INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2

Attached files

file	filename
8-K - INDEPENDENT BANK CORPORATION 8-K 7-28-2014 - INDEPENDENT BANK CORP /MI/	form8k.htm
EX-99.1 - EXHIBIT 99.1 - INDEPENDENT BANK CORP /MI/	ex99_1.htm
EX-99.3 - EXHIBIT 99.3 - INDEPENDENT BANK CORP /MI/	ex99_3.htm

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Supplemental Data

Non-performing assets ⁽¹⁾
	June 30,			December 31,
	2014			2013
	(Dollars in thousands)
Non-accrual loans	$	17,219		$	17,905
Loans 90 days or more past due and still accruing interest		124			-
Total non-performing loans		17,343			17,905
Other real estate and repossessed assets		18,121			18,282
Total non-performing assets	$	35,464		$	36,187

As a percent of Portfolio Loans
Non-performing loans		1.26	%		1.30	%
Allowance for loan losses		2.05			2.35
Non-performing assets to total assets		1.58			1.64
Allowance for loan losses as a percent of non-performing loans		162.58			180.54

⁽¹⁾	Excludes loans classified as "trouble debt restructured" that are not past due and vehicle service contract counterparty receivables, net.

Troubled debt restructurings ("TDR")

	June 30, 2014
	Commercial		Retail			Total
	(In thousands)
Performing TDR's	$	31,678	$	77,044		$	108,722
Non-performing TDR's(1)		4,128		5,510	⁽²⁾		9,638
Total	$	35,806	$	82,554		$	118,360

	December 31, 2013
	Commercial		Retail			Total
	(In thousands)
Performing TDR's	$	35,134	$	79,753		$	114,887
Non-performing TDR's(1)		4,347		4,988	⁽²⁾		9,335
Total	$	39,481	$	84,741		$	124,222

(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.

Allowance for loan losses

	Six months ended
	June 30,
	2014					2013
				Unfunded					Unfunded
	Loans			Commitments		Loans			Commitments
	(Dollars in thousands)
Balance at beginning of period	$	32,325		$	508	$	44,275		$	598
Additions (deductions)
Provision for loan losses		(1,417	)		-		(2,798	)		-
Recoveries credited to allowance		3,959			-		5,409			-
Loans charged against the allowance		(6,670	)		-		(10,100	)		-
Additions (deductions) included in non-interest expense		-			15		-			29
Balance at end of period	$	28,197		$	523	$	36,786		$	627

Net loans charged against the allowance to average Portfolio Loans (annualized)		0.40	%				0.68	%

Capitalization

	June 30,			December 31,
	2014			2013
	(In thousands)
Subordinated debentures	$	40,723		$	40,723
Amount not qualifying as regulatory capital		(1,223	)		(1,223	)
Amount qualifying as regulatory capital		39,500			39,500
Shareholders’ equity
Common stock		351,791			351,173
Accumulated deficit		(102,532	)		(110,347	)
Accumulated other comprehensive loss		(6,298	)		(9,245	)
Total shareholders’ equity		242,961			231,581
Total capitalization	$	282,461		$	271,081

Non-Interest Income

	Three months ended							Six months ended
	June 30,		March 31,		June 30,			June 30,
	2014		2014		2013			2014		2013
	(In thousands)
Service charges on deposit accounts	$	3,532	$	3,055	$	3,583		$	6,587	$	6,989
Interchange income		2,067		1,941		1,933			4,008		3,690
Net gains (losses) on assets
Mortgage loans		1,505		1,144		3,208			2,649		6,845
Securities		54		112		107			166		191
Other than temporary impairment loss on securities
Total impairment loss		-		-		(26	)		-		(26	)
Loss recognized in other comprehensive income		-		-		-			-		-
Net impairment loss recognized in earnings		-		-		(26	)		-		(26	)
Mortgage loan servicing		193		264		1,654			457		2,276
Investment and insurance commissions		499		402		383			901		833
Bank owned life insurance		341		319		337			660		675
Title insurance fees		217		274		368			491		852
Decrease (increase) in fair value of U.S. Treasury warrant		-		-		20			-		(1,025	)
Other		1,668		1,444		1,444			3,112		2,779
Total non-interest income	$	10,076	$	8,955	$	13,011		$	19,031	$	24,079

