Attached files
| file | filename |
|---|---|
| 8-K - INDEPENDENT BANK CORPORATION 8-K 7-29-2013 - INDEPENDENT BANK CORP /MI/ | form8k.htm |
| EX-99 - EXHIBIT 99.1 - INDEPENDENT BANK CORP /MI/ | ex99_1.htm |
Exhibit 99.2
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Supplemental Data
|
Non-performing assets(1)
|
||||||||
|
|
June 30,
|
December 31,
|
||||||
|
|
2013
|
2012
|
||||||
|
|
(Dollars in thousands)
|
|||||||
|
Non-accrual loans
|
$
|
19,973
|
$
|
32,929
|
||||
|
|
||||||||
|
Loans 90 days or more past due and still accruing interest
|
131
|
7
|
||||||
|
Total non-performing loans
|
20,104
|
32,936
|
||||||
|
Other real estate and repossessed assets
|
17,790
|
26,133
|
||||||
|
Total non-performing assets
|
$
|
37,894
|
$
|
59,069
|
||||
|
As a percent of Portfolio Loans
|
||||||||
|
Non-performing loans
|
1.45
|
%
|
2.32
|
%
|
||||
|
Allowance for loan losses
|
2.65
|
3.12
|
||||||
|
Non-performing assets to total assets
|
1.78
|
2.92
|
||||||
|
Allowance for loan losses as a percent of non-performing loans
|
182.98
|
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")
|
||||||||||||
|
|
||||||||||||
|
|
June 30, 2013
|
|||||||||||
|
|
Commercial
|
Retail
|
Total
|
|||||||||
|
|
(In thousands)
|
|||||||||||
|
Performing TDR's
|
$
|
42,543
|
$
|
83,187
|
$
|
125,730
|
||||||
|
Non-performing TDR's (1)
|
3,298
|
6,470
|
(2)
|
9,768
|
||||||||
|
Total
|
$
|
45,841
|
$
|
89,657
|
$
|
135,498
|
||||||
|
|
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. |
10
|
Allowance for loan losses
|
Six months ended
|
|||||||||||||||
|
|
June 30,
|
|||||||||||||||
| 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
|
(2,798
|
)
|
-
|
6,187
|
-
|
|||||||||||
|
Recoveries credited to allowance
|
5,409
|
-
|
3,231
|
-
|
||||||||||||
|
Loans charged against the allowance
|
(10,100
|
)
|
-
|
(16,175
|
)
|
-
|
||||||||||
|
Reclassification to loans held for sale
|
-
|
(781
|
)
|
|||||||||||||
|
Additions (deductions) included in non-interest expense
|
-
|
29
|
-
|
(59
|
)
|
|||||||||||
|
Balance at end of period
|
$
|
36,786
|
$
|
627
|
$
|
51,346
|
$
|
1,227
|
||||||||
|
|
||||||||||||||||
|
Net loans charged against the allowance to average Portfolio Loans
|
0.68
|
%
|
1.69
|
%
|
||||||||||||
Alternative Sources of Funds
|
|
June 30,
|
December 31,
|
|||||||||||||||||||
|
|
2013 | 2012 | |||||||||||||||||||
|
|
Average
|
Average
|
|||||||||||||||||||
|
|
Amount
|
Maturity
|
Rate
|
Amount
|
Maturity
|
Rate
|
|||||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||
|
Brokered CDs
|
$
|
13,225
|
0.5 years
|
1.29
|
%
|
$
|
14,591
|
0.6 years
|
1.70
|
%
|
|||||||||||
|
Fixed-rate FHLB advances
|
17,500
|
4.0 years
|
6.37
|
17,622
|
4.5 years
|
6.38
|
|||||||||||||||
|
Variable-rate FHLB advances
|
-
|
|
-
|
||||||||||||||||||
|
Total
|
$
|
30,725
|
2.5 years
|
4.19
|
%
|
$
|
32,213
|
2.7 years
|
4.26
|
%
|
|||||||||||
|
