||||||||
Amortization | (785 | ) | (609 | ) | (2,850 | ) | (2,868 | ) | ||||||||
Change in valuation allowance | 2,442 | 846 | 966 | 501 | ||||||||||||
Balance at end of period | $ | 13,671 | $ | 12,436 | $ | 13,671 | $ | 12,436 | ||||||||
Valuation allowance at end of period | $ | 2,306 | $ | 3,272 | $ | 2,306 | $ | 3,272 |
3
Mortgage Loan Activity
Three months ended | Twelve months ended | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | |||||||||||||||||
2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Mortgage loans originated | $ | 139,657 | $ | 123,124 | $ | 75,874 | $ | 428,249 | $ | 336,618 | ||||||||||
Mortgage loans sold | 98,491 | 89,349 | 59,537 | 313,985 | 281,494 | |||||||||||||||
Net gains on mortgage loans | 2,839 | 3,556 | 1,713 | 10,566 | 7,448 | |||||||||||||||
Net gains as a percent of mortgage loans sold ("Loan Sales Margin") | 2.88 | % | 3.98 | % | 2.88 | % | 3.37 | % | 2.65 | % | ||||||||||
Fair value adjustments included in the Loan Sales Margin | (0.50 | ) | 0.55 | (0.03 | ) | 0.12 | 0.16 |
Non-Interest Expense
Three months ended | Twelve months ended | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | |||||||||||||||||
2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Compensation | $ | 9,043 | $ | 8,546 | $ | 8,466 | $ | 33,991 | $ | 33,346 | ||||||||||
Performance-based compensation | 1,581 | 2,174 | 2,128 | 6,955 | 6,732 | |||||||||||||||
Payroll taxes and employee benefits | 2,043 | 2,311 | 1,987 | 8,633 | 8,108 | |||||||||||||||
Compensation and employee benefits | 12,667 | 13,031 | 12,581 | 49,579 | 48,186 | |||||||||||||||
Occupancy, net | 2,041 | 1,919 | 1,970 | 8,023 | 8,369 | |||||||||||||||
Data processing | 1,944 | 1,971 | 1,986 | 7,952 | 7,944 | |||||||||||||||
Furniture, fixtures and equipment | 973 | 990 | 977 | 3,912 | 3,892 | |||||||||||||||
Communications | 862 | 670 | 773 | 3,142 | 2,957 | |||||||||||||||
Loan and collection | 548 | 568 | 671 | 2,512 | 3,609 | |||||||||||||||
Litigation settlement expense | 2,300 | - | - | 2,300 | - | |||||||||||||||
Advertising | 446 | 455 | 783 | 1,856 | 2,121 | |||||||||||||||
Legal and professional fees | 564 | 420 | 661 | 1,742 | 2,013 | |||||||||||||||
Interchange expense | 302 | 276 | 266 | 1,111 | 1,125 | |||||||||||||||
FDIC deposit insurance | 197 | 187 | 322 | 1,049 | 1,366 | |||||||||||||||
Credit card and bank service fees | 203 | 203 | 195 | 791 | 797 | |||||||||||||||
Supplies | 177 | 178 | 190 | 728 | 809 | |||||||||||||||
Amortization of intangible assets | 87 | 86 | 87 | 347 | 347 | |||||||||||||||
Loss on sale of payment plan business | 320 | - | - | 320 | - | |||||||||||||||
Net (gains) losses on other real estate and repossessed assets | 152 | 263 | (7 | ) | 250 | (180 | ) | |||||||||||||
Provision for loss reimbursement on sold loans | - | 45 | - | 30 | (59 | ) | ||||||||||||||
Cost (recoveries) related to unfunded lending commitments | (8 | ) | 73 | 67 | (2 | ) | 113 | |||||||||||||
Vehicle service contract counterparty contingencies | (78 | ) | (39 | ) | 30 | (88 | ) | 119 | ||||||||||||
Other | 1,181 | 1,233 | 1,289 | 4,793 | 4,922 | |||||||||||||||
Total non-interest expense | $ | 24,878 | $ | 22,529 | $ | 22,841 | $ | 90,347 | $ | 88,450 |
4
Average Balances and Tax Equivalent Rates
Three Months Ended December 31, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
Average Balance | Interest | Rate (3) | Average Balance | Interest | Rate (3) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets (1) | ||||||||||||||||||||||||
Taxable loans | $ | 1,650,867 | $ | 18,759 | 4.53 | % | $ | 1,489,086 | $ | 18,034 | 4.82 | % | ||||||||||||
Tax-exempt loans (2) | 4,355 | 57 | 5.21 | 3,601 | 57 | 6.28 | ||||||||||||||||||
Taxable securities | 539,170 | 2,660 | 1.97 | 561,216 | 2,277 | 1.62 | ||||||||||||||||||
Tax-exempt securities (2) | 66,611 | 597 | 3.58 | 37,745 | 367 | 3.89 | ||||||||||||||||||
Interest bearing cash | 88,986 | 111 | 0.50 | 71,585 | 81 | 0.45 | ||||||||||||||||||
Other investments | 15,528 | 200 | 5.12 | 15,391 | 197 | 5.08 | ||||||||||||||||||
