Attached files
| file | filename |
|---|---|
| 8-K - INDEPENDENT BANK CORPORATION 8-K 4-22-2013 - INDEPENDENT BANK CORP /MI/ | form8k.htm |
| EX-99.1 - EXHIBIT 99.1 - INDEPENDENT BANK CORP /MI/ | ex99_1.htm |
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
|
Non-performing assets(1)
|
||||||||
|
March 31,
|
December 31,
|
|||||||
|
2013
|
2012
|
|||||||
|
(Dollars in thousands)
|
||||||||
|
Non-accrual loans
|
$ | 27,821 | $ | 32,929 | ||||
|
Loans 90 days or more past due and still accruing interest
|
59 | 7 | ||||||
|
Total non-performing loans
|
27,880 | 32,936 | ||||||
|
Other real estate and repossessed assets
|
23,639 | 26,133 | ||||||
|
Total non-performing assets
|
$ | 51,519 | $ | 59,069 | ||||
|
As a percent of Portfolio Loans
|
||||||||
|
Non-performing loans
|
2.00 | % | 2.32 | % | ||||
|
Allowance for loan losses
|
2.93 | 3.12 | ||||||
|
Non-performing assets to total assets
|
2.45 | 2.92 | ||||||
|
Allowance for loan losses as a percent of non-performing loans
|
146.22 | 134.43 | ||||||
(1) Excludes loans classified as “troubled debt restructured” that are not past due and vehicle service contract counterparty receivables, net.
|
Troubled debt restructurings (“TDR”)
|
||||||||||||
|
March 31, 2013
|
||||||||||||
|
Commercial
|
Retail
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||
|
Performing TDR’s
|
$ | 44,626 | $ | 83,985 | $ | 128,611 | ||||||
|
Non-performing TDR’s (1)
|
6,349 | 8,499 | (2) | 14,848 | ||||||||
|
Total
|
$ | 50,975 | $ | 92,484 | $ | 143,459 | ||||||
|
December 31, 2012
|
||||||||||||
|
Commercial
|
Retail
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||
|
Performing TDR’s
|
$ | 40,753 | $ | 85,977 | $ | 126,730 | ||||||
|
Non-performing TDR’s (1)
|
7,756 | 9,177 | (2) | 16,933 | ||||||||
|
Total
|
$ | 48,509 | $ | 95,154 | $ | 143,663 | ||||||
(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
|
Three months ended
|
|||||||||||||||
|
March 31,
|
||||||||||||||||
|
2013
|
2012
|
|||||||||||||||
|
Unfunded
|
Unfunded
|
|||||||||||||||
|
Loans
|
Commitments
|
Loans
|
Commitments
|
|||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||
|
Balance at beginning of period
|
$ | 44,275 | $ | 598 | $ | 58,884 | $ | 1,286 | ||||||||
|
Additions (deduction)
|
||||||||||||||||
|
Provision for loan losses
|
(691 | ) | - | 5,131 | - | |||||||||||
|
Recoveries credited to allowance
|
1,451 | - | 1,880 | - | ||||||||||||
|
Loans charged against the allowance
|
(4,270 | ) | - | (9,889 | ) | - | ||||||||||
|
Additions (deductions) included in non-interest expense
|
- | (19 | ) | - | (47 | ) | ||||||||||
|
Balance at end of period
|
$ | 40,765 | $ | 579 | $ | 56,006 | $ | 1,239 | ||||||||
|
Net loans charged against the allowance to average Portfolio Loans
|
0.82 | % | 2.07 | % | ||||||||||||
Alternative Sources of Funds
|
March 31,
|
December 31,
|
|||||||||||||||||
|
2013
|
2012
|
|||||||||||||||||
|
Average
|
Average
|
|||||||||||||||||
|
Amount
|
Maturity
|
Rate
|
Amount
|
Maturity
|
Rate
|
|||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
|
Brokered CDs(1)
|
$ | 14,594 |
0.5 years
|
1.73 | % | $ | 14,591 |
0.6 years
|
1.70 | % | ||||||||
|
Fixed-rate FHLB advances
|
17,622 |
4.3 years
|
6.38 | 17,622 |
4.5 years
|
6.38 | ||||||||||||
|
Variable-rate FHLB advances(1)
|
- | - | ||||||||||||||||
|
Total
|
$ | 32,216 |
2.6 years
|
4.28 | % | $ | 32,213 |
2.7 years
|
4.26 | % | ||||||||
|
(1)
|
Certain of these items have had their average maturity and rate altered through the use of derivative instruments, such as pay-fixed interest-rate swaps.