Capitalization
|
||||||||
|
|
June 30,
|
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
|
86,455
|
84,204
|
||||||
|
Common stock
|
255,114
|
251,237
|
||||||
|
Accumulated deficit
|
(125,464
|
)
|
(192,408
|
)
|
||||
|
Accumulated other comprehensive loss
|
(7,270
|
)
|
(8,058
|
)
|
||||
|
Total shareholders' equity
|
208,835
|
134,975
|
||||||
|
Total capitalization
|
$
|
257,503
|
$
|
183,643
|
||||
11
|
Non-Interest Income
|
||||||||||||||||||||
|
|
Three months ended
|
Six months ended
|
||||||||||||||||||
|
|
June 30,
|
March 31,
|
June 30,
|
June 30,
|
||||||||||||||||
|
|
2013
|
2013
|
2012
|
2013
|
2012
|
|||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||
|
Service charges on deposit accounts
|
$
|
3,583
|
$
|
3,406
|
$
|
4,552
|
$
|
6,989
|
$
|
8,753
|
||||||||||
|
Interchange income
|
1,933
|
1,757
|
2,407
|
3,690
|
4,729
|
|||||||||||||||
|
Net gains (losses) on assets
|
||||||||||||||||||||
|
Mortgage loans
|
3,208
|
3,637
|
3,579
|
6,845
|
7,439
|
|||||||||||||||
|
Securities
|
107
|
84
|
169
|
191
|
853
|
|||||||||||||||
|
Other than temporary impairment loss on securities
|
||||||||||||||||||||
|
Total impairment loss
|
(26
|
)
|
-
|
(85
|
)
|
(26
|
)
|
(262
|
)
|
|||||||||||
|
Loss recognized in other comprehensive income
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Net impairment loss recognized in earnings
|
(26
|
)
|
-
|
(85
|
)
|
(26
|
)
|
(262
|
)
|
|||||||||||
|
Mortgage loan servicing
|
1,654
|
622
|
(1,088
|
)
|
2,276
|
(352
|
)
|
|||||||||||||
|
Investment and insurance commissions
|
383
|
450
|
648
|
833
|
1,095
|
|||||||||||||||
|
Bank owned life insurance
|
337
|
338
|
399
|
675
|
823
|
|||||||||||||||
|
Title insurance fees
|
368
|
484
|
489
|
852
|
997
|
|||||||||||||||
|
(Increase) decrease in fair value of U.S.
|
||||||||||||||||||||
|
Treasury warrant
|
20
|
(1,045
|
)
|
(25
|
)
|
(1,025
|
)
|
(179
|
)
|
|||||||||||
|
Other
|
1,444
|
1,335
|
1,997
|
2,779
|
3,730
|
|||||||||||||||
|
Total non-interest income
|
$
|
13,011
|
$
|
11,068
|
$
|
13,042
|
$
|
24,079
|
$
|
27,626
|
||||||||||
|
Capitalized Mortgage Loan Servicing Rights
|
||||||||||||||||
|
|
Three months ended
June 30,
|
Six months ended
June 30,
|
||||||||||||||
|
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
|
|
(In thousands)
|
|||||||||||||||
|
Balance at beginning of period
|
$
|
11,590
|
$
|
11,795
|
$
|
11,013
|
$
|
11,229
|
||||||||
|
Originated servicing rights capitalized
|
860
|
1,028
|
1,889
|
1,952
|
||||||||||||
|
Amortization
|
(1,108
|
)
|
(1,237
|
)
|
(2,318
|
)
|
(2,299
|
)
|
||||||||
|
Change in valuation allowance
|
1,695
|
(935
|
)
|
2,453
|
(231
|
)
|
||||||||||
|
Balance at end of period
|
$
|
13,037
|
$
|
10,651
|
$
|
13,037
|
$
|
10,651
|
||||||||
|
Valuation allowance at end of period
|
$
|
3,634
|
$
|
6,775
|
$
|
3,634
|
$
|
6,775
|
||||||||
Mortgage Loan Activity
|
|
Three months ended