Interest Earning Assets | 2,365,517 | 22,384 | 3.77 | 2,178,624 | 21,013 | 3.84 | ||||||||||||||||||
Cash and due from banks | 33,148 | 44,884 | ||||||||||||||||||||||
Other assets, net | 150,443 | 161,951 | ||||||||||||||||||||||
Total Assets | $ | 2,549,108 | $ | 2,385,459 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest- bearing checking | $ | 1,018,559 | 284 | 0.11 | $ | 988,234 | 264 | 0.11 | ||||||||||||||||
Time deposits | 483,270 | 1,137 | 0.94 | 424,020 | 784 | 0.73 | ||||||||||||||||||
Other borrowings | 46,027 | 486 | 4.20 | 47,583 | 465 | 3.88 | ||||||||||||||||||
Interest Bearing Liabilities | 1,547,856 | 1,907 | 0.49 | 1,459,837 | 1,513 | 0.41 | ||||||||||||||||||
Non-interest bearing deposits | 721,617 | 648,924 | ||||||||||||||||||||||
Other liabilities | 28,900 | 25,575 | ||||||||||||||||||||||
Shareholders’ equity | 250,735 | 251,123 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,549,108 | $ | 2,385,459 | ||||||||||||||||||||
Net Interest Income | $ | 20,477 | $ | 19,500 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.45 | % | 3.56 | % |
(1) | All domestic. |
(2) | Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 35% |
(3) | Annualized |
5
Average Balances and Tax Equivalent Rates
Twelve Months Ended December 31, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
Average Balance | Interest | Rate | Average Balance | Interest | Rate | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets (1) | ||||||||||||||||||||||||
Taxable loans | $ | 1,596,136 | $ | 74,014 | 4.64 | % | $ | 1,457,508 | $ | 70,770 | 4.86 | % | ||||||||||||
Tax-exempt loans (2) | 3,763 | 220 | 5.85 | 3,972 | 246 | 6.19 | ||||||||||||||||||
Taxable securities | 534,233 | 9,921 | 1.86 | 529,571 | 7,805 | 1.47 | ||||||||||||||||||
Tax-exempt securities (2) | 54,390 | 1,917 | 3.52 | 34,039 | 1,388 | 4.08 | ||||||||||||||||||
Interest bearing cash | 78,606 | 403 | 0.51 | 66,595 | 275 | 0.41 | ||||||||||||||||||
Other investments | 15,474 | 792 | 5.12 | 17,171 | 925 | 5.39 | ||||||||||||||||||
Interest Earning Assets | 2,282,602 | 87,267 | 3.82 | 2,108,856 | 81,409 | 3.86 | ||||||||||||||||||
Cash and due from banks | 36,831 | 44,842 | ||||||||||||||||||||||
Other assets, net | 155,778 | 166,363 | ||||||||||||||||||||||
Total Assets | $ | 2,475,211 | $ | 2,320,061 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest-bearing checking | $ | 1,018,685 | 1,115 | 0.11 | $ | 988,504 | 1,056 | 0.11 | ||||||||||||||||
Time deposits | 447,243 | 3,826 | 0.86 | 386,035 | 2,953 | 0.76 | ||||||||||||||||||
Other borrowings | 47,058 | 1,941 | 4.12 | 47,842 | 1,847 | 3.86 | ||||||||||||||||||
Interest Bearing Liabilities | 1,512,986 | 6,882 | 0.45 | 1,422,381 | 5,856 | 0.41 | ||||||||||||||||||
Non-interest bearing deposits | 688,697 | 619,206 | ||||||||||||||||||||||
Other liabilities | 26,439 | 24,840 | ||||||||||||||||||||||
Shareholders’ equity | 247,089 | 253,634 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,475,211 | $ | 2,320,061 | ||||||||||||||||||||
Net Interest Income | $ | 80,385 | $ | 75,553 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.52 | % | 3.58 | % |
(1) | All domestic. |
(2) | Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 35% |
6
Commercial Loan Portfolio Analysis as of December 31, 2016
Total Commercial Loans | ||||||||||||||||||||
Watch Credits | Percent of Loan Category in Watch Credit | |||||||||||||||||||
Loan Category | All Loans | Performing | Non- performing | Total | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Land | $ | 8,083 | $ | 67 | $ | 74 | $ | 141 | 1.7 | % | ||||||||||
Land Development | 4,173 | - | 31 | 31 | 0.7 | |||||||||||||||
Construction | 39,389 | - | - | - | 0.0 | |||||||||||||||
Income Producing | 286,981 | 4,105 | 628 | 4,733 | 1.6 | |||||||||||||||
Owner Occupied | 259,662 | 6,587 | 157 | 6,744 | 2.6 | |||||||||||||||
Total Commercial Real Estate Loans | $ | 598,288 | $ | 10,759 | 890 | $ | 11,649 | 1.9 | ||||||||||||
Other Commercial Loans | $ | 206,523 | $ | 6,154 | 4,273 | $ | 10,427 | 5.0 | ||||||||||||
Total non-performing commercial loans | $ | 5,163 |
7