Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets (1) | ||||||||||||||||||||
September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | September 30, 2016 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Non-accrual loans | $ | 8,410 | $ | 8,542 | $ | 9,014 | $ | 13,364 | $ | 10,801 | ||||||||||
Loans 90 days or more past due and still accruing interest | - | - | - | - | - | |||||||||||||||
Total non-performing loans | 8,410 | 8,542 | 9,014 | 13,364 | 10,801 | |||||||||||||||
Other real estate and repossessed assets | 2,150 | 2,368 | 5,257 | 5,004 | 4,989 | |||||||||||||||
Total non-performing assets | $ | 10,560 | $ | 10,910 | $ | 14,271 | $ | 18,368 | $ | 15,790 | ||||||||||
As a percent of Portfolio Loans | ||||||||||||||||||||
Non-performing loans | 0.43 | % | 0.47 | % | 0.54 | % | 0.83 | % | 0.67 | % | ||||||||||
Allowance for loan losses | 1.11 | 1.14 | 1.20 | 1.26 | 1.37 | |||||||||||||||
Non-performing assets to total assets | 0.38 | 0.41 | 0.55 | 0.72 | 0.62 | |||||||||||||||
Allowance for loan losses as a percent of non-performing loans | 255.39 | 241.00 | 222.30 | 151.41 | 204.08 |
(1) | Excludes loans classified as "trouble debt restructured" that are not past due and vehicle service contract counterparty receivables, net. |
Troubled debt restructurings ("TDR")
September 30, 2017 | ||||||||||||
Commercial | Retail | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR's | $ | 9,431 | $ | 53,755 | $ | 63,186 | ||||||
Non-performing TDR's(1) | 401 | 4,531 | (2) | 4,932 | ||||||||
Total | $ | 9,832 | $ | 58,286 | $ | 68,118 | ||||||
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 |
(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, | ||||||||||||||||
2017 | 2016 | |||||||||||||||
Loans | Unfunded Commitments | Loans | Unfunded Commitments | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 20,234 | $ | 650 | $ | 22,570 | $ | 652 | ||||||||
Additions (deductions) | ||||||||||||||||
Provision for loan losses | 806 | - | (1,439 | ) | - | |||||||||||
Recoveries credited to allowance | 2,998 | - | 3,623 | - | ||||||||||||
Loans charged against the allowance | (2,560 | ) | - | (2,711 | ) | - | ||||||||||
Additions included in non-interest expense | - | 332 | - | 6 | ||||||||||||
Balance at end of period | $ | 21,478 | $ | 982 | $ | 22,043 | $ | 658 | ||||||||
Net loans charged against the allowance to average Portfolio Loans | (0.03 | )% | (0.08 | )% |
Capitalization
September 30, 2017 | December 31, 2016 | |||||||
(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 | 324,607 | 323,745 | ||||||
Accumulated deficit | (53,240 | ) | (65,657 | ) | ||||
Accumulated other comprehensive loss | (3,657 | ) | (9,108 | ) | ||||
Total shareholders’ equity | 267,710 | 248,980 | ||||||
Total capitalization | $ | 302,210 | $ | 283,480 |
2
Non-Interest Income
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Service charges on deposit accounts | $ | 3,281 | $ | 3,175 | $ | 3,281 | $ | 9,465 | $ | 9,164 | ||||||||||
Interchange income | 1,942 | 2,005 | 1,943 | 5,869 | 5,797 | |||||||||||||||
Net gains (losses) on assets | ||||||||||||||||||||
Mortgage loans | 2,971 | 3,344 | 3,556 | 8,886 | 7,727 | |||||||||||||||
Securities | 69 | (34 | ) | (45 | ) | 62 | 302 | |||||||||||||
Mortgage loan servicing, net | 1 | (158 | ) | 858 | 668 | (454 | ) | |||||||||||||
Investment and insurance commissions | 606 | 467 | 427 | 1,541 | 1,278 | |||||||||||||||
Bank owned life insurance | 283 | 240 | 282 | 776 | 870 | |||||||||||||||
Other | 1,151 | 1,407 | 1,406 | 3,822 | 4,413 | |||||||||||||||
Total non-interest income | $ | 10,304 | $ | 10,446 | $ | 11,708 | $ | 31,089 | $ | 29,097 |
Capitalized Mortgage Loan Servicing Rights
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In thousands) | ||||||||||||||||
Balance at beginning of period | $ | 14,515 | $ | 10,331 | $ | 13,671 | $ | 12,436 | ||||||||
Change in accounting | - | - | 542 | - | ||||||||||||
Balance at beginning of period, as adjusted | $ | 14,515 | $ | 10,331 | $ | 14,213 | $ | 12,436 | ||||||||
