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

Attached files

file	filename
8-K - 8-K - INDEPENDENT BANK CORP /MI/	brhc10027222_8k.htm
EX-99.3 - EXHIBIT 99.3 - INDEPENDENT BANK CORP /MI/	brhc10027222_ex99-3.htm
EX-99.1 - EXHIBIT 99.1 - INDEPENDENT BANK CORP /MI/	brhc10027222_ex99-1.htm

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Supplemental Data

Non-performing assets ⁽¹⁾
	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020
	(Dollars in thousands)
Non-accrual loans	$	5,531		$	7,548		$	8,312		$	10,481		$	12,938
Loans 90 days or more past due and still accruing interest		14			-			-			266			5
Subtotal		5,545			7,548			8,312			10,747			12,943
Less: Government guaranteed loans		427			459			439			510			604
Total non-performing loans		5,118			7,089			7,873			10,237			12,339
Other real estate and repossessed assets		296			346			766			1,487			1,569
Total non-performing assets	$	5,414		$	7,435		$	8,639		$	11,724		$	13,908

As a percent of Portfolio Loans
Non-performing loans		0.18	%		0.25	%		0.29	%		0.36	%		0.43	%
Allowance for credit losses		1.63			1.68			1.30			1.25			1.20
Non-performing assets to total assets		0.12			0.17			0.21			0.28			0.34
Allowance for credit losses as a percent of non-performing loans		897.34			659.54			450.01			349.43			279.60

⁽¹⁾	Excludes loans classified as “trouble debt restructured” that are not past due.

Troubled debt restructurings (“TDR”)

	June 30, 2021
	Commercial		Retail ⁽¹⁾			Total
	(In thousands)
Performing TDR’s	$	4,948	$	34,561		$	39,509
Non-performing TDR’s ⁽²⁾		-		1,165	(3)		1,165
Total	$	4,948	$	35,726		$	40,674

	December 31, 2020
	Commercial		Retail ⁽¹⁾			Total
	(In thousands)
Performing TDR’s	$	7,956	$	36,385		$	44,341
Non-performing TDR’s ⁽²⁾		1,148		1,584	(3)		2,732
Total	$	9,104	$	37,969		$	47,073

(1)	Retail loans include mortgage and installment loan segments.

(2)	Included in non-performing assets table above.

(3)	Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis.

Allowance for credit losses

	Six months ended June 30,
	2021						2020
	Loans			Unfunded Commitments			Loans			Unfunded Commitments
	(Dollars in thousands)
Balance at beginning of period	$	35,429		$	1,805		$	26,148		$	1,542
Additions (deductions)
Impact of adoption of ASC 326		11,574			1,469			-			-
Provision for credit losses ⁽¹⁾		(1,899	)		-			11,909			-
Initial allowance on loans purchased with credit deterioration		134			-			-			-
Recoveries credited to allowance		1,434			-			1,754			-
Loans charged against the allowance		(746	)		-			(5,311	)		-
Additions included in non-interest expense		-			(6	)		-			230
Balance at end of period	$	45,926		$	3,268		$	34,500		$	1,772

Net loans charged (recovered) against the allowance to average Portfolio Loans		(0.05	)%					0.26	%

(1)	Beginning January 1, 2021, calculation is based on CECL methodology. Prior to January 1, 2021, calculation was based on the probable incurred loss methodology.

Capitalization

	June 30, 2021			December 31, 2020
	(In thousands)
Subordinated debt	$	39,319		$	39,281
Subordinated debentures		39,558			39,524
Amount not qualifying as regulatory capital		(543	)		(505	)
Amount qualifying as regulatory capital		78,334			78,300
Shareholders’ equity
Common stock		332,457			339,353
Retained earnings		55,101			40,145
Accumulated other comprehensive income		8,416			10,024
Total shareholders’ equity		395,974			389,522
Total capitalization	$	474,308		$	467,822

