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

Attached files

file	filename
8-K - INDEPENDENT BANK CORPORATION 8-K 7-27-2015 - INDEPENDENT BANK CORP /MI/	form8k.htm
EX-99.3 - EXHIBIT 99.3 - INDEPENDENT BANK CORP /MI/	ex99_3.htm
EX-99.1 - 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, 2015			December 31, 2014
	(Dollars in thousands)
Non-accrual loans	$	12,274		$	15,231
Loans 90 days or more past due and still accruing interest		63			7
Total non-performing loans		12,337			15,238
Other real estate and repossessed assets		4,471			6,454
Total non-performing assets	$	16,808		$	21,692

As a percent of Portfolio Loans
Non-performing loans		0.85	%		1.08	%
Allowance for loan losses		1.70			1.84
Non-performing assets to total assets		0.73			0.96
Allowance for loan losses as a percent of non-performing loans		199.29			170.56

(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, 2015
	Commercial		Retail			Total
	(In thousands)
Performing TDR's	$	27,540	$	70,576		$	98,116
Non-performing TDR's(1)		1,698		4,513	⁽²⁾		6,211
Total	$	29,238	$	75,089		$	104,327

	December 31, 2014
	Commercial		Retail			Total
	(In thousands)
Performing TDR's	$	29,475	$	73,496		$	102,971
Non-performing TDR's(1)		1,978		5,225	⁽²⁾		7,203
Total	$	31,453	$	78,721		$	110,174

(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,
	2015					2014
	Loans			Unfunded Commitments		Loans			Unfunded Commitments
	(Dollars in thousands)
Balance at beginning of period	$	25,990		$	539	$	32,325		$	508
Additions (deductions)
Provision for loan losses		(793	)		-		(1,417	)		-
Recoveries credited to allowance		2,245			-		3,959			-
Loans charged against the allowance		(2,856	)		-		(6,670	)		-
Additions (deductions) included in non-interest expense		-			20		-			15
Balance at end of period	$	24,586		$	559	$	28,197		$	523

Net loans charged against the allowance to average Portfolio Loans (annualized)		0.09	%				0.40	%

Capitalization

	June 30, 2015			December 31, 2014
	(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		349,580			352,462
Accumulated deficit		(89,815	)		(96,455	)
Accumulated other comprehensive loss		(5,390	)		(5,636	)
Total shareholders’ equity		254,375			250,371
Total capitalization	$	288,875		$	284,871

Non-Interest Income

	Three months ended								Six months ended
	June 30,			March 31,			June 30,		June 30,
	2015			2015			2014		2015		2014
	(In thousands)
Service charges on deposit accounts	$	3,117		$	2,850		$	3,532	$	5,967	$	6,587
Interchange income		2,240			2,142			2,067		4,382		4,008
Net gains (losses) on assets
Mortgage loans		1,784			2,139			1,505		3,923		2,649
Securities		(33	)		85			54		52		166
Mortgage loan servicing		1,452			(420	)		193		1,032		457
Investment and insurance commissions		487			446			499		933		901
Bank owned life insurance		325			350			341		675		660
Title insurance fees		337			256			217		593		491
Other		1,278			1,114			1,668		2,392		3,112
Total non-interest income	$	10,987		$	8,962		$	10,076	$	19,949	$	19,031

Capitalized Mortgage Loan Servicing Rights

	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
	(In thousands)
Balance at beginning of period	$	11,318		$	13,273		$	12,106		$	13,710
Originated servicing rights capitalized		787			382			1,450			764
Amortization		(800	)		(665	)		(1,559	)		(1,199	)
Change in valuation allowance		1,230			(194	)		538			(479	)
Balance at end of period	$	12,535		$	12,796		$	12,535		$	12,796

Valuation allowance at end of period	$	3,235		$	3,334		$	3,235		$	3,334

Mortgage Loan Activity

	Three months ended									Six months ended
	June 30,			March 31,			June 30,			June 30,
	2015			2015			2014			2015			2014
	(Dollars in thousands)
Mortgage loans originated	$	101,306		$	79,790		$	65,430		$	181,096		$	109,671
Mortgage loans sold		82,167			68,727			46,965			150,894			94,083
Mortgage loans sold with servicing rights released		773			2,669			8,357			3,442			16,218
Net gains on the sale of mortgage loans		1,784			2,139			1,505			3,923			2,649
Net gains as a percent of mortgage loans sold ("Loan Sales Margin")		2.17	%		3.11	%		3.20	%		2.60	%		2.82	%
Fair value adjustments included in the Loan Sales Margin		(0.07	)		0.81			0.61			0.33			0.23

