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

Attached files

file	filename
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
8-K - 8-K - INDEPENDENT BANK CORP /MI/	form8k.htm

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Supplemental Data

Non-performing assets ⁽¹⁾
	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016
	(Dollars in thousands)
Non-accrual loans	$	8,410		$	8,542		$	9,014		$	13,364		$	10,801
Loans 90 days or more past due and still accruing interest		-			-			-			-			-
Total non-performing loans		8,410			8,542			9,014			13,364			10,801
Other real estate and repossessed assets		2,150			2,368			5,257			5,004			4,989
Total non-performing assets	$	10,560		$	10,910		$	14,271		$	18,368		$	15,790

As a percent of Portfolio Loans
Non-performing loans		0.43	%		0.47	%		0.54	%		0.83	%		0.67	%
Allowance for loan losses		1.11			1.14			1.20			1.26			1.37
Non-performing assets to total assets		0.38			0.41			0.55			0.72			0.62
Allowance for loan losses as a percent of non-performing loans		255.39			241.00			222.30			151.41			204.08

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

Troubled debt restructurings ("TDR")

	September 30, 2017
	Commercial		Retail			Total
	(In thousands)
Performing TDR's	$	9,431	$	53,755		$	63,186
Non-performing TDR's(1)		401		4,531	⁽²⁾		4,932
Total	$	9,832	$	58,286		$	68,118

	December 31, 2016
	Commercial		Retail			Total
	(In thousands)
Performing TDR's	$	10,560	$	59,726		$	70,286
Non-performing TDR's(1)		3,565		4,071	⁽²⁾		7,636
Total	$	14,125	$	63,797		$	77,922

(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

	Nine months ended September 30,
	2017					2016
	Loans			Unfunded Commitments		Loans			Unfunded Commitments
	(Dollars in thousands)
Balance at beginning of period	$	20,234		$	650	$	22,570		$	652
Additions (deductions)
Provision for loan losses		806			-		(1,439	)		-
Recoveries credited to allowance		2,998			-		3,623			-
Loans charged against the allowance		(2,560	)		-		(2,711	)		-
Additions included in non-interest expense		-			332		-			6
Balance at end of period	$	21,478		$	982	$	22,043		$	658

Net loans charged against the allowance to average Portfolio Loans		(0.03	)%				(0.08	)%

Capitalization

	September 30, 2017			December 31, 2016
	(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		324,607			323,745
Accumulated deficit		(53,240	)		(65,657	)
Accumulated other comprehensive loss		(3,657	)		(9,108	)
Total shareholders’ equity		267,710			248,980
Total capitalization	$	302,210		$	283,480

Non-Interest Income

	Three months ended								Nine months ended
	September 30,		June 30,			September 30,			September 30,
	2017		2017			2016			2017		2016
	(In thousands)
Service charges on deposit accounts	$	3,281	$	3,175		$	3,281		$	9,465	$	9,164
Interchange income		1,942		2,005			1,943			5,869		5,797
Net gains (losses) on assets
Mortgage loans		2,971		3,344			3,556			8,886		7,727
Securities		69		(34	)		(45	)		62		302
Mortgage loan servicing, net		1		(158	)		858			668		(454	)
Investment and insurance commissions		606		467			427			1,541		1,278
Bank owned life insurance		283		240			282			776		870
Other		1,151		1,407			1,406			3,822		4,413
Total non-interest income	$	10,304	$	10,446		$	11,708		$	31,089	$	29,097

Capitalized Mortgage Loan Servicing Rights

	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
	(In thousands)
Balance at beginning of period	$	14,515		$	10,331		$	13,671		$	12,436
Change in accounting		-			-			542			-
Balance at beginning of period, as adjusted	$	14,515		$	10,331		$	14,213		$	12,436
Originated servicing rights capitalized		1,250			896			3,047			2,153
Amortization		-			(799	)		-			(2,065	)
Change in valuation allowance		-			620			-			(1,476	)
Change in fair value		(1,090	)		-			(2,585	)		-
Balance at end of period	$	14,675		$	11,048		$	14,675		$	11,048

Valuation allowance at end of period	$	-		$	4,748		$	-		$	4,748

Mortgage Loan Activity

	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,
	2017			2017			2016			2017			2016
	(Dollars in thousands)
Mortgage loans originated	$	264,177		$	235,087		$	123,124		$	657,345		$	288,592
Mortgage loans sold		120,981			104,714			89,349			305,386			215,494
Net gains on mortgage loans		2,971			3,344			3,556			8,886			7,727
Net gains as a percent of mortgage loans sold ("Loan Sales Margin")		2.46	%		3.19	%		3.98	%		2.91	%		3.59	%
Fair value adjustments included in the Loan Sales Margin		(0.22	)		0.32			0.55			0.08			0.40

Non-Interest Expense

	Three months ended						Nine months ended
	September 30,		June 30,		September 30,		September 30,
	2017		2017		2016		2017		2016
	(In thousands)
Compensation	$	8,494	$	8,707	$	8,310	$	26,872	$	24,355
Performance-based compensation		2,688		2,138		2,409		6,819		5,967
Payroll taxes and employee benefits		2,395		2,535		2,312		7,413		6,590
Compensation and employee benefits		13,577		13,380		13,031		41,104		36,912
Occupancy, net		1,970		1,920		1,919		6,032		5,982
Data processing		1,796		1,937		1,971		5,670		6,008
Furniture, fixtures and equipment		961		1,005		990		2,943		2,939
Communications		685		678		670		2,046		2,280
Loan and collection		481		670		568		1,564		1,964
Advertising		526		519		455		1,551		1,410
Legal and professional fees		550		389		420		1,376		1,178
Interchange expense		294		292		276		869		809
FDIC deposit insurance		208		202		187		608		852
Supplies		176		159		178		507		551
Credit card and bank service fees		105		136		203		432		588
Costs related to unfunded
lending commitments		92		130		73		332		6
Amortization of intangible assets		87		86		86		260		260
Net losses on other real estate and repossessed assets		30		91		263		132		98
Provision for loss reimbursement on sold loans		15		20		45		66		30
Other		1,063		1,147		1,194		3,454		3,602
Total non-interest expense	$	22,616	$	22,761	$	22,529	$	68,946	$	65,469