|
Six months ended
|
||||||||||||||||||
|
|
June 30,
|
March 31,
|
June 30,
|
June 30,
|
||||||||||||||||
|
|
2013
|
2013
|
2012
|
2013
|
2012
|
|||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||
|
Mortgage loans originated
|
$
|
121,054
|
$
|
128,732
|
$
|
136,835
|
$
|
249,786
|
$
|
249,633
|
||||||||||
|
Mortgage loans sold
|
112,873
|
130,456
|
127,013
|
243,329
|
239,154
|
|||||||||||||||
|
Mortgage loans sold with servicing rights released
|
15,696
|
14,537
|
22,555
|
30,233
|
37,895
|
|||||||||||||||
|
Net gains on the sale of mortgage loans
|
3,208
|
3,637
|
3,579
|
6,845
|
7,439
|
|||||||||||||||
|
Net gains as a percent of mortgage loans sold ("Loan Sales Margin")
|
2.84
|
%
|
2.79
|
%
|
2.82
|
%
|
2.81
|
%
|
3.11
|
%
|
||||||||||
|
Fair value adjustments included in the Loan Sales Margin
|
(0.13
|
)
|
(0.74
|
)
|
0.19
|
(0.46
|
)
|
0.53
|
||||||||||||
12
|
Non-Interest Expense
|
||||||||||||||||||||
|
|
Three months ended
|
Six months ended
|
||||||||||||||||||
|
|
June 30,
|
March 31,
|
June 30,
|
June 30,
|
||||||||||||||||
|
|
2013
|
2013
|
2012
|
2013
|
2012
|
|||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||
|
Compensation
|
$
|
8,346
|
$
|
8,205
|
$
|
9,551
|
$
|
16,551
|
$
|
19,496
|
||||||||||
|
Performance-based compensation
|
1,520
|
1,062
|
1,735
|
2,582
|
1,820
|
|||||||||||||||
|
Payroll taxes and employee benefits
|
1,849
|
2,040
|
2,220
|
3,889
|
4,672
|
|||||||||||||||
|
Compensation and employee benefits
|
11,715
|
11,307
|
13,506
|
23,022
|
25,988
|
|||||||||||||||
|
Occupancy, net
|
2,147
|
2,424
|
2,490
|
4,571
|
5,206
|
|||||||||||||||
|
Data processing
|
2,042
|
1,916
|
2,003
|
3,958
|
3,936
|
|||||||||||||||
|
Loan and collection
|
1,702
|
2,226
|
2,407
|
3,928
|
5,297
|
|||||||||||||||
|
Vehicle service contract counterparty contingencies
|
3,127
|
127
|
326
|
3,254
|
797
|
|||||||||||||||
|
Furniture, fixtures and equipment
|
1,088
|
1,032
|
1,211
|
2,120
|
2,407
|
|||||||||||||||
|
Communications
|
730
|
780
|
922
|
1,510
|
1,895
|
|||||||||||||||
|
Legal and professional fees
|
664
|
692
|
1,268
|
1,356
|
2,165
|
|||||||||||||||
|
FDIC deposit insurance
|
711
|
630
|
816
|
1,341
|
1,673
|
|||||||||||||||
|
Advertising
|
659
|
570
|
639
|
1,229
|
1,195
|
|||||||||||||||
|
Provision for loss reimbursement on sold loans
|
356
|
663
|
126
|
1,019
|
558
|
|||||||||||||||
|
Net losses on other real estate and repossessed assets
|
320
|
652
|
633
|
972
|
1,620
|
|||||||||||||||
|
Interchange expense
|
418
|
410
|
447
|
828
|
853
|
|||||||||||||||
|
Credit card and bank service fees
|
331
|
334
|
624
|
665
|
1,275
|
|||||||||||||||
|
Supplies
|
244
|
250
|
340
|
494
|
734
|
|||||||||||||||
|
Amortization of intangible assets
|
203
|
203
|
272
|
406
|
544
|
|||||||||||||||
|
Cost (recoveries) related to unfunded lending commitments
|
48
|
(19
|
)
|
(12
|
)
|
29
|
(59
|
)
|
||||||||||||
|