Originated servicing rights capitalized | 1,250 | 896 | 3,047 | 2,153 | ||||||||||||
Amortization | - | (799 | ) | - | (2,065 | ) | ||||||||||
Change in valuation allowance | - | 620 | - | (1,476 | ) | |||||||||||
Change in fair value | (1,090 | ) | - | (2,585 | ) | - | ||||||||||
Balance at end of period | $ | 14,675 | $ | 11,048 | $ | 14,675 | $ | 11,048 | ||||||||
Valuation allowance at end of period | $ | - | $ | 4,748 | $ | - | $ | 4,748 |
3
Mortgage Loan Activity
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Mortgage loans originated | $ | 264,177 | $ | 235,087 | $ | 123,124 | $ | 657,345 | $ | 288,592 | ||||||||||
Mortgage loans sold | 120,981 | 104,714 | 89,349 | 305,386 | 215,494 | |||||||||||||||
Net gains on mortgage loans | 2,971 | 3,344 | 3,556 | 8,886 | 7,727 | |||||||||||||||
Net gains as a percent of mortgage loans sold ("Loan Sales Margin") | 2.46 | % | 3.19 | % | 3.98 | % | 2.91 | % | 3.59 | % | ||||||||||
Fair value adjustments included in the Loan Sales Margin | (0.22 | ) | 0.32 | 0.55 | 0.08 | 0.40 |
Non-Interest Expense
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Compensation | $ | 8,494 | $ | 8,707 | $ | 8,310 | $ | 26,872 | $ | 24,355 | ||||||||||
Performance-based compensation | 2,688 | 2,138 | 2,409 | 6,819 | 5,967 | |||||||||||||||
Payroll taxes and employee benefits | 2,395 | 2,535 | 2,312 | 7,413 | 6,590 | |||||||||||||||
Compensation and employee benefits | 13,577 | 13,380 | 13,031 | 41,104 | 36,912 | |||||||||||||||
Occupancy, net | 1,970 | 1,920 | 1,919 | 6,032 | 5,982 | |||||||||||||||
Data processing | 1,796 | 1,937 | 1,971 | 5,670 | 6,008 | |||||||||||||||
Furniture, fixtures and equipment | 961 | 1,005 | 990 | 2,943 | 2,939 | |||||||||||||||
Communications | 685 | 678 | 670 | 2,046 | 2,280 | |||||||||||||||
Loan and collection | 481 | 670 | 568 | 1,564 | 1,964 | |||||||||||||||
Advertising | 526 | 519 | 455 | 1,551 | 1,410 | |||||||||||||||
Legal and professional fees | 550 | 389 | 420 | 1,376 | 1,178 | |||||||||||||||
Interchange expense | 294 | 292 | 276 | 869 | 809 | |||||||||||||||
FDIC deposit insurance | 208 | 202 | 187 | 608 | 852 | |||||||||||||||
Supplies | 176 | 159 | 178 | 507 | 551 | |||||||||||||||
Credit card and bank service fees | 105 | 136 | 203 | 432 | 588 | |||||||||||||||
Costs related to unfunded | ||||||||||||||||||||
lending commitments | 92 | 130 | 73 | 332 | 6 | |||||||||||||||
Amortization of intangible assets | 87 | 86 | 86 | 260 | 260 | |||||||||||||||
Net losses on other real estate and repossessed assets | 30 | 91 | 263 | 132 | 98 | |||||||||||||||
Provision for loss reimbursement on sold loans | 15 | 20 | 45 | 66 | 30 | |||||||||||||||
Other | 1,063 | 1,147 | 1,194 | 3,454 | 3,602 | |||||||||||||||
Total non-interest expense | $ | 22,616 | $ | 22,761 | $ | 22,529 | $ | 68,946 | $ | 65,469 |
4
Average Balances and Tax Equivalent Rates
Three Months Ended September 30, | ||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||
Average Balance | Interest | Rate (2) | Average Balance | Interest | Rate (2) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Taxable loans | $ | 1,908,497 | $ | 21,801 | 4.55 | % | $ | 1,613,189 | $ | 18,562 | 4.59 | % | ||||||||||||
Tax-exempt loans (1) | 3,138 | 47 | 5.94 | 3,492 | 53 | 6.04 | ||||||||||||||||||
Taxable securities | 474,901 | 2,765 | 2.33 | 534,319 | 2,537 | 1.90 | ||||||||||||||||||
Tax-exempt securities (1) | 90,645 | 783 | 3.46 | 58,694 | 507 | 3.46 | ||||||||||||||||||
Interest bearing cash | 29,336 | 63 | 0.85 | 69,603 | 86 | 0.49 | ||||||||||||||||||
Other investments | 15,543 | 200 | 5.11 | 15,347 | 195 | 5.05 | ||||||||||||||||||
Interest Earning Assets | 2,522,060 | 25,659 | 4.05 | 2,294,644 | 21,940 | 3.81 | ||||||||||||||||||
Cash and due from banks | 33,019 | 34,565 | ||||||||||||||||||||||
Other assets, net | 142,283 | 152,793 | ||||||||||||||||||||||
Total Assets | $ | 2,697,362 | $ | 2,482,002 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest- bearing checking | $ | 1,048,289 | 408 | 0.15 | $ | 1,014,201 | 284 | 0.11 | ||||||||||||||||
