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

Attached files

file	filename
8-K - INDEPENDENT BANK CORPORATION 8-K 1-25-2016 - 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⁾

	December 31,
	2015			2014
	(Dollars in thousands)
Non-accrual loans	$	10,607		$	15,231
Loans 90 days or more past due and still accruing interest		116			7
Total non-performing loans		10,723			15,238
Other real estate and repossessed assets		7,150			6,454
Total non-performing assets	$	17,873		$	21,692

As a percent of Portfolio Loans
Non-performing loans		0.71	%		1.08	%
Allowance for loan losses		1.49			1.84
Non-performing assets to total assets		0.74			0.96
Allowance for loan losses as a percent of non-performing loans		210.48			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")

	December 31, 2015
	Commercial		Retail			Total
	(In thousands)
Performing TDR's	$	13,318	$	68,194		$	81,512
Non-performing TDR's(1)		3,041		3,777	⁽²⁾		6,818
Total	$	16,359	$	71,971		$	88,330

	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

	Twelve months ended December 31,
	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		(2,714	)		-		(3,136	)		-
Recoveries credited to allowance		5,022			-		7,420			-
Loans charged against the allowance		(5,728	)		-		(10,619	)		-
Additions (deductions) included in non-interest expense		-			113		-			31
Balance at end of period	$	22,570		$	652	$	25,990		$	539

Net loans charged against the allowance to average Portfolio Loans (annualized)		0.05	%				0.23	%

Capitalization

	December 31,
	2015			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		339,462			352,462
Accumulated deficit		(82,334	)		(96,455	)
Accumulated other comprehensive loss		(6,036	)		(5,636	)
Total shareholders’ equity		251,092			250,371
Total capitalization	$	285,592		$	284,871

Non-Interest Income

	Three months ended									Twelve months ended
	December 31,			September 30,			December 31,			December 31,
	2015			2015			2014			2015		2014
	(In thousands)
Service charges on deposit accounts	$	3,128		$	3,294		$	3,280		$	12,389	$	13,446
Interchange income		1,930			2,169			2,172			8,481		8,164
Net gains (losses) on assets
Mortgage loans		1,713			1,812			1,489			7,448		5,628
Securities		(77	)		45			(5	)		20		329
Other than temporary impairment loss on securities
Total impairment loss		-			-			-			-		(9	)
Loss recognized in other comprehensive income (loss)		-			-			-			-		-
Net impairment loss recognized in earnings		-			-			-			-		(9	)
Mortgage loan servicing		1,275			(556	)		(598	)		1,751		791
Investment and insurance commissions		447			447			509			1,827		1,814
Bank owned life insurance		303			304			350			1,282		1,371
Title insurance fees		282			281			261			1,156		995
Net gain on branch sale		-			1,193			-			1,193		-
Gain on extinguishment of debt		-			-			500			-		500
Other		1,061			1,130			1,243			4,583		5,746
Total non-interest income	$	10,062		$	10,119		$	9,201		$	40,130	$	38,775

Capitalized Mortgage Loan Servicing Rights

	Three months ended December 31,						Tweleve months ended December 31,
	2015			2014			2015			2014
	(In thousands)
Balance at beginning of period	$	11,630		$	13,180		$	12,106		$	13,710
Originated servicing rights capitalized		569			570			2,697			1,823
Amortization		(609	)		(682	)		(2,868	)		(2,509	)
Change in valuation allowance		846			(962	)		501			(918	)
Balance at end of period	$	12,436		$	12,106		$	12,436		$	12,106

Valuation allowance at end of period	$	3,272		$	3,773		$	3,272		$	3,773

Mortgage Loan Activity

	Three months ended									Twelve months ended
	December 31,			September 30,			December 31,			December 31,
	2015			2015			2014			2015			2014
	(Dollars in thousands)
Mortgage loans originated	$	75,874		$	79,648		$	78,322		$	336,618		$	265,494
Mortgage loans sold		59,537			71,063			67,490			281,494			223,580
Mortgage loans sold with servicing rights released		583			872			10,029			4,897			37,476
Net gains on the sale of mortgage loans		1,713			1,812			1,489			7,448			5,628
Net gains as a percent of mortgage loans sold ("Loan Sales Margin")		2.88	%		2.55	%		2.21	%		2.65	%		2.52	%
Fair value adjustments included in the Loan Sales Margin		(0.03	)		(0.05	)		(0.18	)		0.16			0.01

