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)
|
||||||||||||||||||||
December 31,
2018
|
September 30,
2018
|
June 30,
2018
|
March 31,
2018
|
December 31,
2017
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Non-accrual loans
|
$
|
9,029
|
$
|
9,343
|
$
|
9,082
|
$
|
6,629
|
$
|
8,184
|
||||||||||
Loans 90 days or more past due and still accruing interest
|
5
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total non-performing loans
|
9,034
|
9,343
|
9,082
|
6,629
|
8,184
|
|||||||||||||||
Other real estate and repossessed assets
|
1,299
|
1,445
|
1,689
|
1,647
|
1,643
|
|||||||||||||||
Total non-performing assets
|
$
|
10,333
|
$
|
10,788
|
$
|
10,771
|
$
|
8,276
|
$
|
9,827
|
||||||||||
As a percent of Portfolio Loans
|
||||||||||||||||||||
Non-performing loans
|
0.35
|
%
|
0.36
|
%
|
0.37
|
%
|
0.32
|
%
|
0.41
|
%
|
||||||||||
Allowance for loan losses
|
0.96
|
0.95
|
0.95
|
1.11
|
1.12
|
|||||||||||||||
Non-performing assets to total assets
|
0.31
|
0.33
|
0.33
|
0.30
|
0.35
|
|||||||||||||||
Allowance for loan losses as a percent of non-performing loans
|
275.49
|
261.17
|
258.80
|
348.03
|
275.99
|
(1) |
Excludes loans classified as "trouble debt restructured" that are not past due.
|
Troubled debt restructurings ("TDR")
December 31, 2018
|
||||||||||||
Commercial
|
Retail
|
Total
|
||||||||||
(In thousands)
|
||||||||||||
Performing TDR's
|
$
|
6,460
|
$
|
46,627
|
$
|
53,087
|
||||||
Non-performing TDR's(1)
|
74
|
2,884
|
(2)
|
2,958
|
||||||||
Total
|
$
|
6,534
|
$
|
49,511
|
$
|
56,045
|
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
Twelve months ended
December 31,
|
||||||||||||||||
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
|
1,503
|
-
|
1,199
|
-
|
||||||||||||
Recoveries credited to allowance
|
4,622
|
-
|
4,205
|
-
|
||||||||||||
Loans charged against the allowance
|
(3,824
|
)
|
-
|
(3,051
|
)
|
-
|
||||||||||
Additions included in non-interest expense
|
-
|
171
|
-
|
475
|
||||||||||||
Balance at end of period
|
$
|
24,888
|
$
|
1,296
|
$
|
22,587
|
$
|
1,125
|
||||||||
Net loans charged against the allowance to average Portfolio Loans
|
(0.03
|
)%
|
(0.06
|
)%
|
Capitalization
December 31,
|
||||||||
2018
|
2017
|
|||||||
(In thousands)
|
||||||||
Subordinated debentures
|
$
|
39,388
|
$
|
35,569
|
||||
Amount not qualifying as regulatory capital
|
(1,224
|
)
|
(1,069
|
)
|
||||
Amount qualifying as regulatory capital
|
38,164
|
34,500
|
||||||
Shareholders’ equity
|
||||||||
Common stock
|
377,372
|
324,986
|
||||||
Accumulated deficit
|
(28,270
|
)
|
(54,054
|
)
|
||||
Accumulated other comprehensive loss
|
(10,108
|
)
|
(5,999
|
)
|
||||
Total shareholders’ equity
|
338,994
|
264,933
|
||||||
Total capitalization
|
$
|
377,158
|
$
|
299,433
|
2
Non-Interest Income
Three months ended
|
Twelve months ended
|
|||||||||||||||||||
December 31,
|
September 30,
|
December 31,
|
December 31,
|
|||||||||||||||||
2018
|
2018
|
2017
|
2018
|
2017
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Service charges on deposit accounts