Capitalized Mortgage Loan Servicing Rights

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
	(In thousands)
Balance at beginning of period	$	13,273		$	11,590		$	13,710		$	11,013
Originated servicing rights capitalized		382			860			764			1,889
Amortization		(665	)		(1,108	)		(1,199	)		(2,318	)
Change in valuation allowance		(194	)		1,695			(479	)		2,453
Balance at end of period	$	12,796		$	13,037		$	12,796		$	13,037

Valuation allowance at end of period	$	3,334		$	3,634		$	3,334		$	3,634

Mortgage Loan Activity

	Three months ended									Six months ended
	June 30,			March 31,			June 30,			June 30,
	2014			2014			2013			2014			2013
	(Dollars in thousands)
Mortgage loans originated	$	65,430		$	44,241		$	121,054		$	109,671		$	249,786
Mortgage loans sold		46,965			47,118			112,873			94,083			243,329
Mortgage loans sold with servicing rights released		8,357			7,861			15,696			16,218			30,233
Net gains on the sale of mortgage loans		1,505			1,144			3,208			2,649			6,845
Net gains as a percent of mortgage loans sold ("Loan Sales Margin")		3.20	%		2.43	%		2.84	%		2.82	%		2.81	%
Fair value adjustments included in the Loan Sales Margin		0.61			(0.14	)		(0.13	)		0.23			(0.46	)

Non-Interest Expense

	Three months ended								Six months ended
	June 30,			March 31,			June 30,		June 30,
	2014			2014			2013		2014			2013
	(In thousands)
Compensation	$	8,439		$	8,308		$	8,346	$	16,747		$	16,551
Performance-based compensation		1,233			912			1,520		2,145			2,582
Payroll taxes and employee benefits		2,146			2,018			1,849		4,164			3,889
Compensation and employee benefits		11,818			11,238			11,715		23,056			23,022
Occupancy, net		2,153			2,483			2,147		4,636			4,571
Data processing		1,777			2,086			2,042		3,863			3,958
Loan and collection		1,427			1,465			1,702		2,892			3,928
Furniture, fixtures and equipment		1,053			1,069			1,088		2,122			2,120
Communications		711			789			730		1,500			1,510
Advertising		601			519			659		1,120			1,229
FDIC deposit insurance		422			417			711		839			1,341
Legal and professional fees		420			401			664		821			1,356
Interchange expense		342			402			418		744			828
Credit card and bank service fees		245			263			331		508			665
Supplies		258			239			244		497			494
Amortization of intangible assets		134			134			203		268			406
Vehicle service contract counterparty contingencies		73			68			3,127		141			3,254
Cost related to unfunded lending commitments		5			10			48		15			29
Provision for loss reimbursement on sold loans		15			(481	)		356		(466	)		1,019
Net (gains) losses on other real estate and repossessed assets		(38	)		(87	)		320		(125	)		972
Other		1,144			1,385			1,237		2,529			2,513
Total non-interest expense	$	22,560		$	22,400		$	27,742	$	44,960		$	53,215

Average Balances and Tax Equivalent Rates

	Three Months Ended
	June 30,
			2014							2013
	Average							Average
	Balance		Interest		Rate ⁽³⁾			Balance		Interest		Rate ⁽³⁾
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,373,429	$	18,094		5.28	%	$	1,413,738	$	20,243		5.74	%
Tax-exempt loans ⁽²⁾		5,092		80		6.30			5,684		92		6.49
Taxable securities		486,043		1,596		1.32			283,321		993		1.41
Tax-exempt securities⁽²⁾		42,849		439		4.11			27,053		369		5.47
Interest bearing cash and repurchase agreement		77,502		67		0.35			146,132		84		0.23
Other investments		23,414		261		4.47			21,481		240		4.48
Interest Earning Assets		2,008,329		20,537		4.10			1,897,409		22,021		4.65
Cash and due from banks		43,314							42,943
Other assets, net		186,342							140,288
Total Assets	$	2,237,985						$	2,080,640

