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

Attached files

file	filename
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
8-K - 8-K - INDEPENDENT BANK CORP /MI/	form8k.htm

Exhibit 99.2

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Supplemental Data

Non-performing assets ⁽¹⁾

	December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016
	(Dollars in thousands)
Non-accrual loans	$	8,184		$	8,410		$	8,542		$	9,014		$	13,364
Loans 90 days or more past due and still accruing interest		-			-			-			-			-
Total non-performing loans		8,184			8,410			8,542			9,014			13,364
Other real estate and repossessed assets		1,643			2,150			2,368			5,257			5,004
Total non-performing assets	$	9,827		$	10,560		$	10,910		$	14,271		$	18,368

As a percent of Portfolio Loans
Non-performing loans		0.41	%		0.43	%		0.47	%		0.54	%		0.83	%
Allowance for loan losses		1.12			1.11			1.14			1.20			1.26
Non-performing assets to total assets		0.35			0.38			0.41			0.55			0.72
Allowance for loan losses as a percent of non-performing loans		275.99			255.39			241.00			222.3			151.41

⁽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, 2017
			Commercial		Retail			Total
	(In thousands)
Performing TDR's		$	7,748	$	52,367		$	60,115
Non-performing TDR's(1)			323		4,506	⁽²⁾		4,829
Total		$	8,071	$	56,873		$	64,944

			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

(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,
	2017					2016
	Loans			Unfunded Commitments		Loans			Unfunded Commitments
	(Dollars in thousands)
Balance at beginning of period	$	20,234		$	650	$	22,570		$	652
Additions (deductions)
Provision for loan losses		1,199			-		(1,309	)		-
Recoveries credited to allowance		4,205			-		4,619			-
Loans charged against the allowance		(3,051	)		-		(5,587	)		-
Reclassification to loans held for sale							(59	)
Additions included in non-interest expense		-			475		-			(2	)
Balance at end of period	$	22,587		$	1,125	$	20,234		$	650

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

Capitalization

	December 31,
	2017			2016
	(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		324,986			323,745
Accumulated deficit		(54,090	)		(65,657	)
Accumulated other comprehensive loss		(5,963	)		(9,108	)
Total shareholders’ equity		264,933			248,980
Total capitalization	$	299,433		$	283,480

Non-Interest Income

	Three months ended						Twelve months ended
	December 31, 2017		September 30, 2017		December 31, 2016		December 31,
	December 31, 2017		September 30, 2017		December 31, 2016		2017		2016
	(In thousands)
Service charges on deposit accounts	$	3,208	$	3,281	$	3,242	$	12,673	$	12,406
Interchange income		2,154		1,942		2,141		8,023		7,938
Net gains on assets
Mortgage loans		2,876		2,971		2,839		11,762		10,566
Securities		198		69		261		260		563
Mortgage loan servicing, net		979		1		2,676		1,647		2,222
Investment and insurance commissions		427		606		369		1,968		1,647
Bank owned life insurance		285		283		254		1,061		1,124
Other		1,317		1,151		1,419		5,139		5,832
Total non-interest income	$	11,444	$	10,304	$	13,201	$	42,533	$	42,298

Capitalized Mortgage Loan Servicing Rights

	Three months ended December 31,						Twelve months ended December 31,
	2017			2016			2017			2016
	(In thousands)
Balance at beginning of period	$	14,675		$	11,048		$	13,671		$	12,436
Change in accounting		-			-			542			-
Balance at beginning of period, as adjusted	$	14,675		$	11,048		$	14,213		$	12,436
Originated servicing rights capitalized		1,183			966			4,230			3,119
Amortization		-			(785	)		-			(2,850	)
Change in valuation allowance		-			2,442			-			966
Change in fair value		(159	)		-			(2,744	)		-
Balance at end of period	$	15,699		$	13,671		$	15,699		$	13,671

Valuation allowance at end of period	$	-		$	2,306		$	-		$	2,306

Mortgage Loan Activity

	Three months ended									Twelve months ended
	December 31,			September 30,			December 31,			December 31,
	2017			2017			2016			2017			2016
	(Dollars in thousands)
Mortgage loans originated	$	213,877		$	264,177		$	139,657		$	871,222		$	428,249
Mortgage loans sold		117,941			120,981			98,491			423,327			313,985
Net gains on mortgage loans		2,876			2,971			2,839			11,762			10,566
Net gains as a percent of mortgage loans sold ("Loan Sales Margin")		2.44	%		2.46	%		2.88	%		2.78	%		3.37	%
Fair value adjustments included in the Loan Sales Margin		(0.45	)		(0.22	)		(0.50	)		(0.07	)		0.12