Non-Interest Expense

	Three months ended									Six months ended
	June 30,			March 31,			June 30,			June 30,
	2015			2015			2014			2015			2014
	(In thousands)
Compensation	$	8,131		$	8,330		$	8,439		$	16,461		$	16,747
Performance-based compensation		1,744			1,288			1,233			3,032			2,145
Payroll taxes and employee benefits		1,916			2,167			2,146			4,083			4,164
Compensation and employee benefits		11,791			11,785			11,818			23,576			23,056
Occupancy, net		2,040			2,419			2,153			4,459			4,636
Data processing		2,027			1,930			1,777			3,957			3,863
Loan and collection		967			1,155			1,427			2,122			2,892
Furniture, fixtures and equipment		965			952			1,053			1,917			2,122
Communications		694			736			711			1,430			1,500
Advertising		448			484			601			932			1,120
Legal and professional fees		453			380			420			833			821
FDIC deposit insurance		351			343			422			694			839
Interchange expense		289			291			342			580			744
Supplies		216			213			258			429			497
Credit card and bank service fees		203			202			245			405			508
Amortization of intangible assets		87			87			134			174			268
Vehicle service contract counterparty contingencies		30			29			73			59			141
Cost related to unfunded lending commitments		4			16			5			20			15
Provision for loss reimbursement on sold loans		45			(69	)		15			(24	)		(466	)
Net gains on other real estate and repossessed assets		(139	)		(39	)		(38	)		(178	)		(125	)
Other		1,108			1,237			1,144			2,345			2,529
Total non-interest expense	$	21,579		$	22,151		$	22,560		$	43,730		$	44,960

Average Balances and Tax Equivalent Rates

	Three Months Ended June 30,
	2015							2014
	Average Balance		Interest		Rate ⁽³⁾			Average Balance		Interest		Rate ⁽³⁾
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,449,218	$	17,707		4.90	%	$	1,373,429	$	18,094		5.28	%
Tax-exempt loans ⁽²⁾		4,198		67		6.40			5,092		80		6.30
Taxable securities		529,345		1,869		1.41			486,043		1,596		1.32
Tax-exempt securities⁽²⁾		31,397		341		4.34			42,849		439		4.11
Interest bearing cash and repurchase agreement		50,664		54		0.43			77,502		67		0.35
Other investments		18,145		235		5.19			23,414		261		4.47
Interest Earning Assets		2,082,967		20,273		3.90			2,008,329		20,537		4.10
Cash and due from banks		42,980							43,314
Other assets, net		167,499							186,342
Total Assets	$	2,293,446						$	2,237,985

Liabilities
Savings and interest-bearing checking	$	990,019		260		0.11		$	963,662		266		0.11
Time deposits		371,304		707		0.76			419,190		994		0.95
Other borrowings		47,986		463		3.87			56,503		559		3.97
Interest Bearing Liabilities		1,409,309		1,430		0.41			1,439,355		1,819		0.51
Non-interest bearing deposits		603,706							525,441
Other liabilities		25,948							33,568
Shareholders’ equity		254,483							239,621
Total liabilities and shareholders’ equity	$	2,293,446						$	2,237,985

Net Interest Income			$	18,843						$	18,718

Net Interest Income as a Percent of Average Interest Earning Assets						3.62	%						3.74	%

(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%

(2)	Annualized

Average Balances and Tax Equivalent Rates

	Six Months Ended June 30,
	2015							2014
	Average Balance		Interest		Rate ⁽³⁾			Average Balance		Interest		Rate ⁽³⁾
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,434,817	$	34,902		4.89	%	$	1,371,274	$	36,256		5.32	%
Tax-exempt loans ⁽²⁾		4,279		135		6.36			5,142		162		6.35
Taxable securities		517,941		3,627		1.40			464,035		2,979		1.29
Tax-exempt securities⁽²⁾		32,630		674		4.13			41,941		838		4.03
Interest bearing cash and repurchase agreement		62,850		124		0.40			93,093		158		0.34
Other investments		19,063		503		5.32			23,416		593		5.11
Interest Earning Assets		2,071,580		39,965		3.88			1,998,901		40,986		4.13
Cash and due from banks		44,500							44,370
Other assets, net		169,678							187,290
Total Assets	$	2,285,758						$	2,230,561

Liabilities
Savings and interest-bearing checking	$	987,763		526		0.11		$	955,026		529		0.11
Time deposits		374,115		1,448		0.78			431,343		2,024		0.95
Other borrowings		48,012		917		3.85			55,422		1,071		3.90
Interest Bearing Liabilities		1,409,890		2,891		0.41			1,441,791		3,624		0.51
Non-interest bearing deposits		596,935							518,491
Other liabilities		24,951							32,944
Shareholders’ equity		253,982							237,335
Total liabilities and shareholders’ equity	$	2,285,758						$	2,230,561

Net Interest Income			$	37,074						$	37,362

Net Interest Income as a Percent of Average Interest Earning Assets						3.60	%						3.76	%

(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, 2015

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

Land	$	8,358	$	1,849	$	342	$	2,191		26.2	%
Land Development		8,679		1,720		210		1,930		22.2
Construction		18,845		22		-		22		0.1
Income Producing		258,694		13,626		1,150		14,776		5.7
Owner Occupied		213,142		16,677		177		16,854		7.9
Total Commercial Real Estate Loans	$	507,718	$	33,894		1,879	$	35,773		7.0

Other Commercial Loans	$	203,289	$	23,427		2,354	$	25,781		12.7
Total non-performing commercial loans					$	4,233

INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - July 27, 2015

Attached files

INDEPENDENT BANK CORP /MI/ Reports