Time deposits | 531,226 | 1,425 | 1.06 | 438,504 | 970 | 0.88 | ||||||||||||||||||
Other borrowings | 85,219 | 626 | 2.91 | 47,227 | 493 | 4.15 | ||||||||||||||||||
Interest Bearing Liabilities | 1,664,734 | 2,459 | 0.59 | 1,499,932 | 1,747 | 0.46 | ||||||||||||||||||
Non-interest bearing deposits | 736,291 | 706,282 | ||||||||||||||||||||||
Other liabilities | 31,263 | 27,110 | ||||||||||||||||||||||
Shareholders’ equity | 265,074 | 248,678 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,697,362 | $ | 2,482,002 | ||||||||||||||||||||
Net Interest Income | $ | 23,200 | $ | 20,193 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.66 | % | 3.51 | % |
(1) | Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 35% |
(2) | Annualized |
5
Average Balances and Tax Equivalent Rates
Nine Months Ended September 30, | ||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||
Average Balance | Interest | Rate (2) | Average Balance | Interest | Rate (2) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Taxable loans | $ | 1,792,381 | $ | 61,544 | 4.59 | % | $ | 1,577,758 | $ | 55,255 | 4.67 | % | ||||||||||||
Tax-exempt loans (1) | 3,410 | 145 | 5.69 | 3,564 | 163 | 6.11 | ||||||||||||||||||
Taxable securities | 499,886 | 8,300 | 2.21 | 532,576 | 7,261 | 1.82 | ||||||||||||||||||
Tax-exempt securities (1) | 85,853 | 2,264 | 3.52 | 50,286 | 1,320 | 3.50 | ||||||||||||||||||
Interest bearing cash | 42,610 | 229 | 0.72 | 75,121 | 292 | 0.52 | ||||||||||||||||||
Other investments | 15,543 | 638 | 5.49 | 15,456 | 592 | 5.12 | ||||||||||||||||||
Interest Earning Assets | 2,439,683 | 73,120 | 4.00 | 2,254,761 | 64,883 | 3.84 | ||||||||||||||||||
Cash and due from banks | 32,492 | 38,069 | ||||||||||||||||||||||
Other assets, net | 146,753 | 157,570 | ||||||||||||||||||||||
Total Assets | $ | 2,618,928 | $ | 2,450,400 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest- bearing checking | $ | 1,051,395 | 1,007 | 0.13 | $ | 1,018,727 | 831 | 0.11 | ||||||||||||||||
Time deposits | 494,219 | 3,747 | 1.01 | 435,146 | 2,689 | 0.83 | ||||||||||||||||||
Other borrowings | 66,392 | 1,659 | 3.34 | 47,405 | 1,455 | 4.10 | ||||||||||||||||||
Interest Bearing Liabilities | 1,612,006 | 6,413 | 0.53 | 1,501,278 | 4,975 | 0.44 | ||||||||||||||||||
Non-interest bearing deposits | 717,589 | 677,645 | ||||||||||||||||||||||
Other liabilities | 30,372 | 25,612 | ||||||||||||||||||||||
Shareholders’ equity | 258,961 | 245,865 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,618,928 | $ | 2,450,400 | ||||||||||||||||||||
Net Interest Income | $ | 66,707 | $ | 59,908 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.65 | % | 3.55 | % |
(1) | Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 35% |
(2) | Annualized |
6
Reconciliation of Net Interest Margin, Fully Taxable Equivalent ("FTE")
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||
Net interest income | $ | 22,912 | $ | 19,998 | $ | 65,870 | $ | 59,391 | ||||||||
Add: taxable equivalent adjustment | 288 | 195 | 837 | 517 | ||||||||||||
Net interest income - taxable equivalent | $ | 23,200 | $ | 20,193 | $ | 66,707 | $ | 59,908 | ||||||||
Net interest margin (GAAP) (1) | 3.60 | % | 3.47 | % | 3.61 | % | 3.52 | % | ||||||||
Net interest margin (FTE) (1) | 3.66 | % | 3.51 | % | 3.65 | % | 3.55 | % |
(1) | Annualized |
Commercial Loan Portfolio Analysis as of September 30, 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 | $ | 5,505 | $ | 62 | $ | 10 | $ | 72 | 1.3 | % | ||||||||||
Land Development | 7,580 | - | - | - | 0.0 | |||||||||||||||
Construction | 54,556 | - | - | - | 0.0 | |||||||||||||||
Income Producing | 271,594 | 3,331 | 72 | 3,403 | 1.3 | |||||||||||||||
Owner Occupied | 275,833 | 11,535 | 231 | 11,766 | 4.3 | |||||||||||||||
Total Commercial Real Estate Loans | $ | 615,068 | $ | 14,928 | 313 | $ | 15,241 | 2.5 | ||||||||||||
Other Commercial Loans | $ | 222,182 | $ | 12,992 | 475 | $ | 13,467 | 6.1 | ||||||||||||
Total non-performing commercial loans | $ | 788 |
7