Other
|
1,237
|
1,276
|
1,465
|
2,513
|
1,448
|
|||||||||||||||
|
Total non-interest expense
|
$
|
27,742
|
$
|
25,473
|
$
|
29,483
|
$
|
53,215
|
$
|
57,532
|
||||||||||
13
Average Balances and Tax Equivalent Rates
|
|
Three Months Ended
|
|||||||||||||||||||||||
|
|
June 30,
|
|||||||||||||||||||||||
|
|
2013 | 2012 | ||||||||||||||||||||||
|
|
Average
|
Average
|
||||||||||||||||||||||
|
|
Balance
|
Interest
|
Rate(3)
|
Balance
|
Interest
|
Rate(3)
|
||||||||||||||||||
|
Assets (1)
|
(Dollars in thousands)
|
|||||||||||||||||||||||
|
Taxable loans
|
$
|
1,413,738
|
$
|
20,243
|
5.74
|
%
|
$
|
1,556,478
|
$
|
23,623
|
6.09
|
%
|
||||||||||||
|
Tax-exempt loans (2, 3)
|
5,684
|
92
|
6.49
|
7,085
|
112
|
6.36
|
||||||||||||||||||
|
Taxable securities
|
283,321
|
993
|
1.41
|
261,554
|
933
|
1.43
|
||||||||||||||||||
|
Tax-exempt securities (2, 3)
|
27,053
|
369
|
5.47
|
26,431
|
383
|
5.83
|
||||||||||||||||||
|
Cash – interest bearing
|
146,132
|
84
|
0.23
|
306,329
|
196
|
0.26
|
||||||||||||||||||
|
Other investments
|
21,481
|
240
|
4.48
|
20,564
|
186
|
3.64
|
||||||||||||||||||
|
Interest Earning Assets
|
1,897,409
|
22,021
|
4.65
|
2,178,441
|
25,433
|
4.69
|
||||||||||||||||||
|
Cash and due from banks
|
42,943
|
51,470
|
||||||||||||||||||||||
|
Other assets, net
|
140,288
|
163,096
|
||||||||||||||||||||||
|
Total Assets
|
$
|
2,080,640
|
$
|
2,393,007
|
||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Liabilities
|
||||||||||||||||||||||||
|
Savings and interest-bearing checking
|
$
|
906,655
|
288
|
0.13
|
$
|
1,080,130
|
486
|
0.18
|
||||||||||||||||
|
Time deposits
|
422,406
|
1,175
|
1.12
|
571,088
|
1,819
|
1.28
|
||||||||||||||||||
|
Other borrowings
|
67,771
|
876
|
5.18
|
69,826
|
1,120
|
6.45
|
||||||||||||||||||
|
Interest Bearing Liabilities
|
1,396,832
|
2,339
|
0.67
|
1,721,044
|
3,425
|
0.80
|
||||||||||||||||||
|
Non-interest bearing deposits
|
493,932
|
523,647
|
||||||||||||||||||||||
|
Other liabilities
|
39,685
|
39,630
|
||||||||||||||||||||||
|
Shareholders' equity
|
150,191
|
108,686
|
||||||||||||||||||||||
|
Total liabilities and shareholders' equity
|
$
|
2,080,640
|
$
|
2,393,007
|
||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Net Interest Income
|
$
|
19,682
|
$
|
22,008
|
||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Net Interest Income as a Percent of Average Interest Earning Assets
|
4.16
|
%
|
4.06
|
%
|
||||||||||||||||||||
| (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. |
14
Average Balances and Tax Equivalent Rates
|
|
Six Months Ended
|
|||||||||||||||||||||||
|
|
June 30,
|
|||||||||||||||||||||||
|
|
2013 | 2012 | ||||||||||||||||||||||
|
|
Average
|
Average
|
||||||||||||||||||||||
|
|
Balance
|
Interest
|
Rate(3)
|
Balance
|
Interest
|
Rate(3)
|
||||||||||||||||||
|
Assets (1)
|
(Dollars in thousands)
|
|||||||||||||||||||||||
|
Taxable loans
|
$
|