Average Balances and Tax Equivalent Rates

	Three Months Ended September 30,
	2017							2016
	Average Balance		Interest		Rate ⁽²⁾			Average Balance		Interest		Rate ⁽²⁾
	(Dollars in thousands)
Assets
Taxable loans	$	1,908,497	$	21,801		4.55	%	$	1,613,189	$	18,562		4.59	%
Tax-exempt loans ⁽¹⁾		3,138		47		5.94			3,492		53		6.04
Taxable securities		474,901		2,765		2.33			534,319		2,537		1.90
Tax-exempt securities⁽¹⁾		90,645		783		3.46			58,694		507		3.46
Interest bearing cash		29,336		63		0.85			69,603		86		0.49
Other investments		15,543		200		5.11			15,347		195		5.05
Interest Earning Assets		2,522,060		25,659		4.05			2,294,644		21,940		3.81
Cash and due from banks		33,019							34,565
Other assets, net		142,283							152,793
Total Assets	$	2,697,362						$	2,482,002

Liabilities
Savings and interest- bearing checking	$	1,048,289		408		0.15		$	1,014,201		284		0.11
Time deposits		531,226		1,425		1.06			438,504		970		0.88
Other borrowings		85,219		626		2.91			47,227		493		4.15
Interest Bearing Liabilities		1,664,734		2,459		0.59			1,499,932		1,747		0.46
Non-interest bearing deposits		736,291							706,282
Other liabilities		31,263							27,110
Shareholders’ equity		265,074							248,678
Total liabilities and shareholders’ equity	$	2,697,362						$	2,482,002

Net Interest Income			$	23,200						$	20,193

Net Interest Income as a Percent of Average Interest Earning Assets						3.66	%						3.51	%

(1)	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

	Nine Months Ended September 30,
	2017							2016
	Average Balance		Interest		Rate ⁽²⁾			Average Balance		Interest		Rate ⁽²⁾
	(Dollars in thousands)
Assets
Taxable loans	$	1,792,381	$	61,544		4.59	%	$	1,577,758	$	55,255		4.67	%
Tax-exempt loans ⁽¹⁾		3,410		145		5.69			3,564		163		6.11
Taxable securities		499,886		8,300		2.21			532,576		7,261		1.82
Tax-exempt securities⁽¹⁾		85,853		2,264		3.52			50,286		1,320		3.50
Interest bearing cash		42,610		229		0.72			75,121		292		0.52
Other investments		15,543		638		5.49			15,456		592		5.12
Interest Earning Assets		2,439,683		73,120		4.00			2,254,761		64,883		3.84
Cash and due from banks		32,492							38,069
Other assets, net		146,753							157,570
Total Assets	$	2,618,928						$	2,450,400

Liabilities
Savings and interest- bearing checking	$	1,051,395		1,007		0.13		$	1,018,727		831		0.11
Time deposits		494,219		3,747		1.01			435,146		2,689		0.83
Other borrowings		66,392		1,659		3.34			47,405		1,455		4.10
Interest Bearing Liabilities		1,612,006		6,413		0.53			1,501,278		4,975		0.44
Non-interest bearing deposits		717,589							677,645
Other liabilities		30,372							25,612
Shareholders’ equity		258,961							245,865
Total liabilities and shareholders’ equity	$	2,618,928						$	2,450,400

Net Interest Income			$	66,707						$	59,908

Net Interest Income as a Percent of Average Interest Earning Assets						3.65	%						3.55	%

(1)	Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 35%

(2)	Annualized

Reconciliation of Net Interest Margin, Fully Taxable Equivalent ("FTE")

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(Dollars in thousands)						(Dollars in thousands)
Net interest income	$	22,912		$	19,998		$	65,870		$	59,391
Add: taxable equivalent adjustment		288			195			837			517
Net interest income - taxable equivalent	$	23,200		$	20,193		$	66,707		$	59,908
Net interest margin (GAAP) ⁽¹⁾		3.60	%		3.47	%		3.61	%		3.52	%
Net interest margin (FTE) ⁽¹⁾		3.66	%		3.51	%		3.65	%		3.55	%

(1)	Annualized

Commercial Loan Portfolio Analysis as of September 30, 2017

	Total Commercial Loans
			Watch Credits						Percent of Loan
Loan Category	All Loans		Performing		Non- performing		Total		Category in Watch Credit
	(Dollars in thousands)
Land	$	5,505	$	62	$	10	$	72		1.3	%
Land Development		7,580		-		-		-		0.0
Construction		54,556		-		-		-		0.0
Income Producing		271,594		3,331		72		3,403		1.3
Owner Occupied		275,833		11,535		231		11,766		4.3
Total Commercial Real Estate Loans	$	615,068	$	14,928		313	$	15,241		2.5

Other Commercial Loans	$	222,182	$	12,992		475	$	13,467		6.1
Total non-performing commercial loans					$	788

INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - October 26, 2017

Attached files

INDEPENDENT BANK CORP /MI/ Reports