|
|
Capitalization
|
||||||||
|
March 31,
|
December 31,
|
|||||||
|
2013
|
2012
|
|||||||
|
(In thousands)
|
||||||||
|
Subordinated debentures
|
$ | 50,175 | $ | 50,175 | ||||
|
Amount not qualifying as regulatory capital
|
(1,507 | ) | (1,507 | ) | ||||
|
Amount qualifying as regulatory capital
|
48,668 | 48,668 | ||||||
|
Shareholders’ equity
|
||||||||
|
Convertible preferred stock
|
85,299 | 84,204 | ||||||
|
Common stock
|
253,437 | 251,237 | ||||||
|
Accumulated deficit
|
(187,698 | ) | (192,408 | ) | ||||
|
Accumulated other comprehensive loss
|
(6,953 | ) | (8,058 | ) | ||||
|
Total shareholders’ equity
|
144,085 | 134,975 | ||||||
|
Total capitalization
|
$ | 192,753 | $ | 183,643 | ||||
2
Non-Interest Income
|
Three months ended
|
||||||||||||
|
March 31,
|
December 31,
|
March 31,
|
||||||||||
| 2013 | 2012 | 2012 | ||||||||||
|
(In thousands)
|
||||||||||||
|
Service charges on deposit accounts
|
$ | 3,406 | $ | 4,395 | $ | 4,201 | ||||||
|
Interchange income
|
1,757 | 2,135 | 2,322 | |||||||||
|
Net gains (losses) on assets
|
||||||||||||
|
Mortgage loans
|
3,637 | 5,282 | 3,860 | |||||||||
|
Securities
|
84 | 72 | 684 | |||||||||
|
Other than temporary impairment loss on securities
|
||||||||||||
|
Total impairment loss
|
- | (7 | ) | (177 | ) | |||||||
|
Loss recognized in other comprehensive income
|
- | - | ||||||||||
|
Net impairment loss recognized in earnings
|
- | (7 | ) | (177 | ) | |||||||
|
Mortgage loan servicing
|
622 | 882 | 736 | |||||||||
|
Investment and insurance commissions
|
450 | 560 | 447 | |||||||||
|
Bank owned life insurance
|
338 | 401 | 424 | |||||||||
|
Title insurance fees
|
484 | 484 | 508 | |||||||||
|
Increase in fair value of U.S. Treasury warrant
|
(1,045 | ) | (74 | ) | (154 | ) | ||||||
|
Net gain on branch sale
|
- | 5,402 | - | |||||||||
|
Other
|
1,335 | 1,865 | 1,733 | |||||||||
|
Total non-interest income
|
$ | 11,068 | $ | 21,397 | $ | 14,584 | ||||||
|
Capitalized Mortgage Loan Servicing Rights
|
||||||||
|
Three months ended
March 31,
|
||||||||
|
2013
|
2012
|
|||||||
|
(In thousands)
|
||||||||
|
Balance at beginning of period
|
$ | 11,013 | $ | 11,229 | ||||
|
Originated servicing rights capitalized
|
1,029 | 924 | ||||||
|
Amortization
|
(1,210 | ) | (1,062 | ) | ||||
|
Change in valuation allowance
|
758 | 704 | ||||||
|
Balance at end of period
|
$ | 11,590 | $ | 11,795 | ||||
|
Valuation allowance at end of period
|
$ | 5,329 | $ | 5,840 | ||||
Mortgage Loan Activity
|
Three months ended
|
||||||||||||
|
March 31,
|
December 31,
|
March 31,
|
||||||||||
|
2013
|
2012
|
2012
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||
|
Mortgage loans originated
|
$ | 128,732 | $ | 153,821 | $ | 112,798 | ||||||
|
Mortgage loans sold
|
130,456 | 143,138 | 112,141 | |||||||||
|
