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)
June 30,
2018
|
March 31,
2018
|
December 31,
2017
|
September 30,
2017
|
June 30,
2017
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Non-accrual loans
|
$
|
9,082
|
$
|
6,629
|
$
|
8,184
|
$
|
8,410
|
$
|
8,542
|
||||||||||
Loans 90 days or more past due and still accruing interest
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total non-performing loans
|
9,082
|
6,629
|
8,184
|
8,410
|
8,542
|
|||||||||||||||
Other real estate and repossessed assets
|
1,689
|
1,647
|
1,643
|
2,150
|
2,368
|
|||||||||||||||
Total non-performing assets
|
$
|
10,771
|
$
|
8,276
|
$
|
9,827
|
$
|
10,560
|
$
|
10,910
|
||||||||||
As a percent of Portfolio Loans
|
||||||||||||||||||||
Non-performing loans
|
0.37
|
%
|
0.32
|
%
|
0.41
|
%
|
0.43
|
%
|
0.47
|
%
|
||||||||||
Allowance for loan losses
|
0.95
|
1.11
|
1.12
|
1.11
|
1.14
|
|||||||||||||||
Non-performing assets to total assets
|
0.33
|
0.30
|
0.35
|
0.38
|
0.41
|
|||||||||||||||
Allowance for loan losses as a percent of non-performing loans
|
258.80
|
348.03
|
275.99
|
255.39
|
241.00
|
(1)
|
Excludes loans classified as “trouble debt restructured” that are not past due.
|
Troubled debt restructurings (“TDR”)
|
June 30, 2018
|
|||||||||||
|
Commercial | |
Retail | |
Total | |||||||
(In thousands)
|
||||||||||||
Performing TDR’s
|
$
|
7,792
|
$
|
50,313
|
$
|
58,105
|
||||||
Non-performing TDR’s(1)
|
245
|
3,112
|
(2)
|
3,357
|
||||||||
Total
|
$
|
8,037
|
$
|
53,425
|
$
|
61,462
|
||||||
|
December 31, 2017
|
|||||||||||
|
Commercial | |
Retail | |
Total | |||||||
(In thousands)
|
||||||||||||
Performing TDR’s
|
$
|
7,748
|
$
|
52,367
|
$
|
60,115
|
||||||
Non-performing TDR’s(1)
|
323
|
4,506
|
(2)
|
4,829
|
||||||||
Total
|
$
|
8,071
|
$
|
56,873
|
$
|
64,944
|
(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.
|
1
Allowance for loan losses
Six months ended
June 30,
|
||||||||||||||||
2018
|
2017
|
|||||||||||||||
Loans
|
Unfunded
Commitments
|
Loans
|
Unfunded
Commitments
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Balance at beginning of period
|
$
|
22,587
|
$
|
1,125
|
$
|
20,234
|
$
|
650
|
||||||||
Additions (deductions)
|
||||||||||||||||
Provision for loan losses
|
965
|
-
|
224
|
-
|
||||||||||||
Recoveries credited to allowance
|
1,860
|
-
|
1,786
|
-
|
||||||||||||
Loans charged against the allowance
|
(1,908
|
)
|
-
|
(1,658
|
)
|
-
|
||||||||||
Additions included in non-interest expense
|
-
|
(77
|
)
|
-
|
240
|
|||||||||||
Balance at end of period
|
$
|
23,504
|
$
|
1,048
|
$
|
20,586
|
$
|
890
|
||||||||
Net loans charged against the allowance to average Portfolio Loans
|
0.00
|
%
|
(0.02
|
)%
|
Capitalization
June 30,
2018
|
December 31,
2017
|
|||||||
(In thousands)
|
||||||||
Subordinated debentures
|
$
|
39,354
|
$
|
35,569
|
||||
Amount not qualifying as regulatory capital
|
(1,224
|
)
|
(1,069
|
)
|
||||
Amount qualifying as regulatory capital
|
38,130
|
34,500
|
||||||
Shareholders’ equity
|
||||||||
Common stock
|
389,195
|
324,986
|
||||||
Accumulated deficit
|
(42,898
|
)
|
(54,054
|
)
|
||||
Accumulated other comprehensive loss
|
(9,214
|
)
|
(5,999
|
)
|
||||
Total shareholders’ equity
|
337,083
|
264,933
|
||||||
Total capitalization
|
$
|
