Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
Non-performing assets (1) | ||||||||||||||||||||
December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Non-accrual loans | $ | 9,029 | $ | 9,343 | $ | 9,082 | $ | 6,629 | $ | 8,184 | ||||||||||
Loans 90 days or more past due and still accruing interest | 5 | - | - | - | - | |||||||||||||||
Total non-performing loans | 9,034 | 9,343 | 9,082 | 6,629 | 8,184 | |||||||||||||||
Other real estate and repossessed assets | 1,299 | 1,445 | 1,689 | 1,647 | 1,643 | |||||||||||||||
Total non-performing assets | $ | 10,333 | $ | 10,788 | $ | 10,771 | $ | 8,276 | $ | 9,827 | ||||||||||
As a percent of Portfolio Loans | ||||||||||||||||||||
Non-performing loans | 0.35 | % | 0.36 | % | 0.37 | % | 0.32 | % | 0.41 | % | ||||||||||
Allowance for loan losses | 0.96 | 0.95 | 0.95 | 1.11 | 1.12 | |||||||||||||||
Non-performing assets to total assets | 0.31 | 0.33 | 0.33 | 0.30 | 0.35 | |||||||||||||||
Allowance for loan losses as a percent of non-performing loans | 275.49 | 261.17 | 258.80 | 348.03 | 275.99 |
(1) | Excludes loans classified as "trouble debt restructured" that are not past due. |
Troubled debt restructurings ("TDR")
December 31, 2018 | ||||||||||||
Commercial | Retail | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR's | $ | 6,460 | $ | 46,627 | $ | 53,087 | ||||||
Non-performing TDR's(1) | 74 | 2,884 | (2) | 2,958 | ||||||||
Total | $ | 6,534 | $ | 49,511 | $ | 56,045 |
December 31, 2017 | ||||||||||||
Commercial | Retail | Total | ||||||||||
(In thousands) | ||||||||||||
Performing TDR's | $ | 7,748 | $ | 52,367 | $ | 60,115 | ||||||
Non-performing TDR's(1) | 323 | 4,506 | (2) | 4,829 | ||||||||
Total | $ | 8,071 | $ | 56,873 | $ | 64,944 |
(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, | ||||||||||||||||
2018 | 2017 | |||||||||||||||
Loans | Unfunded Commitments | Loans | Unfunded Commitments | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 22,587 | $ | 1,125 | $ | 20,234 | $ | 650 | ||||||||
Additions (deductions) | ||||||||||||||||
Provision for loan losses | 1,503 | - | 1,199 | - | ||||||||||||
Recoveries credited to allowance | 4,622 | - | 4,205 | - | ||||||||||||
Loans charged against the allowance | (3,824 | ) | - | (3,051 | ) | - | ||||||||||
Additions included in non-interest expense | - | 171 | - | 475 | ||||||||||||
Balance at end of period | $ | 24,888 | $ | 1,296 | $ | 22,587 | $ | 1,125 | ||||||||
Net loans charged against the allowance to average Portfolio Loans | (0.03 | )% | (0.06 | )% |
Capitalization
December 31, | ||||||||
2018 | 2017 | |||||||
(In thousands) | ||||||||
Subordinated debentures | $ | 39,388 | $ | 35,569 | ||||
Amount not qualifying as regulatory capital | (1,224 | ) | (1,069 | ) | ||||
Amount qualifying as regulatory capital | 38,164 | 34,500 | ||||||
Shareholders’ equity | ||||||||
Common stock | 377,372 | 324,986 | ||||||
Accumulated deficit | (28,270 | ) | (54,054 | ) | ||||
Accumulated other comprehensive loss | (10,108 | ) | (5,999 | ) | ||||
Total shareholders’ equity | 338,994 | 264,933 | ||||||
Total capitalization | $ | 377,158 | $ | 299,433 |
2
Non-Interest Income
Three months ended | Twelve months ended | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | |||||||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Service charges on deposit accounts | $ | 3,092 | $ | 3,166 | $ | 3,208 | $ | 12,258 | $ | 12,673 | ||||||||||
Interchange income | 2,669 | 2,486 | 2,154 | 9,905 | 8,023 | |||||||||||||||
Net gains on assets | ||||||||||||||||||||
Mortgage loans | 2,026 | 2,745 | 2,876 | 10,597 | 11,762 | |||||||||||||||
Securities | 209 | 93 | 198 | 138 | 260 | |||||||||||||||
Mortgage loan servicing, net | (1,511 | ) | 1,212 | 979 | 3,157 | 1,647 | ||||||||||||||
Investment and insurance commissions | 537 | 513 | 427 | 1,971 | 1,968 | |||||||||||||||
Bank owned life insurance | 257 | 237 | 285 | 970 | 1,061 | |||||||||||||||
Other | 1,672 | 1,384 | 1,317 | 5,819 | 5,139 | |||||||||||||||
Total non-interest income | $ | 8,951 | $ | 11,836 | $ | 11,444 | $ | 44,815 | $ | 42,533 |
