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

Attached files

file	filename
8-K - INDEPENDENT BANK CORP 8-K 10-29-2015 - 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⁾

	September 30, 2015			December 31, 2014
	(Dollars in thousands)
Non-accrual loans	$	15,834		$	15,231
Loans 90 days or more past due and still accruing interest		-			7
Total non-performing loans		15,834			15,238
Other real estate and repossessed assets		3,851			6,454
Total non-performing assets	$	19,685		$	21,692

As a percent of Portfolio Loans
Non-performing loans		1.08	%		1.08	%
Allowance for loan losses		1.68			1.84
Non-performing assets to total assets		0.82			0.96
Allowance for loan losses as a percent of non-performing loans		155.39			170.56

⁽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, 2015
	Commercial		Retail			Total
	(In thousands)
Performing TDR's	$	22,257	$	69,726		$	91,983
Non-performing TDR's(1)		1,501		3,887	⁽²⁾		5,388
Total	$	23,758	$	73,613		$	97,371

	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

(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,
	2015					2014
	Loans			Unfunded Commitments		Loans			Unfunded Commitments
	(Dollars in thousands)
Balance at beginning of period	$	25,990		$	539	$	32,325		$	508
Additions (deductions)
Provision for loan losses		(1,037	)		-		(2,049	)		-
Recoveries credited to allowance		3,418			-		5,438			-
Loans charged against the allowance		(3,767	)		-		(8,206	)		-
Additions (deductions) included in non-interest expense		-			46		-			27
Balance at end of period	$	24,604		$	585	$	27,508		$	535

Net loans charged against the allowance to average Portfolio Loans (annualized)		0.03	%				0.27	%

Capitalization

	September 30, 2015			December 31, 2014
	(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		343,601			352,462
Accumulated deficit		(86,125	)		(96,455	)
Accumulated other comprehensive loss		(4,496	)		(5,636	)
Total shareholders’ equity		252,980			250,371
Total capitalization	$	287,480		$	284,871

Non-Interest Income

	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,
	2015			2015			2014			2015		2014
	(In thousands)
Service charges on deposit accounts	$	3,294		$	3,117		$	3,579		$	9,261	$	10,166
Interchange income		2,169			2,240			1,984			6,551		5,992
Net gains (losses) on assets
Mortgage loans		1,812			1,784			1,490			5,735		4,139
Securities		45			(33	)		168			97		334
Other than temporary impairment loss on securities
Total impairment loss		-			-			(9	)		-		(9	)
Loss recognized in other comprehensive income		-			-			-			-		-
Net impairment loss recognized in earnings		-			-			(9	)		-		(9	)
Mortgage loan servicing		(556	)		1,452			932			476		1,389
Investment and insurance commissions		447			487			404			1,380		1,305
Bank owned life insurance		304			325			361			979		1,021
Title insurance fees		281			337			243			874		734
Net gain on branch sale		1,193			-			-			1,193		-
Other		1,130			1,278			1,391			3,522		4,503
Total non-interest income	$	10,119		$	10,987		$	10,543		$	30,068	$	29,574

Capitalized Mortgage Loan Servicing Rights

	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
	(In thousands)
Balance at beginning of period	$	12,535		$	12,796		$	12,106		$	13,710
Originated servicing rights capitalized		678			489			2,128			1,253
Amortization		(700	)		(628	)		(2,259	)		(1,827	)
Change in valuation allowance		(883	)		523			(345	)		44
Balance at end of period	$	11,630		$	13,180		$	11,630		$	13,180

Valuation allowance at end of period	$	4,118		$	2,811		$	4,118		$	2,811

Mortgage Loan Activity

	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,
	2015			2015			2014			2015			2014
	(Dollars in thousands)
Mortgage loans originated	$	79,648		$	101,306		$	77,501		$	260,744		$	187,172
Mortgage loans sold		71,063			82,167			62,007			221,957			156,090
Mortgage loans sold with servicing rights released		872			773			11,229			4,314			27,447
Net gains on the sale of mortgage loans		1,812			1,784			1,490			5,735			4,139
Net gains as a percent of mortgage loans sold ("Loan Sales Margin")		2.55	%		2.17	%		2.40	%		2.58	%		2.65	%
Fair value adjustments included in the Loan Sales Margin		(0.05	)		(0.07	)		(0.13	)		0.21			0.09

