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

Attached files

file	filename
8-K - INDEPENDENT BANK CORPORATION 8-K 1-26-2017 - 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⁾

	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015
	(Dollars in thousands)
Non-accrual loans	$	13,364		$	10,801		$	10,803		$	10,425		$	10,607
Loans 90 days or more past due and still accruing interest		-			-			94			147			116
Total non-performing loans		13,364			10,801			10,897			10,572			10,723
Other real estate and repossessed assets		5,004			4,989			5,572			6,672			7,150
Total non-performing assets	$	18,368		$	15,790		$	16,469		$	17,244		$	17,873

As a percent of Portfolio Loans
Non-performing loans		0.83	%		0.67	%		0.69	%		0.69	%		0.71	%
Allowance for loan losses		1.26			1.37			1.44			1.46			1.49
Non-performing assets to total assets		0.72			0.62			0.67			0.69			0.74
Allowance for loan losses as a percent of non-performing loans		151.41			204.08			208.42			212.78			210.48

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

Troubled debt restructurings ("TDR")

	December 31, 2016
	Commercial		Retail			Total
	(In thousands)
Performing TDR's	$	10,560	$	59,726		$	70,286
Non-performing TDR's(1)		3,565		4,071	⁽²⁾		7,636
Total	$	14,125	$	63,797		$	77,922

	December 31, 2015
	Commercial		Retail			Total
	(In thousands)
Performing TDR's	$	13,318	$	68,194		$	81,512
Non-performing TDR's(1)		3,041		3,777	⁽²⁾		6,818
Total	$	16,359	$	71,971		$	88,330

(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,
	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		(1,309	)		-			(2,714	)		-
Recoveries credited to allowance		4,619			-			5,022			-
Loans charged against the allowance		(5,587	)		-			(5,728	)		-
Reclassification to loans held for sale		(59	)
Additions (deductions) included in non-interest expense		-			(2	)		-			113
Balance at end of period	$	20,234		$	650		$	22,570		$	652

Net loans charged against the allowance to average Portfolio Loans		0.06	%					0.05	%

Capitalization

	December 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		323,745			339,462
Accumulated deficit		(65,657	)		(82,334	)
Accumulated other comprehensive loss		(9,108	)		(6,036	)
Total shareholders’ equity		248,980			251,092
Total capitalization	$	283,480		$	285,592

Non-Interest Income

	Three months ended								Twelve months ended
	December 31,		September 30,			December 31,			December 31,
	2016		2016			2015			2016		2015
	(In thousands)
Service charges on deposit accounts	$	3,242	$	3,281		$	3,128		$	12,406	$	12,389
Interchange income		2,141		1,943			1,930			7,938		8,481
Net gains (losses) on assets
Mortgage loans		2,839		3,556			1,713			10,566		7,448
Securities		261		(45	)		(77	)		563		20
Mortgage loan servicing, net		2,676		858			1,275			2,222		1,751
Investment and insurance commissions		369		427			447			1,647		1,827
Bank owned life insurance		254		282			303			1,124		1,282
Title insurance fees		327		319			282			1,187		1,156
Net gain on branch sale		-		-			0			-		1,193
Other		1,092		1,087			1,061			4,645		4,583
Total non-interest income	$	13,201	$	11,708		$	10,062		$	42,298	$	40,130

Capitalized Mortgage Loan Servicing Rights

	Three months ended December 31,						Twelve months ended December 31,
	2016			2015			2016			2015
	(In thousands)
Balance at beginning of period	$	11,048		$	11,630		$	12,436		$	12,106
Originated servicing rights capitalized		966			569			3,119			2,697
Amortization		(785	)		(609	)		(2,850	)		(2,868	)
Change in valuation allowance		2,442			846			966			501
Balance at end of period	$	13,671		$	12,436		$	13,671		$	12,436

Valuation allowance at end of period	$	2,306		$	3,272		$	2,306		$	3,272

Mortgage Loan Activity

	Three months ended									Twelve months ended
	December 31,			September 30,			December 31,			December 31,
	2016			2016			2015			2016			2015
	(Dollars in thousands)
Mortgage loans originated	$	139,657		$	123,124		$	75,874		$	428,249		$	336,618
Mortgage loans sold		98,491			89,349			59,537			313,985			281,494
Net gains on mortgage loans		2,839			3,556			1,713			10,566			7,448
Net gains as a percent of mortgage loans sold ("Loan Sales Margin")		2.88	%		3.98	%		2.88	%		3.37	%		2.65	%
Fair value adjustments included in the Loan Sales Margin		(0.50	)		0.55			(0.03	)		0.12			0.16