Capitalized Mortgage Loan Servicing Rights
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(In thousands) | ||||||||||||||||
Balance at beginning of period | $ | 23,151 | $ | 14,675 | $ | 15,699 | $ | 13,671 | ||||||||
Change in accounting | - | - | - | 542 | ||||||||||||
Balance at beginning of period, as adjusted | 23,151 | 14,675 | 15,699 | 14,213 | ||||||||||||
Servicing rights acquired | - | - | 3,047 | - | ||||||||||||
Originated servicing rights capitalized | 1,266 | 1,183 | 4,977 | 4,230 | ||||||||||||
Change in fair value | (3,017 | ) | (159 | ) | (2,323 | ) | (2,744 | ) | ||||||||
Balance at end of period | $ | 21,400 | $ | 15,699 | $ | 21,400 | $ | 15,699 |
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Mortgage Loan Activity | ||||||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | |||||||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Mortgage loans originated | $ | 190,328 | $ | 231,849 | $ | 213,877 | $ | 807,408 | $ | 871,222 | ||||||||||
Mortgage loans sold | 121,426 | 148,730 | 117,941 | 491,798 | 423,327 | |||||||||||||||
Net gains on mortgage loans | 2,026 | 2,745 | 2,876 | 10,597 | 11,762 | |||||||||||||||
Net gains as a percent of mortgage loans sold ("Loan Sales Margin") | 1.67 | % | 1.85 | % | 2.44 | % | 2.15 | % | 2.78 | % | ||||||||||
Fair value adjustments included in the Loan Sales Margin | (0.39 | ) | (0.26 | ) | (0.45 | ) | (0.02 | ) | (0.07 | ) |
Non-Interest Expense
Three months ended | Twelve months ended | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | |||||||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Compensation | $ | 9,792 | $ | 9,582 | $ | 8,525 | $ | 37,878 | $ | 35,397 | ||||||||||
Performance-based compensation | 2,704 | 3,305 | 3,055 | 11,942 | 9,874 | |||||||||||||||
Payroll taxes and employee benefits | 3,076 | 3,282 | 2,405 | 12,258 | 9,818 | |||||||||||||||
Compensation and employee benefits | 15,572 | 16,169 | 13,985 | 62,078 | 55,089 | |||||||||||||||
Occupancy, net | 2,245 | 2,233 | 2,070 | 8,912 | 8,102 | |||||||||||||||
Data processing | 2,082 | 2,051 | 1,987 | 8,262 | 7,657 | |||||||||||||||
Furniture, fixtures and equipment | 1,051 | 1,043 | 927 | 4,080 | 3,870 | |||||||||||||||
Merger related expenses | 111 | 98 | 274 | 3,465 | 284 | |||||||||||||||
Communications | 737 | 727 | 638 | 2,848 | 2,684 | |||||||||||||||
Interchange expense | 728 | 715 | 287 | 2,702 | 1,156 | |||||||||||||||
Loan and collection | 782 | 531 | 666 | 2,682 | 2,230 | |||||||||||||||
Advertising | 577 | 594 | 354 | 2,155 | 1,905 | |||||||||||||||
Legal and professional fees | 528 | 477 | 526 | 1,839 | 1,892 | |||||||||||||||
FDIC deposit insurance | 331 | 270 | 286 | 1,081 | 894 | |||||||||||||||
Amortization of intangible assets | 293 | 295 | 86 | 969 | 346 | |||||||||||||||
Supplies | 173 | 173 | 159 | 689 | 666 | |||||||||||||||
Credit card and bank service fees | 104 | 108 | 97 | 414 | 529 | |||||||||||||||
Costs related to unfunded lending commitments | 177 | 71 | 143 | 171 | 475 | |||||||||||||||
Provision for loss reimbursement on sold loans | (68 | ) | 47 | 105 | 10 | 171 | ||||||||||||||
Net gains on other real estate and repossessed assets | (53 | ) | (325 | ) | (738 | ) | (672 | ) | (606 | ) | ||||||||||
Other | 1,455 | 1,463 | 1,284 | 5,776 | 4,738 | |||||||||||||||
Total non-interest expense | $ | 26,825 | $ | 26,740 | $ | 23,136 | $ | 107,461 | $ | 92,082 |
4
Average Balances and Tax Equivalent Rates | ||||||||||||||||||||||||
Three Months Ended December 31, | ||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||
Average Balance | Interest | Rate (2) | Average Balance | Interest | Rate (2) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Taxable loans | $ | 2,618,834 | $ | 32,753 | 4.98 | % | $ | 2,003,636 | $ | 22,625 | 4.49 | % | ||||||||||||
Tax-exempt loans (1) | 8,780 | 107 | 4.83 | 2,571 | 27 | 4.17 | ||||||||||||||||||
Taxable securities | 373,988 | 2,782 | 2.98 | 442,188 | 2,628 | 2.38 | ||||||||||||||||||
Tax-exempt securities (1) | 59,915 | 512 | 3.42 | 90,014 | 799 | 3.55 | ||||||||||||||||||
Interest bearing cash | 41,766 | 157 | 1.49 | 20,827 | 35 | 0.67 | ||||||||||||||||||