Non-Interest Expense

	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,
	2015			2015			2014			2015			2014
	(In thousands)
Compensation	$	8,419		$	8,131		$	8,574		$	24,880		$	25,321
Performance-based compensation		1,572			1,744			1,203			4,604			3,348
Payroll taxes and employee benefits		2,038			1,916			1,941			6,121			6,105
Compensation and employee benefits		12,029			11,791			11,718			35,605			34,774
Occupancy, net		1,940			2,040			2,079			6,399			6,715
Data processing		2,001			2,027			1,790			5,958			5,653
Loan and collection		816			967			1,391			2,938			4,283
Furniture, fixtures and equipment		998			965			1,005			2,915			3,127
Communications		754			694			712			2,184			2,212
Legal and professional fees		519			453			559			1,352			1,380
Advertising		406			448			427			1,338			1,547
FDIC deposit insurance		350			351			396			1,044			1,235
Interchange expense		279			289			368			859			1,112
Supplies		190			216			249			619			746
Credit card and bank service fees		197			203			226			602			734
Amortization of intangible assets		86			87			134			260			402
Vehicle service contract counterparty contingencies		30			30			28			89			169
Cost related to unfunded lending commitments		26			4			12			46			27
Provision for loss reimbursement on sold loans		(35	)		45			-			(59	)		(466	)
Net (gains) losses on other real estate and repossessed assets		5			(139	)		(285	)		(173	)		(410	)
Other		1,288			1,108			1,275			3,633			3,804
Total non-interest expense	$	21,879		$	21,579		$	22,084		$	65,609		$	67,044

Average Balances and Tax Equivalent Rates

	Three Months Ended September 30,
	2015							2014
	Average Balance		Interest		Rate ⁽³⁾			Average Balance		Interest		Rate ⁽³⁾
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,470,529	$	17,834		4.83	%	$	1,390,811	$	17,768		5.08	%
Tax-exempt loans ⁽²⁾		3,740		54		5.73			4,803		77		6.36
Taxable securities		520,805		1,901		1.46			484,687		1,644		1.35
Tax-exempt securities⁽²⁾		33,104		347		4.19			40,613		430		4.20
Interest bearing cash and repurchase agreement		68,972		70		0.40			76,529		61		0.32
Other investments		15,231		225		5.86			23,415		264		4.47
Interest Earning Assets		2,112,381		20,431		3.85			2,020,858		20,244		3.98
Cash and due from banks		45,477							46,643
Other assets, net		164,253							179,861
Total Assets	$	2,322,111						$	2,247,362

Liabilities
Savings and interest- bearing checking	$	990,229		266		0.11		$	949,039		270		0.11
Time deposits		371,501		721		0.77			402,951		966		0.95
Other borrowings		47,769		465		3.86			67,114		649		3.84
Interest Bearing Liabilities		1,409,499		1,452		0.41			1,419,104		1,885		0.53
Non-interest bearing deposits		633,305							551,617
Other liabilities		23,844							30,734
Shareholders’ equity		255,463							245,907
Total liabilities and shareholders’ equity	$	2,322,111						$	2,247,362

Net Interest Income			$	18,979						$	18,359

Net Interest Income as a Percent of Average Interest Earning Assets						3.58	%						3.61	%

(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

	Nine Months Ended September 30,
	2015							2014
	Average Balance		Interest		Rate ⁽³⁾			Average Balance		Interest		Rate ⁽³⁾
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,446,857	$	52,736		4.87	%	$	1,377,884	$	54,024		5.24	%
Tax-exempt loans ⁽²⁾		4,097		189		6.17			5,028		239		6.36
Taxable securities		518,906		5,528		1.42			470,995		4,623		1.31
Tax-exempt securities⁽²⁾		32,790		1,021		4.15			41,493		1,268		4.09
Interest bearing cash and repurchase agreement		64,913		194		0.40			87,511		219		0.33
Other investments		17,772		728		5.48			23,416		857		4.89
Interest Earning Assets		2,085,335		60,396		3.87			2,006,327		61,230		4.08
Cash and due from banks		44,829							45,137
Other assets, net		167,849							184,709
Total Assets	$	2,298,013						$	2,236,173

Liabilities
Savings and interest- bearing checking	$	988,594		792		0.11		$	953,008		799		0.11
Time deposits		373,235		2,169		0.78			421,775		2,990		0.95
Other borrowings		47,930		1,382		3.86			59,362		1,720		3.87
Interest Bearing Liabilities		1,409,759		4,343		0.41			1,434,145		5,509		0.51
Non-interest bearing deposits		609,192							529,654
Other liabilities		24,581							32,226
Shareholders’ equity		254,481							240,148
Total liabilities and shareholders’ equity	$	2,298,013						$	2,236,173

Net Interest Income			$	56,053						$	55,721

Net Interest Income as a Percent of Average Interest Earning Assets						3.59	%						3.71	%

(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

Commercial Loan Portfolio Analysis as of September 30, 2015

	Total Commercial Loans
			Watch Credits						Percent of Loan Category in Watch Credit
Loan Category	All Loans		Performing		Non- performing		Total		Percent of Loan Category in Watch Credit
	(Dollars in thousands)
Land	$	8,262	$	1,792	$	329	$	2,121		25.7	%
Land Development		8,526		1,720		204		1,924		22.6
Construction		25,335		20		-		20		0.1
Income Producing		274,417		8,116		5,135		13,251		4.8
Owner Occupied		213,469		14,268		98		14,366		6.7
Total Commercial Real Estate Loans	$	530,009	$	25,916		5,766	$	31,682		6.0

Other Commercial Loans	$	196,347	$	22,754		2,220	$	24,974		12.7
Total non-performing commercial loans					$	7,986

INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - October 29, 2015

Attached files

INDEPENDENT BANK CORP /MI/ Reports