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

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8-K - INDEPENDENT BANK CORPORATION 8-K 4-25-2016 - INDEPENDENT BANK CORP /MI/	form8k.htm
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

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Supplemental Data

Non-performing assets ⁽¹⁾
	March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015
	(Dollars in thousands)
Non-accrual loans	$	10,425		$	10,607		$	15,834		$	12,274		$	14,593
Loans 90 days or more past due and still accruing interest		147			116			-			63			194
Total non-performing loans		10,572			10,723			15,834			12,337			14,787
Other real estate and repossessed assets		6,672			7,150			3,851			4,471			5,662
Total non-performing assets	$	17,244		$	17,873		$	19,685		$	16,808		$	20,449

As a percent of Portfolio Loans
Non-performing loans		0.69	%		0.71	%		1.08	%		0.85	%		1.04	%
Allowance for loan losses		1.46			1.49			1.68			1.70			1.73
Non-performing assets to total assets		0.69			0.74			0.82			0.73			0.88
Allowance for loan losses as a percent of non-performing loans		212.78			210.48			155.39			199.29			166.90

⁽¹⁾	Excludes loans classified as "trouble debt restructured" that are not past due and vehicle service contract counterparty receivables, net.

Troubled debt restructurings ("TDR")
	March 31, 2016
	Commercial		Retail			Total
	(In thousands)
Performing TDR's	$	13,950	$	66,619		$	80,569
Non-performing TDR's(1)		2,798		3,693	⁽²⁾		6,491
Total	$	16,748	$	70,312		$	87,060

(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

	Three months ended March 31,
	2016					2015
	Loans			Unfunded Commitments		Loans			Unfunded Commitments
	(Dollars in thousands)
Balance at beginning of period	$	22,570		$	652	$	25,990		$	539
Additions (deductions)
Provision for loan losses		(530	)		-		(659	)		-
Recoveries credited to allowance		959			-		990			-
Loans charged against the allowance		(504	)		-		(1,642	)		-
Additions (deductions) included in non-interest expense		-			13		-			16
Balance at end of period	$	22,495		$	665	$	24,679		$	555

Net loans charged against the allowance to average Portfolio Loans (annualized)		(0.12	)%				0.19	%

Capitalization

	March 31, 2016			December 31, 2015
	(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		324,328			339,462
Accumulated deficit		(79,984	)		(82,334	)
Accumulated other comprehensive loss		(4,799	)		(6,036	)
Total shareholders’ equity		239,545			251,092
Total capitalization	$	274,045		$	285,592

Non-Interest Income

	Three months ended
	March 31, 2016			December 31, 2015			March 31, 2015
	(In thousands)
Service charges on deposit accounts	$	2,845		$	3,128		$	2,850
Interchange income		1,878			1,930			2,142
Net gains (losses) on assets
Mortgage loans		1,642			1,713			2,139
Securities		162			(77	)		85
Mortgage loan servicing		(978	)		1,275			(420	)
Investment and insurance commissions		467			447			446
Bank owned life insurance		290			303			350
Title insurance fees		288			282			256
Other		1,215			1,061			1,114
Total non-interest income	$	7,809		$	10,062		$	8,962

Capitalized Mortgage Loan Servicing Rights

	Three months ended
	March 31,
	2016			2015
	(In thousands)
Balance at beginning of period	$	12,436		$	12,106
Originated servicing rights capitalized		554			663
Amortization		(557	)		(759	)
Change in valuation allowance		(1,450	)		(692	)
Balance at end of period	$	10,983		$	11,318

Valuation allowance at end of period	$	4,722		$	4,465

Mortgage Loan Activity

	Three months ended
	March 31, 2016				December 31, 2015			March 31, 2015
	(Dollars in thousands)
Mortgage loans originated		$	73,502		$	75,874		$	79,790
Mortgage loans sold			55,666			59,537			68,727
Net gains on the sale of mortgage loans			1,642			1,713			2,139
Net gains as a percent of mortgage loans sold ("Loan Sales Margin")			2.95	%		2.88	%		3.11	%
Fair value adjustments included in the Loan Sales Margin			0.25			(0.03	)		0.81

Non-Interest Expense

	Three months ended
	March 31, 2016			December 31, 2015			March 31, 2015
	(In thousands)
Compensation	$	8,234		$	8,466		$	8,330
Performance-based compensation		1,521			2,128			1,288
Payroll taxes and employee benefits		2,126			1,987			2,167
Compensation and employee benefits		11,881			12,581			11,785
Occupancy, net		2,207			1,970			2,419
Data processing		2,101			1,986			1,930
Furniture, fixtures and equipment		984			977			952
Communications		888			773			736
Loan and collection		825			671			1,155
Advertising		477			783			484
Legal and professional fees		413			661			380
FDIC deposit insurance		334			322			343
Interchange expense		266			266			291
Credit card and bank service fees		187			195			202
Supplies		176			190			213
Amortization of intangible assets		87			87			87
Vehicle service contract counterparty contingencies		30			30			29
Cost related to unfunded lending commitments		13			67			16
Net gains on other real estate and repossessed assets		(6	)		(7	)		(39	)
Provision for loss reimbursement on sold loans		(15	)		-			(69	)
Other		1,197			1,289			1,237
Total non-interest expense	$	22,045		$	22,841		$	22,151

Average Balances and Tax Equivalent Rates

	Three Months Ended March 31,
	2016							2015
	Average Balance		Interest		Rate ⁽³⁾			Average Balance		Interest		Rate ⁽³⁾
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,546,142	$	18,520		4.81	%	$	1,420,272	$	17,195		4.88	%
Tax-exempt loans ⁽²⁾		3,647		55		6.07			4,360		68		6.33
Taxable securities		521,833		2,244		1.72			506,411		1,758		1.39
Tax-exempt securities⁽²⁾		41,982		381		3.63			33,877		333		3.93
Interest bearing cash		81,436		106		0.52			75,171		70		0.38
Other investments		15,546		200		5.17			19,991		268		5.44
Interest Earning Assets		2,210,586		21,506		3.90			2,060,082		19,692		3.86
Cash and due from banks		45,165							46,035
Other assets, net		165,104							171,878
Total Assets	$	2,420,855						$	2,277,995

Liabilities
Savings and interest- bearing checking	$	1,014,117		270		0.11		$	985,482		266		0.11
Time deposits		435,943		844		0.78			376,958		741		0.80
Other borrowings		47,524		477		4.04			48,038		454		3.83
Interest Bearing Liabilities		1,497,584		1,591		0.43			1,410,478		1,461		0.42
Non-interest bearing deposits		653,417							590,088
Other liabilities		23,768							23,955
Shareholders’ equity		246,086							253,474
Total liabilities and shareholders’ equity	$	2,420,855						$	2,277,995

Net Interest Income			$	19,915						$	18,231

Net Interest Income as a Percent of Average Interest Earning Assets						3.61	%						3.57	%

(1)	All domestic.

(2)	Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rateof 35%

(3)	Annualized

Commercial Loan Portfolio Analysis as of March 31, 2016

	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	$	9,386	$	250	$	-	$	250		2.7	%
Land Development		5,898		1,425		168		1,593		27.0
Construction		25,593		-		-		-		0.0
Income Producing		311,139		7,382		1,117		8,499		2.7
Owner Occupied		218,868		9,455		211		9,666		4.4
Total Commercial Real Estate Loans	$	570,884	$	18,512		1,496	$	20,008		3.5

Other Commercial Loans	$	200,002	$	16,626		2,237	$	18,863		9.4
Total non-performing commercial loans					$	3,733

INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - April 25, 2016