Other investments | 18,357 | 236 | 5.10 | 15,543 | 198 | 5.05 | ||||||||||||||||||
Interest Earning Assets | 3,121,640 | 36,547 | 4.66 | 2,574,779 | 26,312 | 4.07 | ||||||||||||||||||
Cash and due from banks | 33,915 | 30,459 | ||||||||||||||||||||||
Other assets, net | 171,447 | 137,523 | ||||||||||||||||||||||
Total Assets | $ | 3,327,002 | $ | 2,742,761 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest- bearing checking | $ | 1,291,994 | 1,361 | 0.42 | $ | 1,054,651 | 523 | 0.20 | ||||||||||||||||
Time deposits | 695,316 | 3,645 | 2.08 | 526,217 | 1,498 | 1.13 | ||||||||||||||||||
Other borrowings | 71,410 | 746 | 4.14 | 100,049 | 689 | 2.73 | ||||||||||||||||||
Interest Bearing Liabilities | 2,058,720 | 5,752 | 1.11 | 1,680,917 | 2,710 | 0.64 | ||||||||||||||||||
Non-interest bearing deposits | 886,579 | 759,725 | ||||||||||||||||||||||
Other liabilities | 36,924 | 32,020 | ||||||||||||||||||||||
Shareholders’ equity | 344,779 | 270,099 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,327,002 | $ | 2,742,761 | ||||||||||||||||||||
Net Interest Income | $ | 30,795 | $ | 23,602 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.93 | % | 3.65 | % |
(1) | Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21% in 2018 and 35% in 2017. |
(2) | Annualized |
5
Average Balances and Tax Equivalent Rates
Twelve Months Ended December 31, | ||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||
Average Balance | Interest | Rate | Average Balance | Interest | Rate | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Taxable loans | $ | 2,418,421 | $ | 116,634 | 4.82 | % | $ | 1,845,661 | $ | 84,169 | 4.56 | % | ||||||||||||
Tax-exempt loans (1) | 6,118 | 292 | 4.77 | 3,199 | 172 | 5.38 | ||||||||||||||||||
Taxable securities | 394,160 | 10,874 | 2.76 | 485,343 | 10,928 | 2.25 | ||||||||||||||||||
Tax-exempt securities (1) | 67,574 | 2,192 | 3.24 | 86,902 | 3,063 | 3.52 | ||||||||||||||||||
Interest bearing cash | 32,593 | 371 | 1.14 | 37,119 | 264 | 0.71 | ||||||||||||||||||
Other investments | 16,936 | 920 | 5.43 | 15,543 | 836 | 5.38 | ||||||||||||||||||
Interest Earning Assets | 2,935,802 | 131,283 | 4.48 | 2,473,767 | 99,432 | 4.02 | ||||||||||||||||||
Cash and due from banks | 33,384 | 31,980 | ||||||||||||||||||||||
Other assets, net | 162,750 | 144,442 | ||||||||||||||||||||||
Total Assets | $ | 3,131,936 | $ | 2,650,189 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Savings and interest-bearing checking | $ | 1,218,243 | 4,146 | 0.34 | $ | 1,052,215 | 1,530 | 0.15 | ||||||||||||||||
Time deposits | 632,330 | 10,332 | 1.63 | 502,284 | 5,245 | 1.04 | ||||||||||||||||||
Other borrowings | 79,519 | 3,013 | 3.79 | 74,876 | 2,348 | 3.14 | ||||||||||||||||||
Interest Bearing Liabilities | 1,930,092 | 17,491 | 0.91 | 1,629,375 | 9,123 | 0.56 | ||||||||||||||||||
Non-interest bearing deposits | 846,718 | 728,208 | ||||||||||||||||||||||
Other liabilities | 33,354 | 30,838 | ||||||||||||||||||||||
Shareholders’ equity | 321,772 | 261,768 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,131,936 | $ | 2,650,189 | ||||||||||||||||||||
Net Interest Income | $ | 113,792 | $ | 90,309 | ||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets | 3.88 | % | 3.65 | % |
(1) | Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21% in 2018 and 35% in 2017. |
6
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 |
Commercial Loan Portfolio Analysis as of December 31, 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 | $ | 8,559 | $ | 60 | $ | 9 | $ | 69 | 0.8 | % | ||||||||||
Land Development | 9,685 | - | - | - | 0.0 | |||||||||||||||
Construction | 51,733 | - | - | - | 0.0 | |||||||||||||||
Income Producing | 289,799 | 1,590 | 30 | 1,620 | 0.6 | |||||||||||||||
Owner Occupied | 258,888 | 11,491 | 170 | 11,661 | 4.5 | |||||||||||||||
Total Commercial Real Estate Loans | $ | 618,664 | $ | 13,141 | 209 | $ | 13,350 | 2.2 | ||||||||||||
Other Commercial Loans | $ | 234,596 | $ | 19,109 | 437 | $ | 19,546 | 8.3 | ||||||||||||
Total non-performing commercial loans | $ | 646 |
7