375,213
|
$
|
299,433
|
2
Non-Interest Income
Three months ended
|
Six months ended | |||||||||||||||||||
June 30,
2018
|
March 30,
2018
|
June 30,
2017
|
June 30,
|
|||||||||||||||||
2018
|
2017
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Service charges on deposit accounts
|
$
|
3,095
|
$
|
2,905
|
$
|
3,175
|
$
|
6,000
|
$
|
6,184
|
||||||||||
Interchange income
|
2,504
|
2,246
|
2,005
|
4,750
|
3,927
|
|||||||||||||||
Net gains (losses) on assets
|
||||||||||||||||||||
Mortgage loans
|
3,255
|
2,571
|
3,344
|
5,826
|
5,915
|
|||||||||||||||
Securities
|
9
|
(173
|
)
|
(34
|
)
|
(164
|
)
|
(7
|
)
|
|||||||||||
Mortgage loan servicing, net
|
1,235
|
2,221
|
(158
|
)
|
3,456
|
667
|
||||||||||||||
Investment and insurance commissions
|
483
|
438
|
467
|
921
|
935
|
|||||||||||||||
Bank owned life insurance
|
220
|
256
|
240
|
476
|
493
|
|||||||||||||||
Other
|
1,514
|
1,249
|
1,407
|
2,763
|
2,671
|
|||||||||||||||
Total non-interest income
|
$
|
12,315
|
$
|
11,713
|
$
|
10,446
|
$
|
24,028
|
$
|
20,785
|
Capitalized Mortgage Loan Servicing Rights
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Balance at beginning of period
|
$
|
17,783
|
$
|
14,727
|
$
|
15,699
|
$
|
13,671
|
||||||||
Change in accounting
|
-
|
-
|
-
|
542
|
||||||||||||
Balance at beginning of period, as adjusted
|
17,783
|
14,727
|
15,699
|
14,213
|
||||||||||||
Servicing rights acquired
|
3,047
|
-
|
3,047
|
-
|
||||||||||||
Originated servicing rights capitalized
|
1,155
|
1,019
|
2,210
|
1,797
|
||||||||||||
Change in fair value
|
(137
|
)
|
(1,231
|
)
|
892
|
(1,495
|
)
|
|||||||||
Balance at end of period
|
$
|
21,848
|
$
|
14,515
|
$
|
21,848
|
$
|
14,515
|
3
Mortgage Loan Activity
Three months ended | Six months ended | |||||||||||||||||||
June 30,
2018
|
March 30,
2018
|
June 30,
2017
|
June 30,
|
|||||||||||||||||
2018
|
2017
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Mortgage loans originated
|
$
|
226,264
|
$
|
158,967
|
$
|
235,087
|
$
|
385,231
|
$
|
393,168
|
||||||||||
Mortgage loans sold
|
115,299
|
106,343
|
104,714
|
221,642
|
184,405
|
|||||||||||||||
Net gains on mortgage loans
|
3,255
|
2,571
|
3,344
|
5,826
|
5,915
|
|||||||||||||||
Net gains as a percent of mortgage loans sold (“Loan Sales Margin”)
|
2.82
|
%
|
2.42
|
%
|
3.19
|
%
|
2.63
|
%
|
3.21
|
%
|
||||||||||
Fair value adjustments included in the Loan Sales Margin
|
0.57
|
0.11
|
0.32
|
0.35
|
0.27
|
Non-Interest Expense
Three months ended
|
Six months ended | |||||||||||||||||||
June 30,
2018
|
March 30,
2018
|
June 30,
2017
|
June 30,
|
|||||||||||||||||
2018
|
2017
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Compensation
|
$
|
9,574
|
$
|
8,930
|
$
|
8,707
|
$
|
18,504
|
$
|
18,379
|
||||||||||
Performance-based compensation
|
3,150
|
2,783
|
2,138
|
5,933
|
4,131
|
|||||||||||||||
Payroll taxes and employee benefits
|
3,145
|
2,755
|
2,535
|
5,900
|
5,017
|
|||||||||||||||
Compensation and employee benefits
|
15,869
|
14,468
|
13,380
|
30,337
|
27,527
|
|||||||||||||||
Occupancy, net
|
2,170
|
2,264
|
1,920
|
4,434
|
4,062
|
|||||||||||||||
Data processing
|
2,251
|
1,878
|
1,937
|
4,129
|
3,874
|
|||||||||||||||
Merger related expenses
|
3,082
|
174
|
-
|
3,256
|
-
|
|||||||||||||||
Furniture, fixtures and equipment