Non-Interest Income

	Three months ended								Six months ended
	June 30,			March 31,		June 30,			June 30,
	2021			2021		2020			2021		2020
	(In thousands)
Interchange income	$	3,453		$	3,049	$	2,526		$	6,502	$	4,983
Service charges on deposit accounts		2,318			1,916		1,623			4,234		4,214
Net gains on assets
Mortgage loans		9,091			12,828		17,642			21,919		26,482
Securities		-			1,416		0			1,416		253
Mortgage loan servicing, net		(1,962	)		5,167		(3,022	)		3,205		(8,322	)
Investment and insurance commissions		634			583		435			1,217		948
Bank owned life insurance		127			139		265			266		535
Other		1,110			1,308		898			2,418		2,278
Total non-interest income	$	14,771		$	26,406	$	20,367		$	41,177	$	31,371

Capitalized Mortgage Loan Servicing Rights

	Three months ended June 30,						Six months ended June 30,
	2021			2020			2021			2020
	(In thousands)
Balance at beginning of period	$	23,530		$	14,829		$	16,904		$	19,171
Originated servicing rights capitalized		2,739			3,611			6,108			6,243
Change in fair value		(3,838	)		(4,667	)		(581	)		(11,641	)
Balance at end of period	$	22,431		$	13,773		$	22,431		$	13,773

Mortgage Loan Activity

	Three months ended									Six months ended
	June 30,			March 31,			June 30,			June 30,
	2021			2021			2020			2021			2020
	(Dollars in thousands)
Mortgage loans originated	$	473,742		$	509,003		$	470,626		$	982,745		$	781,704
Mortgage loans sold		306,789			377,418			379,048			684,207			641,308
Net gains on mortgage loans		9,091			12,828			17,642			21,919			26,482
Net gains as a percent of mortgage loans sold (“Loan Sales Margin”)		2.96	%		3.40	%		4.65	%		3.20	%		4.13	%
Fair value adjustments included in the
Loan Sales Margin		(0.08	)		(0.98	)		1.14			(0.57	)		0.99

Non-Interest Expense

	Three months ended								Six months ended
	June 30,		March 31,			June 30,			June 30,
	2021		2021			2020			2021			2020
	(In thousands)
Compensation	$	11,136	$	10,121		$	9,668		$	21,257		$	20,371
Performance-based compensation		4,783		4,292			3,809			9,075			5,930
Payroll taxes and employee benefits		3,964		4,109			2,802			8,073			6,487
Compensation and employee benefits		19,883		18,522			16,279			38,405			32,788
Data processing		2,576		2,374			1,590			4,950			3,945
Occupancy, net		2,153		2,343			2,159			4,496			4,619
Interchange expense		1,201		948			726			2,149			1,585
Furniture, fixtures and equipment		1,034		1,003			1,090			2,037			2,126
Communications		777		881			800			1,658			1,603
Loan and collection		859		759			756			1,618			1,561
Conversion related expenses		1,143		218			346			1,361			402
Legal and professional		522		499			468			1,021			861
Advertising		164		489			364			653			1,047
FDIC deposit insurance		307		330			430			637			800
Amortization of intangible assets		243		242			255			485			510
Supplies		170		174			203			344			387
Correspondent bank service fees		115		100			94			215			193
Provision for loss reimbursement on sold loans		25		34			77			59			114
Branch closure costs		-		-			417			-			417
Costs (recoveries) related to unfunded lending commitments		26		(32	)		111			(6	)		230
Net (gains) losses on other real estate and repossessed assets		6		(180	)		(9	)		(174	)		100
Other		1,332		1,317			1,190			2,649			2,777
Total non-interest expense	$	32,536	$	30,021		$	27,346		$	62,557		$	56,065

Average Balances and Tax Equivalent Rates

	Three Months Ended June 30,
			2021							2020
	Average Balance		Interest		Rate ⁽²⁾			Average Balance		Interest		Rate ⁽²⁾
	(Dollars in thousands)
Assets
Taxable loans	$	2,852,972	$	28,026		3.94	%	$	2,906,843	$	29,793		4.11	%
Tax-exempt loans ⁽¹⁾		6,572		82		5.00			7,014		88		5.05
Taxable securities		908,622		3,656		1.61			535,345		2,847		2.13
Tax-exempt securities⁽¹⁾		365,934		2,005		2.19			124,781		998		3.20
Interest bearing cash		71,043		22		0.12			67,204		18		0.11
Other investments		18,427		186		4.05			18,427		233		5.09
Interest Earning Assets		4,223,570		33,977		3.22			3,659,614		33,977		3.72
Cash and due from banks		54,120							45,714
Other assets, net		157,070							163,080
Total Assets	$	4,434,760						$	3,868,408