Mortgage loans sold with servicing rights released
|
14,537 | 23,459 | 15,340 | |||||||||
|
Net gains on the sale of mortgage loans
|
3,637 | 5,282 | 3,860 | |||||||||
|
Net gains as a percent of mortgage loans sold (“Loan Sales Margin”)
|
2.79 |
%
|
3.69 |
%
|
3.44 |
%
|
||||||
|
Fair value adjustments included in the Loan Sales Margin
|
(0.74 |
)
|
(0.15 |
)
|
0.92 | |||||||
3
|
Non-Interest Expense
|
||||||||||||
|
Three months ended
|
||||||||||||
|
March 31,
|
December 31,
|
March 31,
|
||||||||||
|
2013
|
2012
|
2012
|
||||||||||
|
(In thousands)
|
||||||||||||
|
Compensation
|
$ | 8,205 | $ | 9,804 | $ | 9,945 | ||||||
|
Performance-based compensation
|
1,062 | 2,140 | 85 | |||||||||
|
Payroll taxes and employee benefits
|
2,040 | 2,441 | 2,452 | |||||||||
|
Compensation and employee benefits
|
11,307 | 14,385 | 12,482 | |||||||||
|
Occupancy, net
|
2,424 | 2,416 | 2,716 | |||||||||
|
Loan and collection
|
2,226 | 1,836 | 2,890 | |||||||||
|
Data processing
|
1,916 | 2,049 | 1,933 | |||||||||
|
Furniture, fixtures and equipment
|
1,032 | 1,145 | 1,196 | |||||||||
|
Communications
|
780 | 886 | 973 | |||||||||
|
Legal and professional fees
|
692 | 1,058 | 897 | |||||||||
|
Provision for loss reimbursement on sold loans
|
663 | 361 | 432 | |||||||||
|
Net losses on other real estate and repossessed assets
|
652 | 943 | 987 | |||||||||
|
FDIC deposit insurance
|
630 | 817 | 857 | |||||||||
|
Advertising
|
570 | 652 | 556 | |||||||||
|
Interchange expense
|
410 | 478 | 406 | |||||||||
|
Credit card and bank service fees
|
334 | 383 | 651 | |||||||||
|
Supplies
|
250 | 248 | 394 | |||||||||
|
Amortization of intangible assets
|
203 | 249 | 272 | |||||||||
|
Vehicle service contract counterparty contingencies
|
127 | 551 | 471 | |||||||||
|
Recoveries related to unfunded lending commitments
|
(19 | ) | (91 | ) | (47 | ) | ||||||
|
Other
|
1,276 | 1,541 | (17 | ) | ||||||||
|
Total non-interest expense
|
$ | 25,473 | $ | 29,907 | $ | 28,049 | ||||||
4
|
Average Balances and Rates
|
||||||||||||||||||||||||
|
Three Months Ended
|
||||||||||||||||||||||||
|
March 31,
|
||||||||||||||||||||||||
|
2013
|
2012
|
|||||||||||||||||||||||
|
Average
|
Average
|
|||||||||||||||||||||||
|
Balance
|
Interest
|
Rate(3)
|
Balance
|
Interest
|
Rate(3)
|
|||||||||||||||||||
|
Assets (1)
|
(Dollars in thousands)
|
|||||||||||||||||||||||
|
Taxable loans
|
$ | 1,436,527 | $ | 20,649 | 5.81 | % | $ | 1,582,444 | $ | 24,270 |
6.16
|
% | ||||||||||||
|
Tax-exempt loans (2)
|
5,884 | 61 | 4.20 | 7,239 | 76 | 4.22 | ||||||||||||||||||
|
Taxable securities
|
199,876 | 670 | 1.36 | 184,798 | 658 | 1.43 | ||||||||||||||||||
|
Tax-exempt securities (2)
|
24,200 | 238 | 3.99 | 27,145 | 296 | 4.39 | ||||||||||||||||||
|
Cash – interest bearing
|
