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

Attached files

file	filename
8-K - INDEPENDENT BANK CORP 8-K 1-23-2015 - 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,
	2014			2013
	(Dollars in thousands)
Non-accrual loans	$	15,231		$	17,905
Loans 90 days or more past due and still accruing interest		7			-
Total non-performing loans		15,238			17,905
Other real estate and repossessed assets		6,454			18,282
Total non-performing assets	$	21,692		$	36,187

As a percent of Portfolio Loans
Non-performing loans		1.08	%		1.30	%
Allowance for loan losses		1.84			2.35
Non-performing assets to total assets		0.96			1.64
Allowance for loan losses as a percent of non-performing loans		170.56			180.54

⁽¹⁾	Excludes loans classified as "trouble debt restructured" that are performing and vehicle service contract counterparty receivables, net.

Troubled debt restructurings ("TDR")

	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

	December 31, 2013
	Commercial		Retail			Total
	(In thousands)
Performing TDR's	$	35,134	$	79,753		$	114,887
Non-performing TDR's(1)		4,347		4,988	⁽²⁾		9,335
Total	$	39,481	$	84,741		$	124,222

(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,
	2014					2013
				Unfunded					Unfunded
	Loans			Commitments		Loans			Commitments
	(Dollars in thousands)
Balance at beginning of period	$	32,325		$	508	$	44,275		$	598
Additions (deductions)
Provision for loan losses		(3,136	)		-		(3,988	)		-
Recoveries credited to allowance		7,420			-		8,270			-
Loans charged against the allowance		(10,619	)		-		(16,232	)		-
Additions (deductions) included in non-interest expense		-			31		-			(90	)
Balance at end of period	$	25,990		$	539	$	32,325		$	508

Net loans charged against the allowance to average Portfolio Loans (annualized)		0.23	%				0.58	%

Capitalization

	December 31,
	2014			2013
	(In thousands)
Subordinated debentures	$	35,569		$	40,723
Amount not qualifying as regulatory capital		(1,069	)		(1,223	)
Amount qualifying as regulatory capital		34,500			39,500
Shareholders’ equity
Common stock		352,462			351,173
Accumulated deficit		(96,455	)		(110,347	)
Accumulated other comprehensive loss		(5,636	)		(9,245	)
Total shareholders’ equity		250,371			231,581
Total capitalization	$	284,871		$	271,081

Non-Interest Income

	Three months ended								Twelve months ended
	December 31,			September 30,			December 31,		December 31,
	2014			2014			2013		2014			2013
	(In thousands)
Service charges on deposit accounts	$	3,280		$	3,579		$	3,473	$	13,446		$	14,076
Interchange income		2,172			1,984			1,820		8,164			7,362
Net gains (losses) on assets
Mortgage loans		1,489			1,490			1,607		5,628			10,022
Securities		(5	)		168			190		329			395
Other than temporary impairment loss on securities
Total impairment loss		-			(9	)		-		(9	)		(26	)
Loss recognized in other comprehensive income		-			-			-		-			-
Net impairment loss recognized in earnings		-			(9	)		-		(9	)		(26	)
Mortgage loan servicing		(598	)		932			1,192		791			3,806
Investment and insurance commissions		509			404			429		1,814			1,709
Bank owned life insurance		350			361			335		1,371			1,363
Title insurance fees		261			243			421		995			1,682
Gain on extinguishment of debt		500			-			-		500			-
Increase in fair value of U.S. Treasury warrant		-			-			-		-			(1,025	)
Other		1,243			1,391			1,446		5,746			5,465
Total non-interest income	$	9,201		$	10,543		$	10,913	$	38,775		$	44,829

Capitalized Mortgage Loan Servicing Rights

	Three months ended							Twelve months ended
	December 31,							December 31,
	2014				2013			2014			2013
	(In thousands)
Balance at beginning of period		$	13,180		$	13,051		$	13,710		$	11,013
Originated servicing rights capitalized			570			549			1,823			3,210
Amortization			(682	)		(634	)		(2,509	)		(3,745	)
Change in valuation allowance			(962	)		744			(918	)		3,232
Balance at end of period		$	12,106		$	13,710		$	12,106		$	13,710

Valuation allowance at end of period		$	3,773		$	2,855		$	3,773		$	2,855

Mortgage Loan Activity

	Three months ended										Twelve months ended
	December 31,				September 30,			December 31,			December 31,
	2014				2014			2013			2014			2013
	(Dollars in thousands)
Mortgage loans originated		$	78,322		$	77,501		$	72,317		$	265,494		$	419,494
Mortgage loans sold			67,490			62,007			66,917			223,580			407,235
Mortgage loans sold with servicing rights released			10,029			11,229			10,849			37,476			57,099
Net gains on the sale of mortgage loans			1,489			1,490			1,607			5,628			10,022
Net gains as a percent of mortgage loans sold ("Loan Sales Margin")			2.21	%		2.40	%		2.40	%		2.52	%		2.46	%
Fair value adjustments included in the Loan Sales Margin			(0.18	)		(0.13	)		(0.38	)		0.01			(0.55	)