|
1,019
|
967
|
1,005
|
1,986
|
1,982
|
|||||||||||||||
Communications
|
704
|
680
|
678
|
1,384
|
1,361
|
|||||||||||||||
Loan and collection
|
692
|
677
|
670
|
1,369
|
1,083
|
|||||||||||||||
Interchange expense
|
661
|
598
|
292
|
1,259
|
575
|
|||||||||||||||
Advertising
|
543
|
441
|
519
|
984
|
1,025
|
|||||||||||||||
Legal and professional fees
|
456
|
378
|
389
|
834
|
826
|
|||||||||||||||
FDIC deposit insurance
|
250
|
230
|
202
|
480
|
400
|
|||||||||||||||
Amortization of intangible assets
|
295
|
86
|
86
|
381
|
173
|
|||||||||||||||
Supplies
|
178
|
165
|
159
|
343
|
331
|
|||||||||||||||
Credit card and bank service fees
|
106
|
96
|
136
|
202
|
327
|
|||||||||||||||
Provision for loss reimbursement on sold loans
|
20
|
11
|
20
|
31
|
51
|
|||||||||||||||
Costs (recoveries) related to unfunded lending commitments
|
37
|
(114
|
)
|
130
|
(77
|
)
|
240
|
|||||||||||||
Net (gains) losses on other real estate and repossessed assets
|
(4
|
)
|
(290
|
)
|
91
|
(294
|
)
|
102
|
||||||||||||
Other
|
1,432
|
1,426
|
1,147
|
2,858
|
2,391
|
|||||||||||||||
Total non-interest expense
|
$
|
29,761
|
$
|
24,135
|
$
|
22,761
|
$
|
53,896
|
$
|
46,330
|
4
Average Balances and Tax Equivalent Rates
Three Months Ended
June 30,
|
||||||||||||||||||||||||
2018
|
2017
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Rate (2)
|
Average
Balance
|
Interest
|
Rate (2)
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Taxable loans
|
$
|
2,442,159
|
$
|
29,606
|
4.86
|
%
|
$
|
1,779,916
|
$
|
19,919
|
4.49
|
%
|
||||||||||||
Tax-exempt loans (1)
|
6,897
|
85
|
4.94
|
3,037
|
46
|
6.08
|
||||||||||||||||||
Taxable securities
|
401,102
|
2,720
|
2.71
|
503,863
|
2,781
|
2.21
|
||||||||||||||||||
Tax-exempt securities (1)
|
69,325
|
559
|
3.23
|
88,731
|
783
|
3.53
|
||||||||||||||||||
Interest bearing cash
|
28,187
|
66
|
0.94
|
32,193
|
53
|
0.66
|
||||||||||||||||||
Other investments
|
16,312
|
199
|
4.89
|
15,543
|
239
|
6.17
|
||||||||||||||||||
Interest Earning Assets
|
2,963,982
|
33,235
|
4.49
|
2,423,283
|
23,821
|
3.94
|
||||||||||||||||||
Cash and due from banks
|
31,564
|
30,649
|
||||||||||||||||||||||
Other assets, net
|
172,650
|
144,673
|
||||||||||||||||||||||
Total Assets
|
$
|
3,168,196
|
$
|
2,598,605
|
||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Savings and interest-bearing checking
|
$
|
1,241,700
|
1,011
|
0.33
|
$
|
1,058,768
|
316
|
0.12
|
||||||||||||||||
Time deposits
|
603,833
|
2,198
|
1.46
|
468,705
|
1,162
|
0.99
|
||||||||||||||||||
Other borrowings
|
100,754
|
914
|
3.64
|
68,511
|
563
|
3.30
|
||||||||||||||||||
Interest Bearing Liabilities
|
1,946,287
|
4,123
|
0.85
|
1,595,984
|
2,041
|
0.51
|
||||||||||||||||||
Non-interest bearing deposits
|
855,829
|
712,132
|
||||||||||||||||||||||
Other liabilities
|
31,454
|
30,394
|
||||||||||||||||||||||
Shareholders’ equity
|
334,626
|
260,095
|
||||||||||||||||||||||
|
||||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$
|
3,168,196
|
$
|
2,598,605
|
||||||||||||||||||||
Net Interest Income
|
$
|
29,112
|
$
|
21,780
|
||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning
Assets
|
3.93
|
%
|
3.60
|
%
|
(1)
|
Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21% in 2018 and 35% in 2017.