Non-Interest Expense

	Three months ended									Twelve months ended
	December 31,			September 30,			December 31,			December 31,
	2016			2016			2015			2016			2015
	(In thousands)
Compensation	$	9,043		$	8,546		$	8,466		$	33,991		$	33,346
Performance-based compensation		1,581			2,174			2,128			6,955			6,732
Payroll taxes and employee benefits		2,043			2,311			1,987			8,633			8,108
Compensation and employee benefits		12,667			13,031			12,581			49,579			48,186
Occupancy, net		2,041			1,919			1,970			8,023			8,369
Data processing		1,944			1,971			1,986			7,952			7,944
Furniture, fixtures and equipment		973			990			977			3,912			3,892
Communications		862			670			773			3,142			2,957
Loan and collection		548			568			671			2,512			3,609
Litigation settlement expense		2,300			-			-			2,300			-
Advertising		446			455			783			1,856			2,121
Legal and professional fees		564			420			661			1,742			2,013
Interchange expense		302			276			266			1,111			1,125
FDIC deposit insurance		197			187			322			1,049			1,366
Credit card and bank service fees		203			203			195			791			797
Supplies		177			178			190			728			809
Amortization of intangible assets		87			86			87			347			347
Loss on sale of payment plan business		320			-			-			320			-
Net (gains) losses on other real estate and repossessed assets		152			263			(7	)		250			(180	)
Provision for loss reimbursement on sold loans		-			45			-			30			(59	)
Cost (recoveries) related to unfunded lending commitments		(8	)		73			67			(2	)		113
Vehicle service contract counterparty contingencies		(78	)		(39	)		30			(88	)		119
Other		1,181			1,233			1,289			4,793			4,922
Total non-interest expense	$	24,878		$	22,529		$	22,841		$	90,347		$	88,450

Average Balances and Tax Equivalent Rates

	Three Months Ended December 31,
	Three Months Ended December 31,
	2016							2015
	Average Balance		Interest		Rate ⁽³⁾			Average Balance		Interest		Rate ⁽³⁾
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,650,867	$	18,759		4.53	%	$	1,489,086	$	18,034		4.82	%
Tax-exempt loans ⁽²⁾		4,355		57		5.21			3,601		57		6.28
Taxable securities		539,170		2,660		1.97			561,216		2,277		1.62
Tax-exempt securities⁽²⁾		66,611		597		3.58			37,745		367		3.89
Interest bearing cash		88,986		111		0.50			71,585		81		0.45
Other investments		15,528		200		5.12			15,391		197		5.08
Interest Earning Assets		2,365,517		22,384		3.77			2,178,624		21,013		3.84
Cash and due from banks		33,148							44,884
Other assets, net		150,443							161,951
Total Assets	$	2,549,108						$	2,385,459

Liabilities
Savings and interest- bearing checking	$	1,018,559		284		0.11		$	988,234		264		0.11
Time deposits		483,270		1,137		0.94			424,020		784		0.73
Other borrowings		46,027		486		4.20			47,583		465		3.88
Interest Bearing Liabilities		1,547,856		1,907		0.49			1,459,837		1,513		0.41
Non-interest bearing deposits		721,617							648,924
Other liabilities		28,900							25,575
Shareholders’ equity		250,735							251,123
Total liabilities and shareholders’ equity	$	2,549,108						$	2,385,459

Net Interest Income			$	20,477						$	19,500

Net Interest Income as a Percent of Average Interest Earning Assets						3.45	%						3.56	%

(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,
	Twelve Months Ended December 31,
	2016							2015
	Average Balance		Interest		Rate				Average Balance		Interest		Rate
	(Dollars in thousands)
Assets ⁽¹⁾
Taxable loans	$	1,596,136	$	74,014		4.64	%		$	1,457,508	$	70,770		4.86	%
Tax-exempt loans ⁽²⁾		3,763		220		5.85				3,972		246		6.19
Taxable securities		534,233		9,921		1.86				529,571		7,805		1.47
Tax-exempt securities⁽²⁾		54,390		1,917		3.52				34,039		1,388		4.08
Interest bearing cash		78,606		403		0.51				66,595		275		0.41
Other investments		15,474		792		5.12				17,171		925		5.39
Interest Earning Assets		2,282,602		87,267		3.82				2,108,856		81,409		3.86
Cash and due from banks		36,831								44,842
Other assets, net		155,778								166,363
Total Assets	$	2,475,211							$	2,320,061

Liabilities
Savings and interest-bearing checking	$	1,018,685		1,115		0.11			$	988,504		1,056		0.11
Time deposits		447,243		3,826		0.86				386,035		2,953		0.76
Other borrowings		47,058		1,941		4.12				47,842		1,847		3.86
Interest Bearing Liabilities		1,512,986		6,882		0.45				1,422,381		5,856		0.41
Non-interest bearing deposits		688,697								619,206
Other liabilities		26,439								24,840
Shareholders’ equity		247,089								253,634
Total liabilities and shareholders’ equity	$	2,475,211							$	2,320,061

Net Interest Income			$	80,385							$	75,553

Net Interest Income as a Percent of Average Interest Earning Assets						3.52	%							3.58	%

(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, 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	$	8,083	$	67	$	74	$	141		1.7	%
Land Development		4,173		-		31		31		0.7
Construction		39,389		-		-		-		0.0
Income Producing		286,981		4,105		628		4,733		1.6
Owner Occupied		259,662		6,587		157		6,744		2.6
Total Commercial Real Estate Loans	$	598,288	$	10,759		890	$	11,649		1.9

Other Commercial Loans	$	206,523	$	6,154		4,273	$	10,427		5.0
Total non-performing commercial loans					$	5,163

INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - January 26, 2017

Attached files

INDEPENDENT BANK CORP /MI/ Reports