|
$
|
3,092
|
$
|
3,166
|
$
|
3,208
|
$
|
12,258
|
$
|
12,673
|
||||||||||
Interchange income
|
2,669
|
2,486
|
2,154
|
9,905
|
8,023
|
|||||||||||||||
Net gains on assets
|
||||||||||||||||||||
Mortgage loans
|
2,026
|
2,745
|
2,876
|
10,597
|
11,762
|
|||||||||||||||
Securities
|
209
|
93
|
198
|
138
|
260
|
|||||||||||||||
Mortgage loan servicing, net
|
(1,511
|
)
|
1,212
|
979
|
3,157
|
1,647
|
||||||||||||||
Investment and insurance commissions
|
537
|
513
|
427
|
1,971
|
1,968
|
|||||||||||||||
Bank owned life insurance
|
257
|
237
|
285
|
970
|
1,061
|
|||||||||||||||
Other
|
1,672
|
1,384
|
1,317
|
5,819
|
5,139
|
|||||||||||||||
Total non-interest income
|
$
|
8,951
|
$
|
11,836
|
$
|
11,444
|
$
|
44,815
|
$
|
42,533
|
Capitalized Mortgage Loan Servicing Rights
Three months ended
December 31,
|
Twelve months ended
December 31,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Balance at beginning of period
|
$
|
23,151
|
$
|
14,675
|
$
|
15,699
|
$
|
13,671
|
||||||||
Change in accounting
|
-
|
-
|
-
|
542
|
||||||||||||
Balance at beginning of period, as adjusted
|
23,151
|
14,675
|
15,699
|
14,213
|
||||||||||||
Servicing rights acquired
|
-
|
-
|
3,047
|
-
|
||||||||||||
Originated servicing rights capitalized
|
1,266
|
1,183
|
4,977
|
4,230
|
||||||||||||
Change in fair value
|
(3,017
|
)
|
(159
|
)
|
(2,323
|
)
|
(2,744
|
)
|
||||||||
Balance at end of period
|
$
|
21,400
|
$
|
15,699
|
$
|
21,400
|
$
|
15,699
|
3
Mortgage Loan Activity
|
||||||||||||||||||||
Three months ended
|
Twelve months ended
|
|||||||||||||||||||
December 31,
|
September 30,
|
December 31,
|
December 31,
|
|||||||||||||||||
2018
|
2018
|
2017
|
2018
|
2017
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Mortgage loans originated
|
$
|
190,328
|
$
|
231,849
|
$
|
213,877
|
$
|
807,408
|
$
|
871,222
|
||||||||||
Mortgage loans sold
|
121,426
|
148,730
|
117,941
|
491,798
|
423,327
|
|||||||||||||||
Net gains on mortgage loans
|
2,026
|
2,745
|
2,876
|
10,597
|
11,762
|
|||||||||||||||
Net gains as a percent of mortgage loans sold ("Loan Sales Margin")
|
1.67
|
%
|
1.85
|
%
|
2.44
|
%
|
2.15
|
%
|
2.78
|
%
|
||||||||||
Fair value adjustments included in the Loan Sales Margin
|
(0.39
|
)
|
(0.26
|
)
|
(0.45
|
)
|
(0.02
|
)
|
(0.07
|
)
|
Non-Interest Expense
Three months ended
|
Twelve months ended
|
|||||||||||||||||||
December 31,
|
September 30,
|
December 31,
|
December 31,
|
|||||||||||||||||
2018
|
2018
|
2017
|
2018
|
2017
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Compensation
|
$
|
9,792
|
$
|
9,582
|
$
|
8,525
|
$
|
37,878
|
$
|
35,397
|
||||||||||
Performance-based compensation
|
2,704
|
3,305
|
3,055
|
11,942
|
9,874
|
|||||||||||||||
Payroll taxes and employee benefits
|
3,076
|
3,282
|
2,405
|
12,258
|
9,818
|
|||||||||||||||
Compensation and employee benefits
|
15,572
|
16,169
|
13,985
|
62,078
|
55,089
|
|||||||||||||||
Occupancy, net
|
2,245
|
2,233
|
2,070
|
8,912
|
8,102
|
|||||||||||||||
Data processing
|
2,082
|
2,051
|
1,987
|
8,262
|
7,657
|
|||||||||||||||