|
(2)
|
Annualized
|
5
Average Balances and Tax Equivalent Rates
Six Months Ended
June 30,
|
||||||||||||||||||||||||
2018
|
2017
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Rate (2)
|
Average
Balance
|
Interest
|
Rate (2)
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Taxable loans
|
$
|
2,252,492
|
$
|
52,945
|
4.72
|
%
|
$
|
1,733,225
|
$
|
39,743
|
4.61
|
%
|
||||||||||||
Tax-exempt loans (1)
|
4,526
|
104
|
4.63
|
3,549
|
98
|
5.57
|
||||||||||||||||||
Taxable securities
|
411,619
|
5,355
|
2.60
|
512,586
|
5,535
|
2.16
|
||||||||||||||||||
Tax-exempt securities (1)
|
73,810
|
1,162
|
3.15
|
83,417
|
1,481
|
3.55
|
||||||||||||||||||
Interest bearing cash
|
30,531
|
148
|
0.98
|
49,356
|
166
|
0.68
|
||||||||||||||||||
Other investments
|
15,930
|
447
|
5.66
|
15,543
|
438
|
5.68
|
||||||||||||||||||
Interest Earning Assets
|
2,788,908
|
60,161
|
4.33
|
2,397,676
|
47,461
|
3.98
|
||||||||||||||||||
Cash and due from banks
|
31,848
|
32,212
|
||||||||||||||||||||||
Other assets, net
|
152,912
|
149,306
|
||||||||||||||||||||||
Total Assets
|
$
|
2,973,668
|
$
|
2,579,194
|
||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Savings and interest-bearing checking
|
$
|
1,168,747
|
1,562
|
0.27
|
$
|
1,052,973
|
599
|
0.11
|
||||||||||||||||
Time deposits
|
584,167
|
3,934
|
1.36
|
475,409
|
2,322
|
0.98
|
||||||||||||||||||
Other borrowings
|
82,920
|
1,488
|
3.62
|
56,823
|
1,033
|
3.67
|
||||||||||||||||||
Interest Bearing Liabilities
|
1,835,834
|
6,984
|
0.77
|
1,585,205
|
3,954
|
0.50
|
||||||||||||||||||
Non-interest bearing deposits
|
807,504
|
708,363
|
||||||||||||||||||||||
Other liabilities
|
30,531
|
29,772
|
||||||||||||||||||||||
Shareholders’ equity
|
299,799
|
255,854
|
||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$
|
2,973,668
|
$
|
2,579,194
|
||||||||||||||||||||
Net Interest Income
|
$
|
53,177
|
$
|
43,507
|
||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning
Assets
|
3.83
|
%
|
3.65
|
%
|
(1)
|
Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21% in 2018 and 35% in 2017.
|
(2)
|
Annualized
|
6
Commercial Loan Portfolio Analysis as of June 30, 2018
Total Commercial Loans
|
||||||||||||||||||||
Watch Credits
|
Percent of Loan
|
|||||||||||||||||||
Loan Category
|
All Loans
|
Performing
|
Non-
performing
|
Total
|
Category in
Watch Credit
|
|||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Land
|
$
|
10,835
|
$
|
70
|
$
|
-
|
$
|
70
|
0.6
|
%
|
||||||||||
Land Development
|
15,181
|
-
|
-
|
-
|
0.0
|
|||||||||||||||
Construction
|
35,697
|
6,431
|
2,401
|
8,832
|
24.7
|
|||||||||||||||
Income Producing
|
365,672
|
2,895
|
-
|
2,895
|
0.8
|
|||||||||||||||
Owner Occupied
|
352,478
|
15,266
|
165
|
15,431
|
4.4
|
|||||||||||||||
Total Commercial Real Estate Loans
|
$
|
779,863
|
$
|
24,662
|
2,566
|
$
|
27,228
|
3.5
|
||||||||||||
Other Commercial Loans
|
$
|
327,124
|
$
|
20,997
|
323
|
$
|
21,320
|
6.5
|
||||||||||||
Total non-performing commercial loans
|
$
|
2,889
|
Commercial Loan Portfolio Analysis as of December 31, 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
|
$
|
8,559
|
$
|
60
|
$
|
9
|
$
|
69
|
0.8
|
%
|
||||||||||
Land Development
|
9,685
|
-
|
-
|
-
|
0.0
|
|||||||||||||||
Construction
|
51,733
|
-
|
-
|
-
|
0.0
|
|||||||||||||||
Income Producing
|
289,799
|
1,590
|
30
|
1,620
|
0.6
|
|||||||||||||||
Owner Occupied
|
258,888
|
11,491
|
170
|
11,661
|
4.5
|
|||||||||||||||
Total Commercial Real Estate Loans
|
$
|
618,664
|
$
|
13,141
|
209
|
$
|
13,350
|
2.2
|
||||||||||||
Other Commercial Loans
|
$
|
234,596
|
$
|
19,109
|
437
|
$
|
19,546
|
8.3
|
||||||||||||
Total non-performing commercial loans
|
$
|
646
|
7