186,065 | 120 | 0.26 | 318,573 | 199 | 0.25 | ||||||||||||||||||
|
Other investments
|
20,838 | 212 | 4.13 | 20,828 | 197 | 3.80 | ||||||||||||||||||
|
Interest Earning Assets
|
1,873,390 | 21,950 | 4.73 | 2,141,027 | 25,696 | 4.82 | ||||||||||||||||||
|
Cash and due from banks
|
45,583 | 56,080 | ||||||||||||||||||||||
|
Other assets, net
|
142,300 | 164,120 | ||||||||||||||||||||||
|
Total Assets
|
$ | 2,061,273 | $ | 2,361,227 | ||||||||||||||||||||
|
Liabilities
|
||||||||||||||||||||||||
|
Savings and interest-bearing checking
|
$ | 894,348 | 282 | 0.13 | $ | 1,053,896 | 472 | 0.18 | ||||||||||||||||
|
Time deposits
|
423,713 | 1,247 | 1.19 | 576,967 | 1,952 | 1.36 | ||||||||||||||||||
|
Other borrowings
|
67,802 | 865 | 5.17 | 83,384 | 1,172 | 5.65 | ||||||||||||||||||
|
Interest Bearing Liabilities
|
1,385,863 | 2,394 | 0.70 | 1,714,247 | 3,596 | 0.84 | ||||||||||||||||||
|
Non-interest bearing deposits
|
493,952 | 504,019 | ||||||||||||||||||||||
|
Other liabilities
|
41,683 | 39,252 | ||||||||||||||||||||||
|
Shareholders’ equity
|
139,775 | 103,709 | ||||||||||||||||||||||
|
Total liabilities and shareholders’ equity
|
$ | 2,061,273 | $ | 2,361,227 | ||||||||||||||||||||
|
Net Interest Income
|
$ |
19,556
|
$ |
22,100
|
||||||||||||||||||||
|
Net Interest Income as a Percent of Average Interest Earning Assets
|
4.21 | % | 4.14 | % | ||||||||||||||||||||
|
(1)
|
All domestic.
|
|
(2)
|
Interest on tax-exempt loans and securities is not presented on a fully tax equivalent basis due to the current net operating loss carryforward position and the deferred tax asset valuation allowance.
|
|
(3)
|
Annualized.
|
5
|
Commercial Loan Portfolio Analysis as of March 31, 2013
|
||||||||||||||||||||
|
Total Commercial Loans
|
||||||||||||||||||||
|
Watch Credits
|
Percent of Loan
|
|||||||||||||||||||
|
Loan Category
|
All Loans
|
Performing
|
Non- performing
|
Total
|
Category in Watch Credit
|
|||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
|
Land
|
$ | 11,919 | $ | 1,491 | $ | 1,995 | $ | 3,486 | 29.2 | % | ||||||||||
|
Land Development
|
13,627 | 4,001 | 840 | 4,841 | 35.5 | |||||||||||||||
|
Construction
|
15,346 | 883 | 157 | 1,040 | 6.8 | |||||||||||||||
|
Income Producing
|
224,615 | 33,902 | 4,099 | 38,001 | 16.9 | |||||||||||||||
|
Owner Occupied
|
213,004 | 25,194 | 4,100 | 29,294 | 13.8 | |||||||||||||||
|
Total Commercial Real Estate Loans (1)
|
$ | 478,511 | $ | 65,471 | 11,191 | $ | 76,662 | 16.0 | ||||||||||||
|
Other Commercial Loans(1)
|
$ | 133,820 | $ | 13,047 | 404 | $ | 13,451 | 10.1 | ||||||||||||
|
Total non-performing commercial loans
|
$ | 11,595 | ||||||||||||||||||
|
(1)
|
The total of these two categories is different than the March 31, 2013, Consolidated Statement of Financial Condition due primarily to loans in process.
|
6