Liabilities
Savings and interest-bearing checking	$	963,662		266		0.11		$	906,655		288		0.13
Time deposits		419,190		994		0.95			422,406		1,175		1.12
Other borrowings		56,503		559		3.97			67,771		876		5.18
Interest Bearing Liabilities		1,439,355		1,819		0.51			1,396,832		2,339		0.67
Non-interest bearing deposits		525,441							493,932
Other liabilities		33,568							39,685
Shareholders’ equity		239,621							150,191
Total liabilities and shareholders’ equity	$	2,237,985						$	2,080,640

Net Interest Income			$	18,718						$	19,682

Net Interest Income as a Percent of Average Interest Earning Assets						3.74	%						4.16	%

(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

Average Balances and Tax Equivalent Rates

	Six Months Ended
	June 30,
			2014							2013
	Average							Average
	Balance		Interest		Rate ⁽³⁾			Balance		Interest		Rate ⁽³⁾
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,371,274	$	36,256		5.32	%	$	1,425,078	$	40,892		5.77	%
Tax-exempt loans ⁽²⁾		5,142		162		6.35			5,783		186		6.49
Taxable securities		464,035		2,979		1.29			241,829		1,663		1.39
Tax-exempt securities⁽²⁾		41,941		838		4.03			25,635		731		5.75
Interest bearing cash and repurchase agreement		93,093		158		0.34			165,988		204		0.25
Other investments		23,416		593		5.11			21,161		452		4.31
Interest Earning Assets		1,998,901		40,986		4.13			1,885,474		44,128		4.71
Cash and due from banks		44,370							44,256
Other assets, net		187,290							140,942
Total Assets	$	2,230,561						$	2,070,672

Liabilities
Savings and interest-bearing checking	$	955,026		529		0.11		$	900,535		570		0.13
Time deposits		431,343		2,024		0.95			423,057		2,422		1.15
Other borrowings		55,422		1,071		3.90			67,786		1,741		5.18
Interest Bearing Liabilities		1,441,791		3,624		0.51			1,391,378		4,733		0.69
Non-interest bearing deposits		518,491							493,942
Other liabilities		32,944							40,340
Shareholders’ equity		237,335							145,012
Total liabilities and shareholders’ equity	$	2,230,561						$	2,070,672

Net Interest Income			$	37,362						$	39,395

Net Interest Income as a Percent of Average Interest Earning Assets						3.76	%						4.20	%

(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

Commercial Loan Portfolio Analysis as of June 30, 2014

	Total Commercial Loans
			Watch Credits						Percent of Loan Category in Watch Credit
Loan Category	All Loans		Performing		Non-performing		Total		Percent of Loan Category in Watch Credit

Land	$	9,184	$	1,625	$	413	$	2,038		22.2	%
Land Development		12,709		7,322		274		7,596		59.8
Construction		12,057		936		-		936		7.8
Income Producing		242,032		15,932		1,454		17,386		7.2
Owner Occupied		202,442		18,696		2,034		20,730		10.2
Total Commercial Real Estate Loans	$	478,424	$	44,511		4,175	$	48,686		10.2

Other Commercial Loans	$	175,824	$	12,398		932	$	13,330		7.6
Total non-performing commercial loans					$	5,107

Attached files

INDEPENDENT BANK CORP /MI/ Reports

Also read

INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - July 28, 2014

Attached files

INDEPENDENT BANK CORP /MI/ Reports

Also read