1,425,078
|
$
|
40,892
|
5.77
|
%
|
$
|
1,569,460
|
$
|
47,893
|
6.13
|
%
|
||||||||||||
|
Tax-exempt loans (2, 3)
|
5,783
|
186
|
6.49
|
7,162
|
229
|
6.43
|
||||||||||||||||||
|
Taxable securities
|
241,829
|
1,663
|
1.39
|
223,176
|
1,591
|
1.43
|
||||||||||||||||||
|
Tax-exempt securities (2, 3)
|
25,635
|
731
|
5.75
|
26,788
|
822
|
6.17
|
||||||||||||||||||
|
Cash – interest bearing
|
165,988
|
204
|
0.25
|
312,452
|
395
|
0.25
|
||||||||||||||||||
|
Other investments
|
21,161
|
452
|
4.31
|
20,696
|
383
|
3.72
|
||||||||||||||||||
|
Interest Earning Assets
|
1,885,474
|
44,128
|
4.71
|
2,159,734
|
51,313
|
4.77
|
||||||||||||||||||
|
Cash and due from banks
|
44,256
|
53,776
|
||||||||||||||||||||||
|
Other assets, net
|
140,942
|
163,608
|
||||||||||||||||||||||
|
Total Assets
|
$
|
2,070,672
|
$
|
2,377,118
|
||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Liabilities
|
||||||||||||||||||||||||
|
Savings and interest-bearing checking
|
$
|
900,535
|
570
|
0.13
|
$
|
1,067,013
|
958
|
0.18
|
||||||||||||||||
|
Time deposits
|
423,057
|
2,422
|
1.15
|
574,028
|
3,771
|
1.32
|
||||||||||||||||||
|
Other borrowings
|
67,786
|
1,741
|
5.18
|
76,605
|
2,292
|
6.02
|
||||||||||||||||||
|
Interest Bearing Liabilities
|
1,391,378
|
4,733
|
0.69
|
1,717,646
|
7,021
|
0.82
|
||||||||||||||||||
|
Non-interest bearing deposits
|
493,942
|
513,833
|
||||||||||||||||||||||
|
Other liabilities
|
40,340
|
39,442
|
||||||||||||||||||||||
|
Shareholders' equity
|
145,012
|
106,197
|
||||||||||||||||||||||
|
Total liabilities and shareholders' equity
|
$
|
2,070,672
|
$
|
2,377,118
|
||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Net Interest Income
|
$
|
39,395
|
$
|
44,292
|
||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Net Interest Income as a Percent of Average Interest Earning Assets
|
4.20
|
%
|
4.12
|
%
|
||||||||||||||||||||
| (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. |
15
|
Commercial Loan Portfolio Analysis as of June 30, 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
|
$
|
11,285
|
$
|
1,358
|
$
|
1,136
|
$
|
2,494
|
22.1
|
%
|
||||||||||
|
Land Development
|
12,748
|
3,662
|
638
|
4,300
|
33.7
|
|||||||||||||||
|
Construction
|
15,368
|
749
|
-
|
749
|
4.9
|
|||||||||||||||
|
Income Producing
|
234,780
|
35,476
|
1,700
|
37,176
|
15.8
|
|||||||||||||||
|
Owner Occupied
|
204,223
|
25,406
|
1,192
|
26,598
|
13.0
|
|||||||||||||||
|
Total Commercial Real Estate Loans (1)
|
$
|
478,404
|
$
|
66,651
|
4,666
|
$
|
71,317
|
14.9
|
||||||||||||
|
|
||||||||||||||||||||
|
Other Commercial Loans(1)
|
$
|
138,646
|
$
|
14,766
|
319
|
$
|
15,085
|
10.9
|
||||||||||||
|
Total non-performing commercial loans
|
$
|
4,985
|
||||||||||||||||||
| (1) | The total of these two categories is different than the June 30, 2013, Consolidated Statement of Financial Condition due primarily to loans in process. |
16