Non-Interest Expense

	Three months ended								Twelve months ended
	December 31,			September 30,		December 31,			December 31,
	2017			2017		2016			2017			2016
	(In thousands)
Compensation	$	8,525		$	8,494	$	8,724		$	35,397		$	33,080
Performance-based compensation		3,055			2,688		1,900			9,874			7,866
Payroll taxes and employee benefits		2,405			2,395		2,043			9,818			8,633
Compensation and employee benefits		13,985			13,577		12,667			55,089			49,579
Occupancy, net		2,070			1,970		2,041			8,102			8,023
Data processing		1,987			1,796		1,944			7,657			7,952
Furniture, fixtures and equipment		927			961		973			3,870			3,912
Communications		638			685		862			2,684			3,142
Loan and collection		666			481		548			2,230			2,512
Advertising		354			526		446			1,905			1,856
Legal and professional fees		516			550		564			1,892			1,742
Interchange expense		287			294		302			1,156			1,111
FDIC deposit insurance		286			208		197			894			1,049
Supplies		159			176		177			666			728
Credit card and bank service fees		97			105		203			529			791
Costs (recoveries) related to unfunded lending commitments		143			92		(8	)		475			(2	)
Amortization of intangible assets		86			87		87			346			347
Merger related expenses		284			-		-			284			-
Provision for loss reimbursement on sold loans		105			15		-			171			30
Net (gains) losses on other real estate and repossessed assets		(738	)		30		152			(606	)		250
Litigation settlement expense		-			-		2,300			-			2,300
Loss on sale of payment plan business		-			-		320			-			320
Other		1,284			1,063		1,103			4,738			4,705
Total non-interest expense	$	23,136		$	22,616	$	24,878		$	92,082		$	90,347

Average Balances and Tax Equivalent Rates

	Three Months Ended December 31,
			2017							2016
	Average Balance		Interest		Rate ⁽²⁾			Average Balance		Interest		Rate ⁽²⁾
	(Dollars in thousands)
Assets
Taxable loans	$	2,003,636	$	22,625		4.49	%	$	1,650,867	$	18,759		4.53	%
Tax-exempt loans ⁽¹⁾		2,571		27		4.17			4,355		57		5.21
Taxable securities		442,188		2,628		2.38			539,170		2,660		1.97
Tax-exempt securities⁽¹⁾		90,014		799		3.55			66,611		597		3.58
Interest bearing cash		20,827		35		0.67			88,986		111		0.50
Other investments		15,543		198		5.05			15,528		200		5.12
Interest Earning Assets		2,574,779		26,312		4.07			2,365,517		22,384		3.77
Cash and due from banks		30,459							33,148
Other assets, net		137,523							150,443
Total Assets	$	2,742,761						$	2,549,108

Liabilities
Savings and interest-bearing checking	$	1,054,651		523		0.20		$	1,018,559		284		0.11
Time deposits		526,217		1,498		1.13			483,270		1,137		0.94
Other borrowings		100,049		689		2.73			46,027		486		4.20
Interest Bearing Liabilities		1,680,917		2,710		0.64			1,547,856		1,907		0.49
Non-interest bearing deposits		759,725							721,617
Other liabilities		32,020							28,900
Shareholders’ equity		270,099							250,735
Total liabilities and shareholders’ equity	$	2,742,761						$	2,549,108

Net Interest Income			$	23,602						$	20,477

Net Interest Income as a Percent of Average Interest Earning Assets						3.65	%						3.45	%

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

(2)	Annualized

Average Balances and Tax Equivalent Rates

	Twelve Months Ended December 31,
			2017							2016
	Average Balance		Interest		Rate			Average Balance		Interest		Rate
	(Dollars in thousands)
Assets
Taxable loans	$	1,845,661	$	84,169		4.56	%	$	1,596,136	$	74,014		4.64	%
Tax-exempt loans ⁽¹⁾		3,199		172		5.38			3,763		220		5.85
Taxable securities		485,343		10,928		2.25			534,233		9,921		1.86
Tax-exempt securities⁽¹⁾		86,902		3,063		3.52			54,390		1,917		3.52
Interest bearing cash		37,119		264		0.71			78,606		403		0.51
Other investments		15,543		836		5.38			15,474		792		5.12
Interest Earning Assets		2,473,767		99,432		4.02			2,282,602		87,267		3.82
Cash and due from banks		31,980							36,831
Other assets, net		144,442							155,778
Total Assets	$	2,650,189						$	2,475,211

Liabilities
Savings and interest-bearing checking	$	1,052,215		1,530		0.15		$	1,018,685		1,115		0.11
Time deposits		502,284		5,245		1.04			447,243		3,826		0.86
Other borrowings		74,876		2,348		3.14			47,058		1,941		4.12
Interest Bearing Liabilities		1,629,375		9,123		0.56			1,512,986		6,882		0.45
Non-interest bearing deposits		728,208							688,697
Other liabilities		30,838							26,439
Shareholders’ equity		261,768							247,089
Total liabilities and shareholders’ equity	$	2,650,189						$	2,475,211

Net Interest Income			$	90,309						$	80,385

Net Interest Income as a Percent of Average Interest Earning Assets						3.65	%						3.52	%

(1)	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, 2017

	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	$	8,559	$	60	$	9	$	69		0.8	%
Land Development		9,685		-		-		-		0.0
Construction		51,733		-		-		-		0.0
Income Producing		289,799		1,590		30		1,620		0.6
Owner Occupied		258,888		11,491		170		11,661		4.5
Total Commercial Real Estate Loans	$	618,664	$	13,141		209	$	13,350		2.2

Other Commercial Loans	$	234,596	$	19,109		437	$	19,546		8.3
Total non-performing commercial loans					$	646

INDEPENDENT BANK CORP /MI/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - January 30, 2018

Attached files

INDEPENDENT BANK CORP /MI/ Reports