Non-Interest Expense

	Three months ended									Twelve months ended
	December 31,			September 30,			December 31,			December 31,
	2014			2014			2013			2014			2013
	(In thousands)
Compensation	$	8,512		$	8,574		$	8,435		$	33,833		$	33,515
Performance-based compensation		1,806			1,203			1,821			5,154			6,507
Payroll taxes and employee benefits		2,129			1,941			2,055			8,234			7,902
Compensation and employee benefits		12,447			11,718			12,311			47,221			47,924
Occupancy, net		2,197			2,079			2,257			8,912			8,845
Data processing		1,879			1,790			1,971			7,532			8,019
Loan and collection		1,109			1,391			1,374			5,392			6,886
Furniture, fixtures and equipment		1,010			1,005			1,122			4,137			4,293
Communications		714			712			714			2,926			2,919
Advertising		646			427			552			2,193			2,433
Legal and professional fees		589			559			616			1,969			2,459
FDIC deposit insurance		332			396			409			1,567			2,435
Interchange expense		179			368			407			1,291			1,645
Supplies		247			249			257			993			1,028
Credit card and bank service fees		212			226			288			946			1,263
Amortization of intangible assets		134			134			203			536			812
Vehicle service contract counterparty contingencies		30			28			1,434			199			4,837
Cost (recoveries) related to unfunded lending commitments		4			12			(33	)		31			(90	)
Provision for loss reimbursement on sold loans		-			-			(284	)		(466	)		2,152
Net (gains) losses on other real estate and repossessed assets		(90	)		(285	)		146			(500	)		1,237
Other		1,268			1,275			1,225			5,072			5,021
Total non-interest expense	$	22,907		$	22,084		$	24,969		$	89,951		$	104,118

Average Balances and Tax Equivalent Rates

	Three Months Ended
	December 31,
			2014							2013
	Average							Average
	Balance		Interest		Rate ⁽³⁾			Balance		Interest		Rate ⁽³⁾
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,401,597	$	17,597		5.00	%	$	1,386,716	$	19,515		5.60	%
Tax-exempt loans ⁽²⁾		4,478		71		6.29			5,084		82		6.40
Taxable securities		490,525		1,718		1.39			398,843		1,287		1.28
Tax-exempt securities⁽²⁾		36,361		242		2.64			41,483		516		4.93
Interest bearing cash and
repurchase agreement		74,551		63		0.34			107,258		87		0.32
Other investments		22,766		261		4.55			22,854		244		4.24
Interest Earning Assets		2,030,278		19,952		3.91			1,962,238		21,731		4.40
Cash and due from banks		45,444							44,388
Other assets, net		174,349							185,766
Total Assets	$	2,250,071						$	2,192,392

Liabilities
Savings and interest-bearing checking	$	947,995		265		0.11		$	916,736		267		0.12
Time deposits		389,855		913		0.93			438,418		1,076		0.97
Other borrowings		62,787		612		3.87			58,989		831		5.59
Interest Bearing Liabilities		1,400,637		1,790		0.51			1,414,143		2,174		0.61
Non-interest bearing deposits		571,128							512,234
Other liabilities		28,259							35,894
Shareholders’ equity		250,047							230,121
Total liabilities and shareholders’ equity	$	2,250,071						$	2,192,392

Net Interest Income			$	18,162						$	19,557

Net Interest Income as a Percent of Average Interest Earning Assets						3.56	%						3.96	%

(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,
			2014							2013
	Average							Average
	Balance		Interest		Rate			Balance		Interest		Rate
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,383,883	$	71,621		5.18	%	$	1,408,305	$	80,434		5.71	%
Tax-exempt loans ⁽²⁾		4,889		310		6.34			5,491		354		6.45
Taxable securities		475,917		6,341		1.33			305,468		4,059		1.33
Tax-exempt securities⁽²⁾		40,200		1,510		3.76			32,051		1,680		5.24
Interest bearing cash and repurchase agreement		84,244		282		0.33			139,082		396		0.28
Other investments		23,252		1,118		4.81			21,673		901		4.16
Interest Earning Assets		2,012,385		81,182		4.03			1,912,070		87,824		4.59
Cash and due from banks		45,213							44,745
Other assets, net		182,099							164,281
Total Assets	$	2,239,697						$	2,121,096

Liabilities
Savings and interest-bearing checking	$	951,745		1,064		0.11		$	908,740		1,131		0.12
Time deposits		413,729		3,903		0.94			423,291		4,575		1.08
Other borrowings		60,225		2,332		3.87			65,517		3,456		5.27
Interest Bearing Liabilities		1,425,699		7,299		0.51			1,397,548		9,162		0.66
Non-interest bearing deposits		540,107							500,673
Other liabilities		31,247							38,462
Shareholders’ equity		242,644							184,413
Total liabilities and shareholders’ equity	$	2,239,697						$	2,121,096

Net Interest Income			$	73,883						$	78,662
Net Interest Income as a Percent of Average Interest Earning Assets						3.67	%						4.11	%

(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, 2014

	Total Commercial Loans
			Watch Credits						Percent of Loan
Loan Category	All Loans		Performing		Non-performing		Total		Category in Watch Credit

Land	$	8,938	$	1,121	$	371	$	1,492		16.7	%
Land Development		10,694		1,720		223		1,943		18.2
Construction		14,627		26		-		26		0.2
Income Producing		252,512		10,530		1,233		11,763		4.7
Owner Occupied		214,332		13,042		231		13,273		6.2
Total Commercial Real Estate Loans	$	501,103	$	26,439		2,058	$	28,497		5.7

Other Commercial Loans	$	189,852	$	16,341		2,515	$	18,856		9.9
Total non-performing commercial loans					$	4,573

INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - January 23, 2015

Attached files

INDEPENDENT BANK CORP /MI/ Reports