Furniture, fixtures and equipment
|
1,051
|
1,043
|
927
|
4,080
|
3,870
|
|||||||||||||||
Merger related expenses
|
111
|
98
|
274
|
3,465
|
284
|
|||||||||||||||
Communications
|
737
|
727
|
638
|
2,848
|
2,684
|
|||||||||||||||
Interchange expense
|
728
|
715
|
287
|
2,702
|
1,156
|
|||||||||||||||
Loan and collection
|
782
|
531
|
666
|
2,682
|
2,230
|
|||||||||||||||
Advertising
|
577
|
594
|
354
|
2,155
|
1,905
|
|||||||||||||||
Legal and professional fees
|
528
|
477
|
526
|
1,839
|
1,892
|
|||||||||||||||
FDIC deposit insurance
|
331
|
270
|
286
|
1,081
|
894
|
|||||||||||||||
Amortization of intangible assets
|
293
|
295
|
86
|
969
|
346
|
|||||||||||||||
Supplies
|
173
|
173
|
159
|
689
|
666
|
|||||||||||||||
Credit card and bank service fees
|
104
|
108
|
97
|
414
|
529
|
|||||||||||||||
Costs related to unfunded lending commitments
|
177
|
71
|
143
|
171
|
475
|
|||||||||||||||
Provision for loss reimbursement on sold loans
|
(68
|
)
|
47
|
105
|
10
|
171
|
||||||||||||||
Net gains on other real estate and repossessed assets
|
(53
|
)
|
(325
|
)
|
(738
|
)
|
(672
|
)
|
(606
|
)
|
||||||||||
Other
|
1,455
|
1,463
|
1,284
|
5,776
|
4,738
|
|||||||||||||||
Total non-interest expense
|
$
|
26,825
|
$
|
26,740
|
$
|
23,136
|
$
|
107,461
|
$
|
92,082
|
4
Average Balances and Tax Equivalent Rates
|
||||||||||||||||||||||||
Three Months Ended
December 31, |
||||||||||||||||||||||||
2018
|
2017
|
|||||||||||||||||||||||
Average
Balance |
Interest
|
Rate (2)
|
Average
Balance |
Interest
|
Rate (2)
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Taxable loans
|
$
|
2,618,834
|
$
|
32,753
|
4.98
|
%
|
$
|
2,003,636
|
$
|
22,625
|
4.49
|
%
|
||||||||||||
Tax-exempt loans (1)
|
8,780
|
107
|
4.83
|
2,571
|
27
|
4.17
|
||||||||||||||||||
Taxable securities
|
373,988
|
2,782
|
2.98
|
442,188
|
2,628
|
2.38
|
||||||||||||||||||
Tax-exempt securities (1)
|
59,915
|
512
|
3.42
|
90,014
|
799
|
3.55
|
||||||||||||||||||
Interest bearing cash
|
41,766
|
157
|
1.49
|
20,827
|
35
|
0.67
|
||||||||||||||||||
Other investments
|
18,357
|
236
|
5.10
|
15,543
|
198
|
5.05
|
||||||||||||||||||
Interest Earning Assets
|
3,121,640
|
36,547
|
4.66
|
2,574,779
|
26,312
|
4.07
|
||||||||||||||||||
Cash and due from banks
|
33,915
|
30,459
|
||||||||||||||||||||||
Other assets, net
|
171,447
|
137,523
|
||||||||||||||||||||||
Total Assets
|
$
|
3,327,002
|
$
|
2,742,761
|
||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Savings and interest- bearing checking
|
$
|
1,291,994
|
1,361
|
0.42
|
$
|
1,054,651
|
523
|
0.20
|
||||||||||||||||
Time deposits
|
695,316
|
3,645
|
2.08
|
526,217
|
1,498
|
1.13
|
||||||||||||||||||
Other borrowings
|
71,410
|
746
|
4.14
|
100,049
|
689
|
2.73
|
||||||||||||||||||
Interest Bearing Liabilities
|
2,058,720
|
5,752
|
1.11
|
1,680,917
|
2,710
|
0.64
|
||||||||||||||||||
Non-interest bearing deposits
|
886,579
|
759,725
|
||||||||||||||||||||||
Other liabilities
|
36,924
|
32,020
|
||||||||||||||||||||||
Shareholders’ equity
|
344,779
|
270,099
|