Liabilities
Savings and interest-bearing checking	$	2,260,172		689		0.12		$	1,754,503		505		0.12
Time deposits		305,390		453		0.59			494,411		1,883		1.53
Other borrowings		108,863		964		3.55			153,447		904		2.37
Interest Bearing Liabilities		2,674,425		2,106		0.32			2,402,361		3,292		0.55
Non-interest bearing deposits		1,314,153							1,054,388
Other liabilities		57,402							70,053
Shareholders’ equity		388,780							341,606
Total liabilities and
shareholders’ equity	$	4,434,760						$	3,868,408

Net Interest Income			$	31,871						$	30,685

Net Interest Income as a Percent of Average Interest Earning Assets						3.02	%						3.36	%

(1)	Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.

(2)	Annualized

Average Balances and Tax Equivalent Rates

	Six Months Ended June 30,
	2021							2020
	Average Balance		Interest		Rate ⁽²⁾			Average Balance		Interest		Rate ⁽²⁾
	(Dollars in thousands)
Assets
Taxable loans	$	2,840,224	$	56,065		3.98	%	$	2,832,876	$	61,481		4.36	%
Tax-exempt loans ⁽¹⁾		6,624		166		5.07			7,438		185		5.00
Taxable securities		845,895		6,452		1.52			501,720		5,906		2.35
Tax-exempt securities⁽¹⁾		338,692		3,775		2.22			92,040		1,488		3.23
Interest bearing cash		86,384		51		0.12			52,814		146		0.56
Other investments		18,427		374		4.10			18,393		471		5.15
Interest Earning Assets		4,136,246		66,883		3.25			3,505,281		69,677		3.99
Cash and due from banks		55,239							47,663
Other assets, net		153,540							164,167
Total Assets	$	4,345,025						$	3,717,111

Liabilities
Savings and interest-bearing checking	$	2,200,620		1,364		0.13		$	1,685,046		2,435		0.29
Time deposits		322,535		1,034		0.65			544,642		4,653		1.72
Other borrowings		108,844		1,926		3.58			126,491		1,592		2.53
Interest Bearing Liabilities		2,631,999		4,324		0.33			2,356,179		8,680		0.74
Non-interest bearing deposits		1,266,607							955,114
Other liabilities		61,950							60,540
Shareholders’ equity		384,469							345,278
Total liabilities and
shareholders’ equity	$	4,345,025						$	3,717,111

Net Interest Income			$	62,559						$	60,997

Net Interest Income as a Percent of Average Interest Earning Assets						3.04	%						3.49	%

(1)	Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.

(2)	Annualized

Commercial Loan Portfolio Analysis as of June 30, 2021

	Total Commercial Loans
			Watch Credits						Percent of Loan
Loan Category	All Loans		Performing		Non-accrual		Total		Category in Watch Credit
	(Dollars in thousands)
Land	$	13,523	$	162	$	-	$	162		1.2	%
Land Development		11,498		34		-		34		0.3
Construction		70,347		-		-		-		0.0
Income Producing		369,262		2,337		-		2,337		0.6
Owner Occupied		340,061		13,400		-		13,400		3.9
Total Commercial Real Estate Loans	$	804,691	$	15,933		-	$	15,933		2.0

Other Commercial Loans	$	439,856	$	12,560		242	$	12,802		2.9
Total non-performing commercial loans					$	242

Commercial Loan Portfolio Analysis as of December 31, 2020

	Total Commercial Loans
			Watch Credits						Percent of Loan
Loan Category	All Loans		Performing		Non-accrual		Total		Category in Watch Credit
	(Dollars in thousands)
Land	$	14,567	$	116	$	-	$	116		0.8	%
Land Development		12,176		36		-		36		0.3
Construction		68,724		36		-		36		0.1
Income Producing		358,603		3,699		-		3,699		1.0
Owner Occupied		360,510		24,693		745		25,438		7.1
Total Commercial Real Estate Loans	$	814,580	$	28,580		745	$	29,325		3.6

Other Commercial Loans	$	427,835	$	16,059		695	$	16,754		3.9
Total non-performing commercial loans					$	1,440

INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - July 29, 2021

Attached files

INDEPENDENT BANK CORP /MI/ Reports