Non-Interest Expense

	Three months ended									Twelve months ended
	December 31,			September 30,			December 31,			December 31,
	2015			2015			2014			2015			2014
	(In thousands)
Compensation	$	8,466		$	8,419		$	8,512		$	33,346		$	33,833
Performance-based compensation		2,128			1,572			1,806			6,732			5,154
Payroll taxes and employee benefits		1,987			2,038			2,129			8,108			8,234
Compensation and employee benefits		12,581			12,029			12,447			48,186			47,221
Occupancy, net		1,970			1,940			2,197			8,369			8,912
Data processing		1,986			2,001			1,879			7,944			7,532
Furniture, fixtures and equipment		977			998			1,010			3,892			4,137
Loan and collection		671			816			1,109			3,609			5,392
Communications		773			754			714			2,957			2,926
Advertising		783			406			646			2,121			2,193
Legal and professional fees		661			519			589			2,013			1,969
FDIC deposit insurance		322			350			332			1,366			1,567
Interchange expense		266			279			179			1,125			1,291
Supplies		190			190			247			809			993
Credit card and bank service fees		195			197			212			797			946
Amortization of intangible assets		87			86			134			347			536
Vehicle service contract counterparty contingencies		30			30			30			119			199
Cost related to unfunded lending commitments		67			26			4			113			31
Provision for loss reimbursement on sold loans		-			(35	)		-			(59	)		(466	)
Net (gains) losses on other real estate and repossessed assets		(7	)		5			(90	)		(180	)		(500	)
Other		1,289			1,288			1,268			4,922			5,072
Total non-interest expense	$	22,841		$	21,879		$	22,907		$	88,450		$	89,951

Average Balances and Tax Equivalent Rates

	Three Months Ended December 31,
	2015							2014
	Average Balance		Interest		Rate ⁽³⁾			Average Balance		Interest		Rate ⁽³⁾
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,489,086	$	18,034		4.82	%	$	1,401,597	$	17,597		5.00	%
Tax-exempt loans ⁽²⁾		3,601		57		6.28			4,478		71		6.29
Taxable securities		561,216		2,277		1.62			490,525		1,718		1.39
Tax-exempt securities⁽²⁾		37,745		367		3.89			36,361		242		2.64
Interest bearing cash and repurchase agreement		71,585		81		0.45			74,551		63		0.34
Other investments		15,391		197		5.08			22,766		261		4.55
Interest Earning Assets		2,178,624		21,013		3.84			2,030,278		19,952		3.91
Cash and due from banks		44,884							45,444
Other assets, net		161,951							174,349
Total Assets	$	2,385,459						$	2,250,071

Liabilities
Savings and interest- bearing checking	$	988,234		264		0.11		$	947,995		265		0.11
Time deposits		424,020		784		0.73			389,855		913		0.93
Other borrowings		47,583		465		3.88			62,787		612		3.87
Interest Bearing Liabilities		1,459,837		1,513		0.41			1,400,637		1,790		0.51
Non-interest bearing deposits		648,924							571,128
Other liabilities		25,575							28,259
Shareholders’ equity		251,123							250,047
Total liabilities and shareholders’ equity	$	2,385,459						$	2,250,071

Net Interest Income			$	19,500						$	18,162

Net Interest Income as a Percent of Average Interest Earning Assets						3.56	%						3.56	%

(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

	Twelve Months Ended December 31,
	2015							2014
	Average Balance		Interest		Rate			Average Balance		Interest		Rate
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,457,508	$	70,770		4.86	%	$	1,383,883	$	71,621		5.18	%
Tax-exempt loans ⁽²⁾		3,972		246		6.19			4,889		310		6.34
Taxable securities		529,571		7,805		1.47			475,917		6,341		1.33
Tax-exempt securities⁽²⁾		34,039		1,388		4.08			40,200		1,510		3.76
Interest bearing cash and repurchase agreement		66,595		275		0.41			84,244		282		0.33
Other investments		17,171		925		5.39			23,252		1,118		4.81
Interest Earning Assets		2,108,856		81,409		3.86			2,012,385		81,182		4.03
Cash and due from banks		44,842							45,213
Other assets, net		166,363							182,099
Total Assets	$	2,320,061						$	2,239,697

Liabilities
Savings and interest- bearing checking	$	988,504		1,056		0.11		$	951,745		1,064		0.11
Time deposits		386,035		2,953		0.76			413,729		3,903		0.94
Other borrowings		47,842		1,847		3.86			60,225		2,332		3.87
Interest Bearing Liabilities		1,422,381		5,856		0.41			1,425,699		7,299		0.51
Non-interest bearing deposits		619,206							540,107
Other liabilities		24,840							31,247
Shareholders’ equity		253,634							242,644
Total liabilities and shareholders’ equity	$	2,320,061						$	2,239,697

Net Interest Income			$	75,553						$	73,883

Net Interest Income as a Percent of Average Interest Earning Assets						3.58	%						3.67	%

(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%

Commercial Loan Portfolio Analysis as of December 31, 2015

	Total Commercial Loans
			Watch Credits						Percent of Loan
Loan Category	All Loans		Performing		Non- performing		Total		Category in Watch Credit
	(Dollars in thousands)
Land	$	10,113	$	1,517	$	246	$	1,763		17.4	%
Land Development		9,567		1,645		203		1,848		19.3
Construction		24,705		18		-		18		0.1
Income Producing		305,513		8,259		1,027		9,286		3.0
Owner Occupied		215,674		9,358		86		9,444		4.4
Total Commercial Real Estate Loans	$	565,572	$	20,797		1,562	$	22,359		4.0

Other Commercial Loans	$	182,826	$	16,659		2,010	$	18,669		10.2
Total non-performing commercial loans					$	3,572

INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - January 25, 2016

Attached files

INDEPENDENT BANK CORP /MI/ Reports