||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$
|
3,327,002
|
$
|
2,742,761
|
||||||||||||||||||||
Net Interest Income
|
$
|
30,795
|
$
|
23,602
|
||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets
|
3.93
|
%
|
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
|
5
Average Balances and Tax Equivalent Rates
Twelve Months Ended
December 31,
|
||||||||||||||||||||||||
2018
|
2017
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Rate
|
Average
Balance
|
Interest
|
Rate
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Taxable loans
|
$
|
2,418,421
|
$
|
116,634
|
4.82
|
%
|
$
|
1,845,661
|
$
|
84,169
|
4.56
|
%
|
||||||||||||
Tax-exempt loans (1)
|
6,118
|
292
|
4.77
|
3,199
|
172
|
5.38
|
||||||||||||||||||
Taxable securities
|
394,160
|
10,874
|
2.76
|
485,343
|
10,928
|
2.25
|
||||||||||||||||||
Tax-exempt securities (1)
|
67,574
|
2,192
|
3.24
|
86,902
|
3,063
|
3.52
|
||||||||||||||||||
Interest bearing cash
|
32,593
|
371
|
1.14
|
37,119
|
264
|
0.71
|
||||||||||||||||||
Other investments
|
16,936
|
920
|
5.43
|
15,543
|
836
|
5.38
|
||||||||||||||||||
Interest Earning Assets
|
2,935,802
|
131,283
|
4.48
|
2,473,767
|
99,432
|
4.02
|
||||||||||||||||||
Cash and due from banks
|
33,384
|
31,980
|
||||||||||||||||||||||
Other assets, net
|
162,750
|
144,442
|
||||||||||||||||||||||
Total Assets
|
$
|
3,131,936
|
$
|
2,650,189
|
||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Savings and interest-bearing checking
|
$
|
1,218,243
|
4,146
|
0.34
|
$
|
1,052,215
|
1,530
|
0.15
|
||||||||||||||||
Time deposits
|
632,330
|
10,332
|
1.63
|
502,284
|
5,245
|
1.04
|
||||||||||||||||||
Other borrowings
|
79,519
|
3,013
|
3.79
|
74,876
|
2,348
|
3.14
|
||||||||||||||||||
Interest Bearing Liabilities
|
1,930,092
|
17,491
|
0.91
|
1,629,375
|
9,123
|
0.56
|
||||||||||||||||||
Non-interest bearing deposits
|
846,718
|
728,208
|
||||||||||||||||||||||
Other liabilities
|
33,354
|
30,838
|
||||||||||||||||||||||
Shareholders’ equity
|
321,772
|
261,768
|
||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$
|
3,131,936
|
$
|
2,650,189
|
||||||||||||||||||||
Net Interest Income
|
$
|
113,792
|
$
|
90,309
|
||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets
|
3.88
|
%
|
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.
|
6
Commercial Loan Portfolio Analysis as of December 31, 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
|
$
|
12,308
|
$
|
63
|
$
|
-
|
$
|
63
|
0.5
|
%
|
||||||||||
Land Development
|
12,155
|
338
|
-
|
338
|
2.8
|
|||||||||||||||
Construction
|
59,856
|
7,901
|
-
|
7,901
|
13.2
|
|||||||||||||||
Income Producing
|
388,311
|
12,430
|
-
|
12,430
|
3.2
|
|||||||||||||||
Owner Occupied
|
353,572
|
23,041
|
846
|
23,887
|
6.8
|
|||||||||||||||
Total Commercial Real Estate Loans
|
$
|
826,202
|
$
|
43,773
|
846
|
$
|
44,619
|
5.4
|
||||||||||||
Other Commercial Loans
|
$
|
318,279
|
$
|
16,695
|
1,374
|
$
|
18,069
|
5.7
|
||||||||||||
Total non-performing commercial loans
|
$
|
2,220
|
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